AVCE BUSINESS: MARKETING.
AVCE BUSINESS: MARKETING.
The existing product I have chosen to do a marketing strategy is the chocolate bar 'Aero'. Aero has remained the second best selling brand in its sector for the 10th year running, behind Kit Kat. Sales increased a further 3% over and above the 2000 success to top 200 million. The primary objectives of my marketing strategy is to keep 'Aero' success for the last 65 years, to hold advantage over its competitors, to help increase sales and become the leading chocolate bar. Below is a brief history of Aero and its success:
Rowntree launched Aero as 'the new chocolate' in October 1935, at a cost of 2d. (Old pennies). Initially it was available only in the North of England, distribution expanding throughout the UK the following year. By 1936 Aero had reached New York. It was one of the first products promoted by Rowntree primarily on the strength of the brand, rather than the company name.
Aero's success owes much to its unique bubbly texture. From the first television advertising campaigns screened during the 1950's, the secret bubbly formula has proved a major success in providing the inspiration behind the 'Lovely Bubbly Aero' campaign.
Aero has undergone a series of developments in packaging, bar size and flavour, with the most significant innovations being the 1982 and 1996 relaunches. In 1982, the first count line Aero bar was introduced. This new 'chunky' bar resulted in sales of Aero almost doubling in the following few years. In 1996, Aero was reinvented as light, indulgent bar marketed directly at the female chocolate consumer with the successful slogan 'Float away with an Aero'. The traditional block Aero was redesigned to improve the breakage quality of the individual chunks. The wrappers of both the traditional and count line bars were redesigned in 1996, featuring a new Aero logo.
In August 1999, the Aero pack was redesigned again and a new TV ad featuring the Aero Hot Gospellers on air from September. The title of the gospel song, "Have you ever felt the bubbles melt?" is also the new strap line for Aero. It is reflected in improved pack graphics, which feature an enlarged 'O' with a stream of chocolate bubbles issuing from it.
Chronology
935 Launch of Aero in the North of England in October 1935.
936 Aero launched across the UK and exported to New York.
937 Acrobats used to advertise the new Nut Milk and Fruit and Nut Milk varieties of Aero.
950s Television advertising launched for Aero.
982 Aero count line bar introduced.
999 Major relaunch of Aero.
Packs and variants:
* Aero Milk Chunky
* Aero Milk Medium
* Aero Peppermint Medium
* Aero Orange Medium
* Aero Milk Giant
* Aero Peppermint Giant
* Aero Mini Hanging Bags
Limited Editions
* Aero White (launched 1999)
* Aero Cappuccino
* Aero Mint Egg (Easter; debut in 1996)
* Nut Aero
* Fruit and Nut Aero
* Strawberry Aero
* Lime Aero
Special Editions
* Peppermint Aero (launched 1973)
* Orange Aero (launched 1974)
Extensions of Brand
* Aero Milk Drinks
* Aero Mousse
* Aero Ice Cream (Peppermint Aero Ice Cream Chocolate Bar launched in 1996)
Primary and Secondary research relevant to the marketing strategy of Aero.
In order for the marketing strategy to get off the ground I will need to collect and use Primary and Secondary data, which would be relevant to the marketing strategy. To start off I will identify the Primary/ Secondary research, then I will present them and finally I will interpret and analyse the results I got.
Primary research
This is Primary research where the information is actually obtained by an organization from outside itself. It is specific to the organization's needs and can involve a range of methods including:
* Telephone interviews
* Questionnaires
* Personal interviews with representatives of the company
I have used a questionnaire as my main source of information as I feel this would be the easiest way to obtain the information I feel I need about the chocolate confectionery market sector. The Questionnaire was done by using a few questions about why, where and what chocolate consumers bought. This was quick and simple and didn't require a lot of thought to be put in to answering the questions as everyone has their own tastes and preferences, so this would make the results easy to analyse. I could use 'closed' or 'open' questions:
* Open questions allow the person answering the questions to give their own opinions, although this could leave the questioner with a variety of responses.
* Closed questions usually require an answer picked from a range of options i.e. yes or no.
The main purpose of the questions I used was so that I could find out what chocolate consumers bought and how much they were willing to pay for the chocolate bar Aero. The outcome of this could affect what type of strategy I would adopt, For example lets say my questionnaire revealed that my competitors products were cheaper and as a result more people bought that product then my strategy would simply be 'destruction pricing'.
