Excluded from this definition are all chocolate confectionary items based mainly on sugar or artificial sweeteners, such as toffees, jellies and mints (unless they are chocolate coated); all other types of biscuit which are not chocolate biscuit countlines; and cereal bars cakes and desserts of all types.
Part 4 – The principles of marketing
As a marketing advisor it is important to understand marketing thoroughly. My view on marketing is getting the four P’s in a balances proportion. Here are some other definitions.
Marketing is not just about selling or advertising your products, it is about making it as easy as possible for the potential consumer to buy the product.
Marketing is the social process by which individuals and groups obtain what they need and want through crediting and exchanging products and value with other - Kotler
Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably – CIM
The right product, in the right place, at the right time, at the right price – Adcock
Marketing is essentially about marshalling the resources of an organization so that they meet the changing needs of the customer on whom the organization depends - Palmer http://www.marketingteacher.com/Lessons/lesson_what_is_marketing.htm
Marketing is the process whereby society, to supply its consumption needs, evolves distributive systems composed of participants, who, interacting under constraints - technical (economic) and ethical (social) - create the transactions or flows which resolve market separations and result in exchange and consumption. –Bartles http://www.marketingteacher.com/Lessons/lesson_what_is_marketing.htm
Marketing is an integrated communications-based process through which individuals and communities are informed or persuaded that existing and newly-identified needs and wants may be satisfied by the products and services of others - http://en.wikipedia.org/wiki/Marketing
In Marketing we have to understand:
- The importance of marketing as a strategy
- How marketing objectives direct an organization
- The need for market segmentation
- How market segmentation can inform business strategies
- An appreciation of each of the elements of the marketing mix; price, product, place, promotion
Marketing is essential to the long-term success of any business. An example of this is Lucozade’s success.
Lucozade has been leader in the energy drink category with just under 60% value in the energy drink segment, with competitors like red bull and PowerAde. Lucozade was first launched in 1927 as a provider or energy during recovery from illness. Eventually they consistently gained a 10% year-on-year growth, cementing its position as the clear category leader. The drink no has 15% value share of the energy category and is the UK’s leading sports drink.
Lucozade then wanted to be recognized as a drink to provide energy during sporting activities. So they had to advertise differently. They began to make television adverts using big sporting icons such as Steven Gerrard to get this point across.
Now more than 7 bottles of Lucozade are sold every second worldwide.
Lucozade got the marketing mix right with this product and with all of their products they have not yet created something that has failed on the market. They do not only sell the bottled drink. Their product range now goes under four titles of; Hydration, Fuel, Focus, Recovery, Strength and that is only in their sports range. So as you can imagine they have many products. Which include drinks, powders, bars and a caffeine boost?
Lucozade also selling in the right place which is almost everywhere including gyms which is a good move as the products are aimed at aiding exercise in one way or another.
Lucozade
In contrast to Lucozade, in 2001 the Coca Cola Company launched a bottle of water called Dasani in the UK. But unlike most water it hadn’t come from alpine glaciers or from a natural spring. It was tap water that although had been filtered and purified was being bottled and sold at 95p.
When this was exposed it received a lot of bad media attention receiving newspaper headlines such as “Coke sells tap water for 95p”.
However this didn’t stop coke. They persisted with their product Dasani, until a bad batch of minerals had contaminated the water. As a result of this 500,000 bottles were immediately withdrawn from circulation.
This was the end of Dasani in just five weeks.
Dasani had got two of the four P’s very wrong. Firstly the product, which was bottled tap water which barely competed with the sources of other, competing products of, bottled water that was on sale. And secondly the price of 95p which the public found extortive for the fact that it was tap water in a bottle.
In order for a business to be successful it must have identified its marketing objectives and the factors that contribute to successful marketing. The most important of these factors is to be able to understand customer needs and wants. To meet customer needs it to provide a product which fulfils a basic customer requirement. Businesses should always be looking to stay ahead of the competition by developing new product to keep you existing customers and attract new ones. Customer needs and want will help design new products. Innovative businesses are successful businesses.
Part 5 – Establishing customer needs
HFS Ltd has to investigate and understand the needs of its customers and the performance of its competitors in order to create the best marketing strategy possible. Prior to doing this, I will identify a possible number of ideas for a new healthy chocolate bar. To begin with I developed ample ideas which were based on my hobbies and interest as well as current market trends.
