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  • The Marketing Mix

  • Marketing MixThe marketing mix is one of the most famous marketing terms. The marketing mix is the tactical or operational part of a marketing plan. The marketing mix is also called the 4Ps. The 4Ps are price, place, product and promotion. The services marketing mix is also called the 7Ps and includes the addition of process, people and physical evidence.

  • The Marketing Mix

  • The Marketing MixThe tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives7Ps Price, Product, Promotion, Place, People, Process, Physical EnvironmentTraditional 4Ps extended to encompass growth of service industry

  • Price

  • PricePricing StrategyImportance of:knowing the marketelasticitykeeping an eye on rivalsImage copyright: www.freeimages.co.uk

  • Product

  • ProductMethods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g.Extension strategiesSpecialised versionsNew editionsImprovements real or otherwise!Changed packagingTechnology, etc.

    Image copyright: www.freeimages.co.uk

  • The stages a product goes through from when it was first thought of, until it finally is removed from the market. (from development to withdrawal from the market)

    Not all products reach this final stage. Some continue to grow and others rise and fall.

    Product Portfolio The range of products a company has in development or available for consumers at any one timeManaging product portfolio is important for cash flow- WHY?

  • Product Life CyclesProduct Life Cycle (PLC):Each product may have a different life cyclePLC determines revenue earnedContributes to strategic marketing planningMay help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc.May help in new product development planningMay help in forecasting and managing cash flow

  • Product Life Cycles and the Boston MatrixThe Stages of the Product Life Cycle:DevelopmentIntroduction/LaunchGrowthMaturityDeclineWithdrawal

  • Development The conceptual stage where initial ideas are thought out.

    May come from any of the following Market research gaps in the market identifiedMonitoring competitorsPlanned research and development (R&D)Luck or intuition stumble across ideas?Creative thinking inventions, hunches?Futures thinking what will people be using/wanting/needing 5,10,20 years later on?New ideas/possible inventionsMarket analysis Is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?Product Development and refinementTest Marketing possibly local/regionalAnalysis of test marketing results and amendment of product/production processPreparations for launch publicity, marketing campaign etc.

    Product Life Cycle Stages

  • IDEA GENERATIONSCREENINGCONCEPT TESTINGBUSINESS PLANNING AND ANALYSISPRODUCT DEVELOPMENTTEST MARKETINGCOMMERCIALIZATION Phases of a new Product development

  • Samsung BRIX is modular, full touchscreen multimedia mobile phone, where you can add additional brick modules to the basic platform to expand its capabilities and user experience.E.g. if the phone screen is too small to enjoy a movie, get more bricks to improve the screen real estate; need a better camera than is currently on the phone? Just plug-in expansion camera brick.

  • Introduction- (The initial stage of a products life cycle.)Sales at zero/low. Profits - very low or negativeLow capacity utilizationHigh unit costs - teething problemsUsually negative cash flowDistributors reluctant to carry an unproven product

    Relevant strategies at the introduction stage might include:Heavy promotion to make consumers aware of the productAim to encourage customer adoptionHigh promotional spending to create awareness and inform peopleEither skimming or penetration pricingLimited, focused distributionDemand initially from early adopters

    Product Life Cycle Stages

  • Growth- Sales rise rapidly and profits accelerates towards a peak Expanding market but arrival of competitorsFast growing salesRise in capacity utilizationProduct gains market acceptanceCash flow may become positiveUnit costs fall with economies of scaleThe market grows, profits rise but attracts the entry of new competitors

    Relevant strategies at the growth stage might include:Advertising to promote brand awarenessIncrease in distribution outlets - intensive distributionGo for market penetration and (if possible) price leadershipTarget the early majority of potential buyersContinuing high promotional spendingImprove the product - new features, improved styling, more options

    Product Life Cycle Stages

  • NOT NEW ANYMORE IS IT?

