Market Penetration Pricing Strategy

FollowMe Industries Sdn Bhd. established in 1983. FollowMe is the manufacturer of personal care, toiletry products, and cosmetics distributed and marketed under the trademarks “Follow Me”, “Secret”, “Everyday” and “Can Can” exclusively by its distributor Tohtonku Sdn Bhd. Tohtonku Sdn Bhd. established in 1964. The company has a unique sound and a Japanese flavour to reflect the company’s origins. When Tohtonku was first founded in 60’s, its core business was the sale of Japanese medicines and related products. Through the years, Tohtonku grew from selling just medicine to offering a wide range of products that are essential for day to day living. Today, Tohtonku market a complete range of personal care and household products that cater to the needs of Malaysia’s general population. The company also has made its mark in the market with popular brand names. Tohtonku Sdn. Bhd. being a trading company has more than 40 years’ experience in international export and import trade. Tohtonku has 932 capable employees and 19 brands of which are FollowMe Nutox Oxyfusion, Nanowhite, Secret, Ubermen, A’laisyah, Can Can, Everday, Koolfever, Ammeltz, Sawaday, Saniplast, Seirogan, Breathpop, ARS, You&Me, Rainna and King Kong. Tohtonku has progressed from a homegrown name into a multinational brand. Its products are benchmarked against international standards that bring them into close competition with other established international brands. There are 6 offices in Malaysia and currently the main office is located in Penang while the Sales & Marketing office is in Kuala Lumpur. Tohtonku began with a dream to make every people looking good and feeling confidence of who they are. Hence, their products are ever changing to meet every consumers demand. Now, Tohtonku is setting its sights on a new dream. To conquer the South East Asian market and emerge as the region’s most popular shoppers’ choice in the coming years. The company will focus on the customer’s needs and play on the strengths of the management team and its workforce, Tohtonku will be at the forefront of product development with a range of great products being developed for the marketplace in years to come.

Tohtonku have been awarded under following categories:-

Nutox Oxyfusion Moisture Emulsion SPF25++ won CLEO “Beauty Hall of Fame 2009”

Nutox Oxyfusion Spot Away won Women’s Weekly “Best Beauty Buys Award”

nanowhite Intensive De-Pigmentor won “Spot Corrector Terbaik” for Cosmopolitan

A’laisyah Gel Pengelupas won “Gel Pengelupasan Terbaik” for Cosmopolitan

2. The Marketing Mix Strategies

2.1 Product Strategy

Product Classification

In the product strategy, FollowMe products are considered as consumer product because it is bought by final consumers for personal use. There are four types of consumer products and FollowMe products are considered as convenience products. Convenience products are products that frequently and immediately purchase by customers. Customers will not plan much when they want to buy the convenience product and also little comparison is made. Besides, FollowMe Products can be easily found in many locations such as hypermarket, convenience store, groceries and so on. Many promotions also done by FollowMe to promote its product such as advertisement, sales promotion and so on.

Product Mix

For the product mix width, FollowMe has a product line of personal care product such as Haircare, Bodycare, Skincare, Oralcare and Wecare. Based on the product line, FollowMe come out with its product mix length. FollowMe has different kind of product for each of the product line. For example, the product line of Haircare; FollowMe has Kids Range which is the shampoo that is suitable for children to use, Styling Range that is used to comb the hairstyle and Men Range is for men. FollowMe also has its product mix depth. The Men Range can be dividing into three types to meet the needs of different people. The three types are Men Hair Cream to keep hair firmly styled, Men Premium Hair Cream to prevent split ends and coarse hair and Men Hair Liquid to make the hair easier to manage.

No.

