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Tuesday 13 October 2015

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Marketing Management-ISBM



MARKETING MANAGEMENT

Case-1

The use of the marketing mix in product launch

Introduction

NIVEA® is an established name in high quality skin and beauty care products. It is part of

a range of brands produced and sold by Beiersdorf. Beiersdorf, founded in 1882, has grown

to be a global company specialising in skin and beauty care.

In the UK, Beiersdorf s continuing goal is to have its products as close as possible to its

consumers, regardless of where they live. Its aims are to understand its consumers in its

many different markets and delight them with innovative products for their skin and beauty

care needs. This strengthens the trust and appeal of Beiersdorf brands. The business prides

itself on being consumer-led and this focus has helped it to grow NIVEA into one of the

largest skin care brands in the world.

Beiersdorf s continuing programme of market research showed a gap in the market. This led

to the launch of NIVEA VISAGE® Young in 2005 as part of the NIVEA VISAGE range offering a

comprehensive selection of products aimed at young women. It carries the strength of the

NIVEA brand image to the target market of girls aged 13-19. NIVEA VISAGE Young helps girls

to develop a proper skin care routine to help keep their skin looking healthy and

beautiful.

The market can be developed by creating a good product/range and introducing it to the

market (product-orientated approach) or by finding a gap in the market and developing a

product to fill it (market-orientated approach). Having identified a gap in the market,

Beiersdorf launched NIVEA VISAGE Young using an effective balance of the right product,

price, promotion and place. This is known as the marketing mix or 'four Ps'. It is vital

that a company gets the balance of these four elements correct so that a product will

achieve its critical success factors. Beiersdorf needed to develop a mix that suited the

product and the target market as well as meeting its own business objectives.

The company re-launched the NIVEA VISAGE Young range in June 2007 further optimising its

position in the market. Optimised means the product had a new formula, new design, new

packaging and a new name. This case study shows how a carefully balanced marketing mix

provides the platform for launching and re-launching a brand onto the market.

Product:

The first stage in building an effective mix is to understand the market. NIVEA uses market

research to target key market segments which identifies groups of people with the same

characteristics such as age/gender/attitude/lifestyle. The knowledge and understanding from

the research helps in the development of new products. NIVEA carries out its market

research with consumers in a number of different ways. These include:

• using focus groups to listen to consumers directly

• gathering data from consumers through a variety of different research techniques

• product testing with consumers in different markets.

Beiersdorf s market research identified that younger consumers wanted more specialised face

care aimed at their own age group that offered a 'beautifying' benefit, rather than a

solution to skin problems. NIVEA VISAGE Young is a skin care range targeted at girls who do

not want medicated products but want a regime for their normal skin.

Competitor products tend to be problem focussed and offer medicated solutions. This gives

NIVEA competitive advantage. NIVEA VISAGE Young provides a unique bridge between the

teenage market and the adult market.

The company improved the product to make it more effective and more consumer-friendly.

Beiersdorf tested the improved products on a sample group from its target audience before

finalising the range for re-launch. This testing resulted in a number of changes to

existing products. Improvements included:

•  Changing the formula of some products. For example, it removed alcohol from one product

and used natural sea salts and minerals in others.

•  Introducing two completely new products.

•  A new modern pack design with a flower pattern and softer colours to appeal to younger

women.

•  Changing product descriptions and introducing larger pack sizes.

Each of these changes helped to strengthen the product range, to better meet the needs of

the market.

Some of these changes reflect NIVEA's commitment to the environment. Its corporate

responsibility approach aims to:

•  reduce packaging and waste - by using larger pack sizes

•  use more natural products - by including minerals and sea salts in the formula

•  increase opportunities for recycling - by using recyclable plastic in its containers.

Price :

Lots of factors affect the end price of a product, for example, the costs of production or

the business need to maximise profits or sales. A product's price also needs to provide

value for money in the market and attract consumers to buy.

There are several pricing strategies that a business can use:

•  Cost based pricing - this can either simply cover costs or include an element of profit.

It focuses on the product and does not take account of consumers.

•  Penetration price - an initial low price to ensure that there is a high volume of

purchases and market share is quickly won. This strategy encourages consumers to develop a

habit of buying.

•  Price skimming - an initial high price for a unique product encouraging those who want

to be 'first to buy' to pay a premium price. This strategy helps a business to gain maximum

revenue before a competitor's product reaches the market.

