Marketing Foundations and Applications - Assignment Example

Running Head: MARKETING FOUNDATIONS AND APPLICATIONS Marketing Foundations and Applications In APA Style By University 1. Despite the importance of new product development to firms, managing new product development is difficult. Describe and discuss the criticisms of new product development. Product development is a business organization's growth strategy of offering new products to current market. This happens when business organization has a new product offering which suits the market it currently serves. A company may opt to pursue this strategy if it recognizes that it can enhance the value derived by its current customers by offering a new product or by modifying or upgrading its current products. Even though companies especially in the information technology industry are aggressively pushing this strategy, it is irrefutable that new product development faces huge challenges to the different functional areas thus, leading to a lot of criticisms. Product development often becomes impossible and critised because of the following reasons: shortage of important ideas in certain areas; fragmented markets; social and governmental constraints; cost of development; capital shortages; faster required development time; and shorter life cycle. New product development often entails modifying an existing product or creating totally different offerings to satisfy a current need. In these product developments, business organizations may encounter hardships in identifying features which adds value to the customer. There are cases when current products cannot be enhanced because of shortage of ideas that can improve the offering. A good example of detergent soaps. Companies may be hindered in developing new detergent products which can boost the satisfaction of customer in this particular product. Next, product development can be unlikely because the business organization is operating in a fragmented market which implies that they need to aim their new products at smaller market segments thereby generating only meager profits and revenues. When developing new products, companies should take into account all of its current market and not just a segment of it. If not, the new product developed will completely change the positioning of the business organization in the industry and may also discourage their current customers in purchasing the new product. With the increasing clamor for being socially responsible, companies are often under the scrutiny and regulations of social organizations and the government. New product development can be critised because of the hazard that these products can bring to the consuming public. An example of this is the growing concern for obesity in the global arena which forces business organizations to modify their products and add only those which have more health benefits. Another criticism of product development is the large cost associated in the process which cannot be adequately provided for by the business organization. New product developments are investments which companies undertake. It should be noted that as investments, the greater the possible gain, the greater the risks which should be incurred. Product development can bring adverse financial impact to business organizations if gains are not realized. Another criticism of product development is the faster required development time which is needed in order to account for shorter product life cycle. It should be noted that the key to the success of a company is often linked to its ability of bringing products to the market at speed faster than its competitors. 2. What are the features and characteristics that differentiate business-to-business markets from consumer markets Illustrate your answers with examples. Since marketing deals with the identification and provision of customer needs, companies are intensifying their efforts in knowing their customers. Business organizations often cater to individual buyers which are collectively called consumer markets and other commercial organizations which are referred to as business markets. In serving these two different markets, companies face the challenge of knowing their differences in order to adapt to their specific needs and behaviors. Kotler stresses eight points which differentiates consumer markets from business ones. As opposed to the consumer market, the business market is characterised by fewer buyers. It should be noted that in selling a particular product in the consumer market, a marketer targets individual and diverse buyers which can be scattered around a geographical region. In the business market however, marketer deals with only a few business entities which can buy their products. In contrast to individual customers who purchase single goods, business buyers often buy in bulk in order for them to gain all the supplies that they need and can also get discounts for their large acquisitions. For example, a large retailer like Tesco Plc will not purchase a single or dozen apple but thousands of boxes of it. In the business market, the formation of strategic partnerships between commercial organizations is gaining importance. It should be noted that in this market, close buyer and customer relationship is establish which facilitates the customization of products in order to satisfy customer requirements and needs. In the case between Sony and Dell, Inc., Sony specially designs batteries which can be specifically used for the laptops manufactured by Dell, Inc. The growing importance of clustering of business organizations in a certain geographical area makes business buyers more geographically concentrated compared to the consumer market. It should be noted that companies targeting consumer market often broaden their scope and generates more revenue by spreading out their outlets. In the business market however, a marketer often concentrates on a single geographical region like London where most companies operate. In the customer market, demand is often dictated by the individual needs and preferences of buyers. In the business market, demand is derived from the demand of customers. Thus, business marketers are required to know the trends and developments which are happening in the consumer market in order to prepare for the likely behavior of commercial organizations. For example, a rise in the demand for Thorntons Plc's chocolates during Valentines' Day will definitely trigger and increase in purchases of packaging materials from its supplier. It should also be noted that as opposed to the consumer market, fluctuations in demand are greater in the business market. Compared to the customer market, the demand in the business market is often inelastic which means that changes in prices does not greatly affect demand. Since companies are often more concerned in the quality of the product, necessity of the purchased input, and relationship with the supplier, price increases do not necessarily dampen demand. Lastly, business marketers often deal with buying agents which are trained and must strictly adhere to the procedures, guidelines, and policies of the companies that they represent. 