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1-
Keeping our
Promise
|
 At the end of Course
B104 "Marketing I" we said:
"There
is still a lot to do at McEla regarding their Soap
Project. But this story will continue in Course B105
"Marketing II".
Now, let's continue with the Case
Study of McEla. |
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2-
Refreshing the
Definition
Given in
Marketing I
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We defined Marketing as "the
name given to a wide array of functions and actions. They
extend from the initial development of a product to the
continuous support and follow-up of the selling and
delivering of the product to the customers. The key word
here is array because the many functions and
actions we call Marketing are all equally important in
reaching the key objective: to make the product (and
the business) profitable." |
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3 -
The Total
Marketing
Process:
Subjects
Covered in
previous course
Marketing I
|
 Product
Development
Packaging
Positioning
The Target Group
Looking outside: Market, Competition,
Distribution Channels
Selling Price
Sales Forecast
Production Cost |
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4
-
The Total
Marketing
Process:
Subjects
Covered in
this
course
Marketing II |
The Test Market
Advertising, Promotion, Merchandising
Distribution: Placing the Product where the customer can
buy it
Selling
Evaluating Test Market results
Follow-up of the Product's performance
The Product Manager's job |
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5-
Brand name,
SKU's
|
McEla management has finally decided to
launch the new soap under a single brand name. After
testing several names with consumer panels, they decided to use
"Bubbly®TM".
The symbols after the name indicate that they are Registered as a Trade Mark . One of either of
these symbols is sufficient to protect the brand from
being used by anyone but the owner. From now on, the name
Bubbly will always be followed by the ®, even in McEla's
internal memos and documents.
McEla will market Bubbly® in two different
fragrances: "Flower pour Femme" and
"Virility pour Homme". Each fragrance will be
available in three sizes: large size (which is the
smallest!),
bath
size (the medium one), and giant size (the large one, of
course). That's six SKU's, or Stock Keeping Units. |
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6-
The
meaning of
words used
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We can draw some conclusions from what
is described above.
From the names used for the two fragrances, which include
words in French, we can be sure that Bubbly® will be positioned as a
sophisticated product for medium and high income persons.
We can assume it will be priced and packaged accordingly.
Also from the names of the fragrances we know that one is
aimed at women, the other one at men.
As for the names of the sizes, they follow a tradition in
marketing many consumer products. The words
"small" or "medium" are considered to
be negative and never used. The smaller size is called
"large", and fantasy names such as "bath
size" or "giant size" are used instead of
medium or large. |
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7-
Test
Markets
|
McEla
must now decide if they want to launch the new products
on a large scale (say, the whole country, or a large
portion of it) or if they would rather do a "Market
Test".
A Market Test is the launching of a product in a reduced
geographic area, obviously called the "test
market".
Why conduct a Market Test? There are several good
reasons:
To minimize the risk inherent in any new product launch.
To learn and make changes in every
aspect (packaging, publicity, distribution, pricing,
etc.)
A Market Test can be
useful not only for a new product launch, but for any
major change in an existing product strategy.
There some important drawbacks in conducting a
Market Test :
The competition gets an early alert and
has more time to prepare countermeasures for a large area
launch.
It is difficult to define a small area
(test market) which is a representative sample of the
future large target area. If the test market is not very
similar (representative sample) to the larger area, the
market test will not be reliable. This includes many
aspects, such as spendable income, tastes, age
distribution, types of media available for publicity,
distribution channels, etc.) |
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8-
McEla
makes
a decision on
market testing
|
It's a
tough decision, given the important pros and cons.
Nowadays there is one more alternative: doing a computer
simulation of a market test. Data about the new product
marketing plan is input into a "model" of a
given test market, and hopefully we get results very
similar to a real market test. Of course, the reliability
of the results depends on the quality of the model. Since
in the final analysis, we are talking about
people and their
reactions, a computer model may be very misleading.
McEla's management decided to do a market test in a city
of 100,000 inhabitants which they regarded as
representative of the future large target area, the whole
country. |
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9-
Promotion, Advertising... and
Merchandising!
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The word
Promotion
requires
some definition. In general usage, it means every action in favor of a
product, including advertising it. But in the jargon of
marketing, promotion
does not include advertising. Yes, it is confusing!
So, let's resort again to the American Marketing
Association definition: "Promotional activities are
those which
support advertisement, personal sales and merchandising, helping them to be more
effective". The definition is very open, but we can
imagine some examples: organizing seminars or plant tours
for customers, giving away samples of the product to
potential consumers at public places, cents-off coupons,
etc.
So what is "merchandising"? In the jargon, it
means actions to make the product visible, reachable, and
attractive to the consumer at the point of sale. How a product is
physically located in a supermarket shelves is vital:
shelf space, height in the shelf, vicinity to other
products, are important factors addressed by
merchandising. |
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10-
Advertising.
Promotion planning
& executing
|
Once
McEla decided to conduct a market test, and selected the
test market area, it started the crucial process of
planning the promotion and advertising campaign of Bubbly®.
