However, this is annoyance by the fact that not all economists are hopeful in their outlook. Interest rates remain high and may raise further, affecting the general wealth and buying power of the customer. Therefore if interest rates rise further and stamp duty is also raised as expected the economy might take a downward turn meaning the business cycle may move into recession. Indeed, it is worth considering that in the midst of this economic prosperity, high street sales have not increased as hoped meaning the retail sector has been one of the worst performing sectors on the UK stock market over the last 12 months.
Competition does not appear to be very brand orientated in the targeted sector. There are many different manufacturers making loo brushes that are almost identical. LB2K will use a differentiated product and marketing strategy in order to gain a substantial market share in this structure of monopolistic competition. This is similar to how firms such as Levis have gained a foothold in the jeans industry.
SWOT Analysis
The group have constructed a detailed SWOT analysis, which has given an important foundation to our marketing plan. We have reviewed LB2K’s major internal strengths and weaknesses, together with an assessment of those opportunities and threats in the external environment, which are going to make an impact on our strategic choices.
For the detailed SWOT analysis pleases appendix A.
Internal Strengths
The five members of the group have given us a range of people that will be involved in devising and implementing our marketing plans. The objectives of the group will determine the targets set in the marketing plan. The skills and abilities of the group will determine whether targets will be met.
The group has set an ambitious marketing goal, which will require financial backing. The Mother Company Kwik Save has agreed to make funds available to fund the LB2K project. Also resources will be made available, therefore there will be no problem in planning to increase market share as production can be met.
The development of LB2K allows for an increase in the product mix of existing Kwik Save products. This will not only extend Kwik Save product depth, but will also widen the product mix width.
Internal Weaknesses
The introduction of a new product into a competitive market is bound to produce some internal complications. The major weakness here is that none of the members of the group have had hands on experience of such an ambitious marketing plan.
Having suggested that finance will be readily available to us, it would be realistic to suggest that this would not be the case. Unless suitable finance is obtained our marketing goals will not be achieved.
It is currently unsure if the company can produce the product. There would be little point in planning to break into the market or obtaining market share unless enough of the product can be produced in order to achieve this.
There is a limited time period to develop LB2K, test it, and market it effectively, as LB2k can only be produced in this year, hence the name.
External opportunities
There is limited competition for LB2K as the design and nature of the product is so unique, this will create competitive advantage, as LB2K is so different. LB2K is also more technically advanced than any other loo brush. In an age were design and technology is constantly changing, this will open up opportunities as it could lead to the obsolescence of existing products and shorter product life cycles.
At this moment in time unemployment is low and average earnings are high, therefore people will have surplus liquidity. Therefore if we break into the current market demand levels should be high as consumers have more money to spend on consumer goods.
British society is currently very hygiene and germ free conscious, this would suit our market as LB2K makes your toilet cleaner, kills more germs and is hygiene friendly. We could therefore market LB2K as being ‘healthier for your family’.
When LB2K matures and starts to move into decline it will be easy to diversify/introduce new products into the market that are associated with LB2K such as a revolving bendy duster to clean all nooks and crannies, and other changeable heads.
External Threats
The marketing plan for LB2K should take into account the pricing, promotion, distribution and product policies of rival firms. This would involve financial analysis of competitors such as Aldi, Asdas, Morrison and Tesco.
A minority of people may not accept the idea of a technologically advanced toilet brush and not buy the product. Our market research suggests that this will only be a minority of people, most probably the elderly generation.
There are no barriers to entry to the toilet brush market, so other new or existing companies may follow suite, restricting current and future profit levels, and eliminating any chance of super normal profits. Or the case may be that they launch a product in conjunction with ours and force us out of the market. LB2K will also be vulnerable to price cutting, malicious advertising and marketing campaigns.
Economists are predicting that the ‘economic bubble’ is going burst, so the Monetary Policy Committee have, and will do so again, increase interest rates. Therefore people will cut down their spending which may affect future levels of demand.
The LB2K team must concentrate on applying the marketing mix. The 4P’s in this case are Price, Place, Product and Promotion.
PRICE
Setting a suitable price for our target market is important. By analysing our market research results we can conclude that the preferred price is within the £0-£5 bracket with 70% of responses falling into this category. The other 30% were prepared to pay between £6-£10. When price setting, the type of competition in the market and also the cost of the whole marketing mix will have to be considered. Consumers preferred price should be noticed and possible reaction too higher or lower prices are important. Mark ups, discounts and different types of pricing shall be discussed under promotion. The £4.99 price, a form of psychological pricing was chosen, as the actual price seems cheaper than it actually is. The main pricing objective of this product is survival, with gaining market share and profit being more of a long-term strategy. As £4.99 for the LB2K, shall only cover the companies' variable costs. This however was preferred, as setting a high price, price skimming, would lead to poor consumer response and sales. It is hoped the fixed costs can be made via other products within the kick saver product range. The company is aware that if the initial market selling price is incorrect, even through market research backs £4.99, price in the marketing mix is a variable that can be easily changed, kwik save is much more concerned on Place and Promotion and Product at this stage as these are harder to change. Kwik save is also aware that the cost of the LB2K shall be subject to change due to economies of scale, competition activity, image and any new technology.
