What particular flavours would you prefer for the chewing gum?
Below is a graph showing the results for thirty people of what flavoured chewing gum they would prefer for the product. From looking at the results I had found that a large percentage of people had preferred the chocolate flavoured chewing gum to any other flavours. There were 63% of people who had ticked chocolate flavoured, compared to 17% of people who had ticked strawberry flavoured, 13% who ticked mint flavoured and finally 7% who ticked other. After analysing the results I had found from the questionnaires, the information showed that a larger majority of people had preferred chocolate flavoured. Therefore the graph had helped to provide customer feedback and had helped to decide on the chosen flavour for the product which is chocolate. This is because a vast majority of people had preferred to have chocolate flavoured chewing gum to any other flavour.
What packaging for the chewing gum would you prefer?
Below is a pie chart demonstrating the results of the question asking people what packaging for the chewing they would prefer. From looking at the results I have found that 50% of the people prefer to have paper packaging whereas 27% of people would have wanted plastic, 13% wanted foil and 10% ticked other. Therefore as a result this research helped to decide that for the product I would use paper packaging.
What colour packaging would you prefer?
Below is a graph showing the results for what colour packaging people would prefer. From looking at the results I have found that most people preferred the colour red, with 30% of people ticked this category. The second highest percent ticked was corporate with 22% of people who ticked this category. I found there were 7% who ticked yellow. There were 11% who ticked blue, 6% who ticked green and 15% who ticked orange, 9% ticked black and 4% ticked other. Therefore form these results I have found that most people would prefer the red and corporate coloured packaging. Therefore I will keep the packaging colour red and also keep the corporate colours used for the logo.
In what form do you prefer your chewing gum to be?
Below is a graph showing the results for the question asking people what form what they prefer the chewing gum to be. From looking at the graph I can see that a large majority of 53% of people preferred their chewing gum to be in sticks. Whereas 33% preferred tablets and also there were 13% who ticked other. Therefore by using this research it helped to decide that I would use sticks for my chewing gum as a larger percentage of people preferred that compared to any other form of chewing gum.
Where would you expect to buy that product from?
Below is a pie chart displaying the results of where people would expect the buy the product. By looking at the results I have found that a large majority of 42% of people would expect to buy that product from the supermarkets. Around 21% of people would expect to buy the product form local shops and around 17% of people would expect to buy the product from petrol stations and the remaining 11% of people had ticked impulse.
Therefore as a result of this information found from the analysis I will now promote the product mainly in supermarkets and local shops. This is because most people would expect to see the product, in that specific place.
How much would you be willing to pay for the product?
Below is a graph showing the results of how much people would be willing to pay for the product. From looking at the results I have found that 53% of people had ticked that they were willing to pay 20 – 30p, a further 21% were willing to pay between 31 – 40p. There were 11% who ticked between 41 – 50p, 4% who ticked 50p or more and finally 11% ticked other. This showed that most people would be willing to pay a low price for the product. From this question I was unable to gain sufficient results from everyone. This is because people who answered this question were more likely to want to pay the cheapest price for the product. Therefore this question didn’t really help to find out what people were willing to pay
Where would you expect the product to be advertised?
Below I have created a pie chart displaying the results for the question asking people where they would expect the product to be advertised. I have found that 39% of people would expect the product to be advertised in magazines. Whereas 35% of people would expect the product to be advertised in T.V adverts, 12% of people would expect it to be on radio, 7% each ticked billboards and other. Therefore I have come to a conclusion that the product will be mostly advertised in magazines this is because I had found from doing primary research that most people expect the product to be advertised in magazines.
What type of promotion would encourage you to purchase the product?
Below is a graph showing the results for the question I had asked which was what type of promotion would encourage the person to buy the product. There were 54% of people who said that buy one get one free offers would encourage them to buy the product. Whereas 34% of people ticked money off coupons, 10% ticked competitions and finally 2% ticked other. Therefore this research helped me to decide what form of promotion I would offer the customers who buy the product.
Advantages and Disadvantage of Primary Research
Before creating my product, I had identified the possible advantages and disadvantages of primary research. I had carried out primary research to help me decide on the chosen product I was to create for Wrigley’s.
Advantages
One of the advantages of the primary research I carried out was the fact that it was first hand information that was gathered by me. Also another advantage of primary research was that I could be aware of people’s body language when finding out certain information. Another advantage was the fact that this primary research was asked precisely to my product. The primary research was helpful and useful to help decide the chosen product I was going to create and therefore this was an advantage.
Disadvantages
One of the disadvantages of primary research is that it was time consuming, this is because it would took a lot of time to gather, collect and analyse the information. Another disadvantage is that collecting primary research can be costly, due to producing things such as questionnaire, surveys or any other things. A third disadvantage is that the data’s biased, as I had only asked thirty people to complete the questionnaire, and most of the people were all from the same close area. Therefore I was unable to get a wider and varied audience, this came as a disadvantage when trying to collect primary research.
Secondary research
Introduction
The secondary research I had collected was important because it helped to collect a lot more information in terms of what I was going to base my product on. When I did my primary research I was only able to survey 30 people; however as keynotes is an industry they were able to collect a lot more information from thousands of people nationwide. Therefore this is why it was essential for me to research this secondary information as it helped me to decide on my chosen product. Secondary research is more valid than primary research because it used nationwide.
