Launching a New Product - a Variant of Red Bull - Essay Example

Objectives Launch objectives could also address any of the following areas: Revenue/unit sales Current base vs. incremental sales Brand/product attitude/awareness/usage shifts Sales channel training Public relations/analyst relations All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic, and Timed. Specific - Be precise about what is going to achieve Measurable - Quantify the objectives Achievable - Are you attempting too much Realistic - Do you have the resource to make the objective happen (men, money, machines, materials, minutes) Timed - State when you will achieve the objective (within a month By February 2010) Objective of the launch Promotional Objectives To achieve 80%awareness of the product on the market. Objectives for Survival To survive the current market war between competitors. Launch timing Product-Launch Time Line. Six Months Ahead Background Research: Examine the marketplace and position in it from both inside and outside the company. Talk to employees, editors, analysts, and key customers or prospects. Be realistic! Five To Six Months Ahead Outline A Marketing Communications Plan: Address where you are today (situation analysis), where you want to go (goals and objectives), and how you will get there (marketing vehicles such as advertising and public relations). Include budget and evaluation criteria. Three To Four Months Ahead Clarify Positioning: Where do you want to be positioned in the minds of your prospects Develop a short statement that conveys the unique benefits of your new product or service. Use your "positioning line" on all your literature, press kits, ads, etc. Prepare Literature: Have data sheets, brochures, and company information ready to go for launch. Prepare Advertising: Plan a media schedule that targets core market, and prepare an ad campaign for the recommended media Two To Three Months Ahead Consider A Press Tour: If the product is newsworthy, talking with editors can result in feature articles, which can enhance the product's credibility. If people outside the business would not be likely to view the product as new and important, stick with press releases to editors. Plan to distribute the releases two to three weeks before the product's launch day. Typical time lines for launch: Pre-launch activities: Month 0 - 3 Product completion By Month 3 at latest Launch planning Month 4 - 6 Launch Month 7 -10 Sometimes a company actively markets the right product or service to the right people in the right media. But the marketing effort flops - all because of poor timing. To get the most mileage from the marketing efforts, you must be keenly aware of the right and wrong times to get the word out. To gain a bit of insight, consider the following: To launch a product on a limited budget, the best bet is to market when the competitors have eased up so that the product can gain the largest share of target audience attention with the smallest investment. That may mean marketing during what are typically slow months in your industry. But because this is when one can attract the most attention the fastest, it's worth it. The product should be launched around Christmas when the people have the time to go shopping and watch television along with family. This way the product would get maximum attention. Word of mouth would also work for it as the people who have seen the prelaunch activities might discuss with friends and relatives over dinner. Also this is the time when health and family welfare are highest on the consumer's agenda . Estimated Budget Budget For Energy Drink Price per Unit 85p Variable Cost 10p Gross Contribution( PPU-VC) 75p Sales Volume(Estimated Units) 10,00,000 Sales Revenue 85,000,000 Gross Contribution Margin(GC*SV) 75,000,000 Over Heads 20,000,000 Net Contribution(GCM-OH) 55,000,000 Advertising and Promotions 10,000,000 Sales Force and Distribution 8,000,000 Net Operating Profit(NC- Adv-Sales force distribution) 37,000,000 After the product concept is prepared , in order to evaluate business proposal attractiveness , one needs to prepare sales cost and profit projections. Here estimated sales methods has been used to prepare the budget. Segmentation Segments are large identifiable groups within a market. Different variables are used to segment a particular market like geographic, psychographic ,behavioural and demographic. Sometimes a combination of two is used as it is very difficult to generalise People on just one attribute. A powerful form of segmentation is to classify According to the different benefits they seek from the product. Each customer Segment is to be profiled in detail as each benefit group has a particular Demographic, behaviouristic and psychographic characteristics. Benefits Demographic Behavioural Psychographic Taste Children Light Users Active socially Economy Old , retired People Heavy Users Value Oriented, Detached Healthy Young Married Professional Heavy Users Mentally active, Socially Conscious Energy Young, Single, Students Heavy Users Physically active, Adventurous The process of segmentation divides market into different subsets of common Needs and characters to avoid head on competition in the market place by Offering different promotional appeal, packaging, distribution method