PLACE
The actual Place of sale is important. Here the marketing team should be concerned with getting the right product to the target market place. For example it will be useless to consumers if the product is not available where and when it is demanded. Referring to our market research results the most popular location was in a Supermarket with Hardware/DIY store being next. The channel of distribution is an important factor to consider, with this compromising of 1/5 of R.R.P. With a toilet brush this would involve the manufacturer - retailer - consumer.
The actual product should be concerned with developing a product that the actual consumer wants. By carrying out market research and by doing demonstrations shall allow this. The actual product will need to examine the quality, any accessories, warranty, the type of packaging (if any) and logos plus the use of branding.
The marketing team should also be aware of AIDA, this standing for Awareness, Interest, Desire and Action.
The AIDA approach, describes the stages that a consumer goes through when faced with a new product. Firstly the consumer becomes aware of the new product, possible via an advertising campaign, but at this stage lacks detailed information about the product. Then the consumer becomes interested in the product and seeks information about it, (perhaps contacting kwik save on a free phone helpline, or contacting shops to see if they sell it.) By this time the consumer had the desire to try the product, maybe on a trail basis, or through the free promotion available via domestos. Finally Action, this involves regular use of the product.
The actual adoption to new products varies depending on individuals. For instance some consumers may adopt and use the product early on (innovators) other at a later stage (early and late majority) and those consumers who take part when the product is established (laggards). Therefore by carrying out a direct mail campaign, targeting all uses of domestoes and including some sort of incentive, in the form of money off coupons, this shall raise awareness and information about the product and should encourage purchase.
Kwik save has previously adopted the SMILE factor. This concerns the advertising of the product. Any advertising should be repeated at least three times over the chosen medium. It is also important to have the correct time slots, as it is no point in advertising on television during 3-4pm when your target market, housewives/Mums are out collecting their children from school. The Smile approach is as follows;
Simple - The target consumer must understand what the product is about.
Memorable - It must stand out in the consumer's memory and the brand message be remembered.
Interesting - It must hold the viewer's attention, containing relevant info about the product.
Linked to the brand - Most important, any one who remembers the commercial should also remember the brand.
Emotionally involving and linked -
Creating a relationship with the consumer and the brand.
The Product Life Cycle.
The popular theory is that all products have a natural life cycle, starting with the introduction where sales are getting off the ground, then going through the growth, which will hopefully happen if consumers like and re-purchase the product, and maturity stages. This is where sales levels tend to remain constant, until finally reaching their decline. This is when the product loses its appeal or is more costly or difficult to sustain than a new one.
The Product Life Cycle
The Introductory Phase
LB2K will be launched using tactics, which will be discussed, in the section of the report entitled “Tactics for Launch”. LB2K is highly differentiated from any other products currently available on the market. This serves to our advantage in the way that it is a completely new idea, and our market research suggests that consumers would be interested in it. But the introductory phase may be a difficult and expensive one as it is such an innovative product that there will be very high promotional costs involved with educating the public and persuading retailers to stock the product. It is a great advantage that we have the full backing, both financially and otherwise of the company kwik save
The Growth Phase
LB2k will now move into the growth phase, where we hope to see a rapid increase in sales as more and more people begin to see the benefits of our labour saving product. The problem in this phase may be that competitors begin to bring out similar products, and although our product will always be the original we will have to start thinking about implementing some adaptations for the brush. During this phase we will still need to spend a large part or our budget on promotion – but as sales increase our manufacturing costs per unit should decrease.
The Maturity Phase
The next phase that LB2K will have to contend with is maturity. Hopefully by this stage our product will be well established and widely accepted so we will be able to cut our advertising budget. But, this is the stage where we must start to introduce adaptations to the product in order to stay ahead of the competition. The marketing team introduced the idea of interchangeable heads on the original brush handle, the most practical was decided to be a duster head and the designers then developed this. As LB2K comes to the maturity phase we will introduce the duster head. If we move our product along according to the Product Life Cycle Model by Enis, Lagarce and Prell, the maturity phase can also include Maintenance and Proliferation. This would work to the advantage of LB2K as “mid-life kickers” such as more interchangeable could be introduced during the maintenance phase,. Associated products could be introduced in the proliferation phase to extend the life cycle of LB2K
The Revised Product Lifecycle - Enis et al.
