Social And Technological Factors Also Affect The Company Marketing Essay

5091 words (20 pages) Essay

1st Jan 1970 Marketing Reference this

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Political, Economical, Social and Technological factors also affect the company as a whole. If the Political or Economical condition of the country is not strong, this can affect the business as well.

Political Factors

Politics affects the business a lot; because a company must follow certain rules or regulations (laws) made by the government. Creation of different laws depends upon the ruling political party. For example, the end of Cold War has been a big change for weapon makers. Moreover Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

Tax policy

Employment laws

Environmental regulations

Trade restrictions and tariffs

Political stability

Economic Factors

The economic condition of the country and state has a great influence on the company progression. The different economic policies, which affect business, are

Taxation

Interest rates

Currency rate

Public economic condition (either people are poor or rich)

Inflation rate

Social Factors

Social values, beliefs, religion and culture really affect the business. Business must be according to social aspects. For example, in Pakistan we cannot sale or purchase things like wine, because it is against Islamic faith. Another example is of wearing shorts by the women. Here it is unsocial, so we cannot start the business of selling shorts to women. Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include:

Health consciousness

Population growth rate

Age distribution

Career attitudes

Emphasis on safety

Technological Factors

The most challenging factor for marketing manager is technological factor, because growth of the company depends upon the “innovation” and for innovation, the use of new technology is very much important. In order to beat the competitors, an organization must have effective research, planning and marketing of new products and for this purpose new machinery, techniques and ideas are very much important Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity

Automation

Technology incentives

Rate of technological change

Porter’s Five Forces

The pure competition model does not present a viable tool to assess an industry. Porter’s Five Forces attempts to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry. This model may be used as a tool to better develop a strategic advantage over competing firms within an industry in a competitive and healthy environment. It identifies five forces that determine the long-run profitability of a market or market segment

Power of suppliers

An industry that produces goods requires raw materials. This leads to buyer-supplier relationships between the industry and the firms that provide the raw materials. Depending on where the power lies, suppliers may be able to exert an influence on the producing industry. They may be able to dictate price and influence availability. A segment is unattractive when an organization’s suppliers have the ability to:

Increase prices without suffering from a decrease in volume

Reduce the quantity supplied

Organize in a formal or informal manner

Compete in an environment with relatively few substitutes

Provide a product/material that is a critical part of the end product or service

Impose switching costs on their customers when they depart

Integrate downstream by purchasing or controlling the distribution channels.

Power of buyers

The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to what economists term a monopsony. A Monopsony is a market where there are many suppliers and one buyer. Under these market conditions, the buyer has the most influence in determining the price. The bargaining power of buyers increases when they have the ability to:

Be “organized” in some form with others providing similar products and services

Purchase a product that represents a significant fraction of the buyer’s costs

Buy a product that is undifferentiated

Incur low switching costs when they change vendors

Be price sensitive, with other options available

Integrate upstream, to purchase the providers of the goods.

Barriers to entry/exit

The possibility of new firms entering the industry impacts competition. A key is to assess how easy it is for a new player to enter an industry. The most attractive segment has high entry barriers and low exit barriers. The definable characteristics of each industry protect profitable areas for firms and inhibit additional rivals from entering the market. These inhibitive characteristics are referred to as barriers to entry.

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Barriers to entry are unique characteristics to each industry. They reduce the rate of entry of new firms and, therefore, maintain a level of profits for current industry competitors. Barriers to entry can be created or exploited to enhance a firm’s competitive advantage. Barriers to exit work similarly to barriers to entry, Exit barriers limit the ability of a firm to leave the market and can exacerbate rivalry unable to leave the industry, a firm must compete.

Substitute products

Porter’s Five Forces model refers to “substitute products” as those products that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. Substitute products may limit the ability of firms within an industry to raise prices and improve margins.

Rivalry

Firms strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. For example, the intensity of rivalry is increased by the following industry characteristics:

Numerous competitors that are particularly strong or aggressive that are competing for the same customers and resources

Declining sales revenues and volumes resulting in slow market growth, creating the need to actively fight for market share

High fixed costs result in an economy of scale effect

High storage costs or highly perishable products

Plant capacity is being added, over and above what is needed to meet demand

Low switching costs for buyers

Low levels of product differentiation

Strategic stakes are high when a firm is losing market position or has potential for great gains

High exit barriers place a significant cost on abandoning the product.

Discuss and Propose Segmentation Criteria to be used for any of two products of the above company in different markets (Pass)

Market Segmentation: -Market segmentation divides market into smaller units that can be reached more efficiently and effectively. Market segmentation is divided into four groups.

