Foundations of Marketing - Essay Example

1. With the ever-intensifying competition in the market, businessmen realised the need to segment the market and use the marketing mix (product, price, place, and promotions) to effectively sell their products. Market segmentation provides them focus in intensifying their marketing campaign to their key buyers. This effort will then minimise the unwanted costs and maximise the visibility and recall of the product to their intended consumers. In case of the chocolate industry producers have dynamically utilising the marketing mix to gain market dominance in some or most segments in the market. This is one of the reasons why chocolate firms produce a variety of products that caters to the diverse preferences, budget, and geographic location of their buyers. Below is the elaboration of the activities done by the firms on each of the 4ps in marketing (marketing mix) with the principle of market segmentation in mind: Product - Brand names fuels the marketing activities of chocolates. World-renowned chocolate firms (Cadbury, M&M's, Hershey's, Ferrero-Rocher) produce various chocolate goods to cater the needs and desires of different market segments on a massive scale. To illustrate this point, let us pick Cadbury as an example of what the chocolate companies do in segmenting their products. Cadbury has a wide array of chocolate variants for different age levels and interest segments. Aside from its Dairy Milk brand (intended for the general public), it released Cadbury Heroes in September 1999 that intends to position its product line to children. The product is a tub of tiny bits of the whole collection of chocolate variants of Cadbury (except its Cadbury Under 99 Calorie Range brand, which is positioned for the figure conscious segment). Local chocolate manufacturers and houses of chocolates follow the same product diversification strategy as the multinationals. The capacity for customised products is a primary advantage of local chocolate makers. Product packaging also enhances the appeal and saleability of the product. Oftentimes, packaging is relative on seasonal variations, especially during Valentine's Day and the Yuletide season. Chocolate specialty and hand made chocolate stores also offer customised packaging for different occasions. Price - Product packaging plays an important role in per unit price of a chocolate brand. The availability of bite-sized, large-sized and a bag of chocolates packaging for world-known brands enables price flexibility and affordability. Using this packaging strategy, consumers can easily avail of the product depending on their consumption capacity and budget. Place - Chocolate and confectionery shops are the foremost selling venue of chocolates. World-known brands are available in retail shops, like supermarkets and convenience stores, for easy and mass consumption using the distribution channels in efficiently delivering their products to the end consumers. Customised chocolates are sold in chocolate shops. E-commerce also provides a virtual venue in chocolate shopping. While world-class chocolate manufacturers, because of its mass production and distribution method transact in business-to-business setup, majority of local chocolate shops conduct business to individual transaction on the web. Promotion - Global chocolate producers use the push strategy in promoting their products. It is by advertising via the mass media that they are able to promote their product. Local chocolate producers utilise more personalised approach, using promotional offers and the Internet. 2. Positioning Map With this position map, we can see how the each chocolate firm can effectively execute its marketing efforts. Upon knowing their current position in the business environment they are in, they can create ways to maximize their promotion to this defined segment and act efficiently to this. Let us take the above position map to expound on the benefits of positioning a company. Based on the map above both Cadbury and M&Ms should heavily rely on advertisement and other mass promotional schemes to market diversified products that will cater to the different segments in the global market. Their globally known brand names and extensive production capacity brought about by its global chocolate market dominance, they have the edge in doing business on a large scale. In the case of Kennedy's Fine Chocolates and Thornton's, local chocolate manufacturers in the United Kingdom, they should specialise in customised, hand made chocolate production. The quality of their product depends heavily on the local British taste. Knowing this, they need not to exert their effort on availing mass advertisement like what the multinational chocolate companies are doing. What they need is to find ways to produce and promote their products on a local scale. 