Advertising as One of the Main Concepts of Patchi Shops Business - Term Paper Example

Patchi Shops Part One Introduction Advertising is one of the main concepts that is incredible in ensuring that the prosperity and economic worth of products can easily be realized. Advertising is a concept that communicates information regarding a given product and service to potential customers imploring them to purchase and use the products being offered by a given company (Bitner & Booms 35). The important information that should be contained in an advertisement include the following: - The name of the product, The benefits of the product to the potential customers, and Persuasive information for the potential buyers to woo them into preferring the product to others being provided in the market (Bitner & Booms 75). In a snapshot, the advertisement for the Patchi chocolate shops is aimed at encouraging larger turnover returns for the selling of low calorie chocolates that have been fronted for introduction in the market. Promotion Strategy The main advertising objective for the new product which is fronted in the Patchi Chocolate shops is to sensitize the customers and give persuasive information to the niche market regarding the new product so as to implore buyers into preferring the new chocolate brand to others offered by our competitors in the market. In so doing, this objective will be informed by the aim of ensuring that after twenty eight weeks, Patchi shops’ market share in the market will have increased to be 35 percent. The justification for this objective is that for every business endeavour, the single reason that informs investment is the realization of profits and growth of the market share of the company trading in the product fronted in the market (Borden 155). This therefore means that an advertising strategy should be steered towards ensuring that there is adequate profitability that can be derived from the product and in so doing also ensure that there is adequate market share that the product helps the company to attain in its niche market. For the promotion of the new chocolate brand introduced in the Patchi shops, and for effective promotion strategy, the concept of Marketing Mix will be used where the main elements that will be used for promotion of the product are the five P’s of the Marketing Mix. These are: - Product brand and name, Price of the product, and The Promotional approaches preferred (Diane 65). In discussing this, the form of distribution of the product to the market will also be discussed and ventured into. These four elements whose objectives and strategies are given herein below will form the backbone of the entire promotional strategy for Patchi shops and their new brand of chocolate without calories. Strategies for each element of the marketing mix Objectives of the New Product i. The function of the new product will be such that it meets consumer needs and satisfies them with its convenience and effectiveness. ii. To ensure consumer satisfaction, the appearance of the product in packaging will be such that its artistic and aesthetic value is unrivalled. iii. To further consolidate the product’s likeability in the market, the ease of using, portability and nutritional content will be enhanced with the most recent Food Science technologies. Objectives for the Price that the product will be sold at i. While keeping in mind profit margins and the probable pricing response of competitors, pricing strategy will skew towards use of discounts to realize this. ii. Financing for subsequent re-investment in the new product will be among the determining factors that direct pricing decisions for the new product. iii. To further diversify the scope of the new product’s likeability in the market with relation to its pricing element, promotional techniques such as ‘buy-three-get-one-free’ will be devised and used to encourage bulk purchasing and persuade customers to buy more of the chocolate as well as serving as an encouragement for consumer loyalty. Objectives for the Distribution Approach i. It will be the intention of this promotion strategy to limit the extortion of middlemen as much as possible by facilitating distribution channels that reach the consumers directly as far as it is possible. ii. Distribution will be skewed so as to take advantage of the company’s popularity in the market by making its market coverage as extensive as possible reaching to individual households as well as corporate businesses that form part of the target market. iii. To improve logistics and level of service in the distribution channels, the new product will be merchandised in physical stores as well as virtual stores on the internet. Objectives of the Promotion Approach i. Advertising to popularize the new product in addition to educating consumers on the advantages of using the product within the market will be done. ii. There will be deliberate efforts done in public relations to foster acceptance and usage of the new product within the market. iii. Given the high costs of promotion, break-even analysis to determine the value of consumer in order to determine whether additional customers are worth the cost of acquiring them will be done before engaging in these promotional activities. I find these the best strategies for the mix that will help realize the objectives of the plan. This is so in three broad fronts: First, the broad spectrum in which the strategies permeate in the marketing elements from