Competition Within the Chip Market - Report Example

The Report Is Under the of "Buyer & Consumer Behavior” Assignment Part B Table of contents Executive Summary 2 Brand Performance 3 Structure of Competition within the Chip Market 5 Brand Attitude 6 Brand Attitude Patterns in Table 3 7 Does smith perform as expected within the total sample and its customers? 7 How to grow and change the attitude of market in order to grow Smith’s brand further 7 Demographic differences between Smith’s brand and its competitors 8 Demographic Implications and Segmentation Result for Smith’s 9 Works Cited 10 The Report Is Under the Course of "Buyer & Consumer Behavior Executive Summary The research attracts attention because in the year 2012, the market share of potato chips 68% reduced to only 62% among couples. However, the shares of their key competitors such as such Kettle, Doritos, Red Rock Deli and Jumpy have remained at 68%, 65%, 68% and 65% respectively. The size of Smith’s chips market then was $42 million. Although Smith’s Chips retained its original market share the quantity of sales in the whole market reduced to $33 million. Further, research reveals that the market shrinkage came at the same time with an increase in health awareness to the consumers who consider the deep fried potato and food additives in chips as unhealthy. In addition, since the third quarter of 2012, an increasing number of rival natural potatoes appeared on the market. The rivals convinced consumers that they offer consumers a healthy alternative brand. All these factors remain to be major challenges causing a decrease in volume of sales of Smith’s chips among couples and females. Natural potato chip is the latest chips range suggested by the Department of Food and Nutrition report. The report examines this crop and recommends that it is the ideal chip to meet the challenge arising from the market. It could satisfy the new consumer demand since it uses importantly reduced fat and food additive ingredients endorsed by famous health experts. 97% of the 4500 consumers interviewed recently reveal that it provides the same flavor as that of the artificial potato chips. In the brand performance part, marketer can understand data of chips from brand performance metrics. Such metrics include exclusive loyalty, penetration and market share. It is recommended that, Smith’s take immediate actions to launch and promote natural potato chips, besides its existing product variety; Smith’s adopt a recommended and healthy trade; Renowned health experts be part of the launch campaign to endorse the product. Natural potato chip made available in health food outlets together with traditional chips retail outlets Brand Performance Smith’s, Kettle, Doritos, Red Rock Deli, And Jumpy’s are the market competing brands. Brand performance measure statistics shows that Smith’s is the brand with leading market share of 34% followed by Kettle at 24%. Red Rock Deli and Jumpy’s are the brands with least market shares at fifteen percent and six percent respectively. Further, Smith’s has the most favorable market penetration as well as sole loyalty of the customers. Smith’s success is attributable to several factors. The first factor that gives it the most favorable brand performance is its well-established brand identity (Glynn, Arch, and Woodside 6). Through cognitive processes, consumer conceives and evaluates evidence, after which they assume rationality. At this stage, Smith’s engaged in advertisement that provide consumers with information. Information provided lead consumers to reject alternatives and chose Smith’s chip. Established brand identity is a uniquely designed set of affiliations that implies a promise to the customers. It includes an essence, timeless and extended identity of the brand that remains perpetual as the brand sets stage to new markets and fresh products. Core identity, therefore, broadly concentrates broadly on Smith’s user profile, attributes, store atmosphere, and its performance. Smith’s has extended identity woven around its name with snack elements organized into cohesive and meaningful sets that offer a Smith’s distinguished texture, completeness. Smith’s snacks also provide its customers with brand personality, warm relationship as well as a strong symbol affiliation (Brahams 29). Consequently, sole loyalty develops among its clients. Another reason for Smith’s competing advantage is the differentiation of its snacks from its competitors. Differentiation in Smith’s products effectively represents the business’ potential and future plans. The successful understanding of brand identity development, what their brand stands for and the effective way with which Smith’s company expressed that identity made it to outclass its competitors and deeply penetrate the market customer base (Sharp 21). Cognitively, the already convinced clients find themselves making it habitual to buy Smith’s products frequently and often than other companies’ products. Differentiation provides for a distinct identity of relevance, endurance, and credibility assurance of value associated with its snacks. When companies present a cohesive, relevant, and distinctive brand identity, they attract preference in the marketplace, increase their goods and services value, and consequently command a price premium. Jumpy’s 8.3, Doritos 7.2 and Red Rock Deli 7.2 however, are posing threats to Smith’s. The threat emerges because the two snack providers show an upper hand in the category buying rate column compared to Smith’s at 5.6. Smith’s good brand personality enables