My Initial Ideas
Name: Caramel Plus
- This is target woman who may be watching their weight but would still like to enjoy chocolate from time to time, with Caramel plus they can do this knowing they are giving they are self a healthy nutritious chocolate.
Slogan: “Spoil yourself without the guilt”
Target: 24 – 40 year old women
Ingredients: Caramel, Dark Chocolate, Nuts and Raisins
Packaging: A colour with a tone of purple with the product name in an elegant font
Name: Health Bar Duo
- This bar is also another chocolate aimed at women who want to still be able to eat their favourite chocolate whilst controlling their calorie intake. And there are two bars to attract those who are fans or products such as Twix.
Slogan: “Twice the taste and nutrition!”
Target: 24- 40 year old women
Ingredients: Chocolate, raisins, almonds and cherries
Packaging: square shape packaging coloured green and
Name: Gogo bar
- This chocolate is targeted at the young generation that are always on the go, hence the name. The Gogo bar will give them the energy boost that they missed from skipping breakfast, in some healthy ingredients masked in chocolate.
Slogan: “Eat well on the go!”
Target: 16 – 24 year olds
Ingredients: Chocolate, nuts and raisins
Packaging: Colourful with bright bold font with images to attract the target. The bar will be a rectangle shape.
Name: Enigma
- Enigma is a chocolate bar with the sense of mystery, hence the name; Enigma. The name is given because there are a variety of dried fruit in the chocolate as well so as the consumer will not know what they will come across in their chocolate bar; it creates the sense of mystery.
Slogan: “There’s a mystery in every bite”
Target: 16-30 year olds
Ingredients: Milk chocolate, egg white, milk fat, raisins and nuts and various dried fruit
Packaging: Rectangle shape bar. Wrapping is dark blue and purple in colour.
I have chosen to go forward with the gogo bar because it is aimed at the same target age group that fit into and towards the same lifestyle I live. Therefore when I will be creating the product I will know how to relate to it to make it more market orientated for the target market.
Part 6 – The importance of market segmentation
Market segmentation is the process of dividing up a total market into sub groups with similar characteristics. Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution.
It is important to understand market segmentation because it can help target advertising and promotion more effectively at the relevant market segments.
Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life a business can retain customers who might otherwise switch to competing products and brands
In addition it can ensure that the products are on sale at the right place to attract the target market segment which will allow you to maximise your sales.
Sometimes a company will identify a segment whose needs are not being met; this is called a gap in the market. The company can increase their sales if they develop a product to fill the gap.
Socio-Economic Groups
Socio-Economic groups are groups based on the occupation of the head of a household. The occupation a person has obviously affects the amount of money they earn and will affect the way in which a business will target its products.
Markets can be split into different segments to help them market their sales accurately
-
Geographic: countries, regions , cities , urban and rural
-
Demographic: age, sex, occupation, income, religion, education and family
-
Psychographic: social class, lifestyle, activities interests and opinion
In Geographic sales perhaps for example if I focused on cities I would have to think of selling in busy and crowded areas as that is what city life entails. You would also need to create a product that fits into the lifestyle of the people you will be selling to. This may be good as there will be many potential customers so it will give my product a chance to be sold to many people on a daily basis. However if it is a crowded area there is bound to be competition. Cities are also good places for promotion.
Demographic sales are specifically targeted at age, sex, occupation, income, religion, education and family type. This is more or a personal way of marketing as your focus on an actual age or gender to sell your products to. Examples of this include toothpaste with a contrast in branding between toothpaste for children and adults.
Psychographic segmentation is sometimes also referred to as behavioural segmentation. This aspect of market segmentation works closer with the consumers and the type of products that people prefer to buy based on their lifestyle choices. Marketing campaigns are customised so that they appeal more specifically to customers.
Part 7 – Market segmentation and HFS’ target group
Currently HFS LTD’s product range is serving a niche market. This is resulting in the loss of sales, as a cause of this HFS has been losing profit.
A niche is a concentrated part of the market that focuses on selling one type of product.
With my new product I hope to change this segment.