competitor’s influence to market forces make them representative in their consideration of the factors that could affect the company’s venture with the new product. Secondly, these strategies are incorporative of the company’s strengths and weaknesses in a way that gauges the company’s comparative advantage in its niche market and therefore give it a better approach in its market entry with the new product to ensure profitability; a core objective for the company with the new product. The strategies for the mix further afford for flexibility in the target market so as to broaden its scope of acceptance while at the same time remaining consistent with the company objectives and mission. The marketing promotion for the new chocolate brand will be done at three levels spanning through three demographic classes. This is found likeable since there is appreciable difference in the needs of these demographic classes and therefore it is important to design a promotional approach for the three classes separately to optimize the effectiveness of the strategy (Diane 105). The three Demographic classes of interest Marketing and promotional approaches among the teens While marketing this chocolate brand among the teens it is necessary to put up campaigns especially the persuasive type of advertisements. This may form part of the firm’s pull strategy to draw this explorative group of consumers to the stores. It must be noted that teens like being different and trying out new things. For the chocolate intended to be sold to teens, advertisements would do well encouraging these consumers into the stores and it will go a long way reinforcing this approach by using such tools as samples, in-store display and premiums. Since this consumer bracket is greatly enthused by celebrities and modernity, celebrity endorsement is an approach that will greatly appeal to the teens increasing the sale of the product to them. It can also be noted that teens will certainly purchase the product regardless of the price as long as it appeals to their tastes. Other marketing outlets such as the social networks which are a kind of on-line marketing approach are also suitable in this particular case. Social networks such as Myspace, Facebook, Twitter and YouTube can also be used to popularize the product. Marketing and promotional approaches among the parents Whereas the most obvious purchase determinant for the teen would be the product’s appeal, the parent may be more concerned with the price and quality as they are more conscious of the value for their money. Therefore this target consumers will require a slightly different marketing and promotional approach from the one used in the previous consumer target. Comparative advertisements are generally one of the tools that can be employed in promotion here. For this target consumers, push strategy is appropriate and can be further be reinforced by sale and aggressive price promotions targeting certain occasions. Personal selling, premiums, offers, samples and store displays can also suffice for this category of consumers. Marketing and promotional approaches among the seniors The senior’s category promotional and marketing approach for the chocolate is slightly different. Being a group of consumers that is keen on health issues the organically farmed species of chocolate become a very strong selling point among them. Personal selling, offers, samples and premium may well be among the tools employed to promote this product among seniors. A marketing approach that focuses on the society is most suited for this category of consumers (see appendix one for sample advertisement). Tactics and Action Plan Strategy Task Timeline Monitoring Procedures: actions to measure effectiveness of plan Timeline for the action measures Product To ensure consumer satisfaction, the appearance of the product in packaging will be such that its artistic and aesthetic value is unrivalled Design of packaging parcels that are eccentric Three months after the premier entrance of the product in the market. Take inventory of the product in relation to its profitability Six months after its initial entry in the market. Price To further diversify the scope of the new product’s likeability in the market with relation to its pricing element, leasing options will be availed for bulk acquisition of the new product and as an encouragement for consumer loyalty. Institute a pricing model that is representative and accommodative of all economic factors. Twelve months after analysis of the behaviour of the product in the market in terms of profitability. Take the product’s popularity in the market coverage by use of questionnaires and interviews to consumers At the fall of the 2008/9 fiscal year Distribution To improve logistics and level of service in the distribution channels, the new product will be merchandised in physical stores as well as virtual stores on the internet. Create a distribution channel that protects the consumer from extortion 18 months after initial entry of the new product in the market Suscept the product to resilience analysis that determines the effectiveness of the distribution, pricing and promotional approaches of the plan 24 months after the initial entry of the product in the market. Promotion Given the high costs of promotion, break-even analysis to determine the value of consumer in order to determine whether additional customers are worth the cost of acquiring them will be done before engaging in