The Decline Phase
After maturity there is decline where LB2K may lose market share and its profitability. The marketing team will have to decide whether, judging by the past success of LB2K, it is worth keeping the product alive using innovations such as the interchangeable heads, or if it would be better to allow LB2K to disappear. Tactics such as price-cuts could be employed to try and delay the decline and keep the customers interested in buying.
Tactics for Launch.
It was unanimously decided that LB2K should be launched initially by way of an offensive television advertising campaign, as it has been proven beyond doubt that it is the most powerful single selling medium. The advertisements will quickly build LB2K a solid reputation (and they can be used nationally and regionally). As our backers, kwik save is happy with this strategy as TV has always worked well for them – they spend 90% of their advertising budget on television.
The decision was made to use our parent company to a greater extent. We will introduce a token system whereby customers can collect tokens from bottles of Domestos. There will be a picture of LB2K on the front labels of the promotional bottles of Domestos for the first three weeks of the launch campaign.
It has also been decided to advertise LB2K in the colour magazine “Innovations” which regularly comes in many of the Sunday Newspapers.
With the kwik save advertising budget behind us we will also be able to use Direct Mail to target specific areas. Leaflets and sales letters will be sent out to areas with the highest concentrations of our target market.
Control and Evaluation
In order to measure the success or otherwise of LB2K it is important that we know our consumers. The LB2K group recognises the importance of designing LB2K so that it meets consumer needs and is distributed and advertised in a way that best appeals to these needs. To do this successfully, the group has to understand the consumer who buys LB2K’s products, his/her characteristics, habits, knowledge, attributes and beliefs, needs and aspirations. The group also needs a clear picture of the nature of the society in which our customers live, a rapidly changing society, influenced by changes in technology, from ‘want it all/have it all’ philosophy of the eighties, to the more caring, health conscious and puritanical nineties.
With the help of The Market Research Society, the group has developed an effective marketing information system. This has helped us to build a marketing databank of the research that we have carried out. Evaluating the research has helped to set a price for our product and it has helped us to establish a target market segment, which as mentioned previously is housewives between the ages of twenty five and fifty. The analysis showed that men were not stimulated by the concept of our product, so we therefore did not target them as our niche market.
The evaluation of the market research has allowed the group to understand what influences people, and how these influences shape peoples attitude towards our product. This has enabled the group to build a bridge between the consumers and the LB2K product.
Before launching we have made sure that LB2K meets public approval. This has been done by extensive product testing and constant control and evaluation. For example, during testing it became clear that the motor was too strong, and therefore sprayed water everywhere. Consequently we had to change the motor to prevent this from happening. LB2K has also been through hundreds of hours of laboratory tests, to make sure there are no design faults, and to make sure that LB2K is a safe product.
It will be important to the success of LB2K that we monitor consumer reaction. As LB2K is an entirely new concept in toilet cleaning, normal toilet brushes have been the accepted format for the majority of cleaning tasks. In order to test consumer reaction we must carry out further Market Research. One way of doing this would be to use the questionnaire that we used previously, by use of a survey and classifying the people interviewed by social class. The LB2K questionnaire was designed to find out what type of people would be most likely to use the new product, but we could redesign the questionnaire after LB2K’s launch to find out what consumers liked about it and why. By getting answers to these questions the LB2K group will be able to build up a profile of potential future customers and compare it with existing customers. This kind of information will also help the LB2K group develop advertising campaigns, and build up consumer profiles on which the group can build when launching future products.
As well as Market Research, the LB2K group will carry out in depth investigations into the changing dusting heads concept to appraise its performance.
Both product and market research for LB2K have produced the following results:
- No equivalent product out-performed LB2K
- Test market results showed positive consumer reaction
- 80% of those who purchased LB2K said they would purchase a dusting head.
- Bleach refill proved very efficient in dispensing all the liquid
The LB2K group have made a prototype of the product which has been essential in proving how popular the product is going to be. This has allowed the group to demonstrate the product to the board of directors at kwik save, so the directors can have some broad assessment of whether LB2K has sufficient consumer appeal to justify the investment.
When the product is eventually launched onto the market the LB2K group will launch a vigorous advertising campaign, both on National Television and Radio, and in broadsheet newspapers to not only break into the market but to establish market share. The results of the advertising campaign will be measured in terms of improved brand recognition and acceptance by consumers, and ultimately increased market share.
Once the product is launched a schedule for comparing results achieved with the objectives set out in the marketing plan will be developed. This will involve analysis of financial measures such as sales volumes, levels of profitability and market share. Also financial projections and budgets will be analysed and the costs incurred will be weighed against expected revenues. The group will also consider plans of action for increased