  • Maturity- Sales are at a peak, and may even start to decline. Slower sales growth as rivals enter the market- intense competition + fight for market shareHigh level of capacity utilizationHigh profits for those with high market shareCash flow - strongly positiveWeaker competitors start to leave the marketPrices and profits fall

    Relevant strategies at the maturity stage might include:Product differentiation & product improvements/ Change packaging and sizesRationalization of capacityCompetitor based pricingPromotion focuses on differentiation/Attract new usersPersuasive advertisingIntensive distribution/Enter new segmentsRepositioningDevelop new uses/ Develop public relations

    Product Life Cycle Stages

  • Decline- Sales falling rapidly. Market saturation and/or competitionDecline in profits & weaker cash flowsMore competitors leave the marketDecline in capacity utilization switch capacity to alternative products

    Potential strategies are:Harvest by spending little on marketing the productRationalize by weeding out product variationsPrice cutting to maintain competitivenessPromotion/partnership (Premium promotions) to retain loyal customersDistribution narrowed (Maximize distribution efficiency) Eliminate or repositionProduct Life Cycle Stages

  • Product Life Cycle Extension strategiesHelpextend the life of the product before it goes into decline.

    Examples of the techniques are:Advertising try to gain a new audience or remind the current audience

    Price reduction more attractive to customers

    Adding value add new features to the current product, e.g. video messaging on mobile phones

    Explore new markets/new distribution methodology try selling abroad

    New packaging brightening up old packaging / subtle changes

  • Product Life Cycle Extension strategiesA branded good can enjoy continuous growth, such as Microsoft, because the product is being constantly improved and advertised, and maintains a strong brand loyalty.

  • Phase out- Allow product to decline without a change in marketing approach- No New Life.

    Run out- Exploit strengths. Step up efforts in core markets and eliminate expenses in weak markets. (Good for obsolete products or technological products that are approaching obsolete)

    Immediate Drop- Cut sales. Recall product and credit customers where advisable. (Credit can be applied to purchase of new product line which helps in obtaining market penetration)Product elimination

  • The shape and duration of the cycle variesStrategic decisions can change the life cycleIt is difficult to recognise exactly where a product is in its life cycleLength cannot be reliably predictedDecline is not inevitable?Assumes no reversion to earlier consumer preferencesIt can become a self fulfilling prophecy

    Criticisms of the product life cycle

  • Core Product- What the buyer is really buying

    Facilitating Product- Any goods or services which must be present for use of the core product.

    Supporting Product- Any goods or services that are not ABSOLUTELY required but are used to enhance the appeal of the core product. And may help differentiate it from the competitors.

    Augmented Product- The intangible associations made with the core product (Atmosphere, Ambiance or the perceived aura in a restaurant.) Dimensions of a Product

  • Promotion

  • PromotionPromotion is the business of communicating with customers. It will provide information that will assist them in making a decision to purchase a product or service. It is the razzmatazz, pace and creativity The cost associated with promotion or advertising goods and services often represents a sizeable proportion of the overall cost of producing an item. However, successful promotion increases sales so that advertising and other costs are spread over a larger output.

    Though increased promotional activity is often a sign of a response to a problem such as competitive activity, it enables an organisation to develop and build up a succession of messages and can be extremely cost-effective.

  • PromotionStrategies to make the consumer aware of the existence of a product or serviceNOT just advertising

  • PromotionPromotion falls into two main categories:Above-the-line promotionBelow-the-line promotion.

    Above-the-lineAbove-the-line promotion is paid-for and includes traditional advertising routes such as television, radio and the press. These are good for carrying marketing messages to a large audience. However, it is less easy to measure the impact of these channels, for example, whether a TV advert has increased sales.Special displays or positioning in stores or advertising on supermarket trolleys are also examples of above-the-line promotional activity.

  • PromotionBelow-the-lineBelow-the-line promotion can take many forms and is usually more under the control of the business. Typical examples include events or direct mail. door-to-door leaflet drops or books of vouchers which give customers discounts over a period of time. These help to attract consumers and establish brand loyalty so the consumer buys the product again.email newsletter for consumers. This creates a relationship with consumers, which is unusual for a B2B organisation. It not only allows the company to communicate directly with and listen to consumers, it also enables the business to collect information, for example, about their lifestyles and product choices. This is used for feedback, research and promotions.PR and sponsorshipPublic relations (PR) is a form of promotion that is concerned with developing goodwill and understanding between organisations and the public. Sponsorship is supporting an event, activity or organisation by providing money or other resources that is of value to the sponsored event. This is usually in return for advertising space at the event or as part of the publicity for the event.

