Essay Instructions: ASSIGNMENT 2 Marketing Strategies
DUE DATE MAR 11 Wednesday 19th August, 2009
Value: 30%
Length: 3000 words +/-10%(provide a word count on your cover sheet any spot)
Format: Structured-essay format – formal language in third person, no I first person
This assignment follows on from the 1st assignment. In the first assignment you undertook a situation analysis to identify trends that would have a significant impact upon your marketing strategy. You will now use these trends to help you segment and target the market, and set marketing objectives. These trends will also help you position the product using the marketing mix.
Section 1: Introduction
To refresh the marker’s memory, identify the product (must be a breakfast cereal) you used for the first assignment and briefly summarise the major trends you identified for the firm from the 6 macro-environments (this should take no more than 100 words). Also outline the purpose of this essay.
Section 1
No marks have been allocated to this section. Its purpose is to simply provide the marker with the necessary background information for the following sections.
Section 2: Target market
Identify a target market for the organisation. In order to satisfy customers, organisations need to know customer characteristics and needs. Describe the characteristics of the target market using segmentation variables. Dedicate approximately 500 words to this section. What are the definitions of each segmentation variable? How do these segmentation variables apply / fit your target market? Marketers use this information to describe the target group, so avoid the use of just age in demographic, what of the family life cycle stage of your target group or occupation ? for example.
Section 2: Target Market (4 marks)
Use and define at least one segmentation variable from each of the four categories (demographic, behavioural, psychographic and geographical) in order to define and explain the target market. You will be Awarded 1 mark for each of the four categories used well.
Section 3: Setting marketing objectives for your organisation
Having identified the target market and the trends facing the organisation you are ready to identify the organisation’s marketing objectives. This means the objectives should relate to marketing goals such as consumer awareness, market share, targeting a specific segment, utilising a new distribution channel etc. As a rule-of-thumb each trend should translate into a marketing objective (e.g. for a fast food chain, the trend towards healthier diets suggests introducing a healthier menu as a marketing objective for the product strategy). But to make things easier, just identify the four major MARKETING objectives. Dedicate approximately 200 words to this section. Number each of the four objectives. Nb. Do these last if you like so that the objectives match your strategies.
Section 3: Marketing Objectives (4 marks)
The key criteria are that you provide four marketing objectives, that are S.M.A.R.T (e.g. Specific (for example is it sales, consumer awareness, new distribution channel –online, market share, specific target teens, seniors, etc.,) Measurable (in terms of percentage, market share etc., Achievable (must be realistic), Relevant (relevant to your trend macro analysis, target market, product offering etc., and Time-bound plan within the next two years to capture the organic market by 10% from introduction, 6 months to raise consumer awareness through extensive media communication etc.,) and that some at least are linked to the analysis of the macro-environment and/or the target market.
Section 4: The marketing mix
Having identified the target market, you now need to devise a marketing-mix. Remember market planning is a process, so your marketing mix should be specifically designed in response to your situation analysis, target market’s needs and marketing objectives. Product, Price, Place and Promotion have to be defined, discussed and stated in this order, use each P as a heading for each section. Dedicate approximately 2000 words to this section.
Section 4: Marketing Mix (16 marks)
In this section you must position the product using either the 4P’s (for a product) or the 7P’s (if we were marketing a service, but we are Not so just the 4Ps). As a general guide and criteria, each marketing mix element should;
? Specifically take into account the characteristics of the target market;
? Be consistent with the other elements of the mix (e.g. a higher price should be used when the product strategy emphasises high quality);
? Make occasional use of macro-environmental trends from assignment #1 to justify the strategy (e.g. the social trend towards environmental concern would support a product strategy, that uses re-cycled packaging, and promotes these important attributes on the label).
a. Product Strategy define and reference source (nb you need to do this with all 4Ps) – Key discussion topics here include;
• What are the 3 components of the Product? Identify these, why are they important and apply to own product?
• What is product classification? How are decisions made on the products category or classification? Apply to own product, what is the products classification and why justify it?
• What is Product Positioning and the basis of the application to your own product?
• Other (e.g. branding decisions, labelling etc about your product but keep it very brief, not overly descriptive, perhaps more on why is branding important)
b. Price Strategy - Key discussion topics here include;
• What is the definition of pricing strategy? Why important?
