Today’s business world has become much competitive that requires continuous and visible effort to get and retain customers. Companies are increasing focus on sales and marketing. Businesses need to decide which customers to target. Businesses need to work out how they will reach and win new customers. Businesses need to make sure that they keep existing customers happy. And they need to keep reviewing and improving everything in order to stay ahead of the competition. Therefore businesses need to develop appropriate marketing strategies which allow them to move forward.

This is a marketing strategy report. First part will identify and explain the best analysis for two competing cosmetic brands (Competitor A and B) which consists of eight products from four product lines. In this section SWOT analyses of two competitors’ product lines will be given.

Second part will analyse and map those products with aid of product life cycle and BCG matrix. These models will be discussed briefly with justifications.

Third section will talk about the best product, pricing, promotional and placing strategies for each and every type of products in both companies. In addition to this a comparison of analysis of these two companies will be given.

This will be followed by discussion of the possible types of disagreement between the company and the channel distribution in Competitor A.

The next section will give talk about the factors influencing the selection of a marketing channel. Lastly a summary of this report and suggestions will be given.

2.0 Introduction

The understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the product’s success or failure. The PLC sequence is closely linked with the dynamics in the market environment and has subsequent effects on the product marketing mix and marketing strategies. Hence, for the companies to manage a product’s life cycle successfully, need to have good marketing strategies and secure distribution channels.

This marketing strategy report is prepared for two competing cosmetic brands (Competitor A and B) which consists of eight products from four product lines. This report is organized as follows. First section provides SWOT analyses of two competitors’ product lines. Second section will analyse and map those products with aid of product life cycle and BCG matrix. Third section gives product, pricing, promotional and placing strategies for each and every type of products in both companies. This is followed by the possible types of disagreement between the company and the channel distribution in Competitor A. The next section explores the factors influencing the selection of a marketing channel. The last section refers to the conclusion giving summary and suggestions for both companies.

3.0 Analysis and mapping of the products

In this section SWOT analyses are done to analyse the current situation of the product lines of both companies. For Competitor A, the analysis shows that the Facial Wash is in introduction stage and in question mark quadrant. The Whitening Cream is in growth stage and in star quadrant. The Moisturiser is in maturity stage and in cash cow quadrant. The Sun Block Cream is in decline stage and in dog quadrant.

For Competitor B, the analysis shows that the Whitening Cream is in introduction stage and in question mark quadrant. The Facial Wash is in growth stage and in star quadrant.. The Moisturiser is in maturity stage and in cash cow quadrant. The Sun Block Cream is in decline stage and in dog quadrant.

4.0 Analysis and mapping of the products with models

The general characteristics of various stages of product life cycle are as follows.

1. Introduction stage: The costs are very high, slow sales volumes to start, little or no competition, demand has to be created, customers have to be prompted to try the product and makes less money at this stage (Lamb et. al 2011).

2. Growth stage: The costs reduced due to economies of scale, sales volume increases significantly, profitability begins to rise, public awareness increases, competition begins to increase with a few new players in establishing market and increased competition leads to price decreases.

3. Maturity stage: The costs are lowered as a result of production volumes increasing and experience curve effects, sales volume peaks and market saturation is reached, increase in competitors entering the market, prices tend to drop due to the proliferation of competing products, brand differentiation and feature diversification is emphasized to maintain or increase market share and industrial profits go down.

4. Decline stage: The costs become counter-optimal, sales volume decline, prices and profitability diminish and profit becomes more a challenge of production or distribution efficiency than increased sales (Lamb et. al 2011).

The general characteristics of four quadrants in BCG matrix are as follows.

1. Question mark: In this quadrant there is high market growth rate and low market share.

2. Star: In this quadrant there is high market growth rate and high market share.

3. Cash cow: In this quadrant there is low market growth rate and high market share.

4. Dog: In this quadrant there is low market growth rate and low market share (Lamb et. al 2011).

In general the above characteristics are present in each of PLC stages and BCG matrix positions. The analyses of the product lines also have shown the presence of these characteristics in each of the stages in PLC and BCG positions.

Competitor A

1. Introduction stage: The product Facial Wash comes in introduction stage. This is because its sales is low, profits are negative and there is less or no competition. The product is in question mark quadrant because it has high market growth rate and low market share.