Above is a source of secondary information I had collected for the product I have created for Wrigley’s which was chocolate flavoured chewing gum. The data below shows the amount of chocolate and sugar confectionary which has risen over the last five years. The marketing for these types of products is increasing and is becoming more competitive, due to a rise in number in the amount of money made during the last couple of years. Therefore it makes sense to bring out a new flavoured chewing gum, as this comes under sugar confectionary. This is because there is a rising number in the amount of sugar and chocolate confectionary consumed.
Above is a table showing the estimated UK sugar confectionary for chewing gum. It shows that an estimated number of 330 million was spent on chewing gum and a total of 20% out of the sugar confectionary. This shows that a large percentage of people had purchased chewing gum. Therefore this is the reason why I had chosen to do a new flavoured chewing gum as my product. Chewing gum outsells mints and other sugar confectionary with a £330 million pound value and 20% market share. Therefore Wrigley needs to continue to expand their product range.
In the above table it shows that a majority of people around 56% of people had purchased their confectionary from impulse and other outlets. Rather than from multiple grocers and co-operatives which were around 44%. Therefore as most people purchase their confectionary market from impulse and other outlets. Therefore I will base my product in impulse and other outlets and not in supermarkets, because that’s where that product is mostly sold.
Above is a table showing the information for Wrigley’s and the manufacturer shares in the confectionary market. Cadbury Trebor Bassett is the leading business with 30.1% of the market share. Wrigley’s is the fourth business with a market share of 7.1%. Wrigley’s would need to keep bringing out products in order to keep at the same market share or expand on their market share, as this is one of their objectives.
The above table shows how much has been spent on advertising. I can see that Wrigley’s extra mints there was around £2,980 spent, for Wrigley’s extra chewing gum there was £3,067 and Wrigley’s airwaves chewing gum there was £3,332. This shows that the business has spent a lot of money on advertising. Therefore for the new flavoured chewing gum I will be creating for Wrigley’s, the amount spent on advertising would be costly.
Market Segmentation
This involves dividing a market into discrete, identifiable groups of customers. A business needs to segment so that they can access up to date market research. This can involve analysing marketing data and using different criteria to split the data in different groups. The three types of segmentation include Geographic, Psychographic and Demographic.
Geographic segmentation includes analysing markets and sorting them into groups, based on geographic factors. This is because a business may choose to advertise its products or services to a particular area it can reach.
Psychographic segmentation is when the market is analysed based on psychographic factors; this can be based on lifestyles, which may fall into different categories. Demographic segmentation is when the market is analysed and grouped, in terms of age, sex, and the social class of customers. Below are the tables demonstrating how I have used demographic segmentation to determine the age, sex and social grade of my target markets.
In the above tables, S6 stands for chewing gum, which is the product I will be creating for Wrigley’s. The data shows that 41% of people who purchased chewing during three months were males compared, to a similar amount of 45% of which were females. From this information as there was a similar amount of both males and females purchasing chewing gum, this means that the target market I would be basing my product on would be both males and females.
The above information shows the information for chewing gum and the amount of chewing gum purchased within the last three months. As S6 stands for the chewing gum it shows a large majority of 73% of people who purchased chewing gum were within the 16 – 24 age category. A further large majority of 63% of people who purchased chewing gum were around the age group of 25 – 34. Compared to a minority of 15% of people who purchased chewing were 65 and over, this shows that most young adults had purchased chewing gum.
The data above suggests that the older the person, the less likely they are to purchase chewing gum. Chewing gum is mostly purchased by the younger adults, because there is a higher percentage of people that have bought the product within the last three months. The main age groups which have purchased the product were between 16 -24 and 25 – 34 therefore this would be the main target market for the product I am creating for Wrigley’s.
The above shows the information the amount of chewing gum purchased according to the social grade of customers. It shows that a large majority of 57% of people who purchased chewing gum were the social grade of C2. This social status of this grade was skilled working class, whose occupation usually were such a skilled manual workers. The social status of these customers was the biggest percentage of customers who had purchased the most amount of chewing gum.
This shows that the target market for the product I am creating for Wrigley’s would be mostly skilled working class people and the also the working class customers which have a social grade of D. The 50% of customers who purchased chewing gum were of the social status of working class. This means that the social grades D and C2 are the main target markets for the product I am creating for Wrigley’s.
Above is a graph showing the amount confectionary including chewing gum purchased over the last couple of years. It shows as the amount of years increased the amount of confectionary bought also increased. This means every year the amount of confectionary is increasing. Therefore it makes sense to bring out a new flavoured chewing gum for Wrigley’s at this time because there are lots of customers purchasing that type of product.
Advantages and Disadvantages of secondary research
Introduction
The secondary research I carried out was important because, it provided information helped me to determine whether the product I am creating for Wrigley’s would be released or not. It is just as effective as the primary research I did, but the research is collected nationwide. There is a number of advantages and disadvantages of having the secondary research collected for the chosen product. As I was creating a product for Wrigley’s it was important to carry out secondary research and identify the benefits, and disadvantages.
Advantages
The secondary research I had collected had come from the internet and textbooks. This was an advantage as there were no costs involved and it was relatively easy to find information. However the main source of where I gained my secondary research had come from the Keynotes industry.