After I collected the information I would then use the information I gathered to look at the market as a whole and see how I could develop Aero further to fit in with the current market and gain some new consumers in the process.
The questionnaire was designed by using a simple layout. Tick boxes followed by the questions for the person doing the questionnaire to tick their option. However, the 'open questions' were just on the basis of stating the answer.
The data was collected using 'simple random sampling' but also convenience sampling this meant that I could choose the size of the sample that I felt I required and on a totally random basis. Although for this I worked on the basis of 60 samples, as I felt this was a big number and I would easily be able to analyse the results.
From the questionnaire I produced, I have been able to look into different types of opposing chocolates of Aero's competitors that wanted to move in on Aero's action, this has given me a good basis to look into my own products development. I have also found out that most people I asked were between 5 and 60. However I did get quite a few people over the age of 60 to answer my questionnaire, which meant my results weren't all based on one particular age group. Out of all the possible answers for question two the majority of people I asked preferred 'Snickers' which Aero hasn't had that competition with, in the market.
Question 1:
* How old are you?
* 5 - 10 yrs [20]
* 21 - 40 yrs [19]
* 40 -60 yrs [12]
* 61+ [9]
Question 2:
* Which chocolate Brands do you prefer?
* Aero [16]
* Dairy Milk [12]
* Mars [10]
* Snickers [20]
* Fuse [1]
* Yorkie [1]
Question 3:
* How often do you buy chocolate?
* Everyday [22]
* Occasionally [30]
* Whenever you feel like one [8]
Question 4:
* Where do you buy your chocolate?
* Supermarket [5]
* Newsagents [20]
* Local corner shop [15]
* Off license [4]
* Petrol station [11]
* Train station [5]
Question 5:
* What Prices are you prepared to pay?
* 15 - 20p [5]
* 21 - 30p [30]
* 31 - 40p [15]
* 41p+ [10]
Question 6:
* Size and quantity? (In what forms do you buy your chocolates.)
* Single [41]
* Twin pack [9]
* Mulitpack [8]
* King-size [2]
Question 7:
* Sex?
* Male [21]
* Female [39]
As you can see from the Primary research that I have taken I have found out that it is a competition between my chosen product Aero, against Snickers. The questionnaire also shows that more females consume chocolates and this enables me to pin point our main market segment and to focus in new markets.
Secondary research
Secondary research is the cheapest form of marketing research. Secondary research is mainly external data and is in the form of published materials, this data can give a 'Broader dimension to data previously collected'.
External information can be used to compare against Aero's other competitors like Cadburys and Mars. External data could also be used to compare against the economy as a Whole.
Businesses can also get government statistics these are also supplied by ONS (Office for National Statistics) some of the publications they produce include 'Regional Trends' 'Retail Price Index'.
They can also gather other information in the media as they present a series of stories of key market sectors or larger organizations, examples of these include:
* Newspapers - Broadsheets such as 'The Times'.
* Trade journals- i.e. 'The Economist'.
* Company information (e.g. existing annual reports and accounts, sales figures).
* Internet- this has become a business resource. Aero's company 'Nestle' have their own website: (www.nestle.co.uk)
* Information from competitors (e.g. promotional materials, product details, price lists).
* Contact the company by writing to them.
Market research companies like 'Key Note' and 'Mintel report' give information on the market size, their main competitors, and projected growth and in depth reports on certain markets.
By doing secondary research I hope to find out how Aero is doing in terms of market share and sales figures compared against its competitors and as a outcome of this I would base a marketing strategy on this data.
Brand Consumer spending
£M
Coca-cola ...
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* Information from competitors (e.g. promotional materials, product details, price lists).
* Contact the company by writing to them.
Market research companies like 'Key Note' and 'Mintel report' give information on the market size, their main competitors, and projected growth and in depth reports on certain markets.
By doing secondary research I hope to find out how Aero is doing in terms of market share and sales figures compared against its competitors and as a outcome of this I would base a marketing strategy on this data.
