Project Of Strategic Marketing

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Project Of Strategic Marketing

  1. 1. Project of Strategic Marketing On Group Name: Opportunity Seizers Company Name: GFK corporation. (Detergents) Submitted to: Prof. Awais Khan Submitted by: M. Farhan Saleem. Reg. No. L1f09mbam1132 Hussain Zain ul Abiden. Reg. No. L1f09mbam1138 Syed Ali Kamran. Reg. No. L1f09mbam1165 UNIVERSITY OF CENTRAL PUNJAB LAHORE
  2. 2. TABLE OF CONTENTS 1.0 Introduction................................................................................................................2 1.2 Mission Vision.........................................................................................................3 1.3 Values.......................................................................................................................3 ........................................................................................................................................... 2.0 Situation Analysis.....................................................................................................4 2.1 Market Summary....................................................................................................4 2.2 Market potential......................................................................................................4 2.3 Demographic Trends..............................................................................................4 2.4 Consumer Behaviour.............................................................................................5 2.5 Competitive Environment.....................................................................................5 2.6 Economy..................................................................................................................6 2.7 Legal and Political Issues.......................................................................................7 3.0 Objectives and Action Plans...................................................................................9 3.1 Product...................................................................................................................10 3.2 Place........................................................................................................................10 3.3 Price........................................................................................................................11 3.4 Promotion..............................................................................................................11 4.0 Microenviornment...................................................................................................12 5.0 Macroenviornment..................................................................................................13 6.0 Distribution Strategy..............................................................................................15 7.0 Financial Aspects.....................................................................................................17 7.1 Fixed Costs.............................................................................................................17 7.2 Product Launching Cost......................................................................................17 7.3 Unit Cost (Variable Cost) ....................................................................................17 8.0 Advertising Goals....................................................................................................18 9.0 BCG, SWOT, PLC...............................................................................................20-22 10.0 Overall Assessment of Opportunity..................................................................23 11.0 Advertising Objectives.........................................................................................24 2
  3. 3. 12.0 Advertising and Marketing Budget..............................................................25-26 Introduction: We are launching a brand named “Spin n Clear” under the umbrella of GFK corporation, Spin n Clear is very effective detergent agent by its composition. Managers are expecting that it will make a sound image in the consumers evoked set of mind. A detergent (as a noun) is a material intended to assist cleaning. The term is sometimes used to differentiate between soap and other surfactants used for cleaning. As an adjective pertaining to a substance, it (or "detersive") means "cleaning" or "having cleaning properties"; "detergency" indicates presence or degree of cleaning property. A detergent powder which gives you a better cleaning power with much less effort than the similar priced competitors. Logo of Spin N Clear: Tag line of Spin N Clear: “Stains No More” 3