As Keynotes is a nationwide database, it would be impossible to access because of the costs, and the advantage of using Keynotes is that it is nationwide. It covers a large number of people and it forecasts trends. Therefore this was a great advantage as it meant that I was able to access certain information that I wanted, without having to pay for the costs of collecting and analysing the information. Because Keynotes had already covered the costs for research and gathering data, it meant that I didn’t have to pay these costs, this was an advantage.
Another advantage of doing the secondary research was the flexibility, this is because it can be done at the persons own time, whenever they want. This can either be by using the internet, library or other source.
A third advantage of a business doing secondary research was the ease of access. This is because the secondary research was easy to find as there are so many sources to choose from such as from the internet and from Keynotes. Any data I needed to find was found on the internet or the library. Because the data had already been analysed and presented, it makes it easily accessible for me to collect their secondary information.
Disadvantages
As I gathered most of my secondary research from keynotes industry there were disadvantages as well as advantages. One of the disadvantages was that Keynotes was not specific to my product, as it covers all confectionary including chocolate, and not specifically for chewing gum. Therefore it meant I wasn’t able to gather specific information for the product I was creating, therefore this was a disadvantage.
Another disadvantage of the secondary information I had collected was that some of the information I collected was irrelevant. This is because some of the information I got from Keynotes was related to other confectionary but I needed to know about chewing gum and other information, however I found that some of the information from the secondary research wasn’t useful for the market of products I was researching.
Another disadvantage of the secondary research I did was that some of the information wasn’t as up to date. Therefore some of the information may have changed from then. This is because as I got my information and secondary research from Keynotes, which was published in 2005, therefore some of this information would be quite old, and have not much relevance, as times and information may have changed within a year.
SWOT analysis
Introduction:
It is important to identify the SWOT analysis for my product, in order to identify the internal strengths and weaknesses, which are controllable by the business. I will also be identifying the external opportunities and threats which are uncontrollable by the business. SWOT analysis is basically a tool used by organisations; it helps the business to develop its overall business, marketing, or product strategies. As I will be creating a new flavoured chewing gum for Wrigley’s I will be doing SWOT analysis of the product to identify information that I would need to know before creating the product.
Strengths
As Wrigley’s is a big organisation, the company specialises in creating different types of chewing gum. Therefore the strength that Wrigley’s has internally is that it has a good reputation, due to the success from previous products, the business has created. As Wrigley’s comes under confectionary it means that it is ‘regarded as a low price indulgence’. This is one of the businesses internal strengths, as it means more customers are likely to purchase the product, due to the fact they consider it as being inexpensive and more affordable.
Wrigley’s is a ‘strong brand’ which ‘is a feature on the market’ and may also ‘encourage impulse buying’. This is also considered as an internal strength as Wrigley’s is more recognisable as a business; therefore people are more aware of the businesses products. Customers may be more willing to buy the product if they are aware of the brand. ‘Confectionary products are distributed through a wide range of outlets’. This also applies to Wrigley’s as chewing gum comes under confectionary it means that the products are likely to be placed in a number of different outlets. Therefore this is an advantage to Wrigley’s as it means more people are likely to be aware of their products, and there are more places to buy the product from, meaning possibly more profit for the business. Other internal strengths Wrigley’s has are market share and expertise and skill in the products they have created previously.
Wrigley’s had no major competitors, as they are the only leading business in the chewing gum market. Therefore this is regarded as a strength for the business, because Wrigley’s is the brand leader and would gain the entire market share for the chewing gum products.
Source: Keynote
Weaknesses
The internal weaknesses of Wrigley’s are that confectionary can be seen as an unhealthy product and contain high levels of fat and sugar. Therefore this may influence a customer’s decision to buy the product, as they may not want to purchase the product due to fact it is considered unhealthy and may have an effect on their health. Another weakness is that the UK confectionary market is relatively mature, with little scope for new consumers. This would be seen as a weakness because it means its hard for a business such as Wrigley’s to gain more customers, because there is currently a lot of competition from other businesses who sell confectionary.
Also another internal weakness is that strong branding demands substantial financial investment. This applies especially to Wrigley’s because they are such a strong brand, that they would need a lot of financial investment to pay for things such as advertising and any other costs.
Source: Keynote
Opportunities
The external opportunities for Wrigley’s would be to move into different parts of the confectionary market to try and launch new products other than chewing gum. The business could also bring out new flavoured products, and the business could also increase market share. Wrigley’s could also bring out new products which are more environmentally friendly and also chewing gum which is more tooth friendly, such as sugar free products.
Threats
Threats are external to a business, as for Wrigley’s the main threat would be competitors who have similar line of products as them. Another threat can come from the strength of multiple grocers and retailer own brands which can threaten established brands. Another threat can be that the advertising and promotion of confectionary are under increasing scrutiny. For Wrigley’s this may affect the amount of people who purchase products, because people may be tempted to buy retailer own brand confectionary because of it being less expensive, rather than purchasing products which have strong brands.
Source: Keynote
According to the cbbcnews the ‘estimated cost of cleaning up one packet of gum is £7.27’ which is ‘around £60,000 a year’. This can be a major threat to the sales of chewing gum. This is because so much money is being used up cleaning up chewing gum, that the government may decide to stop the sales of chewing gum, or even raise the prices and cost for them. This is because it has such a major effect on the environment. If the prices rise, more customers will stop purchasing chewing gum; therefore sales will stop for chewing gum meaning that there could no longer be a market for that particular product. This is major threat to Wrigley’s as a business because as the amount of litter is increasing, there is more money is needed and is being spent to clean up the excess chewing gum.