Geographic Segmentation

Geographic segmentation is dividing the market into different geographical groups e.g. countries, regions, cities, towns’ etc World region or country (Europe, Middle East, India, china, Pakistan)

Demographic Segmentation

Demographic segmentation is dividing the market into groups based on variables such as age, gender, family size, family life cycle, income occupation, education, religion and nationality.

Age: -Consumer needs and wants change with age. Companies offer different products for different age groups e.g. Johnson’s baby lotion for kids, play stations for teen age’s etc

Gender: -Gender segmentation is dividing the market into different groups based on gender e.g. clothes for males and females etc

Income: -Income segmentation is dividing the market into different income groups. Marketers produce products and services for different income segmented groups such as automobile industry, boats, clothing’s etc

Psychographic Segmentation

Psychographic segmentation is dividing a market into different groups based on social class life style or personality characteristic.

Behavioral Segmentation

Behavioral segmentation is dividing a market into groups based on consumer knowledge, attitude, uses (potential users/non users) or their response to a product.

Occasions

Is dividing the market into groups according to occasion when buyers get the idea to buy, actually make their purchase or use the purchased item e.g. orange juice is most often consumed at break fast but orange juice manufacturers have promoted drinking orange juice as a cool and refreshing drink at other times of the day.

DOMINO’S PIZZA

The bottom of the pizza, called the “crust”, may vary widely according to style thin as in a typical hand-tossed pizza , or thick as in a typical pan pizza or deep pan pizza It is traditionally plain, but may also be seasoned with garlic, or herbs, or stuffed with cheese.

In Domino’s, pizza can be baked in an oven above the heat source, an electric deck oven, a conveyor belt oven or, in the case of more expensive restaurants, a wood- or coal-fired oven. On deck ovens, the pizza can be slid into the oven on a long paddle, called a peel, and baked directly on the hot oven or baked on a screen (a round metal grate, typically aluminum). Another option is grilled pizza in which the crust is baked directly on a barbecue grill.

Each ingredient used in the pizzas has a different value and a different need and all these ingredients are value added features. This differentiates dominos from other local pizza parlors in Pakistan.

Demographic Segmentation:

Age: Attracts children (6-15), teenagers and young adults (16-22), and general adults.

Family aspect is the basis of dominos. It got strong aspects about families visiting it.

Income: Income Level: This is also an important variable on which segmentation can be carried out. People belonging to the lower income groups can not afford to buy dominos pizza will target that segment whose income puts them in the upper middle and higher income groups.

Social Class: dominos caters to the upper- upper middle to middle upper social class.

Occasions: Birthday Parties, Get together.

SERVICE

Free delivery and take away counters have eased that service that dominos offers. This changes the outlook and satisfies customer’s demands on time.

Overall if we see, the differentiation is all on quality and hygiene and this provides the best value for the customer’s money. A benefit of the hygienic factor and deliciousness is the quality that dominos has offered through out.

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Psychographic Segmentation:

Life StyleSocial Class: Buyers are divided into different groups based on social class and life style. Many consumers live a simple life style and belong to lower and middle class; they don’t spend on buying pizza. So dominos should target that segment living a high class life and can afford to buy pizza.

Behavioral Segmentation:

Occasion: The other segment can be of regular occasions, which includes parties and get together.

Foreigners: This can be an important segment for dominos because those who come from abroad are very brand conscious.

DOMINO’S SANDWICHES

Domino’s Sandwiches are a widely popular type of lunch food, typically taken to work or school, or picnics to be eaten as part of a packed lunch. They generally contain a combination of salad vegetables meat, cheese, and a variety of sauces or savoury spreads. The bread can be used as it is, or it can be coated with any condiments to enhance flavor and texture. They are widely sold in dominos outlets.

Geographic Segmentation:

Regions: Commonly people prefer to eat sandwich. So dominos can segment the market on the basis of people taste.

Cities: Consumption of sandwiches is more in the large cities as compared to the small cities or town due to various factors such as income and education level. dominos should focus more on making its sandwiches available in the cities where people are willing and able to buy.

Demographic Segmentation:

Age: dominos can easily target various age groups. The most important of these groups are children and young peoples. For children it can introduce club sandwiches with additional nutritional contents such as cheese and minerals. For older people it already has salad sandwiches . A smaller segment can be of the people who are aging. These people can be convinced that the sandwiches will help their diet remain healthy (especially women).

Gender: It will be very beneficial to target working women and men. If they are convinced that the sandwiches will be good for their health during working hour specially in tight working schedule.