Part 8 – Purpose of market research
If I am to sell my new chocolate bar from HFS; before if do this I will need to carry out a wide range of market research. The main reason for why I will do this is to find out what my future customers will expect from my product. Optimistically my market research will show that my business is viable.
An advantage of me carrying out primary research is that the research is mine so will not be revealed to others. Therefore it will be kept hidden from competitors so I may gain some benefits from this.
Another reason as to why will carry out primary research is that my results can be accurate to the time, place and situation I am researching.
Primary research gives you answers to specific questions related to you business, whereas Secondary information is information collected from books, internet, newspapers and magazines and other similar sources or sometimes even oral statement that has been made from another person.
Part 9 – Primary Research: Application and Analysis
Questionnaire
On Saturday the 14th of November I interviewed 50 people on a south London high street. I asked 17 questions in total but I have only been able to represent 14 in a column chart format as the remaining 3 were not multiple choices. I have presented my results below and analysed the results.
This was my first question. 50% of the people who took part in the questionnaire submitted their age as 16 - 20 years old which I was happy to get such results in the south London area as that is where HFS is based and that is the age group my products will be targeted at.
Most people who participated in the questionnaire were male (64%). My target gender is both male and female but I don’t think these results will have any change of the amount of sales per gender
I wanted to know if people were interested in buying healthy chocolate bars. 66% of the people I asked said they would be interest in buying the bars. From this information I can go ahead and make my healthy chocolate bar because the majority of people I questioned like this idea...
Most of the people I questioned (70%) fitted into the category of them buying 1 to 3 chocolate bars in a week. Therefore I will need to supply quite a lot of supply to meet the demands. A problem that may arise is that people may be used to buying another type of chocolate bar that is made by one of my competitiors.
Most people asked this question answered yes to skipping breakfast (78%). I was content with this result as my chocolate bar is specifically made to target these people.
82% were happy with the rectangular shape of the chocolate bar as they said they were used to it as most other bars are in the same shape. They also said it is more practical for example fitting the bar into pockets.
36% of the people asked opted for Nuts as the ingredient they would most like in the cereal bar. Following was raisins with 20% of the vote. This is good as my initial plan was to involve both of these ingredients in my bar.
Combined, 58% of the vote went toward pricing chocolate bars at either 40p or 50p. This is a good result as the price I had in mind for my chocolate bars I were to sell them singularly was 40p
Sadly 60% of people opted as no for whether they would pay more a fair trade chocolate bar, although I was not initially planning to do this. I could have looked into it in the future.
Most people, in fact 52% or the people who took the questionnaire voted for small retailers as where they buy their chocolate from. These being shops like newsagents and corner shops. I think this is common for a lot of people.
Surprisingly most people selected West London as the place where they normally buy chocolate (48%)
44% of people who participated in the questionnaire voted that they looks at flyers which is a good thing as that was going to be my source of promotion. 30% of people voted “sometimes”.
Focus Group
A piece of primary research that I completed was a focus group. A focus group is when a company invites current customers and potential customers to discuss the different aspects of a new or old product, service, concept, advertisement, idea, or packaging. Questions are asked in an interactive group setting where participants are free to talk with other group members.
The advantage of a focus group is that you can find more detailed information and open ended discussion about the product.
Focus groups are better at finding qualitative information.
Qualitative researches opinions presented in narrative. Qualitative research aims to gather in depth understanding, as opposed to Quantitative research. Quantitative research generates numerical data. For example: the number of households in London.
I have included a sample of the documentation used for the focus group in the next few pages this include questions asked and responses by the people who have attended.
Focus Group Documentation
Date:
26th October 2009
Venue:
BE2
Focus Group Leader:
Stephen Olasupo (Me)
Attendees:
Ricardo. Sophie. Michael. Danielle
Questions asked and responses
What type of chocolate bar do you usually buy?
Ricardo:
I like dark chocolate. I don’t focus too much on the health aspect.
Sophie:
I usually purchase light chocolate bars. Ones that have too much chocolate make me bloated.
Michael:
I buy chocolate when I crave for it. I’m not too particular on what brand or how healthy it is because I go to the gym regularly.
Danielle:
I would agree with Michael and Ricardo with their motives for the dark colours. I like black in an item of clothing. If not black then it has to be white.