  • PromotionManchester UnitedThe product includes providing an excellent football team that plays and wins in an exciting way.Manchester United markets itself as a global brand. The club also engages in a range of joint promotional activities, for example with the mobile phone company Vodafone. The club has positioned itself at the upmarket premier end of the market and, as a result, it tends to charge premium prices as evidenced by the high cost of a season ticket to watch home league games. Additionally there are other ingredients of the product including merchandising such as the sale of shirts, and a range of memorabilia. The product also relates to television rights, and Manchester United's own television channel. Its products are sold across the globe, through the club's website and a range of other sales media. Manchester United books, shirts, programmes, keyrings and many other items are sold and promoted through its website. What are the main elements of the marketing mix of Manchester United?

  • Blood Donors RespondDuring summer, the Pennsylvania/New Jersey regional branch of the American Red Cross invited people to get their kicks on Route 56. That's the name of the summer blood drive campaign just completed. During the campaign, all donors receiveed a Route 56-logoed Red Cross keytag, and the chance to win a year's supply of gas. When people came in to give blood, they got a keytag and a scratch-off game piece that gave them a chance to win T-shirts, visors, coffee mugs, or the grand prize of $2,000 in gas money.The campaign was particularly important because it helped increase blood donations during the summer, a time when levels are typically become dangerously low. "This was our emergency summer campaign," says Jennifer Lawser, account manager for blood services at the regional office. "In the summertime, people are on vacation, kids are home from school, and nobody really thinks about donating blood.The fun auto-related theme was a big hit during a time of record-high gas prices. Donations increased more than 16% over the prior year. By the way, the free gas was donated in a nice public relations move by Lukoil Corp. "Most people thought it was a great incentive. Others felt it wasn't the reason they donated, but it was nice to walk away with a token of appreciation," Lawser says. "Either way, we won

  • Tattoos Build AwarenessWhat do the phrases "Run Your Own Race" and "Don't Cry Til' You Get to the Car" have in common? They're both albums by Mulberry Lane, a Nebraska-born pop group made up of four sisters. But unless you're one of the 500,000 people who bought one, you likely wouldn't know that.Mulberry Lane realizes the importance of keeping its name fresh in people's minds as one element in helping CD sales and growing its overall fan base. Part of this is, as the majority of groups know, selling logoed items such as T-shirts, posters and pins at its concerts.But when it came time to release A Very Mulberry Christmas, its first holiday album, as well as launch its Midwest tour, the group wanted to go beyond the fundamentals. "We wanted a branded piece that would visually represent our music," says Bo Rizutto, one of the group's members. "We decided on temporary tattoos. Kids love them, and parents approve because they're temporary. And kids always take handfuls to give to their friends. They walk around with the tattoos for a few days, and it keeps our name out in public."As many of Mulberry Lane's songs deal with young love and many fans are also young, the tattoos themselves were a very basic design: the words "I Love Mulberry Lane" with the copy in black and the heart in red. An initial order of 500 was given away at the merchandise table at the tour's first concert. The group ended up reordering them for the next show, and, says Rizutto, has been doing so "constantly" ever since.Fueled by the popularity of the tattoos at shows, the group now includes them in all of its press kits as well. To date, thousands have been distributed, and they work. "The whole campaign has been wonderful," says Rizutto. "It's great to go into a radio station or record store and see people wearing Mulberry Lane tattoos. We think they really add an extra element of fun."