for each Group. For effective segmentation, there must be five characteristics in a market: Market Targeting Segmentation reveals the market segment where the firm has the opportunity to Cater to .The firm's task is to evaluate various segments and decide which one to Target .In evaluating the target segments, some parameters are used. For any segment to be feasible enough to enter, it must have sufficient number of People to warrant tailoring to specific need. A company must target that segment Where people are stable in terms of demographic and psychological factors and Needs and the one which would grow larger with time. Also, the decision whether to target one or several segments. Each target Segment needs a specifically designed marketing mix. Targeting several A segment using individual marketing mix is termed as differentiated marketing Whereas targeting one segment with unique marketing mix is concentrated Marketing. Concentrated marketing is a good option for a new product as with a Limited budget, it is not possible to cater to all the segments simultaneously. Positioning It is the impact that a product has on the minds of consumers, proper positioning is more important for the success of a product than its attributes. Marketers try to Position their brand in such a way that it is perceived by the customer as a better Need fulfiller than the competitor brand. Positioning Strategies: Use positioning: Benefit Positioning: User positioning Competitor positioning Product category positioning For a product to be successful, a distinctive image should be created in The mind of the customer. The product created should be consistent with the Relevant self image of the target customer segment. Here the product's benefit of Being a zero caffeine drink is the basis of positioning. Thus benefit positioning is Used here. Competitor and market analysis Industry is a group of firms where firms are offering products that are close substitutes of each other. The structure of any industry is determined by the number of sellers, entry barriers, exit barriers, global reach. Any industry could be of the following types: Pure Monopoly: Only one firm provides a product in certain country or area. Here Firm sells at increased price, does no advertising and offers minimal service. Oligopoly: Few firms produce same commodity. Here prices cannot be Increased, competitor's advantage can be achieved through lowering costs. Differential Oligopoly: Few firms produce partially different products. These Differences could be in terms of quality, features or services. Each firm seeks Leadership along one of these attributes and charges premium price for it. Monopolistic: Many firms present, distinguish their offers wholly/ partially. Companies focus on markets where they can meet customer needs better And charge premium price for it. Pure Competition: Many firms offering the same product and service, prices are The same as there is no basis of differentiation. This soft drink industry is an example of monopolistic competition. The early stages of the millennium witnessed a plethora of energy and functional drinks hitting the UK market, many of which have disappeared as the category has steadily matured. The market in 2005 shows consumers are now drinking for both health and functionality, whether it is to make oneself feel more energetic, to stay awake while driving or to dance on into the small hours. Indeed, the category in the UK is highly concentrated among a few products and suppliers, supported by a handful of minor players and supermarket own label. Having become well established from the suppliers' point of view, it necessitates continuous investment in educating potential drinkers as to the benefits of the category while continuing to preach the existing message to the converted. The functional drinks market includes: Sports drinks Energy drinks Vitamin and mineral-enriched drinks ACE drinks (fortified with A, C or E antioxidant vitamins) Wellness drinks Nutraceutical drinks Near-water drinks Herbal drinks According to Britvic, the UK soft drinks market was worth more than 7.3bn in 2004, split between take-home and on-premises consumption. Soft drinks accounted for 30% of total commercial beverages consumption, behind hot drinks; and at 5.1bn were the single largest FMCG category, two-thirds bigger than chocolate. The UK's Top 10 Soft Drinks Manufacturers by take-home sales in 2004 Coca-Cola Enterprises (1.5bn) Red Bull (110m) Britvic Soft Drinks (615m) AG Barr (105m) Glaxo SmithKline (389m) Gerber Foods (90m) Danone (287m) Nestle Waters (58m) Tropicana UK (PepsiCo) (178m) Del Monte (46m) The UK's Top 10 Soft Drinks by take-home sales in 2004 Coca-Cola (895m) Ribena (Glaxo SmithKline) (157m) Robinsons (Britvic) (266m) Tropicana (PepsiCo) (136m) Lucozade (GlaxoSmithKline) (229m) Volvic (Danone) (109m) Pepsi (Britvic) (213m) Red Bull (110m) Fanta (Coca-Cola) (162m) Actimel (Danone) (91m) Source: Britvic/ACNielsen Britvic's 2005 report on the UK Soft Drinks market The Top 10 Bottled Water Brands in the UK by value in 2003 Private label Buxton (Nestle Waters) Volvic (Danone) Danone Activ (Danone) Evian (Danone) Strathmore (Constellation Brands) Highland Spring Perrier (Nestle Waters) Vittel (Nestle Waters) Aqua Pura (Well Well Well) Source: Marketing/AC Nielsen Other Non-Alcoholic Beverage Companies & Brands Profiled in Adbrands Unilever Kirin Britvic Soft Drinks Glaxo SmithKline Nescafe Sunny Delight Procter & Gamble Vimto Lipton Folgers Nestea Scottish & Newcastle FEMSA Japan Tobacco AmBev In 2003, the total UK fruit juices and health drinks market was worth an estimated 2.19bn at retail selling prices (rsp), a rise of 6.6% on 2002. Fruit juice was the largest sector in 2003, accounting for 40.2% of the total market. Despite the Relatively mature nature of the fruit juice sector, the market grew strongly in terms Of both value and volume between 1999 and 2003. In addition, fruit juices, fruit Drinks and health drinks recorded a high household penetration level. A number Of factors contributed to this growth, including the increasing interest in health and diet, which is undoubtedly one of the main drivers. In general, fruit juices and Health drinks are regarded as healthy choices, certainly in comparison to Alternative soft drinks, such as carbonates. In addition, the strength of the economy and rising household disposable income Levels have contributed to the growth of premium-priced products, such as Freshly-squeezed juice. Manufacturers have launched innovative products, which Are popular with consumers; for example, Sunny Delight proved to be one of the Marketing phenomena of the past decade. Although sales of Sunny Delight Eventually declined sharply as a result of concerns relating to the high sugar and Low juice content of the drink, many consumers switched to more natural juice Drinks rather than leaving the market altogether. In the health drinks sector, Red Bull has enjoyed astonishing success and, since its launch in 1995, has Contributed to growing sales in this sector. Indeed, Red Bull is the most Significant brand in the health drinks sector in terms of value, ahead of Lucozade. Over the next 5 years, it is expected that the fruit juices and health drinks Market will remain healthy, with sales growing by an average annual rate of just Over 6%. Increasing concerns relating to health and diet will play a major role in The market, as consumers move away from products that are perceived as being Unhealthy, such as carbonated soft drinks, towards more natural alternatives, Such as fruit juices. In addition, growing awareness of the importance of the Government's 'five-a-day' campaign to increase fruit and vegetable consumption Will encourage new entrants into the market. In particular, younger consumers Might regard fruit juice as a convenient way of boosting their consumption of fruit and vegetables. Promotion strategy In today's competitive world, having the right product at the right place in the right time, might still not be enough. Effective communication with the target market is essential for the success of the product and business. Promotion is the p of the marketing mix designed to inform the marketplace about who you are, how good your product is and where they can buy it. Promotion is also used to persuade the customers to try a new product, or buy more of an old product. The promotional mix is the combination of personal selling, advertising, sales promotion and public relations that it uses in its marketing plan. Advertising, sales promotion, public relation is non personal form of communication. Advertising gives a reason to buy; sales promotion gives an incentive to buy. Advertising is an effective means to reach geographically dispersed buyers and to create a long term brand image. In advertising, a message is developed using an appeal which interests the buyers and deliver it through attractive sources which would achieve higher attention and recall. When a product is launched, there is a need to create awareness about its attributes. This could best be achieved by advertising in combination with public relations. It is characterised by impersonality, amplified expressiveness, pervasiveness and a public presentation. For this product, an emotional appeal would be used in its advertisements showing people in an office setting enjoying the drink with a punch line" Health First" Sales promotion creates a quicker and stronger response but is not very effective in creating a long run brand preference. Also it is less expensive, cause impulse buying and very effective in buying initial shelf space. Sales promotion could be done by Coupons: Certificate entitling bearer to stated savings on purchase of specific product. Causes early trial of a new brand. Price packs: Offer consumers saving off regular price or single pack sold at the reduced price or two packs sold at the price of one. Premiums: Merchandise offered at a low cost or free on purchase of a product. Point of purchase displays: The display materials at the place where the purchase is made. Have caps, stationary, mugs, uniform with the company name and logo on it. For this product point of purchase displays would work leading to impulse buying. The target market would visit cinema halls on weekends, so special stalls should be put there. Public Relations: Public is a group having actual interest on impact on a company's ability to achieve objectives. This promotional tool is very effective in launching a new product. In launching this particular product the company could make use