Strategic Marketing Plan for Red Box - Case Study Example

MACQUARIE University SYDNEY AUSTRALIA " MKTG303 Marketing Strategy Analysis and Decisions Assessment Guide Session 2, 2016 Department of Marketing and Management Table of Contents Marketing plan – red round 2 The main aim of is to Present a Strategic Marketing Plan Red Box over the Years 41 – 43 Sales Period. 2 Target Customer Segment/s 2 This can be explained by shifting from the low price-orientated channels to channels that attracted customers who can pay high price. 4 Distribution Channel/s 4 Market Expansion 4 Marketing Mix- 4 P’s 5 Product 6 Price 6 Place 7 Promotion 7 Recommendation/Strategy 8 References 8 Appendices – screenshots 9 Marketing plan – red round The main aim of is to Present a Strategic Marketing Plan Red Box over the Years 41 – 43 Sales Period. Target Customer Segment/s The current situation industry is exemplified by predominant three market segment. Detailed demographic profile of a generic customer of the Red box is discussed below. While the profile is being made as detailed as possible, it does not claim to be comprehensive and absolutely broad or exhaustive. These target customers segments for Red box are of ages 6-21, 22-35 and 36 plus. The current market situation for Red box has 27.8% of the market share for entire population while for customers of ages 6-21, have a share of 27.5%. The segment of ages 22-35 they had a market share of 29.2% while 26.8%. . The screenshot below shows market share of the product Figure 1: Market share among competitors Targeting currently in 6-21 age group only works well in low priced distribution since the group has less income. However most people of over age of 36 have extra disposable income which should be a better target. This mix gives the organization the best returns while generating the maximum amount of value to the customers. Figure 2: Market segment growth On the demographic front, the primary target market for the product has always been age group of 6 and 21. During the initial years of launch, these products were marketed only to youngsters but 36+ are taking up entertainment. In the psychographics segment, the product are mainly targeted to people who are younger than 30 years and the ones who have a busy and active lifestyle and to people who are interested in product that offer them extra entertain to handle the day-to-day stress. The behavior pattern of the target market of product includes young, thrill-seekers and busy life style people The graph below shows the market share of Red box for the three years in 41, 42 and 43. As the market share reduces EBIT is increasing which is as of profitability. Figure 3:share price index This can be explained by shifting from the low price-orientated channels to channels that attracted customers who can pay high price. Distribution Channel/s Currently there are three distribution channels low price-orientated, specialized electronic stores and video game specialists. In year 40 the low price-orientated channels had 64% distribution. In years 41 to 43 , Red box distribution channels rates changed from 64% to 62% for specialized electronic stores while for video game specialists increased to 25% and low price-orientated channels was 13%. This reduced the budget deficit was being experienced in year 40. Meanwhile, it is great advantage for Red box if they would owns specialized electronic stores and video game specialists that will allow greater flexibility. In such decision, Red box could further control the distribution, development, and marketing of their new products.. Market Expansion The reasons for market can be attributed to the diminished profits and the stressful style of consumers which eventually motivates consumers to seek products that offer them some entertainment to get the most out of every day. In addition, strong marketing, wider supply, and the challenges posed by new brands in the market have resulted in increased consumer acceptance which is again influential to the contribution of higher growth. The current market situation is that they distribution the entire Roundland while they cover 20% of Starland. This is expanded to 30% in Starland in year 42 and 43. When expanding into Starland, sound marketing is a very necessary component for developing its service in the market as well as successfully selling, nurturing, and growing the Red box .The problem with Red box in its peak of your success is 100% coverage of Roundland. Thus they failed to get the concepts of market reality. Other pertinent issues were the flaws in the marketing concepts like distribution margins, sales promotion techniques, and price thresholds. Figure 4; market expansion Marketing Mix- 4 P’s It is necessary to understand and to implement the marketing mix of Price, Promotion, Place, and Product in the market. This way, we could better classify the segmentation to sell the product in Roundland and Starland. Figure 5; price, place, promotion and place Product The product that lies in Red box is the level of professionalism of the performances and including a professional advertising to show the quality and excellence of the event. Red box product mix includes Console Power, Graphics Sophistication, Controller Sophistication, Audio Sophistication, Multimedia Add-ons and Online Gaming. In order to gain competitive advantage, red box should resort into more tactics, innovations just to conquer the market. Price The price of the Red box is currently at $399 which is affordable to the three market segments. The price will be maintained for years 41 and 43 however it will be reduced in the year 42 to $ 379. The prices are above the cost of product which was $149 for year 40 but was changed $257 for years 41 and 42 while for years 43 it was reduced to $254. These pricing leads to break even as they are below the cost of production and it attract more sales and gain a share of the market for the segment of 36 plus. Although no profit will be earned by using the break even pricing strategy, they should adopt this as it help Red box penetrate the market and possibly secure a significant customer base, after which it will apply marketing strategies to retain customers. Red box will later engage in competitive pricing and delivery to attract new customers and capture a larger share of the market. Competitive pricing will involve the setting of a lower price for the product compared to those of competitors, seeking to penetrate the market by increasing sales volumes. Place As mentioned before, the Red box is distributed in Starland and Roundland. Due to the strategic location of Roundland currently the place is covered 100%. It is also distributed 20% of Starland , however this changes in years 42 and 43 to 30%. In Starland, competitive delivery should be implemented which is a commitment to the needs of the customers, thus maintaining customer satisfaction and promoting brand loyalty. This competitive delivery will also be achieved through attentive customer service and customer-focused practices by the company. This will increase the market coverage to 100% Promotion The most important part of the marketing mix of all four would be the promotion, the strategy of pricing the red box is the one that would makes it successful or unsuccessful. To promote increased sales and enhance the success of red box in penetrating the Starland market, Red box will engage in a mixture of promotion activities including advertising, personal selling, sales promotion, public relations, and direct marketing. Advertising will involve the use of television broadcasts to air infomercials concerning the product, aiming to create and reinforce awareness among the target population. Recommendation/Strategy Key to Red box’s overall success would be its R&D and strive to constant innovation. With yellow console being biggest threats for its product, the important area of marketing for its success should be to innovative smartphones product line. The focus should be to make use of an opportunity and break-in in Starlard. Moreover the company should manipulate buyer behavior and target on their personal, social, and psychological influences, not to mention center on the customer relationship marketing. References Ferrell, O. C., & Hartline, M. (2010). Marketing Strategy. Mason: Cengage Learning. Appendices – screenshots Read More