  • Top U.S. Cities Play the Branding GameNo matter what business you're in, it's a good idea to think about branding. Whether you operate a medical practice, a construction company, or a food distributor, you should be thinking about the image of your business. Cities and towns that play the branding game well are part of a growing trend of thriving destinations whose mottos and monikers are helping to market their appeal and put them squarely on the map.So says TaglineGuru (www.TaglineGuru.com), which recently released its survey of the Top 50 U.S. City Slogans and Top 50 U.S. City Nicknames. It also announced the winners of the "Sloganville, USA Awards," recognizing the most notable and notorious city slogans across the nation.According to 100 leading branding, marketing and advertising professionals, "What Happens Here, Stays Here" (Las Vegas) was ranked #1 out of 400 city slogans, followed by "So Very Virginia" (Charlottesville, VA); "Always Turned On" (Atlantic City, NJ); "Cleveland Rocks!"; and "The Sweetest Place on Earth" (Hershey, PA).The well-known moniker "The Big Apple" was ranked #1 out of nearly 800 city nicknames, followed by "Sin City" (Las Vegas); "The Big Easy" (New Orleans); "Motor City" (Detroit); and "The Windy City" (Chicago).Rankings were based on whether slogans and nicknames expressed a city's brand character and personality; told a story in a clever, original, and memorable way; and inspired others to visit there, move there or learn more. According to Eric Swartz, president of TaglineGuru, "Re-branding your town with a memorable motto or moniker is the most cost-effective way to leverage your assets, increase your visibility and build brand identity. For small towns, it means creating slogans that are unique and specific capitalizing on their history, values and individual style. For big cities, re-branding means staying vibrant, contemporary and inclusive."

  • Guerilla Marketing Promotes Free ATM'sThe signs were everywhere: billboards, newspapers, even posters on the subway. To promote its new "no ATM fees at any bank anywhere" policy, TD Banknorth kicked off a multi-tiered campaign. The bank launched its "Bank Freely" campaign - featuring a No ATM Fees Visa debit card - that spread through Connecticut, New York, Pennsylvania and New Jersey. TD Banknorth ads in popular magazines and TV spots helped snag consumers' attention. But the campaign's guerilla marketing had the strongest effect. Bank reps, called "free agents," cruised around in customized Honda Elements that looked just like the No ATM Fees card, handing out branded coffee and popcorn cup holders, mock-up newspapers, bottled water, and door hangers. "We gave out water at a baseball game and ice cream on a hot day," says Thomas Dyck, director of marketing for TD Banknorth. "It was all about giving something free to the customer." The popcorn cup holders stole the spotlight at movie theaters, and morning travelers who stopped by their local cafes got their daily dose of caffeine and TD Banknorth advertising. Stickers that read, "With the money you save from no ATM fees, you can get more of these" decorated all the products. "Guerilla marketing gives you the opportunity to actually engage in a dialogue with customers," says Dyck. "Customers could ask our 'free agents' questions about the no ATM fees offer and get answers immediately." "The goal for the entire campaign is to take a year to interact with customers firsthand and to learn what else they might want in a bank," says Dyck. The buzz surrounding communities who use TD Banknorth appears to have already pushed the campaign in the right direction.

  • Place

  • PlaceThe means by which products and services get from producer to consumer and where they can be accessed by the consumerThe more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?)

  • Distribution channel - path through which productsand legal ownership of themflow from producer to consumers or business users.Distribution StrategyPhysical distribution -actual movement of products from producer to consumers or business users.

  • Direct DistributionDirect contact between producer and customer.Most common in B2B markets.Often found in the marketing of relatively expensive, complex products that may require demonstrations. Internet is helping companies distribute directly to consumer market.Distribution Channels Using Marketing IntermediariesProducers distribute products through wholesalers and retailers.Inexpensive products sold to thousands of consumers in widely scattered locations.Lowers costs of goods to consumers by creating market utility.

    Distribution Channels using Marketing Intermediaries

  • Wholesaler - distribution channel member that sells primarily to retailers, other wholesalers, or business users.Manufacturer-Owned Wholesaling IntermediariesOwned by the manufacturer of the good.Sales branch which stocks products and fills orders from inventories.Sales office which takes orders but does not stock the product.

    Wholesaling

  • Retailer - channel member that sells goods and services to individuals for their own use rather than for resale.Final link of the distribution channel.Two types: store and non-store.Retailers

  • Non-Store RetailingDirect response retailingInternet retailingAutomatic merchandisingDirect selling

  • Retail Stores

  • What specific channel will it use?What will be the level of distribution intensity?

    Selecting Distribution ChannelsComplex, expensive, custom-made, or perishable products move through shorter distribution channels involving fewor nointermediaries. Standardized products or items with low unit values usually pass through relatively long distribution channels.Start-up companies often use direct channels because they cant persuade intermediaries to carry their products.Distribution Channel Decisions and Logistics

  • Intensive distribution - firms products in nearly every available outlet. Requires cooperation of many intermediaries.Selective distribution - limited number of retailers to distribute its product lines. Exclusive distribution - limits market coverage in a specific geographical region.

