Principles of Marketing Strategic Decisions

Question: Discuss about the Principles of Marketing for Strategic Decisions. Answer: 1. The strategic decisions of Kraft affected the company after the release of iSnack 2.0. The two Ps of the marketing mix namely- Product and Promotion got affected by the strategic decisions. The brand name is a vital component of the Product component of the marketing mix. The brand name is the external cover, which is perceived most by the customers. The brand name gives an idea about the seller's goods and the purpose of the company. The brand name has a particular significance or meaning attached to them, which gives powerful messages to the customers. The brand name evolves in the hearts and minds of the customers. It gives a set of ideas and emotions that the customers associate with the company. The name of the brand should present a unique idea in the minds of the customers. The product is an essential component of the marketing mix as it is the primary component on which all the other components are depending upon. The brand name iSnack 2.0 was taken from the public recommendations. However, the sole decision was dependent on the company itself. The marketing manager of the company should consider other names also for the nomenclature of their new product. The management wanted to promote the idea of snacking and hence selected the name. They considered only a single dimension of the product and ignored the mass appeal of the name. The customers wanted a more trendy name. The brand name failed to connect to the customers at an emotional level. The names of the brands are the first impression, which is perceived by the customers. The brand name is said to affect the hearts of the customers, and they tend to relate to the brand name with their full dedication. The brand name iSnack 2.0 is also similar to a digital name and made the customers remind of the increased role of technology in their lives. The customers were certainly not happy with the technical name of a breakfast spread, and this mad e the customers unhappy. The promotion component of the marketing mix was also affected to a certain extent. The promotions include integrated marketing, extensive advertisements and sales promotion. The promotion component is the most crucial factor during the initial months of the product launch. During the initial period, there is a need to influence the attitude of the customers and position the product well. The organizations strive to impart a positive perception of the products. The promotional activities are dependent on the product decisions and the pricing decisions. The promotional activities of the iBrand 2.0 were affected by the growing unrest among the people. It is true that the demand for the product was not affected by the nonacceptance of the brand name. Despite this fact, the promotion of the product was subdued as a result of the intolerance. It failed to penetrate the masses as it was expected. The publicity was made, but it was negative publicity, which is not good for a new brand. 2. The marketing mix consists of four elements namely Product, Price, Promotion, and Place. These factors contributed to the success of iSnack 2.0 during the initial stages. This is described as below- Product- The product is an item, which satisfies the desire or need of the customers. The successful product should satisfy a specific need of the target audience. The iSnack 2.0 satisfied the needs of the customers as they were happy with the taste of the product. The product had characteristics that differentiated it from the competitors. The unique selling proposition of the product was that it was easy to spread, creamier and can be used without butter. These value added features delighted the customers, and the company enjoyed a better position in the market. There are identical products in the market with similar features. Hence it is important for a brand to identify its unique factors. The company has highlighted the enhanced features, which made the customers realize that the product is superior to the existing products in the market. The company also understood its target market well, so it was easier for market positioning of the product. The decisions regarding a product are vital, and the company paid full attention to the details. The quality of the product was premium and with unique features. This factor helped the brand to create mass acceptability of the product. The company took good decisions in the product development stage. The first step of a product development process deals with the generation of ideas. The company had used the tools of consumer feedback before they started to develop the new product. This made the company aware of the customer preferences and developed a product that satisfies their need. Price- The pricing is an important component of the marketing mix as it is a source of income as well as profits. The price also gives an impression about the company and its products, in the minds of the customers. The organizational management also strives to support the various costs associated with the products like the cost of distribution, cost of production and the cost of promotional activities. The pricing decision should be made through proper market research and consider the strategic objectives of the organization. The price of iSnack 2.0 was neither too low nor too high, which attracted millions of customers. The pricing strategy was also used by the company for triggering first impressions about a product. The company also used the pricing strategy for performing sales promotion. This is meant for the increased generation of interest in the product. The company used competitive prices of the breakfast spread to increase the number of sales. The number of sales was high as it is evident from the fact that three million products were sold in the first three months of the product launch. The objectives of the pricing methods are profit maximization, revenue generation, partial cost recovery and maintaining the status quo. The company used some internal factors as well as some external factors to determine the price of their new products. The internal factors included fixed costs, variable costs, company strategies, company