Marketing. Textbook
.pdfgifts is most often a birthday, Christmas or Valentine's Day, and the gift itself is a souvenir from abroad;
c)watch manufacturers convince consumers of the need to buy different watches to match their clothes and suit the situation. But only
22.7% of consumers follow this advice: most adults wear the same watch all the time;
d)35.9 % of women surveyed indicated that in the future they want to wear Japanese-made watches, 11.8 % — American or European-made, and 40.0 % said that it does not matter to them what country they are made in watch;
e)watches made in America and Europe are most popular among 20-year-olds and single people, employees of various institutions and diplomats;
f)most women who want American and European watches attribute this to an attractive design, even if the price is slightly higher, or a wellknown brand name, indicating that good design and product image along with high quality are important to the Japanese consumer.
Watch prices of ¥ 20,000 and ¥ 30,000 have been cited as being most affordable, but affordability largely depends on annual income levels. In families with annual incomes of ¥ 10,000,000 or more, a price of ¥ 30,000 is considered acceptable, of which 15.2 % indicated a price of ¥ 100,000 [7, p. 48].
Questions:
1.Research background information and identify the challenges Japanese wristwatch manufacturers were facing in the late 1980s.
2.Describe the target segment of the Japanese wristwatch market for foreign firms.
3.What conclusions can be drawn based on the survey conducted about the attitude of Japanese consumers towards wristwatches?
4.Formulate recommendations to Japanese watch manufacturers regarding their market policy.
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2. The consumer is always right
Harris Queensway was originally a carpet trader. In 1957 she owned only three stores in London. Twice the company decided to diversify its activities: in 1980 it acquired a furniture sales company, and seven years later this new division already had more than four hundred retail outlets; in 1986, Queensway acquired an electrical goods retailer and another company that sold upholstered furniture. Queensway's profits began to grow rapidly, and if in 1986 they amounted to about 12 million pounds sterling, then a year later they exceeded 40 million pounds sterling. However, the deterioration of the economic situation, which became noticeable already in 1988, led the company to death: the profit received over the last three years was reduced to zero. The company's founder, who made a fortune from the retail boom of the past few years, has left his creation. The 1986 acquisitions were sold. An attempt to revive the company in 1990 failed. During this period of time, the company's problems largely depended on the reduction in consumer spending. Sales of furniture and carpets stagnated, since most families began to buy new expensive things only after the old ones had worn out.
The study showed that prices for Queensway products are quite comparable with the income level of consumers. But competing firms set more flexible prices, offered a variety of discounts, attractive loans, supported by intensive promotion of goods.
Being in a big loss, Queensway could not reduce prices to increase sales. And this, in turn, practically deprived it of allocations for communication policy and loans to suppliers, which made them noticeably wary. It was noted that improved design had little effect on sales levels, so retailers focused on inventory, sales status, and the quantity and quality of services provided to customers. The company's philosophy of selling what sells easily was the exact opposite of modern marketing.
Industry market research among carpet and furniture buyers has shown that these products begin to attract people's attention when they move into a new home. These could be people buying a home for the first
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time (new or remodeled). They usually have a modest budget, choose small rooms and pay close attention to design. Newlyweds (or those about to get married) prefer larger rooms and larger homes, despite their modest budgets. Design is quite important to them. Growing families who buy a new home out of necessity are more affluent and prefer multi-room houses with a garden. For them, the main priority is children, and furniture is a functional addition to the interior.
The category of consumers “the two of us again” — the children have already left home, opportunities are high, a large number of spacious rooms, more free time — often turns into the category of “newly secluded”, buying an apartment or a small one-story house with a veranda. With a fairly high income, small rooms, and a significant amount of free time, they realize that with age their income will decrease.
Consumers came under the influence of firms in the 1980s. The assortment was frequently updated. And when Queensway began using price-cutting tactics without providing the required range of products in well-stocked, professionally serviced stores, it turned off many customers.
The company ignored the principles of marketing: it did not consult customers or study their preferences, but sought to achieve sales growth by changing prices. In the 1990s, there was no marketing department in the structure of the company, since with the dismissal of many specialists during difficult times for the company, it ceased to exist.
At the end of the 1980s, the preference of English consumers of furniture and carpets was characterized by the following parameters: quality and price corresponding to its level, design and company image, durability, delivery conditions, safety.