  4. 4. The statement is showing the operativeness of the detergent. It’s concise, achievable and realistic. Create a good sense in the mind of reader. Our Mission: Our mission is to add vitality to life. We meet everyday needs for hygiene, and personal care with brands that help people feel good and get more out of life. Our Vision: To be leading firm in the detergent industry, by providing better quality services to customers and gain larger customer base and greater market share. Our Values: Integrity • We always try to do the right thing. • We are honest and straightforward with each other. • We operate within the letter and spirit. • We uphold the values and principles of GFK company in every action and decision. • We are data based and intellectuality honest in advocating proposals, including recognizing risks. Leadership • We are all leaders in our area of responsibility, with a deep commitment to delivering leadership results. • We have a clear vision of where we are going. • We focus our resources to achieve leadership objectives and strategies. • We develop the capability to deliver our strategies and eliminate organizational barriers. Ownership • We accept personal accountability to meet our personal needs, improve our systems and help others improve their effectiveness. • We all act like owners, treating the company’s assets as our own and behaving with the company’s long term success in mind. Passion for Winning • We are determined to be the best at doing what matters most. • We have a healthy dissatisfaction with the status quo. • We have a compelling desire to improve and to win in the marketplace. Trust • We respect our GFK colleagues, customers and consumers, and treat them as we want to be treated. • We have confidence in each other’s capabilities and intentions. 4
  5. 5. • We believe that people work best when there is a foundation of trust Situation Analysis Market Summary At GFK CORPORATION, we have detailed information about the kitchen appliance market as well as a comprehensive understanding of consumer needs. According to the 2003 survey of household energy use produced by Natural Resources Pakistan, home owners account for 74.4% of Detergent owners. Based on this information, we have decided to target current and new home owners during our first year of launch, as they are most likely to either have a Detergent or will need one installed. The market size (in households) is based on information from Statistics Pakistan from 2003, it is estimated that there are over 11 million households in Pakistan. Of these households, approximately 8 million are owned, hence 3 million households are rented. Conversely, approximately 6 million home owners (households) own a Detergent. Market potential The household penetration of domestic electrical appliances is very well developed in most sectors of the Pakistani market. Detergents are a potential market for penetration, as they are convenient for young families with two income earners. Retail volume sales of Detergents are predicted to increase by 13% over the 2003 to 2008 period. Household penetration of Detergents increased over the review period, yet the relatively low penetration rate presents a continued opportunity for new sales over the forecasted years. Demographic Trends The trend toward convenience is also largely driven by the shortened time that households devote to household chores, as work placed greater demands on 5
  6. 6. time, thereby leaving remaining time during the average day devoted to leisure rather than cooking and cleaning. According Statistics Pakistan, the number of new constructions has been consistent since 2002. In 2005, there were 135,461 new constructions. This is an important market for GFK CORPORATION to target as new appliances are sought items for these consumers. Pakistan has a large informal economy, which the government is trying to document and assess. Approximately 49% of adults are literate, and life expectancy is about 64 years. The population, about 168 million in 2007, is growing at about 1.80%. Relatively few resources in the past had been devoted to socio-economic development or infrastructure projects. Inadequate provision of social services, high birth rates and immigration from nearby countries in the past have contributed to a persistence of poverty. An influential recent study concluded that the fertility rate peaked in the 1980s, and has since fallen sharply. Pakistan has a family-income Gini index of 41, close to the world average of 39. Consumer Behaviour With competition being prominent throughout the Detergent market segment, there are many different types and styles of Detergents available to own. Built-in units accounted for 94% of retail volume sales in 2003, up from 91% in 1998. Although there are counter top and portable models available, these are rarely found in Pakistani homes. With the size and design of most kitchens, built-in models are easily accommodated and the added convenience of not having to manually hook the appliance to the sink and the space-saving features of a built-in Detergent are primary factors behind the decline of the freestanding model. In fact, it is now difficult to find freestanding Detergents in retail outlets, as most models on the sales floor are built-in. 6
  7. 7. Economy The economy of Pakistan is the 27th largest economy in the world in terms of purchasing power, and the 48th largest in absolute dollar terms. Pakistan has a semi industrialized economy that mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan's economy are situated along the Indus River, diversified economies of Karachi and Punjab's urban centers, coexist with lesser developed areas in other parts of the country. The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery the last decade. Substantial macroeconomic reforms since 2000, most notably at privatizing the banking sector have helped the economy. GDP growth, spurred by gains in the industrial and service sectors, remained in the 6-8% range in 2004-06. Due to economic reforms in the year 2000 by the Musharraf government. In 2005, the World Bank named Pakistan the top reformer in its region and in the top 10 reformers globally. Islamabad has steadily raised development spending in recent years, including a 52% real increase in the budget allocation for development in FY07, a necessary step toward reversing the broad underdevelopment of its social sector. The fiscal deficit - the result of chronically low tax collection and increased spending, including reconstruction costs from the devastating Kashmir earthquake in 2005 was manageable. 7