objectives, market segments and decisions regarding positioning. The external factors included the competitors pricing, industry trends, behavior of the target market, industry constraints, legal factors and others. Promotion- The promotion of a product includes the activities that involve the transfer of the message to the customers regarding the products and its associated benefits. It involves spreading the correct awareness through various mediums to increase sales as well as create brand loyalty. The company, Kraft, did extensive promotional activities, during the early days of the product launch. The objective of the company was to build awareness regarding the brand, create interest about the product, provide information regarding the product and stimulate the demand for the spread breakfast product. The company also strived for reinforcing the brand and aimed for the differentiation of the product in the market. The company used various elements for the promotional campaign. This included the online advertisements, offline ads, sales promotion, direct marketing, public relations and others. The company made widespread publicity, which resulted in the enormous increase of sales. The compa ny engaged in aggressive marketing practices during the initial stages, which proved to be beneficial for the company. The products of the company were talked about by the general masses. The products were also welcomed with open arms. The quality of the products fascinated the customers and these increased the sales. the company suffered negative reviews regarding the brand name in the initial stages. However, this did not stop the sales of the company. The promotional activities were highly successful, which improved the brand image of the company. Place- This component of the marketing mix ensures that the products are provided to the customers in a convenient manner. The distribution component is an important component for ensuring that the products reach the customers in the least possible time. The company, Kraft, decided on the channels of distribution, well before the launch of a product. The company also planned the way that the product would be accessed by the end users or the customers. The company ensured that the location of the provision of the products should be convenient and easily accessed by the customers. The company aims to gain a wide reach for its products to make sure that the products are available at easy locations,w hich can be accessed by the customers at the times of need. The primary channels of distribution are the retail outlets, followed by online availability. The chain grocery outlets are the major distributors of the breakfast spread products, where a large number of children as well as youths, make their purchases. The stores provide a cost effective channel of distribution, which possesses a wide reach. The company manages in cost cutting measures of by selling its products to various wholesalers rather than selling them directly to smaller stores. The company also ensured that the product is available, and the customers are not returned due to nonavailability of the product. 3. The marketers face stiff challenges in maintaining the brand status of their most popular products. There would be ongoing pressure on the marketing managers to deliver short-run financial benefits, which makes the organization to focus more on tactics. They start to neglect the goals of building assets. The marketing innovations start to decline after the product reaches its maturity stage. The innovation is a critical step in maintaining the brand value of the products. The passing of time often decreases the amount of innovation that is observed in the initial stages of the product launch. The brand image gets affected when there is any dip in the quality of the product or other consumer experiences. This may cause a negative image of the brand in the minds of the consumers. There may be a lot of competition in the market which is offering similar products. This may pose a challenge for Kraft brand's Vegemite. The company may also lose its loyal customers, in the future course of time. There may be inconsistencies in delivering the required products, as per the needs of the customers. The company may cease to anticipate the needs of the customers and continue selling their existing product range. The company may also fail to provide any personalized experience to individual customers if the situation demands. The company should take care of these challenges that may arise in the future. The marketers should strive for building assets and not merely financial benefits. There should be a continued innovation of their existing products. The market research should be done, which would give the managers an idea regarding the customer preferences and the customer needs. The market insights give crucial data to the managers, through which they can strive to make superior products. There is a tendency of the customers to change their preferences over a period. The target markets of this company include young adults and teenagers, who are known to frequently change their taste preferences. The marketing manager of Kraft should pay attention to these changed patterns of the customer buying behavior. The brand should continue its focus on the promotional activities to continue spreading awareness among the people. The company should strive to make an initiative towards gaining new customers and the retention of the existing customers. The company should venture into new markets and expand its present areas of operations. The company should strive to make an excellent supply chain operations so that its operations are smooth and hassle free.The company should also take care of the availability of the products in its retail outlets or online medium. It is very important for the company to analyze the products and prices of the competitors so that the company can plan their marketing initiatives accordingly. If the company are careful regarding these little points, then the brand Vegemite would continue to enjoy its premium status. 