3. Discuss the major concept and models, advocated in the literature, which might aid organization in their efforts to develop effective positioning strategies. Use illustrations and examples from the service sector to support your discussion. (please also write something about the segmentation) Positioning is one of the key components in marketing. Positioning is the "act of designing the company's offering and image to occupy the mind a distinctive place in the mind of the target market." Positioning is the product of the different techniques employed by marketers which gives it a unique image. The end product of positioning is the unique value proposition which is delivered by the company. It is a challenge for business organizations to come up with the right positioning strategy and communicating it so that the desired position is established in the mind of the customers. The creation of an efficient positioning strategy is often preceded by two important processes which companies should undertake. These are segmentation and targeting. Segmentation refers to the process of dividing the market based on certain variables like geographic, demographic, psychographic, and behavioral factors. The rationale of market segmentation is the identification of a specific market which a business organization can best and profitably serve. This way, it is better positioned to create a product or service which more suitable and appropriate for a specific market as well as complement it with other components of marketing mix such as price, promotion activities, and distribution channels. On the other hand, targeting is the stage where companies decide which specific market to enter and operate in. These two concepts are tied-up in the creation of a positioning strategy which becomes the key in the company's success and mere existence in the industry where it belongs. These concepts can be applied to a service firm in the hospitality industry, Ritz-Carlton. This company has already gained wide acceptance by having been able to position itself better than its competitors. Ritz-Carlton basically segments its market through a lifestyle and demographic segmentation. The company identifies its target market by dividing the leisure market and business market according to the income and lifestyle of the individual. In its targeting, Ritz-Carlton opted to operate in the high-end market, choosing to cater to the needs of high income customers by providing their lodging needs. The hotel positions itself as haven for relaxation, elegance, and luxury by conveying the "Ritz-Carlton experience." The hotel does not stop in the creation of the positioning strategy. Its day to day operation supports its commitment in occupying the position that it wants to have. Ritz-Carlton has created a marketing mix (Product, Price, Place, and Promotion) which is in line with its positioning and ensures the all-time delivery of these. The company recognizes that it differs from business organizations which are offering tangible products. As services are intangible, inseparable, variable, and perishable, Ritz-Carlton maintains its positioning through the design, equipment, and interiors of its hotels, maintains close relationship with its guests, provide even the unexpressed desires of their clients, and maintains courtesy. The company recognizes that luxury and comfort can be both bestowed through their place of operation and their interaction with the customers. The company's positioning effort is three pronged including identifying the position which is aided by segmentation and targeting tools, communicating the position through the company's advertising techniques, and delivering it through the day to day operation of the business entity. 4. Discuss the impact that social and cultural influences have on consumer attitudes and behavior. Provide examples to illustrate you answer. The importance of considering social and cultural influences on consumer attitudes and buying behavior is highlighted by the growing trend of internationalization strategies pursued by companies. It should be noted that business organizations which operates in domestic and foreign markets alike needs to understand the social and cultural background and trends in order for them to launch successful products and marketing strategies. This claim is supported by lots of empirical examples where companies fail because they were not able to take into account the social and cultural factors of the markets where they operate. Socio-cultural factors differentiate customers on how they view themselves, others, organizations, society, nature, and universe. In UK for example, people's view of themselves influence the products which the companies should offer. Emphasis on individuality and self-expression encourages business organization to offer products which are viewed as status and individuality symbols. On the other hand, companies should also consider the religious beliefs and affiliations of its target market. A classic example is the Muslim market which requires a very particular way in the preparation of products. Muslims only use products which are Halal or prepared according to the requirements of their religion. This religion also prohibits consumption of products which contains pork. A company which opts to capture this market should understand these socio-cultural factors before embarking on a specific marketing plan. Marketers should also recognize the existence of subcultures within the larger culture. These subcultures may present opportunities which are not presently taken advantage of current industry players. In the UK, the banking industry has recognized the presence of Muslims in the European market. Thus, they opt to offer Islamic banking services apart from the traditional banking services which are deemed more acceptable for this subculture. The current globalization also means that companies are more exposed to different culture thereby necessitating a deep understanding of the important socio-cultural factors in their markets. An example of this is Nike which released its newest model of shoes in the Middle East. With a lack of understanding in the country's written language, it fails to recognize that the "air" logo on its shoes closely resembles "Allah" which is perceived as morally and spiritually degrading to the Muslims. The product has been withdrawn and Nike offers a public apology to the Muslim community. The globalization also involves the shift of cultural values through time. For instance, the growing involvement of companies in the Chinese market causes an evolution of new culture in the country which is a mix of the traditional and Western culture. There is a growing perception of the superiority and trendiness of Western culture in the Chinese market which marketers can capitalize into when introducing or promoting a new product. Realizing this opportunity, Nestle and Kraft ventured into China with the hope of transforming the tea country into a coffee drinking nation. The Chinese is in the process of embracing this new trend with their growing involvement with the Western culture. The rising coffee consumption in the country highly mirrors the country's shift in secondary culture. Read More