Investigation of a medium to large sized business to produce a marketing proposal to launch a new product or service within the context of the chosen business.
My chosen business is Tesco; they are a UK-based global supermarket chain with annual revenues of ï¿½20 billion. Tesco is also the world’s most successful and profitable online grocer. They have worked hard to streamline the customer’s grocery shopping scenario, both in-store and online. No other online grocer has seamlessly integrated customers’ in-store shopping and their online shopping.
I am proposing a new service in partnership with Tescos. This service would provide secondary school children with another food option for lunchtime other than the school cafeteria. This service will consist of a number of food vans that will visit schools in the South Hertfordshire area. They will aim to provide appetizing yet healthy and nutritious food at affordable prices for school children.
Marketing objectives are an essential part of the marketing plan as they provide direction for activities to pursue. For my chosen business, Tesco to thrive and maintain competitiveness, aims and objectives must be set.
Marketing is about understanding the customer’s needs and ensuring that products and services are of the highest possible standards in order to satisfy the potential customers’ wants and needs. Marketing also focuses on ways in which the business can influence the behaviour of customers.
Marketing is essential to achieve success of all businesses. Its primary aim is to enable businesses to meet the needs of their actual and their potential customers and should be able to:
* Understand consumer needs
o It is important to understand and discover the needs of consumers to ensure the right goods and services are produced. This can be done via questionnaires/surveys or face-to-face discussions. By ensuring that they are providing a good or service that has demand, they are likely to increase sales.
* Understand and keep ahead of the competition
o Tesco’s are always aiming to keep ahead of their competitors, they need to ensure that their product rivals the others; this can be done by improving the quality of theirs, or lowering prices. Most products are competitive in the sense that consumers can almost always turn to a similar product provided by another company if they are not satisfied. Many organisations like Tesco carry out market research in order to help them make decisions on new and existing products. The research is designed to help Tesco to identify competitors, update or improve knowledge of consumers and competitors, uses trends to forecast future activities or to improve their competitive edge.
* Communicate effectively with its customers to satisfy customer expectations
o Communication of products/services contributes to the persuasion process, which encourages consumers to benefit themselves with what is on offer.
Certain tools are used to communicate with customers to please their expectations; this falls within the ‘promotional mix.’ This could include:
* Advertising – promotion of goods or services via the media, for example television, newspapers, billboards etc. the adverts are intended to persuade people who see them.
* Direct mail – Personally addressed advertisements sent via mail, this is a complex but more effective way of advertising because the consumer is spoke to directly, this makes them feel valued.
* Public relations – non-personal communications via the media.
* Sales promotion – techniques designed to boost sales, perks may be offered such as discount coupons or competitions.
* Sponsorship – financial funding for an event or project designed to promote consumer awareness or media coverage.
* Product presentation – improvement of a band’s appearance through packaging, for example the use of labels and branding.
* Direct selling – making sales with an emphasis upon the value of salesmanship.
* Use of innovation and enterprise to identify opportunities in the market
Only about 10% of new products are actually new, usually new products:
* Replace an old product
* Opens up a new market
* Broadens an existing market
There are 6 stages in the development process for new products. The following stages illustrate innovation and enterprise:
1. Ideas – All new products start from ideas. Ideas for new products may come from:
o Research and development – Market research helps product development by exploring consumer needs.
o Brain storming – for example people developing ideas from words and concepts;
o Suggestions box – for example employers may encourage employees to contribute their own ideas.
o Sales force – customer services have an input into product development by interacting with consumers.
o Forced relationships – amalgamating of products can be used to form a new product concept. For example, washing powder and fabric conditioner joined to make one product two in one.
2. Screening of ideas – Once the idea for the product has been generated, the product competitiveness and uniqueness should be considered.
3. Marketing analysis – The products market potential is assessed in the marketing analysis, this helps identify the market volume and expected sales rate.
4. Product development – design, innovation and the uses of technology play an important role in the development stage; possible packaging and branding could come into play here also.
5. Testing – this is deigned to ensure the product works properly and performs to expectations, it could be tested on part of a consumer market or it could be taken through a trial period.
6. Launch and commercialisation – The launch is highly significant because this is the day that the product is finally revealed to customers. The company whom produced the new product would aim for high levels of commercialisation in order to make the product’s presence known on the market.
* Be aware of constraints on marketing activities
o There are two types of constraints that effect marketing activities, internal and external. Internal constraints are to do with the resource capabilities of a business, for example costs. If a company decides to produce new goods or services, resources are needed to finance the expansion. Or if a company is working on a large enough scale, they may wish to make a presence globally, this is a big step and therefore would require a lot of resources, long-term investments would be required for example, or in order to finance an expansion, existing assets could be sold off.
o External constraints are limitations within the business environment that can affect companies, these could include:
* Consumers – companies reply on consumers to purchase their product, if the consumers are not interested in the product, this causes difficulty in marketing.
* Competitors – Marketing is difficult when competitors are offering the same good or service, this causes companies to attempt to differentiate their product to give consumers a reason to buy theirs and not competitors.