it to maintain its reputation and distinguish itself from contending offerings during market place aggressive competition. As a result, Smith’s products gain market loyalty and growth. A solid brand identity that is comprehensive to the clients develops trust from within them and shields the company from tough competition as well (Samanta 170). Smith’s must for that reason maintain a clear and consistent brand identity if it has to maintain its market loyalty and share from the customers. Smith’s also posses certain images and symbols that its clients associate with it in a process called brand association. Cognitive model has it that considers, evaluates evidence, and then assumes rationality. The symbols are a reflection of the delicious and yummy tastes of its snacks. Such tastes and attributes hit customer’s mind whenever somebody mentions Smith’s. Besides customer’s greater attachment of importance to functional benefits, the emotional value that clients hold on the snacks also help Smith to stand above other competitors. Smith’s carries out regular customer research using methodologies such as ranking and rating. When ranking, Smith’s puts its products in order from most liked to lowest liked for an attribute. The other method applied by Smiths is rating which gives every brand a score for an attribute. The approaches enable Smith’s to understand its competitors as well as its customers. That is why Smith’s is standing out amongst its competitors with a conspicuous 34 percent against its closest rivals Kettle and Doritos. The competitors are trailing it at 24 and 21 percent at position three and four respectfully in the market share. Brand intensity affiliated to beliefs and values that Smiths products are the best remains most powerful and challenging to imitate by the close rivals. Smith’s beat its rivals in the market share and loyalty by making its clients sense consistency with their brands communication. Among Smith’s functional features, it creates personality brands that cater for a richer source of competitive advantage. From the personality attributes, the Smith’s business accomplishes sustainable differentiation because they create more difficulty for other business rivals to copying them. The move aims at utilizing the customers’ cognitive ability to ensure that they make it habitual by sticking to Smith’s products. Structure of Competition within the Chip Market Table 2 shows penetration. Table 2 reveals divergence that exists between the ascertained and the expected” duplications of a standard duplication that discloses proportion of people who bought brand A and those who bought brand B. It is evident that with penetration of 72%, Smith’s products dominate the chip market. The result for buyers suggests some worrying partitions to Smith’s. There exist conspicuously Smith’s and Kettle as well as Doritos and Red Rock Deli. These two groups exhibit high expectations in chip market spread across the market (Wright 145). There is much more than expected of sharing between Smith’s and Kettle, which poses challenges to explain. To obtain previously recognized insights, it is vital to use duplication of purchase law from different perspectives. There exists a modest partition between chips from Smith’s and Kettle. Doritos and Smith also share less or more than expected buyers in the duplication of purchase shown. Considerations in the light of geographic proximity and similarity in the tastes of chips explain each of the positive interactions. For instance, Jumpy’s and Smith’s as well as the rest of the companies have higher than expected sharing. Therefore, it demonstrates how the companies have close geographical proximities where consumers display similar behaviors and patterns. Brand Attitude Brand attitude of the customer refers to the extent to which a customer likes or dislikes a particular brand of a product depending on the experiences with the brand. Attitude can also have a definition of a general and lasting or logical positive, negative, or neutral rating of a brand. Attitude posses a characteristic of stability, meaning it changes but minimally. Measuring brand attitude comes in many ways including how much do people prefer a brand to another, whether its value is good and taste nice. Other methods of measuring brand attitude are through estimating satisfaction level and loyalty by the customers. Brand salience on the other hand refers to the extent to which customers think and notice a brand when he or she is in purchasing situation. It is the thought of a brand that a customer links to other vital structures when buying. Brand salience serves purposes of giving a memorable quantity to remember when buying products and providing strength of associating and the relevance of attribute. However, the most important aspect of a brand to measure is a brand attitude. The reason is that measuring attitude will summarize measurement of brand salience. Brand attitude attributes have enough indices of the structure of cognitive. Brand attitude further influences advertisement response of the customers because it elicits taste, value, and nutrition in the minds of consumers. Measuring brand attitude not only asses the attitude itself but also does the evaluation of customers responses to the measurements. Brand Attitude Patterns in Table 3 The brand attitude patterns describe usage in attitude data. The trend shows how the customers display loyalty to their desired brands. That is the reason why Smith’s still holds the top notch as the favorite and market-leading brand. However, the