Natalia's Herbal Pain Relief Cream Marketing Mix - Case Study Example

Natalia’s herbal pain relief cream marketing mix Student: Tutor: Course: Submission Date: Natalia’s herbal pain relief cream marketing mix The aim of this section of the marketing plan is to come up with a suitable marketing mix for Natalia’s herbal pain relief. The marketing mix is defined by the current market situation in the Australian Pharmaceutical industry. This marketing plan section will have recommendations for the most suited marketing mix for Natalia’s herbal pain relief. The marketing mix analysis is based on the target market characteristics and the competition environment in the pharmaceutical industry of Australia. This section will also provide a budget estimate, evaluation and implementation strategy for Natalia’s herbal pain relief marketing plan. NB: “The product” refers to Natalia’s herbal based pain relief cream Natalia’s herbal cream mission is to be world’s number one herbal-based muscle pain relief. To achieve this mission, Natalia’s company has the following specific marketing objectives: 1. To ensure the brand ranks among the top three pain reliefs in Australia 2. To increase the volume of product sales by at least 10% monthly 3. To acquire 5% of the market share in the first three years 4. To ensure the product is available all over Australia at a competitive price within one year Market segmentation According to the Australian Institute of Health and Welfare (AIHW), about 28% of Australians have arthritis and other musculoskeletal conditions. These are the most common chronic conditions in Australia (Australian Institute of Health and Welfare: Australian Governement, 2015). According to data from Australian Bureau of statistics, 65% of Australians aged between 15 years and above participated in physical activities for recreation, exercise or sport at some point between 2011 and 2012. 27% of these participated in organised sport (Australian Bureau of Statistics (ABS), 2012). This market size comprises a huge chunk of the target market for Natalia’s herbal pain relief cream. Between 2008 and 2009, $5.7 billion was spent on arthritis and other musculoskeletal (Australian Institute of Health and Welfare: Australian Governement, 2015). Natalia’s herbal cream can be used for both chronic conditions and common muscle pain problems from physical activities making it an ideal product for the target market. According to data released by the Australian bureau of statistics in 2008, 750,000 Australians consulted a complementary health therapist. Chiropractors and naturopaths were the most consulted therapists. This was a growth of 80% compared to 500,000 Australians who sought complementary therapy in 1995 (Australian Bureau of Statistics (ABS), 2008). Going by this trend, there is growing acceptance and demand for natural medicine for common ailments amongst Australians. Natalia’s product is, therefore, well placed to serve the target market provided pricing and distribution elements meet consumer’s expectations. Product Natalia’s herbal pain relief will be promoted as an effective and natural medicine for common muscle pains and chronic musculoskeletal conditions. There is a growing trend in Australians and the rest of the developing world to seek alternative natural therapies since they are less intoxicating to the body (Stobart & Francia, 2014). In addition, herbal drugs have been known to boost the immune system (Packer, Sissi, Choon, & Halliwell, 2004). However, it is important to note that, the demand for herbal medicine can only be existent if they alleviate muscle pains in the users. A product has to meet the primary expectations of a consumer in order to be competitive (Walker & Mullins, 2010). Natalia’s herbal creams will indeed have proven effectiveness in relieving pain. Testimonials from users and approval from Therapeutic Goods Administration, Australia will be critical in marketing the product to first-time buyers. Natalia’s herbal pain relief will satisfy two consumer needs in the target market. First, the herbal cream will relieve users of pain in their muscles and joints. Secondly, the herbal cream will offer consumers the satisfaction of knowing they are using a natural product that is totally safe-to-use for their bodies. Branding will be very crucial for Natalia’s herbal pain relief in attracting buyers. The main purpose of branding is to create product identity and salience (Romaniuk & Sharp, 2004). The most appropriate branding colour for a natural herbal product is green. Natalia’s herbal cream will be packaged in containers and packs that are more than 90% green in appearance. The green colour will create and maintain the perception in the consumers’ mind that Natalia’s herbal pain relief is natural and safe. Natalie’s natural pain relief will be an appropriate brand name to differentiate the product in the market. Having the word “natural” appear conspicuously on the packaging and promotional materials will reassure consumers of the product’s main benefit of safety. The words “pain relief” will communicate the core product in Natalia’s herbal cream. “Natalie’s” is the main differentiating word in the brand name to identify the brand and encourage customer loyalty towards the product. Natalia’s herbal pain relief is at the introductory stage in the product life cycle. This stage requires a lot of marketing and promotion to create product awareness among consumers and generate initial sales to grow the market (Pickton & Broderick, 2005). Promotion must communicate the unique value proposition of the product to the consumers. The value will be in a safe-to-use and effective herbal pain relief. Consumers' feedback must be collected regularly