During the recession, when demand for carpets and furniture fell, the company changed its focus somewhat: it tried to capture the middleincome segment of buyers and refocused on discount trading along major highways. Soon trade improved, the company began to pay attention to service, product design, and customer service. Its image as a company for middle-income consumers began to take hold. Unfortunately, there was not enough cash to meet the new demands of department stores, which
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resulted in changes in the level of services they provided. But this was not the only thing that confused buyers: the Queensway company, which provided discounts, ceased to be such [8, p. 48].
Questions:
1.What are Queensway's target segments and its corresponding positioning?
2.How did the firm seek to reach additional segments?
3.What factors most influenced the decision to make purchases in this market and how did the company use this to improve the efficiency of its activities?
4.How can the attitude of buyers towards the products of competing firms be studied?
5.Suggest ways for the company to get out of a difficult situation.
3.2.EXERCISES
1.Make the maximum possible list of marketing research tasks.
2.Conduct a comparative analysis of the main methods of data collection in marketing research. Which methods would you recommend to a company based on the type of information required?
3.Conduct a comparative description of the main survey methods as a method of data collection.
4.Which method is the most economical, fastest, and most effective in terms of returning questionnaires?
5.Make a sequence of application of various marketing research methods to identify the cause:
- reduction of the company's sales volume;
- reduction of consumer loyalty to the brand; - reduction in product quality.
6.There are five main stages of marketing research. Conduct a miniresearch on any product on the Russian market.
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7. Describe the process of selecting the sample for the study. Conduct a comparative analysis of the main methods for determining sample size.
3.3.CONTROL QUESTIONS
1.Name the main stages of marketing research. Describe each of these stages.
2.Under the influence of what factors is the market situation formed?
3.Name the basic principles that form the idea of consumer behavior. Reveal the essence of each of them.
4.Why does a market participant need to study consumer behavior?
5.Review the stages of Dogmare's ladder and explain their significance for studying buyer behavior.
6.What is the essence of product positioning?
7.What are the main criteria that underlie segmentation?
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TOPIC 4. PRODUCT AND PRODUCT POLICY IN MARKETING
4.1.SITUATIONAL TASKS
1.Updating the product and promoting it to the market
The size of the confectionery market in the UK was estimated in the 1980s. £ 3 billion, with 10 % of sales coming from Scotland. Traditionally, chocolate products are positioned mainly either as a product for personal consumption (Kit Kat, Mars Bars) or as a gift (Black Magic, All Gold). According to marketers, when choosing a product, buyers pay much more attention to the price when purchasing for themselves.
Gordons has decided to release a new product. The company was founded in 1850 by William and Maria Gordon in Dundee. At the turn of the century, a subsidiary was established in Stirling, which was acquired in 1927 by one of the Big Chocolate Four firms in Great Britain. The new owner used the Stirling factory to expand its presence in the highly lucrative confectionery market. In 1986 the company left the Scottish market.
Three years later, a group of former factory workers decided to reenter the market with traditional Gordons products — Continental Creams. They leased the same factory in Stirling that their former employer had rented to them. The managing director believed that the company would get a good return on its investment if its market share was 1 % in the first year and eventually reached 10 %. Three new product lines were planned for 1989: apricot brandy truffle, chocolate ginger praline, orange and curacao candies. The managing director knew that he could not compete on equal terms with the giants of the chocolate business.
The maximum possible budget for product promotion could only be set at £ 10,000 for the first year. He decided to target customers who prefer products of purely Scottish origin. Research has shown that none of the
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firms present on the Scottish market are perceived by consumers as purely Scottish.
The marketing director argued that customers are willing to pay a premium if a new product differs significantly from existing products. He suggested positioning the new product as a gift and paying special attention to the attractiveness of the design, focusing on the price of Black Magic (£ 1.78 per box weighing 227 g). He ordered new packaging from a leading Scottish design centre. Contrary to the traditional tartan and heather theme of Scottish products, the design of this packaging was done in dark red, cream and dark blue. Six dark chocolate cream fillings (orange, gooseberry, raspberry, apricot, lime, blackcurrant) are shown as if through a window. The central part of the box is surrounded by a ribbon with a new logogram and the name of the product. The retail price for the 62 g set was 49 pence.
The director believed that the time to introduce a new product to the market was chosen correctly, taking into account at least two circumstances. Firstly, although confectionery is predominantly purchased by people aged 18–35, a significant number of consumers remember the days when Gordons was the “Scottish word in chocolate”. Secondly,
Edinburgh is attractive to tourists: it receives 2.5 million people annually. He also took into account the traditional success of elite brands in the UK [8, p. 109].
