Forced relationships
-At times one or more products can be joined together to form new product concepts.
Competitors
- Monitoring the actions of competitors may provide a rich source of new ideas.
Screening of ideas
-Once Cadburys ideas have been generated. It is important to screen for the ideas likely to be successful. Considerations may include how well the product fits in with others in the product range the unique element of any idea that makes it competitive. They are likely to demand for the product and whether or not it could be manufactured economically.
The two main errors Cadbury needs to avoid when screening ideas are;
- They must not reject new ideas
- They must not develop poor ideas or Cadbury will loose money
Market analysis
Once Cadburys ideas have been screened market analysis begins. It involves analysis of the product market potential. This helps them to identify market potential.
Product development
This happens when Cadbury has come through the test of marketing analysis. The idea is translated in to a product. Here the design innovation and the uses of technology are very important in product development.
U.S.P. = Unique selling point. Cadburys chocolate products are of quality and that’s what makes them unique. That’s why consumers are prepared to pay the price for the product.
Testing
Testing is important for Cadbury. Testing is a vital stage in the product development process. This is because if the product does not meet consumer’s requirements then Cadburys can stop producing their product and develop their product where it will meet consumer’s requirements.
Launch and commercialisation
For Cadbury launching a new product is the important date in life of a product. The product is finally revealed to customers.
Entering New Markets
When entering a new product it is to enter a new market. Existing products could be offered to different markets.
Another alternative would be to consider marketing products more widely through international markets. International market involves the marketing of products in two or more countries. There are a number of ways of entering such markets. These might include the following:
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Indirect exporting- This may initially be through an export house where main activity is the handling or the financing of international trade.
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Direct exporting - This involves manufactures or suppliers shipping their products overseas and selling their wares directly to customers.
Diversification
This is a strategy for growth that involves developing products or business areas that are outside the organisations market.
Diversification will lead to a move away from core activities. This might involve some form of integration of production into related activities.
This is the most expensive and risky strategy for Cadbury to choose and it requires intensive screening of both the ideas for new products. Nestle and many other businesses find that the costs of development and entry are too high.
Product life cycle
This product life cycle is the period over which it appeals to customers. The life cycle can be broken down into distinct stages. In the introductory phase growth is slow and volume is low because of a limited awareness of the products existence. In this phase for Cadbury it can be expensive but if Cadburys use Internet sales and direct selling it is particularly useful it will make them overcome the entry barrier.
Foe e.g. Cadbury’s most profitable chocolate has not declined for over 100 years. This shows that Cadbury the most competitive business has not declined for a long time and in the near future they hope their customers will be satisfied with their existing and new products.
Sales then rise rapidly during the profit per unit of growth. During the profit per unit sold usually reaches a maximum. Towards the end of this competitors enter the market to promote their own products, which reduces the rate of growth of sales of the initial product. If there is little competition such as Nestle and Galaxy, then the profit levels will increase for Cadbury.
During maturity the product differentiation in the form of new colours, size etc.
Competition tends to come in quicker at this stage that’s why it is important that Cadbury keeps their prices in competition on with competitors. Cadbury at this stage could cut prices and may give discount to stimulate sales.
During saturation, some brands will drop out of the market. The product market may eventually decline and reach a stage when it becomes up profitable. At this stage even if Cadbury cut prices the demand on the chocolate will decline and it will have to reconsider the product, but it is unlikely that this will happen.
The life cycle may last for years or only a few months. Cadbury needs to readjust the ingredients of the marketing mix.
Once Cadbury has collected and analysed market information about its external environment and carried out a marketing audit of its internal strengths and weaknesses, it can then describe the best strategy to achieve their objectives.
Ansoff matrix
Ansoff described Harvard Business Review first in 1957.
Existing Products New
The horizontal axis represents existing and new products. The vertical axis shows new and existing markets. For increasing sales the basic two by two gives four possible strategies.
There are two choices for Cadburys: one is to exploit the product and the other is to market. First Cadbury would have to assess or screen the new products then compare the potential benefits with those expected from continuing with existing markets and products to make a decision.
Boston matrix
After producing a product lifecycle for each of Cadburys products they can use these to carry out an analysis on their product portfolio. This will help them identify the areas of growth. A useful technique for doing this is Boston matrix, originally developed by the Boston Consulting Group, a leading firm of management consultants in the USA.
Stars
These are products with a high market share like Cadburys in a rapidly growing industry. Unless Cadburys chocolate bar has not achieved this position through heavy discounting, it should be generating high profits. For Cadbury to remain a star in a competitive environment its chocolate bean will continue to need heavy marketing expenditure.
Cash cow
Cash cows have a high market share in a slow growing, but mature market. Cadbury could fall into this because there competitors do have higher cost slightly. But Cadbury benefits from high economic of scale. It can generate high profits which could be used to finance ‘problem children/question marks’.
Question Marks and problem children
This product has a low market share in a rapidly growing market. The business has to decide whether to with draw the product or to support it with heavy marketing, which could be difficult if it is not generating funds elsewhere.
Dog
This product has a low market share in markets where there is little or no growth.
At this stage a product is at the end of its life cycle. The product is best if it is dropped out of its portfolio.