at this stage to improve the product attributes in preparation for the growth stage of the lifecycle. Promotion Promotion communicates a product’s value to the consumer and stimulates them to make a purchase decision (Shankar, Carpenter, & Hamilton, 2012). Promotional activities and messages should be designed in consideration of the unique needs of the target market and how the product satisfies them. The target market should be made to believe that the product will indeed fulfil their need and is worth the price it is quoted for. (Spake & Joseph, 2007) The ultimate focus of marketing Natalia’s herbal pain relief in the introductory stage is to create brand awareness. Consumers need to know there is an effective pain relief that has an added advantage of being natural and as such does not introduce harmful chemical into the skin cells. This message will be communicated by advertising in nationwide newspapers and TV stations. Newspapers and TV are more trusted than digital media and reach a wide audience throughout Australia (The Australian, 2014). The target market for Natalia’s product will definitely receive a message communicated through TV and newspaper. Billboards will also be very effective in communicating the existence and major benefits of Natalia’s product. Billboards can be placed strategically along major highways in Australia. Natalia’s herbal pain relief may also sponsor popular events such as rugby, football at community level in schools and clubs to popularize the brand. Natalia’s herbal pain relief will rely on the growing use of the internet and social media sites including Facebook and Twitter to reach the target market. Natalia’s herbal pain relief will be effectively publicized by having social media accounts that communicate its core benefits. The accounts will conduct viral promotions where “followers” on Twitter and “fans” on Facebook get rewarded for participating. Promotion and marketing efforts for Natalia’s product must adopt an integrated marketing communication strategy. Integrated marketing communication achieves the effectiveness of sending a consistent message through different channels for maximum efficiency (Pickton & Broderick, 2005). The message should consistently remind the consumers that Natalia’s product is the most effective and truly natural herbal cream for muscle pain in the market. Price The price quoted for a product serves different purposes at different stages of the product’s lifecycle. At the introductory stage a lower price is mostly favoured as a strategy to penetrate the market (Whan, Maclnnis, Priester, Eisingerich, & Lacobucci, 2010). Skimming may also be an appropriate strategy mostly adopted to test the consumers’ perception towards a product. It is important to note that consumers’ perception towards the value of a product may be influenced by the price (Fifield, 2012). Clearly, the products positioning and lifecycle stage have a great influence in the pricing decisions. Natalia’s herbal pain relief is a new brand in the market. The main focus of the business will be to gain and grow market share. A penetration pricing strategy will be adopted to attract pharmacies and gift shops. With a good profit margin, pharmacies and gift shops will be willing to stock Natalia’s product and introduce it to their customers. The average retail price for a 2 oz (60g) of a pain relief cream is $15. 2 oz Australian Dream arthritis pain relief cream costs $17 at Wal-Mart stores (Walmart, 2015). Natalia’s herbal pain relief cream will be priced at $8 for whole sale with a recommended retail price of $12. This price is intended for the introductory stage and can be reviewed upwards at the growth stage to recover initial losses. For the 60g pack, the cost of preparing Natalia herbal cream is $1.5 (12.5%); the labour, rent and other variables contribute 50% of the cost at $2. marketing and distribution cost take up the remainder $0.5 (12.5%). The total cost of producing the 60g pack is $4. The profit will be +/- 55.5% of the wholesale price. Natalia’s herbal cream pain relief is the only product in the business and will thus contribute 100% of revenue. In order to penetrate the market, Natalia’s herbal pain relief will offer slightly higher quantity discounts to pharmacies and gift shops. Discounts will attract and retain stockists of Natalia’s products even though it may be costly in the long run. A 5% discount will be guaranteed for pharmacies and shops that stock more than $500 worth of Natalia’s product. The discount rate can be sustained for the first six months upon which it can be reviewed. Distribution Natalia’s herbal pain relief will be distributed to pharmacies and gift shops all over Australia. Natalia will specifically seek to distribute the herbal pain relief cream through major pharmacies such as Chemmart. Such pharmacies have a nationwide presence and capacity to order economically serviceable quantities. This distribution strategy is the most cost effective way to move the Natalia’s product in the market within the shortest possible time. Natalia will not have to incur the cost of procuring expensive shop locations to retail directly to consumers. The strategy will also allow Natalia to monitor the market response to the product and adjust accordingly. However, selling to retailers minimizes the profit margin that Natalia’s product can get from sales. It is strategically important for Natalia to consider expansion to retail in the long run in order to realise higher profit margins. Marketing plan implementation timeline This marketing plan will be implemented through a combined effort of the marketing, finance and quality control functions of Natalia’s business. The plan implementation process