Questions:
1.Assess the degree of novelty of the Gordons product. In your opinion, does the new product have distinctive features and what are they?
2.What market segments would you advise a marketing director to target? What criteria will you use to select target segments? Give their characteristics.
3.Suggest a way to position the product.
4.Develop an advertising slogan for the company's new product.
5.What types of communications would you offer to the company's management as a marketing director? Give reasons for your choice.
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6. What, in your opinion, should be the cost structure for product promotion based on the amount indicated in the situation for the first year of market development?
2. Old product — new market
The company, one of the world's largest suppliers of plastic bearings and rollers for escalators, had a 26 % market share in Europe and the United States in 1983. A year later, its share increased to 36 %. The company's headquarters and main plant are located in Sweden, subsidiaries and small enterprises are located in Switzerland and Germany.
The bearings and rollers that the company produces provide optimal sliding and eliminate noise in escalators and conveyors. Its assortment includes four types of products for various purposes. The company is one of the few in the world that produces both rolling and sliding bearings. Thanks to the high quality of its products, the company enjoys a good reputation in Europe and the USA. Its strong position is also supported by reasonable prices based on achievements in resource conservation.
Demand for bearings and rollers is expected to increase annually by an average of 3.5 % over the next five years, with needs determined both by the need to replace used parts and for installation on new escalators and conveyors. Currently, the company's main task is to penetrate the Japanese market. According to preliminary forecasts, in Japan the company's products could be sold at a price of $ 2 per product. This decision was made based on the rapid growth rate (higher than the average for the world market for these products) which, according to forecasts, will continue until 2000. The capacity of the Japanese market for plastic bearings and rollers is about 30 % of the world market.
Desk and field research, which was carried out by a specialized marketing organization at the request of the company, allowed us to obtain the following information. There are five fairly large suppliers of plastic bearings and rollers on the market, two of which control 60 % of the market, the average prices of competitors are $ 5–8.
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Japanese buyers prefer long-term relationships with sellers. Thus, the Japanese market is stable, the number of competitors is small. Problems in developing long-term connections arise mainly due to cultural differences that make contact difficult. And this appears to be a real barrier to entry into the Japanese market.
A survey of buyers showed that they consider high quality, delivery times, reliability and the length of the warranty period to be the main parameters determining the purchasing decision. But the highest rating always has the quality of the product. Will the company fulfill the task: to increase its share in the Japanese market to 30 % in six years [8, p. 293]?
Questions:
1.Which method of penetration into the Japanese market would you recommend for a company and why?
2.Propose a market strategy and develop product positioning. Identify the most important factors that need to be taken into account when doing so.
3.Provide suggestions for the marketing mix that could provide specific benefits to the company's offering.
4.2.EXERCISES
1.Analyze the differences between the main approaches to defining a product. Is everything a commodity?
2.Describe the main stages of the product life cycle. Give examples of products that are at different stages of the product life cycle today.
3.Analyze changes in profit, income and costs depending on the product life cycle.
4.Describe the main marketing strategies at various stages of the product life cycle. Give examples of companies that have used these strategies.
5.In people's daily lives, products such as television, refrigerator, computer, toothpaste are widely used. Formulate your vision of each of
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them as a product by design, a product in actual execution, and a product with reinforcement.
Determine which of these goods are durable goods and which are non-durable. Offer a range of services that support these products. Formulate the most important characteristics of the listed products, designed, in your opinion, to most fully satisfy the needs of specific consumers.
6.Formulate your basic needs and place them in a hierarchical sequence in accordance with Abraham Maslow's pyramid. Indicate the main products that can satisfy these needs.
7.The most contrasting colors are three: red, yellow and blue. Weaker contrasts are provided by combinations of orange, purple and green. The schematic representation of these spectral colors is called the “Delacroix Triangle”. These properties are often used when designing packaging for companies (“Wimm-Bill-Dann”, “Krasnyj Oktyabr'”). Give an example of products that use the principle of color contrast.
4.3.CONTROL QUESTIONS
1.Define the concept of “product”. Give an example of a marketing classification of consumer goods.
2.Name the main stages of the product life cycle and describe each of them.
3.What is the activity of assortment formation?
4.What are the main functions of packaging?
5.What is considered product reinforcement in marketing?
6.How do the concepts of product quality differ for the manufacturer and the consumer?
7.What characterizes the new product?
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