On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This

reflected its new formulations, packaging and extended product range. However, the company

also had to take into account that the target market was both teenage girls and mums buying

the product for their daughters. This meant that the price had to offer value for money or

it would be out of reach of its target market.

As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs

of this market segment, it is effectively the price leader. This means that it sets the

price level that competitors will follow or undercut. NIVEA needs to regularly review

prices should a competitor enter the market at the 'market growth' point of the product

life cycle to ensure that its pricing remains competitive.

The pricing strategy for NIVEA is not the same as that of the retailers. It sells products

to retailers at one price. However, retailers have the freedom to use other strategies for

sales promotion. These take account of the competitive nature of the high street. They may

use:

•  loss leader: the retailer sells for less than it cost to attract large volume of sales,

for example by supermarkets

•  discounting - alongside other special offers, such as 'Buy one, get one free' (BOGOF) or

'two for one'. NIVEA VISAGE Young's pricing strategy now generates around 7% of NIVEA

VISAGE sales.

Place

Place refers to:

•  How the product arrives at the point of sale. This means a business must think about

what distribution strategies it will use.

•  Where a product is sold. This includes retail outlets like supermarkets or high street

shops. It also includes other ways in which businesses make products directly available to

their target market, for example, through direct mail or the Internet.

NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure

the widest reach of its products to its target market. The main channels for the product

are retail outlets where consumers expect to find skin care ranges. Around 65% of NIVEA

VISAGE.

Young sales are through large high street shops such as Boots and Superdrug. Superdrug is

particularly important for the 'young-end' market. The other 35% of sales mainly comes from

large grocery chains that stock beauty products, such as ASP A, Tesco and Sainsbury's.

Market research shows that around 20% of this younger target market buys products for

themselves in the high street stores when shopping with friends. Research also shows that

the majority of purchasers are actually made by mums, buying for teenagers. Mums are more

likely to buy the product from supermarkets whilst doing their grocery shopping.

NIVEA distributes through a range of outlets that are cost effective but that also reach

the highest number of consumers. Its distribution strategies also consider the

environmental impact of transport. It uses a central distribution point in the UK. Products

arrive from European production plants using contract vehicles for efficiency for onward

delivery to retail stores. Beiersdorf does not sell direct to smaller retailers as the

volume of products sold would not be cost effective to deliver but it uses wholesalers for

these smaller accounts. It does not sell directly through its website as the costs of

producing small orders would be too high. However, the retailers, like Tesco, feature and

sell the NIVEA products in their online stores.

Promotion

Promotion is how the business tells customers that products are available and persuades

them to buy. Promotion is either above-the-line or below-the-line. Above-the-line promotion

is directly paid for, for example TV or newspaper advertising.

Below-the-line is where the business uses other promotional methods to get the product

message across:

•  Events or trade fairs help to launch a product to a wide audience. Events may be

business to consumer (B2C) whereas trade fairs are business to business (B2B).

•  Direct mail can reach a large number of people but is not easy to target specific

consumers cost-effectively.

•  Public relations (PR) includes the different ways a business can communicate with its

stakeholders, through, for example, newspaper press releases. Other PR activities include

sponsorship of high profile events like Formula 1 or the World Cup, as well as donations to

or participation in charity events.

Branding - a strong and consistent brand identity differentiates the product and helps

consumers to understand and trust the product. This aims to keep consumers buying the

product long-term.

• Sales promotions, for example competitions or sampling, encourage consumers to buy

products in the short-term.

NIVEA chooses promotional strategies that reflect the lifestyle of its audience and the

range of media available. It realises that a 'one way' message, using TV or the press, is

not as effective as talking directly to its target group of consumers. Therefore NIVEA does

not plan to use any above-the-line promotion for NIVEA VISAGE Young.

The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes,

NIVEA identifies ways of talking to teenagers (and their mums) directly.

•  A key part of the strategy is the use of product samples. These allow customers to

touch, feel, smell and try the products. Over a million samples of NIVEA VISAGE Young

products will be given away during 2008. These samples will be available through the

website, samples in stores or in 'goody bags' given out at VISAGE roadshows up and down the

country.

•  NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young &

Independent) to raise awareness of the brand. The concept behind the magazine is to give

teenage girls the confidence to become young women and to enjoy their new-found

independence. Communication channels are original and engaging to enable teenagers to

identify with NIVEA VISAGE Young. The magazine focuses on 'first time' experiences relating

to NIVEA VISAGE Young being their first skincare routine. It is promoted using the Hit40UK

chart show and the TMF digital TV channel.

• In connection with FYI, NIVEA VISAGE Young has recognised the power of social network

sites for this young audience and also has pages on MySpace, Facebook and Bebo. The company

is using the power of new media as part of the mix to grow awareness amongst the target

audience.

Conclusion

NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and

beauty of the teenage consumer rather than being medicated to treat skin problems. As such,

it has created a clear position in the market. This shows that NIVEA understands its

consumers and has produced this differentiated product range in order to meet their needs.

To bring the range to market, the business has put together a marketing mix. This mix

balances the four elements of product, price, place and promotion. The mix uses traditional

methods of place, such as distribution through the high street, alongside more modern

methods of promotion, such as through social networking sites. It makes sure that the

message of NIVEA VISAGE Young reaches the right people in the right way.

Answer the following questions:

1.     Describe what is meant by a business being 'consumer led'.

2.     What are the key parts of the marketing mix? Explain how each works with the others.

3.     Explain why the balance of the marketing mix is as important as any single element.

4.     Analyse the marketing mix for NIVEA VISAGE Young. What are its strongest points?

Explain why you think this is so.

Case-2

SWOT analysis in action at Skoda

Introduction

In 1895 in Czechoslovakia, two keen cyclists, Vaclav Laurin and Vaclav Klement, designed

and produced their own bicycle. Their business became Skoda in 1925. Skoda went on to

manufacture cycles, cars, farm ploughs and airplanes in Eastern Europe. Skoda overcame hard

times over the next 65 years. These included war, economic depression and political change.

By 1990 the Czech management of Skoda was looking for a strong foreign partner. Volkswagen

AG (VAG) was chosen because of its reputation for strength, quality and reliability. It is

the largest car manufacturer in Europe providing an average of more than 5 million cars a

year - giving it a 12% share of the world car market. Volkswagen AG comprises the

Volkswagen, Audi, Skoda, SEAT, Volkswagen Commercial Vehicles, Lamborghini, Bentley and

Bugatti brands. Each brand has its own specific character and is independent in the market.

Skoda UK sells Skoda cars through its network of independent franchised dealers.

To improve its performance in the competitive car market, Skoda UK's management needed to

assess its brand positioning. Brand positioning means establishing a distinctive image for

the brand compared to competing brands. Only then could it grow from being a small player.

To aid its decision-making, Skoda UK obtained market research data from internal and

external strategic audits. This enabled it to take advantage of new opportunities and

respond to threats.

The audit provided a summary of the business's overall strategic position by using a SWOT

analysis. SWOT is an acronym which stands for:

• Strengths - the internal elements of the business that contribute to improvement and

growth

• Weaknesses - the attributes that will hinder a business or make it vulnerable to failure

• Opportunities - the external conditions that could enable future growth

• Threats - the external factors which could negatively affect the business.

This case study focuses on how Skoda UK's management built on all the areas of the

strategic audit. The outcome of the SWOT analysis was a strategy for effective competition

in the car industry.

Strengths

To identify its strengths, Skoda UK carried out research. It asked customers directly for

their opinions about its cars. It also used reliable independent surveys that tested

customers' feelings. For example, the annual JD Power customer satisfaction survey asks

owners what they feel about cars they have owned for at least six months. JD Power surveys

almost 20,000 car owners using detailed questionnaires. Skoda has been in the top five

manufacturers in this survey for the past 13 years. In Top Gear's 2007 customer

satisfaction survey, 56,000 viewers gave their opinions on 152 models and voted Skoda the

'number 1 car maker'. Skoda's Octavia model has also won the 200% Auto Express Driver Power

'Best Car'.

Skoda attributes these results to the business concentrating on owner experience rather

than on sales. It has considered 'the human touch' from design through to sale. Skoda knows

that 98% of its drivers would recommend Skoda to a friend. This is a clearly identifiable

and quantifiable strength. Skoda uses this to guide its future strategic development and

marketing of its brand image.