Income and occupation: People will buy sandwiches when they have enough monetary resources. Dominos should target people in the higher income groups. People with blue collar jobs can be targeted by telling them that the sandwiches will help them in their daily routine. Life cycle stage can also be important because families with younger kids will want to buy sandwiches.

Psychographic segmentation:

Social class and life style: People belonging to the higher social classes tend to spend more on luxuries as compared to people in the lower classes. Such people can be easily targeted as they are very health conscious. dominos can urge these people (along with diet conscious) to buy their line of diet sandwiches.

Discuss any two factors which influence the choice of targeting strategy (Pass)

Target Market Selection

Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market. Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm’s objectives, resources, and capabilities.

Attractiveness of a Market Segment

The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:

Size of the segment (number of customers and/or number of units)

Growth rate of the segment

Competition in the segment

Brand loyalty of existing customers in the segment

Attainable market share given promotional budget and competitors’ expenditures

Required market share to break even

Sales potential for the firm in the segment

Expected profit margins in the segment

Market research and analysis is instrumental in obtaining this information. For example, buyer intentions, sales force estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable micro-environmental and macro-environmental variables on the market segment should be considered.

Suitability of Market Segments to the Firm

Market segments also should be evaluated according to how they fit the firm’s objectives, resources, and capabilities. Some aspects of fit include:

Whether the firm can offer superior value to the customers in the segment

The impact of serving the segment on the firm’s image

Access to distribution channels required to serve the segment

The firm’s resources vs. capital investment required to serve the segment

The better the firm’s fit to a market segment and the more attractive the market segment, the greater the profit potential to the firm.

Target Market Strategies

There are several different target market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:

Single-segment strategy: -Is also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources.

Selective specialization: -This is a multiple-segment strategy which is also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different in many cases only the promotional message or distribution channels vary.

Product specialization: -The firm specializes in a particular product and tailors it to different market segments.

Market specialization: -The firm specializes in serving a particular market segment and offers that segment an array of different products.

Full market coverage: -The firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment.

Discuss how buyer behavior affects marketing activities in different situations in light of the assigned companies (Pass)

Buyer Behavior

In addition to understanding the needs of your customers, you also need to understand what motivates them to purchase, and how you can influence the buying process to ensure that your products or services are on the shopping list.

Understanding your customers will help you to develop and distribute your product, as well as getting the right price point and developing successful promotional activities. The psychology of the buying process has been widely studied, and no matter what size your business, knowledge of this process can help you become more successful.

Both businesses and consumers exhibit patterns of buying behavior. The business model is less open to debate as your business customers will almost certainly have some formalized process of buying in place. Your task is to understand the process and match your marketing activities to the different stages of the process. This means that the customer will receive the right kind of contact at the right time.

Marketing in Domino’s:

Marketing is based on the principle of customer satisfaction. This is the foundation for the environmental marketing approach of dominos. Environmental product claims in advertising, promotional material and on packaging are in accordance with legal requirements, based on solid scientific evidence and used in a serious and reasonable manner. Their aim is to minimize wastage in communication, publicity and promotional material, in particular through more precise targeting of marketing activities. Consumer promotions and merchandising material such as consumer offers, in store promotions, display material, leaflets, printed matter, etc. take environmental aspects into account. This means due consideration of environmental impact in selecting both materials and printing methods. In distribution, energy efficient and pollution controlled methods are encouraged wherever possible.

The attractiveness of ads may attract consumers

Strong brand image also help in attracting customers that influence their buying behavior.

Quality of product its price & packaging also influence buyers behavior

The distribution channels, the placement of products also influence the behavior.

3.1 Describe how products are developed to sustain competitive advantages .

Now a day’s technology is improving so as baking and heating ovens will be of new and efficient technology and will provide efficient service. Due to new technology there are new ways of marketing like internet; telemarketing and the organization can advertise their products with much more faster pace. Computer based customer data that is MIS (managing information system) helps in collecting customer data, daily transactions, future forecasting and decision making. New vehicles will make their service more efficient.

Domino’z pizza is the market leader in providing different products of pizzas as there are many competitors in this sector. There good image makes the organization more strong. Domino’z pizza is providing good taste, quality products with qualified staff, good atmosphere and hygienic environment. They are specialized in pizzas. 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 are providing free home delivery service. Another big Strength and even a Competitive Advantage is the fact that they have a full service restaurant as well as delivery services. Most of Domino’z pizza’s competitors do not have restaurants. Because of the restaurant, Domino’z pizza can market too many different segments that other pizza chains cannot.