Product Mix Width

Product Mix Length

Product Mix Depth

1)

Haircare

Kids Range

Styling Range

Men Range

( Men Range )

Men Hair Cream

Men Premium Hair Cream

Men Hair Liquid

2)

Bodycare

Nature’s Path

Kids Range

Rainna

( Rainna )

Rainna Moisture Rich Spa

Rainna Botanic Relaxing Spa

Rainna Aroma Therapy

3)

Skincare

Oil Control

UBER-MEN

( UBER-MEN )

UBER-MEN Age-Defense Treatment Essence

UBER-MEN Oil Away Power Cleanser + Toner

4)

Wecare

Men Range

Scene

UBER-MEN

( UBER-MEN )

UBER-MEN Attrax Body Spray

UBER-MEN Pozess Body Spray

UBER-MEN Indulge Body Spray

Brand

The brand name FollowMe is a brand name that is own by a manufacturer called Tohtonku Sdn Bhd. According to Jasper Lim, a director of Tohtonku and a third-generation Lim at the company, FollowMe was taken from an English language programme that his mother attended in 1980s. FollowMe is a brand name as there are only words that form the brand name. The FollowMe is a brand that has a combination of Japanese and English words. FollowMe is taken by the Jasper Lim father as his father think that FollowMe is a unique name that could be a brand.

FollowMe is considered as a manufacturer’s brand. FollowMe is own by the Tohtonku Sdn Bhd that is a manufacturer. Besides, Tohtonku Sdn Bhd has its own factory in Malaysia. Tohtonku Sdn Bhd also using the brand name FollowMe to sell its products.

Packaging and Labelling

Normally, FollowMe package its product with a plastic bottle but there are different packaging design and colour scheme for each range of product. There are different sizes of plastic bottle according to its volume. Bu using plastic bottle, the product of FollowMe is more protective, it will not break easily or leak easily as many of the FollowMe products are come in the form of liquid or cream. Besides, cover is also available in order to prevent the product being contaminated.

The packaging is labelled with the identification of the products such as trademarks, serial number, and registration number the product itself. The usage instructions and content descriptions also printed on the packaging. Barcode is printed on the package to make payment easier. Other than that, expired date also printed to let consumer know the life usage of the product.

2.2 Pricing Strategy

Market-Penetration Pricing Strategy

FollowMe is using market penetration pricing strategy for its new product pricing strategies. FollowMe is using this strategy because there are too many competitors in the market and the market is highly price sensitive. So, they set a low initial price in order for the brand to penetrate into the market quickly and deeply, using this method they can attract a large number of buyers quickly and win a large market share in short period of time. The high sales volume will result in reducing of production and distribution cost and allowing FollowMe to cut their prices even further. FollowMe has the superiority to use this strategy because Follow Me is a local company and its product is locally manufactured and distributed. FollowMe has a lower cost of production compared to other foreign company as import tax is not required. For example, the STRAIGHT & SILKY SHAMPOO 750ML only cost for RM23.90. The price is economical and quality can be guarantee because Follow Me products are benchmarked against international standards and this enables them to compete with other established international brands.

Product Line Pricing Strategies

FollowMe is using product line pricing strategies in its product mix pricing strategies. FollowMe is selling variety of personal care products with different features and functions, so FollowMe apply this pricing strategies to differentiate its products. By using this strategy, it can attract customers’ attention towards the product because customer will feel curious when they see same products with different prices. Customers surely will find out why when they feel curious, and automatically the customers’ attention will go towards the products. For example, FollowMe sell GREEN TEA HAIR REVITALIZER SHP 750ML for RM24.90 but GREEN TEA SCALP CARE SHP 750ML for RM27.90. It shows that Follow Me will set different prices for different function of shampoo. Besides, FollowMe also set price according to the size of the packaging. For example, GREEN TEA HAIR VOLUMIZER SHP 750ML is RM24.90 but GREEN TEA HAIR VOLUMIZER SHP 400ML is RM14.60.

Promotional Pricing Strategy

FollowMe is using promotional pricing strategy in price adjustment strategies. They offer a lower price within a specified time to draw more customers to create excitement and a sense of urgent to boost their sales. For example, when ten year anniversary of the company they will do sales like the price of FollowMe product will decrease compare to off sales. FollowMe will also reduce the price in order to reduce stock.

2.3 Promotion Strategy

Promotion is very important to every company and their products. Promotion is to provide latest information to consumers. Besides, it can make the company differentiated from their competitors and hence increase the demand from consumer toward the products.