Brand Consumer spending
£M
Coca-cola 269.5
Nescafe 240.2
Walkers crisps 220.8
Robinson's Squash 135.8
Flora Margarine 125.0
Silver Spoon Sugar 124.1
Muller yogurt 119.7
Tetley tea 115.6
Anchor Butter 110.7
PG tips 104.6
Pepsi cola 104.2
Kellogg's Corn Flakes 101.8
Birds Eye Menu master 101.6
Heinz baked beans 100.7
Kit Kat 100.7
Mr. Kipling cakes 100.3
Heinz Soups 96.9
Ribena 95.6
Tate and Lyle sugar 92.0
Nescafe Gold Blend 75.6
The table above shows the top 20 food grocery brands in the UK in 1995, given by AC Nielsen
As you can see Aero has not been in the top 20 food grocery brands in the UK. But Kit Kat is Nestlé's biggest selling confectionery brand for the last twelve years. In 1997 sales amounted to more than 210 million compared to 1995 as you can see above.
Up to date secondary data shows that Aero has remained the second best selling brand in its sector. Sales increased a further 3% to top £250 million.
A survey taken by "Key Note" during January 2000 analyses the popularity of various brands of chocolate bar in the UK. This research was carried out by "BMRB Access" (those aged 16 and over.)
Penetration of leading brands of chocolate bars (% of Adults), 2001
Question: which, of these chocolate bars do you buy on a regular basis?
All Adults Men Women
Kit Kat 56 57 52
Aero 45 48 51
Dairy Milk 40 44 50
Twix 38 39 36
Snickers 32 36 35
Mars Bar 25 29 28
Crunchy 24 25 50
Bounty 23 22 23
Flake 21 18 33
Time Out 17 16 21
Wispa 15 15 18
Fuse 14 12 14
None 22 20 24
Source: BMRB Access, 2001
The results summarized in the above table confirms that Aero is the second UK's leading chocolate bar, bought by 45% of all adults. It should be noted that Aero white the limited edition was the major success of the year, and its introduction has resulted in incremental growth for the brand as a whole. Aero was followed by Cadbury's Dairy Milk bought by 40% of all adults, Twix (38%), Snickers (32%), Mars Bar (25%) and Crunchy (24%).
As we can see from certain chocolate bars that women eat more chocolate than men, and vice versa. Generally, men tend to prefer the heavier, more filling bars such as Mars Bar, Snickers and Twix, most of which are sold in king-size variants. Females tend to prefer the lighter, more indulgent products like Dairy Milk, flake and bounty.
From that astonishing discovery I could say that my product Aero can make it more lighter and indulgent to target female consumers, and that could be one of numerous strategies I could adopt; product development.
Generally, the leading chocolate bar brands Aero enjoy considerable popularity amongst the younger age groups, especially since most are impulse purchases. However it should be noted that that the penetration of both Aero and Dairy Milk peaks in the 35 to 44 age range, with 55% and 45% of adults respectively. In contrast, both Twix and Snickers are most popular with 16 to 24 year olds, and penetration tends to decrease, as consumers get older. The penetration of Mars Bar is similar, peaking in the 25 to 34 age ranges.
There are no major differences in regional consumption patterns, although penetration of both my product Aero and Dairy Milk is highest in Wales 65% and 54% respectively.
Both the Primary and Secondary research will affect my marketing strategy whether I want to increase sales of Aero or increase Aero's market share. The primary and secondary data from my perspective shows that there is a void which Aero must fill, and that is the diverse consumer, for example Aero could be developed to appeal to a different segment of the market i.e. The younger generation.
In the short run, Aero's sale figures are a key indicator of success, enabling me to Asses growth and market share performance and for me to compare its progress with its competitors. However for the long term, I have gained market research information on consumer perceptions. I have found out that consumer attitudes constantly change over time. If Aero is going to maintain its brand leadership, it must be aware of and adapt to these changes through my marketing strategy.
How the Principles of marketing would affect Aero's Marketing strategy
In order for Nestle or any other organization to come up with a marketing strategy they would need to take into consideration the 'principles of marketing'. Nestlé's primary aim is to meet the needs of their actual and potential customers, whether for profit or not. For Aero and any other product new or old it is imperative for Nestle to fulfill the following criteria for their marketing strategy to be successful:
* Understand customer needs
* Understand and keep ahead of the competition by adopting a marketing approach
* Co-ordinate its functions to achieve marketing aims
* Communicate effectively with its customers to satisfy customer expectations
* Be aware of constraints on their marketing activities
I need to be able to identify the needs of Aero's existing and potential customers. Part of this task I feel has been accomplished through the primary and secondary research I carried out in the beginning of this marketing strategy.