Another major threat is that chewing gum is causing environmental pollution which is affecting people at a local level. According to the cbbcnews ’12 areas will get government money for an advertising campaign encouraging people to bin their used chewing gum’ this again is a lot a money being used, and the pollution is a threat to Wrigley’s because people are likely to stop purchasing chewing gum as result of the campaign, and the pollution it is causing to the environment.
Source:
Limitations of the SWOT analysis
The SWOT analysis tends to oversimplify a situation by classifying a business’s environmental factors into categories in terms of the strengths, weaknesses, opportunities and threats. However sometimes these factors may not always fit into one particular category, this is because sometimes in one way a situation can be seen as strength for the business whereas in another point of view it can be seen as a weakness.
Also if a certain situation was seen as a threat on the other hand it can be seen as an opportunity. Therefore this is one of the problems when identifying the SWOT analysis because it is important for businesses to see the situations from all points of view.
The SWOT analysis would only be useful at the date it is written, this is because the constraint alter. Also the SWOT analysis is only as good as the person using it, if it is not used then it’s a paper based task.
Pestel Analysis
Introduction:
PESTEL Analysis is a popular method of examining the many different external factors affecting an organisation. A management technique would help to understand the external environment in which a business operates. In a PESTEL analysis the P stands for political, E stands for Economic, S stands for sociological, T stands for technological. Also E stands for Environmental/ Ethical and finally L stands for the legal factors.
Source; http://www.trainingessentials.org.uk/pestlesitecopy/index.html
Political
The political factors are factors relating to government which affect businesses i.e. the Sunday Trading Act. The political factors will not have any great affect on the product I am creating for Wrigley’s. The political factors do not relate to my product I am creating which is a new flavoured chewing gum. This is because the Prime Minister, Tony Blair and the government have been in power for such a long time, the laws and regulations are not changing all the time. The only thing which could affect my product would be if there was a new prime Minister, government or change in laws and regulations.
Economic - retail sales
Economic factors are factors relating the process of the economy. A number of different economic factors could affect a business. These could include inflation rises which involves the percentage change in the rise of prices. This is because according to the BBC the UK inflation rise has risen by 2%. This means that if prices are rising, then the price of the product I will be creating will also be rising. Therefore people are more likely to not purchase the product if the inflation is continuing to rise, meaning that there would be less profit for the business as a result. Therefore the economic factors such as rise in inflation would certainly have an affect on the new flavoured chewing gum I will be creating.
UK inflation rises to 2% target
Source: http://news.bbc.co.uk/1/hi/business/4985300.stm
The interest rate is another economic factor which could affect a business. The rise in interest could possibly have an affect upon the product I will be creating which would be developing a new flavoured chewing gum for Wrigley’s. Currently according to the ‘interest rates are currently low’ according to the BBC; however they are continuing to rise gradually. But if the interest rates continue to increase it means things such as mortgage prices will go up.
This means that there was less disposable income for people after they pay for things such as mortgages or bills, which would result in people moving away from branded goods such as the Wrigley’s. If the interest rates increase then people will start buying own brand products because of less disposable income, or may even decide to not buy the product at all. People are more likely to by cheaper goods or substitutes, such as non branded goods. If interest rates are still rising then this would affect the product I am creating for Wrigley’s. There would be less people who would buy the product as a result of less income.
‘The Bank of England has raised interest rates by a quarter of a percentage point to 4.75%’.
Source: http://news.bbc.co.uk/1/hi/business/5242344.stm
UK economic growth revised down
Source: http://news.bbc.co.uk/1/hi/business/4636993.stm
Retail Sales are increasing so people are buying more products, because they are able to afford confectionary products. This is another economic factor that is affecting businesses currently. This applies to a business such as Wrigley’s because people are more likely to purchase confectionary products if there are retail sales which are increasing.
Sociological
The demographical trends that are occurring are that people are buying more confectionary products such as chewing gum as the years are increasing. There are more confectionary products on the market being purchased.
Above is a graph is showing the trend for how people are buying chewing gum more, this is because the graph shows as the years are increasing as the amount of chewing gum being purchased is also increasing. Therefore more people are buying chewing as a result of this.
Another trend is that people are changing from buying high sugar chewing gum to low sugar chewing gum this is due to health reasons and problems leading to obesity which is increasing. Therefore because of the rising number of people purchasing confectionary products such as chewing gum, there are more and more people becoming obese and unhealthy. As a result some people are making the switch to healthier products.
The social economic groups for my product are C2 and D; these are the main target markets for the product I am creating for Wrigley’s.
Technological
The technological trends are the trends which occur if the product from a business has changed due to new technology being brought out, causing changes in new products. This does not apply to Wrigley’s and the product I am creating because the product I am creating is a chewing gum which comes under confectionary. Therefore any technological changes wouldn’t affect the product I am creating.