Promotional activities for distributors and supermarkets
were planned. A publicity Agency was selected and
Graphic, radio and TV ads were developed. An
advertisement budget was prepared, with all details of
how the dollars were to be spent among the different
types of media. |
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11-
Distribution:
do it yourself
or contract a
third party
|
Maybe
you, as a consumer, had this experience before : you
notice ads for a product that entice you into buying it,
you look for it at your favorite store... but they don't
have it! Very frustrating indeed. So, a very important
factor in launching a product is distribution: the
product must be placed were the final customer, the consumer, can buy it. McEla did the following:
They selected a Distributor for the test area. This company, named
Bob's Inc., was to perform the following services for
McEla: warehousing and delivering Bubbly® to the stores where it
would be sold to consumers.
McEla decided to perform the selling
and merchandising with their own employees, and proceeded
to hire and train this staff.
The options for McEla were several; they
could have contracted a distributor to perform the
selling and merchandising as well. But they decided to
contract for warehousing and delivering since they did
not want to invest in warehouses and trucks. On the other
hand, they preferred to control the crucial selling
activity themselves.
Accordingly, McEla's own sales force would take orders
from customers and those orders would be channeled to the
distributor for delivery. Naturally, McEla would keep the
distributor's warehouse supplied with Bubbly® six SKU's. |
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12-
Here
we go!
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Now
it seems everything is in place for the launch.
McEla has produced a quantity of soap
according to the sales forecast and delivered it to Bob's
Inc.
They have promoted the product in
meetings with "the Trade"
(name given to middlemen and/or large retail stores),
advising them of the imminent launch and telling them how
good it would be for their business.
They have a trained sales and
merchandising staff.
They have negotiated initial orders
from the Trade so that when the ads started to appear the
consumers would find the product available, and those
orders were delivered; the procedure called "pipe line
filling". The
merchandisers have done their best to display the product
effectively at the stores.
On Monday, March 1st., the ad campaign starts and McEla's
people cross their fingers. |
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13-
Selling
|
McEla's
sales force has several tasks. They must make sure that
their customers place orders so that the points of sale
are constantly provided with the product for the consumer
to purchase. They must also be the "eyes and
ears" of McEla in the market, advising about
competition activities, customer reactions toward McEla
and its competitors, etc.
There are, of course, many types of sales persons. They
go from mere "order takers" to very
sophisticated technically specialized
"advisors", depending on the product and the
types of customers. But in all cases, the efficiency of
the work force is crucial. What are the qualities of a
good salesperson? This is very difficult to establish,
but motivation and ambition are an important part. For
that reason, most salespersons are paid on a commission
basis. |
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14-
Interpreting
the
Market Test
Results
|
Everyone
at McEla is closely watching the market test. No wonder,
since evaluating the results of the test correctly is the
key to a successful future launch in a wider market.
The first indication is the size and frequency of the
orders from the trade to replenish their shelves. These
first replenishment orders make people very happy.
However, they may be misleading.
Let's go back to your own experience as a consumer.
Surely, you have bought this new shampoo or whatever you
saw advertised on TV. You brought it home, and did not
like too much. Or you did, but for some conscious or
unconscious reason reason the next time you went to the
store, you purchased your old brand and never again
bought the new one.
This happens to a lot of people, and that is the reason
why the real first positive indication in a new product
launch are not those first replenishment orders from the
stores, but the following ones. The first orders may be
influenced a lot by those "one and only"
purchase exemplified above. If the following orders are
satisfactory, they are usually the result of
"repeat" purchases from consumers. The ones who
bought the stuff for the first time and went on using it
and buying more. |
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15-
Fine tuning for the
"Big Bang"
|
After
a reasonable time a "go"/"no go"
decision with a large area launch must be taken. Careful
analysis of results allows the "fine tuning" of
the marketing strategy. Reaction of consumers and the
community to the advertisements, relations with the
Trade, reaction of the competition, are factors to be
added to actual sales figures to evaluate the test. |
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16
-
Follow-up of the
Product's
performance
The Product
Manager's job
|
From
it's initial launch, and for all its life cycle, the
performance of a product must be carefully monitored.
In many companies there is a position called Product
Manager for each important brand or product line. The
incumbent's main responsibilities are:
Monitor production costs and quality
control.
Closely watch the market to make
decisions on pricing, special promotional offers,
advertising design and campaigns, merchandising, sales
force's attitude to the product, etc..
Check on the distribution chain to make
sure that the customers orders come in and are filled so
that the product is always available for the consumer at
the points of sale.
Monitor customers and consumer
satisfaction with the product and its supporting
"customer service" when appropriate.
Be an important contributor in the
preparation of sales forecasts and production schedules.
As a result of these activities, he is
to a high degree responsible for the profitability of the
product. |
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17-
The End |
This
is the
end of Marketing
II. If you care to
comment on this course, we'll appreciate it. Kindly email
us at comments@mbaii.org
When you are ready take your self-evaluation
test below. |
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