The marketing for Nestle or any other organization for that matter involves constantly reviewing all aspects of a product in this case it's Aero in order to ensure that it continues to satisfy the potential customers requirements. This means having the right product, available at the right price and at the right time and place. It is only by satisfying all these factors companies like Nestle will make a profit and be effective in meeting its objectives. Ultimately, a business like Nestle can claim that it's marketing is successful when consumers make repeat purchases or are prepared to make recommendations about the Nestlé's products.
Organizations can be categorized as being product-oriented, and this has a large effect on their approach to marketing activities as I have found out with Nestle.
In a product-orientated organization, managers often become complacent about the organization's products and service. By focusing on the product rather than the market, they might assume that the existing range of products is the best on the market and that sales will follow automatically; they may see no need for a product change or modification. These attitudes can lead to the downfall of an organization, particularly if it is operating in a rapidly changing, highly competitive business environment.
Organize its functions to achieve marketing aims
The primary aim of marketing for Aero is to ensure that potential customers buy the chocolate. The way in which marketing is carried out varies enormously between organizations according to their size and the nature of their product. This is obvious with Nestlé's competitor Cadbury. Although they sell similar products their marketing is varied, for example Nestle market their individual brands like Aero differently, where as Cadbury tend to view all of its brands under the same label.
In large organizations like Nestle there may be specialists responsible for each part of the marketing function. The diagram below shows how marketing could be organized in Nestle, which has markets home and abroad. A special key account manager would handle the most important domestic customers. Some of the work connected with market research, public relations and advertising could be handled by outside agencies.
Businesses like Nestle need to communicate effectively with their customers if they are to satisfy the needs of the customers. Effective communication involves the exchange of information to achieve mutual understanding. In the marketing field, it centers on the use of advertising, public relations, sales promotion and direct marketing activities, which will also play a key, part in Aero's marketing strategy. The aim is to control purchasing decisions of specific customer groups. A secondary aim is to obtain positive media hype for the organization in this case Nestle to enhance its public image as I have seen over the years with the Aero.
For marketing communications to be effective, the objective spectators should comprise a group of customers with similar needs and attitudes, so that each customer is likely to respond in a similar way to a particular advertisement or other promotional message.
The objective spectators require different types of information before making a purchasing decision. Potential buyers need to know:
* That the product exists.
* Where it can be bought.
* Details about product, its price and features
* Information to assess whether it meets potential customers needs
This information has to pass through a number of stages of communication. Beginning by the organization, choice of communication format and channel, and receipt by members of the intended viewers or customers. One of the problems with this communication sequence is that it is essentially one way; it offers little opportunity for potential customers to provide feedback to the seller. This makes it difficult to measure the effectiveness of marketing communications. Companies often have wide and rather vague indicators, such as comparison of sales before and after an advertising campaign.
There are a handful of constraints that are likely to affect marketing activities as well as the marketing strategy for Aero. In order for marketing strategy to be successful you will need to be aware of the following constraints and to work my way around them if possible:
* Industry-based constraints
* Ethical, environmental and social constraints
* Pressure groups
* Legal constraints
Industry based constraints
Most promotion and advertising in the UK is covered by voluntary controls. It is self-regulated by the industry. Its key feature is to provide and maintain standards so that all advertising is legal, decent truthful and honest.
The Advertising standards Authority (ASA) is an independent voluntary body financed by the advertising industry to make sure that self-regulation works. It has an independent chairperson and two thirds of its members must come from outside the advertising industry. It does not have statutory powers. It supervises all advertising, except that on radio and TV. Its role is to protect consumers' interests. It administers the British Code of Advertising Practice and the British Code of Sales Promotion Practice. These work on the assumption that all advertisements should be legal, decent, truthful and honest. Although ASA tries to prevent the media from carrying objectionable advertisements it does not enforce the law.
The ASA monitors advertisements on a daily basis and can investigate written complaints from the general public. If it is unable to stop offensive advertisements appearing, it can as a last resort refer the advertiser to the Director General of the Office of Fair Trading using the Control of Misleading Advertisements Regulations. Most advertisers stop running their advertisements before this stage is reached.