of public relations and advertising. The greatest challenge facing any new product is the FUD Factor-Fear, Uncertainty and Doubt. This holds true whether you're trying to influence analysts, editors, prospects or customers. Effective public relations not only eliminate FUD, it earns your product the dominant position in customer minds. Effective PR informs, educates and influences editors by providing them what they most want to provide their audience-what's new and what's better. Sponsoring Companies annual functions and corporate quiz, Health shows and contest at health clubs. Participation in public service activities (donations to orphanages) out of consumer purchases. Pricing strategy Price is an often overlooked marketing strategy, as many tend to focus on promotions or advertising. Pricing strategies, however, can have a large impact on sales and (more importantly) profit. Price is what a customer pays and/or what the end consumer pays for a product or service. In the case of products not sold directly to the end user, pricing is often described as "wholesale" and "retail." When the distribution channel is long (such as when there is a manufacturer, broker/distributor, retailer, and end consumer), multiple mark-ups can occur between the wholesale and the retail price. An optimal pricing strategy will depend on more than the costs. Forces within the external and internal business environment such as competitors, suppliers, the availability of substitute products, and customers come into play as well. Positioning (how a company wants to be perceived by its target audience) is also a consideration. Pricing Strategies There are a variety of pricing strategies in existence. Each strategy is used in a different set of circumstances. Some of the things to consider when choosing the best strategy for a situation are the costs; both short term and long term sales and profit goals; competitors' activities; and customer lifetime value. While there are others, a few of the more popular pricing strategies to consider are: Cost plus mark-up. Here the profit you need to make before setting the price is decided. Figure out the costs and selling price is simply the costs plus a pre-determined profit number. This approach helps keep profitability top-of-mind, but May also result in prices that are out-of-line with customer expectations and worth of a product or service. Competitive pricing. When competitive pricing, a company looks at the prices different competitors are charging and use those prices as a benchmark when pricing its own products. The manufacturer and its competitors' positioning strategies will determine whether price at par, slightly below, or slightly above the competition. Price skimming. This technique is used when a company offer a unique or scarce product with few or no substitutes. The price is set high, resulting in high margins for the seller. Buyers are those that are willing to pay the price because of the product's prestige and/or uniqueness. In the case of a scarce but necessary product, customers pay the price because they have no choice. Often, price skimming is a short-term strategy as competitors enter with their own products, bringing prices down. In the case of scarce products, either the need passes (salt during an ice storm, for example) or the shortage is temporary. Penetration pricing. This is the opposite of price skimming. Prices are set low in an effort to gain large market share. Because the penetration price does not cover costs, this is also a temporary strategy. For this strategy to be profitable, customers must be willing to pay normal, higher price later on. Loss leader. Here, one or more products are priced below cost to attract customers with a hope that those customers will purchase other profitable products from the same company. This strategy is often implemented as part of a short-term promotion. Close out.This is a tactical move to clear slow-moving or excess products out of inventory. The inventory is sold at a steep discount to avoid storing or discarding the product. End-of season merchandise, perishables that are about to expire, and prior software versions or book printings are examples of eligible closeout items. Multiple unit pricing. Also called quantity discount. The customer gets a lower price for purchasing multiple units or large quantities. Membership or trade discounting. Here, some customers (those that you know are heavy or frequent purchasers) are given an elite status, which gives them the privilege of a price discount on their purchases. This elite status can be based on occupation, membership in an organization, subscription status, or some other criteria. Variable pricing. With a variable pricing strategy, different customers pay different prices. Often, this strategy is used for project work. Each project has unique characteristics so is priced by the job. Versioning. This is offering similar products with different levels of functionality. Each level is priced differently and includes a different bundle of attributes. Software and Web hosting companies often use thispricing strategy. A trial or very basic version may be offered at low or no cost. Upgraded versions are available at higher costs. Bundling. Here, several items are sold together at a price less