However, the fact that Domino’z pizza does have a restaurant to run is also a weakness. Domino’z pizza has higher overhead costs, due to the restaurant that other competitors don’t have to deal with. Another result of higher overhead costs is higher prices Domino’z pizza must charge. Obviously, Domino’z pizza is not the low cost producer. They rely on their quality pizza and good service to account for their higher prices. They are providing less range of products comparatively with high prices. They are more focused on Western taste instead of Eastern.

New markets can be explored and new opportunities they can gain. Domino’z pizza can come up with the new products considering the Eastern taste of the people as like McDonalds . Diversification of new products can increase their market share. They can reduce their prices because of more resources.

3.2 Explain how distribution is arranged to provide customer convenience

Distribution

It refers to the best place to offer program. That is the place where it is located and through what channels are we distributing programs and the competitive advantage lies in distribution. The Domino’z pizza islamabad is situated in blue area.. Secondly the catchment area is of a specified minimum size and within a given drive time to the site.

Distribution The type of distribution channel used by Domino’z pizza is the direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each.

Domino’z pizza uses three different methods of selling its products directly to the market.

The first method of distribution used by Domino’z pizza is Home. Office delivery. Customers can call Domino’z pizza ahead of time, place an order, and the order is delivered to the customer’s home.

Another method of distribution is for customers to dine-in. Customers can go to the nearest Domino’z pizza, place an order and either leave with the order or eat at the restaurant. One of Domino’z pizza’s largest competitive advantages is its restaurant style facility. Domino’z pizza offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere.

The third method of distribution is to order Online. Selective County Customers can now go on the Internet and place an order for Pizza. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers.

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

Pricing Strategy

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 Domino’z pizza which could compete with the quality of pizza produced at Domino’z pizza, therefore, the pricing strategy adopted by Domino’z pizza is ‘market skimming’. Domino’z pizza has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Domino’z pizza, as there are no competitors and hence, Domino’z pizza is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. 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 Domino’z pizza will have to change its pricing strategy. 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 not home-produced. They are imported from different countries keeping in view the best

Quality.

3.4 Illustrate how promotional activity is integrated to achieve marketing objectives

Promotional Activity

This forced competitors to look for new methods of increasing their customer bases. Many pizza chains decided to diversify and offer new non-pizza items such as Buffalo wings, and Italian cheese bread. The current trend in pizza chains today is the same. They all try to come up with some newer, bigger, better, pizza for a low price. Offering special promotions and new pizza variations are popular today as well. For example, chicken is now a common topping found on pizzas.

In the past, Domino’z pizza has always had the first mover advantage. Their marketing strategy in the past has always been to be first. One of their main strategies that they still follow today is the diversification of the products they offer. Domino’z pizza is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Domino’z pizza restaurants worldwide. They were trying to offer many different food items for customers who didn’t necessarily want pizza.

Another strategy they used in the past and are still using is the diversification of their pizzas. Domino’z pizza is always trying to come up with some innovative way to make a pizza into something slightly different – different enough that customers will think it’s a whole new product. For example, let’s look at some of the pizzas Domino’z pizza has marketed in the past. In 1989, Domino’z pizza introduced their Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Domino’z pizza restaurants. In 1994, they introduced the “Bigfoot,” which was two square feet of pizza cut into 21 slices. In 1995, they introduced “Stuffed Crust Pizza,” where the crust would be filled with cheese. In 1997, they marketed “The Edge,” which had cheese and toppings all the way to the edge of the pizza. Currently, they are marketing “The Big New Yorker,” trying to bring the famous New York style pizza to the whole country.

3.5 Analyze the additional elements of the extended marketing mix

People

The employees in Domino’z pizza have a standard uniform and Domino’z pizza 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 Domino’z pizza workers.

Process

The food manufacturing process at Domino’z pizza is transparent and hidden (the whole process is not visible to the customers).

Physical Evidence

Domino’z pizza focuses on clean and hygienic interiors of its outlets and at the same time the interiors are attractive and the Pizza maintains a proper etiquette at its joints.

The design, furnishing, lighting, layout and decoration of the Pizza 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.

4.1 Recommend marketing mixes for two different segments in consumer markets

Segmentation

Main segments which Domino’z pizza has captured are the combination of higher incomes and dual career families , due to higher income consumer have more disposable income , allowing them to eat out more often .

Domino’z pizza holds the most market share in the Pizza industry, the perceived quality and service of the company will help to ensure a better the average chance at a successful introduction of a new product. The introduction of a product that keeps with today trends is also important to reduce the risk of failure.

Domino’z pizza maximum market segment is younger generations. These generation ranges from 12 to 30, the overall spending of these generations is mostly on non essential items, the higher amount of spending has been done on eating out.