  8. 8. Inflation remains the biggest threat to the economy, jumping to more than 9% in 2005 before easing to 7.9% in 2006. In 2008, following the surge in global petrol prices inflation in Pakistan has reached as high as 25.0%. The central bank is pursuing tighter monetary policy while trying to preserve growth. Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit - driven by a widening trade gap as import growth outstrips export expansion - could draw down reserves and dampen GDP growth in the medium term. Technology The Spin n Clear Detergent uses cryogenic technology to clean your Stains in a way that is economically and ecologically viable. The use of dry ice pellets allows for a clean method of removing dirt and grime, while at the same time it does not produce any secondary wastes. The dry ice medium is chemically neutral, electrically non-conductive and totally non-abrasive. There are absolutely no secondary wastes and the material being removed generally becomes light dry dust that is captured in filters. The dry ice blocks, pellets, and powders are shown in the diagram below. Upon impact, the dry ice pellets sublimate immediately to gaseous carbon dioxide. The dwell time of the dry ice pellets on the surface material is minimal and other than very slight sub-cooling of the surface significant heat transfer does not take place. The surface being cleaned will have an un-appreciable drop in temperature. Contrary to popular opinion, the surface is not frozen. This would cause a brittle state and shattering would be possible. The majority of the removed material falls to the bottom steel receptacle. The dirt, being food residue, can simply be composted or alternatively, the dirt can be vacuumed into your home vacuum cleaner. The term “ice” is an idiom for dry ice. There is no water in carbon dioxide. Since the dry ice sublimates from a solid directly to a gas upon impact, it is a virtual impossibility to leave moisture from the dry ice itself. The duration of the cleaning process depends upon the 8
  9. 9. size of the load in the Detergent. A typical run during the scientific studies showed 20 minutes required. Legal and Political Issues As a general trend in legal and political implications relevant to Detergents, among other home electrical appliances, water and energy efficiencies are major preoccupations. As an example, the Energy Star programme is a nationally developed rating system for energy efficiency for large domestic electrical appliances, which assigns an Energy Star rating in the form of a sticker on the appliance at the retail level. Promotion of the Energy Star program by the Federal Government is supported by national mandates to increase the efficiency of resource utilization in the consumer market. Moreover, there is the regulation of all electrical appliances with a power supply of more than 30 volts RMS, they must comply with the Pakistani Electrical Code as stated in the federal Electrical Safety Act. The industry took a number of corrective measures to comply with increasingly stringent federal, provincial and local regulations concerning pollution control. During the 1980s, CSA developed approximately 30 Energy Efficiency Standards covering a wide array of appliances, including Detergents. In 1993, a new EnerGuide label was introduced to provide the estimated annual energy consumption rating for each appliance. It also includes a scale that shows how energy-efficient an appliance is relative to similar models in an effort to help the consumers select a model to meet their needs. Since these regulations were enforced, there have been significant improvements in the energy efficiency of all new kitchen appliances introduced to the market. With reference to Detergents, this translated into an average annual energy use 9
  10. 10. reduction of 37%. The SPIN N CLEAR Detergent will further reduce energy consumption by 50% as compared to current products on the market. Objectives and Action Plans The primary target for our first year on the market is residential homeowners as they are environmentally conscientious individuals and are attracted by new innovative products. They were also the essence for developing this product so it is important that they be the first to have the opportunity of using our product. Idea generation: The concept of this energy efficient, low cost Detergent arose from customer complaints based on feedback conducted in July 2009. Idea screening: GFK CORPORATION, a company which is concerned with the comfort and convenience of its customers considers that the new SPIN N CLEAR Detergent is in-line with the company's objectives, strategies and resources. This was confirmed in September after a meeting held with GFK CORPORATION executives. Concept development and testing: Development took one year with a final prototype available and ready for testing in November 2009. Marketing strategy development: In January 2010, the penetration business strategy was agreed upon as being a cost effective and affordable strategy for launching the new SPIN N CLEAR Detergent. Business analysis: Following the business analysis completed in December 2009, which was included in the marketing plan, it was determined that a return on investment will be achieved after 5 years with only the first year showing yearly losses. Following the fifth year, it is forecasted that GFK CORPORATION will make approximately $7 Million profit on their new product, SPIN N CLEAR. 10
