Evaluate the possible ways to market a new product.
- Business Studies Coursework -
Evaluate the Possible Ways to Market a New Product
Introduction
During this assignment I shall explain different methods a business could use in order to successfully market a new product. I shall also give explanations of how to market a 'real life' product. The product I have chosen to market is a new stain removing product called 'Oxyclean'. It claims to beat the competition in its cleaning power. It also claims to be able to remove any grease stain. I shall present the coursework in four main sections:
* Consumer Analysis
* Competitor Analysis
* Distribution Analysis
* Marketing Mix
Consumer Analysis
I must begin my plan for marketing by looking at what the consumer requires, his or her needs. Everyone does not have similar desires so the point of my consumer analysis is to identify segments of the market with similar needs, I will then be able to target my marketing towards them. First I must identify this market.
Who needs the product and why?
The product I am marketing is a new multi-purpose stain removing product which claims to be more effective than current available products in removing stains from clothes. The people who are likely to need and use this product are people that take care of housekeeping duties. In most typical family cases this would be the mother of the household, there are of course other cases where people are living alone or with friends.
It is important that there is scope for a stain removing product so I conducted a questionnaire asking 50 women aged 25+ various questions in order to get a clearer picture of what the market wants.
The questions asked were
* Do you use specialist stain removing products?
* (If yes) What is the product you currently use?
* Do you find this product to be effective every time?
* How do you feel about the price of this product?
* Would you be prepared to change to a product which claimed to be better that the leading product in the field?
* Where do you shop?
* When do you watch the majority of your television?
The results I gained form my questionnaire were not that varied. Most of the
women said they used stain removing products. The most popular product was 'Vanish' with nearly 70% of the women using this product. Supermarket own brands featured a few times and many women gave bleach as their answer. Yet many of the women said they were not completely satisfied with the products' performance, finding some stains un removable. They also said they would be happy to switch products as long as the price was not too much. Supermarkets were the most popular places to buy these products. Also I discovered that many women watch television during the times of 7 and 10 pm.
What is the buying process?
For any product the process in which a consumer goes about purchasing a product can be reduced to four steps:
* Awareness of product being available
* Information search about the product
* Evaluation of alternative options
* Purchase
Awareness
Awareness of the need for my product might be due to someone realising the need for a stain remover either because, they have got a stain on their shirt, or they have run out of a previous product, or they have seen advertising for my product and it encouraged them to purchase it. They may become aware of the product at the point of purchase, where they see it on the shelves and decide to try it.
Information Search
This may not be relevant to my product, however some people may require further information. This could be done by speaking to salespeople at the point of purchase, by looking on the internet, or by word of mouth.
Evaluate Alternatives
This would probably occur at the stage where the consumer may look at the different products lined up on the shelves and decide which would be the best for them. To ensure my product doesn't loose out the packaging for my product should be appealing and attention-grabbing.
Purchase
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Information Search
This may not be relevant to my product, however some people may require further information. This could be done by speaking to salespeople at the point of purchase, by looking on the internet, or by word of mouth.
Evaluate Alternatives
This would probably occur at the stage where the consumer may look at the different products lined up on the shelves and decide which would be the best for them. To ensure my product doesn't loose out the packaging for my product should be appealing and attention-grabbing.
Purchase
At the stage of purchasing the initial decision is 'yes' however many consumers would be giving the product a trial run. If it does its job, then the consumer will buy the product again, if not then there is no repeat purchase and its poor or indifferent performance could be spread by word of mouth.
Is my product a high or low involvement product?
If the consumer feels a high level of 'risk' in buying the product then it is considered a high involvement product. In a household context my stain removing product would be considered a low involvement product as the price is relatively low.
How I going to segment the market?
The question of 'who is the consumer' is crucial to the marketing task. When segmenting the market it is important to make sure the segment will be profitable enough and that it can be easily reached by marketing. There are many different ways to segment the market, it could be by;
Age Different ages mean different wants and needs
Sex Men desire different things to women
Income The ability to purchase
Marital status Family needs
Occupation An indication of the wants of consumers
Religion/Race Particular preferences
Lifestyle Interests, opinions
Personality Are they risk-taking, ambitious, cautious etc.
