marketing

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How products are developed to sustain competitive advantages

Sustainable competitive advantage is the focal point of a corporate strategy.  It allows the maintenance and improvement of an enterprise's competitive position in the market. It is an advantage that enables business to survive against its competition over a long period of time. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.

Michael Porter identified two basic types of competitive advantage cost advantage.

A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation. A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage.

Chief Burger is the market leader in providing different products like Burger and Pizza as there are no competitors in this sector. There good image makes the organization more strong. Chief Burger is providing good taste, quality products with qualified staff, good atmosphere and hygienic environment. They are specialized in Burgers. Motivation level of staff is very high which make the organization more prosperous. They are ISO (International Standard Organization) certified. They have enough resources for operating different activities of the organization. They have created good image in customers mind another big Strength and even a Competitive Advantage is the fact that they have a full service restaurant because of the restaurant; Chief Burger can market too many different segments that other restaurants cannot do. For example, Chief Burger can market to families much easier than Shiraz and others because most of the Peshawar people are not good financially so they can attract even more families by their low prices with good quality foods. They are providing high range of products comparatively with low prices.

Explain how distribution is arranged to provide customer convenience

Distribution in marketing acts importantly to attract customer’s convenience therefore; the system of distribution of an organization can show the key ability for the organization. Distribution is beneath the group of place and therefore organizations build-up an accurate distribution method so that it’s easily accessible to the customers and it can improve possible sales for an organization. For example if Pepsi does not work on its distribution services and Pepsi bottles are just accessible at their factories then consumers might not be enthusiastic to get them. It’s more suitable for the consumer to purchase Pepsi from a close by retailer as compared to getting it from factory. Therefore distribution system of an organization can be both its weakness and strength. Companies in current scenario make sure that their distribution channel should be strong so that their product is available where there is need. It should be easily accessible to the customers. For this purpose the middle man plays an important role. Middle man is basically the source by which companies distribute their products in market. Companies make sure the availability of their products at retailer shops and stores where customers can easily purchase it.

Explain how prices are set to reflect an organizations objective and market conditions.

Most companies now recognize the fallacy of cost-based pricing and its adverse effect on profit. They realize the need for pricing to reflect market conditions. As a result, many have taken pricing authority away from financial managers and given it to sales or product managers. In theory, this trend is clearly consistent with value-based pricing, since marketing and sales are that part of the organization best positioned to understand value to the customer. In practice, however, the misuse of pricing to achieve short-term sales objectives often undermines perceived value and depresses profits even further.

The purpose of value-based pricing is not simply to create satisfied customers. Customer satisfaction can usually be bought by discounting sufficiently, but marketers delude themselves if they believe that the resulting sales represent marketing successes. The purpose of value-based pricing is to price more profitably by capturing more value, not necessarily by making more sales. When marketers confuse the first objective with the second, they fall into the trap of pricing at whatever buyers are willing to pay, rather than at what the product is really worth. Although that decision enables marketers to meet their sales objectives, it invariably undermines long-term profitability.

Pricing Strategy of Chief Burger

The level of competition a business faces determines its pricing strategy. Sometimes a business has the scope to set its price and sometimes a business cannot. When a business has the scope to set its price there is a number of pricing strategies or policies it might choose. As there are no such competitors of Chief Burger which could compete with the quality of Chief’s Burger produced at Chief Burger, therefore the pricing strategy adopted by Chief Burger is 'market skimming'. Chief Burger has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Chief Burger as there are no competitors and hence, Chief Burger is free to charge any price they want. They are charging lower prices due to the daily sales of the products. They satisfy the target market as the food quality is worth the price paid. The pricing strategy is not just to get the worth of quality but also to gain maximum profits before any competitor enters because then Chief Burger will have to change its pricing strategy like more lower although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are produced by Chief Burger

Illustrate how promotional activity is integrated to achieve marketing objectives

These activities are performed in order to awake and aware the consumers about the product.

Promotion being a feature of marketing mix consists of communication among the consumer and supplier of that product. Thus it’s also identified as marketing communications. Promotional activities are important factor because it tells the consumer about the product from different regions and it becomes difficult in selling a product if they are not being anticipated in the market through different promotional activities.

Example:

In recent years consumers of OLPER’S milk have improved here in Pakistan and therefore it has now got enough market shares in Pakistan. The major motive behind all this is the mass media coverage of OLPER’S milk Ads and due to this message of OLPER’S milk is being transferred to every individual and group living in Pakistan.

While reading marketing we mostly come across a word target market which is an important key factor for a company while promoting its products. Promotion includes different phases from which we described some of them that how to accomplish aspire of target market through different promotional movements. Some of the actions used for promoting a product are as follows:

Mass media like newspapers, pamphlets, magazines, Television, Radio, billboards, banners, internet etc.

Publicity through different ways like Billboards, banners, internet etc.

Specific branding and trademarks.

Promotion of sales likely through agents, wraps etc.

Public Relation Department

Promotion Mix

There are four essential characteristics of promotional mix

Advertising

Publicity

Sales Promotion

Personal Selling

Advertising:

It’s a paid appearance of communication of thoughts and goods within “prime media” like newspapers, posters, and cinema etc. Advertising is done in order to convince and inform its viewers.

Publicity:

Publicity is promotion which is done by non-personal communication channel which is ended by unrevealed supporter or it’s a method of broadcasting information to achieve public concentration.