  11. 11. Product development: The final prototype was completed in October 2009. Commercialization: The product will be launched in January 2010. 4 P’s of Marketing: Product: The product was developed based on customer feedback and market research conducted on Pakistani consumers. To do so, we have not only taken into account consumer concerns about environment, energy, water, pollution, detergents and noise, we have anticipated these expectations, and have now surpassed them by designing the only detergent that addressed all these issues simultaneously. Composition: A detergent typically consists of ionic and anionic surfactants which act as the detergent to remove the dirt from the clothes, perfume, phosphors which make clothes appear whiter (it is these that show up under ultraviolet light), and for powders anticaking agents to prevent the powder becoming one large lump in the presence of moisture. For liquid detergents, the bulk of the product is water; for concentrated liquids, somewhat less water, but still the product is mostly water. Biological laundry detergents contain enzymes which act as catalysts to "eat" the dirt off of the laundry; these function best at the kinds of body temperatures found in warm-blooded creatures (30 °C (86 °F) to 50 °C (122 °F)) and will perform no better, and sometimes worse, at higher temperatures. Detergents may have other additives such as bleaches and fabric softeners and these are usually advertised clearly on the packets as selling points. 11
  12. 12. Place We plan to launch this product in the major urban cities in Pakistan, namely Lahore, Karachi, Islamabad and Multan. The launch will coincide with the National Home show occurring in each of these cities. The National Home Show provides GFK CORPORATION with the opportunity of bringing awareness to the marketplace. The National Home Shows all take place in the spring season amongst these 4 different cities. GFK CORPORATION will continue to maintain product availability through their key retailers. Price The prices of spin n clear detergent powder for various sizes of packages are as follows; 2Kg -------------------------------- Rs 199.00 1 Kg -------------------------------- Rs 99.00 500g -------------------------------- Rs 59.00 200g -------------------------------- Rs 29.00 65g -------------------------------- Rs 9.00 Promotion We have different promotional campaigns that will help to bring awareness to this new product. The Statistics Pakistan 1996 Census found that only 22% of Pakistan's population (6.4 million) live in rural areas. Therefore, as mentioned above, we will concentrate our launch in the urban areas. As we plan to launch 12
  13. 13. in major cities in Pakistan, namely, Lahore, Islamabad, Karachi, and Multan, our launch in each of these cities will follow the same pattern. MICROENVIRONMENT: The factors of this environment are explained below: Suppliers: Suppliers are an important link in the company’s overall customer “value delivery system.” All GFK corporation approved agencies handled by commercial department. Marketing Intermediaries: Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies and financial intermediaries. It is very difficult to deal with all the wholesalers and retailers individually so GFK corporation has a sole distribution system. Customers: Consumer markets consist of individuals and households that buy goods and services for personal consumption. In the case of our chosen product “SPIN N CLEAR” , a detergent , the main customers our house-wives because they are the ones who buy detergents. Competitors: There are 3 main players in the detergent industry of Pakistan. 1) Colgate-palmolive corporation ( Brite , Express power , Bonus ) 2) Lever Brothers ( Surf , Wheel ) 3) Proctor & Gamble ( Ariel ) Publics: 13
  14. 14. The company’s marketing environment also includes various publics such as , Financial publics , Media publics , Government publics , Citizen action publics , Local publics , Internal publics and the general public. Amongst all the publics the most important is the general public , because they are the ones that but the product so the company needs to be concerned about their attitudes toward its products. MACRO ENVIRONMENT: The factors of this environment are explained below: Demographics: In the case of “SPIN N CLEAR” the demographics that we have found out are , that any housewife who is both price sensitive as well as quality conscious , belongs to any class, any occupation , if can afford Spin N Clear will buy it. Psychographics: People who are ambitious, hygiene conscious, those who want to be authoritative are Spin N Clear buyers, because when it comes to personality values than no compromise. Technology: GFK corporation was the first one to launch in “polythene bags.” This was a change in technology the poly packs don’t get torn off after getting wet like the carton boxes, so this change found a ready market. Economy: Spin N Clear is a premium quality detergent at a relatively low price than other detergents of same quality. This was made possible by launching it in polythene bags so as to cut down cost price. Market size: Due to the launching of different detergents in sachets , a large number of soap users are converting into detergent users because now they can afford to buy a detergent at the 14