Market segment for a stain removing product
The most likely segment to want a effective stain remover are women aged 25+. In the majority these would be housewives, however single professional women and men would be present also. This is an extremely large market segment so it has the potential to be extremely profitable; it is also a segment which is easily reached through advertising. The problem lies with the issue of competitors.
Competitor analysis
Now that I have chosen a segment to target, a plan to defeat the competition must be developed.
My main competitors in the stain removing industry are:
Vanish Price £3.49
500ml
Vanish claims that it removes stains the natural way; it is one of the most popular products on the market.
Sainsbury's Price £2.89
own brand 1 litre
It claims to be 'soft and gentle on your wash' and wil not damage your clothes
Stain Devils Price £2.50
150ml
There are different specialist products for certain stains grease, red wine etc
Shout Price £2.99
500ml
A stain removing spray which is strengthened with enzymes
The competitor with the largest market share is 'Vanish', because it is an effective product. My product, 'Oxyclean' is just as good if not better than Vanish so my task is to make customers aware of this through effective advertising.
As customers are often unwilling to change products if they are happy with their current product my strategy to overcome this will be to price 'Oxyclean' cheaper than £3.49 (the price of Vanish) and so obtain a price advantage in an attempt to steal consumers.
Distribution analysis
How is my product going to reach the consumer?
There are many ways of distribution in order to get the product from manufacturer to consumer, e.g., products such as cereals must go through wholesalers and retailers before reaching the consumer.
Ways of distributing to the consumer involve
* Wholesalers
* Distributors
* Sales forces
* Sales representatives
* Retailers
My product will go straight from the warehouse, where it is stored, to the retailer. This cuts out any 'middle-man' thereby cutting out a loss in profit.
The Marketing Mix
The marketing mix is commonly referred to as the four P's:
Product
Place
Promotion
Price
Product
It is critical that the product satisfies consumers' needs and wants. My product should differentiate from the competition available. Products can be differentiated in many ways:
* Features of the product
* The fit of the garment, if it is a item of clothing
* Reliability - warranties, return policies
* Packaging - colour, size, shape, protection
* Name - appealing name, brand labelling
Only a few of those ideas are relevant to my product. My product differentiates from other products as it claims to have a superior stain removing power, a feature of the product. The packaging will also be bright and attention grabbing.
Place
Where will the product be sold?
The place of retail is crucial. Supermarkets need to be central, near a large population where there are good road and rail links. Village shops only survive where there is a large enough population. Place is important to manufacturers as they must make sure the goods are easily available to consumers. This is the distribution strategy. Businesses may choose to be exclusive where they sell in only one outlet in each market, they may be selective, where they sell in a few, or intensive, where they sell in as many outlets as possible. The place of sale can effect the perception of your product. Eg, products sold in only a few outlets, such as designer clothes are seen as being better or more exclusive than others.
A product such as mine will be an intensive product; it will be sold wherever possible in order to gain maximum number of sales and customer awareness. The kind of retail outlets which will stock it will range from supermarkets to general stores.
It is important to choose a suitable channel of distribution for a product. This is the route which the product takes in getting from the manufacturer to the consumer. It is important that the correct channel of distribution is used. A number of factors are involved:
The Product
Different products must be distributed in different ways. Products which are perishable, such as fruits and vegetables must have fast efficient channels of distribution. Perishable products tend to be sold through wholesalers as they have expertise in the type of distribution needed.
The Market
Mass market products are commonly sold to wholesalers or large retailers, who purchase in bulk. Niche market products are often sold direct to retailers or perhaps by form of mail order or maybe a shop owned by the manufacturer.
Effectiveness
Some products channels of distribution are fixed by existing patterns of selling and buying this is because they are the most effective.
My product is likely to follow the channels of distribution common for stain removing products, this is direct to the retailers or perhaps wholesalers.
