Pricing, Distributing and Communicating new products within Starbucks and KFC - Essay Example

Marketing Planning Table of Contents Marketing Planning 1 Table of Contents 1 Pricing, Distributing and Communicating new products within Starbucks 2 New Product Launch 3 Evaluation and Control 4 Ethical Issues in Marketing 5 Effects of Ethical Issues on Marketing Mix 6 Comparative Study 6 References 8 Pricing, Distributing and Communicating new products within Starbucks Pricing implies the price or fees charged in monetary terms by an organization in return for goods and services (Pezzullo & American Bankers Association, 1998, p.172). Starbucks would adopt an optimum pricing strategy for its new products. This would help the firm to maintain competitive prices for the new product that would help generate competitive advantage and take on the price wars being prevalent in the industry (Smith, 2002, p.206). An optimum pricing strategy would also be the best option for the company considering the fact that the disposable income levels of consumers have dipped in the recent years owning to recessionary activities and hence this strategy can go about in improving the market share of the company through the new product. Distribution strategy implies the supply chain strategy that would be followed by the organization. Starbucks would essentially adopt a value delivery based distribution strategy that would imply that the company adds value in each of the stages of distribution (Hooley & Graham, 2008, p.6). Starbucks would also try to undertake a vertical backward integration that would help the company reduce the cost leakage and would also enable greater value creation. This would help generate cost advantage that could be passed on to the customers as price discounts. Moreover, a backward integration would also enable the Starbucks to generate greater value in the finished product in the form of better quality standards as it would enable the firm to have greater control over the supply chain increasing its bargaining power to a considerable extent. This would also help the company to create entry barriers for new entrants (Porter, 1998, p.302). In addition to pricing and distribution marketing communications also plays a major role in the success of a product in the market. Starbucks would adopt an integrated marketing communication strategy that would include using multiple channels of communication. Considering the fact that Starbucks has its operation spread around diverse areas of the globe hence a ‘glocalisation’ strategy of thinking globally and acting locally would be followed by the company across its entire line of business. This would imply that the company would essentially take into account the local culture and sentiments of the target market while implementing the marketing communication strategy (Carey, 2007, p.143). New Product Launch New product development includes a number of steps beginning with idea generation, idea screening, evaluation, prototype launch, final screening and actual launch (Waters, 2006, p.278). A new product to be launched by Starbucks would be a smoothie that would be a blend of coffee and chocolates. The product would come up with fruit flavors that would essentially include local fruits as well as seasonal fruits. The new product would be positioned as a drink with a nutritional value that would also have a good taste and nutritional value. The product would be targeted at the younger age group of 15-45 years. The company would launch this new product simultaneously across all the markets that are being currently served by the company. In this regard, the company would add local tastes and flavors that would help the company easily popularise the product. This would be in line with the ‘glocalisation' strategy of thinking globally and acting locally (Hamel, 2001, p.100). Starbucks would adopt an effective integrated marketing communication strategy that would essentially use different media sources including the print as well as electronic media. Billboards and hoardings would be also used to promote the new product. In addition, attractive initial discount would be offered to the customers to initially make the consumers aware of the new product. In-store, displays would also be used to communicate the customers about the new product that is being launched by the company. In addition to these traditional channels, the company would also use the online marketing communication channel to reach out to new customers. In this regard, the company would also use the social networking sites like Facebook and Orkut to reach out to a wide network of target market audience. This would help the company create awareness about the new product and would also enable it to promote the product to a large audience with relatively cheaper costs. The target market of the company is also highly addicted to these social networking sites and using this channel would provide the company with considerable opportunities towards generating sustainability. College fests and other programs would also be sponsored by the company in which the new product would be offered as a promotional product to the students free of cost. This would help in generating greater awareness and would also help the company analyze the feedbacks regarding the product so as to take corrective steps with regards to any defects in the product. Evaluation and Control The process of new product launch would ant be complete without a mechanism to monitor the extent to which the strategy is working according to the plan. Starbucks would use the balanced scorecard method to analyze and evaluate the effectiveness of the marketing strategies. This strategy would not only help in evaluating the financial aspects but would also help evaluate the nonfinancial aspects of the business strategy being undertaken by the company. Defects within the strategies can be taken note of and remedial measures could be taken in advance so as to