The Radio Authority and Independent Television Commission ITC control radio and TV advertising, which have the power to take advertisements off the screen. Its guidelines are published in the ITC Code of Trading Practice
Not every thing can be advertised on Television. In the UK there are restrictions on political and religious advertising, and advertising Tobacco is banned.
Professional bodies, such as the institute of Public Relations and the institute of Sales Promotion, also publish their own codes of good practice. Direct marketing activities are also controlled - for example, consumers can have their names removed from lists of junk mail.
Ethical constraints
As part of the trend towards social responsibility, companies like Nestle are paying more attention to the need to behave. Therefore in producing the marketing strategy. Anyone concerned with marketing should
* Not offer for sale any product, which could cause harm and should not try to deceive.
* Treat all information about the organization as confidential - for example, not revealing in advance the contents of a market campaign/ strategy.
Environmental and social constraints
While marketing has specific social and ethical responsibilities, since the 60s there has been growing concern for the environment. This concern has been given impetus by major human by major human and ecological disasters such as the BSE crisis in beef cattle and the toxic feed given to Belgian chickens have drawn attention to the fact that some businesses may be prepared to cut corners to achieve this.
There is an organization, or group of people, which attempt to influence important decisions. The group may be in favour or against a particular outcome.
Legal or statutory constraints
There is a raft of legislation controlling marketing activity as well as marketing strategies to ensure that it is not misleading, does not encourage harmful behaviour, does not cause offence and is not illegal-for example, does not break the equal opportunities legislation.
The overall purpose is to protect consumers and promote a socially responsible attitude towards society and citizens.
Trades Description Act
The Act applies to transactions between businesses and consumers and between businesses. It makes it a criminal offence to:
* Apply a false description to any goods. The description can be written or oral and can apply to the quality, size and specification, ingredients or raw materials, features, date and place of manufacture
* Apply misleading advertisements
* Make misleading statements about the price
* Apply false description to facilities, services or accommodation.
Monopolies and Mergers Act
This is part of a body of legislation designed to protect consumers by the promotion of competition between businesses. As a rough guide the concept of 'public interest' is used to determine whether a particular monopoly or proposed merger should be allowed to proceed. Here are some examples of situations, which could have an impact on marketing activity:
* Using monopoly power to charge excessive prices
* Using predatory pricing to eliminate the competition-once competitors have been forced out, prices are raised!
* Using exclusive dealership so that competitors cannot find outlets for their products.
The Sale and Supply of Goods Act 1994
This act amended both the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. It applies to all goods including food, regardless of where they are bought, for example, at shops, market stalls, door-to-door sale, home party sales, or catalogue mail order. According to the Act the seller must ensure that goods are:
* Of satisfactory quality: this term has replaced 'merchantable quality' used in the previous Act. Satisfactory quality is defined as the standard that a reasonable person would regard satisfactory, taking account of any description of the goods. The quality of the goods includes their state and condition plus fitness for purpose, appearance and finish, freedom from minor defects and safety durability.
* Reasonably fit for any particular purpose, e.g. they must be able to do what the seller claims they can do, for example, an electric toaster should be able to toast four slices in one minute if this is how it was described.
Internal and External influences affecting Aero's marketing strategy.
SWOT Analysis
A SWOT analysis sets out to focus upon the Strengths, Weaknesses, Opportunities and Threats facing a business or its products at a given moment. It includes both an internal and an external element. The internal element looks at current strengths and weaknesses of the product. The external element looks at the opportunities and threats present in the environment in which the product operates.
STRENGHTS
* Well-known brand - long established. Popular with a range of age groups. Successful advertising campaign.
* Product development - updated packaging/no. Of different flavours. Introduction of white chocolate.
* The UK is one of the largest chocolate confectionery markets in the world Per Capita. Consumption currently stands at around 16kg per person, a figure higher than that for most of the major nations, including the US.
* Nestle/Rowntree - strong brand image - one of the "big three".
WEAKNESSES
* Aero and all other chocolates have been perceived as unhealthy, causing tooth decay and, within the food industry as a whole, increasing levels of obesity. This has lead to the introduction of products such as low-fat chocolate bars, which affect Aero's sales.
* Maybe not enough innovation. Perhaps a need to look for new markets. Aero not seen as being as innovative as other brands.