Strategic management guides a business so that it can compete and grow in its market. Skoda

adopted a strategy focused on building cars that their owners would enjoy. This is

different from simply maximising sales of a product. As a result, Skoda's biggest strength

was the satisfaction of its customers. This means the brand is associated with a quality

product and happy customers.



Weaknesses

A SWOT analysis identifies areas of weakness inside the business. Skoda UK's analysis

showed that in order to grow it needed to address key questions about the brand position.

Skoda has only 1.7% market share. This made it a very small player in the market for cars.

The main issue it needed to address was: how did Skoda fit into this highly competitive,

fragmented market?

This weakness was partly due to out-dated perceptions of the brand. These related to

Skoda's eastern European origins. In the past the cars had an image of poor vehicle

quality, design, assembly, and materials. Crucially, this poor perception also affected

Skoda owners. For many people, car ownership is all about image. If you are a Skoda driver,

what do other people think?

From 1999 onwards, under Volkswagen AG ownership, Skoda changed this negative image. Skoda

cars were no longer seen as low-budget or low quality. However, a brand 'health check' in

2006 showed that Skoda still had a weak and neutral image in the mid-market range it

occupies, compared to other players in this area, for example, Ford, Peugeot and Renault.

This meant that whilst the brand no longer had a poor image, it did not have a strong

appeal either. This understanding showed Skoda in which direction it needed to go. It

needed to stop being defensive in promotional campaigns. The company had sought to correct

old perceptions and demonstrate what Skoda cars were not. It realised it was now time to

say what the brand does stand for. The marketing message for the change was simple. Skoda

owners were known to be happy and contented with their cars. The car-buying public and the

car industry as a whole needed convincing that Skoda cars were great to own and drive.

Opportunities and Threats

Opportunities

Opportunities occur in the external environment of a business. These include for example,

gaps in the market for new products or services. In analysing the external market, Skoda

noted that its competitors' marketing approaches focused on the product itself.

Audi emphasises the technology through its strapline, 'Vorsprung Durch Technik' ('advantage

through technology'). BMW promotes 'the ultimate driving machine'. Many brands place

emphasis on the machine and the driving experience. Skoda UK discovered that its customers

loved their cars more than owners of competitor brands, such as Renault or Ford.

Information from the SWOT analysis helped Skoda to differentiate its product range. Having

a complete understanding of the brand's weaknesses allowed it to develop a strategy to

strengthen the brand and take advantage of the opportunities in the market. It focused on

its existing strengths and provided cars focused on the customer experience. The focus on

'happy Skoda customers' is an opportunity. It enables Skoda to differentiate the Skoda

brand to make it stand out from the competition. This is Skoda's unique selling proposition

(USP) in the motor industry.

Threats

Threats come from outside of a business. These involve, for example, a competitor launching

cheaper products. A careful

analysis of the nature, source and likelihood of these threats is a key part of the SWOT

process.

The UK car market includes 50 different car makers selling 200 models. Within these there

are over 2,000 model derivatives. Skoda UK needed to ensure that its messages were powerful

enough for customers to hear within such a crowded and competitive environment. If not,

potential buyers would overlook Skoda. This posed the threat of a further loss of market

share.

Skoda needed a strong product range to compete in the UK and globally. In the UK the Skoda

brand is represented by seven different cars. Each one is designed to appeal to different

market segments. For example:

•  The Skoda Fabia is sold as a basic but quality 'city car'

•  The Skoda Superb offers a more luxurious, 'up-market' appeal

•  The Skoda Octavia Estate provides a family with a fun drive but also a great big boot.

Pricing reflects the competitive nature of Skoda's market. Each model range is priced to

appeal to different groups within the mainstream car market. The combination of a clear

range with competitive pricing has overcome the threat of the crowded market.

The following example illustrates how Skoda responded to another of its threats, namely,

the need to respond to EU legal and environmental regulations. Skoda responded by designing

products that are environmentally friendly at every stage of their life cycle. This was

done by for example:-

•  Recycling as much as possible. Skoda parts are marked for quick and easy identification

when the car is taken apart.

•  Using the latest, most environmentally-friendly manufacturing technologies and

facilities available. For instance, areas painted to protect against corrosion use lead-

free, water based colours.

•  Designing processes to cut fuel consumption and emissions in petrol and diesel engines.

These use lighter parts making vehicles as aerodynamic as possible to use less energy.