    Distribution Intensity

  • Logistics and Physical DistributionSupply chain complete sequence of suppliers that contribute to creating a good or service and delivering it to business users and final consumers.Logistics the activities involved in controlling the flow of goods, services, and information among members of the supply chain.Physical Distribution the activities aimed at efficiently moving finished goods from the production line to the consumer or business buyer.

  • People

  • PeoplePeople represent the businessThe image they present can be importantFirst contact often human what is the lasting image they provide to the customer?Extent of training and knowledge of the product/service concernedMission statement how relevant?Do staff represent the desired culture of the business?

  • Process

  • ProcessHow do people consume services?What processes do they have to go through to acquire the services?Where do they find the availability of the service?ContactRemindersRegistrationSubscriptionForm fillingDegree of technology

  • Physical Environment

  • Physical EnvironmentThe ambience, mood or physical presentation of the environmentSmart/shabby?Trendy/retro/modern/old fashioned?Light/dark/bright/subdued?Romantic/chic/loud?Clean/dirty/unkempt/neat?Music?Smell?

  • Pricing Strategies

  • Penetration Pricing

  • Penetration PricingPrice set to penetrate the marketLow price to secure high volumesTypical in mass market products chocolate bars, food stuffs, household goods, etc.Suitable for products with long anticipated life cyclesMay be useful if launching into a new market

  • Market Skimming

  • Market SkimmingHigh price, Low volumesSkim the profit from the marketSuitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out)Examples include: Playstation, jewellery, digital technology, new DVDs, etc.

  • Value Pricing

  • Value PricingPrice set in accordance with customer perceptions about the value of the product/serviceExamples include status products/exclusive products Companies may be able to set prices according to perceived value.

    Copyright: iStock.com

  • Loss Leader

  • Loss LeaderGoods/services deliberately sold below cost to encourage sales elsewhereTypical in supermarkets, e.g. at Christmas, selling bottles of gin at 3 in the hope that people will be attracted to the store and buy other thingsPurchases of other items more than covers loss on item solde.g. Free mobile phone when taking on contract package

  • Psychological Pricing

  • Psychological PricingUsed to play on consumer perceptionsClassic example - $9.99 instead of $10.99!Links with value pricing high value goods priced according to what consumers THINK should be the price

  • Going Rate (Price Leadership)

  • Going Rate (Price Leadership)In case of price leader, rivals have difficulty in competing on price too high and they lose market share, too low and the price leader would match price and force smaller rival out of marketMay follow pricing leads of rivals especially where those rivals have a clear dominance of market shareWhere competition is limited, going rate pricing may be applicable banks, supermarkets, electrical goods find very similar prices in all outlets

  • Tender Pricing

  • Tender PricingMany contracts awarded on a tender basisFirm (or firms) submit their price for carrying out the workPurchaser then chooses which represents best valueMostly done in secret

  • Price Discrimination

  • Price DiscriminationCharging a different price for the same good/service in different marketsRequires each market to be impenetrableRequires different price elasticity of demand in each marketPrices for rail travel differ for the same journey at different times of the day

    Copyright: iStock.com

  • Destroyer Pricing/Predatory Pricing

  • Destroyer/Predatory PricingDeliberate price cutting or offer of free gifts/products to force rivals (normally smaller and weaker) out of business or prevent new entrantsAnti-competitive and illegal if it can be proved

  • Absorption/Full Cost Pricing

  • Absorption/Full Cost PricingFull Cost Pricing attempting to set price to cover both fixed and variable costsAbsorption Cost Pricing Price set to absorb some of the fixed costs of production

  • Marginal Cost Pricing

  • Marginal Cost PricingMarginal cost the cost of producing ONE extra or ONE fewer item of productionMC pricing allows flexibility Particularly relevant in transport where fixed costs may be relatively highAllows variable pricing structure e.g. on a flight from London to New York providing the cost of the extra passenger is covered, the price could be varied a good deal to attract customers and fill the aircraft