these promotional activities. Instigate public relation services and advertisements through electronic and print media 24 months after the new product’s initial entry in the market Assess the profitability obtainable from this product when suscepted to this plan by taking into account product volume vis-à-vis revenue realizable from it 26 months after the inception of the product in the market. Part Two Pricing and Distribution Being a new product in the market, there is to be keen interest and consideration in the way pricing of the new chocolate brand by Patchi Shops is done since it will go a long way in determining many other areas of the success of the product. This therefore means that there has to be proper pricing strategies that are used for determining the exact product that is to be used for selling the product. In determining the pricing strategy to use for the new brand, the following objectives have to be met by the approach opted for the pricing of the product: i. While keeping in mind profit margins and the probable pricing response of competitors, pricing strategy will skew towards use of discounts to realize this increased sales. ii. Financing for subsequent re-investment in the new product will be among the determining factors that direct pricing decisions for the new product. iii. To further diversify the scope of the new product’s likeability in the market with relation to its pricing element, promotional techniques such as ‘buy-three-get-one-free’ will be devised and used to encourage bulky purchasing and encourage customers to buy more of the chocolate as well as serving as an encouragement for consumer loyalty. The pricing strategy that will be used for determining the price of the product will be one that ensures affordability while at the same time ensuring viable economic good for the company in an overall capacity. There are different factors that come in play when it comes to determination of the profitability of a new product which is directly determined with pricing of the brand. In this regard therefore, it is essential for local representation in the market therefore Patchi Shops should appoint an agent or importer to handle distribution and other related business concerns in the market. Participation in such ventures as chocolate and beverage exhibitions is a cost-effective way of initial market entry since it begins company’s awareness and presence assertion in the market from which prominence and establishment is anticipated. This will help determine the appropriate pricing that can be appended to the new chocolate brand. Supplying the market with consistent quality chocolate, timely delivery and stable supply and considerable pricing is the main strategic approach recommendable for Patchi shops since first time impression is so imperative in the creation of a company’s niche in its market. This together with quality service delivery and personal relations from the employees with their target consumers forms a formidable strategic approach for the company’s initial market entry into the chocolate market (Borden 65). The distribution channel that is used by Patchi Shops is informed with the nature of the market conditions of Lebanon. Chocolate and beverages market in Lebanon is characterized by a heavy foreign influx as opposed to local importers. This is attributable to the importation requirements associated with foreign chocolate importation. The strategic approach into this market therefore is one that skews more towards investment in sensitization of the consumers of the benefits associated with wine since this awareness is lacking despite the apparent increase in consumption. The distribution channel favourable for this strategy is doing business through hotels and restaurants from which maximum economic gain can be postulated to be realized. This is because the chocolate consumption in Lebanon is increasingly dominated by middle and upper class professional who imbibe in its consumption for the luxury and sophistication that has come to be associated with wine in the market. Patchi’s involvement in the market should not only raise its general company profile in Lebanon but also should focus on educating those who influence purchasing decisions such as sommeliers, restaurant managers, candy and chocolate shop owners and the media so as to maximally benefit from the increased volume of sales that is envisionable by such a strategic venture (Kotler & Keller 45). The most important sales channel as of now is hotels and restaurants since it is here that maximum profits can be realized where only those of the higher social economic class go for leisure and are willing to pay more to maintain their status quo. There are however other distribution channels operational in the Lebanon chocolate market albeit with restricted economic reap. These include departmental stores, discount stores and candy shops which are growing slowly into prominence as they reach those from the middle and lower class who are many in number. To this list of distribution channels are also convenience stores and supermarkets who sell low-priced chocolates. Producers and importers make profits of between 30 percent and 50 percent depending on the distribution channel used. For instance, retailers mark up 8- 20 percent (discount stores), 30- 40 percent (department stores, wine shops, supermarkets) and the lines share 100 percent or more goes to restaurants led by hotel restaurants which mark well up