3. With the geodemographic tool used by the United Kingdom to identify and understand UK population and their demands for product and services, the ACORN (acronym for A Classification Of Residential Neighbourhood), British marketers can easily segment the market. Using this tool would give them a clear picture on what kind of marketing strategy they would use. Let us take the location where the main office of the two local chocolate manufacturers, Kennedy's Fine Chocolates and Thornton's Chocolates as examples and use the ACORN to identify the geodemograpic data of these two places (ACORN web site). Kennedy's Fine Chocolate's main branch is located in Cumbria with a postal code of CA10 3RU. By using ACORN we have found out that the neighbourhood consists mostly of wealthy achievers, affluent, and old people living in detached homes. Statistics shows that on the average they spend 75 pounds per week on food shopping. Most of the people living here are in the higher managerial/professional occupations and never worked because of their old age. In the case of Thornton's Chocolate its main branch is located in Derbyshire, having a postal code of DE55 4XJ. ACORN reveals that the majority in the neighbourhood belong to the wealthy achievers segment of the population that belongs to flourishing, well-off families with mortgages. The huge slice of its population heavily spends on food products (more than 75 pounds a week). A probable reason for this heavy food expenditure is the predominance of infants and toddlers as well as middle-aged parents in the population of the neighbourhood. The biggest share of its workforce belongs to higher managerial/professional positions. Upon knowing the demographic and financial situation of the two British communities, we can now choose the most ideal marketing mix for chocolates. Product - In terms of the firm's product line, chocolate companies in Kennedy's Fine Chocolates place should produce products for matured buyers. It should consider selling classic flavoured chocolates, as well as diabetic friendly and low-calorie chocolates; since most of the probable end consumers here are senior citizens. Packaging should be elegant and classy, since the most probable reason for purchasing chocolates is to give these as gifts for mature people with refined taste. Chocolate products manufactured in Thornton's Chocolates' place on the other hand should consider producing chocolates for the children and middle-aged market. This means that colours and variety of flavour would be appealing to the consumers here. Variety in packaging its chocolate products is also a plus factor. Customised chocolates for children's birthday and for wedding celebration are also ideal for its inclusion in its product line. Pricing - In terms of pricing, consumers in both places would prefer to buy high-grade chocolates of superb quality. This means that the price is higher a compared to the average price of chocolates in the market. Place - Additional features for the location of the chocolate houses in both places. For Kennedy's place, a classy and cosy venue for business related chats is ideal for the place. A chocolate house with an accessories and gift shop is applicable for Thornton's site. 4. As we have seen above, segmenting markets enables marketers to concentrate its marketing efforts in activities that maximise time and production efficiency as well as minimise the cost of production. By identifying the key characteristics of a market segment, entrepreneurs and marketers can point out the specific needs and desires of their customers. The can also attune their marketing mix to fill the requirements of the segment. In spite of several advantages of marketing segmentation, there are still visible disadvantages for this. One of these is the possibility of inflexibility with regards to the variations in the market. Even a minimal shift in the number of population or preferences of customers can create marketing problems, which if not addressed immediately can immensely affect the company's marketing campaign. Another problem of concentrating marketing activities in a single market segment is its difficulty in market expansion. There is a tendency for the firm to be stuck in a single consumer base, which can entail vulnerability to profit loss, especially in the currently dynamic business environment. In short, mass marketing minimises a company's susceptibility to inflexibility to the ever-changing market. However, the present marketing campaigns of multinationals which are likely to perform this method because of its capitalization on the benefits of economies of scale, involve the localisation and segmentation of their marketing campaign in a particular country. Flexibility and adaptability to the changes in the business environment is then the key for a sustainable marketing success. References ACORN (2003) Retrieved Aug. 16, 2006 from http://www.caci.co.uk/acorn/whatis.asp Cadbury Chocolates (2006) Retrieved Aug. 16, 2006 from http://www.cadbury.co.uk/EN/CTB2003/ Kennedys Fine Chocolates (n.d.) Retrieved Aug. 16, 2006 from http://www.kennedyschocolates.co.uk/ Market Segmentation (2006) Retrieved Aug. 15, 2006 from http://www.businessplans.org/Segment.html Marketing Mix (The 4P's of Marketing) (n.d.) Retrieved Aug. 15, 2006 from http://www.netmba.com/marketing/mix/ Ripley, M.L. (n.d.) Market Segmentation, Targeting and Positioning for Competitive Advantage Retrieved Aug. 16, 2006 from http://www.atkinson.yorku.ca/lripley/imUsegment.htm Thorntons Chocolate (n.d.) Retrieved Aug. 15, 2006 from http://www.thorntons.co.uk/ThorntonsSite/pages/home/default.asp What is a Market (n.d.) Retrieved Aug. 16, 2006 from http://www.udel.edu/alex/chapt9.html Read More