Environmental/ Ethical
The environmental and ethical factors can affect a business such as Wrigley’s because chewing gum is becoming more and more of a nuisance because of the litter it is creating. It is affecting the society as a whole because the chewing gum is currently non biodegradable which means it usually causes litter, by sticking to floors and making it hard to remove. Wrigley’s could consider the environmental and ethical factors, by producing chewing gum which was more environmentally friendly, which is biodegradable so that it would be easy to be removed, and will not have much of an effect and impact on the society.
Legal
Trade Descriptions Act 1968
All businesses have to be aware of the Trade Descriptions Act 1968 which states that it is illegal for products within a business to be incorrectly described. This applies to a business such as Wrigley’s, especially the products the business creates they must be aware and make sure that none of their products would be possibly misleading to any of their customers.
Therefore because I am creating a new flavoured chewing gum for Wrigley’s it is important to bear in mind that the product is not misleading to the customers and that it is not incorrectly described. This is part of the legal factors which can affect a business in the way it creates its products.
Consumer Protection Act 1987
The consumer protection act can affect the way business advertises the prices of its goods. This is because this act was enforced to make sure businesses such as Wrigley’s couldn’t mislead customers over the price of their products or sales. The consumer protection relates to both the price and safety of the goods. This is because it makes sure that businesses do not sell products which haven’t been thoroughly checked to meet safety requirements.
This legal act would certainly have an affect on a business such as Wrigley’ s and especially the product I am creating because it is important to make sure that the new flavoured chewing had met safety requirements and couldn’t potentially be at risk to customers. Also it is also important to make sure that the product I am creating for Wrigley’s is not misleading in terms of the prices and advertising.
Weights and Measures Act 1988
The Weights and Measures Act is designed to make sure that businesses such as Wrigley’s state correctly on the product the correct weight of the products and do not mislead customers into thinking otherwise. Therefore this act would affect the product I will be creating for Wrigley’s because the new flavoured chewing gum would have to contain the right information in terms of the weight, in order to abide by this act.
Food and Safety Act 1990
The Food and Safety Act was enforced to protect customers by preventing them from being mislead about the type of the food they are purchasing, it was also designed to prevent illness from the consumption of food. This act certainly applies to Wrigley’s as business because as they sell confectionary, they must make sure their products are safe and do not mislead customers about the ingredients of what the chewing gum contains.
As I will be producing a new flavoured chewing gum for Wrigley’s it is important to make sure that customers are aware exactly what the product is and what it contains. Also in order to abide by this act the product I will be creating must be safe so that it will not cause harm to customers and it must not mislead customers into thinking differently about the product.
Supply of goods and services Act 1982
The supply of goods and services act was designed to make sure that customers received services or goods which were of satisfactory quality. This applies to the product I will be creating for Wrigley’s because the products must be satisfactory to the customer. Therefore this act would affect the new flavoured chewing gum I will be creating for Wrigley’s.
Food and drugs Act 1974
The food and drugs act was designed to make sure that food is fit for human consumption. It makes sure that businesses such as Wrigley’s do not supply people with bad food that could potentially be a health hazard to people. Therefore as the product I will be creating for Wrigley’s is a new flavoured chewing gum, it is important to abide by this act. This is to make sure that the new product is safe enough for people to use.
Other acts that would have to be taken into account when creating the new flavoured chewing gum for Wrigley’s would be:
- Flavourings in Food Regulations 1992
- Food additives Regulation 1992
- The Food Standards Act 1999
- Food (Lot Marking) Regulations 1996
- General Product Safety Regulations 1994
Advertising Standards Authority
The ASA are responsible for drawing up the rules in the advertising standard codes. The main principles of these codes are to ensure that advertisements ‘should not mislead’, ‘should not cause serious or widespread offence’, and ‘should not cause harm’. Also it also states that advertisements ‘should not be socially responsible’ and ‘should have regard for the principles of fair competition’.
This means because I am creating a new flavoured product for Wrigley’s the advertising of the product must have abided by these laws. Therefore this is how the ASA would have an affect upon the product I will create and how the product would be advertised. Before advertising the new product, I would have to consider the ASA rules, so that there is not a breach of the rules.
Source: http://www.asa.org.uk/asa/adcampaign/rules.htm
Competitor analysis
A competitor analysis is the study of any major competitors within the same field it would look at both the strengths and weaknesses of the competing businesses. In the case of Wrigley’s there are no major competitors within the chewing gum market. Although it is not to say that Wrigley’s may not have any competition from other businesses in the future. At the moment Wrigley’s is the only leading business in the chewing gum market, they do not have any competition from any other businesses.
Product Life – cycle
Introduction:
The six stages of the product life cycle involve, the development, introduction of the product, growth, maturity, saturation and the decline. All businesses are aware of this cycle when they introduce new products. The whole point of a product life cycle to see to how well a product is doing over a period of time.
At the moment the product I am creating for Wrigley’s which is chocolate flavoured chewing gum, is at the development stage. This is because, I have only done the research to create and develop the product. I have done the questionnaires to interview several people and find out what customers want.
Development
The development stage is basically the time at which is spent designing and testing the new product, and to see if people would want that product. Also decisions would be made as to whether the product will or will not be launched. This is the point at which the product I am creating for Wrigley’s which is chocolate flavoured chewing gum is at the moment. This is a stage at which the costs are likely to be high because of doing things such as research and testing to see whether the product would be successful.