to 150 percent or more (Diane 98). The Lebanese market is segmented along socio-economic lines with the most robust market coming from the high class citizens who consume chocolates and related products for its elegance and societal sophistication. It is therefore from this segment of the Lebanese market that most flamboyant business flourishes which would a strategic target for Patchi shops. Since the segment that consumes chocolates most is of a higher societal order, the market is concentrated in developed towns that boast of luxurious hotels, restaurants and guest-inns and therefore this specific business niche would flourish in big cities and towns in Lebanon. An increased westernized diet and drinking diet and general income increment among the middle and high class coupled with the perception that wine has some health benefits have increased wine consumption in Lebanon (Borden 112). The Lebanese chocolate market is supplied by both local companies importing beverages and candies from overseas as well as foreign companies exporting them to Lebanon. The local importers however cannot sustain the demand in its market. The increasing chocolate demand in the market can be attributed to a number of reasons among which is the recent news reports by Lebanese media touting possible medicinal value of chocolate without calories which have surged chocolate demand for the citizenry (Kotler & Keller 74). Increased Lebanese incomes flanged by westernization of lifestyle especially among the professionals have been another contributor to this increased chocolate demand in Lebanon. Inasmuch as Lebanese importers have shown tremendous growth in the last five years, they find themselves at a disadvantage due to the higher costs associated by importation of raw materials for the different varieties of chocolate without calories which then allows influx of exporters in the market. These costs are associated to policies regulations that control importation of these materials which include: Lebanon has complex tax requirements for imported wine and consumer prices for wine are generally higher than other beverages. Stringent inspection and labeling specifications that are rigorous and so detailed and engrossing they incur high costs to meet e.g. the labels used should be in local dialect and should include: name of the product; country of origin; type of product; importer's name, address and telephone number; business license number of importer; expiry date; alcohol percent and volume; name and volume of ingredients by percentage; name of place where the product can be returned or exchanged in case the product is damaged or defective; instructions for storage; name of food additives; the Government's health warning clause and lot number or manufacturing date. These existent distribution channels that are already in operation in the company’s promotion, are similar approaches that can be used with minor refining and alterations to meet the requirements of the new product being fronted into the market. Owing to the high competition in the market, economic challenges, consumer satisfaction and need to remain competitive in the market, various developments can be used to ensure that the product gets the market dominance that it requires. These adjustments to the existing strategy and channel distribution can be surmised into what is called The 4P’s that achieves these business requirements. For Patchi to remain competitive in the retail industry, such marketing mix development suggestions could be considered as discussed below for the new product. Product refers to the physical goods or services offered to the consumer. Patchi has a range of both physical products and services it renders to its customers one of the main being the new chocolate brand that does not have calories that is to be introduced in the market. To optimize on this marketing mix so as to remain competitive in the market, Patchi could improve on the attractiveness of their packaging and general arrangement of products on the shelves to make it easy for customers to access them. This could also include clear labels showing where commonly used products can be found with ease. To further maximize the returns that can be drawn from this marketing mix component, appearance of products could be improved and subsidizing of prices for bulky purchases given to cultivate consumer confidence and convenience. For the Price determinant, Patchi could ensure that all price lists are adequately updated and clearly availed in places where consumers will have access to them with minimal effort. While keeping into account profit margins and pricing response of competitors, pricing decisions should be made in a way that takes advantage of prevailing market trends. This could be done through temporary price reductions, discounts and other options such as subsidizing for bulky purchases that when well applied will set the stage for new consume entrants while at the same time increasing the volume of consumer loyalty. Place refers to locations where a product can be sold. In addition to the expansion efforts already in place Patchi could also improve its distribution system so as to perform transactional, logistics and product facilitation functions effectively. This can be achieved by intensifying market coverage within places that already have branches by engaging in massive campaigns (and advertisement) to inform the public about these locations. Efforts could also be made