  15. 15. price of soap. Total per annum sale of detergents in Pakistan is upto 40,000 tons. This market is growing at a rate of 4.25% per annum. Target market: Normally speaking detergent is a product which is purchased by the housewives but still there is a big target market. Demographics: Age: People of all ages like to wear clean clothes. Gender: Male and Female. Family size: No limit of members, clothes are to be washed. Family life cycle: Young or old, married or single. Income: 3,400 and above ( because Spin N Clear is not marketed in sachets so a person has to earn this much so that he can spend atleast 1% of his income to buy a small pack of Spin N Clear.) Occupation: Students , Working people and Housewives. Social class: Upper class , Middle class and working class. Psychographics: Lifestyle: Achievers , Strugglers and Ambitious people. Personality: Hygiene conscious , Strong and Authorative. Promotional Target Market: 15
  16. 16. Promotion of the product in the target market is very important to create sales. SPIN N CLEAR was promoted among the following age group customers. Matured age group: By launching the 1st ever pakistani detergent in polythene pack. Young age group: By launching it in a colorful and attractive pack. Distribution Strategy: The distribution of SPIN N CLEAR is done by a distributing agency The company has divided Pakistan into 2 parts: 1) Sindh 2) Punjab Sindh is further divided into 4 zones: 1) Karachi 2) Hyderabad 3) Sukkur 4) Quetta Punjab is further divided into 5 zones: 1) Lahore 2) Faisalabad 3) Islamabad 4) Multan 5) NWFP Each zone is fed by a warehouse , which feeds 60 towns around each zone. Everyday sales persons of all particular zones visit shops of their related area , collect sales reports and next orders from the shopkeepers on order taking cards. The order taking card has the following information: 16
  17. 17. Name of the shop Name of the shopkeeper Name and signature of the person ordering Address of the shop Quantity and sizes of the product After collecting this information, at the end of the day all the sales persons submit the daily sales report and the order cards to the distributor so as to arrange for the delivery for the next day. Then the next day the vehicles of distributor deliver the quantity required by every shopkeeper at his shop. Selecting the Right Advertising Approach Once a company decides what type of specific advertising campaign it wants to use, it must decide what approach should carry the message. A company is interested in a number of areas regarding advertising, such as frequency, media impact, media timing, and reach. Advertising Evaluation Once the advertising campaign is over, companies normally evaluate it compared to the established goals. An effective tactic in measuring the usefulness of the advertising campaign is to measure the pre-and post-sales of the company's product. In order to make this more effective, some companies divide up the country into regions and run the advertising campaigns only in some areas. The different geographic areas are then compared (advertising versus nonadvertising), and a detailed analysis is performed to provide an evaluation of the campaign's effectiveness. Summary Advertising is the paid, nonpersonal promotion of a cause, idea, product, or service by an identified sponsor attempting to inform or persuade a particular target audience. Advertising has evolved to take a variety of forms and has permeated nearly every aspect 17
  18. 18. of modern society. The various delivery mechanisms for advertising include banners at sporting events, billboards, Internet Web sites, logos on clothing, magazines, newspapers, radio spots, and television commercials. While advertising can be successful at getting the message out, it does have several limitations, including its inability to (1) focus on an individual consumer's specific needs, (2) provide in-depth information about a product, and (3) be cost-effective for small companies. Other factors, such as objectives, budgets, approaches, and evaluation methods must all be considered. Financial Aspects In order to determine the cost to manufacture and ultimately the selling and retail price, the following analysis of the fixed costs, product launching costs, and unit costs (variable costs) are analyzed. Fixed Costs As is the case with every product launched at GFK CORPORATION, we include in our budget money allocated for employee satisfaction. We believe satisfied employees will lead to better products that are designed and manufactured in a more efficient way. Furthermore, at GFK CORPORATION, we ensure that all our manufacturing processes are environmentally safe, and that any manufacturing by-product is properly disposed. Therefore, budget is also set aside for the environment. The executive and office staff salaries are averaged and accounted. Twenty percent is added to their salary to account for their benefits. Office supplies include items such as computers, software licenses or paper. Product Launching Cost The product launch costs will be added to the fixed costs. These, however have been separated out because they only apply to the product launch (i.e. the first year). Our unit price will be set, to ensure the product launching costs are zero in 18