Is 50p too much to pay for a chocolate bar
Ricardo:
It isn’t that much for a chocolate bar. However I would usually buy a chocolate bar for around 40p.
Sophie:
40p is the maximum I would spend on any chocolate bar.
Michael:
I would never buy a chocolate bar for more than 40p. The production cost cannot as much the price suggests.
Danielle:
I would be prepared to pay anything up to 50p for a chocolate bar but I would be happier with a price of roughly 45p.
Where do you buy your Chocolate?
Ricardo:
I normally buy from big retailers such as Sainsbury’s or Tesco. But i wouldn’t mind going elsewhere if I felt it was worthwhile.
Sophie:
I’ve always bought my chocolates from off licence shops for as long as I can remember.
Michael:
With my budget, buying from small retailers like my local off licence is the only option for me.
Danielle:
I always buy my chocolate from supermarkets as I would fear that it is of poor quality if I were to buy elsewhere.
Would you buy a chocolate targeted at people who usually skip breakfast?
Ricardo:
I haven’t in the past but I would like to buy something new for a change.
Sophie:
I normally buy breakfast type chocolate bars so I am happy to continue.
Michael:
I can’t think of my chocolate bar that i have bought that isn’t healthy. Plain chocolate bars are unhealthy. I am very into healthy eating.
Danielle:
I don’t mind as long as it does not have nuts, I’m allergic.
Do you buy single chocolate bars or multipack?
Ricardo:
I buy singular chocolate bars. I find if I buy a multipack I eat them quicker which isn’t good.
Sophie:
I buy multipack chocolate bars as they are there at my disposal when I want one.
Michael:
Multipack chocolate bars are cheaper than buying the same amount singularly but however I still buy single chocolate bars.
Danielle:
I’m not too bothered about whether I get multipack bars of single bars, but I would most probably end up with the single bar option.
What promotion appeals to you?
Ricardo:
Funny TV adverts appeal to me and certainly give me a push in the direction of the product advertised.
Sophie:
TV adverts are convenient for me as I am at home a lot.
Michael:
I am at work a lot so I’m always on buses and trains. Therefore newspapers are where I mostly see advertisements.
Danielle:
I would prefer to go the west end where there is a greater range of t-shirts with more reliable quality.
Secondary Research
Secondary research data is information that already exists. Some secondary data can be available within a business e.g. sales figure. Secondary or desk research usually take place at a desk in the home, library or office Its sources may be electronically based of paper based. Sources are classified as internal or external.
Using data that already exists can be classified as Internal or External.
There are advantages and disadvantages of secondary research:
I have conducted secondary research from the Mintel report.
Part 12 – Marketing Strategy
Marketing Strategy
A marketing strategy in simple terms forms the basis of a marketing plan designed to reach marketing objectives.
A marketing strategy is a long term plan for a business to focus on its resources in order to achieve an increase in sales to attain their mission statement.
Ansoffs Matrix
Ansoffs Matrix is a business tool that helps businesses decide their product and market growth strategy. It provides a good framework for a business to identify opportunities to expand product range.
The matrix is a guide which sets out choices available to businesses.
Market penetration
The extent to which a product is recognized and bought by customers in a particular market
Market penetration seeks to achieve four main objectives:
• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling
• Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors
• Increase usage by existing customers – for example by introducing loyalty schemes
A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.
Nivea will penetrate the market by selling more products or growing the market as a whole. Nivea can increase their sale by making adjustments to the marketing mix. For example the product aspect could be reformulating their product to make the more effective.
HFS will penetrate the market by working on the product as well and further developing maybe also eventually introducing another health bar but I doubt I will diversify as I will want to keep the company known for healthy chocolate.
Market development
Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
• New geographical markets for example exporting the product to a new country
• New product dimensions or packaging: for example
• New distribution channels
• Different pricing policies to attract different customers or create new market segments
Product development
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.
Diversification
Diversification is the name given to the growth strategy where a business markets new products in new markets.
This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. And if they decide to go ahead with it they will be entering a new market.
Part 13 – Market strategy and factors
Internal constraints
Internal constrains can affects decisions regarding the plans of my business. They can affect my the decisions regarding the plans of my business as it can slow sown the activity up to a rate that cannot be supported or afforded by ,y business. Also it can change planned activity.
