Marketing Plans
Syllabus Link: 4 P s
The Marketing Process Marketing Process: The marketing process relates to marketing strategies used to facilitate the market launch of new food products. Marketing Plan: Expresses a company s objectives in marketing terms; that is, how to maximise sales, improve customer satisfaction and quality aspects of a food product.
Marketing plans have either a product-orientation approach or a sales-orientation approach. All marketing plans must focus on meeting consumer wants and needs, although some may try to convince consumers that they need a new food product.
The Marketing Process
Marketing Mix Marketing Mix: The marketing mix refers to the 4 P s. It is the overall plan to market a new food product. The marketing mix consists of; Product Planning Price Structure Placement (or Distribution) Promotion For a new product to succeed or an existing product to continue selling, a company must use all areas in the marketing mix. A mistake or delay in one area results in an unsuccessful product.
Product Planning
The Product Lifecycle Product Lifecycle: Traces the growth, stationary and decline phases of a product s sales revenue history.
The Product Lifecycle Phases of the Product Lifecycle: Phase Explanation Introduction Phase The time during which a new product is introduced to the market. The manufacturer attempts to develop a demand for the product category. This phase involves intense and costly, marketing and promotional strategies compared to the other phases. Growth Phase The period where sales of the product grow rapidly and, thus, its income generation also increases. Marketing strategies during this phase tend to focus on brand name rather than product category, and must try to counteract (act against) actions of other manufacturers.
The Product Lifecycle Maturity Phase The term used to describe the life-cycle phase when market share is stable, growth in sale slows down and many smaller, or less committed, competitor companies have ceased to market their versions of the product. The level of competition in this phase becomes more intense Marketing strategies during this stage tend to focus on brand name, company image and pricing. Decline Phase This occurs when sales decline and generation of sales income decreases. At this time, less marketing effort is expended on the product. There is not much that a company can do in terms of marketing strategies to revive a product which is in the decline phase, without some radical improvements or changes. These improvements and changes are mostly focused on line extensions, for example; new flavours, colours, sizes, packaging.
Cadbury Example
Why do new products FAIL? It is important for food manufacturers to understand and recognise the onset of product failure and the reasons for it.
What to do with a failed Product? The most simple indication of product failure is is that its sales decline and profits drop. What actions can a company make with a failed product? Discontinue manufacturing the product Sell the product to another company. Revise marketing strategies - market the product at a discontinued price or try another market segment. Gradually decrease distribution and manufacture of the product.
Price Structures
Price Structures Pricing is an integral part of the marketing plan. The best pricing policy allows for consumers to pay more if they see more value in a product - e.g: paying $29.00 per kilogram for king prawns and $10.00 per kilogram for school prawns.
Price Structures and Target Markets The product price depends on what the target market is prepared to pay. Certain characteristics of a target market include; age, gender, socioeconomic level, family size and education.
Setting a Price for New Product The price of a new product normally reflects consumers needs and wants. Some factors can assist in deciding a product s price: It is generally assumed that the lower the price is, the higher the demand will be. The market share the company wishes to gain. To encourage more people to buy the product, the price must be lower than the competitor s price.
Setting a Price for New Product All products have a basic list price or a suggested selling price based on the breakeven point. The profit margin ranges between 5% and 20% of fixed costs. Sometimes the break-even point does not arrive until the maturity stage of the product life cycle.
Pricing Structures Penetration Pricing: The product price is below that of competitors for long enough to obtain a foothold (secure position) in the market. When is it used? When a company enters a new market segment for the first time, when a me-too product is being launched or when it is hoped that the product will be around for a long time.
Pricing Structures Price Skimming: A product is sold at a relatively high price at first, and the the price falls over time. When is it used? New-to-the world or line extension that has no other competition. The only one on the market and without a substitute. Positioned as an exclusive, high-status brand. Consumers assume that a high price means high quality. Not expected to have a long life cycle.
Pricing Structures Competitive Pricing (aka status quo pricing): The price is set to match that of the competition. When is it used? Used by market leaders (a company selling the largest quantity of a particular product) and at places like Paddy s Market where all the fruit and vegetable sellers charge much the same price for their goods.
