Market Research
Price Snacks need to know what the consumer needs and wants to buy. Price Snacks develop and launch a product and then embark on a heavy promotion and advertising campaign to convince the consumer that they want the product. This type of company is called a Product orientated company. Prices Snacks is a market-orientated company, this means that Prices Snacks find out what customers want and then they develop the product to meet their need. To find out what consumers want market research is carried out. Market research is the gathering, presenting and analysing and interpreting the data about the people’s demands for a product.
Methods of market research
There are several ways of collecting data. Prices snacks have their own marketing department, whilst others employ outside agencies to do the research for them. The two main methods of research are:
Desk research is the gathering together of existing data that has already been collected and published for other purposes. This is called secondary research. Using desk research is relevantly cheap and a quick way to gather information.
Field research is the gathering of new data direct from consumers, by carrying out relevant surveys and questionnaires. This is called primary research. The main type of research that Prices Snacks use is primary research but occasionally secondary research is required.
Segmenting and niche markets
Market segmentation is when a market is broken down into different pieces, which are very similar. Prices snacks research into which age group, what sex, and also where the customers mostly purchase the products. Niche marketing is not involved in the distribution of Price’s snacks chocolate, but it is involved in some companies market segmenting e.g. McDonalds cater for vegetarians, so they have to carry out wider research. Trace of nuts is the only Niche market that we look into.
Pricing strategies
Different pricing strategies help products sell faster. Price skimming is when a company puts their product onto the market at a higher price. They do this because the product is new so therefore people will be prepared to pay the extra cost to try the new product because of the high demand. Penetration pricing is where the product is released into the market at a lower price to competitors; therefore more bars are being sold but only a small profits being made. Once the product is selling at a steady pace then the price will be increased slowly.
Cost plus pricing is a good way of setting the price of a new product. To do this the following formula is used:
Number of chocolate bars sold + Number of bars being distributed + How much it costs to produce the product then a bit onto is added to this to make the product profitable.
Prices snacks use this method because it is easy to apply to the products, so a profit is guaranteed. Price skimming is used for new improved products that are not in the market, this is because there is no competition, and therefore people will be prepared to pay that bit more extra for a bit more luxury.
How and where the product will be distributed
Businesses have to decide where is the best place to sell their products. Houses will be sold directly to customers and so will cars, but chocolate is a lot more complicated to sell straight to customers so Prices snacks have to sell to wholesalers and retailers. This type of distribution is more cost effective and efficient. There are many different ways of distributing the bulk products to the wholesalers including:
- By train,
- By ferry,
- By aeroplane.
Prices Snacks use road haulage to distribute products to all the different shops this is because the products reach the destination that they are going to a lot quicker than by any other transport. If the products were being delivered by aeroplane then the flights are only at certain times so the product reaches its destination at later dates than intended. The just in time system (JIT) is used throughout the company so all goods are delivered fresh, and can be sold at more places liker smaller shops because they do not have the storage space for bulk orders.
There are lots of different places that Prices snacks sell their products. We make sure that our chocolate is available for everyone in different place for example in vending machines when people at work or at school need a quick snack. Petrol stations are another one of our main stockists because people who travel a lot in their vehicles can stop off at any point to get a chocolate this is very useful and builds up their energy if their day is stressing. In corner shops and in supermarkets are the main places that we sell our stock to because these to are close to work places. Most chocolates are placed by the cash till so if people don’t intend to get a chocolate see them and are more tempted to buy them.
People tend to travel a lot on different types of transport so we also sell products in airports, train stations and on ferries. People sometimes have phobias about travelling therefore chocolate is seen as a stimulant and more purchases are made.
Promoting products
Advertising is the most common form of promotion. It is used to persuade and inform as many customers as possible to buy a company’s product. Its purpose is to catch the attention of customers enough for them to want to buy the product.
Prices snacks use a variety of different media to promote their new products. The three main types of promotion are
- Newspapers,
- Magazines
- Television
Newspapers are a good way to advertise products because they are published everyday and a lot of people buy newspapers there are also free papers that come through the door. It is cheap to advertise in a newspaper therefore not a lot of the profits will be lost to pay for such advertising.
Magazines are also a good way of advertising because like newspapers a lot of people read them. Also people tend to read magazines when travelling and if the article catchers their attention when they go into a shop they will be tempted to buy the product that they have seen advertised.
Televisions are the best way to advertise new products because more people watch television, also a wider range of age groups see commercials mainly children. Children tend to eat most chocolate and will be encouraged to try the new product on offer. The problem with advertising on television is that it costs a lot and is only used in large businesses.
Product lifecycles
Any new product will have an expected life cycle. This is the amount of time that the manufacturer expects the product to sell. The product life cycle is made up of series of stages these are as followed:
Research and development
Prices snacks invest money into researching the market for the new product, develop it and market test the product. At this stage the product is making no money, it is costing the money company.
Introduction
The product is launched on the market. A promotion campaign and a large amount of advertising will take place at this stage. The product is still making a loss.
Growth
The product starts to make a profit because it is becoming known in the market. Advertisement is still used.
Maturity/saturation
The product is still well established in the market. Advertising will be used to remind the consumer about the product. This is when the product reaches its peak and is at its highest profit level. Companies will try to maintain this stage as long as possible. Then they may introduce new models, or revitalise the advertising campaign to promote further sales.
Decline
The product begins to lose its sales. Competitors are entering rivals into the market. The product is out of date and sales begin to fall and so do profits.
End of production line:
The product is taken out of production. The last stock is often sold at a lower price for a quick sale. To make sure a product does not reach the end of production line Prices snacks are always researching into new ideas for new improved chocolate bars.