prevent any misinformation within the organization (Balanced Scorecard Institute, 2011). Accountability would be fixed with different individuals so as to ensure greater responsibility among the team members associated with the launch of the new product in the market. The use of balanced scorecard would not only help in monitoring and evaluating the business strategies being pursued by the company but would also help in improving the learning curve of the entire organization that can be used by the company to reap advantages in the future to generate sustainable competitive advantage. Ethical Issues in Marketing Starbucks has often been lauded with appreciation with regards to the ethical considerations of the organization while pursuing business strategies. The company has been often praised for its fair practices in maintaining ethics in its relations with the suppliers (Trading Visions, 2009). The company also has a strong policy of maintaining highest standards in dealing with employees as well as their product strategy (Starbucks, 2011). However, some of the marketing communication strategies of Starbucks has been often been questioned as unethical by certain circles. The company has been criticised for using children and elder people in its messages that include using CDs and DVDs for targeting younger teens. The contents and the manner of promoting these CD's have often been termed as unethical by some quarters. Moreover certain other issues such as the controversy over the company advertising its product ‘frappuchino' as a low cost and affordable product while actually it remains one of the most expensive products on the menu list of the store has led to severe criticism from different quarters as violations of ethical codes (Wakemanp, 2007, p.2-8). These issues if left unchecked can lead to the severe impact on the positioning and brand image of the organization. Effects of Ethical Issues on Marketing Mix The elements of marketing mix include the aspect of the product, price, place, and promotions (Foxall, 1981, p.11). Ethical issues can have a considerable impact on the elements of marketing mix. Ensuing ethics in the relationship with the suppliers can lead to better improvements in the distribution aspect of the marketing mix. Moreover, use of ethical standards in the procurement of raw materials, as well as the use of quality items as raw materials, can also go a long way in ensuring the improvement of the brand image of the organization in the minds of the target customers. Ethical aspects also need to be adopted by the company with regards to the promotional strategies of the company. Care must be ensured by the company so that unethical practices are not used while promoting the products and services of the company. Finally, Starbucks should also use ethical pricing standards so that customers do not feel cheated and that they get the full value for their purchase. Comparative Study Comparing the ethical standards followed by KFC and Starbucks it can be easily stated that Starbucks follows greater ethics in its business. KFC one of the major fast food chains of the globe has been severely criticised for its procurement policies including the maintenance of a slaughterhouse with very unhygienic conditions. KFC also promotes that it uses the highest quality products as raw materials and states that it does not use stale products or unhygienic slaughterhouses (Voiceless, 2008, p.23). On the contrary, Starbucks scores high on the list of organizations adopting ethical and legal practices in business. The company has a policy of under which every store is expected to contribute towards Corporate Social Responsibility. In addition, the company also follows a strict code for suppliers and also maintains fair trade policies with suppliers that ensure maintenance of the high degree of ethics by the organization (Starbucks, 2011, p.1-12). References Balanced Scorecard Institute. (2011). Balanced Scorecard Basics. [Online]. Available at: http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx. [Accessed on September 14, 2011]. Carey, B. (2007). The Carey Formula: Your Ideas Are Worth Millions. The Carey Formula. Foxall, G.R. (1981). Strategic Marketing Management. Taylor & Francis. Hamel, P. (2001). Globalization and social movements. Palgrave Macmillan. Hooley & Graham, H. (2008). Marketing Strategy and Competitive Positioning. Pearson Education India. Pezzullo, M.A. & American Bankers Association. (1998). Marketing financial services. Kogan Page Publishers. Porter, M.E. (1998). Competitive strategy: techniques for analyzing industries and competitors : with a new introduction. Simon and Schuster. Smith, M.C. (2002). Pharmaceutical marketing: principles, environment, and practice. Routledge. Starbucks. (2011). Standards of Business Conduct. [Pdf]. Available at: http://assets.starbucks.com/assets/sobc-fy09-eng.pdf. [Accessed on September 14, 2011]. Trading Visions. (2009). Starbucks: the marketing of ethics. [Online]. Available at: http://www.tradingvisions.org/content/starbucks-marketing-ethics. [Accessed on September 14, 2011]. Voiceless. (2008). From nest to nugget. [Pdf]. Available at: http://www.al-act.org/files/Voiceless%20Report%20From_nest_to_nugget_.pdf. [Accessed on September 14, 2011]. Wakemanp, L. (2007). Starbucks Reflecting Marketing Concepts. [Doc]. Available at: http://www.plu.edu/~wakemalr/doc/marketing.doc. [Accessed on September 14, 2011]. Waters, D. (2006). Operations strategy. Cengage Learning EMEA. Bibliography Davis, J.A. (2009). Competitive Success, How Branding Adds Value. John Wiley and Sons. Griffin, R.W. (2008). Management. Cengage Learning. John, C.H. & Harrison, J.S. Strategic Management Fundamentals. South Western Cengage Learning. Longenecker et.al. (2005). Small business management: an entrepreneurial emphasis. Cengage Learning. Moore, C.W. (2008). Managing Small Business. Cengage Learning EMEA. Parnell, J.A. 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