Promotion
What is Promotion? Promotion informs consumers about new products. It persuades customers to buy a new product or buy more of an existing one. Promotional activities used to persuade consumers include; - Advertising Personal Selling Publicity and Public Relations Sales Promotions (sales, in-store sample testing, product giveaways and demonstrations)
Advertising Advertising: A marketing strategy used to sell or promote a product. Types of Advertising The most obvious advertising appears in magazines and newspapers, and on television, radio and the internet. The marketing team uses market research to identify the physical and buying behaviour of its target market, then selects the media outlet that best delivers the advertising message to the consumer.
Advertising An advantage of printed media is that consumers can digest material at their own pace, whereas the electronic media of radio and television do not allow consumers much time to receive and understand the advertising message. The majority of advertising on television during prime time is food advertising. Other forms of advertising include; outdoor advertising on buses, trains and taxis; posters and billboards on buildings, bus shelters and sports fields. These are visible and absorbed at a subconscious level.
Advertising Point-of-purchase promotion includes; posters in retail stores (signs on walls), display racks and vending machines. The packaging of a product is also a form of advertising. Every product we buy attempts to advertise itself through its packaging. Example; curvaceous shape of the Coca Cola bottle helps consumers recognise the product and company.
Promotional Activities Sales Promotions and Demonstrations: Sales promotions include; contests, free samples, coupons and cash-back offers. Large supermarkets have demonstrations in which people can sample a food product. Gondola Ends located at the ends of supermarket aisles, floor bins in a store s busiest areas (called hot spots). Off location displays (such as display box of sauces next to the barbecue cuts of meat) are other forms of sales promotion. Products on sale or displayed as being available for a limited time only.
Sales Promotions and Demonstrations: Gondola Ends Sale Items
Promotional Activities Personal Selling: A retail-salesperson helping a customer choose one product over another and the drivers delivering to retail outlets are all examples of personal selling.
Promotional Activities Publicity and Public Relations: Publicity: Unpaid use of media to broaden the public s knowledge of a product. For example; a celebrity who wears the company logo when playing sport or eating/drinking a company s product. Public Relations: Sponsorship of sporting teams, school activities and charity drives which contribute to building a positive company image.
Place & Distribution Systems
Place Place refers to where the product will be sold geographically and to the kinds of outlet in which it will be sold. Distribution refers to the process of moving the product from the producer to the consumer.
Place Place is where the target market lives, works, plays and shops. Intensive Distribution: When products are available at every possible outlet. For example; chocolate bars are sold in small shops, service stations, grocery stores, bakery shops, vending machines, online etc. Selective Distribution: This is when there is a wide but not intensive distribution. For example; some types of cheeses are available at some delis rather than Woolworths or Coles. Exclusive Distribution: When a limited supply of a product is sold in only a few retail outlets, usually because the product is expensive. For example; hand made chocolates have an elite image in the consumer s mind.
Retailers Retailer: A company that sells something directly to the consumer (via telephone, vending machine, internet, face-toface). The main function of a retailer is to sell goods and services to consumers who will use the products for their own use. Fresh food outlets such as; greengrocers, butchers, bakeries and fish markets are threatening supermarkets. A large number of consumers also do online shopping because it is convenient.
The table below shows the main reasons why people choose to purchase fresh produce outside the supermarket.
Distribution Systems As mentioned previously, distribution refers to the process of moving the product from the producer to the consumer. The longer the distribution chain is, the less efficient it is. Only 30%of the food sold in Sydney is still grown in NSW. Therefore, our distribution systems need to be extremely efficient.
Distribution Systems 1. 2. 3. Warehousing: Depending on the location of customers, warehouses can be located at one central place or in different parts of the State and/or country. Materials Handling: This refers to the forklifts, conveyor belts and other methods that move the cartons of product from the storage area to pallets ready for shipping. Inventory Control: Relates to checking stock. This is essential because it ensures the quality of the product and quick filling of orders. Holding too much stock is expensive.
Distribution Systems 4. Order Processing: This involves the handling and filling of orders, processing of accounts and collection of credit payments. When stock is low, it is automatically reordered. 5. Transportation: The type of transportation used - air, water, rail, road - depends on the type of product, the distances to be covered and the nature of the product.