than if they were purchased alone. By bundling a popular item with lesser-known products, you can increase your sales. Additionally, in the case of inventoried items, you may be able to avoid a closeout. Combined, smart use of both the Internet and available pricing strategies can help boost your company's bottom line. In this case, the new product can charge premium price and offer high quality as health concerns are attached with it. The target market consists of educated, affluent, aware customers who wont mind paying a slightly higher for their health. Perceptions of price have strong influence on the purchase intention and satisfaction that the customer gains from the product. A customer uses a reference price to conclude whether a product's price is higher, lower or optimum. The price for the new product is 85p for a 250 ml can. A sipper fitting in the car cup holder would be free with a 12 pack costing 9 pounds. Distribution Strategy: The manufacturer do not sell their goods directly to their customers, but a number of intermediaries are involved in the process. These intermediaries are a set of independent organisations involved in the process of making a product available for use . A manufacturer has the following options available to decide on the number of middlemen to be used: Exclusive Distribution: The retailer is not allowed to carry the competing brands as the producer wants to maintain a great deal of control over the service level. The producer wants an aggressive an knowledgable approach towards selling.This type of distribution enhances the image of the product and allow higher markups. Selective Distribution: It involves the use of more than a few, but less than all intermediaries who are willing to carry a particular product. The advantage is that the company does not have to dissipate its efforts over a large number of outlets rather it has to develop good relations with the middlemen and expect a better than average selling effort. Intensive Distribution: It involves placing the goods in as many outlets as possible . When the consumer requires great deal of convenience , then it offers great intensity of distribution and also great sales figures. In this case, the product chosen belongs to the convenience goods category So would be beneficial if it has an intensive distribution strategy. But since the product is new and caters to the educated and affluent section, a selective distribution strategy would work best. It would be placed in UK Supermarkets, office canteens ,specialty stores like health food stores and selective drug stores. Retailers would be asked to dedicate space whether it's a Whats New rack or an Innovation Rac. Marketing Proposal Executive Summary The objective here is to make 80% of the market aware about the new vitamin rich decaffeinated soft drink in the United Kingdom through heavy and innovative means of communication. Market Situation The market for soft drinks in UK was worth 7.3 billion pounds in 2004. The market is divided into several subcategories: carbonated drinks, health drinks, sports drink, energy drink, vitamin enriched drink etc. With several big players in the market it is a highly competitive market. The new product is targeted at the health conscious professionals who are looking for a drink which energises them without causing any side effects. They are even ready to pay a premium price for it. Product Situation: The product contains Taurine, Glucurono lactone, Sucrose. Glucose. Vitamin B6, B12, B3 and B4, Carbonated Water. It is a Vitamin rich decaffeinated Drink. Positioning: Benefit positioning depicting it as a healthy and energy giving decaffeinated drink. High price and high promotion policy i.e. rapid skimming strategy used. Distribution: Selective distribution to specialised shops, supermarkets, drug stores. SWOT: Strength: Decaffeinated, Vitamin rich .Any time usage, just one product so efforts are focused, new sales promotion technique and distribution channel. Good advertising plan Weakness: Budget might be a constraint as other are investing lot of money in promotion. No sugar free version. Opportunity: Health issues being raised by government and people leading to customers to non-caffeinated drinks. Threat: Government law could be passed against the contents used in it and fast catching markets of Fruit juice. Reference List Kotler Philip " Principles Of Marketing" 8th Eition Kanuk Schiffman " Consumer Behavior" Robyn M. Sachs," Using Media to Introduce New Products" http://www.dbmarketing.com/articles/Art122.htm http://pelepubs.com/launchdr/first_high.htm Right on time: you're ready to market your product, but is the market ready for you Entrepreneur, Nov, 1998 by Jay Conrad Levinson [ www.findarticles.com] www.netmba.com/mktg/pricing www.findarticles.com www.sequentlearning.com www.websitemktngplan.com www.french-rogers.com www.pelepubs.com/launchdr/launch_articles2 www.marketresearch.com/prod/display.asp www.npd-solutions.com/launchcom.htm www.oplaunch.com/optimised-launch.htm www.rmr.com/tips/mktgadisor5.html www.nickwebb.com www.bizjournals.com/triangle/stories www.entityinc.com/product_launch.htm www.eclicktick.com/launchchecklist.htm www.s;ingshotpdg.com/knowledgebase/prod_launch.html www.dbmarketing.com/articles/article122.htm Read More