Promotion Analysis of Steelco - Research Paper Example

Section Brand Analysis Steelco is one of the largest players in a typical industry characterized by only two large players and Steelco being one ofthem apart from having quite a few local players who can very well be hailed as small time players in the industry. Thus Steelco is already a brand to reckon with within the industry, that is essentially price sensitive, and also has few barriers to sale other than price. As far as the product is concerned, the wide flange iron beams sold by Steelco does not reach the actual customers but is further processed before being finally used. Thus theirs is a typical business-to-business product, and the direct buyers rely more on the standardized specifications in the industry rather than going by any other criteria or mandate. So far the brand of Steelco is concerned, it is already a known brand within the industry and the key players down the line who act as the direct customers of the products sold by Steelco are aware about the products as well as buy them. Thus it is clear that brand awareness is not required by Steelco. However, given that the new products have not been taken well by the direct customers of Steelco, the branding strategy needs a thorough relook so that both the existing products as well as the new products may be branded in such a way that demands for both these product lines may be augmented. In this regard, in order to take a relook at the branding strategy deployed by Steelco, the first step could be to analyse the existing branding strategy as well as activities of the firm. To this end, the concept of POP and POD comes into play. Kotler (2007) has noted that points of parity or (POP) refers to those associations that are not essentially unique to the brand, however these points may overlap with other brands. He has further noted that the concept of competitive points of parity holds that the associations that are designed in order to negate the points of difference of the competitors. On the other hand, Keller, Jacob and Parameshwaran (2011) have been of the opinion that points o difference are attributes or benefits that consumers strongly associate with a particular brand and are even of the belief that the particular point cannot be found to the same extent with any other brand available. In this context, Steelco has already gone by the typical routes of business to business marketing as well as brand building activities. Their awareness about the new product program has included informing about the latest development at their end to their customers through mails, informing the sales personnel to promote the new products. However, what Steelco has not done is not advertised their products. Since the market of these products is dependent on channel partners much down the line that Steelco is not directly in contact with, advertising should have been the first step to take in order to ensure awareness of the product among the actual customers who can create the demand for the products. Also, since the expansion of the product width has not been well appreciated by the customers owing to introduction of new technologies, they should find new uses of these products that the standardized wide flank steel is not capable of catering to. As far as the POP of these new products is concerned, the products of Steelco match the technical specifications of those marketed as well as manufactured by USX. However, the fact that they are conjoining their less thick steel to come up with these thicker versions of their products is not being well appreciated. One likely reason for this is that the market is apprehensive about the success of this new technology and also because the product does not offer any difference in terms of price. Given that Steelco has launched a product that is not new in its core benefits and also has an established player to compete with, the product cannot be expected to skim the market (Armstrong & Kotler, 2005) or even price the product competitively with the existing products in the market. Thus the first branding activity to be followed is to create brand awareness among the direct customers. Subsequently, the new products can be expected to create brand recognition and lastly become a top of the mind brand (Kelley & Jugenheimer, 2011). The point of differentiation activities should include conveying benefits of the product to the direct customers that cannot be offered by the conventional thick steel beams. These may be unique and hitherto not thought of by the customers. The new benefits of these products is likely to generate demands for these products. Or else, they may price the product way below the established products in the market so that price becomes the biggest point of differentiation. Of course, the IMC program should convey this carefully. Apart from this, corporate brand building for Steelco may be another strategy so that brand loyalty can be used to sell the new products thereby capitalizing the established brand image of the firm. These may be coupled with the efforts of the sales force to segregate a part of the market that may be called early adopters, a section that is willing to take chances for a new brand (Kotler, 2000; Lamb, Hair & McDaniel, 2009). These are the chief branding activities that may be taken up by Steelco under the circumstances that has been given in the case. Section 2 Promotion Analysis Promoting the products of Steelco with special emphasis on the new products