•  Using technology to design cars with lower noise levels and improved sound quality.

Outcomes and benefits of SWOT analysis.

Skoda UK's SWOT analysis answered some key questions. It discovered that:

•  Skoda car owners were happy about owning a Skoda

•  the brand was no longer seen as a poorer version of competitors' cars.

However,

•  the brand was still very much within a niche market

•  a change in public perception was vital for Skoda to compete and increase its market

share of the mainstream car market.

The challenge was how to build on this and develop the brand so that it was viewed

positively. It required a whole new marketing strategy.

Skoda UK has responded with a new marketing strategy based on the confident slogan, 'the

manufacturer of happy drivers.' The campaign's promotional activities support the new brand

position. The key messages for the campaign focus on the 'happy' customer experience and

appeal at an emotional rather than a practical level. The campaign includes:

•  he 'Fabia Cake' TV advert. This showed that the car was 'full of lovely stuff with the

happy music ('Favourite things') in the background.

•  An improved and redesigned website which is easy and fun to use. This is to appeal to a

young audience. It embodies the message 'experience the happiness of Skoda online'.

Customers are able to book test drives and order brochures online. The result is that

potential customers will feel a Skoda is not only a reliable and sensible car to own, it is

also 'lovely' to own.

Analysing the external opportunities and threats allows Skoda UK to pinpoint precisely how

it should target its marketing messages. No other market player has 'driver happiness' as

its USP. By building on the understanding derived from the SWOT, Skoda UK has given new

impetus to its campaign. At the same time, the campaign has addressed the threat of

external competition by setting Skoda apart from its rivals.

Conclusion

Skoda is a global brand offering a range of products in a highly competitive and fragmented

market. The company must respond positively to internal and external issues to avoid losing

sales and market share.

A SWOT analysis brings order and structure to otherwise random information. The SWOT model

helps managers to look internally as well as externally. The information derived from the

analysis gives direction to the strategy. It highlights the key internal weaknesses in a

business, it focuses on strengths and it alerts managers to opportunities and threats.

Skoda was able to identify where it had strengths to compete. The structured review of

internal and external factors helped transform Skoda UK's strategic direction.

The case study shows how Skoda UK transformed its brand image in the eyes of potential

customers and build its competitive edge over rivals. By developing a marketing strategy

playing on clearly identified strengths of customer happiness, Skoda was able to overcome

weaknesses. It turned its previously defensive position of the brand to a positive

customer-focused experience. The various awards Skoda has won demonstrate how its

communications are reaching customers. Improved sales show that Skoda UK's new strategy has

delivered benefits.

Answer the

1.      What was the key weakness that Skoda was able to identify?

2.     What strength did Skoda use to turn its brand weakness into an opportunity?

3.     How has Skoda strategically addressed external threats?

4.     What in your view are the important benefits of using a SWOT analysis

Case-3

Marketing strategy for growth

Introduction

Businesses must respond to change in order to remain competitive. Developing appropriate

strategies which allow them to move forward is essential. Wilkinson is a prime example of a

business that has responded to changing customer needs throughout its history. It is one of

the UK's long-established retailers of a wide range of food, home, garden, office, health

and beauty products. James Kemsey (JK) Wilkinson opened his first Wilkinson Store in

Charnwood Street, Leicester in 1930. After the Second World War, the 1950s saw a rise in

the use of labour-saving devices and DIY. Wilkinson responded by making this type of

product the focus of its sales. In the 1960s customers wanted more convenience shopping.

Wilkinson started selling groceries and supermarket goods and created the Wilko brand. In

the 1980s Wilkinson extended its range of low-cost products to include quality clothing,

toys, toiletries and perfumes. In 1995 it opened a central distribution centre in Workshop,

serving stores in the north of England and in 2004, a new distribution centre opened in

Wales. In 2005 Wilkinson launched its Internet shopping service, offering over 800,000

product lines for sale online. Wilkinson currently has over 300 stores, which carry an

average of 25,000 product lines. 40% of these are Wilko 'own-brand' products. The company's

target is to see this element grow and to have over 500 stores by 2012.

Wilkinson's growth places it in the top 30 retailers in the UK. Recently it has faced

increasing challenges from competitors, such as the supermarket sector. Wilkinson needed to

combat this and identify new areas for growth. Over two years it conducted extensive market

research. This has helped it create a marketing strategy designed to continue growing by

targeting a new market segment - the student population. This case study focuses on how

Wilkinson created and implemented this strategy, using the findings of its market research

to drive the strategy forward.

