Advertising and Promotion in UltraChromSpec (UCS) - Term Paper Example

Advertising and Promotion: UltraChromSpec (UCS) Case Study Table of Contents Table of Contents 1 Question 1 2 Question 2 4 Question 3 7 Question 4 9 Works Cited 20 Question 1 UltraChromSpec (UCS) was founded by a person named Bruno Muller around thirty years ago. The nonappearance of any competent as well as well organized distributor organization especially in the field of scientific and technical instruments in Switzerland led the company to form. The company started its business operations acting as a distributor dealing mainly with the United States produced scientific instruments. As days passed, UltraChromSpec rapidly established a great reputation for its deliverance of superior quality standard of sales and service. As a result, the business of UltraChromSpec expanded drastically in its different field of activities not only in the US but also outside the Swiss borders into Austria and Germany. After twelve years of its initial foundation, UltraChromSpec started to execute its business operations outside Germany by having collaboration with one of the Swiss pharmaceutical giants i.e. Kaiser-Holzer (K-H). Gradually, UltraChromSpec transformed itself from a distributor to a manufacturer. In this connection, after the transformation from a distributor to a manufacturer, the businesses of UltraChromSpec were formed in three major divisions. One of the divisions is the Medical Division. In this division, UltraChromSpec started to sell mainly the hospital laboratory instruments and the critical care products which are manufactured by Kaiser-Holzer (K-H). The other division is the Analytical Division. In this division, UltraChromSpec started to sell electro or optical laboratory instruments. The other division has been the Electronics Division. In this particular division, UltraChromSpec started to sell electronic components and computer peripherals. According to Bruno Muller, the vision statement of the business policy of UltraChromSpec is, “Experience has realized us that we cannot do everything, but at least we can be sure that the activities in which we are engaged do benefit our customers” (Business School Lausanne. “UltrachromSpec”). It has been identified that the marketing team of UltraChromSpec which is situated in the headquarters in Zurich had reorganized especially the Analytical Division into two business units and the units were again segregated into two distinct groups. The two business units of the Analytical Division include Analytical Chemical Business Unit (which is again divided into two groups namely Spectrophotometry Product Group and Chromatography Product Group) and Biochemistry Business Unit which is again sub-divided into Ultracentrifugation Product Group and Nuclear Counting Product Group. It has also been observed that every product group was administered by a Product Manager who reports directly to the Business Unit Manager. The Business Unit Manager then reports to the Vice President of Marketing. The various responsibilities of the Business Unit Managers are to make necessary decisions in order to manage different business functions by considering various factors such as people, sales promotion, investment, products, stock and pricing. In this connection, along with the various responsibilities of the Business Unit Managers, the Product Managers look after the daily business operations in order to support as well as sustain the business for future. The significant function of Product Management is new product specification and cooperation with the Research and Development department. The various products of UltraChromSpech’s Analytical Division were sold through the subsidiaries of UltraChromSpec in Western Europe, Japan and the USA. In other countries, sales were made through a distributor or an agent. The subsidiaries of UltraChromSpec purchased the products from the Swiss headquarters and resold them. Each country was administered by a Country Manager, holding the responsibility for local price setting along with maintaining local gross margin. The different expenditures which are covered by the local gross margin include selling expenses, local advertising and promotional expenses, warranty and servicing and administration. In this regard, the gross margin which was made in Zurich was intended to cover the expenditures that include business unit operations, product management support, international advertising, service support, key local advertising and production of marketing communications material. Therefore, these are UltraChromSpech’s approach to their business in the spectrophotometry market. Question 2 The spectrophotometer has established itself to be the most flexible, dependable and broadly used of all the laboratory appliances especially in the clinical chemistry. It has been observed that because of the heavy usage of the spectrophotometers, the laboratory working staffs require to possess a rigid understanding of the various theories of spectrophotometry (Bryce-Smith, D., “Photochemistry”). Moreover, the extensive usage of the spectrophotometers raised the technological potentials of the working staffs in order to operate these instruments efficiently along with performing its various basic maintenance processes (Austin Community College, “Spectrophotometry”). It has been identified that the high growth especially in the Pharmaceutical sector eventually raised a greater development in the laboratory analytical equipment market. The laboratory analytical equipment market has been progressing significantly and raised enormous manufacturing opportunities. In this connection, the market of spectrophotometers are very demanding because this instrument i.e. spectrophotometers are very much crucial for conducting various reaches of medicinal drugs (Agilent Technologies, “Agilent in Mass Spectrometry”). As there lays heavy progression and advancement in