  19. 19. the second year. The table below lists the extra cost associated with launching the new product. Unit Cost (Variable Cost) Some manufacturing materials are expandable during the manufacturing process. The cost of these types of materials depends on the number of units produced. To minimize the mileage, two trucks will be in each of the four cities specified earlier, and the merchandise will arrive by train to each city leaving from Lahore. Advertising Goals: Once a company decides what type of specific advertising campaign it wants to use, it must decide what approach should carry the message. A company is interested in a number of areas regarding advertising, such as frequency, media impact, media timing, and reach. Frequency refers to the average number of times that an average consumer is exposed to the advertising campaign. A company usually establishes frequency goals, which can vary for each advertising campaign. For example, a company might want to have the average consumer exposed to the message at least six times during the advertising campaign. This number might seem high, but in a crowded and competitive market repetition is one of the best methods to increase the product's visibility and to increase company sales. The more exposure a company desires for its product, the more expensive the advertising campaign. Thus, often only large companies can afford to have high-frequency advertisements during a campaign. Media Impact Media impact generally refers to how effective advertising will be through the various media outlets (e.g., television, Internet, print). A company 19
  20. 20. must decide, based on its product, the best method to maximize consumer interest and awareness. For example, a company promoting a new laundry detergent might fare better with television commercials rather than simple print ads because more consumers are likely to see the television commercial. Similarly, a company such as Mercedes-Benz, which markets expensive products, might advertise in specialty car magazines to reach a high percentage of its potential customers. Before any money is spent on any advertising media, a thorough analysis is done of each one's strengths and weaknesses in comparison to the cost. Once the analysis is done, the company will make the best decision possible and embark on its advertising campaign. Media Timing Another major consideration for any company engaging in an advertising campaign is when to run the advertisements. For example, some companies run ads during the holidays to promote season-specific products. The other major consideration for a company is whether it wants to employ a continuous or pulsing pattern of advertisements. Continuous refers to advertisements that are run on a scheduled basis for a given time period. The advantage of this tactic is that an advertising campaign can run longer and might provide more exposure over time. For example, a company could run an advertising campaign for a particular product that lasts years with the hope of keeping the product in the minds of customers. Pulsing indicates that advertisements will be scheduled in a disproportionate manner within a given time frame. Thus, a company could run thirty-two television commercials over a three-or six-month period to promote the specific product is wants to sell. The advantage with the pulsing strategy is twofold. The company could spend less money on advertising over a shorter time period but still gain the same recognition because the advertising campaign is more intense. 20
  21. 21. Reach Reach refers to the percentage of customers in the target market who are exposed to the advertising campaign for a given time period. A company might have a goal of reaching at least 80 percent of its target audience during a given time frame. The goal is to be as close to 100 percent as possible, because the more the target audience is exposed to the message, the higher the chance of future sales. The Boston Consulting Group (BCG) matrix provides a firm an opportunity to assess how well its business units work together. Each business unit is evaluated in terms of two factors: market share and the growth prospects in the market. Generally, the larger a firm’s share, the stronger its position, and the greater the growth in a market, the better future possibilities. Four combinations emerge: • A star represents a business unit that has a high share in a growing market. For example, Motorola has a large share in the rapidly growing market for cellular phones. • A question mark results when a unit has a small share in a rapidly growing market. The firm’s position, then, is not as strong as it would have been had its market share been greater, but there is an opportunity to grow. For example, Hewlett-Packard has a small share of the digital camera market, but this is a very rapidly growing market. • A cash cow results when a firm has a large share in a market that is not growing, and may even be shrinking. Brother has a large share of the typewriter market. 21