Marketing strategy aims to communicate to customers the added-value of products and

services. This considers the right mix of design, function, image or service to improve

customer awareness of the business' products and ultimately to encourage them to buy. An

important tool for helping develop an appropriate marketing strategy is Ansoff s Matrix.

This model looks at the options for developing a marketing strategy and helps to assess the

levels of risk involved with each option. Marketing strategies may focus on the development

of products or markets. Doing more of what a business already does carries least risk;

developing a completely new product for a new audience carries the highest risk both in

terms of time and costs.

Based on its research, Wilkinson committed to a market development strategy to sell its

products to a new audience of students. This is a medium risk strategy as it requires the

business to find and develop new customers. It also carries costs of the marketing

campaigns to reach this new group. The main focus of the strategy was to increase awareness

of the brand among students and encourage them to shop regularly at Wilkinson stores.

Market research

Market research is vital for collecting data on which to base the strategy. Market research

takes one of two main forms -primary research and secondary research. Primary research

(also called field research) involves collecting data first hand. This can take many forms,

the main ones being interview, questionnaires, panels and observation. Secondary research

(also called desk research) involves collecting data which already exists. This includes

using information from reports, publications, Internet research and company files.

Both methods have advantages and disadvantages. The advantages of primary research are that

it is recent, relevant and designed specifically for the company's intended strategy. The

main disadvantage is that it is more expensive than secondary research and can be biased if

not planned well. Secondary research is relatively cheap, can be undertaken quickly and so

enables decision-making sooner. However, secondary research can go out-of-date and may not

be entirely relevant to the business' needs.

Wilkinson undertook primary market research using questionnaires from students across the

UK and secondary research using government and university admissions data. The statistics

revealed that there were three million potential student customers.

They had a combined annual spend of around £9 billion per year. This research confirmed

that the choice of focusing on the student market as a means of growth was valid. Wilkinson

undertook further research to identify how to reach students and persuade them to start

shopping at Wilkinson stores. This information was used to formulate a focus strategy. This

was aimed specifically at the needs of the student 'market segment'. Marketing to students

Wilkinson involved 60 universities in research, using questionnaires distributed to

students initially in Years 2 and 3 of a range of universities and then to 'freshers' (new

students) through the University and Colleges Admission Service. This ensured the widest

range of students was included to eliminate bias. It also gave a wide range of responses.

From this initial



group, students were asked a second set of questions. Participants were rewarded with

Amazon vouchers to encourage a good take-up. The research focused on two areas:

1.     student awareness of the Wilkinson brand and

2.     reasons why students were currently not using the stores regularly.

The market research enabled Wilkinson to put together its marketing strategy. The aim was

to ensure the student population began shopping at Wilkinson stores early in their student

experience. This would help to maintain their customer loyalty to Wilkinson throughout

their student years and also to develop them as future customers after university. Repeat

business is key to sustained growth. Wilkinson wanted to create satisfied customers with

their needs met by the Wilkinson range of products. A marketing campaign was launched which

focused on a range of promotional tactics, specifically designed to appeal to university

students:

•  Wilkinson being present at freshers' fairs - and giving free goody bags with sample

products directly to students

•  direct mail flyers to homes and student halls, prior to students arriving

•  advertisements with fun theme, for example, showing frying pans as tennis racquets

•  web banners

•  offering discounts of 15% with first purchase using the online store

•  gift vouchers

•  free wallplanners.

The challenge was to get students into Wilkinson stores. The opportunity was to capture a

new customer group at an early stage and provide essential items all year round. This would

lead to a committed customer group and secure repeat business.

Outcomes/evaluation

Wilkinson wanted to know what would inspire students to shop at Wilkinson more and what

factors would help to attract non-customers. The research provided significant primary

information to analyse the effects of the campaign. Wilkinson used questionnaires collected

from the first year undergraduates to gather qualitative data. In addition, Wilkinson

obtained quantitative data from various other sources, including:

•  redemption rates - how many people used the discount vouchers when buying

•  sales analysis - how much extra business did the stores handle

•  footfall in stores analysis - how many extra people went into stores.

