Marketing Concepts and Tutbury Crystal - Case Study Example

MARKETING CONCEPTS AND TUTBURY CRYSTAL Introduction Employing several known marketing concepts and models, this treatise probes into the characterof Tutbury Crystal, how it started and evolved, its present classification and designation and a few market components that can and will encroach on its growth and development in international marketing. The study starts with a brief account of Tatbury Crystal's history which is vital to understanding the significance and dynamics of producing and marketing a product that is generally viewed as a "luxury good" or a "prestige product." It then attempts to tackle selected company branding notions which include fundamentally secured values, brand personality and brand positioning. Further, aspects like target segments, differentiation were also adequately addressed. The Company Tatbury Crystal Glass Ltd is a family-owned manufacturer of quality cut glass made from full lead crystal. Known as Tutbury Crystal (TC) since 1984, manufacturing on the site in the Staffordshire village went back as far as the 15th century. In the 1920-60s, the crystal had the name Thomas, Webb & Corbett, a prestigious name renowned for high-quality product. The manufactured crystals were to be seen as traditional, English, aspirational, handcrafted, exclusive and full of heritage. Marketing and the Luxury Good Luxury brands have characteristically been correlated with the essential proficiencies of originality and ingenuity, individuality, craftsmanship, accuracy and meticulousness, high quality, innovation and premium pricing. These product features provide consumers the satisfaction of not only having possession of expensive items but the added psychological benefits like esteem, prestige and a sense of "high status" that reminds them that they belong to an exclusive group of a select few who can afford these costly items. Generally, the luxury sector aims its products and services at consumers on the top-end of society's economic spectrum. These self-selected elite are more or less price-insensitive and choose to spend their time and money on objects that are plainly considered as 'opulence' rather than necessities. For these reasons, luxury and prestige brands have, for hundreds of years, commanded a stanch and often illogical customer loyalty. At present, the luxury market is taking on a new direction with exceptional demand coming from Asian countries, and hence research has centered on the cross-cultural comparison of attitudes toward the luxury concept (Dubois & Laurent, 1996; Dubois & Paternault, 1997) and the comparison of motivations between Asian and Western societies (Wong & Ahuvia, 1998). Nonetheless, these investigations have focused on only some facets of prestige-seeking consumer behavior. Although researchers concur that the inquiry of prestige goods is interesting and significant, there is currently little agreement about how best to define, and tehrefore understand, the psychology of prestige-related consumer behavior. "Status brand strategies are intuitively recognised by marketing professionals and practitioners. However, there is little literature on the topic reported in scientific journals" (Andrus, Silver & Johnson 1986). As a consequence of the remarkable growth of luxury markets over the years, the marketing arena has recently seen ample and significant interest in the study of prestige brands. Research in the UK projected important social changes by the year 2000 (Powderly & MacNulty, 1990). Their study recognised that people's needs for appearances and materialism were increasing. That is, they reported a rising demand for conspicuous and status products. In Australia, contemporary market reports seem to support this analysis. "Australians have embarked on a shopping spree for imported luxury goods, with sales of diamonds, furs, caviar and champagne jumping this year" (Rees 1997, p. 8). The United States' economic recovery and the fast growing demand in Asia, before the slowdown that started in 1997, have also boosted the growth of the luxury market in recent years (Echikson, 1994). As a general rule, prestige products have been employed as an example of extreme-end high-involvement decision making. The premise is that prestige products are seldom purchased, require a higher level of interest and knowledge, and keenly relate to an individual's self-concept. As an example, Rossiter, Percy, and Donovan (1991) elucidated that the difference between high and low involvement was dichotomous rather than continuous, and presented a second dimension operationalised as "informational-transformational. Their perspective logically presupposes that prestige products are high-involvement products, and that transformational brand options -- sensory gratification, intellectual stimulation, and particularly social approval -- are the principal elements in choosing a prestige product. Although the involvement model is valuable to distinguish prestige products from normal products, it does not significantly differentiate the level of prestige among prestige brands (Horiuchi, 1984). With Tutbury Crystals, products are available in standard, personalised or bespoke forms. Personalization, in many instances, meant engraving the crystal with the client's name or logo while bespoke items entail the design of entirely new shapes and patterns and are frequently exclusive to a specific client. Some bespoke items can be extremely huge and with intricate designs, as in the case of large vases and bowls to serve as important awards or gifts, which can sell for thousands of pounds. Brand Personality/Positioning In the field of marketing, positioning has come to mean the process by which marketers attempt to create an image or identity in the attention and psyche of their target market for its product, brand, or organisation. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market. In essence, a product's position is how potential buyers see the product and expressed relative to the position of competitors. The term was coined in 1969 by Al Ries and Jack Trout and according to them, positioning is something (perception) that happens in the minds of the target market. It is the overall awareness the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive regarding the on-going process of evolving a position. However, it is believed that a company can completely and encouragingly affect the market's perceptions through enlightened strategic actions (Trout, 1969; Ries & Trout, 1981; Trout & Rivkin, 1996). One objective of Tutbury Crystal is for their products to project the image and thereby position it as a product that is traditional, very English, handcrafted and full of heritage. As it is, only about 10% of TC sales are aimed at direct retailers. These are specialist shops operating on the top end of the market. Likewise, 30% of its current sales are made direct to organisations that give out awards and trophies to sports and social clubs. Target Segments/Differentiation Product differentiation, also known simply as differentiation, is that process wherein a product or offering is made to "greatly vary" or make it stand out and make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as one's own product offerings. Marketing textbooks are firm on the point that any differentiation must be valued by buyers (Kotler & Keller 2006). In this regard, the term "unique selling proposition" refers to an advertising method which communicates a product's differentiation (Reeves 1961). The brand differences are usually minor; they can be merely a difference in packaging or an advertising theme. Basically, the physical product need not change, but it could. Differentiation is due to buyers perceiving a difference; thus, causes of differentiation may stem from functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows. Variations in quality which are typically accompanied by differences in price Modifications in functional features or design Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing Sales promotion activities of sellers and, in particular, advertising Differences in availability (e.g. timing and location). A salient objective of differentiation is to develop a position that potential customers would see as unique. Differentiation principally affects performance through reducing directness of competition: As the product becomes more different or differentiated, categorisation becomes tougher and thereby attracts fewer comparisons from its competition. A successful product differentiation strategy will move a product from competing based primarily on price to competing on non-price factors like product characteristics, distribution strategy, or promotional variables. Most people would say that the implication of differentiation is the possibility of charging a price premium; however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects of competing offers and price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features (non-price) of the product (Sharp & Dawes, 2001). With Tutbury Crystal's innovative "design your own crystal" service, items can greatly be differentiated from competitors. However good a competitor is on design, manufacturing and marketing, nothing beats a design or an idea that came directly from a specific client; this move alone, though for sure there are other methods to differentiate TC products from other existing goods, can make TC crystals very unique and highly personalised. Country of Origin From a marketing perspective, country of origin also provides an opportunity for a product to be diffrentiated from its competitors. It is believed that the country of origin has an impact on the willingness of buyers to choose and purchase a product, and studies have shown that consumers may tend to have a relative preference for products from their own country (ethnocentrism) or may tend to have a relative preference for or aversion to certain products that originate from certain nations. The effect of country of origin is however debated as studies have shown that the country of design (for instance Apple computers or Nike shoes) can be more important than the country of origin. In the case of Tutbury Crystal items, it helped a lot that the items came from UK and manufactured from an "old village" for somehow it gave the "image" of being conservative, class and tradition. Further, as products are differentiated, so does target sectors. Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Since every segment is considerably homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way. Broadly, markets can be divided according to a number of general standards, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets. And though it has similar goals and has common characteristics with consumer markets in several ways, the process of industrial market segmentation is quite different. Basically, the process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The general objective is to identify groups of similar customers and potential customers; to prioritise the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are hence improved, correspondingly, improved segmentation can lead to considerably enhanced marketing effectiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased. George Day (1980) describes model of segmentation as the top-down approach: That is, one starts with the total population and divide it into segments. In this method, one begins with a single customer and build on that profile. This typically requires the use of customer relationship management software or a database of some kind. Here, it would be very valuable if profiles of existing customers are created and analysed. Various demographic, behavioural, and psychographic patterns are developed using techniques such as cluster analysis and this process is sometimes called database marketing or micro-marketing. Its use is most appropriate in highly fragmented markets. McKenna (1988) claims that this approach treats every customer as a "micro majority" while Pine (1993) used the bottom-up approach in what he called "segment