  • Example:Aircraft flying from Bristol to Edinburgh Total Cost (including normal profit) = 15,000 of which 13,000 is fixed cost*Number of seats = 160, average price = 93.75MC of each passenger = 2000/160 = 12.50If flight not full, better to offer passengers chance of flying at 12.50 and fill the seat than not fill it at all! *All figures are estimates only

  • Contribution Pricing

  • Contribution PricingContribution = Selling Price Variable (direct costs)Prices set to ensure coverage of variable costs and a contribution to the fixed costsSimilar in principle to marginal cost pricingBreak-even analysis might be useful in such circumstances

  • Cost-Plus Pricing

  • Cost-Plus PricingCalculation of the average cost (AC) plus a mark upAC = Total Cost/Output

  • Influence of Elasticity

  • The Marketing MixBlend of the mix depends upon:Marketing objectivesType of productTarget marketMarket structureRivals behaviourGlobal issues culture/religion, etc.Marketing positionProduct portfolioProduct lifecycleBoston Matrix

  • 4Cs of Marketing4cs is also important for marketing mix. The four Cs includes-Customer SolutionCustomer CostConvenienceCommunicationThe Marketing Mix- The 4 Cs

  • The Four Ps is being replaced by the Four Cs model, consisting of consumer, cost, convenience, and communication.The Four Cs model is more consumer-oriented and fits better in the movement from mass marketing to niche marketing.The product part of the Four Ps model is replaced by consumer or consumer models, shifting the focus to satisfying the consumer.Product is replaced by Customer: You have to study consumer wants and needs and then attract consumers one by one with something each one wants.It is to create a custom solution rather than pigeon-holing a customer into a product.Pricing is replaced by cost, reflecting the reality of the total cost of ownership. Many factors affect cost, including but not limited to the customers cost to change or implement the new product or service and the customers cost for not selecting a competitors capability. You have to realize that price - measured in dollars - is one part of the cost to satisfy. If you sell hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of conscience of eating meat, etc.

    The Marketing Mix- The 4 Cs

  • Placeis replaced by theconveniencefunction. With the rise of internet and hybrid models of purchasing, place is no longer relevant. Convenience takes into account the ease to buy a product, find a product, find information about a product, and several other considerations. You have to know how each subset of the market prefers to buy - on the Internet, from a catalogue, on the phone, using credit cards, etc. Lands End clothing, Amazon Books and Dell Computers are just a few businesses who do very well over the Internet.Promotionsfeature is replaced bycommunication. Communications represents a broader focus than simply promotions. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the firm and the consumer. Be creative and you can make any advertising "interactive". Use phone numbers, your web site address, etc. to help here. And listen to your customers when they are "with" you.

    The Marketing Mix- The 4 Cs

  • The Marketing Mix- The 4 Cs

  • Bon VoyageThe holiday market represents a highly segmented and targeted market. For example we have Saga type holidays aimed at the over 50s and designed to fill this groups needs. On the other hand wehave had Club Med and Club 18-30, the latter in particular suggesting the age group these two operators were targeting. You have been appointed as the new marketing manager for a large travel group, Bon Voyage, offering a range of holiday packages aimed at several parts of the market. The group includes package tour operations, a nationwide chain of travel shops and a fleet of aircraft. One of the fastest growing parts of the travel market in recent years has been the cruise market. Once the domain of the privileged few, cruises are now available to a much wider target market as costs have come down and incomes have risen. Until now, the company that just been appointed by you has not been part of the cruise market. It now realizes it may have made a mistake in this respect and wishes to enter the market as soon as possible. The company has negotiated the provision of two cruise ships for the next season, which will sail round the Mediterranean and the Caribbean respectively. The ships have just been refurbished and offer the most up-to-date facilities. Other companies in this market have been predominantly targeting the middle-income groups. However, there remains a part of the market which is aimed only at the luxury end, with high prices and prestigious ships.

  • Bon Voyage

    The company has asked you to give them some preliminary advice about how to segment this market and which target segments might be most appropriate and why.

    It also wants to know how its product offerings in this area might be positioned so as to differentiate it from existing competitors.