First element of integrated marketing communication is advertising. FollowMe is newly launched, they advertise it to stimulate and build up the primary demand for the product. Information is provided about the products to the consumers. The main media of advertising for FollowMe is through internet. There are quite numbers of links and pages that are promoting the product, for example like FollowMe Green Tea Shampoo advertisement at a bus stop in Pulau TIkus, Penang and FollowMe Happy Shampoo advertisement on a billboard in Gurney Drive, Penang and so on. Besides, there are many videos that describing and promoting the product are uploaded to the internet such as Youtube, Facebook and others. The magazines are also one of the media for FollowMe to advertise their products.

Personal selling is a direct communication between the seller and consumer. FollowMe had used this promotion strategy in promotion of their products also. In every outlet shop of FollowMe hired sales assistants to provide personal selling service. The main purpose of this is to introduce the new products to the consumers and also provide messages about the product to them.

Third element is sales promotion. FollowMe is giving promotion or freebies for purchasing the products. This is to stimulate the purchasing of the product at the mature stage. In 2005, department stores achieved a value share of almost 17.5% of total cosmetics and toiletries sales. In this case, this can stimulate the retailer to purchase more for store. And the mark out for the price can be lowered down for sales.

Next element for integrated marketing communication is followed by public relations. FollowMe had used public relations to promote their brand and also products. They had become one of the sponsorship for a numbers of activities such as sports, Olympics, talks and others. FollowMe also promote their products by using media mass, this will help them to advertise the product indirectly and consumers will interested to the product and hence increase the demand.

Last but not least is direct marketing. FollowMe used direct marketing to promote all the products. The methods used by FollowMe are via internet and direct mail, for example, they have Green Tea Shampoo and Happy Shampoo on TVC. A webpage for online purchasing and order for products are formed in the official website of FollowMe. Consumers can purchase or order the product via the webpage. By promoting the product with the mix of these promotional strategies, information of the products can be easily reach every consumers all around the world.

2.4 Place Strategy

FollowMe group use information key channel to collecting and disseminating market research and intelligence information about actors and forces. Field research had been used by FollowMe Group to identify their target market and the product features wanted by the public.

Besides, FollowMe group also use contact key channel. By using the feedback from the internet, FollowMe group can communicate with the prospective buyers. Moreover, matching key channel had been used by FollowMe group. The group provided the customers with different needs of shampoo, for example customers with itchy head can use anti-dandruff and so on, so that everyone can buy it with different needs. Other than that, Negotiation key channel also used by FollowMe group to reach an agreement on price and other terms of the offer so that possession can be transferred.

In addition, the group used physical distribution key channel to transporting and storing goods. For example, FollowMe group used ocean freight and air freight to transport their goods to the customer who live in oversea. FollowMe group also apply financing key channel to acquiring and using funds to cover the costs of the channel work. Risk taking key channel also had been used by the group to assuming the risks of carrying out the channel.

FollowMe group has two channels for consumer products which are retailer channels and wholesaler channel. Both of the channels are under indirect channel which mean the goods need to go through intermediaries before the goods arrival to the ultimate users.

Retailing includes all the activities involved in selling products or services directly to final consumers for their personal or business use. There are five class of product line that is specialty stores, department stores, supermarkets, convenience stores and superstores. FollowMe group is under the product line class of supermarkets, convenience stores and department stores only.

Wholesaling is all activities that involved in selling goods and services to those buying for resale or business use. Wholesaler also adds value for producers by performing one or more channel functions. The main markets for FollowMe Corporation are all over South East Asia including Japan, Hong Kong, Singapore, Thailand, Indonesia, Myanmar, Brunei, Pakistan and Sri Lanka.There are 6 offices in Malaysia and currently the main office is situated in Penang while the Sales & Marketing office in Kuala Lumpur. FollowMe group use shipping method to transport out all the goods that had been ordered. Merchant wholesaler means they own the product they sell. They buy the good from producer then have the ownership and selling procedure. The two main categories are full-service wholesalers and limited service wholesalers.