Political, Economical, Social and Technological factors also affect the company as a whole. If the Political or Economical condition of the country is not strong, this can affect the business as well.

Political Factors

Politics affects the business a lot; because a company must follow certain rules or regulations (laws) made by the government. Creation of different laws depends upon the ruling political party. For example, the end of Cold War has been a big change for weapon makers. Moreover Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

Tax policy

Employment laws

Environmental regulations

Trade restrictions and tariffs

Political stability

Economic Factors

The economic condition of the country and state has a great influence on the company progression. The different economic policies, which affect business, are

Taxation

Interest rates

Currency rate

Public economic condition (either people are poor or rich)

Inflation rate

Social Factors

Social values, beliefs, religion and culture really affect the business. Business must be according to social aspects. For example, in Pakistan we cannot sale or purchase things like wine, because it is against Islamic faith. Another example is of wearing shorts by the women. Here it is unsocial, so we cannot start the business of selling shorts to women. Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include:

Health consciousness

Population growth rate

Age distribution

Career attitudes

Emphasis on safety

Technological Factors

The most challenging factor for marketing manager is technological factor, because growth of the company depends upon the “innovation” and for innovation, the use of new technology is very much important. In order to beat the competitors, an organization must have effective research, planning and marketing of new products and for this purpose new machinery, techniques and ideas are very much important Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity

Automation

Technology incentives

Rate of technological change

Porter’s Five Forces

The pure competition model does not present a viable tool to assess an industry. Porter’s Five Forces attempts to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry. This model may be used as a tool to better develop a strategic advantage over competing firms within an industry in a competitive and healthy environment. It identifies five forces that determine the long-run profitability of a market or market segment

Power of suppliers

An industry that produces goods requires raw materials. This leads to buyer-supplier relationships between the industry and the firms that provide the raw materials. Depending on where the power lies, suppliers may be able to exert an influence on the producing industry. They may be able to dictate price and influence availability. A segment is unattractive when an organization’s suppliers have the ability to:

Increase prices without suffering from a decrease in volume

Reduce the quantity supplied

Organize in a formal or informal manner

Compete in an environment with relatively few substitutes

Provide a product/material that is a critical part of the end product or service

Impose switching costs on their customers when they depart

Integrate downstream by purchasing or controlling the distribution channels.

Power of buyers

The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to what economists term a monopsony. A Monopsony is a market where there are many suppliers and one buyer. Under these market conditions, the buyer has the most influence in determining the price. The bargaining power of buyers increases when they have the ability to:

Be “organized” in some form with others providing similar products and services

Purchase a product that represents a significant fraction of the buyer’s costs

Buy a product that is undifferentiated

Incur low switching costs when they change vendors

Be price sensitive, with other options available

Integrate upstream, to purchase the providers of the goods.

Barriers to entry/exit

The possibility of new firms entering the industry impacts competition. A key is to assess how easy it is for a new player to enter an industry. The most attractive segment has high entry barriers and low exit barriers. The definable characteristics of each industry protect profitable areas for firms and inhibit additional rivals from entering the market. These inhibitive characteristics are referred to as barriers to entry.

Barriers to entry are unique characteristics to each industry. They reduce the rate of entry of new firms and, therefore, maintain a level of profits for current industry competitors. Barriers to entry can be created or exploited to enhance a firm’s competitive advantage. Barriers to exit work similarly to barriers to entry, Exit barriers limit the ability of a firm to leave the market and can exacerbate rivalry unable to leave the industry, a firm must compete.

Substitute products

Porter’s Five Forces model refers to “substitute products” as those products that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. Substitute products may limit the ability of firms within an industry to raise prices and improve margins.

Rivalry

Firms strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. For example, the intensity of rivalry is increased by the following industry characteristics:

Numerous competitors that are particularly strong or aggressive that are competing for the same customers and resources

Declining sales revenues and volumes resulting in slow market growth, creating the need to actively fight for market share

High fixed costs result in an economy of scale effect

High storage costs or highly perishable products

Plant capacity is being added, over and above what is needed to meet demand

Low switching costs for buyers

Low levels of product differentiation

Strategic stakes are high when a firm is losing market position or has potential for great gains

High exit barriers place a significant cost on abandoning the product.

Discuss and Propose Segmentation Criteria to be used for any of two products of the above company in different markets (Pass)

Market Segmentation: -Market segmentation divides market into smaller units that can be reached more efficiently and effectively. Market segmentation is divided into four groups.