Pharmaceutical sector, the demand as well as the market of spectrophotometers are growing significantly (Agilent Technologies, “Agilent in Mass Spectrometry”). UltraChromSpec was engaged in the part of the spectrophotometry business which used the light in the 200-800 nanometer (nm) wavelength regions which is also regarded as the Ultra Violet/Visible or UV/VIS region. Fundamentally, there lie various utilities of spectrophotometry. It can be used in order to deliver information about the chemical substances that are present and to determine the quantity of a particular material of substance in a sample. In relation with the spectrophotometry market, UV/VIS Spectrophotometry is a common purpose analytical chemistry procedure which implies that almost every laboratory engaged in analytical chemistry will make use of certain types of UV/VIS Spectrophotometer. Within the various procedures, there are wide ranges of chemical instruments along with prices depending upon the level of superiority (Choi, “Advantages of Photodiode Array”). The Spectrophotometry market can broadly be segregated into certain sections such as ‘mass spectrometry’, ‘atomic spectroscopy’ and ‘molecular spectroscopy’. All these market segments have been progressing or advancing steadily. For instance, the projected development rate mainly for molecular spectroscopy amounted to 4% during the year 2003 (Choi, “Advantages of Photodiode Array”). The applications of the UV/VIS Spectrophotometry are found not only in the field of traditional Chemistry but also in the newer market segments such as pharmaceutical companies, energy, agriculture and petrochemical industries. The different systems as well as the processes for the spectrophotometers of UV/VIS have progressed periodically in order to keep pace with the enlargement of applications and thus a broad variety of UV/VIS equipments are sufficiently obtainable (Choi, “Advantages of Photodiode Array”). Due to the factor of low price of the market along with the presence of low priced producers, there lies a stiff competition of the Spectrophotometers of UV/VIS. However, gradually, the sales or the dealings of the Spectrophotometers are diminishing consistently due to the fact that there lays a strong demand in various applications which necessitate more sophisticated functions. It has been recognized that the quicker and the more prevailing and dominant instruments at marginally greater prices, are speedily replacing the lower performing instruments (Choi, “Advantages of Photodiode Array”). UltraChromSpec is engaged in such a part of a market which serves the requirement for double beam scanning UV/VIS Spectrophotometers within the price range of CHF 16,000 to CHF 40,000. The world market for scanning Spectrophotometers of UV/VIS is assessed at 14,000 units. The growth was estimated between 0 and 3% yearly which signifies that most of the businesses dealt with the replacement of older models (Business School Lausanne. “UltrachromSpec”). In this connection, the geographical segregation regarding the world market for scanning UV/VIS Spectrophotometers includes the USA comprising 35%, Europe 30% and the rest of the countries possessing 35%. From this segregation, it is evident that particularly in Europe the Total Available Market (TAM) of UltraChromSpec is of 4200 units (Business School Lausanne. “UltrachromSpec”). Question 3 It has been observed that the various products of UltraChromSpec contended or participated in near about 50% of the scanning UV/VIS market which signifies that the company possesses Potential Available Market (PAM) of approx 2000 units particularly in Europe. In the world market for scanning UV/VIS Spectrophotometers, the chief users who made use of UltraChromSpech’s type of Spectrophotometers include 25% of the government financed institutions which encompass academic or scientific, research and development and other testing laboratories. Along with the government financed institutions, the users of UltraChromSpec also include 65% of various pharmaceuticals, chemical, agricultural and other industries. And the rest 10% of the users comprise of the healthcare associations that include clinical and biochemical segments among others. The market of scanning UV/VIS Spectrophotometers business has remained highly competitive. Fundamentally, there are various competitors available in Europe such as Viron (USA) capturing the market share of 30%, Shanki (USA) possessing 30%, Peters-Ericson (Holland) capturing 15%, Bispec (Australia) possessing 10%, Prince (Japan) capturing 5% and UltraCromSpec (Switzerland) possessing 10% of market share (Business School Lausanne. “UltrachromSpec”). In order to remain highly competitive in the world market of scanning UV/VIS Spectrophotometers business, UltraChromSpec introduced a new model named The Model 1800 which was a new product for them that would replace the Model 1600. The new model or the new product took two years to develop and the company expenditure had amounted to CHF 2.3 million for the new model (Business School Lausanne. “UltrachromSpec”). The UV/VIS Product Manager of UltraChromSpec Peter Dickson described the Model 1800 as a high quality standard of UV/VIS measurements which relies mainly upon two features such as optics and electronics. According to the Product Manager, the vision statement for the new Model 1800 would be that the company will not compromise regarding the intelligent electronics and the proven optics that have been required in the making of the new Model 1800. The Product Manager also stated that the new Model 1800 is mainly designed to enhance, raise and preserve their market share as compared with their other business competitors such as Viron and Shanki. The competitors of UltraChromSpec have the products in the same range as the new Model 1800, but the company believed that their new model product 1800 possess significant advantages. The significant advantages of