3.0 Market opportunities

For the FollowMe products, it is variety. It has shampoo, hair color, hair styling, shower foam and body care. Besides that, FollowMe had produce some products which is specify to certain customers. For example, some products are suitable for man who is teenager or adult. Some of the products are suitable for baby and kids only. However, FollowMe had missed one specific product still not yet develop. The product is specifying only for woman who is teenager or adult.

During our research, we found that the competitor of FollowMe – Dove had produced this type of product which is for woman only. This product is focus on those female customers who are in the situation of high-involvement purchase decision. Those customers do not willing to take any risk to their goods. Therefore, they will decide to buy a high quality and price products which decrease the risk probability.

For prevent this market had fully taken by their competitors, FollowMe should undertake this market by doing research and development about the product which is specify to woman only. It can expand the FollowMe market base and also can increase the loyalty of female customer. This is because those loyal customers are using a FollowMe compound shampoo, finally they can buy a pure shampoo for their own after the specify product had been manufactured. For the market base, it will attract those customers who are willing to buy those high quality products for their daily use.

In year 2011, Dove had promoted a free sample of Dove shampoo and gift hampers. By receive this promotion, the first 50,000 customers who order their free sample in Dove website will have a chance to win this prize. Although it is a good type of promotion, but it will receive a bad comment from those customer who do not know how to use computer. Therefore, FollowMe should consider about the lifestyle of the customer. To making a promotion for the product, FollowMe should create an easy way to let customer enjoy the promotion. Since this product is slow being developed, FollowMe need to increase the awareness and adaption of customer to expand the market of this product as fast as possible.

In other way, we found that the products of FollowMe had distributed to many country. For example which are Brunei, China, Indonesia, Pakistan, Singapore, Vietnam and Malaysia. We noticed that FollowMe products do not have distributed to North America, North America and also Europe.

FollowMe had become a popular shampoo product in Malaysia. This is because FollowMe had done a very successful business during the 45years export and import in Malaysia. The main market of FollowMe is South East Asia. Nowadays, almost all the customer living in South East Asia also understands this brand. However, the person who is out of South East Asia still treats this brand as unknown. The reason is because FollowMe never distribute their product out from the South East Asia.

By measuring the market base of FollowMe, FollowMe is holding one third of the whole world only. To expand the market become larger, the only way is try to make the business become globalization. The globalization business is meaning to distribute the products to South East Asia and also out of South East Asia. Since FollowMe had built up their market base in South East Asia about 45years, the market of FollowMe in South East Asia was very stable nowadays. So that, FollowMe can tries to start their new market entrance which is out of South East Asia.

Although maintain the stabilization of market in South East Asia is important, but create a new market is the only way to expand the business. In South East Asia, FollowMe is facing a lot of competitor. The main market of competitors is mostly same as FollowMe which is in the South East Asia. During our research, we found that Dove Company is under U.S which the main market is Europe. It means that Dove Company is trying to expand their market to global.

Therefore, FollowMe should start to create a new market for out of South East Asia. It still got half number of the people living in this world is know nothing about this product, so FollowMe should enter this new market as soon as possible. This is because it can slightly increase the speed of awareness and adaption of customer for their products. Besides that, they can acquire a loyalty customer as fast as possible in the new market.

4.0 Recommendations

Competitive environment is interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power. FollowMe need to always heavy emphasis on development a new cosmetic product because serious competitors can emerge quickly from what seems to be out of nowhere. A company need to develop competitive advantage to sustains profit and attract more customers. Competitive advantage is an advantage over competitors in some measure cost, quality or speed which lead to control of a market and increase its performance and productivity.

There are many way to gain a competitive advantage and it is important to develop competitive strategies to have a lasting competitive advantage. The company can compete on price, time, experience, service and reputation to gain competitors advantage. FollowMe will expand into international markets by believe that it could achieve competitive advantage abroad by applying its combination of technology, logistics and human resources with its greater buying power with multinational consumer goods suppliers. Technology is application to marketing such as knowledge based on discoveries in science, inventions, and innovations. Technology leads to new products and improved existing products to attract the new consumers as well as existing consumers benefiting from growth in revenue.