OPPOURTUNITIES
* Chocolate - growing market.
* Increased proportion of spending on chocolate. Snacking - replacements of meals with snacks (chocolate/crisps).
* The market is seeing a growth in the amount of gesture gifting i.e. chocolate confectionery bought on impulse for everyday occasions. The main beneficiaries of this trend would appear to be boxed chocolate assortments.
THREATS
* Lots of competitions of product development as competitors look to increase market share.
* Lots of change in market - e.g. new varieties of old brands - e.g. chunky, king size, snack size, ice cream.
* Hot summers (of which there have been an increasing number in recent years) usually lead to falling sales of chocolate products like Aero.
* The power of the supermarket groups shows no sign of waning. They may, therefore make further inroads in to the market, either by increasing multipack sales of count lines, or developing products of their own, which would boost their own label sector
The SWOT Analysis has enabled me to look at influences affecting my marketing strategy from another perspective. I have found out from the outcome of the SWOT Analysis that the strengths, weaknesses, opportunities and threats are balanced and therefore my marketing strategy would probably be centered around rectifying certain aspects of my SWOT Analysis i.e. weaknesses and threats. For example one the last threats stated for my company Nestle and Aero is reduced consumer confidence as a result of killing off certain brands. In order to take this threat in to consideration I would have to come up with a marketing strategy that would rejuvenate the consumer's confidence in Aero and therefore this would open a new window of opportunity for Aero if Nestle were to snatch new customers who were affected by the killing off the brand.
If I were to carry out the above then I would need to consider using a marketing model like the Ansoff matrix, which would lead me to consider building growth through the development of the Aero.
PEST Analysis (Political, Economic, Social and Technological Influences)
Carrying out a PEST analysis involves identifying the key factors external to an organization that are in a state of flux and that are likely to have an influence on the product in the coming months and years.
POLITICAL
* Foot and mouth disease would affect transport of livestock, which would in turn affect the supply of milk and other dairy products (which are the key ingredients for any chocolate) due to new laws being introduced.
* Public spending- taxation
* Government is very concerned about obesity. Heart problems are costing the NHS more each year.
ECONOMIC
* Prices - would increase because lack of supply due to foot and mouth.
* If there were a boom in the economy there would generally be more demand. However this could take place via a recession. Uncertainty, some commentators believe we are entering a recession, which means reduction in spending. But other commentators believe we will avoid recession, but they see inflation as a danger. The government therefore increases interest rates leaving people with less money to spend. This may then reduce chocolate consumption.
* Foot and mouth will not only affect the food industry but other industries in the long-term like the chocolate confectionery industry. For example foundries make components which are used in the manufacturing of food, however if the industry was unable to produce that particular food they wouldn't need to make the components causing the foundries to lose profits due to loss of business.
SOCIAL
* Social Trends: chocolate would be considered a leisure product.
* Trend in snacking - Increase in people eating on the "go" (vending machines)
TECHNOLOGICAL
* Better Equipment
* New product development
* New materials and substitutes for existing materials. A good example of this would be the switch from Cocoa beans to vegetable fat extracts as the sole ingredients for chocolate in the United Kingdom.
* Internet opportunities - opportunities to develop customer loyalty, especially with children.
The PEST Analysis affects many aspects of Nestlé's market activities especially those involved with Political and economical influences as these affect national income, interest rates, VAT and overall Prices this could mean the total costs would rise meaning Nestle would have to pay out more overall.
Identification and explanation of the links between my Analysis of internal and external influences on the development of my marketing strategy.
There is a link between Aero's SWOT and PEST analysis of the internal as well as external influences that are likely to affect my marketing strategy. This is evident from the external influences of the SWOT analysis's opportunities such as changing demographic patterns. These are linked to the social factors of Aero's PEST analysis, which clearly indicates the awareness of Britain's ageing population, which could in turn have a detrimental effect on Aero's marketing strategy and success.
Another aspect of the PEST analysis which is linked to the SWOT analysis's external factor - opportunities gives a implication for the need for low-fat and more healthy confectionery clearly exemplifies the need for "New product development" which is one of the Technological factors in the PEST analysis. The PEST and SWOT analysis' are the Internal and External Audits and assumptions that Nestle have to take into account on the development of Aero's marketing strategy. By using PEST and SWOT models to generate information on the business environment, it is possible for Nestle to analyze trends and developments and spot new market opportunities and threats.