to the effect of exploiting opportunities of expansion in other areas. This extension of distribution channels with efforts to increase level of service will eventually help the shops enjoy considerable popularity which translates in it remaining competitive in the market. Promotion decisions are those related to communicating and selling to the target market. Patchi could increase its viability in the market by using this factor of the marketing mix in an optimal manner. Usually promotion costs could be large in relation to product price, so break-down analysis should be done to know the value of customers so as to determine whether additional customers are worth the cost of acquiring them. Promotion aspects that the supermarket could engage in could be advertisement through electronic and print media of its new branches, offers and products available in their stores. Since advertisement is paid for, stronger involvement could be considered in public relations through organizing exhibitions, trade fairs, sponsorship deals and press releases all which will increase public awareness of the supermarket. These promotion techniques will encourage consumer loyalty and increase volume of sales. While seeking competitiveness, Patchi is to be conscious of the growing trend towards going green. In addition to green initiative promotion already in place, the supermarket could also consider reducing its overall carbon emissions from its machinery and from food transport. To further discourage use of toxic wrappings, Patchi could invest in recyclable or biodegradable packaging which is not only environment friendly but also effectively reduces home and company expenses especially through recycling. One final approach that is in tandem with the ease with which the new product by Patchi will be accepted in the market is the company’s Corporate Social Responsibility (CSR). Corporate Social Responsibility which is closely related to the concept of sustainable promotion strategy is another important subject of interest around the marketing strategy for new products being introduced into a given market. It is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Lauterbom 25). There are a variety of points of interest that are looked at in defining CSR in a way that can be used for determining an appropriate marketing strategy for the new chocolate brand. This notwithstanding, there are basic elements that are common to whatever definition that is used. Some of these common elements are in companies’ commitment to business responsibilities in ways that add value to the society beyond classical economic interest; society’s expectations of what is acceptable in business operations (ethical elements); environmental representation especially in industries such as oil and transport industries, is usually highlighted because it can easily be measured and monitored. It is difficult to ascertain whether it is the ethical or instrumental aspect that influences the acceptance of CSR as a promotional strategy for new products. Marens is a good proponent of this ethical definition of CSR. This he shows by expanding the definition of CSR to incorporate normative exercise to be considered in the setting out of what corporations should be responsible for in the society. To this he further suggests that there should some sort of ideological exercise to be used as a guide in describing how the society’s political economy should be organized to curtail the influence of corporate power (Marens 6). On the other hand, these two considerations do not conflict with each other since CSR acceptance usually emanates from both of them (Borden 87). From these three trends it may be concluded that consumers in the East and specifically in the Lebanese market today are more reflective and more empowered to put their beliefs into action (Lauterbom 73). Bottom-up grassroots activities are also increasingly defining the market parameters which companies must maneuver. Non-governmental organizations, (NGOs) and costumers are the ones driving this changing relationship between costumer and company. Today’s consumers consider themselves as important stakeholders, with a relationship between them and the industries, based on trust, rights and demands (Lauterbom 66). Globalization and converging cultures boost the importance of CSR as brands are built on perceptions, ideals and concepts that typically appeal to higher values. In this sense, CSR matches corporate actions with stakeholders’ demands and principals at a time when these values are constantly evolving and developing internationally. Works Cited Bitner, James & Bentney Booms. Marketing Strategies and Organizational Structures for Service Firms. Chicago: America Marketing Association, 1981. Borden, Nelly. “The Concept of the Marketing Mix.” Journal of Advertising Research. 4.1 (2001): 2-7. Diane, Thomas. Our Heritage: Company Chronology: PATCHI Shops. Washington: Diane Publishing, 2004. Kotler, Phillip and Lane Keller. Marketing Management: Promotional and Pricing Strategies. NY: Prentice Hall, 2007. Lauterbom, Reynold. “New Marketing Litany: 4P’s Passe; C words take over.” Advertising Age. 1.3 (1990): 26-45. Appendix 1: Sample of Advertisement for the Chocolate Another one from Patchi Shops!!!: Chocolate with absolutely no calories: Delicious and Elegant! Huge, ripe and fresh strawberries dipped in our specially mixed raspberry flavored chocolate and premium chocolate tinted powdered blue Read More