the new Model 1800 include easier parameter entry, more adaptability and flexibility in parameter (method) selection, method file memory, calculation exactness and spectrum memory. Moreover, the company also believed that the new Model 1800 will allow the company to possess greater access especially into the USA and Japanese markets. Question 4 The new Model 1800 of UltraChromSpec would be launched after conducting all tests and experiments along with delivering initial training to the sales people and sales demonstrators. In order to launch the new product Model 1800, Hubacher who had been with UltraChromSpec for less than one year had decided to introduce the product initially in Europe and within the USA and Far East after 6-9 months. The main purpose or intention for Hubacher in order to make this crucial and critical decision lay in the fact that Hubacher wanted to maintain the stronger market position of UltraChromSpec especially in Europe. Moreover, Hubacher also wanted to keep the first production units within the easy reach of the experts to help especially the engineers as well as the service experts of the research and development department. Thus, it can be stated that Hubacher on behalf of UltraChromSpech, should launch its new Model 1800 after conducting all its initial training and experiments and presenting necessary training to the sales person as well as the sales demonstrators. Furthermore, Hubacher made the decision to launch the new Model 1800 of UltraChromSpec especially in Europe first rather than any other country or region. In this connection, he also determined to initiate the new Model 1800 within the USA and Far East later, by 6-9 months. Marketing communication is an integral part of product promotion which is considered as one of the significant components of marketing mix and is liable for placing the marketing offer to the target market. Moreover, marketing communication is one of the integrated as well as the planned communication activities that correspond with the stakeholders of an organization (Varey, R. J., “Marketing Communication: Principles and Practice”). An effective marketing communication works with certain aspects that include ‘attention’, ‘desire’, ‘action’ and ‘interest’. The various steps regarding developing a successful communication and promotion program include recognizing the target audience, determining the expected response, designing a message, selecting appropriate media, choosing the basis of the message and gathering the feedback (Koekemoer, L. & Bird, S., “Marketing Communications”). In order to launch the new Model 1800 into the various markets, initially Hubacher needs to use certain marketing communication sales promotion practices and the necessary tools. It can be stated that the total marketing communication policies and methods of a particular company comprises a specific mixture of various marketing sales promotion practices. The various sales promotion practices include ‘individual selling’, ‘advertising’ and ‘public relation’ tools that the company executes in order to pursue its advertising and marketing objectives (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Similarly, for UltraChromSpec the various marketing communication sales promotion practices which are discussed above can be considered to a certain extent in order launch its new Model 1800. It is essential to identify the various sales promotion practices and then the different marketing communication tools which are needed to initiate a new product to a certain extent. On behalf of UltraChromSpech, Hubacher can use the conception of advertising as one of the sales promotion practices in order to launch the new Model 1800. In this context, advertising is a type of non-individual appearance in a paid form. The main purpose of advertising is to generate awareness among the customers regarding any product which ultimately encourage them to acquire the products along with creating the demand (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). By conducting non-individual appearances along with promoting various products through the medium of advertising could be one of the important marketing communication tools to be included in the launch plan of Hubacher (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). The other major sales promotion practice that Hubacher can include in his launch plan is ‘personal selling’. ‘Personal selling’ refers to individual arrangements which are made by the sales workforce in order to make sales along with build customer relationships (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). The conception of public relations can also be considered as a sales promotion practice for Hubacher. Public relations refers to building and generating good relations especially with the public by attaining encouraging exposure, generating a good corporate image and handling the various unfavorable incidents or events relating within an organization (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). In this connection, direct marketing can also be regarded as one of the crucial marketing and sales promotion practices for Hubacher. Direct communications are generally made towards the individual targeted customers in order to acquire an instant or direct response through the execution of various communications techniques. The various communication techniques include the utilization of e-mail, fax and telephone among others (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). It has been identified that the various marketing and sales promotion practices that have been discussed above can be vital components to augment the sales of the new product. In lieu of this, advertising include transmission, print, outdoor and other forms. Similarly, personal selling includes business demonstrations, sales arrangement through presentations and various reward programs. Direct marketing includes telecommunication marketing, fax, e-mail and catalogues (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Moreover, the other marketing communication tools that can be used by Hubacher include specialty advertising, demonstrations, discounts, coupons, premiums and other traditional media such as newspaper, radio and television (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Apart from these marketing communication tools that are discussed above, the design of the product or the new model, the price, the style of packaging along with the stores that would sell the product, everything counts to create an effective communication tool of marketing (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Collectively, Hubacher can use various marketing communication tools for the product launch of the new Model 1800 particularly in Europe. The media advertising such as television, radio, magazines and newspapers and the direct response and interactive advertising such as the application of internet, telephone conversation and online advertising can play a significant role in the promotion of the new product of UltraChromSpec (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Along with the media advertising, direct response and interactive advertising, Hubacher can also adopt or use the other marketing communication tools such as place advertising that include billboards, transit ads, posters, cinema advertisements and bulletins to a certain extent. From the viewpoint of ‘point-of-purchase advertising’, the marketing communication tools include exterior store symbols, in-store shelf symbols, shopping cart advertisements and in-store radio and television (Shimp, T. A., “Advertising, Promotion and Other Aspects of Integrated Marketing Communications”). Thus, these are certain marketing and sales promotion practices along with various marketing communication tools that Hubacher can use in order to new product or the new Model 1800 into the market. In terms of marketing communication budget, Hubacher on behalf of UltrachromSpec calculated that he would have CHF 200,000 for the marketing communications launch package for the new Model 1800 in Europe. There lie various areas where the money would be invested while launching the new Model 1800 especially in Europe. The various areas where the money needs to be invested include advertisements, technical magazines, mailing or postages, conducting exhibitions, brochures, conducting seminars, press conferences and video films among others. The budget in order to launch the new Model 1800 especially in Europe is provided hereunder. Areas Amount (CHF) Advertisement Technical Magazines Mailing Lists Exhibitions Brochures Seminars Press Conferences Video Film 15,000 18,000 4,000 45,000 65,000 8,000 5,000 50,000 Total Expenditure 2,10,000 The above mentioned budget would be appropriate for UltraChromspec to a certain extent in order to launch the new Model 1800 in Europe. In lieu of the budget, the marketing communication tools especially advertising, personal selling and organizing various seminars as well as exhibitions will be most effective and relevant towards launching the new product or model. With regard to the budget, the preparation costs as well as the insertion costs have been included in the advertisement criteria in which the preparation costs may be amounted to CHF 8,000 and the insertion costs might be CHF 7,000. The mailing lists also include the preparation cost which UltraChromspec has to consider while launching the new model. The exhibitions and the seminars would be conducted in the major area or town of the business so that a large amount of spectators get attracted towards the new model. The size of the area of exhibition might be about 200 sq. m. and the seminars would be conducted with a minimum of 80 persons. The cost of the brochures in the budget includes both the preparation and the printing costs. The preparation costs might be amounted to CHF 39,000 and the printing costs may be amounted to CHF 36,000. The brochures may be prepared around 20,000 units costing CHF 2.8 per unit. The video film would be made quite small near about 5 to 8 min and finally the conducting press conference is likely to be introduced while launching the new product. Hubacher calculated that he would have CHF 200,000 for the marketing communications launch package for the new Model 1800 in Europe. However, the budget seems to be exceeding by CHF 10,000 as compared to what Hubacher calculated. In order to maintain this budget and to make proper and adequate launch of the new product or the new Model 1800 especially in the market of Europe, it is necessary to spend outside the ‘normal’ budget after attaining the approval from the President of the company. It can be stated that spending outside the ‘normal’ budget is justified because the above mentioned budget itself shows the necessity to spend outside the ‘normal’ budget. In order to launch successfully a quality new product into a new potential market such as Europe, it is essential to maintain the above mentioned budget to a certain extent. Thus, by presenting the budget in order to launch the new Model 1800, there lays a strong justification regarding the spending or investing outside the ‘normal’ budget. Works Cited Agilent Technologies. “Agilent in Mass Spectrometry”. March 06, 2012. Applications, 2011. Austin Community College. “Spectrophotometry”. March 06, 2012. Principle, 2012. Business School Lausanne. UltrachromSpec 3SL, No Date. Bryce-Smith, D. Photochemistry. Royal Society of Chemistry, 1973. Choi, Hun. “Advantages of Photodiode Array”. March 06, 2012. Market Analysis, No Date. Koekemoer, Ludi & Bird, Steve. Marketing Communications. Juta & Company, 2004. Shimp, Terence A. Advertising, Promotion and Other Aspects of Integrated Marketing Communications Cengage Learning, 2008. Varey, Richard J. Marketing Communication: Principles and Practice. Routledge, 1992. Read More