A realistic Rationale for the development of Aero's marketing mix including previous marketing mix.
The primary objective for Aero is to be the UK's number one selling confectionery brand. In order to achieve this, I have to develop a marketing strategy that will take into account all the elements of the marketing mix. This will involve individual strategies for pricing, product development, promotion and distribution. For an established brand name, these strategies must be flexible and relevant to each new generation of consumers, but at the same time, great care must be taken not to damage the perceptions of the product built up over decades of marketing.
Aero has a particularly broad consumer profile and is popular with all age groups.
The product life cycle.
The life of a product is the period over which it appeals to customers. We can all think of goods that everyone wanted at one time but that have now gone out of fashion. The sales performance of any product rises from nought (when the product is introduced to the market), reaches a peak and then goes into decline.
Sales
Development Introduction Growth Maturity Decline
Time
Most products have a limited life cycle. Initially the product may flourish and grow, the market will mature and finally, the product will move towards decline and petrification. At each stage in the product life cycle there is a close relationship between sales and profits so that, as organizations or brands go into decline their profitability decreases.
The life cycle can be broken down into distinct stages. In the introductory phase, growth is slow and volume is low because of a limited awareness of the products existence. Sales then rise rapidly during the period of growth. It is during this phase that the profit per unit sold usually reaches a maximum. Towards the end of this phase competitors enter the market to promote their own products, which reduces the rate of growth of sales of the initial product.
This period is known as maturity. Competitive jockeying - such as product differentiation in the form of new flavours will sift out the weaker brands. During saturation, some brands will drop out of the market. The product market may eventually decline and reach a stage when it becomes unprofitable.
The life cycle may last for a few months. To prolong the life cycle of a brand or a product, an organization needs to read just the ingredients of the marketing mix. Periodic injections of new ideas are needed, product improvements, line extensions or improved promotions are needed.
THE FOUR P's:
PRODUCT STRATEGY
No matter how effective the promotion and packaging, a firm will find it very difficult to market a product, which fails to satisfy a consumer need.
* Altering the actual product is potentially a very hazardous act for an established brand name as it risks altering the consumer perceptions of quality built up over decades. Tampering with the recognized core qualities could well damage the integrity of the brand.
Approximately three hundred and thirty aero bars are wrapped per minute. The wrappers are then gummed and coded. The bars are then loaded into cartons. Aero destined for the UK market is packed into cartons containing two dozen bars. Aero cartons, which must travel to Australia, contain three dozen. Changing cartons between the UK and Australia takes about forty-five minutes. The machine itself must be changed when switching to produce Australian bars or Giant Aero. Whilst twenty-seven moulds can be processed per minute for traditional bars, Australian and Giant bars can only be produced in quantities of sixteen to seventeen moulds per minute.
Once the bars have been wrapped and stamped, they must pass through a metal detector. This is to ensure that no foreign bodies have entered the aero products at any stage of the production process. The coding machine must be checked every fifteen minutes. If the labels have not been printed correctly, they cannot be sold.
PRICING STRATEGY
The price that a manufacture asks for its goods has to be high enough for it to make a reasonable profit when it sells to the retailers, and for the retailers to make a profit when they sell to the public. But it has to be low enough to be attractive to the consumer. Various factors need to be considered:
* Cost. The price has to relate to the cost of production and the amount of profit required.
* Demand. The price must reflect what the customers are prepared to pay.
* Competition. The price must be based on what competitors are charging for similar products. If the chosen price is much higher than the competition, the product must show why this is so, perhaps by stressing the quality of the ingredients.
PROMOTIONAL STRATEGY
To encourage shops to stock their goods and the public to buy them, manufactures advertise their products and promote them in various ways:
* Advertising - on TV, radio, and posters and in the press, carefully targeting the people who are likely to buy and presenting the right image for the product.
* Sales promotion - free samples, money off vouchers, two for one offers, in-store demonstrations and point of sale displays, aimed at attracting customers attention and stimulating demand.
* Packaging - this not only protects the product, but it should be attractive and appealing to the customer as well.
* Personal selling - with representatives going out to see customers, to show and explain products, as well as answer their questions.
* Public relations - creating a favourable image by providing news stories to the media, sponsoring goods and events.