• What are the different methods of pricing? What are some of the pros and cons / advantages and disadvantages of these Apply to own what method will be used(e.g. is the price based on cost-factors, benefits, competition etc);
• Will a skimming or penetration strategy be used?
• Will the firm be competing on price or non-price factors?
c. Place Strategy –Key discussions here include:
? What is the definition of place strategy? Why is place strategy important? Where is the business located and why?
• What method is being used (eg store retailing, Internet, intermediaries, etc); Discuss intermediaries – 3 types apply one to own organisation and justify choice.
• What are the different distribution channels? Apply the chosen distribution channel to own product and justify the decision.
• (must be linked and consistent with the product classification and price strategies)
d. Promotion Strategy - Key discussions here include:
• What is Promotion Strategy? What is IMC? What are the aims or goals of IMC? Why is IMC important? What is the IMC budget approach to be adopted and why?
• What is the Method of communication and persuasion to the target market
• Advertising, personal selling, direct marketing, online etc., keep it brief not overly descriptive, more what advantages of these methods, links to macro analysis and why these methods important (based on research if possible)
• Distinguish between Push Strategy and Pull Strategy, which applies to own strategy and why? Justify and should be consistent with other Ps.
Section 5: Conclusion
A concise 200 word summary of Sections 2 through 4. This is not an editorial commentary, but an actual wrap-up of major points of your essay.
Presentation and Process (6 marks)
A total of 6 marks will also be awarded to presentation factors (e.g. spelling, sentence structure, referencing format, Reference List format etc) and illustration of an understanding that the various components of the marketing plan are inter-related (e.g. the product strategy is based upon trends identified in the analysis of the macro-environment).
Use paragraphs also Headings and Sub-headings; this will assist with the structure and flow of your essay, be guided by the requirements of each section. Go over the Q Manual and referencing requirements, include a separate reference page of all the references sited in your essay.
Mark allocation
• Target market 4 marks
• Marketing objectives 4 marks
• Marketing mix 16 marks
• Meets the criteria and illustrates understanding that market planning is a process (e.g. the strategies in section 4 are based on input from Assignment 1 and sections 2 and 3) 6 marks
See Criteria Sheet: This will help guide you in terms of what the marker is looking for in your assignment submission
Copy of assignment one submitted below
Assignment 1: Analysing Marketing Opportunities
Introduction
Healthy Co. Pty Ltd is a food processing organisation located in Queensland, Australia. Initial research has developed the ‘Nutri-Mix’ breakfast cereal based on nutrition and healthy life choices for the Australian market. The product serves as a healthy alternative to high calorie breakfast options today on the market, emphasising the benefit of nutritional content, value and well-being.
The purpose of this task is to examine the six macro-environments which will then be analysed for the marketing team to plan a strategy for a specific target market. ‘Marketing’ is defined as an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships that benefit the organisation and its stakeholders (Kotler, Brown, Adam, Burton & Armstrong, 2007). The marketing managerial process involves the research and examination of the macro-environment. After analysis, strategic planning and planning marketing strategies are undertaken and finally, the implementation of these marketing strategies completes the initial process.
Analysing the macro-environment
The Macro-environment consists of six major forces which include demographic, economic, natural, technological, political and cultural environments. These all pose threats and shape opportunities that must be closely monitored by an organisation for successful strategies to be planned, organised, controlled and implemented. The capacity of organisations to analyse and adjust their present marketing structures and operations, that is, the ways in which they re-organise and adapt exchange relationships with customers and other connected stakeholders within the marketing environment, is crucial to long-term survival (Andersson, 2000).
Demographic Environment
Demography is the study of human population in terms of size, density, location, age, sex, race, occupation and other statistics. It is of major interest to markets as it is about people and people make up markets. Demography takes into account the changing age structure, the changing family, geographic shifts in population, the levels of education and the increasing diversity of ethnicity (Kotler et al., 2007).
According to the Australian Government Intergenerational Report (IGR, 2004), the estimated proportion of population above 65 years of age from the total population will almost double in the next 40 years to 25%. In the same time the proportion of working population from the total population is going to decrease, implying a smaller taxation base for the government income tax. Two aspects are likely to be noticed in the future. On one hand, the aged and health care spending will increase as more senior people will need care, which in turn will force the government to be more creative regarding preventive health measures, such as nutrition. For a potential investor in food products this could suggest that the focus should be on healthy products, rather than non-nutritional sugar based ones, targeting the ‘Baby Boomers’ (Australians born between 1946 and 1961).
Women account for doing two thirds of the household duties today (ABS, 2009),
which is less than they used to in generations gone. According to the same statistics,
women are more accustom to indoor house work and men to outdoor ones, but the
trend is slowly reverting towards a balance of the two types of duties. Bearing this in
mind a potential investor should assume that most breakfast cereals are likely to be
purchased or put on the shopping list by a female, rather than a male so market
research, aiming ‘breakfast cereals’ content and appeal, should be focused more
from a female’s perspective.
Economic Environment
The economic environment typically consists of factors that influence consumer buying power and spending patterns. Marketing plans should consider major trends in income and of changing consumer spending patterns when developing new products or plans for a target market (Kotler et al., 2007).
Australia’s Gross Domestic Product (GDP) in power purchase prices (PPP) was $795 billion, with a GDP/capita of $37,298 and a GDP/capita growth of roughly 3% in 2008 (IMF, 2009). Many Australian cities have been rated by ‘The Economist’ magazine (2008) among the most liveable in the world. Thus, Melbourne was ranked the 2nd, Perth the 4th, the Adelaide 7th and Sydney the 9th. It also ranked Australia 6th in the world in terms of quality of life for 2005 (The Economist, 2005).
The current economic situation of general crisis has impacted on Australia as it did on most developed economies. IMF (2009) estimated that the global financial crisis would contract Australia’s economic growth by 1.4% in 2009, whereas the world economy is expected to contract by 2.8%. The same source estimates unemployment to rise from 4.4% in 2007 and 4.2% in 2008 to 6.8% in 2009 and 7.8% in 2010. However, by later this year, the economy is expected to increase by 0.6%, hence entering its recovery period.
The economic indicators for Australia characterise a mature, strong and stable economy that fosters a healthy business environment. However, given its maturity and development, it is expected for potential start-up investors in any industry (e.g. breakfast cereal) to face strong competition from already established brands. Furthermore, consumer confidence appears stable, given the strength of the Australian market suggesting the launch of a new breakfast cereal would co-inside with the recovering economy.
Natural Environment
The Natural environment involves natural resources that are either used by marketers as inputs or that are affected by marketing activities. Factors such as shortages of certain raw materials, increased energy costs, increased pollution levels, and increasing government intervention in natural-resource management will all impact upon an organization (Kotler et al., 2007).
Most of Australia is dessert or semi-arid. Nevertheless, wheat, the major crop in Australia had 12.2 million hectares planted in 2007. Drought has a major impact on crops’ outcome. Thus, in 2005-2006 the wheat production reached 25 million tonnes, whereas in 2006/2007 the wheat production was estimated at 12.7 million tonnes. (DAFF, 09). For a potential breakfast cereal investor, this translates into an inconsistent source of raw materials or with a highly volatile price, which suggests the possible need for sourcing an import supplier which could compromise an ethical approach to marketing an Australian made and owned product.
Alternatively, national recognition that ‘Global Warming’ is an issue that must be addressed is likely to result in increasing pressure on organisations to reduce pollution and emissions (Kotler et al., 2007). By acknowledging the need to protect and clean our natural environment, marketers may see consumers doing more business with ecologically responsible organisations and avoiding those who are not. Environmentally friendly products would provide an additional basis for a strong marketing campaign.
Technological Environment
The technological environment entails forces that affect new technologies, creating new products and market opportunities (Kotler et al., 2007). This environment is recognised as the most influential force now shaping organizational marketing concepts. However, despite the trend towards rapid technological change and generous resource allocation, most firms continue to focus on copying competitors’ products. While the increased in technological change has resulted in greater regulation which in turn has increased research and development costs, longer lead times between idea conception, market introduction and technological development, has allowed organisations to seek alternative means of competitive advantage other than quality and price. Technology can also represent a serious threat to many organisations such as the music industry where music copying has become common practice (Kotler et al., 2007).
Being one of the most developed economies in the world, Australia possess a level of advanced technologic environments, which translate into fast/automated food producing processes, logistics and marketing. A potential investor in the breakfast cereal industry should be prepared to commit a substantial quantity of resources to get to a technological level similar to competitors.
The Internet now represents an important place of strategy for many firms. There has been significant growth in Australia's access to/use of the Internet between 2001 and 2006. In 2001, 35% of Australian dwellings had access to the Internet in the week prior to the Census date. By 2006, 63% of Dwellings had access to the Internet
(ABS, 2006). The Trend for an increase in the usage of the internet in Australian households would indicate further opportunities for the marketing and exposure of a new cereal product.
Political Environment
The Political environment consists of laws, government agencies and pressure groups that influence and limit organisations and individuals in society. Legislation regulating business and an increased emphasis on ethics and socially responsible actions have all impacted on the strategies and direction of organisations (Kotler et al., 2007).
General food safety requirements refer to the health and hygiene of the food handlers, their food handling skills and knowledge, the control parameters for receipt, storage, processing, display, packaging, transportation, disposal and recall of food. Food safety is considered essential and the standards are even higher for vulnerable persons or persons with special nutrition needs (e.g. diabetes). Food Standards Australia is continually monitoring and updating the standards of food production. More recently the standards for the amount of thiamin and folic acid as well as the use of iodised salt in cereal and bread production have been introduced (Food Standards Australia, 2009). Therefore, the required investment in food safety measures and maintenance in proper conditions of a production facility is substantial, such a business being not only costly, but essential for a customer relationship of trust in quality and safety to be established and maintained.
‘The Parents Jury’, an online network of parents, grandparents and guardians in Australia has started to attract more and more attention and therefore gain increased lobbying power. This network’s goal is to improve the food and physical activity environment of Australian children. Nowadays, some of their main discussion issues concern the extent to which the food products are healthy for their children, adults and people with special nutrition needs. This ‘pressure group’ could be an advocate for a healthy cereal opportunity.
Cultural (social) Environment
The Cultural environment consists of institutions and other forces that affect society’s basic values, perceptions, preferences and behaviours. People grow up in a particular society which shapes their basic values and beliefs. Marketing decisions are affected by cultural characteristics such as, persistence of cultural values, subcultures, shifts in secondary cultural values and responding to the marketing environment (Kotler et al., 2007).
The Australian food shopping and eating trends have a strong impact on competition in the food market. Recent trends show that the proportion of eating away from home compared to that of eating of home is continually increasing and is well in excess of grocery food sales (DAFF, 2006). On one hand this is justified by the increasing involvement of women in the labour market, from 48% in 1992 to 55% in 2006, which reduces the time spent home cooking and on the other hand it is a normal evolution given by technological advancement, which changes lifestyle choices (ABS, 2009). Breakfast however, is likely to continue to be a meal taken home, but the emphasis is on the time needed on preparing the meals, which has to be as short as possible. Also, for busier people there could be an option to have breakfast cereals away from home, so a potential new breakfast cereal product could try to attract professional clients as well as domestic consumers.
Additionally, Australia is facing a major obesity problem, which is more prevalent among children due to sugary, low-nutritional food content. Between 1985 and 1995 the child obesity rate grew almost 50% in both genders (Parliament of Australia, 2006). A ‘Social Responsibility’ is to be exercised regarding the quality of food products given to children.
Finally, the concern for synthetic food products and materials is increasing as well, leading to an increased demand for organic/bio options in all types of products, cereals included. The need for natural crops as raw material is likely to increase, given that the demand for organic breakfast cereal products will increase. The production of packaging via biodegradable or recycled materials would also be attuned to cultural trends. In March 1996, 91% of Australian households said they practiced some form of waste recycling and/or reuse activity. By March 2006, almost all households (99%) reported that they recycled and/or reused. (ABS, 2007).
Conclusion
The analysis indicates a challenging market entry and growth scenario due to the strong competition of already established companies. Moreover, the volatility of raw material supply due to natural factors and the low raw material prices in neighbouring countries implies that the logistic would include imports and therefore it would be a complex system. Regulatory issues, when addressed, would provide a potential target market to an insight into the quality of the product, as well as the ‘social responsiveness’ to societal trends, of the organisation.
Additionally, the Australian consumers are changing their habits towards healthier eating due to increased awareness on issues such as obesity and poor nutrition from as early as childhood. Also, the ‘organic’ and ‘bio’ products mania is increasing concern about healthy eating and packaging as well, which creates favourable conditions for a product addressing these environmental concerns. A healthy-eating breakfast cereal would also have the support of authorities and pressure groups, who are significantly worried about the poor eating habits of current and future Australian generations. Nutri-Mix could be a successful concept if targeted to an ageing health conscience market.
References
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