  22. 22. • A dog results when a business unit has a small share in a market that is not growing. This is generally a somewhat unattractive situation, although dogs can still be profitable in the short run. For example, Smith Corona how has a small share of the typewriter market. Firms are usually best of with a portfolio that has a balance of firms in each category. The cash cows tend to generate cash but require little future investment. On the other hand, stars generate some cash, but even more cash is needed to invest in the future—for research and development, marketing campaigns, and building new manufacturing facilities. Therefore, a firm may take excess cash from the cash cow and divert it to the star. A SWOT (“Strengths, Opportunities, Weaknesses, and Threats”) For example: A strength could be: • Your specialist marketing expertise. • A new, innovative product or service. • Location of your business. • Quality processes and procedures. • Any other aspect of your business that adds value to your product or service. A weakness could be: • Lack of marketing expertise. • Undifferentiated products or services (i.e. in relation to your competitors). • Location of your business. • Poor quality goods or services. • Damaged reputation. : An opportunity could be: • A developing market such as the Internet. • Mergers, joint ventures or strategic alliances. • Moving into new market segments that offer improved profits. • A new international market. • A market vacated by an ineffective competitor. A threat could be: • A new competitor in your home market. • Price wars with competitors. • A competitor has a new, innovative product or service. • Competitors have superior access to channels of distribution. • Taxation is introduced on your product or service. 22
  23. 23. A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too much. THE PRODUCT LIFE CYCLE Products often go through a life cycle. Initially, a product is introduced. Stage in the Product Life Cycle New product offerings require considerably more advertising to make customers aware of their existence. As a product moves through the product life cycle, fewer and fewer advertising resources are needed because the product has become known and has developed an established buyer base. Advertising budgets are typically highest for a particular product during the introduction stage and gradually decline as the product matures. Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited. Eventually, however, many products reach a growth phase—sales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set. Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than others—they are willing to pay a premium price for the 23
  24. 24. new product and take a risk on unproven technology. It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice. At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market for baking soda in its traditional use, Arm & Hammer launched a major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created. Overall Assessment of Opportunity We can summarize from the findings provided in the Situation Analysis, that there is a significant opportunity that can be capitalized on when looking at the current dishwashing market. To prove this point, let us summarize the key findings of the Situation Analysis, namely: the focus of improvements to Detergents; the forecast growth in the Pakistani economy; coupled with the proliferation of home improvements. These three main areas constitute the opportunity, to which our innovative new technology shall only be improved. In conclusion, these three factors are the perfect blend of opportunities on which our idea can flourish. The area of greatest opportunity for growth and innovation, within the existing Detergent market, lies in the diffusion of the cryogenic cleaning technology. This cutting-edge technology, currently in-use in the aerospace industry, and patented for in-home cleaning, refers to the art of water-and-detergent-free dishwashing. We are then left with spotless and bacteria-free Stains every time, without having to pre-soak before actually washing. This technology is the answer to noise-reduction demands, as noise is 24
  25. 25. eliminated, as well as water, energy and conscience use. All in all, the perfect combination between consumers demands of possible upgrades to the existing Detergents and a way to capitalize on market maximization. This will evidently take the market by storm. Advertising Objectives: Advertising objectives are the communication tasks to be accomplished with specific customers that a company is trying to reach during a particular time frame. A company that advertises usually strives to achieve one of four advertising objectives: trial, continuity, brand switching, and switchback. Which of the four advertising objectives is selected usually depends on where the product is in its life cycle. Trial The purpose of the trial objective is to encourage customers to make an initial purchase of a new product. Companies will typically employ creative advertising strategies in order to cut through other competing advertisements. The reason is simple: Without that first trial of a product by customers, there will not be any re peat purchases. Continuity Continuity advertising is a strategy to keep current customers using a particular product. Existing customers are targeted and are usually provided new and different information about a product that is designed to build consumer loyalty. 25