Introduction
The introduction stage begins with the launch of the product. At this point the costs are very high especially because of the advertising and distribution for the product. The sales for the business are usually very low for the business. The length if this stage can to vary in time. This is because some products can head straight from the introduction stage to the growth. Whereas others can take a long time until they reach the growth stage.
Growth
The growth stage is the stage at when the product starts to get profitable. At this point the advertising is still extensive but not as much as the previous stage. The sales will start to rise, because people start to buy product. This stage would only take place once the business has managed to achieve a high level of repeat purchasers.
Maturity
This is the stage at which the sales of the product start to slow down, after the growth of sales slow down. However the business will try to extend the growth stage for as long as possible, because as long as they are still in the growth stage they are still generating profits. However sooner or later the business will reach the maturity stage, this is where the sales start to fall, however people are still buying the product, the business will reach its maximum market share.
Saturation
This is the stage at which the sales of the products have reached their peak, and there are a lot of other competing products. The income for the business will start to slow down, the business would no longer be generating much sales.
Decline
This is the stage at which the sales drop; people are no longer purchasing that product. This is the final stage of the life cycle; this is where the sales of the products go into decline. This is an inevitable outcome because; the drop of sales can be due to a number of reasons such as changes in customers tastes or because of new products being introduced by competitors and loss of market share.
Extension strategy
This stage normally takes place when a business decides that the product may go into decline, they may want to introduce an extension strategy, before it reaches that stage. If product has reached the saturation stage and the business believes that that product may still be able to generate a high level of sales. It may choose to implement an extension strategy, to avoid the product going into decline.
The business will try to do something to may that product sell again, this can be by changing the appearance of the product, or altering the ingredients. Both of these things have applied to the product I am creating for Wrigley’s, because the product which is chewing gum is still an existing product. The only thing which is changing would be the ingredients of the product which would be changing to a new flavoured chewing gum. Also the appearance of the product has changed because of different wrapping and colours. This is an extension strategy I have used for the product I am creating for Wrigley’s, because I am basically changing the existing product.
As well as my product being at the development stage of the product life cycle, it is also part of an extension strategy. Because as I am creating a new flavoured chewing gum for Wrigley’s it means I am only changing an existing product. This is because chewing gum is already an existing product on the market, and the only thing which is changing is the flavour and packaging of the product. Therefore I have implemented my own extension strategy for Wrigley’s by bringing out a new flavour on an existing product.
Boston Matrix
Introduction
The Boston Matrix basically is a method of analysing the product portfolio of a business.
Problem Child
The problem child is when a product has just been released. The products usually have a low market share in a high growth industry. They absorb the most money which is needed for promotion in order for them to achieve a healthy market share. These products are often launched quite recently. When a product is a problem child this is the introductory stage to the product life cycle. If the product from a business was a problems child then they would have a high market growth and a relatively low market share.
Because my product which is a new flavoured chewing gum, is a problem child it is at a risky stage because, as it is a new product there are possibilities that people may not like the new product. Therefore it is difficult to tell whether the product will do well or not, as is depending if customers like the product enough to purchase it.
Star
These products are usually very successful and have a high market growth as well as a high market share. These are high selling products which are in a competitive market; they have a high market share. The product would be at the growth stage of the product life cycle. These products generate large amounts of income for the business. They would require lots of revenue to be spent on promotion in order to be ahead of rival products from other businesses in the market.
Cash Cows
The cash cows are products which are already on the market, they are products which sell regularly, and are used to generate sales for the business. Cash cows generate more money than is invested in them. The sales of these products are used for promotion and any costs which may occur within the business. The cash cow products have a low market growth but a high market share.
These products would also be at the Maturity and Saturation stages of the product life cycle, and they produce large amounts of income for the business. The money created form the sales of these products would often be used to promote the problem child products, and also to develop new products.
Dogs
These products have a low market growth and a low market share. These products are nearing to decline, as the business may have stopped advertising and selling the products altogether. These products do not generate any income for the business they only absorb revenue of the business. In the product life cycle they are at the decline stage, because they are not generating sales. Businesses have two choices where they can either decide to extend the product life cycle of the product by implementing an extension strategy, in order to boost the sales of that product. Or the business may choose to completely get rid of the product, and stop selling the product altogether.
My product is currently at the problem child stage, this is because the product is still new and at the introductory stage of the product life cycle. The aim for the product I am creating for Wrigley’s would be to change it from being at a problem child, to a star. The stage of a star would be the growth stage of the product life cycle, where all the profit is being created for the new flavoured chewing gum.
Costs would be needed to take the product from the problem child to being a star. The costs would be for advertising and the money would come from any other products within Wrigley’s which are cash cows. These are basically products which sell regularly and generate sales. The sales of the products which are cash cows would be used to pay for the advertising for the new product.
However if the new flavoured chewing gum I am creating for Wrigley’s does not get enough capital from the sales of cash cow products then the new product would be unable to go from the problem child to the star. Therefore the product would not enter the growth stage, and will not generate enough profit. Therefore the product will go from being a problem child to a dog; this is the stage at which the product will go into decline.
Limitations of the Boston Matrix
Boston is a static tool and does not move with the product, it has to keep being withdrawn; this is one of the limitations of the Boston Matrix. Another problem with the Boston matrix is that it oversimplifies a complex set of decision, and sometimes it is better go with a person’s instinct on certain decisions.