Internal constraints originate from within the organisation; they are usually controlled by the senior management or influential stakeholder of the business.
They may stem from resources available, management decisions or corporate ethos-each can have the effect of slowing, changing or halting promotional plans and campaigns.
The internal constraints that have the most direct effect are based on the resources of the business.
Main Internal Constraints
- Budget and Costs
- Time
- Skills and expertise of staff
- Availability of technology resources
External Constrains
External constrains are originated from outside the business.
They are usually beyond the direct control of a business but can still affect a company’s plans.
Main External Constraints
- Economy
- Suppliers
- Competitors
- Government policies
Part 14 – Marketing strategy and external factors – Using PESTEL
PESTLE
Political Factors
Economic Factors
Social Factors
Technological Factors
Legal Factors
Environmental Factors
One of the key influences upon the effectiveness of the marketing mix is the business environment.
It is quite possible for an excellent business idea to do badly mainly because of the factors outside the control of the entrepreneur.
Examining the business environmental helps an organisation to develop appropriate marketing strategies including the marketing mix.
The Customer - Buying behaviour of customer including why they buy, their buying habits and the size of the market
The Industry – The behaviour of organisations e.g. retailers and wholesalers, their motivations and structure
Competitors – Their position and behaviour
The Government and regulatory books – Their influence over marketing and competitive polices.
One useful way of analysing an organisations external environment is by grouping external forces neatly into 6 areas by using a PESTLE analysis all of which are external.
Part 15
Having conducted and analysed both primary and secondary research, I am now in a better position to make decisions and proposals for my winning product.
The purpose of having carried out sufficient market research ensure that the product will me market orientated which as a result would be welcomed by the market.
Before any decisions are made on each element of the marketing mix (product, price, place, promotion) it is worthwhile identifying the initial marketing objectives stated at the beginning of this product.
Part 16
Anything produced by human or mechanical effort or by a natural process is a product. But in my case product represents the chocolate bars that HFS will be manufacturing and selling as part of their new product range.
The new product HFS Ltd will be launching will be the Gogo chocolate bar. The Gogo bar is aimed at 16-24 year old who are often on the go so in turn do not have time for a full meal, so the Gogo bar was created so that whilst on the go there is still a healthy choice of snack from which you attain healthy nutrients and vitamins.
I’m hoping that the new product launch will increase sales for HFS as they have had a lack in sales over the last couple of years which is obviously bad for any business in that position. And as the sales increase hopefully HFS will see a rise in profit for the company which will be a sign whether the Gogo bar was a viable idea. If there is success from the Gogo bar it could open up a whole new product range for HFS in the chocolate confectionary industry and we could possible diversify into another market.
This will completely differ from HFS’s current state as they are suffering a financial downfall with a loss of sales and profit therefore if the launch of the Gogo bar is a success there will be opportunity to increase profit and sales to a level where HFS is not making a loss, and eventually HFS could expand their market and end up selling to supermarkets on an international level.
The reason for the launch of a new product was that it was needed as their sales and profit were on the decline.
The research I carried out was preliminary. The important points that I found were that snacker are mainly always on the go and I also found that the chocolate confectionary market is a growing market and HFS could have a good chance of survival if they moved into it.
Part 17 – Product life cycle
Product life cycle shows the stages a product passes through over time. The five stages of each product lifecycle are product development, introduction, growth, maturity and decline.
Development
Product starts life at this stage. This is when the idea for the product is discussed, designs are looked at and research takes place. At this stage there are mp sales because that project has not yet been launched.
Introduction
The product is then ready to be launched. Most products coming on the market will be backed up by some advertising and other forms of promotion such as TV adverts and newspaper features.
Growth
In this stage, sales and profits will be rising. Advertising and other promotion support change slightly as the product will be generally known to consumers.
Maturity
In this stage the product reaches a peak in terms of sales. Research and development costs are likely to have been paid off.
Decline
Eventually, a product is likely to go into decline. Sales are falling and many consumers see the products as old and switch to those of competitors.
At the stage of decline is when a successful business would have developed a new product to replace the one that is in decline
Saturation
Saturation is a market in which nearly all potential customers have been reached and use of a product or service is currently near a maximum. For example, a town is saturated with supermarkets.