2. Growth stage: The product Whitening Cream comes in growth stage. This is because its sales starts climbing, profits increasing, production scale increased, consumers are convinced, promotion has increased and prices dropped slightly. The product is in star quadrant because it has high market growth rate and high market share.

3. Maturity stage: The product Moisturiser comes in maturity stage. This is because its price is stable, it is well-established in the market, making good profit and sales and high competition in the market. The product is in cash cow quadrant because it has low market growth rate and high market share.

4. Decline stage: The product Sun Block Cream is in decline stage. This is because its sales and quantity offering starts declining, profit decreasing, price and promotion are decreasing. The product is in dog quadrant because it has low market growth rate and low market share.

Competitor B

1. Introduction stage: The product Whitening Cream comes in introduction stage. This is because its output rate is relatively stumpy, low growth rate of sales, mostly incurs losses, customers are unaware about the product and less competition. The product is in question mark quadrant because it has high market growth rate and low market share.

2. Growth stage: The product Facial Wash comes in growth stage. This is because large number of units sold, annual earnings increasing, profits and demand are increasing and new customers are increasing. The product is in star quadrant because it has high market growth rate and high market share.

3. Maturity stage: The product Moisturiser comes in maturity stage. This is because product has already achieved acceptance in the market, sales are slowdown, very high competition and innovation of new models. The product is in cash cow quadrant because it has low market growth rate and high market share.

4. Decline stage: The product Sun Block Cream is in decline stage. This is because it is difficult to maintain sustainable sales levels, low growth in sales, most of the product class usually dies and customers perceive the product as "old" and may not be in demand. The product is in dog quadrant because it has low market growth rate and low market share.

The below two product life cycle show the current stage of these products of two competitors in the market. Competitor A’s Facial Wash and Competitor B’s Whitening Cream are in introduction stage. Competitor A’s Whitening Cream and Competitor B’s Facial Wash are in growth stage. Moisturizer products of both companies are in maturity stage. Sun Block cream products of both companies are in decline stage.

The below two BCG matrixes show the current position of these products of two competitors in the market. Competitor A’s Facial Wash and Competitor B’s Whitening Cream are in question mark quadrant. Competitor A’s Whitening Cream and Competitor B’s Facial Wash are in star quadrant. Moisturizer products of both companies are in cash cow quadrant. Sun Block cream products of both companies are in dog quadrant.

5.0 Comparison of product, pricing, promotional and placing strategies

The below two diagrams show the comparison of two competitors’ products analysis by PLC and BCG matrix models.

The below table shows the comparison of 4 Ps strategies for the products of two competitors.

(Lamb et. al 2011).

Competitor A – 4 Ps Strategies

1. Facial Wash (Introduction stage)

Product: Facial Wash product design will be revised and modified. Modified basic product can be used to remove make-up, dead skin cells, oil, dirt, and other types of pollutants from the skin of the face. Potential product- different skin types, like for dry skin, oily skin and for sensitive skin. Types of product include morning cleaner, on-the-go cleaner and night time cleaner. It will be available in sizes from up to 20 gm to 60 gm.

Pricing: The penetrate pricing will be used. Products will be offered at a low price during initial offering in order to attract customers away from competitors. Hence customers will buy and become aware of the product. Products 20gm for $2.5, 40gm for $3, 60gm for $4.

Promotion: Informative advertising will be used to increase product awareness. Push and Pull strategy will be used. Heavy product promotion will be done. Bollywood actress Mallika Sherawat will be the brand ambassador. Product will be targeted to all customer groups.

http://www.breezemasti.com/gallery/data/media/112/bollywood-mallika-sherawat-hot-photos-6.jpg

Brand Ambassador Mallika Sherawat

Place: Selective distribution channels will be used. 20 suppliers, 2 factories, 9 agents, 1000 direct outlets will be used. Product will be re-launched after modification.

2. Whitening Cream (Growth stage)

Product: Product extension - additional product in the same product category under the same brand name will be introduced. The available products include Fade Cream, Skin Botanical Brightener and Luminous Brightening Cream. The additional product is Advanced Formula Porcelain Skin Brightening Cream. The quality of existing products will be improved and maintained. It will be available in sizes from up to 20 gm to 60 gm.