Ansoff’s Matrix
Introduction
The Ansoff’s matrix is a well known marketing tool which helps businesses to decide their product and market growth strategy.
Source: http://www.tutor2u.net/business/strategy/ansoff_matrix.htm
Source:
Market Penetration
Market penetration is where a business would market its existing products to its existing customers. The business would do this doing extra promotion for the existing product. The only thing the business would do is altering the existing product, and then promoting it in order to get more sales. The business would try to seek out more customers of the same target market; this is by doing extra promotion.
The market penetration basically involves the present product, with the present target market. The product I am creating falls under market penetration this is because I am not creating a brand new product, but changing just an existing product which is already on the market. Also the aim would have been to seek out more customers of the same target market, in order to make sales.
Market Development
Market development is basically when the business takes an existing product and tries to attract a different type of audience. The business would aim to take a product and move it to a different target market. The aim of the business would be to attract a new type of customer to purchase the products. Market development basically involves taking a present product and marketing it to a new audience. My product wouldn’t fall into market development because I would not be introducing the product to a different target market.
Product Development
The product development involves introducing a new product to a present audience and existing customers. The business would have to create a new product in order to replace existing ones. This usually happens to keep the existing customers of a business satisfied and happy with new products. The business would have to replace old products and also to keep products updated.
Diversification
Diversification basically involves introducing a completely new product to a new target market. The two types of diversification involve related and unrelated diversification. As I am creating a product which is already on the market, it is an altered form of an existing product and is introduced to the present audience. My product does not therefore come under diversification.
Marketing Strategy
Product
In this unit I had designed and created a new flavoured chewing gum for Wrigley’s. However before deciding and coming up with the decision to create this product, I did primary research where I found out information including what people wanted the product to be like. After analysing my primary research and looking at the results I had decided on creating a chocolate flavoured chewing gum, for my final product. For my primary research I had produced a questionnaire where I asked a number of questions on product.
Firstly I asked the person what particular flavours they preferred the chewing gum to be, from analysing the results I had found that a majority of 63% of people had preferred chocolate flavoured chewing gum, and a further 50% of people preferred to have paper packaging for the product. There were also an additional 30% of people who preferred to have a red coloured packaging, and 53% of people preferred the chewing gum to be in the form of sticks. Therefore as a result I have come to the conclusion that I was to create a chocolate flavoured chewing gum, in the forms of sticks, and in red paper packaging.
As well as doing primary research I also carried out secondary research. Keynotes provided the source of secondary information it showed me the graph that the chewing gum market is rising, therefore it is a good time to bring out the new product. In the secondary research there was a trend showing the market growing Wrigley’s market share. This showed that the chewing gum market is increasing over the years; therefore it made sense to bring out this new flavoured chewing, if there is a large market for it already.
My segmentation found that the main age category for the product I was going to create for Wrigley’s within the chewing gum market was between the ages 16 – 24. The results show that the target markets for my new product would be aimed at both males and females. The secondary information identified the social grade for the main target market of customers the product was aimed at, this was C2 and D. As Wrigley’s currently has 7.1% of the market for the year and are currently fourth, they need to continue to bring out new products to expand their market share.
The PESTEL analysis, found out the environmental factors which could have an effect on the product I was creating. Becuase chewing gum is becoming more of a nuisance to the society it means that money is being spent. Therefore in the future there may not be a market for chewing gum because of the environmental pollution it causes. This would affect my product there may not be market for that product because, of the impact it is having on the society.
I identified the legal factors in the PESTEL analysis which was the trade description act this stated it was illegal for a product to be incorrectly described. I found that I had to be aware of the Trades descriptions act when labelling my product packaging, so that I abide by this act. My SWOT analysis showed that the company is still the market leader in the confectionary market, which is still growing.
It also showed me that Wrigley’s is the only brand within the chewing gum market which was a strength for the business and a weakness in the fact that the product I am creating contained high levels of fat and was a health issue to many consumers. These strengths and weaknesses shown in my SWOT could have both a positive and negative affect upon the new flavoured chewing gum I am creating for Wrigley’s.
In the competitor analysis I found that for Wrigley’s there were no other competitors within the chewing gum market. This was a strength which I found out within my SWOT analysis. This is because it meant that because there were no other competitors, as Wrigley’s would gain the entire market share for their goods. Therefore for the product I am creating it meant that there weren’t any competitors and therefore the product would be far likely to be more successful, in terms of gaining all profit for that particular market.
In the product life cycle I am currently at the development stage this is because my product is still developing as I am only doing the research behind deciding on the chosen product I will create. I have also done an extension strategy because I have changed an existing product for Wrigley’s which is already on the market. In the Boston Matrix my product is a problem child; also in the Ansoff Matrix my product falls under Market penetration.
Price
Price is the amount of money a business would charge its customers for purchasing a product. The three pricing strategies for price are used are penetration pricing, psychological pricing, and cost plus pricing. Penetration pricing happens when a businesses offer low prices at the beginning, in order to break into market and also achieve a sudden spurt in market share. Businesses usually charge low prices at the beginning of when a product is first released, then once the businesses has gained all the customers afterwards they will then charge the full price. This method is used to entice customers.
Psychological pricing is when businesses use a pricing tactic where they would usually charge a penny less for a price, I order to make it seem as though the price is cheaper. It is used to give a psychological impression of value in the readers mind. For example businesses would charge £5.99 instead of £6.00.