Geographic Segmentation

Geographic segmentation is dividing the market into different geographical groups e.g. countries, regions, cities, towns’ etc World region or country (Europe, Middle East, India, china, Pakistan)

Demographic Segmentation

Demographic segmentation is dividing the market into groups based on variables such as age, gender, family size, family life cycle, income occupation, education, religion and nationality.

Age: -Consumer needs and wants change with age. Companies offer different products for different age groups e.g. Johnson’s baby lotion for kids, play stations for teen age’s etc

Gender: -Gender segmentation is dividing the market into different groups based on gender e.g. clothes for males and females etc

Income: -Income segmentation is dividing the market into different income groups. Marketers produce products and services for different income segmented groups such as automobile industry, boats, clothing’s etc

Psychographic Segmentation

Psychographic segmentation is dividing a market into different groups based on social class life style or personality characteristic.

Behavioral Segmentation

Behavioral segmentation is dividing a market into groups based on consumer knowledge, attitude, uses (potential users/non users) or their response to a product.

Occasions

Is dividing the market into groups according to occasion when buyers get the idea to buy, actually make their purchase or use the purchased item e.g. orange juice is most often consumed at break fast but orange juice manufacturers have promoted drinking orange juice as a cool and refreshing drink at other times of the day.

DOMINO’S PIZZA

The bottom of the pizza, called the “crust”, may vary widely according to style thin as in a typical hand-tossed pizza , or thick as in a typical pan pizza or deep pan pizza It is traditionally plain, but may also be seasoned with garlic, or herbs, or stuffed with cheese.

In Domino’s, pizza can be baked in an oven above the heat source, an electric deck oven, a conveyor belt oven or, in the case of more expensive restaurants, a wood- or coal-fired oven. On deck ovens, the pizza can be slid into the oven on a long paddle, called a peel, and baked directly on the hot oven or baked on a screen (a round metal grate, typically aluminum). Another option is grilled pizza in which the crust is baked directly on a barbecue grill.

Each ingredient used in the pizzas has a different value and a different need and all these ingredients are value added features. This differentiates dominos from other local pizza parlors in Pakistan.

Demographic Segmentation:

Age: Attracts children (6-15), teenagers and young adults (16-22), and general adults.

Family aspect is the basis of dominos. It got strong aspects about families visiting it.

Income: Income Level: This is also an important variable on which segmentation can be carried out. People belonging to the lower income groups can not afford to buy dominos pizza will target that segment whose income puts them in the upper middle and higher income groups.

Social Class: dominos caters to the upper- upper middle to middle upper social class.

Occasions: Birthday Parties, Get together.

SERVICE

Free delivery and take away counters have eased that service that dominos offers. This changes the outlook and satisfies customer’s demands on time.

Overall if we see, the differentiation is all on quality and hygiene and this provides the best value for the customer’s money. A benefit of the hygienic factor and deliciousness is the quality that dominos has offered through out.

Psychographic Segmentation:

Life StyleSocial Class: Buyers are divided into different groups based on social class and life style. Many consumers live a simple life style and belong to lower and middle class; they don’t spend on buying pizza. So dominos should target that segment living a high class life and can afford to buy pizza.

Behavioral Segmentation:

Occasion: The other segment can be of regular occasions, which includes parties and get together.

Foreigners: This can be an important segment for dominos because those who come from abroad are very brand conscious.

DOMINO’S SANDWICHES

Domino’s Sandwiches are a widely popular type of lunch food, typically taken to work or school, or picnics to be eaten as part of a packed lunch. They generally contain a combination of salad vegetables meat, cheese, and a variety of sauces or savoury spreads. The bread can be used as it is, or it can be coated with any condiments to enhance flavor and texture. They are widely sold in dominos outlets.

Geographic Segmentation:

Regions: Commonly people prefer to eat sandwich. So dominos can segment the market on the basis of people taste.

Cities: Consumption of sandwiches is more in the large cities as compared to the small cities or town due to various factors such as income and education level. dominos should focus more on making its sandwiches available in the cities where people are willing and able to buy.

Demographic Segmentation:

Age: dominos can easily target various age groups. The most important of these groups are children and young peoples. For children it can introduce club sandwiches with additional nutritional contents such as cheese and minerals. For older people it already has salad sandwiches . A smaller segment can be of the people who are aging. These people can be convinced that the sandwiches will help their diet remain healthy (especially women).

Gender: It will be very beneficial to target working women and men. If they are convinced that the sandwiches will be good for their health during working hour specially in tight working schedule.