Pricing: The prices will be cut down slightly to gain more market share and to increase sales. Products 20gm for $3.5, 40gm for $4.20, 60gm for $6.

Promotion: Persuasive advertising will be used to increase brand loyalty. More affords will be done to make aware of product quality and benefits. Advertisement will be targeted to more expanded market.

Place: Intensive distribution channels will be used including wholesaler, retailer. 45 suppliers, 2 factories, 15 agents, 1200 direct outlets will be used.

3. Moisturiser (Maturity stage)

Product: Available products include Calendula Cream, Intense Moisturizing Cream and Oil-Free Moisturizer. Product will be differenced by adding new and unique features based on customers’ requirements and competitors’ products features. Diversify – new product (Caviar Luxe Cream) will be introduced to the product line. It will be available in sizes from up to 20 gm to 60 gm.

Pricing: Price will match to competitor prices. This will help to compete in the market without losing customers. Products 20gm for $3.5, 40gm for $4.20, 60gm for $6.

Promotion: Will promoting new features of the products. Will make customers aware about the brand differences and products benefits. Customers will be reminded about the brand and products.

Place: Will expand market reach by adding more intensive distribution channels like wholesalers and retailers. 50 suppliers, 3 factories, 25 agents, 1400 direct outlets will be used.

4. Sun Block Cream (Decline stage)

Product: Available products include Neutrogena Pure & Free Liquid Daily Sunblock and Neutrogena Clear Face Liquid Lotion Sunblock. In this stage weak product (Neutrogena Pure & Free Liquid Daily Sunblock) which cannot be further improved will phase out. The quality of the products will be further enhanced by adding new features in accordance with the customer needs.

Pricing: Prices will be further decreased to survive in the market. To cut the prices will work to reduce product costs without compromising the quality to cover the required margin.

Promotion: The reminder advertisements will be used to remind the customers about the brand. Promotional activities will be reduced to minimal level to retain hardcore loyals.

Place: Selective distribution channels will be used. 20 suppliers, 2 factories, 9 agents, 1000 direct outlets will be used. Divesting - will phase out unprofitable outlets. Harvest – will try to maximize the remaining profits with minimal or no further investment.

Competitor B – 4 Ps Strategies

1. Whitening Cream (Introduction stage)

Product: Will offer basic product without any modification. Available products include Natural White Day Cream, Clear Fairness Cream and Touch and Glow. It will be available in sizes from up to 30 gm to 70 gm. Types of product include Skin whitening, skin lightening, and skin bleaching. Bring the glow back to the face and are good enough to treat aging spots and all types of hyper pigmentation which
cause dark spots and patches.

Pricing: Cost plus pricing will be used. Cost-plus pricing is a simple and easily controllable pricing strategy that can be used to boost profits. 30gm for $4, 50gm for $4.80, 70gm for $5.5.

Promotion: To increase awareness informative advertising will be used. Push and Pull strategy will be used. Will have heavy promotional activities. Marketing will be targeted to all customer groups. Bollywood actress Bipasha Basu will be the brand ambassador.

Brand Ambassador Bipasha Basu

Place: Selective distribution channels will be used. 13 suppliers, 3 factories, 11 agents, 870 direct outlets will be used.

2. Facial Wash (Growth stage)

Product: Same products will be offered but the product quality be enhanced. Available products include First Aid Beauty Face Cleanser, Liquid Facial Soap and Red Tea Forming Cleanser. It will be available in sizes from up to 30 gm to 70 gm.

Pricing: Stabilize pricing will be used to compete on non-price considerations. Stabilization of margin is basically a cost-plus approach in which attempts to maintain the same margin regardless of changes in cost. Products 30gm for $3.95, 50gm for $4.50, 70gm for $7.2.

Promotion: Will increase advertising budget. Advertising targets to mass markets. Advertising aims to increase brand loyalty and to make awareness of product quality.

Place: Intensive distribution channels will be used including wholesaler and retailer. 16 suppliers, 3 factories, 17 agents, 1300 direct outlets will be used.

3. Moisturiser (Maturity stage)

Product: Products will be differenced by adding unique features. Available products include Almond moisturizing lotion and Oil Free Moisturizer. It will be available in sizes from up to 30 gm to 70 gm.