  • The Pizza Puzzle

    George Hansen is General Manager for the Marigold Inn in Augusta, Georgia. SharonCoombs is Restaurant and Food Services Manager for the Inn. She reports to George. Twoyears ago, Sharon noticed a decline in room service business, the highest margin portion ofher operation. This decline coincided with an increase in the national sales of pizza deliveryand carryout firms as well as an increase in the number of empty pizza boxes from thesefirms being left in guest rooms in the Inn. Her immediate response was to install a pizzaoven in the kitchen and offer room service pizza to guests. The effort met with modestsuccess, though it was well below her expectations. Questionnaires completed by departingguests revealed a problem of product quality.

    Focusing on this problem, Sharon improved the Inns pizza until blind taste tests judged it at least equal in quality to the products of the two major pizza delivery competitors in Augusta.Sales did not improve, convincing Sharon that the problem was a perceived mismatchbetween the hotels image and guests expectations of pizza makers. Guests simply did notseem to believe that the traditional steak and seafood restaurant at the Inn could make ahigh-quality, authentic pizza.

  • The Pizza Puzzle

    Based on this conclusion, Sharon presented the following proposal to George:

    Sales of room service pizza are stagnant due to guests misperception that our product islower in quality than that of competitors. This misperception is based on the belief that untilwe disassociate our pizza from the Marigold Inn name. Therefore, to capture more roomservice pizza business, we should create a Napoli Pizza image for our guest room deliveryservice by: Preparing Napoli Pizza brochures for each guest room, complete with a phone numberwith a prefix different from that of Marigold Inn. The number will reach a special phonein room service, which will be answered, Napoli Pizza, authentic Italian pizza from old,family recipes. Using special Napoli Pizza boxes for delivering room service pizza to guests. Issuing Napoli Pizza hats and jackets to room service personnel for use in pizzadelivery. Room service waiters and waitresses will wear these garments to deliver pizza.They will change to their regular uniforms for other deliveries.

    How should George respond to this proposal?

    *************** * ****Promotion*Promotion*PromotionA further demonstration of the 'It's All Good' ethos is McCain Foods' ethical stance on promotion. McCain makes a commitment not to advertise to children under 12 years old.It also ensures that the retail labeling on its products carries clear information on levels of fat, saturated fat, salt and sugar to help shoppers choose healthier options. Its labeling is in line with the Food Standards Agency (FSA) traffic light scheme and the food industry's Guideline Daily Amounts (GDA).Promotion falls into two main categories:Above-the-line promotionBelow-the-line promotion.Above-the-lineAbove-the-line promotion is paid-for and includes traditional advertising routes such as television, radio and the press. These are good for carrying marketing messages to a large audience. However, it is less easy to measure the impact of these channels, for example, whether a TV advert has increased sales.Special displays or positioning in stores or advertising on supermarket trolleys are also examples of above-the-line promotional activity at McCain Foods.Below-the-lineBelow-the-line promotion can take many forms and is usually more under the control of the business. Typical examples include events or direct mail. McCain uses a combination of below-the-line activities including:door-to-door leaflet drops or books of vouchers which give customers discounts over a period of time. These help to attract consumers and establish brand loyalty so the consumer buys the product again.email newsletter for consumers. This creates a relationship with consumers, which is unusual for a B2B organisation. It not only allows McCain to communicate directly with and listen to consumers, it also enables the business to collect information, for example, about their lifestyles and product choices. This is used for feedback, research and promotions.PR and sponsorshipPublic relations (PR) is a form of promotion that is concerned with developing goodwill and understanding between organisations and the public. For example, McCain uses its relationship with UK Athletics to deliver 'Track and Field' roadshows across the UK. These emphasise the link between healthy food and healthy lifestyle. Again, this aligns with the 'It's All Good' message.McCain also takes part in different types of sponsorship, such as:TV show Family Fortunes. This brings the McCain brand to a wide audience through a popular family programme.McCain Athletics Networks which encourage young people to get involved in the sport through local clubs. This further supports the companys approach to balancing calories in with calories out.McCain also aims to promote better understanding of where food comes from through initiatives such as The Potato Story. This is an educational resource that helps teach children about how potatoes grow and their place in a balanced healthy diet. *************************