Youth Involvement in an Innovative Coconut Value Chain by Mwalimu Menza
Project Of Strategic Marketing
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
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”
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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.
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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
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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.
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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.
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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
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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
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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.
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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.
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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
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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:
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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
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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:
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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:
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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
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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
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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
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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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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