  26. 26. Brand Switching Companies adopt brand switching as an objective when they want customers to switch from competitors' brands to their brands. A common strategy is for a company to compare product price or quality in order to convince customers to switch to its product brand. Switchback Companies subscribe to this advertising objective when they want to get back former users of their product brand. A company might highlight new product features, price reductions, or other important product information in order to get former customers of its product to switchback. Advertising Budget: Once an advertising objective has been selected, companies must then set an advertising budget for each product. Developing such a budget can be a difficult process because brand managers want to receive a large resource allocation to promote their products. Overall, the advertising budget should be established so as to be congruent with overall company objectives. Before establishing an advertising budget, companies must take into consideration other market factors, such as advertising frequency, competition and clutter, market share, product differentiation, and stage in the product life cycle. Advertising Frequency Advertising frequency refers to the number of times an advertisement is repeated during a given time period to promote a product's name, message, and other important information. A larger advertising budget is required in order to achieve a high advertising frequency: Estimates have been put forward that a consumer needs to come in contact with an advertising message nine times before it will be remembered. 26
  27. 27. Competition and Clutter Highly competitive product markets, such as the soft-drink industry, require higher advertising budgets just to stay even with competitors. If a company wants to be a leader in an industry, then a substantial advertising budget must be earmarked every year. Examples abound of companies that spend millions of dollars on advertising in order to be key players in their respective industries (e.g., Coca Cola and General Motors). Market Share Desired market share is also an important factor in establishing an advertising budget. Increasing market share normally requires a large advertising budget because a company's competitors counterattack with their own advertising blitz. Successfully increasing market share depends on advertisement quality, competitor responses, and product demand and quality. Product Differentiation How customers perceive products is also important to the budget-setting process. Product differentiation is often necessary in competitive markets where customers have a hard time differentiating between products. For example, product differentiation might be necessary when a new laundry detergent is advertised: Since so many brands of detergent already exist, an aggressive advertising campaign would be required. Without this aggressive advertising, customers would not be aware of the product's availability and how it differs from other products on the market. The advertising budget is higher in order to pay for the additional advertising. 27
  28. 28. Marketing Budget Financial Statements for Marketing Failure to properly cost and budget your marketing plan could lead to problems. While insufficient funding for such items as equipment or staffing may immediately come to mind when budgeting for the whole business, it's the lack of a properly constructed marketing budget that dooms many marketing plans and campaigns. A marketing budget is the marketing plan written in terms of costs. Marketing Budget A marketing budget is an estimate of projected costs to market your products or services. A typical marketing budget will take into account all marketing costs e.g. marketing communications, salaries for marketing managers, cost of office space etc. However much of the budget is concerned with marketing communications e.g. public relations, website, advertising, etc. Both are considered here. The costs in a marketing budget will be allocated according to the campaign and the media to be utilized. Some prior research will be necessary for the cost estimates to be as realistic as possible. This is called advertising or marketing communications research. Helpful Pre-budgeting Research • Industry and Market Research • Competitor Analysis/SWOT • Internal marketing performance records e.g. marketing metrics, marketing controls. • Marketing Audit. 28
  29. 29. Typical general marketing expenses: • Advertising agency commissions • Salaries for marketing managers • Salaries for marketing support e.g. marketing assistants. • Office space • Fixtures and fittings • Travel costs • Other direct and indirect marketing costs, including marketing communications costs. Typical marketing communications costs: • Personal Selling • Public Relations • Printing • Mailing • Website Development & Hosting • Brochure Design • Advertising • Television Advertising • Radio Advertising • Direct Marketing • Newspaper Advertising • Proposal Development/bid submittal • Networking • Event Attendance • Sales Promotion • Many other marketing communications tools. 29
  30. 30. Summary of the Marketing Budget Marketing budgets ensure that your marketing plan or campaign is realistically costed. Some pre-budget research into your industry and market, your competitors and your business's historical marketing metrics helps marketing managers make a more informed calculation. You should cost out all general marketing and marketing communications expenses. You could also work in conjunction with an accountant to make sure that the figures are complete and realistic. 30

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