will consider the critical interdependence of the marketing mix elements to provide a quality herbal-based product, popularise it and offer it to the target market at a favourable price. The success of the team in meeting the marketing plan milestones will be assessed through a bi-monthly meeting of the three core functions (Finance, Marketing and quality control) of Natalia’s business. Time activity Department 2015/May- 1/October/2015 Market & Product feasibility research Marketing 2015/Oct – 2015/December Product development and branding conceptualisation Finance & Marketing 2015/Dec– 2016/Feb Publicity and advertisement planning Marketing 2016/Feb – 2016/December Product distribution and promotion Operations, Finance & Marketing 2016/March - indefinite Product improvement, innovation & marketing Marketing and quality control Budget estimate Projected marketing mix budget for Natalia’s herbal cream marketing plan for the first year Item Description Projected expenses Product costs Research, development, license fees and branding $200,000 Pricing costs Discounts, offers $70,000 Distribution costs transport, promotion , regulatory and compliance fees, rent and electricity $150,000 Promotion TV advertisements Targeted motion picture messages on leading national TV channels $120,000 Print advertisements Newspapers $80,000 Billboards Situated on major highways $80,000 Promotion materials Printed merchandise (pens, shirts, notebooks...) $ 50,000 Events marketing Sponsorships $80,000 Website Website development and blog links $50,000 Total marketing plan expenditure $880,000 Natalia’s business will have to sell at least $450,000 of the herbal cream in the first year of operation in order to finance the marketing plan budget. This is half the cost of the marketing plan considering the costs can be spread over two years. The Pharmaceuticals and drugs industry in Australia is quite competitive but is experiencing noticeable growth especially in the sale of arthritis and other musculoskeletal conditions medicine (Australian Institute of Health and Welfare: Australian Governement, 2015). Natalia will have to develop a strong brand that consumers will identify with due to its effectiveness and herbal attributes. Natalia’s herbal pain relief will have to be priced slightly lower than its competitors’ products in order to penetrate the market. Natalia’s product will require extensive advertising and publicity campaign to inform the target market of its presence and also persuade them to buy. Natalia should focus on distributing her product through pharmacies and gift shops spread all over Australia. This strategy is lees costly and strategic at the introductory stage of the product. This marketing plan should be accepted and implemented by the proprietor of Natalia’s herbal pain relief as it considers the cafe industry situation in Canberra and the unexploited opportunity in the cafe business. References Australian Bureau of Statistics (ABS). (2008, July 23). 4102.0 - Australian Social Trends, 2008. Retrieved May 5, 2015, from Australian Bureau of Statistics (ABS): http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Chapter5202008 Australian Bureau of Statistics (ABS). (2012, December 20). 4156.0 - Sports and Physical Recreation: A Statistical Overview, Australia, 2012. Retrieved May 5, 2015, from Australian Bureau of Statistics (ABS) website: http://www.abs.gov.au/ausstats/abs@.nsf/Products/FC8A8FD7A0DD9DC5CA257AD9000E246E?opendocument Australian Institute of Health and Welfare: Australian Governement. (2015). Arthritis, osteoporosis and other musculoskeletal conditions. Retrieved May 5, 2015, from Australian Institute of Health and Welfare (AIHW) website: http://www.aihw.gov.au/arthritis-and-musculoskeletal-conditions/ Fifield, P. (2012). Marketing Strategy (3 ed.). Routledge. Packer, L., Sissi, W., Choon, N., & Halliwell, B. (2004). Herbal and Traditional Medicine: Biomolecular and Clinical Aspects. CRC Press. Pickton, D., & Broderick, A. (2005). Integrated marketing communications. Financial Times Prentice . Romaniuk, J., & Sharp, b. (2004). Conceptualizing and measuring brand salience. Marketing theory 4(4) , 327-342. Shankar, V., Carpenter, G., & Hamilton, A. (2012). Handbook of Marketing Strategy. Edward Elgar Publishing. Spake, D., & Joseph, M. (2007). Consumer opinion and effectiveness of direct-to-consumer advertising. Journal of Consumer Marketing , 24 (5), 283-293. Stobart, A., & Francia, S. (2014). Critical Approaches to the History of Western Herbal Medicine: From Classical Antiquity to the Early Modern Period. A&C Black. The Australian (2014 November 27) Newspapers, TV more trusted than social media, blogs. The Australian: Business Review. Retrieved on 2015 May 5 from: HYPERLINK "http://www.theaustralian.com.au/business/media/newspapers-tv-more-trusted-than-social-media-blogs/story-e6frg996-1227136729277" http://www.theaustralian.com.au/business/media/newspapers-tv-more-trusted-than-social-media-blogs/story-e6frg996-1227136729277 Walker, O., & Mullins, J. (2010). Marketing Strategy: A Decision-Focused Approach. New-York: McGraw-Hill Irwin. Walmart. (2015). Australian Dream Arthritis Pain Relief Cream, 2 oz - Walmart.com. Retrieved May 5, 2015, from Walmart : http://www.walmart.com/ip/Australian-Dream-Arthritis-Pain-Relief-Cream-2-oz/29148044?action=product_interest&action_type=title&item_id=29148044&placement_id=irs-105-t1&strategy=PWVUB&visitor_id=K09W13dhs1a8Xx7H-j6EKo&category=&client_guid=aa4d303b-8a4f-40 Whan, P., Maclnnis, D., Priester, J., Eisingerich, A., & Lacobucci, D. (2010). Brand Attachment and Brand Attitude: Conceptual and Empirical Diffrentiation of Two critical Brand Equity Drivers. journal of Marketing 74 , 1-17. Read More