* Economy – During periods of economics recession or depression, consumers spend less on goods and services, this leads to marketing problems, especially for luxury goods.
* The law – certain laws can constrict the activities of a business and result in difficulty for those companies.
Companies need to research into these external constraints in order to find solutions to them before they become serious problems.
It’s important that marketing objectives follow and cover the SMART criteria:
SPECIFIC – The objectives must relate to the issues and markets in which the organisation is involved.
MEASURABLE – Evaluate whether the business has been successful in achieving the marketing objectives.
ACHIEVABLE – setting realistic objectives that are possible to reach, while objectives should stretch a business, they shouldn’t be too ambitious.
REALISTIC – The business needs to have the resources needed to reach the objectives, the key resources are usually people and money.
TIME-BOUND – deadlines should be set for the marketing objectives, planning for the objectives involve identifying when and how they can be achieved.
Functional areas of a business and their supporting role
In order to carry out different business activities, businesses are often subdivided into a number of functional areas. Each of these departments is brought together through a process of interdependence to work to meet the same ends. In other words, even though the departments are doing different things, they are still working on the same objectives. It is important that they work closely together to co-ordinate the different ways in which they meet customer needs. All of the departments In the Tesco organisation work directly with Marketing apart from Human Resources, The full list of departments includes:
This department is required for identifying, anticipating and fulfilling customer requirements profitably. The marketing department works closely with Research and Development to make sure that new product offers match customer requirements. Marketing also works with Production and Operations to ensure that the requirements, choice and needs of customers are met. The finance department is required to invest in promotional activities designed to communicate the new products and services with the customers. Finance also prepares a budget for marketing; this budget would cover expenses for aspects such as brochures, leaflets and press releases. Customer Service also works with marketing because they have to deal with problems or queries relating to the new products. The staff within customer service needs to have good product knowledge in order to deal with customers.
Market research is a vital procedure that all businesses must undertake, not just Tesco. The American Market Research Association defines market research as: “The systematic gathering, recording and analysis of data about problems related to the marketing of goods and services.”
A market is basically made up of real or potential buyers of a product and the sellers who provide the goods to meet buyer’s requirements. Interaction between buyers and sellers is based upon the notion of the marketing mix. The mix provides a useful way of looking at the marketplace for products. Tesco will need to create a successful mix of:
* The right product/service
* Sold in the right place
* At the right price
* Using the most effective form of promotion
Mass marketing, sometimes referred to as undifferentiated, is creating a product, which appeals to all types of consumer. Companies make use of global mass markets, which means selling the same product with similar marketing techniques all around the world. It is a moderately cheap way of marketing a product, however it tends to ignore individual differences.
Niche marketing is aiming a product at a specific type of consumer. A niche market is usually a smaller segment of a larger market. Companies using a niche market often get less sales than they would if they aimed at a mass market so they have to make up for this by charging a higher price (as the product is often more specific to consumer needs, the customer is normally willing to pay more). It is easier for smaller firms to operate niche markets, as there is less competition from bigger companies. Niche markets are usually ignored by larger multinational firms, who are not interested in the low sales volume yielded by a small segment. A good example is Rolls Royce who specialise in the luxury automobile niche.
Market segmentation is the process in marketing of grouping a market (i.e. customers) into smaller subgroups. There are 3 important elements to segmentation:
* Market segments – These are groups of customers who have similar desires, the duty of the businesses is to produce different products to suit the different segments desires.
* Targeting – As there are so many segments, an organisation has to target one of more segments which have a need which they feel they can best meet. This process is known as targeting and can involve the type of marketing an organisation feels most appropriate, (mass, niche or concentrated.)
* Positioning – This is a perceptual location; it is where a product or service fits into the marketplace. Positioning basically how your market segment defines you in relation to your competitors. Effective positioning puts you first in line in the minds of potential customers, it portrays your uniqueness.
There are seven positioning strategies that can be pursued:
Product Attributes: What are the specific products attributes?
Benefits: What are the benefits to the customers?
Usage Occasions: When / how can the product be used?
Users: Identify a class of users.
Against a Competitor: Positioned directly against a competitor.
Away from a Competitor: Positioned away from competitor.
Product Classes: Compared to different classes of products.
Investigating consumer attitudes
It is essential that organisations understand and value the consumer attitudes; there is a strong correlation between consumer attitudes and their behaviour in buying patterns. By understanding consumer attitudes, it can be possible for an organisation to produce a product/service that consumers actually want. It is highly significant that products/services developed are produced in relation to consumer attitudes; this helps to ensure the products saleability.
To be able to collect data on consumer attitudes to produce a product/service, there are a selection of research processes can be undertaken:
* Face to face discussions with consumers
* Telemarketing calls
* Questionnaires handed out on high street shopping centres or through the post or internet.
Once this data on consumer attitudes has been collected, it would need to be analysed in order to find the link between consumer attitudes and the products/services they purchase.