Promotion
Businesses must communicate with the consumers, promotion is all about
* Consumer awareness of your product
* Informing them of what the product is
* Make the consumer aware of how the product will serve their needs
* Ensuring loyalty to your product
It is the first stage of the buying process I outlines in my consumer analysis, awareness.
There are 5 general areas of promotional efforts:
Advertising
Personal selling
Sales promotion
Direct selling
Advertising
Advertising takes many forms, the media is commonly used. The media includes
* Television, radio and cinema
* Magazines
* National and local newspapers
* Trade journals
* Directories
* Posters and transport - billboards on sides of roads, advertisements on buses and vans
* The internet
Each medium has its advantages and disadvantages, cost is often a problem with advertising such as television and nation newspaper advertising as it reaches the largest audience. The target audience also differs for each medium, television will target consumers where as trade journals are aimed at workers or businesses.
Each medium also delivers the message differently. Television allows the use of colour and moving pictures, unlike paper ads. Although ads in papers can be kept for future reference.
There are two types of promotion, above and below the line methods. Using the media is classed as above the line. The methods I shall now discuss a business could use are below the line methods of promotion.
Personal selling
This is often the choice when a business requires direct contact with the buyer. A salesperson talks one to one with the consumer and can personalise your message. It means questions can be asked and answers gained. The problem is when the customer is not interested and does not like being pressurised.
Sales Promotion
Sales promotion is designed to provide a short term sales boost. Methods used include:
Competitions Many businesses attract customers through the chance to win a prize buy purchasing the product.
Free gifts This can make the product seem better value.
Money off Businesses offer discounts on their products to encourage people to buy.
Point of sale material This promotion takes place where the product is being sold. It can take the form of cardboard displays in windows, or posters. In supermarkets dump bins are often places at the end of isles in the hope of attracting customers attention.
Public relations
Public relations is a tool used to communicate to a wide audience. It does not set out to sell the product, but to create a good image about the product. A public relations department would deal with letters and bad publicity the business may face.
Direct sales
Direct mail is used to segment the market and target specific households where there are potential customers. Businesses can buy names and addresses from other companies of people who have bought similar products. The problem is that direct mail is often seen as junk mail and is immediately thrown away.
My products advertising budget will be spent on two main methods of promotion. The first will be television advertising. Even though television advertising is one of the most expensive means of advertising I feel it would be the most effective as it would target the largest audience. Television would let me show the stain removing power Oxyclean and the use of sound could also be put to great effect. The advert would be aired during prime time (eg, during coronation street) This is because this is the time when most housekeeping women will be watching television, and they are my target audience, it may be expensive but it will be the most beneficial.
I shall also use point of sale promotion in major supermarkets where the product will be sold as this can persuade people to buy the product. If someone is in a rush they may see the promoting material and be encouraged to purchase. There could be posters in the supermarket and large dump bins at the end isles.
Price
The decision of pricing can dramatically affect the successfulness of the product. The higher the price the lower the demand will be. Yet the price must be sufficient enough to ensure that the business breaks even and hopefully makes a profit.
One strategy for calculating a price is to look at the price of competitors products and set an average. Setting an average price could have advantages; a high price could act as a deterrent and lead customers to buy a rival product; a low price could persuade competitors to reduce their prices producing no product price advantage.
Another strategy is to give the product a high price (prestige pricing). This is a deliberate method to convey an image of quality and the product being luxury.
I will price Oxyclean around the same as my competitors which will be around the £3 mark. However, when my product first goes on sale I shall use a method called penetration pricing where I will sell the product at a discounted price, around £2 - £2.50. This would hopefully gain my business a market share and customer loyalty. The penetration pricing would last about 1 month.
Hopefully all these marketing aspects put together would prove to make the Oxyclean stain remover a successful product. Once it has developed its own market segment and has loyal customers I feel it will do well, maximising its sales and make pleasing profits. In the future there could be further products to be released under the Oxyclean name and hopefully these will also be successful due to the brand loyalty the product develops.