4. The process of marketing is viewed as beneficial for the organization. The marketing function, however, attracts a significant amount of criticisms, from the customers. The wide range of criticisms is discussed below- It is a common saying of the customers that marketing often forces people or influences people to purchase things, which they do not require. The advertisements are said to be brainwashing people so that they can make more and more purchases, which is non-essential. Customers blame the marketers for pushing the customers to buy more products, irrespective of the fact whether they need them actually or not. They say that marketers try to influence and transform the minds of the customers which force them to purchase unnecessary stuff. The customers often repent the wastage of money in buying the unnecessary stuff. The root of these arguments lies in the fact that the customers believe that marketing agencies want to satisfy their personal needs, and they are least bothered about the needs of the customers. The marketers are said to be manipulating the customers with their tactics. This is a serious concern for the marketing companies. It destroys the goodwill of the brand and customer s start losing their interest in the brands. The companies often lose their loyal customer base as a consequence of this practice. This, in turn, inhibits the long-term success of the company. The marketers are believed to embellish the product claims. The customers often accuse the marketers for the exaggeration of the benefits offered by the particular product. This phenomenon can be seen when a company engages in extensive advertisement and the involvement of a large number of salespeople. The serious issue arises when the claims of the marketer are false and misleading. The customers find that the product is of inferior quality, or it is not matching with the claimed benefits. This brings a lot of controversies, which ultimately damages the brand image of the company. The customers want an answer for the mismatch of the benefits. The customers may stop using the particular product or boycott the brand. This implies a loss of revenue for the company, which affects the financial performance of the company. Marketing practices are known to generate environmental waste. Marketing is said to be affecting the surrounding environment. Marketing practices make use of excess packaging materials of non-biodegradable origin, such as the use of plastics in wrapping small products inside large packages and so on. There is an increased development of the resource consuming infrastructures like the construction of new buildings, shopping malls, residential complex, golf courses and others. There is also a proliferation of wasteful ways of promotional substances like direct mail, outdoor billboards, and others. The marketing practices are said to encroach the rights of the customers towards privacy. The process of marketing requires the collection and analysis of vital information for formulating good marketing decisions. The valuable information of the customers give the purchase behavior of the customers and determine the factors that influence the purchase decisions of the customers. There are instances when the marketers cross the line as far as the collection of information regarding customer buying behavior, is considered. They gather private and confidential information of the customers, which puts a big question on the privacy concerns of the customers. The customers blame that the marketers use illegitimate procedures that track the activity of the users. The marketers are also said to be using advanced technologies for gaining access to vital information like customer shopping data. For example, the marketers can use highly advanced technological tools to gather data on user activ ity over the internet. Sometimes, this is done by loading tracking software in the computer of the users. There is a software named Adware, which allows the marketers to monitor the website browsing activity of the users. This information is used by the marketers to deliver suitable advertisements based on the internet habits of the users. The marketers not only track the online activity of the customers but also track the offline purchasing activity of the customers as well. An example to support this statement is when the retail stores engage in matching the sales transactions to the individual customers (by loyalty cards, discount cards, and others). There is a breach of customer privacy when their credit card information is hacked and misused by an unauthorized third person. In recent times, this has been a burning issue, which is faced by a wide number of customers. There is a growing concern against the marketing companies, which revolves around the ethical considerations. There is a fine line of distinction between unethical behavior and ethical behavior. Th e-marketers, sometimes, cross the boundaries of the ethical practices, either intentionally or unintentionally. The marketers should handle criticism efficiently so as to maintain their brand image. The company should be careful about the content of the advertisements. It should not be misleading or promote any false claims. To combat the issues of environmental misuse, the marketers can opt for green marketing initiatives. These initiatives can utilize the potential business opportunities as well as make the critics happy. The marketers should respond to the issues of the customers in the least possible time, especially in the case of a possible breach of privacy. The marketers should adopt an honest and clear approach while dealing with the irritated customers. The advertisement campaign should be authentic and present true as well as tested features of the products. The marketers should be ready to change the attributes of the campaign, in case it faces allegations of the customers. A rigid and stubborn attitude of the company would only invite more troubles for the concerned company. The m arketing managers should demonstrate a professional approach when dealing with the criticism. They need to have patience, politeness, and cool mind when they face negative criticism. There are instances when there are miscommunications with the customers. The marketing concern should take care of this aspect and ensure a transparent mode of communication. 