fundamentals of marketing
...ewhere like London as it has a larger population of the younger generation. Other demographic data that would need to be looked at would be the education status as further education can lead to better job prospects, which in return can lead to more disposable income this also includes the occupation segment. Social groups and religion will also play a part in what products consumer’s purchase. By focussing on the important differences of the economic circumstances of these people we can then begin to identity their buying behaviour as this is frequently reflected in their purchasing behaviour. (e) Further investigation of products By looking at the product portfolio of the UK Sales of Male Toiletries and Cosmetics a tool which can be used to analyse this is the Boston Matrix. The Boston Matrix has four categories which, cover the following types of products: Cash Cow – These are types of products with a high share of a slow growth market, they generate more than is invested into them. Dogs – These are products with a low share of the growth market. They do not generate cash for the company, they tend to absorb the cash instead (get rid of these products. Problem Child (Question Mark) – These are products with a low share of a high growth market, they tend to consume resources and generate little in return. They attempt to increase the market share. Stars – These are the products, which are in the high growth market with a relatively high share of the market. The rationale behind the matrix is that the growth rates will significantly affect the attractiveness of a market to an organisation for investment purposes and relative market share. Relative market share is a good indicator of a business’s strength within the market. Growth rates are also of interest because they relate to the stage of a product life cycle. High growth rates are associated with markets where the customer base is expanding rapidly and with their market share position. Low growth rates indicate that the market is maturing and implies that a business does not have to compete with other suppliers for a new customers entering the market, in order to maintain its share of the market. By using the Boston Matrix, the product which needs further investigation is Talcum Powder as it is a Question Mark/Problem Child. Although the Talcum Powder is operating in a growth market, the market share is likely to mean that these business units are unable to sustain the level of investment needed in order to try and turn them into stars. Competition may result in such a product becoming a dog. Talcum powder is the product that represents the least amount of growth over the last five years (1995 – 1999). In 1995 the product had a total amount of sale of £21m and in 1999 it had only grown to £44m in comparison with the other three remaining products have a larger growth rate within the market. STAGE (B) The company, after considerable market research, has decided to enter the Face Products sector of the Male Cosmetic Market with a moisturising cream. Mystique Company is aiming to achieve a 10% share of the Male Face Product Market and have asked us as Marketing Managers to draw up a proposal for the marketing mix of Mystique new moisturising cream for men. Within the current market there are two companies which are dominating the market with a 40% share (£ sales). Miller is representing 22% of the market share along with Tyco with 18%. Another 15 companies make up the remainder of the market share, which has a share of no greater than 7% of the market share. The Marketing Mix The marketing mix can be defined as “ the mixture of controllable marketing variables that the firm uses to pursue the sought level of sales in the target market” (Kotler) Product – is what covers the shape or form of what is offered to prospective clients in this instance the product referred to as the line of cosmetics which Mystique manufacture. Mystique will need to look at the identity of the product and create a particular image for the moisturising cream. Areas that need to be looked at will be the brand of the product and the design of the product and its packaging along with the colour of it. The product needs to be the following in order to make it appeal to the customer: Are the colours appealing? Does it catch your eye? Does the logo stick and packaging stick in your mind? As packaging adds to the cost of the product so it is important that you get it right as “packaging is a necessary marketing tool, which must be right to reap the benefits”. Price – is termed as the published or negotiated terms of the exchange transaction. Factors affecting Price: Consumers – affect the price as consumer demand for the product can lead to a price increase when there is believed to be no real loss in quality. However the market must also be tested in order to determine the price a consumer is willing to pay. Costs – The end cost of the final product must allow for costs to be built in such as the changing costs of raw material or alternative search for substitute. Other factors that will influence the final cost the research and development along with the packaging, advertising, distribution and promotion all need to be built in, in order to recoup costs. Competitors – The competitors pricing policy needs to be looked into as any increase or decrease in the product will alter the product prices. Channel Members – The distribution channel also needs to be explored. The producer Mystique sells the product onto the wholesaler and then in turn onto the retailer who then sells the product onto the consumer it creates extra costs that need to be built into the final cost of the product. The other method of distribution that Mystique uses is direct mail or mail order, which has the distribution channel of the straight from the producer (Mystique) to the consumer cutting out the two middle channels of the channel this can lead to an increase in total revenue. Demand – Mystique need to bear in mind that one of the largest increases is due to the scarcity of demand. There should always be more products available to the consumer than the demand for the product. New Products – As Mystique is launching a new product in the market it must consider these three factors in order to get the initial price established. The price must be one that consumers accept for that particular product. Must be able to produce a profit. In the face of stiff competition the product must be able to establish itself in the market. External Influences Internal Influences – Things like Industrial action along with problems with the quality can badly affect the price of the goods. Marketing Objectives – There are four main objectives that the pricing strategy is concerned with: A competitive price is established. The market share of the product is increased bu the price or at least be maintained. The price of the product enables cost recovery. Price establishes a degree of market penetration. Pricing strategy has two main alternatives that Mystique has are the following, skimming or penetrating the market. The one that Mystique need to look at closely is the price penetrating as this process can establish long term locality whilst the consumer samples the product at a fraction of the real cost. Therefore Mystique need to be launching the new face product at round about the lowest price in the table (see bellow for table) £3.49 which is equal to 2% of the market share. Although this pricing range does have a small share of the market it will allow Mystique to come in with a price bellow their main competitors Miller & Tyco but just above the lowest competitor it can begin to claim part of their competitors share of the market. Ex. Works Prices of Moisturising Cream in the UK Market – January – 50cc Tub. Company Price (50cc Tub – Moisturising Cream) ...