Furthermore, FollowMe is ultimately being responsible for providing product advertising and promotion. The main purpose to provide advertising and promotion is to launch or re-launch FollowMe’s product in order to attract new customer and gain more revenue. Even thought FollowMe product has been around in the market for many years, but FollowMe still needs some advertising and promotion in order to ensure the products can continue being recognized by the customer to purchases it in order to increase the sales and the profit.

Currently, we are facing high cost of marketing due to high advertising cost especially TV advertising. In previous year, we spent more in TV advertising as it was the best option and considered the most effective mass-market advertising format at that time. It offers us the most extensive coverage and highest reach to the audiences. Thus, in response with this, we create a cost reduction program with the objective to reduce the advertising cost. FollowMe has to sacrifice one of these, it should be reach. Target the audience very carefully and ensure they hear from you over the campaign period.Targeted advertising is just one of the ways that advertisers try to earn consumer’s hearts. Therefore the advertisement no need repeat and repeat in a day , avoid wasting cost,can save the money increase its profit.

Nowadays, many competitive of this kind of products exist in the marketplace. FollowMe also cannot be exempted. So FollowMe need to take more attention to the problem. FollowMe need for analyzing their competitiveness in the market to improve and develop strategies to enhance its competitive edge that impact competitive advantage in their marketplace. FollowMe trying to create a new market is the only way to expand the business to global. The force is the threat of entry of new competitors. The meaning of force is that many new firms may enter and exit the marketplace as competitor. FollowMe would has to create entry barriers because the need to decrease the threat of entry of new competitors. The company has focus on market research about what types of product and services are satisfied by customers. The company always improves the quality of products and services against the competitors. Thus, new firms are difficult to enter to the market.

FollowMe has a great operation’s scale; brand name, financial capital, and outstanding distribution systems for fend off other competitors. The new competitors and prominent companies have difficult time matching the prices and costs provided by FollowMe. From an efficient distribution system, the cost advantage of the FollowMe occur which requires great scale and capital investment. The company always has an absolute cost advantage over many competitors. However, the barriers to entry are low if the FollowMe competes with more diversity of specialized retailers in specific types of products. FollowMe products focus going forward is to consolidate the gains made in its FollowMe business and broaden the distribution of the wealth management offering. Business model positions the group to adapt and ensures it is well placed to benefit from an improvement in market conditions.

Lastly, a customer orientation strategy is a way that a company focuses on its product or services to consumers and concentrates making them happy. FollowMe use an aesthetician who specialized in FollowMe products to administer customer scans. FollowMe provide professional consultant to consumer if they have any question about the products, let consumers more confidence with the products, in general that orient a product to consumers is by aiming at price sensitive customers, aiming at quality sensitive customers and also aiming at niche customers. FollowMe own many loyal customers due to the strong brand images and has successfully sustains a great reputation in the marketplace. FollowMe has opened up tremendous opportunities for more profitable sales growth abroad. There have some of the new hubs were built out of South East Asia .FallowMe must invest in marketing to make their brand become more famous out of South East Asia sure will hit our sale target and earn more profit.

5.0 Conclusion

In conclusion, FollowMe products are design for a hair care, skin care and body care products. It consists of several functions that are whitening, long lasting and moisturizer. In our assignment, we initially segment the total market into smaller homogenous group, and then from the segmented market we analyze and select the potential group of people to target. Finally, we developed profundity image and position our brand in the potential buyers’ mind. Besides, we come out with our marketing mix strategy calls “4Ps” which are product, price, place and promotion. In this 4Ps, we choose some suitable strategies to assist us producing, pricing, placing and promoting our new product efficiently.

Lastly, in this assignment, we had learned many useful marketing skills. Besides, we found out that cooperative is very important in teamwork and we need to tolerate with each other as well. In the process of doing assignment, we learnt how to divide our task fairly and if one of us faced problems, we discuss together and come out with a consensus solution. After this assignment, our friendship become stronger and we had known each other deeply.