This information helped Wilkinson to develop its plans for future marketing campaigns. It

identified Motivation factors for the student audience which would help to encourage future

purchase. Key factors included products being cheaper than competitors and easy access to

stores. 23% of students questioned gave 'distance from university' as a reason for not

regularly visiting the store. The layout of the store was another major problem affecting

repeat visits. These findings have been taken on board by Wilkinson in its future planning

of store locations and layouts.

Researching students' opinions after the campaign showed that:

• Awareness of Wilkinson brand had significantly risen from 77% to 95% of those

interviewed. This brought it in line with Morrison supermarkets, a key competitor.

Conclusion

Wilkinson's marketing strategy began with its corporate aim to grow and increase stores

across the UK. It was facing increased competition from supermarkets and needed to identify

an area to focus on. To pursue a growth strategy, Wilkinson used market research to

identify new target customers. This enabled it to prepare marketing strategies to fit the

audience.

Primary and secondary research was used to find out customer views regarding its brand.

Data indicated the student market segment was a significant area to focus on to achieve

market development. A marketing campaign using data from a follow-up survey was put in

place. The campaign showed significant increase in students' levels of awareness about

Wilkinson and its products. It encouraged them either to shop more or to try Wilkinson for

the first time. The campaign helped to achieve many of the business' aims, creating

increased brand awareness and repeat visits. It also helped to inform the company's future

strategies for growth. Market research gathered will help to formulate future plans for new

stores. These will be in line with Wilkinson commitment to providing communities with

affordable products across the country.

Answer the following questions

1.     What is the difference between primary and secondary research? Identify one example

of primary and secondary research carried out by Wilkinson.

2.     Explain why Wilkinson needed a marketing strategy to help them to grow.

3.     Evaluate the benefits of the marketing campaign to Wilkinson.

4.     Analyse how effective the marketing campaign was in helping Wilkinson respond to

competitive pressures.



Case-4 : Extending the product life cycle

Introduction

Businesses need to set themselves clear aims and objectives if they are going to succeed.

The Kellogg Company is the world's leading producer of breakfast cereals and convenience

foods, such as cereal bars, and aims to maintain that position. In 2006, Kellogg had total

worldwide sales of almost $11 billion (£5.5 billion). In 2007, it was Britain's biggest

selling grocery brand, with sales of more than £550 million. Product lines include ready-

to-eat cereals (i.e. not hot cereals like porridge) and nutritious snacks, such as cereal

bars. Kellogg's brands are household names around the world and include Rice Krispies,

Special K and Nutri-Grain, whilst some of its brand characters, like Snap, Crackle and Pop,

are amongst the most wellknown in the world.

Kellogg has achieved this position, not only through great brands and great brand value,

but through a strong commitment to corporate social responsibility. This means that all of

Kellogg's business aims are set within a particular context or set of ideals. Central to

this is Kellogg's passion for the business, the brands and the food, demonstrated through

the promotion of healthy living.

The company divides its market into six key segments. Kellogg's Corn Flakes has been on

breakfast tables for over 100 years and represents the 'Tasty Start' cereals that people

eat to start their day. Other segments include 'Simply Wholesome' products that are good

for you, such as Kashi Muesli, 'Shape Management' products, such as Special K and 'Inner

Health' lines, such as All-Bran. Children will be most familiar with the 'Kid Preferred'

brands, such as Frosties, whilst 'Mum Approved' brands like Raisin Wheats are recognised by

parents as being good for their children.

Each brand has to hold its own in a competitive market. Brand managers monitor the success

of brands in terms of market share, growth and performance against the competition. Key

decisions have to be made about the future of any brand that is not succeeding. This case

study is about Nutri-Grain. It shows how Kellogg recognised there was a problem with the

brand and used business tools to reach a solution. The overall aim was to re-launch the

brand and return it to growth in its market.

The product life cycle

Each product has its own life cycle. It will be 'born', it will 'develop', it will 'grow

old' and, eventually, it will 'die'. Some products, like Kellogg's Corn Flakes, have

retained their market position for a long time. Others may have their success undermined by

falling market share or by competitors. The product life cycle shows how sales of a product

change over time. The five typical stages of the life cycle are shown on a graph. However,

perhaps the most important stage of a product life cycle happens before this graph starts,

namely the

Research and Development (R&D) stage. Here the company designs a product to meet a need in

the market. The costs of market research - to identify a gap in the market and of product

development to ensure that the product meets the needs of that gap - are called 'sunk' or

start-up costs. Nutri-Grain was originally designed to meet the needs of busy people who

had missed breakfast. It aimed to provide a healthy cereal breakfast in a portable and

convenient format.

1.       Launch - Many products do well when they are first brought out and Nutri-Grain was

no exception. From launch (the first stage on the diagram) in 1997 it was immediately

successful, gaining almost 50% share of the growing cereal bar market in just two years.

2.       Growth - Nutri-Grain's sales steadily increased as the product was promoted and

became well known. It maintained growth in sales until 2002 through expanding the original

product with new developments of flavour and format. This is good for the business, as it

does not have to spend money on new machines or equipment for production. The market

position of Nutri-Grain also subtly changed from a 'missed breakfast' product to an 'all-

day' healthy snack.

3.       Maturity - Successful products attract other competitor businesses to start

selling similar products. This indicates the third stage of the life cycle - maturity. This

is the time of maximum profitability, when profits can be used to continue to build the

brand. However, competitor brands from both Kellogg itself (e.g. All Bran bars) and other

manufacturers (e.g. Alpen bars) offered the same benefits and this slowed down sales and

chipped away at Nutri-Grain's market position. Kellogg continued to support the development

of the brand but some products (such as Minis and Twists), struggled in a crowded market.

Although Elevenses continued to succeed, this was not enough to offset the overall sales

decline. Not all products follow these stages precisely and time periods for each stage

will vary widely. Growth, for example, may take place over a few months or, as in the case

of Nutri-Grain, over several years.

4.       Saturation - This is the fourth stage of the life cycle and the point when the

market is 'full'. Most people have the product and there are other, better or cheaper

competitor products. This is called market saturation and is when sales start to fall. By

mid-2004 Nutri-Grain found its sales declining whilst the market continued to grow at a

rate of 15%.



5. Decline - Clearly, at this point, Kellogg had to make a key business decision. Sales

were falling, the product was in decline and losing its position. Should Kellogg let the

product 'die', i.e. withdraw it from the market, or should it try to extend its life?

Strategic use of the product life cycle

When a company recognises that a product has gone into decline or is not performing as well

as it should, it has to decide what to do. The decision needs to be made within the context

of the overall aims of the business. Kellogg's aims included the development of great

brands, great brand value and the promotion of healthy living. Strategically, Kellogg had a

strong position in the market for both healthy foods and convenience foods. Nutri-Grain

fitted well with its main aims and objectives and therefore was a product and a brand worth

rescuing.

Kellogg decided to try to extend the life of the product rather than withdraw it from the

market. This meant developing an extension strategy for the product. Ansoff s matrix is a

tool that helps analyse which strategy is appropriate. It shows both market-orientated and

product-orientated possibilities.

Extending the Nutri-Grain cycle - identifying the problem

Kellogg had to decide whether the problem with Nutri-Grain was the market, the product or

both. The market had grown by

over 15% and competitors' market share had increased whilst Nutri-Grain sales in 2003 had

declined. The market in terms of

customer tastes had also changed - more people missed breakfast and therefore there was an

increased need for such a snack

product.

The choice of extension strategy indicated by the matrix was either product development or

diversification. Diversification carries much higher costs and risks. Kellogg decided that

it needed to focus on changing the product to meet the changing market needs.

Research showed that there were several issues to address:

1.       The brand message was not strong enough in the face of competition. Consumers were

not impressed enough by the product to choose it over competitors.

2.       Some of the other Kellogg products (e.g. Minis) had taken the focus away from the

core business.

3.       The core products of Nutri-Grain Soft Bake and Elevenses between them represented

over 80% of sales but received a small proportion of advertising and promotion budgets.

4.       Those sales that were taking place were being driven by promotional pricing (i.e

discounted pricing) rather than the underlying strength of the brand.

Implementing the extension strategy for Nutri-Grain having recognised the problems, Kellogg

then developed solutions to re-brand and re-launch the product in 2005.

1.  Fundamental to the re-launch was the renewal of the brand image. Kellogg looked at the

core features that made the brand
different and modelled the new brand image on these. Nutri-Grain is unique as it is the

only product of this kind that is
baked. This provided two benefits:

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