Personal Selling:

Personal selling in one of the victorious way to keep good customers relationships. A sales person of the company work behalf of them and they are well skilled in approaches and procedures of personal selling, but this method is expensive.

Sales Promotion:

It is the fourth portion of promotional mix. It is a scheme assumed by the company in order to encourage a sufficient enlargement in sales, usage or test of a service. For example Buy-One-Get-One-Free, CRM, New Media, Free gifts, Discounts prices, Free Samples etc “Direct Marketing” which is often listed as fifth part of marketing mix and “Sponsorship” is added as the sixth aspect.

Promotion and Target Market:

The promotional actions performed by the organizations are done accordingly to their target market. A particular targeted market is attained through some definite promotional movements. It can be understood with the example of fertilizers companies more often use T.V and radio for their promotional activities because people living here don’t have all those facilities like Internet, billboards etc therefore promotional movements are done is order qualifications of the target market.

Marketing Mix Designed in Chief

Chief has designed its marketing mix on demographic basis. Here is explanation of the 4P’s of Chief.

PRODUCT:

The products which chief offers are quality products and “it offers a wide and varied menu to customers specializing in quality burger & chicken products”. They offer products that have appeal to all ages and taste. Their products have got taste and quality which is the requirement of every customer.

PRICE:

As price is combination of cost and profit. Chief has a plus point over its competitors due to pricing because the price it charges is really affordable or reasonable as compared to its other competitors like KFC and Pizza Hut etc. This is why Chief has greatly expanded its network of consumers. Currently it is doing more business than the other foreign food chains in Peshawar.

PROMOTION:

Chief has not made special criteria for its promotional activities but it does promotion and its promotional activities are done through internet and bill boards and one more thing word of mouth plays important role in promotion of chief restaurant.

PLACMENT:

Chief has only a single outlet in Pakistan and it’s in Peshawar. As it’s situated in the heart of the city in a very lucrative corner of Fawad Plaza on Jamrud road therefore it is focused to nearby areas like university town, Hayatabad etc. It has placed itself at a very good location as it is covering a maximum area. Chief is located at the heart of the city so it is easily excess able. Also in near locality there are many offices and shopping stores from where people come here and enjoy quality meal in short time.

Analyze the additional elements of the extended marketing mix

People

The employees in Chief Burger have a standard uniform and Chief Burger specially focuses on friendly and prompt service to its customers from their employees. The employees are part time workers and full time workers (not a policy). The aprons of the employees distinguish them as Chief Burger workers.

Process

The food manufacturing process at Chief Burger is transparent and hidden (the whole process is not visible to the customers).

Physical Evidence

Chief Burger focuses on clean and hygienic interiors of its outlets and at the same time the interiors are attractive and the Chief Burger maintains a proper etiquette at its joints. The design, furnishing, lighting, layout and decoration of the Chief Burger chain as well as the appearance and attitudes of its employees will influence customer perceptions of the service quality and experiences. Now another component of the service experience can be the Eviction Model which illustrates the various invisible and visible factors which influence the customer’s experience.

Recommend marketing mixes for two different segments in consumer markets

New Product Development

In this part we have developed a new product. This product is an Energy drink by the name of “STROKE”. We have designed the marketing mix of our product which is in detail below:

MARKETING MIX FOR STROKE

PRODUCT:

Stroke is a very fresh and tasty energy drink which has never been produced yet. This new and fresh drink is made to provide the consumers with energetic feel with taste as well. Lemon flavor with salt gives a very fresh and energetic taste to the consumers.

Product Size:

Stroke is available in two different sizes of 250ml and 300ml bottle.

Product Targets:

This drink is mainly for the teenagers who drink other carbonated drinks which are causing harmful affects to their health. So they should use this new drink which is free of these carbonates.

Product Differentiation:

Stroke is different from other energy drinks on the basis of bottle design, shape and taste. The design of the bottle gives a very sporty look which attracts youngsters.

PRICE:

Price of Stroke is very reasonable as compared to its major competitors. Its 300 ml bottle is for Rs 80 and 250 ml bottle is for Rs 60. This price is very much reasonable as compared to their competitors. Other major energy drink brands are charging 140 to 150 Rs per bottle /cane.

Price Determination:

This is indeed a very important factor. In case of Stroke price is determined on two bases:

Keeping in mind the existing competitor’s price level.

Calculating the cost on the product.

Price Setting:

After determination next step is price setting. In case of Stroke we have set the price keeping in mind the buying power of the customers. We have calculated the cost which includes ingredients and packaging of the product. Adding the profit margin we have set the price.

PROMOTION:

For a product of such high standards like Stroke it requires good promotional activities. For this purpose we have chosen following promotional tools:

Advertisement:

For advertisement we have used different kinds of media like television, newspaper, magazines, internet and radio. Although it requires a lot of money but still we are doing our best to make this product well known to each and every person. For this purpose we have tried our level best to use our resources to the best of our abilities.

Word of Mouth:

We have also used this tool of promotion to much extent. People who are using our product are telling others to try this and in this way our product is getting promoted.

PLACEMENT:

Placement has a major role to play in the products success and failure. We have made sure that our product is placed in such a way in market that it’s in reach of every customer. We have made our distribution channel very strong and our product is available on maximum stores in the city. With waste distribution we make sure that our product is available for our customers all the time whenever they want it.


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