I could not collect any secondary research that was related to price as none seemed to be available, so I decided to do some more primary research into competitors pricing in order for me to decide on a price for my product. I went into my local Tesco�s and recorded the price of 5 chocolate bars that were of the same size as my new product and that brand names were also well established. The information that I collected is shown below:
Twix = 37p
Timeout = 37p
Kit Kat = 36p
Drifter = 35p
Mars = 42p
From my questionnaire I can put forward the proposal that I will price my product at 35p as this may be a few pence cheaper than other competitors but not that much lower so it is still classed as competition pricing, I do not need to entice customers by using penetration pricing as my primary research showed that people would buy my new Snickers product, due to its well established brand name. The pricing strategy that I have chosen is more effective for my product than others, for example, penetration pricing would not be suitable as it is used mostly when a brand is new to the market. Skimming is not suitable as my customers would not be prepared to pay and initial high price as there are many other chocolate bars available that they could buy. When considering the price of my product I also had to consider the elasticity of demand, my product has an elastic demand due to the amount of competitors in the market, for this reason the only suitable strategy would be competition based. I can differentiate my product in other ways than price, such as packaging and promotion.
Promotion
It is important to decide on the correct promotional techniques as this will decide on how well the product is communicated to the target market. If the product is not promoted well using the correct technique then the product will not achieve its maximum sales.
There are 2 main forms of promotion:
Above the line � Relates to promotional techniques such as Television and Newspaper articles.
Below the line � Relates to promotional techniques such as personal selling, sales promotions, Packaging, branding, and direct mail.
The different promotional techniques that are available are:
Advertising � Television, Radio, Posters, Newspapers, Magazines. The advantage of this is that it reaches a wide audience, although the disadvantage is that it can cost a lot of money, especially when advertising on the television. As brand name of my product is well established, the company has enough capital to advertise on television, so this would be a good promotional technique for my product.
Direct Mail � This means posting promotional material through a customers letter box. This form of promotion often does not generate enough sales to justify its use. Telephone selling, or �cold calling� can be a slightly cheaper alternative to this. I will not be using this type of promotion for my product as the disadvantages outweigh the advantages (it does not generate enough sales)
Samples
Test Marketing
Sponsorship
Endorsements � This means getting a sports star or television personality to promote a product for you. Recent examples include David Beckham promoting Police sunglasses and Britney Spears & Beyonce Knowles promoting Pepsi.
Sales promotions � This is a short-term method of boosting sales. Techniques involve; buy one get one free, discounts, free products.
In my questionnaire (primary research) I asked the question �Which advertisements persuade you to buy a product most� most people said the television, I expected this outcome as most people have a television at home and they watch it more frequently than they go to the cinema or read a magazine.
In my secondary research from the Cadbury�s website it showed that most people buy confectionary as a snack food, I am therefore aiming my product at this market, the promotional techniques I use therefore have to be suitable for this market. From my research I propose that one of the ways I am going to promote my products is through advertising on the television. This is an expensive but effective form of promotion as it reaches a wide audience, as Snickers already advertises its products on the TV, which shows that they have enough finance available, Television advertising seems a suitable method.
As well as promoting my product using the television, I am also going to use the internet as this is a very cost effective way of communicating my product to the public. A website can be used to answer any of the publics questions related to my product, therefore it will promote good public relations. A website can also be used to convey the style/attitude that is associated with my product.
I have chosen not to use other promotional techniques such as sales promotions as the brand name of Snickers has a well established customer base, so I think that these people will buy the new product, once they have become aware of it from the television advertisements.
Product
It is important that the correct product is chosen, as if I decide on the wrong product, customers wont buy it. I will need to decide on my products:
Brand Name � has to be short and easy to remember
Style � (gold suggests luxury)
Quality
Packaging
My brand name is going to be �Snicktrix� because it is short and catchy. I am going to keep with the same colour scheme as snickers current products so that my bar will be instantly recognisable. The colour scheme of snickers is red, blue and brown that I think suggests quality. I will use a foil packaging so that my product will be kept fresh, but foil can also be printed on.
Place
Distribution is important as it is about getting the product to the customer, it needs to be in an accessible place, as if it is not then people will either not be able to buy it, or won�t be prepared to buy it.
To select the right place to sell my product I will need to consider the target audience, accessibility and costs. Such costs include the �commission� of Intermediaries. Another factor which could influence which distribution channel a business uses is whether it has enough resources to recruit a sales team, if it doesn�t it may have to consider using agents. Agents will posses customer based skills to distribute the businesses products, the focus heavily on the customer interface and �create a competitive advantage and cement the relationship with their supplying producers� (www.tutor2u.net.)
There are 3 main types of distribution categories that are:
Intensive distribution - Selling the product in all the available outlets and saturating the market.
Selective Distribution � producer sells in a limited number of outlets in a particular geographical area. The advantage of this is that the producer focuses all effort on them. This type of distribution only works if customers are prepared to �Shop Around�
Exclusive distribution � When only one wholesaler, retailer or distributor is used in a specific geographical area.
Effective distribution channels
Choosing the correct distribution channel means meeting the customers needs profitably and efficiently. The distribution method depends largely on the scale of operations and the size of the market. As my product is not specialist (like a Bentley) it is not made to order, so the amount of stock in the warehouse will be continuously replaced as my product will be made along a production line.
To distribute my product I will use an indirect method of selling �Manufacturer -> Wholesaler - > Retailer - > Customer�
The advantage of this is that the wholesaler takes on many of the responsibilities, such as making many journeys to retailers, where as the manufacturer only had to make one journey to the wholesaler. An intermediary can also cut down on other costs for the manufacturer such as paperwork for invoicing and administration. I have not used other channels of distribution such as �Manufacturer -> agent -> wholesaler->retailer-> customer� as an agent usually takes a cut of the profits to promote the product, as my brand is well established and I have already proved that people will buy my product (Primary research � questionnaire), this channel of distribution is more costly and time consuming.
I have not chosen the channel of distribution �Manufacturer->Customer� as a retailer has more experience and expertise in selling/promoting a product to a customer. Selling through a retailer will also help to save money training and employing sales staff, as the retailer will do most of the interacting with the customer.
Product features that may be used to exploit target market
Small snickers fingers will appeal mainly to the female and teenage market mostly as teenagers are getting more health conscious due to the impact of the media.
Integration of the 4 P�s
None of the four P�s can work alone together, to achieve a successful marketing mix, the four P�s have to work together.
The diagram below illustrates this:
