Marketing Action at Morrisons PLC - Assignment Example

Marketing Action at Morrison’s PLC by Marketing Principles Department of Management Sciences 2014-07-11 Marketing principles American marketing association (AMA) defines marketing in a broader way as “marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals”. Marketing is not regarded as the actual presentation of such roles as production and design but as the manipulating and guiding of these activities through the role marketing plays in decision making. Marketing may also be defined as the actions involved in identifying customer wants or needs, developing goods and services to fulfill these needs, and generating and then increasing a demand for these products and services ( Marketing Association, 2014). The core concepts of the marketing process are illustrated below in the diagram. Benefits and cost of marketing orientation: A market orientation is a principle in which all workers are dedicated to the continuous development of higher worth for consumers (e.g., Narver and Slater, 1990; (Deshpande, Farley and Webster Jr, 1993; Slater and Narver, 1994). A market orientation consists of three main behavioral components: customer orientation which includes the constant consideration of the desires of the objective consumers and creating consumer value by using this knowledge. Next is competitor orientation which involves the continuous consideration of the abilities and policies of the major existing and other satisfiers of the objective customers and the use of information in generating higher buyer worth. Last is interfunctional coordination which involves in the coordination of all roles in the business in consuming consumer and other market data to create bigger value for clients (Narver and Slater, 1990, Dawes, 2000). Following are advices on the benefits and cost of market orientation that are used by Morrison’s. In order to increase reliability of product and develop recurrence customers, Morrison’s should develop consumer value through marketed oriented approach. Morrison should device consumer needs in the market and produces products to match those needs by participating in wide marketing research. This will help Morrison’s in raising the production prices of goods and facilities or services. Marketing segmentation, targeting and positioning: Market segmentation is the division of markets into similar sets of customers, each of them responding in a different way to communication, pricing, promotion and other elements of the marketing mix. There should be a small difference between customers in each segment when forming market segments. Thus, every division or segment can be spoke with an independently directed marketing mix. (Perner, 2014) Market segmentation and the recognition of target markets, yet are a significant component of each marketing policy. They are the foundation for defining any specific marketing mix. Segmentation: Segmentation is the foundation for mounting targeted and real marketing plans. Moreover, investigation of market segments allows assessments about strength of marketing happenings in specific segments. A segment-orientated marketing method usually suggests a number of benefits for both businesses and consumers. Advice to Morrison’s on Market criteria for effective segmentation: • A segment must be accessible. That means that getting persons within the segment should be economically supportable • A segment must be substantial. That is, it must be huge enough to validate a distinct marketing agenda. • A segment must be responsive Market segmentation methods: Consumer market can be segmented on the basis of customer characteristics 1. Geographic Segmentation. The geographic segmentation distributes consumers into segments created on the basis of geographical areas such as populations, countries, regions, cities or zones. A company can aim one or more areas and must be conscious of the fact that statistics conferring to geographic segmentation may differ due to inhabitants transferal (Pickton and Broderick, 2001). Geographic segmentation can be a beneficial approach for Morrison’s because it offers a rapid outline of dissimilarities and resemblances between buyers conferring to geographical division. It can be a useful approach because of the reason that buying behavior of the users are determined by their place of living and work (Gunter and Furnham, 1992). Hence Morrison’s modify its goods, publicity, advertising and trade efforts to best fit the needs of the geographical variables (Armstrong, Kotler and He, 2000). 2. Demographic Segmentation Segmentation of consumers on the basis of demographic factors are age, salary, buying power, Profession, Gender, Family Size, Family life cycle, Nationality, Religion, Schooling. This segmentation can be frequently used by Morrison’s due to the fact that different variables are easy to recognize and evaluate. Moreover these variables provide a description of the objective consumers as they are related with the sales of many products or services. 3. Psychographic Segmentation: Psychographic Segmentation assembles consumers conferring to their way of life and buying psychology. Whereas the traditional geographical and demographical sources such as age, gender, income etc offer the seller with availability to customer segments, the psychological variables offer added information about these and improve the understanding of the performance of current and potential target marketplaces (Gunter and Furnham, 1992). Psychographic division thus distributes individuals according to their attitudes, standards, standard of living, benefits and views (Pickton and Broderick, 2001) 4. Behavioral segmentation Behavioral segmentation is established on the basis of consumers’ attitude toward usage or response to a product. Morrison should consider the behavioral variables such as events, profits, user rank, usage frequency, reliability status and attitude that are the top beginning points for building market segments (Kotler and Kalvin Lane, 2009). Targeting The second stage in the segmentation process is market targeting. Morrison’s may choose one or a combination of the following market policies or strategies when taking decision to which groups or segments of consumers to target. These include single segment strategy (differentiated marketing), mass marketing strategy (undifferentiated marketing) or multi-segment strategy (concentrated marketing) (Dibb and Simkin, 1996) Undifferentiated marketing: in this strategy, a company does not look at the differences between individual segments and selects to target the market with one deal or offer. Thus the organization concentrates on the similar wants or needs of the consumers rather than the dissimilarities. Differentiated marketing: It is a marketing strategy in which a company targets many market segments with proposals particularly intended for each segment. Thus the company may have a greater sale and stronger place within each market segment. Though, differentiated marketing also means improved costs of performing business because of the distinct marketing strategies for each segment. Hence companies must take into account increased sales in contrast to increased costs when using differentiated marketing strategy. Concentrated marketing: Concentrated marketing also stated as niche marketing which comprises going after a higher share of one or a little segments. With the help of this marketing, the company can market more efficiently due to a strong place and excessive knowledge of the buyers’ needs or wants within each segment (Armstrong, Kotler and He, 2000). The question arises which segment strategy the Morrison should select is reliant on a number of competitive, product and market factors. Each of these factors must be taken into account before determining the segment or segments to be targeted. The factors are the following: current market share, product similarity, nature of competitive atmosphere, market developments and the marketing atmosphere, buyer wants or needs, segment size and company properties ((Dibb and Simkin, 1996). Morrison can target consumers with the help of differentiated marketing strategy because in it Morrison can target different market segments with a number of proposals and thus have a greater sale and place in market. Effect of Consumer buying behavior on different market activities: Consumer behavior is normally defined as the assessment process and the physical actions that persons involve with when they get, use and dispose of goods and services. (Riley, 2012) A well-developed and established model of buyer behavior is known as the stimulus-response model, which is brief in the diagram. Morrison must understand the buying behavior of consumer by focusing on the factors that determine the consumer characteristics mentioned in the black box of above mentioned diagram. These can be briefed in the diagram below (Riley, 2012) Positioning: The final step in the market segmentation method is positioning. The final step when the company recognized the segments and selects which segments to target is the decision of position, it wants to occupy in those segments. Positioning is related with how the consumers comprehend the products and how it is defined by the customers in order to make the most of the potential advantage to the company. The result is an influential purpose why the target market should purchase the product or products (Kotler and Kalvin Lane, 2009). The main purpose of the positioning strategy is to developing or strengthening a specific brand image in the consumer mind. The main approaches to this strategy are: Customer benefits approach, price-quality approach, product user approach, product class approach, use or application approach, competitor approach, and cultural symbol approach. Positioning planning Positions are designated by variables and within factors that are significant to the consumers. Common examples are supporting services, price, quality, trustworthiness, and importance for money. The tool used to visually illustrate buyers’ insights of a product and its position is called perceptual mapping. There are the following strategies for repositioning that Morrison can apply in order to develop strong brand image in customer mind. • Alter the relation of price and quality for the existing brand • Modify the relation of price and quality by presenting a new brand • Alter believes or concepts about the brand; e.g. image campaign • Change believes about competitive products; e.g. comparing advertisement. • Change customers’ positions of significant elements; e.g. emphasis on added features and appearances • Introduction of new or ignored characteristics Positioning advice to Morrison: Currently, Morrison used expansion strategy in order to provide Morrison’s grocery services to normal UK grocery shoppers who exist in localities where the company does not currently have stores along with introduction of new range of cornflakes. Morrison should modify the price of existing product or introduce new brand with added features or characteristics in order to gain more profit for a longer time. Marketing mix The marketing process requires specific consideration of business management because there is no importance of production unless products are sold. Marketing mix is an approach used to perform marketing functions. It is the planned set of fundamentals which helps the organization to achieve its goals in the market. Marketing mixes have a number of aspects and in order to deal with the dynamic environmental effects of market, it is necessary to create policies to deal with them. McCarthy, E.J. (1978), negates of the marketing mix under 4ps: Product, Price, Place, and Promotion. Product: A product is anything that can be presented to a marketplace to fulfill a necessity or need. It includes services, new innovative ideas, organizations, physical things and places. The product is not a physical element but an awareness of the customer/buyer. Basically product is the happiness or satisfaction of the buyer rather than a physical item. There are other factors associated with the product apart from the good or product that buyers may be attracted to, such as the packaging of the product. Other product characteristics include options, features, brand names, services, warranties and quality. There are 4 stages of product life cycle. Each has its own features that are important in managing the life span of products. Introduction Stage – in this stage, Morrison launches a new product e.g. new range of corn flakes and its primary goal will be to create a market demand for new product. In the start the sale of the product is low and the cost is high due to research and development, customer testing etc. Growth Stage – in this stage, the sale of corn flakes will be increased and profit will also increase. It will help Morrison in the improvement of product, brand preference and in promotional activities by investing more money to increase the potential of this stage. Maturity Stage – During this stage, Morrison primary goal will be to maintain the market share and extend PLC. Following marketing decisions may choose by company are: product modification or new features will be added. Possible price reductions, introduction of new channels and building of brand loyalty etc. Decline Stage – Ultimately, the product sale in the market will start to reduce. Morrison may have few options in this case. Either discontinue the product or reduce the number of products from product line or find new uses of this product. Extension strategies Extension strategies should sustain or rise sales. They include: price reduction, addition of a new feature, product modification and promotion of the product in different market area. Price: It is the consideration paid by customers for the advantage of using any product or service. Price fixation is an important factor of marketing. Pricing choices of an organization are influenced by both internal as well as external factors. Following are the pricing objectives that must be identified by Morrison in order to determine the optimal pricing. These are current profit maximization, current revenue maximization, maximize quantity, maximum profit margin, quality leadership and survival. For new products of Morrison, pricing objective should be either to maximize profit margin or maximize quantity (market share). Skim pricing and penetration pricing may be employed in order to meet these objectives. Pricing strategy selection depends on product, competitive environment and the consumer demands. There are eight common pricing strategies that Morrison may approach. These include Cost-plus, Value-based, Competitive, Going-rate, Skimming, Discount, Loss-leader and Psychological. Promotion Promotion refers to using ways of communication with two goals: updating the potential and standing customers about a product or service and to encourage buyers to purchase the product. Customers may not be aware of the product and fail to satisfy their needs or wants in the absence of communication. (Kotler and Armstrong, 2001) There are two Types of promotion, Above-the-line promotion in which firm has no control on mass media advertising e.g. television, radio and newspapers and Below-the-line promotion in which firm has control on advertising e.g. Direct mail, sales promotions, sponsorship and social media Following are the different strategies of promotional mix: Advertising, Personal selling, Sales, Publicity Benefits of promotion on marketing efforts of Morrison: Following are the benefits of different promotional strategies on marketing efforts of Morrison These strategies will make Morrison business and product name aware to the public These will Create goodwill and build a positive image These strategies help in educating and informing public. These will help in Offering of specific products or services Customers will be attracted to find out more about Morrison product or service Place Place is another important component of marketing mix. After the product is manufactured, packaged, priced and promoted, they made available to customers. Actions associated with placing of the products are come under this component of marketing-mix. It contains assessments relating to channels of distribution and physical supply or distribution. Channels of distribution refer to the persons and organizations which helps in transferring the goods from manufactures to customers. (Delta publishing company, 2008) There are many levels of channel. It is for the manufacturer to choose which level would suit the sale of his product Distribution strategies: Depending on the type of product being distributed Morrison may use any one of the distribution strategies: Intensive distribution, Exclusive distribution, Selective Distribution. For Morrison new range of corn flakes, intensive distribution will be more suitable because it covers a number of outlets or market segments and this will help in the awareness of the product. Extended marketing mix: People: People are a vital component in service delivery; employing and training the right staff is mandatory to generate a competitive advantage. Consumers make decisions about service provision and delivery on the basis of the people representing your organization. This is due to the fact that people are one of the few essentials of the service that consumers can understand and communicate with. (Learnmarketing.net, 2014) To develop people into a competitive advantage, following criteria must be kept in mind choose the right people for the right job train workers to take on bigger roles and duties in future treat workers well with self-respect and esteem provide a safe and relaxed working atmosphere permit workers the authority to make judgments that allows them to attend consumers better make personnel answerable for their activities Process This component of the marketing mix aspects at the arrangements used to provide the service. To make process a competitive advantage, following things should be kept in mind make procedures or processes simple for consumers to recognize or understand and perform make procedures suitable for consumers from their viewpoint do not let visitors wait too long for the service Physical Evidence (Physical Environment) Physical evidence is about where the service is being conveyed from. It is chiefly related to retailers working out of shops. This component of the marketing mix will differentiate a organization from its opponents. Physical evidence can be used to charge a quality price for a service and create a positive experience. (The Chartered Institute of Marketing, 2014) Difference of international market from domestic market: Doing business globally is not the same as doing business at home. There are new skills to study and new information to obtain about the country company will start a business. Company needs to know about different consumers purchasing habits, laws and regulations of that country and change of materials and marketing policies or strategies in order to attract the individuals of that country. It is necessary to keep one thing in mind that the culture of the particular market in which company is entering will determined the way of function of its business in that market not by the company itself. It is important to know the differences between domestic and international marketing because they help the company in competing successfully in international market. The first key to success is the Understanding of both the social and business culture in foreign country. Culture describes everything people do, from their business performances, to its response to promotion and marketing, to manage sales. It is significant to conduct research on the culture of the country that company aims to trade before entering to their market. The company will experience more dynamic and complex competition level in foreign market than its experience in domestic market. If company wants to compete successfully in global market, Porters 5 Forces analysis is a good strategic tool for determination. This tool will evaluate seller power, consumer power, risk of challenger products and the threat of new participants to the market. (Tradestart, 2014) When the company enters in the foreign market, it must abide by the rules and regulations of that country as every county as its own policies related to international business and goods. These rules and laws can greatly influence the long term achievement or success of business. It is important to explore new target market and to know how products are transferred within the country before company enters to that market. Advertising the product and service will be an significant factor of marketing strategy. 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