Cost plus pricing is used when businesses work out how much it would cost to make one product then add on percentage to make profit. The price set is the average cost plus a sum to ensure profit. The percentage added on would depend on a number of factors, including the level of competition, the firm’s objectives and the price that customers are prepared to pay. The three different pricing strategies would al apply for Wrigley’s and the product I will create.
My primary research showed me that 53% of people would be willing pay between 20- 30p and 21% were willing to pay between 31 – 40p. Therefore these are things to bear in mind when pricing the product, because in order to make profit I would have to charge a higher price for the product. However this may be a risk because people may not purchase it, as shown in my primary research, because people are only willing to pay certain prices.
For the product I am creating for Wrigley’s I could use penetration pricing as my secondary research showed me that the social grades for my target markets are C and D, and therefore using this pricing strategy would entice them to buy my product.
In my PESTEL I identified the environmental issues and factors, and I had found from research that chewing gum is becoming more and more of a nuisance and therefore is having an affect on the society. If the chewing gum still continues to be a nuisance to the society it means that I have to be aware that the prices may go up, due to this having such an effect on the environment. Ultimately this would affect the pricing for my product.
The social economic groups which I identified for my target market were C2 and D. This meant that the pricing on my product would depend upon the social grades of the customers and how much would be charged to them for the product. Therefore for the product I would be able to charge either high prices or low prices depending on the social grade for my target market.
As a results form the primary research I will charge around 30 – 40p for the new flavoured chewing gum I am creating.
Place
My primary research has showed me that a majority of 42% of the individuals interviewed would expect to purchase the product from supermarkets. A further 39% of people would expect the product to be advertised in magazines. My secondary information showed me a table showing that 56% of people purchased the confectionary from impulse and other outlets.
Therefore as a result my primary research showed me a majority of people would buy the product from supermarkets, whereas in my secondary research a large percentage would buy the product form impulse and other outlets. Therefore these are the places where my product will be advertised. The chain of distribution is the chain the product goes through to the consumer. As my main places for advertising will be in supermarkets and impulse, I would need to follow the channels of distribution for these places.
Channel of distribution for Supermarkets:
Channel of distribution for impulse and other outlets
Promotion
My primary research has shown that 54% of people said that buy one get one free offers are the type of promotion which would encourage the purchase of a product. It is important to use promotion when introducing new products in a business because it helps to encourage the purchase of a product. As I am a brand leader I would be expected to advertise. The more advertising I do the more brand awareness I will create for Wrigley’s. Therefore once more people are brand aware it can help profitability of the business. Therefore the use of promotion would help achieve the aims and objectives to increase brand awareness and improve profitability.
My product which is chewing gum is not geographically segmented as it is consumed nationwide. Due to my product not being geographically segmented, my advertising will be national. My segmentation is for the target markets for males and females, and between the age group of 16 – 24, therefore I will make sure that I product suitable advertising to meet the needs of this target market.
Because I am promoting to middle working class people I would need to look at magazines which are aimed at both males and females aged between 16- 24 and the social class of C2 and D. Therefore I believe these kinds of magazines for females would be Elle, Cosmopolitan, and Sugar. For men these would be magazines such as FHM, or Maxpower, this is because I know that these magazines are read by this social group.
My secondary research shows a table on marketing, and the most amount of money on advertising expenditures spent by Wrigley’s for a product in 2004 was £3,332. Therefore this means that the product I would create for Wrigley’s would have to have to be advertised and promoted, and large amounts of advertising spent.
My PESTEL states the ASA rules for advertising and promotion. Therefore when doing advertising I must be aware that I do not mislead when advertising or that I do no cause any offence or cause harm. However if I was to make an advertisement for Wrigley’s and it was banned because it did not comply with the ASA rules then it would mean I would be losing out on brand awareness. Therefore as a result there will be a loss of profit, because people will not see the product. During advertising and promotion I would need to think about the ASA as stated in my PESTEL. This is because I need to ensure that the advertisement is suitable for purpose and would not offend anyone.
Wrigley’s has a strong brand name and it and is a feature on the market as stated in the strengths for my SWOT analysis. This affects the advertising that I would do to promote the new flavoured chewing gum, because it means the advertising would bring upon more brand awareness, thereby this would increase the profitability of the business, and achieve the aims and objectives for the business.
In the competitor analysis I had found that I had no competitors for my business. Therefore this meant that this would be an advantage. When it comes to promotion, the advertising is likely to be more effective and more successful. Therefore this means if the advertising was likely to be a success then, it achieve my marketing objectives, of improving profitability and, increasing market share and brand awareness.
Bibliography
The information I collected was mainly from the Keynotes industry, this business provided the secondary information I needed to help complete my work.
The text books I used were:
- The AS level Applied Business for Edexcel – Double Award. – By John Evans Pritchard, Margaret Hancock, Rob Jones, Alan Mansfield, Dave Gray
- Business studies – Second Edition – By Ian Marcouse
- GCE AS Level for Edexcel - Applied Business – Double Award: By Rob Dransfield, and Dave Needham
- Applied Business – AS endorsed by Edexcel – By Charlotte Davies, Peggy McGregor, Chris Nuttall, and Mark Shorey.
The sources of information I received from the internet were:
