Marketing Strategies Suggestions for a New Delicatessen - Coursework Example

Suggestions for marketing strategies to a newly opened delicatessen Introduction The word “delicatessen” is of German origin and means “a delicacy or delicacies”. A village with a community of 8000 to 9000 people would definitely serve as a stepping stone to a more concerted effort at marketing deli products on a larger scale (Mintel, 1995). However any marketing effort targeting a rural community of villagers must take care to study the population statistics or demographics well before the launch. Thus what’s so important for a delicatessen is to know in advance how people in the village would respond to prices, quality, delivery and availability of products. Marketing deli products in an exclusively village setting would require the delicatessen to focus attention on the consumer demographics such as incomes, ages and preferences. These factors would have a much greater impact on the delicatessen’s decision to locate in a village. Thus the primary and immediate assumption is that there are no other deli shops in the village or the existing ones aren’t so well geared to meeting the demand for deli products. Analysis Marketing strategies range from those which advocate market domination to those of Porter’s Generic Strategies; from innovation strategies to growth strategies that depend on integration related synergies; and from strategic archetypal models to warfare marketing strategies (Kotler, 1991). Market domination strategies are based on the understanding that any marketing strategy must have as its core objective the domination of the market. In other words the firm seeks to lead, challenge, simply follow or develop a niche market. There are three types of market dominance strategy. The price leader who sets the price for the rest of the market or industry must have a set of predetermining characteristics such as the ability to set the market ruling price at its will so that other competitors would have no alternative but to follow him. A delicatessen in a village is less likely to benefit from this strategy unless the village is already being served by some competitors who sell an approximate range of delicacies. Similarly the other two types of the market dominance strategy, the quantity leadership or challenger, are of little or no significance to the delicatessen in the village. This paper would thus focus on a hybrid marketing strategy that would include some of the features of the above marketing strategies in addition to the writer’s own analytical perspectives (www.ama.org). In a village of approximately 9,000 people a substantial policy of product differentiation is not essential. While this marketing strategy has substantial scope and value in many industries for newcomers, there is very little application of it in delicatessens in rural environments because if the delicatessen hopes to increase sales by differentiating its products maximally, it would be faced with a strategic marketing dilemma, i.e. how far it has to go in differentiating products in order to start off in the village (Kinsey, 1994). Assuming that there is already a network of non-delicatessens that sell identical products, then the delicatessen would have to focus on price and not product differentiation because enough product differentiation is already there. It is the price that matters now. On the other hand market segmentation strategy is identified with the firm’s efforts to break the market in to different segments according to demographics and other characteristics. This strategy is of particular importance to the delicatessen because even in a smaller village with 9000 odd people the chance of segmenting the market according to demographics is considerable enough. The delicatessen owner can identify the most promising growth drivers in some market segments (Jakubowski, 1995). For example there is the promise of increasing sales to wealthy villagers who might be influenced by fashionable food habits. Thus income-based segmentation is perhaps much better for the delicatessen than the price-based approach. Thus the delicatessen might as well segment the market according to Porter’s Generic Growth Model and cut prices to place itself in a strategically advantageous position. Strategic orientation of a new marketing drive by the delicatessen in the village might be intended to target those customers whose food purchasing habits tend to vary in accordance with incomes and times (Hawkins, & Coney, 2003). When the delicatessen first moves into the village its current status is determined by the expected daily sales. On par with economic theory such sales would, in turn, be determined by different elasticities of demand such as price elasticity, income elasticity and cross elasticity. Marketing comes next in the form of launching a range of deli products that could be regarded as feasible to generate enough demand arising from all three elasticities. Assuming a greater price elasticity of demand for deli products in the village, there is the possibility of a higher level of competition among the existing businesses which don’t sell any deli products. Against this backdrop it’s possible that existing non-deli shops would seek to imitate delicatessen’s innovative approach to marketing by adopting aggressive sales tactics. Such tactics include price cutting efforts and increasing supply. Consumers would have no clear signals coming from the market as a whole thus befuddling them in decision making process. In fact the delicatessen must be able to identify the obvious, viz. the price elasticity of demand rather than the income elasticity of demand in the rest of the market segments other than in the top income/wealth bracket (Schnaars, 1997). Price elasticity of demand, along with the cross elasticity of demand to a certain extent, would significantly influence consumers’ choice though such choice is equally significantly influenced by a set of complex and diverse endogenous and exogenous variables that impact on market forces of demand and supply. Assuming the existence of a greater price elasticity of demand for deli products as is usual in a village, the degree of freedom enjoyed by the delicatessen on its first entry would be limited to gambling on the prices of nearly identical products sold by non-delicatessens in the village (Holley & McKellar, 1996).This is due to the fact that in the minds of many low-income consumers the price carries a greater weight in the decision. As a corollary of the above the delicatessen might as well adopt a market penetration pricing strategy so that in the long run it would be able to achieve some good sales and revenue. But nevertheless the marketing outcomes depend wholly or partially on some other factors as well. For instance, in an exclusive village setting demand is influenced by “conspicuous consumption effect” too, though strictly speaking deli products such as caviar, red wines, mushroom truffles and even gourmet chocolates cannot be classified as “Veblen goods” (Martin & Andreas, 2003). Despite this anomalous marketing situation in the village environment society carries such a heavy weight in the average consumer’s decision making process. Social factors such as the perception of status and interdependence would act as a compulsion on this process to produce outcomes that ordinary marketing campaigns usually ignore for the very convenience of being less articulate and complex. The delicatessen could at its best become a successful innovator by becoming the first mover or pioneer rather than wait till the last moment. This principle or strategy has both advantages and disadvantages (Young, Weiss & Stewart, 2006). For instance there wouldn’t be many close followers who would scramble among themselves to get a market share because the size of the market is limited. The delicatessen would not benefit from closely following the first movers if he were to launch his products on a reactive marketing strategy because it is the proactive marketing strategies that help in identifying gaps left behind by those other non-delicatessens in a limited market. In other words the deli shop must move in at the earliest opportunity to preempt competition from late innovators who might not strictly speaking sell delicacies or deli products but identical products at much lower prices. Thus it’s the price factor that matters in a market of this nature much more than any other. Next growth strategies of marketing such as those related to integration might help the delicatessen. Indeed the owner can seek to integrate horizontally with another delicatessen. This means that a delicatessen selling similar products can be acquired by the owner in order to integrate in to the competitive market (Ahmed, 2008). This strategy has quite a number of advantages such as a readily available market and a brand name and identity. Or the delicatessen might integrate vertically with another company which is either at the raw material producing stage such as a brewery making wine and a meat processor (backward vertical integration) or a delivery company (forward vertical integration). Here too there are some advantages such as making use of the acquired firm’s resources to integrate faster in to the market. The cost factor would favor the owner in the long run. The acquisition of a delivery company in the village environment would be ideal for an intensified marketing campaign. The delicatessen would gain by adopting this type of marketing strategy because the internal value chain and external supply chain related benefits would increase with the availability of scale economies (Feig, 1999). The significance of scale economies such as marketing, transport and labor cannot be denied; neither can they be underestimated in the still larger context of cost reductions. The average cost of the delicatessen ought to be reduced in order for it to survive against the kind of competition as and when it enters the market. This is obvious enough when cost competition related issues in a new market are factored into the marketing equation. Budgeted revenues and expenditures of a new firm in a village context wouldn’t always equal; nor would the former always be higher than the latter. In other words the most important part of the marketing strategy of the delicatessen would be determined by the cash flow rather than the initial resource base. Similarly diversification is also a growth strategy (Green, 1992). For example as mentioned above the deli shop can diversify in to different fields such as raw material supplier networks and food delivery services. Growth strategies help newcomers to identify market opportunities. For example integration increases economies of scale while at the same time positive market synergies would enable the owner to place himself at an advantageous point on the marketing strategy. In other words a head start means quite a lot for a newcomer. Profit margins of integrated firms tend to rise in keeping with marketing strategy. However there is no guarantee that profit margins would rise simply through integration. As some recent researchers have pointed out integration must include cost cutting measures such as reduction of the labor force and integration of managerial skills. In a restricted village setting there is less room for flexibility though still there is the probability of increasing sales on a low-price/low cost note (Tamagnini & Tregear, 1998). Conclusion Authentic marketing situations as in the case of a small village in the world are combinations of a fairly bigger cross section of marketing strategies mentioned above and therefore the delicatessen owner must be able to recognize advantages and disadvantages associated with each strategy and cull some of the best choices to produce and integrated or holistic strategy so that marketing goals can be achieved in the larger context of the strategic operational environment that includes both PESTEL and SWOT sub environments. Thus a combined marketing strategy of differentiation, diversification, growth and cost-based innovation would help the delicatessen to overcome the initial difficulties associated with launching deli products in the village (Jain, 1989). REFERENCES 01. 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W 2006, Marketing Champions: Practical Strategies for Improving Marketings Power, Influence, and Business Impact, Wiley & Sons inc, New Jersey. Read More