Different attitudes can be categorised under the following headings:
* Stability of attitudes – Certain consumers constantly change their attitudes, this results in unstable buying behaviour patterns which makes it difficult for organisations to target these certain consumers accurately
* Conflict of attitude – Sometimes, more than one attitude can be applied to a given situation, so the consumer behaviour might need a compromise between the conflicting aims.
* Strength of attitude – strong attitudes are obviously less likely to change, whereas weaker attitudes can be broken and changed fairly easily, however, the strength of the attitude can determine the behaviour.
* Elapsed time – as attitudes are can be energetic and dynamic, the longer the gap between the measurement of the attitude and the behaviour, the more likely it is that the correlation between the two will break down.
* Situational factors – In certain situations, the case individuals find themselves in may prevent action from taking place. For example, the customer may have no money.
Once the product/service has been marketed and sold, it is important to monitor usage. The organisation needs to be sure that the customers are happy with their purchases; this ensures they will return and recommend the organisation that produced the product/service. The monitoring can be carried out in practical ways such as:
* Post-sale surveys – used to identify the level of satisfaction to pick up on anything that can be improved, whether it’s the actual product/service or the sales service.
* Suggestion boxes – this allows customers to express their opinion in a non-confrontational way as it is private and no details of the customer are provided. It provides the organisation with the exact information they need, what the customers think and want.
This allows organisations to understand what they need to produce and who the potential audience are; this is the real advantage of carrying out extensive market research. Products/services or big decisions can be based on market research providing the information is reliable. It creates business certainty, by knowing what the customers wants through market research, an organisation can provide a product/service knowing that it will be a success as they done the research.
Planning market research
A plan must be created in order to achieve successful market research; the plan can consist of the following:
It is significant that marketers take into consideration the following the aspects:
o The intended groups they are targeting with research activities
o The expenditure of the market research
o The techniques used in order to uncover the needs of potential customers
o The sources of information they aim to use
o The timescale for the completion of the research
Identify who are the potential consumers and what are their requirements
One of the main aims of market research is to identify who the potential customers are and their requirements. The research also aims to forecast future customer needs, this could be their lifestyle or behaviour.
Identify possible sources of information both primary and secondary
Sources of information can be broken up in two different types, primary and secondary. Primary information is basically comes from research which is carried out in order to establish a response from the market to a new product/service.
Secondary information comes from research that has already been carried out for another purchase. For example, the Coca-Cola Company might wish to make use of secondary research to find out how many soft drinks were sold in the last year, they could then conduct some primary research in order to find consumers attitudes towards a new drink they wish to bring out, they could try to establish what exactly the customers want from a soft drink.
Decide which method of research to use to collect information
Two important factors come into play when deciding which method of research to use to collect information, these are the cost of the research, and the time frame allocated. Primary data tends to end up costing more, it can be collected through face to face interviews, telemarketing, focus groups and questionnaires sent to the target audience. Secondary data can be obtained from government statistics, research agencies and possible news reports.
Depending on what exactly an organisation wishes to find out from the market, they have a choice between primary and secondary research, both types could come into play in certain situations, depending on the organisation.
Estimate and set a timescale to the completion of the market research
It is important that a time frame is set for the market research; the research can be carried out more efficiently when the team knows there is a deadline to meet. It is also important that the time given is realistic and allows the team enough team to carry out sufficient research.
Research into a market
Primary research techniques are when gathering market research data, the techniques could consist of the following:
* Observation – This is simply observing how consumers behave in the shopping environment. By carrying out observation, marketers can find out important information that can help influence packaging designs or to decide where certain products should be placed in a store. For example, if market research proved that the first item customers look for when entering a supermarket was bread, then it would make sense to place this product towards the front of the store. Simple ideas like this could increase consumer awareness and improve their attitudes towards the particular store.
* Experiments – these can vary as many different types of experiments can be carried out. For example, if a store was looking to boost sales they could try different techniques out, such as different packaging, for experimental purposes. Then record the sales figures and note any increases or declines, this would give the store a clearer idea of how to achieve their aims, experiments are a good way to do this.
o Laboratory experiments – These are artificial experiments, which could consist of whole mock up stores created to see how customers react to the environment. They can used to record the response to new types of advertising or new products.
o Field experiments – These basically test products in real situations and environments in order to achieve an accurate idea of its success. Before a product is officially launched, in-home placements tests can be used to help predict the likely success of the product, it can also pick up on any problems with product. In-home placement tests basically provided a sample group of individuals with the new product to use in their homes and asked to report back with how they managed and used it. Store tests are also used, retail stores can be selected to stock a new item and sales figures and patterns are recorded. This is a great way to test out the likely success of a new item before it is sold in all stores. Test marketing is another type of field experiment, it involves selecting a certain geographical area and launching and promoting a product there. Judged on the success of the product in that given area, predicted sales figures can be formed for when the official launch takes place.
* Surveys and questionnaires – these are probably the most obvious and common form of primary research, a questionnaire is a systematic list of questions designed to gain information from consumers about their attitudes, their values and beliefs. It is important that the questions asked are relevant and therefore results in good feedback. They should not be too lengthy otherwise consumers will not complete them, the questions should be answerable in the sense that they should not require a lengthy answer. Multiple-choice questions would go down well as they are quick and simple to answer. The sequencing of the questions is significant, the first question should not be to direct or complex, the questions should gradually build up, getting slightly more complex. It is important to remember that the questions are designed to be analysed, therefore they must be relevant and provide answers that the market research team can work with.
Secondary research is basically any source of information that has previously been published, if can be build from both internal and external sources.
Internal sources are information already held within the given organisation, usually in large databases. These databases can hold a large amount of data, which can easily be stored and retrieved. The data within the database can be information on the organisations customers. Most big supermarket chains offer their regular customers loyalty cards, which give the customer discounts and other perks. The organisation benefits from these cards as well. When customers use their loyalty cards, it is possible to match the postcode of the customer with the nature and type of purchases they make. This information can be used as a base for making products and merchandising decisions. The cards allow the organisation to examine their regular customer’s spending and buying habits.
External sources can be described as data that exists in the form of published materials, which would have been put together by someone outside the organisation. Domestic socio-economic data is a type of external sources; it measures customers by their house type, the theory being that a certain lifestyle or spending pattern is associated with that type of house.
The Marketing Mix
The Marketing Mix is a term used to describe the combination of tactics used by a business to achieve its objectives by marketing its products or services effectively to a particular target customer group. The marketing mix is a series of controllable variables that an organisation should use in order to market a product/service successfully and to best meet customer needs.
It is also referred to as the 4 Ps: Product, Price, Promotion and Place. The 4Ps are the ideas to consider when marketing a product. They form the basis of the marketing mix. Getting this mix right is critical in order to successfully market a product.
Why it is important
Businesses need to make sure they are marketing:
* The right product to
* The right person at
* The right price in
* The right place and at
* The right time
For example, if you manufacture pens, and have decided to target schoolchildren, it would be more appropriate to market:
* Coloured ballpoint pens (product)
* At a low price (price)
* Selling them through newsagents and stationers (place)
* And promoting them through point of sale material (promotion)
Than it would be to market:
* Gold fountain pens (product)
* At a high price, including insurance against loss (price)
* Selling them through specialist outlets and jewelry stores (place)
* And promoting them in glossy magazines and Sunday Supplements (promotion
The product is the most significant element in an organisation’s marketing mix.
“A product is everything, both favourable and unfavourable, that is received in an exchange” – Sally Dibb et al (1994)
The results of market research data should be analysed first to identify the potential customers. The market research data will be able to look more closely at what the market wants and then look at the products to see if they are satisfying the customer’s needs. The packaging design, materials used, size and quantity can then be reassessed to suit the targeted customer’s needs.
Customer’s needs are likely to change and therefore products should constantly change to reflect each market change, as if ignored, the products will no longer be needed or desired by the target customers.
Product Phases (life-cycle)
Products also go through what is known as a life cycle or phase. When exploring what mix is best suited to the product, where in the life-cycle your products lies should also consider:
If you are releasing a brand new product or service then it will be new in the market and will need to be introduced to your market. Pricing, promoting and placing it into the market place will need careful consideration.
If a product or service has been enjoying being the only one on the market, competitive products or services will have an affect on the healthy sales the original product might have been enjoying. Reaction to this will have an impact on the survival of the product, for example – should the price be dropped to compete? Should a different promotional method be adopted? Should the distribution method be changed?
If the product is one of many competing products, then the product can be considered to be a mature one. If this is the case then it should be ensured that interest for the product is not lost. Maturity of a product is a dangerous time and it could get swallowed up by the competitors.
If the product is losing its appeal, sales or interest have dropped, the product is in decline. This part of the cycle need careful consideration. The product might need to be removed from the shelves or reinvented by changing packaging or product name.
Depending which phase the product is at – introductory, growth, maturity or decline, you would be able to make further decisions at to what price to charge, where to sell your product and what type of promotion would be most effective.
To create a good/service the following product decisions have to be made:
* Brand name
* Repairs and Support
* Accessories and Service
The price is the amount that shall be charged to customers for the product/service. It costs to produce and design a product; it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation. Pricing should take into account the following factors:
* Fixed and variable costs.
* Company objectives
* Proposed positioning strategies.
* Target group and willingness to pay.
It is vital that the right price is set, if it is too low no profit will be made, but if it is too high then customers could reject it. When setting a price on a range for your products, you need to ensure that you can recoup any overheads, compete with rival companies and charge a price your customers are willing to pay.
* Loss Leader Pricing
This involves lowering prices on a number of key products in order to attract a customer to purchase the products. Loss leader pricing might be used to sell off or stimulate interest in products considered to be in the maturity or decline stage of their life cycle.
* Penetration Pricing
This type of pricing is used for products identified as being in the “introductory” stage of the product life cycle to enable the product to get a foothold in the market. Prices are artificially reduced to attract the largest possible audience.
* Price Skimming
Where Penetration Pricing keeps the pricing below the real market price, price skimming raises the price artificially to enable it to quickly recoup costs and for immediate profit. This type of pricing structure works very well for products that are in demand or where there are few competitors – electronic equipment for example.
* Differential Pricing
This involves allowing the same product to be priced differently; this can be justified when the product is sold in areas with differing economic climates, when sold through differing distribution channels, to appeal to a different market segment. You could also decide to charge more for your product in London than you would in the North of England simply because the economy is more stable in London than in the North of England.
* Competition pricing
When competing products are almost identical, customers are well informed and where there are few suppliers, costs have to be treated as a secondary consideration and a price in comparison with competitors is set.
* Product Line Pricing
Pricing different products within the same product range at different price points. An example would be a video manufacturer offering different video recorders with different features at different prices. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.
* Bundle Pricing
The organisation bundles a group of products at a reduced price.
* Psychological pricing
The seller here will consider the psychology of price and the positioning of price within the market place. The seller will therefore charge 99p instead ï¿½1 or ï¿½199 instead of ï¿½200.
* Premium pricing
The price set is high to reflect the exclusiveness of the product. An example of products using this strategy would be Harrods, first class airline services, Porsche etc.
* Optional pricing
The organisation sells optional extras along with the product to maximise its turnover. This strategy is used commonly within the car industry.
* Pricing strategy
* Suggested retail price
* Volume discount and wholesale pricing
* Cash and early payment discounts
* Seasonal pricing
* Price flexibility
* Price discrimination
In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. There are 4 elements to promotion, known as the promotional mix. These are:
Generally speaking, advertising is the promotion of goods/services, companies and ideas, usually by an identified sponsor. Marketers see advertising as part of an overall promotional strategy. Advertising is non-personal but it is targeted at its specific target audience through a mass media channel, for example, if a company were promoting a new type of golf ball, they would buy a commercial slot during live golf on the television.
Advertising can be seen just about anywhere, common places where advertising can be found are:
* Public transport
There tends to be a variety of advertising objectives, the main two being:
* Promoting goods and services
o to boost sales levels
o To develop awareness of new products/services
o To encourage desire to own a new product
o To generate enquires
* Developing the image of the organisation
o To provide information for a target audience
o To support public relations activities
o To change negative views
o To develop support from a community
There are 3 main forms of advertising:
* Informative advertising – raises consumer awareness of the benefits of the product/service. It tends to be used in the introductory phase of the product life-cycle.
* Persuasive advertising – this focuses highly on the beneficial aspects of the product/service, this is designed to generate a strong desire for the product/service by the consumers. This is mainly used with established therefore mature products.
* Reinforcement advertising – this is designed for products that have already been promoted, but this is to further that promotion, to remind consumers about the product.
It essential that a plan is constructed before an advertising campaign begins, in this plan the following steps would be carried out:
* Identify the target market
* Define advertising objectives
* Decided on and create the advertising message
* Allocate the budget
* Develop the media plan
* Execute the campaign
* Evaluate the effectiveness of the campaign
This consists of sales men selling to the customer on a one to one basis. Advantages being that questions can be answered straight away; problems can be sorted out at a personal level. The sales man remains with the customer’s case through to the completion of the sale.
Personal selling is one of the oldest forms of promotion. It involves the use of a sales force to support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where the role of the sales force may be limited to supporting retailers and providing after-sales service).
Public relations are the art and science of building relationships between an organization and its key publics. The purpose of it therefore is to provide an external environment for an organisation in which it is popular. Public relations are long-term promotional method, this is because it takes time for an organisation to change and improve the way people think about its image. An organisation can have many publics, the aim of public relations is to allow the organisation to build a sustained relationship with these publics, as the diagram below shows.
Types of public relations activities include:
* Charitable donations – provides the company with good publicity and puts the organisation in a good light
* Sponsorship – many big organisations sponsor sporting events and cultural events, this is a great form of advertisement and over time, can link the organisation with that particular event.
* Press releases – covers events affecting the organisation, for example news stories, policy changes or technical developments.
* Hospitality – usually at top sporting events, used by organisations to develop their customer relations.
Sales promotions are non-personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include:
* discounts and sales
* point of purchase displays
* gifts and incentive items
* free travel, such as free flights
Sales promotions can be directed at the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions.
There are a range of different types of sales promotion:
* Dealer loaders – These are designed to attract higher orders from retailers and wholesalers, for example they include a “free case” with so many cases bought. Deals like these are common when buying in bulk
* Competitions – these may interest dealers and consumers, for dealers they could be linked to sales with prizes for the most successful dealer. Scratch cards and bingo cards are common promotional methods used for consumers.
* Promotional gifts – gifts such as bottles of wine, watches or diaries are considered useful inducement for dealers.
* Price reductions and special offers – popular with consumers but can however prove expensive as the consumer may have been willing to pay the full price.
* Premium offers – Coupons with offer money off or “buy one get one free” are used widely; they can be found in magazines/newspapers.
* Loyalty incentives – these are an increasingly popular form of sales promotion. Dealer’s loyalty could be rewarded with bigger discounts, competitions and prizes. For consumers, incentives such as loyalty cards and points can provide ‘cash back’, free gifts or other benefits.
Place simply refers to how products/services will be sold to the customers. Depending on what it is an organisation is selling will directly influence how it is distributed, and it affects mainly those businesses that are in production. If for example you own a small retail outlet or offer a service to your local community then you are at the end of the distribution chain so and will be directly supplying a variety of products directly to the customer.
However, if you are a producer, the method of distribution is extremely important as it could affect how their product is received and how it sells.
There are two types of channel distribution methods available. Indirect Distribution involves distributing a product by the use of an intermediary. Direct Distribution involves distributing direct from a manufacturer to the consumer; a good example of this would be Dell computers. Clearly direct distribution gives a manufacturer complete control over their product. However, indirect distribution saves money on opening and running stores for customers.
Indirect distribution Direct distribution
How manufacturers store, handle, and move products to customers at the right time and at the right place is referred to as physical distribution. Important decisions about distribution could include:
* Inventory – the decision is basically when and how much to order, there are dangerous with ordering too little and too much, if there is too little the organisation could lose custom because of dissatisfaction with the quality of the service, however if there is too much then an organisation could loose money if they can not sell it all. So it is important that good inventory decisions are made as they are vital
* Warehousing – The location and number of warehouses are significant, they need to be located in an area which is in easy accessibility of main transport links and they need to be situated in proportion around the areas they are doing business with.
* Load size – it needs to be decided whether units should be transported in bulk or fewer numbers for delivery.
* Communications – An efficient information processing and invoicing system must be developed.
Depending on the type of product being distributed there are three common distribution strategies available:
1. Intensive distribution: Used commonly to distribute low priced or impulse purchase products e.g. chocolates, soft drinks.
2. Exclusive distribution: Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. An example of would be the sale of vehicles through exclusive dealers.
3. Selective Distribution: A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.
AO2 – Oral Presentation for Marketing Proposal
(Also includes a PowerPoint presentation – Unit 1 presentation).
* Today I am going to introduce to you my proposal for a service in conjunction with Tesco.
* The service is: supplying a healthy packed lunch box with a drink to Secondary School students in the south Hertfordshire region.
* The service is about providing students with a healthy, interesting and affordable lunch option in a disposable box.
* The service will be disseminated from refrigerated vans at the school gates at lunch time.
* Students will be able to purchase vegetarian and non vegetarian meals which meet the Food standards agency guidelines.
* These lunch boxes will be priced to meet all pockets, starting from as low as ï¿½2. 50
* Students will be able to purchase food with money but also with vouchers which could be bought in Tesco. This idea in my research showed appealed to parents of younger children.
* I aim to advertise the service via the Tesco stores as my research showed that a majority of the parents shopped at Tesco.
* Promotional leaflets will also be distributed via schools and local newspapers.
Initially the service will be provided only in the South Hertfordshire schools with a potential to expand nationally.
A03 – Market Research and analysis of the gathered data
In order to ascertain my proposal of introducing the “Lunch Box” service, I have undertaken primary and secondary research aimed at the potential customers – the students and also their parents (as they would influence.) My service is designed for a niche market (directly the secondary school students and indirectly, their parents.) Therefore my market research is conducted upon this group. I needed information on the attitudes, values and preferences of both the students and the parents; therefore I designed my questionnaire with a student and parent section.
I am hoping that my questionnaire will provide me with some statistics on the needs and preferences of my targeted audience in order to enable me to market my product efficiently.
The following questionnaire was distributed to 30 students and their parents in the South Hertfordshire area.
Student/Parent Questionnaire on lunchtime eating habits
1. Are you:
Vegetarian ? Non-vegetarian ? Other special dietary need ?
2. Do you have school lunches or bring a packed lunch?
School lunches ? Packed lunch ?
3. Please tick one of the following boxes that best explains why you choose one of the above:
Preference ? Convenience ? Cost ? Health reason ?
4. If you bring a packed lunch, have you tried school lunches?
Yes ? No ?
If yes, reason for changing over to packed lunch:
Taste ? Lack of choice ? Value ?
5. Would you be interested in trying out a new service providing healthy, convenient and affordable packed nutritional lunches to your school gate?
Be interested and give it a try ? Not interested as you are happy with your present arrangement ?
6. Do you believe that your child’s eating habit at lunch time can be improved?
Yes ? No ?
7. Do you and your partner (if applicable) work full time?
Both work Full time ? One parent works full time ? Single parent works part time ?
8. What is the most you would pay for your child’s lunch?
ï¿½1.50 – ï¿½1.80 ? ï¿½1.85 – ï¿½2.50 ? ï¿½2.60 – ï¿½3.50 ?
Would you prefer you child to use lunch coupons to purchase their lunches instead of cash?
Yes ? No ? Don’t mind either way ?
4. What supermarket do you use for your weekly shopping?
Sainsbury ? Asda ? Tesco ? Morrison ?
Analysis of questionnaire results
The information below is based upon 30 Questionnaires returned.
From 30 Questionnaires 2 students replied saying they are vegetarians.
20% (6) of children who replied currently have school lunches. Which means a dominant 80% (24) have packed lunches.
Of the 6 students who have school lunches – 4 did so for convenience and the remaining 2 did so for preference.
70% (17) of those who currently have packed lunches said that have had tried school dinners and do not like them.
75% (18) of those who currently have packed lunches said that they would consider moving to a healthy packed lunch option
90% (27) of students were interested in the “Lunch Box” service and would be willing to try it.
80% (24) of parents responding thought ï¿½2.50 was good value for a school lunch
90% (27) of parents felt that their child’s eating habit at school can be improved
70% (21) of parents would prefer to give coupons to their children to purchase lunch
80% (24) parents said they do their weekly shopping at Tesco, 3 shopped at Sainsbury, 1 at Asda and 2 at Morrison.
Charts and Graphs displaying data from questionnaires
To display my results in a clear and visual way, I have decided to use the raw data to produce charts and graphs. This makes interpreting the data simpler and clearer.
As this pie chart clearly shows, non-vegetarian students dominate the south Hertfordshire Secondary schools; this tells me that they will be my main customers. Of course it is important not to forget the minority that are the vegetarian students as they are an extremely niche market and are potential customers as well.
This graph above evidently shows me that the majority of the pupils have packed lunches instead of school lunches. As the service I am proposing is to provide pupils with a lunch option very similar to that of packed lunches, I see this information as a huge advantage to me.
This graph is showing me that most of the pupils choose school lunches for convenience. Had they mainly chosen school lunches for preference reasons, I would of found a disadvantage about my proposal. The fact that most pupils choose school lunches for convenience is an advantage to me, this is simply because the service I propose is also just as convenience as their parents still do not have to prepare there lunch for them, like packed lunches. All they are required to do is to pay for their child’s lunches, which are exactly the same as school lunch service they all ready use. My service is therefore just as convenient.
I decided to hold a focus group at the parents evening to capture the views of both the student’s and parent’s needs and preferences who would be my potential customers.
I introduced my proposal with the following handout:
Outcome of the discussion in the Focus Group
I made the following observations from the discussion:
* The students appeared to be more enthusiastic about the proposed service compared to the parents. This made me realise that my proposed service will have to be marketed in a way to attract the parents.
* Some parents were concerned and wanted to know the cost which was not in my handout. My pricing of the service and product will have to be appealing.
* The working mothers welcomed the idea of a healthy lunch being made available as most of them found packing lunches time consuming in the mornings.
* The students were keen to make suggestions about what the lunch box should contain. This prompted me to market my service as one which will have room for versatility and choices.
* Parents of younger students liked the idea of the use of vouchers.
I carried out secondary research via the Internet to gain insight of the eating habits of students at lunch time and I found the following interesting facts and statistics:
* The UK’s unhealthy lunch box
“Statistics show that only a quarter of school lunch boxes packed by parents meet minimum dietary standards – with most being filled with foods high in saturated fat, sugar and salt.”
* Lunchbox survey 2004: facts and figures
Each year more than 5.5 billion lunchboxes are packed for children in the UK, according to Mintel (market analysts).
Lunchbox industry statistics show that the UK’s lunchbox industry is worth more than ï¿½4 billion a year in the UK. Children represent 30% of the market (increasing by 3% year on year).
Of all packed lunches, 23% are eaten at school, increasing by 7% each year.
Lunchbox Survey 2004
* Sandwiches were present in 82% of lunchboxes. Most popular fillings were ham (27%), cheese/cheese spread (21%) or chicken (11%).
* White bread sandwiches were the most popular option in 69% of lunchboxes, whereas brown/granary/wholemeal and softgrain bread accounted for about 13% of lunchboxes.
* Other bread-based options (ciabatta/wraps/crackers) were found in 2% of lunchboxes.
* 16% of lunchboxes did not contain any sandwiches or bread options.
* Of the 688 lunchboxes surveyed, only one salad was recorded.
* Fruit was found in 52% of lunchboxes. Apples were the favourite (in 18% of boxes). Bananas came second (9%).
* Crisps were found in 69% of lunchboxes.
* Biscuits and chocolate bars were found in 58% of packed lunches.
* 45% of boys and 54% of girls brought fruit in their lunchboxes (either fruit, salad, or fruit juice).
* Yoghurts/fromage frais/mousses were fairly popular and were found in 35% of lunchboxes.
* Cheese snacks were found in 14% of packed lunches.
* Cakes and cereal bars were found in 29% of packed lunches.
* Drinks were found in 95% of lunchboxes. Favourite choices were fruit squash (37%), water (17%) and fruit juice (14%).
* 92% of boys and 95% of girls included one of more fatty and sugary foods into their lunchbox (crisps, biscuits, sweets, cakes, cereal bars etc.) Sugar-sweetened drinks were not counted.
* Survey reveals children’s lunchboxes are still packed with saturated fat, salt and sugar
The Food Standards Agency’s (FSA) second survey of school lunchboxes reveals that children who take a packed lunch to school are still eating far too much fat, saturated fat, salt and sugar in one meal.
From lunchbox foods alone, children are eating double the recommended lunchtime intake of saturated fat and sugar* and up to half their daily recommended salt intake.
Three out of four lunchboxes (74%) also fail to meet Government nutritional standards that were set for school meals in 2001.
With an estimated 5.5 billion** lunchboxes packed for children each year in the UK, and with nine out of ten surveyed children choosing to take a packed lunch to school each day, the FSA recognizes the challenges parents face when putting together nutritious, practical and affordable packed lunches that their children will actually eat.
* Jamie gets you healthier lunches
The government has promised to spend an extra ï¿½280 million on making school lunches in England healthier – after a campaign by TV chef Jamie Oliver.
The announcement came on the day Jamie delivered a petition to Downing Street demanding more money is spent on meals.
The government has now promised to spend at least 50p a day in primary schools, and 60p in secondary. At the moment about 40p is spent on each meal.
But the education secretary says she always planned better school lunches………
Analysis of Primary and Secondary Research
The research above clearly shows that there is a need for my proposed service as the statistics reveal that even packed lunchboxes have proven to be unhealthy and school dinners have been given a run for their money by Jamie Oliver.
The results of the questionnaires and Focus group do however indicate that the “Lunch Box” will have to be varied and interesting in order to maintain the interest of the students and the choices of the lunch box contents will have to be constantly updated.
The research also indicated that the cost will have to be competitive with the existing means of lunch provision of the students. The price that most attracted the parents was around ï¿½2.50. However, I am confident that this
Penetration pricing at ï¿½2.50 will work in the long term and when the service is established and successful, parents will not mind paying more.
The questionnaires revealed that most of the parents shopped at Tesco, the company through which I intend to use my service. In store advertising of the service via Posters and Flyers and the offer of purchasing vouchers at the checkout tills will all contribute to boosting consumer awareness of the service.
* Backing of Tesco, a known successful company.
* No other service like this.
* A niche market.
* Research proves that there is a need in the market for the service.
* Tesco or any other store has not entertained this type of service before.
* Could diversify into a wider market geographically.
* Could expand to service other type of customer e.g. offices.
* Competition from the school and lunches packed by parents.
A04 – my judgements on the likely success of my marketing proposal
In order to judge the likely success of my marketing proposal, I will consider the following:
Whether the marketing objectives are likely to be fulfilled
* My proposal meets the particular (provision of healthy lunch) need of my targeted consumer (Secondary School students.) This need was identified via market research which was conducted via questionnaires, focus groups and research on the internet.
* I gained an understanding of the competition (school lunches and lunches packed by parents) via research on the internet which indicated that both the provisions had flaws.
* My proposal is very innovative and enterprising as there is no such service in the market. My research shows that it is going to be successful due to positive feedback from the potential customers, and also, my secondary research showed the existing options have drawbacks.
* My proposal wards off external constraints extremely well on its own accord. I have already established that I received positive feedback from my market research which proved that 90% of students are interested and willing to try “Lunch Box.” The competitors, which would be school lunches and packed lunches have limitations as my secondary research showed, my pricing will be very competitive as I will be using penetration pricing to boost sales. My service provides a product which is relatively low priced, therefore changes in the economy (recessions) which not affect the service. There are also no legal aspects that would cause boundaries to my proposal.
Whether the needs of potential consumers are likely to be met
Due to my market research, I am in no question as to whether the needs of my potential consumers are likely to be met. I have gained statistics proving that there is a need for my service and that the potential consumers are interested.
Whether the proposal is sustainable over time, both in terms of its potential market position and actions of possible rival competitors
I believe that my service, which basically provides students with healthy lunches, is completely sustainable. Food and drink is a necessity therefore I believe there will always be a market for my service.
However, from my secondary research I discovered a serious threat imposed by school lunches:
“The government has promised to spend an extra ï¿½280 million on making school lunches in England healthier.”
This extra funding is likely to threaten “Lunch box” when it comes into action. The whole basis of “Lunch Box” is the fact that we aim to provide healthy food for students, with school lunches soon to be offering the same product, I would be in direct competition.
How the new marketing proposal fits with the business’s current product-portfolio
The business that I am working in conjunction with, Tesco, relate directly to my new marketing proposal. They are the UK’s number one supermarket and one of the main distributors of food goods. They also currently run a successful sandwich range. My proposal fits with Tesco’s product-portfolio perfectly as they are a major food distributor, and I am aim to distribute healthy lunches for students.
The likely impact of the proposal on the other functional areas of the business
My proposal is not likely to affect the other functional areas of Tesco; however it would provide Tesco with more publicity, therefore boosting consumer awareness. All of “Lunch box’s” products including the lunch vans would incorporate the Tesco name and logo.