5. The internal data is an important tool by which the marketing managers gain valuable insights regarding customer behavior. The organizations collect various data in their day to day operations. There are data on various parameters like customer transactions, psychographics, buying patterns, sales by territory, sales by customer types, prices, discounts and customer demographics. These types of data are beneficial for the identification of an organizations highest profitable product and determining the segment of the customers who are purchasing the products of the company. The financial data helps the marketing manager to assess the efficiency of the marketing operations of the company. The managers also use the financial data to estimate the suitable costs for the new products yet to launched. The managers are also able to make proper utilization of the production, transportation and storage functions of the company. The storage data gives an idea to the marketing managers about the rate of stock turn, the costs associated with stockhandling and the assessment of the efficiency of the entire marketing operations. The transport data maintained by the company gives the marketing manager an opportunity to perform trade-off analysis. It also helps the marketing manager to determine the benefits of hiring or owning the vehicles, from an organizational point of view. The marketing managers use the data derived from internal sources to identify marketing opportunities in different market segments. They can also plan the marketing campaigns and evaluate the performance of the same. It helps the managers to take better marketing decisions. The marketing intelligence concerns with the systematic collection of data and the analysis of the publicly available data about the competitors. The competitors are the most important entity in the marketing process. The marketing managers are always concerned about the practices or products of their nearest competitors. The managers want a detailed picture of the competitors strategies, products, ideas, and campaigns. They can do so by the analysis of data available from various public sources. The data on the competitors can be gathered from some sources like the internet, company employees, published information, employees of the competitors, trade shows, channel members, benchmarking and vital clients. The marketing manager can get important information by monitoring the activities of the competitors. It includes purchasing and analyzing competitors' products, checks for new patents, monitors their sales patterns, examination of various physical evidence and others. For example, a company engages itself in analyzing the parking lots of the close competitors. They found out that sometimes the parking lots are full, which indicates that the competitors are having plenty of work. There are such instances also when the parking lots are empty, which indicates that the competitors are going through hard times. The internet is providing a wide variety of information related to the competitors, because almost all the companies, places, ample of information about themselves on the company websites or other websites. For example, a company provides the vital information such as revenue targets operating hours, the number of employees, types of products, manufacturing process and others, on the company websites for their stakeholders. This information can be utilized by the competitors for their benefit. The systematic collection, design, and reporting of relevant data for a specific marketing purpose, is known as marketing research. It can help the marketers to determine the market share and the potential of the market. It also gives the vital statistics regarding customer satisfaction and buying behaviors of the customers. The market research is an effective tool for analysis of product, price, promotional activities and distribution of a product. For example, Dell wants to gather data regarding the perception of the customers regarding the existing products and the probable perception of the newly launched super fast notebook. Some of the large multinational companies possess their marketing research departments, which work on marketing research projects along with the marketing managers. One example of such companies includes Citigroup. The smaller companies recruit research specialist from the open market so that they can consult with the management team on specific marketing is sues. The research specialists conduct the individual marketing research independently on behalf of the concerned companies. There are few instances also when the company simply purchases the specific data made available by outside firms so that it can help them in their decision making process. The marketing managers often use the marketing research data as a foundation for making marketing decisions. This is detrimental to the company in the long run. This is because of several reasons. The marketing research is often based on the feedbacks collected from the target audience only. This gives a biased picture of the entire market. The preferences and purchase patterns of the target audience may differ from the rest of the markets. This results in a loss of customers, resulting in a loss of revenue for the company. It also happens that the feedbacks are not true and are given just for the sake of giving it. The credibility of the data collected from the market research poses a doubtful approach to marketing decisions. It happens that the data collected from market research is not relevant to the marketing issue, or the collected information is unable to answer the burning marketing question. In such cases, the decisions based on such data can prove to be futile and would be unable to serve the purpose of marketing. There are also issues with the data interpretation. A particular term may hold different significance for different people. The perception level of people changes from one individual to the other. For example, the term youth' is a confusing term, and the age group taken by the researcher may not be the same as understood by the manager. The manager needs to find out the exact age group taken by the researcher. This issue needs to seriously deal with the marketing manager before arriving at any marketing decision.