PLACE
Finally a manufacturer must get its goods into the right shops for potential customers to buy them. Manufactures can distribute their goods in various ways:
* Manufactures - wholesaler - retailer - buyer. Here the manufacture sells in bulk to a wholesaler, who breaks the goods down into smaller units for retailers, who sell products individually to the end users (customers).
* Manufacturer - wholesaler/retailer - buyer. The manufacturer makes a bulk sale to a business, which combines wholesale and retail functions, selling direct to the consumer.
DISTRIBUTION STRATEGY.
Nestle has developed distribution channels which ensure the availability of Aero to buy wherever and whenever the consumer the consumer wishes to purchase it. Sales of confectionery depend heavily on its availability, with market research that well over 60% of all purchases are made on impulse. Consequently, Nestle tries to supply as many outlets as possible- both wholesaler and retailer channels.
Point of sale merchandising is also important when consumers are making instant, snap decision from a wide range of products on view. Instantly recognizable packaging also helps to tempt customers. Shoe shops, for example, have recently been identified as having potential for confectionery sales owing to the large number of families that visit them. It is also predicted that confectionery, along with all foodstuffs, will become available through cable and satellite interactive television, videophones and the Internet through E-commerce.
Internationally, Aero is now also manufactured in Canada, Germany, India, Malaysia, China, Japan, South Africa and the United States. It is available in more than 100 countries throughout the world.
Evaluation of Marketing models and their application to evaluate the likely success of the marketing strategy.
Product life cycle
Business theory suggests that products follow a life cycle, going through phases of development as follows:
* The conception of an idea/product
* Research and development
* Introduction to the market
A period of growth then follows as consumers become increasingly aware of the product and, if successful, it becomes profitable. Eventually, the growth of sales will level off - this is the mature phase and is usually the result of increased competition. The theory predicts that sales will gradually decline as the market becomes saturated and the consumer tastes change. However, it would be wrong to assume that after the uphill struggles of the development and growth phases, life becomes easier on the level. It is a considerable challenge to the marketers to prolong the profitable mature phase for as long as possible, using a range of extension strategies as Aero has done for so long.
A major drawback with the product life cycle theory is that it cannot be used as a predictor. Firms may be able to identify some of the stages of development from historical sales data, but they cannot know their exact position on the cycle, nor in which direction they might be heading. In addition, some products seem to enjoy very long maturity, if not immortality like my product Aero, which has no signs of decline. Extending the product life cycle span is the goal of many firms, but achieving this requires careful co-ordination of corporate and marketing objectives and strategies.
My extensive research has leaded me to believe that Aero is at the growth stage in its Product life cycle.
Sales and profits
Aero is here, it has a extended life
This is called product extension and this is achieved
Through product modification like aero white.
Development Introduction Growth Maturity Decline
Time
I have used this marketing model to evaluate my product and to find where it is at compared to its competitors. My marketing strategy will obviously be influenced by Aero's position in the product life cycle. Aero is at the growth stage and I want to maintain that bring that position in the maturity stage by producing a marketing strategy that caters for that need whether its through product modification or development giving Aero another successful 'extension'. Because it is Aero's previous extensions that have been deemed a success to which I must look my marketing strategy.
The product life cycle is the best-known models of marketing. It is useful because it shows clearly that change is predictable as an offering move through its life in the market. Each of the stages of the cycle is characterized by different conditions of demand and supply. To get the best returns from a product at all times the manager must be able to change the marketing mix. This ' skimming' strategy will generate high profits early in the product's life, but once challenged by competitors in the growth stage, prices need to fall if market share is to be won. Likewise, promotional activities must change from awareness generating, through influence to reminder as the product matures.
There are a number of practical limits to the use of the product life cycle, but it does demonstrate the reason for developing a balanced portfolio and show managers why products at the height of their profits generating life are not popular with the owners, because profit growth has leveled off. Most owners expect to see profit growth. To achieve that the business needs growing products for extending the life of already mature products like Aero - for example, boosting sales by opening up new markets, new distribution channels or modifying the existing product to encourage customers to buy again.
Product life cycles are useful indicators, but should not be acted upon without thought.
The product life cycle can be used to track and forecast demand for a product, compare brands within a general product range, but is of less help when trying to evaluate.