Income and occupation: People will buy sandwiches when they have enough monetary resources. Dominos should target people in the higher income groups. People with blue collar jobs can be targeted by telling them that the sandwiches will help them in their daily routine. Life cycle stage can also be important because families with younger kids will want to buy sandwiches.

Psychographic segmentation:

Social class and life style: People belonging to the higher social classes tend to spend more on luxuries as compared to people in the lower classes. Such people can be easily targeted as they are very health conscious. dominos can urge these people (along with diet conscious) to buy their line of diet sandwiches.

Discuss any two factors which influence the choice of targeting strategy (Pass)

Target Market Selection

Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market. Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm’s objectives, resources, and capabilities.

Attractiveness of a Market Segment

The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:

Size of the segment (number of customers and/or number of units)

Growth rate of the segment

Competition in the segment

Brand loyalty of existing customers in the segment

Attainable market share given promotional budget and competitors’ expenditures

Required market share to break even

Sales potential for the firm in the segment

Expected profit margins in the segment

Market research and analysis is instrumental in obtaining this information. For example, buyer intentions, sales force estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable micro-environmental and macro-environmental variables on the market segment should be considered.

Suitability of Market Segments to the Firm

Market segments also should be evaluated according to how they fit the firm’s objectives, resources, and capabilities. Some aspects of fit include:

Whether the firm can offer superior value to the customers in the segment

The impact of serving the segment on the firm’s image

Access to distribution channels required to serve the segment

The firm’s resources vs. capital investment required to serve the segment

The better the firm’s fit to a market segment and the more attractive the market segment, the greater the profit potential to the firm.

Target Market Strategies

There are several different target market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:

Single-segment strategy: -Is also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources.

Selective specialization: -This is a multiple-segment strategy which is also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different in many cases only the promotional message or distribution channels vary.

Product specialization: -The firm specializes in a particular product and tailors it to different market segments.

Market specialization: -The firm specializes in serving a particular market segment and offers that segment an array of different products.

Full market coverage: -The firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment.

Discuss how buyer behavior affects marketing activities in different situations in light of the assigned companies (Pass)

Buyer Behavior

In addition to understanding the needs of your customers, you also need to understand what motivates them to purchase, and how you can influence the buying process to ensure that your products or services are on the shopping list.

Understanding your customers will help you to develop and distribute your product, as well as getting the right price point and developing successful promotional activities. The psychology of the buying process has been widely studied, and no matter what size your business, knowledge of this process can help you become more successful.

Both businesses and consumers exhibit patterns of buying behavior. The business model is less open to debate as your business customers will almost certainly have some formalized process of buying in place. Your task is to understand the process and match your marketing activities to the different stages of the process. This means that the customer will receive the right kind of contact at the right time.

Marketing in Domino’s:

Marketing is based on the principle of customer satisfaction. This is the foundation for the environmental marketing approach of dominos. Environmental product claims in advertising, promotional material and on packaging are in accordance with legal requirements, based on solid scientific evidence and used in a serious and reasonable manner. Their aim is to minimize wastage in communication, publicity and promotional material, in particular through more precise targeting of marketing activities. Consumer promotions and merchandising material such as consumer offers, in store promotions, display material, leaflets, printed matter, etc. take environmental aspects into account. This means due consideration of environmental impact in selecting both materials and printing methods. In distribution, energy efficient and pollution controlled methods are encouraged wherever possible.

The attractiveness of ads may attract consumers

Strong brand image also help in attracting customers that influence their buying behavior.

Quality of product its price & packaging also influence buyers behavior

The distribution channels, the placement of products also influence the behavior.

3.1 Describe how products are developed to sustain competitive advantages .

Now a day’s technology is improving so as baking and heating ovens will be of new and efficient technology and will provide efficient service. Due to new technology there are new ways of marketing like internet; telemarketing and the organization can advertise their products with much more faster pace. Computer based customer data that is MIS (managing information system) helps in collecting customer data, daily transactions, future forecasting and decision making. New vehicles will make their service more efficient.

Domino’z pizza is the market leader in providing different products of pizzas as there are many competitors in this sector. There good image makes the organization more strong. Domino’z pizza is providing good taste, quality products with qualified staff, good atmosphere and hygienic environment. They are specialized in pizzas. 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 are providing free home delivery service. Another big Strength and even a Competitive Advantage is the fact that they have a full service restaurant as well as delivery services. Most of Domino’z pizza’s competitors do not have restaurants. Because of the restaurant, Domino’z pizza can market too many different segments that other pizza chains cannot.

However, the fact that Domino’z pizza does have a restaurant to run is also a weakness. Domino’z pizza has higher overhead costs, due to the restaurant that other competitors don’t have to deal with. Another result of higher overhead costs is higher prices Domino’z pizza must charge. Obviously, Domino’z pizza is not the low cost producer. They rely on their quality pizza and good service to account for their higher prices. They are providing less range of products comparatively with high prices. They are more focused on Western taste instead of Eastern.

New markets can be explored and new opportunities they can gain. Domino’z pizza can come up with the new products considering the Eastern taste of the people as like McDonalds . Diversification of new products can increase their market share. They can reduce their prices because of more resources.

3.2 Explain how distribution is arranged to provide customer convenience

Distribution

It refers to the best place to offer program. That is the place where it is located and through what channels are we distributing programs and the competitive advantage lies in distribution. The Domino’z pizza islamabad is situated in blue area.. Secondly the catchment area is of a specified minimum size and within a given drive time to the site.

Distribution The type of distribution channel used by Domino’z pizza is the direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each.

Domino’z pizza uses three different methods of selling its products directly to the market.

The first method of distribution used by Domino’z pizza is Home. Office delivery. Customers can call Domino’z pizza ahead of time, place an order, and the order is delivered to the customer’s home.

Another method of distribution is for customers to dine-in. Customers can go to the nearest Domino’z pizza, place an order and either leave with the order or eat at the restaurant. One of Domino’z pizza’s largest competitive advantages is its restaurant style facility. Domino’z pizza offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere.

The third method of distribution is to order Online. Selective County Customers can now go on the Internet and place an order for Pizza. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers.

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

Pricing Strategy

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 Domino’z pizza which could compete with the quality of pizza produced at Domino’z pizza, therefore, the pricing strategy adopted by Domino’z pizza is ‘market skimming’. Domino’z pizza has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Domino’z pizza, as there are no competitors and hence, Domino’z pizza is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. 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 Domino’z pizza will have to change its pricing strategy. 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 not home-produced. They are imported from different countries keeping in view the best

Quality.

3.4 Illustrate how promotional activity is integrated to achieve marketing objectives

Promotional Activity

This forced competitors to look for new methods of increasing their customer bases. Many pizza chains decided to diversify and offer new non-pizza items such as Buffalo wings, and Italian cheese bread. The current trend in pizza chains today is the same. They all try to come up with some newer, bigger, better, pizza for a low price. Offering special promotions and new pizza variations are popular today as well. For example, chicken is now a common topping found on pizzas.

In the past, Domino’z pizza has always had the first mover advantage. Their marketing strategy in the past has always been to be first. One of their main strategies that they still follow today is the diversification of the products they offer. Domino’z pizza is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Domino’z pizza restaurants worldwide. They were trying to offer many different food items for customers who didn’t necessarily want pizza.

Another strategy they used in the past and are still using is the diversification of their pizzas. Domino’z pizza is always trying to come up with some innovative way to make a pizza into something slightly different – different enough that customers will think it’s a whole new product. For example, let’s look at some of the pizzas Domino’z pizza has marketed in the past. In 1989, Domino’z pizza introduced their Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Domino’z pizza restaurants. In 1994, they introduced the “Bigfoot,” which was two square feet of pizza cut into 21 slices. In 1995, they introduced “Stuffed Crust Pizza,” where the crust would be filled with cheese. In 1997, they marketed “The Edge,” which had cheese and toppings all the way to the edge of the pizza. Currently, they are marketing “The Big New Yorker,” trying to bring the famous New York style pizza to the whole country.

3.5 Analyze the additional elements of the extended marketing mix

People

The employees in Domino’z pizza have a standard uniform and Domino’z pizza 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 Domino’z pizza workers.

Process

The food manufacturing process at Domino’z pizza is transparent and hidden (the whole process is not visible to the customers).

Physical Evidence

Domino’z pizza focuses on clean and hygienic interiors of its outlets and at the same time the interiors are attractive and the Pizza maintains a proper etiquette at its joints.

The design, furnishing, lighting, layout and decoration of the Pizza 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.

4.1 Recommend marketing mixes for two different segments in consumer markets

Segmentation

Main segments which Domino’z pizza has captured are the combination of higher incomes and dual career families , due to higher income consumer have more disposable income , allowing them to eat out more often .

Domino’z pizza holds the most market share in the Pizza industry, the perceived quality and service of the company will help to ensure a better the average chance at a successful introduction of a new product. The introduction of a product that keeps with today trends is also important to reduce the risk of failure.

Domino’z pizza maximum market segment is younger generations. These generation ranges from 12 to 30, the overall spending of these generations is mostly on non essential items, the higher amount of spending has been done on eating out.

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