trend revealed such that Smiths tops in the percentage of those rating its products as unhealthy is worrying. It is a matter of concern because many clients are likely to turn to other brands they view as healthy. The pattern also sends an alarm to the top two brands that involve Smith’s and Kettle. Attitude patterns are not promising to Smith’s and Kettle brands since they show a significant drop in the customers who treat their brands as favorites. Does smith perform as expected within the total sample and its customers? No, Smith’s does not perform as expected in the pattern of attitude. The reason being that the number of customers showing discontent in terms of unhealthy brands is high. Users only claiming the products are unhealthy are 74 percent, the leading discontent among five brands. The number of users only however declines significantly when it comes to those customers who treat Smith’s products as their favorites. 65 percent is not as high as expected for the market leader. How to grow and change the attitude of market in order to grow Smith’s brand further Various methods apply to ensure that Smiths brand is improved. The first way is to promote particular attributes. Most customers have a neutral attitude towards brands that is as harmful as not liking them. During brand advertisement, Smiths should emphasize on key traits of chips especially those that the customer is looking for from the products (Maclnnis, Park,and Priester 381). The second method of promoting Smith’s product is by building customer loyalty. Building brand loyalty involves intensive advertising campaign that attracts customers. Such adverts may include information about discounts and rewards for regular customers. Promote a new product in such a way that it leaves people rethinking about its outstanding features. Promotion helps to build brand attitude of the customer towards Smith’s products (Wayne, Deborah, MacInnis, and Pieters 167). In addition, Smith’s should also only emphasize on the strength of the business such as quick service and delivery to its customers. It should also take care of good and attractive packaging that best appeals to customers. Finally, Smith’s should also capitalize on swaying customers away from its competitors. Kettle and Doritos are among the brands that threaten to offer competition to Smith’s. Smith’s should therefore focus on the unique practices that it offers yet the competitors do not offer. The initiative can significantly change the customer’s attitude towards Smith’s business. Consequently, the customer base will steadily rise leaving Smith’s at the top notch stable and confident. Demographic differences between Smith’s brand and its competitors Smith’s data is different from those of the competitors. It is so because Smith’s show a different characteristics in the columns of single and couple (Gázquez 107). Results from the data reveal that Smith’s host more singles which are different from the competitors. All the other remaining competitors namely Kettle, Doritos, Red Roc Deil, and Jumpy’s display a large number couples than they receive singles. When it comes to demographics by gender, Smith’s again displays a worrying trend because the competitors host more female customers than it does. It should create an environment that caters for both sexes and couples. Demographic Implications and Segmentation Result for Smith’s Results that Smith’s brand display in the data above requires interventions to enable the business thrive (Burkard 21). Smiths need to invest heavily on facilities that encourage couples into its business brands. Failure to take such measures will make Smith’s vulnerable to its competitors who have shown a milestone in that area. Similarly, Smith’s should invest in intensive advertisement to attract the female gender into its brands because of its poor performance in that area. Works Cited Brahams, David. Brand Risk: Adding Risk Literacy to Brand Management. Aldershot, England: Gower, 2012. Print. Burkard, Nora. Market Segmentation and Branding in the Hotel Industry with Special References to Hilton Cooperation. München: GRIN Verlag GmbH, 2011. Print. Cohen, Justin and Eli, Cohen. "Can Consumers Discriminate Between Sensory Attributes in Wine: The Case of Bordeaux Reds." Accessed October 21, 2014 from https://www.google.com/search?q=duplication+of+purchase&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=sb Gázquez, Abad J. C. National Brands and Private Labels in Retailing: First International Symposium. Nb& Pl, Barcelona, June 2014. , 2014. Print. Glynn, Mark S, and Arch G. Woodside. Business-to-business Brand Management: Theory, Research and Executive Case Study Exercises. Bingley: JAI Press, 2009. Print Maclnnis, Deborah J., Park, Whan & Priester, Joseph. Handbook of Brand Relationships. M. E. Sharpe, 2009. Print. Samanta, Irene. Strategic Marketing in Fragile Economic Conditions. Hershey, PA, 2014. Print. Sharp, Byron. "Who do you really compete with?", Corporate Report, Adelaide, Ehrenberg-Bass Institute for Marketing Science, 2009, 1-5. Accessed October 21, 2014 from https://www.google.com/search?q=Sharp%2C+B.+%282009%29%2C+%22Who+do+you+really+compete+with%3F%22%2C+Corporate+Report%2C+Adelaide%2C+Ehrenberg-Bass+Institute+for+Marketing+Science&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=sb Wayne D. Hoyer, Deborah J. MacInnis, Rik Pieters. Consumer Behavior. New York: Cengage Learning, 2012. Print. Wright, Sheila. Competitive Intelligence, Analysis and Strategy: Creating Organizational Agility. Routledge, 2014. Print. Read More