The Potential Market Segmentation That Is Available, Market Coverage Strategy for Pepsi - Assignment Example

Marketing Management Case Study Name Number 1. What bases can companies use to segment the iced-tea market? Before formulating strategies that segmentation will be based on, it is paramount to understand the characteristics of the market (Croft, 1994). Therefore, the characteristics usually differ and in the case of iced tea and especially based on the case study, these bases will be used: Portability – many people constantly are in the move and thus it is important that anything that comes their way should be transported or carried around easily. Therefore, portability is a major concern to both the consumers and retailers of the beverage. Environmental concern – temperatures and period e.g. winters and summers determine the extent in which consumers will appreciate a drink. Iced tea is suitable during the hot season or during the hot period of the day. Hence, a company should understand the climate conditions of a region to better develop strategies and expectations that are viable. Age – this is a major base that many producers and manufacturers base their products. Age differs, and the drink consumers’ characteristics requirements differ relative to drinks that are offered. This means that understanding the age requirements through the perspective of iced tea will ensure that a formidable market is developed. Distribution Channel – the products that are developed should reach consumers. Hence, at the time of developing a drink, it is paramount to understand the channels that will ensure that the drink penetrates the highest market possible. An example from the case study is when Coca Cola teamed up with Nestle to improve their brands. 2. The potential market segmentations that is available Market segmentation is differentiating a market into different but homogeneous groups of consumers. This will allow an organisation to concentrate meagre resources resulting in maximisation of sales translating in improvement of revenues (Wedel and Kamakura 1999). Thus, some potential for iced tea markets include: Geographic locations – the ice tea is favourable in those environments that have high temperature related climate conditions. This means that the organisations within these product offerings will focus on those regions that have high temperatures. Age – age is a major aspect especially when it comes to health conditions and peer relevance. Hence, age factor will be used to market specific flavours, tastes and ingredients contents of the iced tea. Accessibility or distribution channels – there are markets that are difficult to reach and it could be crucial to segment the market in a way that will ensure that the entire market can be accessed. This can be through segmenting in terms of rural versus urban, train commuters, students going to school, etc. Behavioural segmentation – this is mostly based on variables such as price sensitivity, usage rate and patterns, benefits sought and brand loyalty. Understanding the basis in which consumers appreciate the product will provide a base that will be used to analyse and determine the appropriate market segments in terms of behavioural characteristics. 3. Forecasting demand in the ice tea market and other markets During forecasting the requirements of consumers, it is important to utilise market analysis to determine whether a market is attractive and to understand evolving opportunities, threats, weaknesses and strengths of the organisation (McDonald 2004). Some of the methods to forecast the attractiveness of a market include: Market Size – the market size can be analysed using present sales and any potential sales of the brand can be expanded. Such information and data can be obtained from trade associations, government data, customer surveys and financial data from players in the market. Market Growth – this is easily obtainable from extrapolating historical data into the future. Moreover, it is important to study and analyse information that contributes towards growth, which may include sales growth, demographic information and complementary products. Moreover, analysis such as in the use of product diffusion curve will ensure that future development of the product can be understood. Market profitability – profitability of a market will provide an organisation with basis that can be used to understand the demand of a given product. This can be appreciated through utilisation of Five Porter Model, which brings into consideration barriers to entry, buyer power, substitute products, supplier power and rivalry among competitors. Market Trends – any change in organisation environment will bring threats and opportunities. Some relevant trends are industry dependent but common independent variables include demand for variety, price sensitivity and support. Distribution channels – information from distribution channel is useful in forecasting demand. Some factors that are associated with distribution are trends and emerging channels, channel power structure and existing distribution channels. 4. Market Coverage Strategy for Pepsi/Lipton A major decision that a company must make is to determine what market coverage strategy will be used to market a brand (Drucker 2006). In the case of Lipton/ Pepsi, the appropriate strategy is the use of differentiate market strategy. Differentiated marketing ensures that an organisation concentrates in more than one market segment. This will allow the organisation to develop numerous marketing mix strategies and utilise the requirements of different segments. This technique will ensure that greater loyalty and customer retention will be guaranteed. Generally, it means that many segments will be reached at the same time, identification of different markets resulting in improvement of sales. Positioning may be refereed as the process in which an organisation creates brand image or identity in the minds of their targeted markets. It can be viewed as the ‘relative competitive comparison’ the Pepsi / Lipton product occupies in the mind of consumers. The positioning strategy that will be used on Lipton iced teas and Brooke Bond canned teas in formulating appropriate advertisements and strategically locating the products within the reach of consumers. This will ensure that most consumers will become aware of both products that are offered by the organisation in ensuring that their organisations plans and objectives are achieved. In addition, the companies should ensure that most consumers are aware of the products through visiting places where many people are gathered. For example, in the hot season, they should position the iced tea while in the cold season they should position the canned tea. 5. Marketing Strategy that should be utilised by Shin Shii Pepsi and Lipton are the major partners who have concentrated in the soft drink tea industry. The command large market share, which is had to overturn. Therefore, Shin Shii should understand that conditions within the Asian markets are different from conditions in European Union and Western Countries. Thus, some recommendations that Shin Shii should utilise include Determine the current success of their advertisements especially those that features Chinese/ Asian characters. Concentration on use of only Asian individuals within the ads will likely alienate the non-Asia population to purchase the products. Utilise market data and information to understand the Pepsi and Lipton markets so that they can develop appropriate strategies that will ensure the market is successful. This means they should utilise the weaknesses of their competitors. Utilise marketing mix to ensure that the product can be bought by many consumers. This can be achieved through utilisation of price penetration strategy, pull and push promotional strategy, and creating adverts that associates the consumers with the product (Paulson, 2007). Utilise different packing that will attract many consumers and consuming of its contents should be easily. Moreover, the bottle or cans should be environmental friendly since environmental degradation is a major concern to many consumers. 6. Positioning of Shin Shii Shin Shii is a new product within a market that has numerous competitors. The company should understand that the new market will call upon the utilisation of different strategies and the most appropriate positioning strategy is undifferentiated strategy (Hooley, Saunders and Piercy, 2004). An undifferentiated target strategy is mostly utilised when a company wants to convey the same promotional message to everyone. However, to succeed ion utilisation of this strategy it is paramount to ensure that the product is available and affordable, and should provide the same benefits to everyone. Shin Shii is an iced tea and thus its contents satisfies the requirements of all consumers as illustrated by its success in Taiwan. Utilising such strategy will be cost effective for the new entrant, reaches all customers and employs low marketing complexity. Pepsi/ Lipton companies have concentrated in the soft drinks market and aspect illustrated by the fall of relationship between Coca Cola and Nestle. This means that Shin Shii have to compete with companies that understand the requirements of market environment. Hence, utilisation of undifferentiated positioning will ensure that the company will maximise the meagre resources acquiring a larger market segment. References Croft, M., 1994. Market Segmentation: A Step-by-Step Guide to Profitable New Business. London: Routledge Publishers. Drucker, P., 2006. Managing the Non-Profit Organisation: Practices and Principles. London: Collins Business Publishers. Hooley, G., Saunders, J. and Piercy, N., 2004. Marketing Strategy and Competitive Positioning. New York: Financial Times/ Prentice Hall Publishers. McDonald, M., 2004. Market Segmentation: How to Do It, How to Profit From It. New York: Prentice Hall Publishers. Paulson, E., 2007. The Complete Idiot’s Guide to Starting Your Own Business. London: Alpha Books. Wedel, M. and Kamakura, W., 1999. Market Segmentation: Conceptual and Methodological Foundations. New York: Springer Publishers. Read More