of one marketing". Through this process mass customization is possible. Relationship Marketing In practice, relationship marketing originated in industrial and B2B markets where long-term contracts have been quite common for many years (Jackson, 1985). As it is, relationship marketing is applicable when there are options to select from, when the customer makes the selection judgment, and when there is a continuing and episodic desire for the product or service (Berry, 1982). Fornell and Wernerfet (1987) used the term "defensive marketing" to describe attempts to reduce customer turnover and increase customer loyalty. This customer-retention approach was compared and distinguished with "offensive marketing" which entailed the taking on of new customers and increasing customers' purchase frequency. Defensive marketing centered on the management and reduction of client dissatisfaction while offensive marketing focused on "liberating" discontented or disgruntled customers from the competition at the same time generate new customers. Basically, there are two facets to defensive marketing -- increasing customer satisfaction and increasing switching barriers. At the core of relationship marketing is the concept on customer retention. Gordon (1999) explicates that relationship marketing involves the creation of new and mutual value between a supplier and individual customer. Novelty and mutuality deepen, extend and prolong relationships, creating yet more opportunities for customer and supplier to benefit one another. In like manner, it was claimed that a 5% improvement in customer retention can cause an increase in profitability of between 25% and 85% depending on the industry (Reichheld & Sasser, 1990). However Carrol and Reichheld (1992) contested these calculations, asserting that they result from faulty cross-sectional analysis. In essence, relationship marketers speak of the "relationship ladder of customer loyalty." It groups types of customers according to their level of loyalty. The ladder's first rung consists of "prospects." that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer," "client," "supporter." "advocate." and "partner." Aside from its "design your own crystal" strategy, Tutbury Crystal management, knowing fully well that it owes its continued existence to customers who buy their products not because of necessity but because of the prestige it gives them, sees to it that every item manufactured is of exquisite quality, with a strong semblance of tradition and "Englishness" and carries with it a compelling air of heritage. This is the best way to make customers stay and the easiest method of keeping client loyalty and satisfaction. References/Readings Andrus, D.M., Silver, E. and Johnson, D.E. (1986), "Status Brand Management and Gift Purchase: A Discriminant Analysis," Journal of Consumer Marketing, 3 (1), 5-13. Day, G. (1980), "Strategic Market Analysis: Top-down and Bottom-up Approaches," Working Paper #80-105, Marketing Science Institute, Cambridge, Mass Dubois, B. & Laurent, G. (1994), "Attitudes Toward the Concept of Luxury: An Exploratory Analysis," in Asia-Pacific Advances in Consumer Research, Siew Meng Leong and Joseph A. Cote (eds.), 1 (2), 273-278. Dubois, B. & Paternault, C. (1997), "Does Luxury have a Home Country An Investigation of Country Images in Europe," Marketing and Research Today, 25 (May), 79-85. Echikson, W.(1994), "The Return of Luxury," Fortune, October 17, 18. Horiuchi, Y. (1984), A Systems Anomaly: Consumer Decision-Making Process for Luxury Goods, Unpublished Doctoral Dissertation, University of Pennsylvania. Kotler, P. & Keller, K.L. (2006), Marketing Management, (12 ed.). New Jersey: Prentice Hall. McKenna, R. (1988), "Marketing in the Age of Diversity," Harvard Business Review, 66, September-October, 1988. Millar, D. (1992), "The Generic Strategy Trap," Journal of Business Strategy, 13, 37-41. Pine, J. (1993), "Mass Customizing Products and Services," Planning Review, 22, July-August Porter, M. E. (1980), "Competitive Strategy: Techniques for Analyzing Industries and Competitors," New York, Free Press. Powderly, J. & MacNulty, C. (1990), "Consumer Trends: A Turbulent Time Ahead," Marketing, Oct 11, 33-34. Reeves, R. (1961), The Reality of Advertising. Rees, P. (1997), "Shopping Binge on Luxury," The Sunday Telegraph, September 21, 8. Ries, A. & Trout,J. (1981) Positioning, The Battle for your Mind, Warner Books - McGraw-Hill Inc., New York Rossiter, J. R., Percy, L. & Donovan, R.J. (1991), "A Better Advertising Planning Grid," Journal of Advertising Research, 31, 5, 11-21. Sharp, B. & Dawes, J. (2001), "What is Differentiation and How Does it Work," Journal of Marketing Management, 17, 739-59. Steenkamp & Ter Hofstede (2002) "International Market Segmentation: Issues and Perspectives," Intern. J. of Market Research, 19, 185-213 Treacy, M. & Wiersema, F. (1993), "Customer Intimacy and Other Value Disciplines," Harvard Business Review, Jan/Feb. Trout, J., (1969) "Positioning" is a game people play in today's me-too market place", Industrial Marketing, Vol.54, No.6, (June 1969), pp.51-55. Trout, J. and Rivkin, S. (1996) The New Positioning: The latest on the worlds #1 business strategy, McGraw Hill, New York Wong, N. Y. & Ahuvia, A.C. (1998), "Personal Taste and Family Face: Luxury Consumption in Confucian and Western Societies," Psychology and Marketing, 15 (August), 423-441. Jackson, B. (1985), Build customer relationships that last, Harvard Business Review, 195 Berry, L. (1983), Relationship Marketing. American Marketing Association, Chicago, 146 Fornell, C. and Wernerfet, B. (1987) "Defensive Marketing Strategy by Customer Complaint Management: A Theoretical Analysis," Journal of Marketing Research, 337-346 Gordon, I. (1999), Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever. John Wiley and Sons Publishers, 336 Carrol, P & Reichheld, F. (1992) "The Fallacy of Customer Retention," Journal of Retail Banking, 13, no 4, 1992 Reichheld, F. and Sasser, W. (1990), "Zero defects: Quality Comes to Services," Harvard Business Review, 105-111 Read More