that have the raw materials ready as well as the production has also been set up for producing these new products, we should obviously consider that they are an established player in the industry, and among the largest two in the entire market. Thus being one of the market leaders, the firm is in a rather advantageous position compared to the local players that compete solely on the basis of price. However, since their new product proposition has not been well accepted in the market, it is clear that they wanted to position the thick steel beams as a typical “me too” product (Tybout & Calkins, 2005). However, Tybout and Calkins (2005) have defined a typical “me too” product as one that has the same core value offerings as the pioneer product but are made available at a much lower price. In this context positioning refers to the company’s creation of a distinct position in the prospect’s mind (Ries & Trout, 2003). Thus it becomes clear that this is exactly where Steelco could not successfully launch the “me too” product given the faulty positioning that they undertook. Moreover, it is known to us that the markets that Steelco operates in are typical price sensitive markets. Thus the brand positioning should have been done on the basis of core value proposition and price. Here, again since the core benefit derived from the new products is the same as those offered by the products marketed by USX, so the price should have been the differentiating factor not only in terms of positioning but also POD. Furthermore, the very reason why Steelco adopted this new technique was because they had excess material that they wanted to sell off. Thus either they had to carry the inventory for another year or for that matter till such time the stock was cleared or sell them off as scrap. Of course, a lower price than that offered by the competitor i.e. USX would very likely have fetched a much better deal compared to bearing a high inventory carrying cost or even selling it off as scrap. Once the position has been defined as a product that offers the same benefits however comes at a much lower price, the product is very likely to find acceptance among customers and create a niche market for itself. This would ensure continual production of the product and also gradual rise in prices to meet up the costs and also book profits on the new products. The budget for promotion of Steelco products should include the following with a special emphasis on trade promotion: Print Advertisements in trade magazines and journals – 35% of the total budget Brochures – 10% of the entire budget Direct Mails – 5% of the total budget Customer Loyalty Programs – 15% of the total budget Brand Extension Promotions – 10% of the entire budget (discount on purchase of new products) Television Advertisements – 25% of the entire budget (to be shown in prime time news channels) The major stress has been given on print advertisements in trade magazines since average customers who use the construction structures do not normally understand these specifications but are dependent on professionals. Thus the best way to reach out to them is by advertising in trade magazines. Also Steelco should also target the final consumers of the product so that they also come to know about the worth of their brand and insist on using Steelco’s products only. The budget considered for the entire promotional scheme of Steelco is US $2 million. This is in relation to the fact that the entire product width is covered under the budget. This will at the same time further consolidate its position so far as its established products are concerned and also help to introduce its new products to the market. Print Ad Steelco Buy customized Wide Flange Steel upto 60 inch at unbelievable prices For trade enquiry, contact: Steelco Delaware Valley Phone: 215-831-5020 Email: anssteel@aol.com Billboard Buy customized Wide Flange Steel upto 60 inch at unbelievable prices Steelco, a producer wide flange steel products for the last 30 years, have come up with their latest product, an epitome of technological innovation: Customised Flange Steel upto 60 inch Trade enquiries solicited Phone: 215-831-5020 Email: anssteel@aol.com Promotional Giveaway Discount! Discount! Discount! Buy Customised Flange Steel upto 60 inch at upto 20% off* *Offer valid till stock lasts References 1. Kotler, P. & Keller, K. (2007). A Framework for Marketing Management. New Delhi: Pearson Education 2. Keller, K., Parameshwaran, M. & Jacob, I. 2011. Strategic Brand Management. New Delhi: Doris Kindersley (India) Pvt. Ltd. 3. Kotler, P. (2000). Marketing Management – The Millennium Edition, New Jersey, Prentice Hall 4. Armstrong, G. & Kotler, P. (2005). Marketing – An Introduction. New Delhi: Pearson Education 5. Keller, L. & Jugenheimer, D. (2011). Advertising Account Planning: Planning and Managing an IMC Campaign. NY: M.E. Sharpe & Co. 6. Lamb, C., Hair, J. & McDaniel, C. (2009). Essentials of Marketing. OH: South-Western Cengage Learning 7. Tybout, A. & Calkins, T. (2005). Kellogg on Marketing. Kellogg: Kellogg School of Management 8. Ries, A. & Trout, J. (1981). Positioning: The Battle for your Mind. New Delhi: McGraw Hill Itemized Promotion Budget Sl. No. Promotion Type Weightage in % of Total Budget % in monetary terms ($) 1 Print Advertisements in trade magazines and journals 35 700000 2 Brochures 10 200000 3 Direct Mails 5 100000 4 Customer Loyalty Programs 15 300000 5 Brand Extension Promotions 10 200000 6 Television Advertisements 25 500000 Read More