Pricing: Skimming pricing will be used to capture the consumer surplus in this stage. In this stage they can increase prices because the product is in cash cow quadrant. Products 30gm for $4.99, 50gm for $5.50, 70gm for $7.75.

Promotion: Will be promoting new features, brand differences and product benefits. Will remind the customers about the products and brand.

Place: Will expand market reach by having more distribution channels. 20 suppliers, 3 factories, 19 agents, 1500 direct outlets will be used.

4. Sun Block Cream (Decline stage)

Product: Will phase out weak product (CoolDry Sport Sunscreen) and improve the product by adding new features based on customer feedback. To attract customers products will be re-packed. Cocoa Butter Sunscreen, CoolDry Sport Sunscreen and Activated Sun Protector Water-Light Lotion. It will be available in sizes from up to 30 gm to 70 gm.

Pricing: Prices will be further decreased to survive in the market. To cut the prices will work to reduce product costs without compromising the quality to cover the required margin.

Promotion: The reminder advertisements will be used to remind the customers about the brand. Promotional activities will be reduced to minimal level to retain hardcore loyals.

Place: Selective distribution channels will be used. 13 suppliers, 3 factories, 11 agents, 870 direct outlets will be used. Divesting - will phase out unprofitable outlets. Harvest – will try to maximize the remaining profits with minimal or no further investment.

6.0 Types of disagreement between the competitor A and the channel distribution

Channel conflict is a situation in which one channel member perceives another channel member to be engaged in behavior that prevents it from achieving its goals. Major causes of conflicts includes Goal incompatibility, Roles and rights ambiguity and Differing perceptions.

Types of Conflict

In any distribution channel arrangement there can possibly develop four kinds of conflicts:

1. Vertical channel conflict refers to a situation when conflict occurs between members at different levels within the same distribution channel, such as conflict between the producer and distributors, or between wholesalers and he retailers. This is between parties’ one-level up or one-level below each other.

Vertical conflicts occur due to the differences in goals and objectives, misunderstandings, and mainly due to the poor communication. Lack of role clarity and over dependence on the manufacturers. For e.g. today the large retailers dominate the market and dictate the terms. Hence there are often conflicts between these giant retailers and the manufacturers (Kazmi, 2007).

2. Horizontal channel conflict describes a conflicting situation developing between channel members at the same level, such as when one business starts price-cutting and others at the same level start complaining, or when businesses start sending goods to other business designated territories in adjoining or other territories.

Horizontal conflicts occur when aggressive advertising and pricing by one dealer. Extra service offered by one retailer can attract customers of others. Crossing the assigned territory and selling in other retailer. Unethical practices or malpractices of one dealer or retailer can affect other and spoil the brand image (Kazmi, 2007).

3. Multichannel conflict results when the producer has established two or more different channels to sell the product to the same target market. For example, a computer company may have its own retail showroom, authorised dealers, and also sells online. The conflict may arise if the company store or online prices are lower than what dealers charge for the same products.

4. Inter type conflict occurs when, the Intermediaries dealing in a particular product starts trading outside their normal product range. For example, now the supermarkets such as Foodworld also sell vegetables and fruits and thus compete with small retailers selling these products. Large retailers often offer a large variety and thus they compete with small but specialized retailers. This concept is called as “Scrambled Merchandising” where the retailers keep the merchandise lines that are outside their normal product range (Kazmi, 2007).

7.0 Channel strategy factors

Selection of a Marketing Channel

A variety of factors affect the selection of a marketing channel. Some channel decisions are directed by the marketplace in which the company operates. In other cases, the product itself may be a key variable in picking a marketing channel. Finally, the marketing organization may base its selection of channels on its size and competitive factors. Individual firms in a single industry may choose different channels as pan of their overall strategy to gain a competitive edge. Book publishers, for instance may sell books through bookstores, directly to consumers on their own Web sites, or through nontraditional outlets including specialty retailers such as craft stores or home improvement stores (Boone & Kurtz, 2014).

Market factors

Channel structure reflects a product’s intended markets, for either consumers or business users. Business purchasers usually prefer to deal directly with manufacturers (except for routine supplies or small accessory items) but most consumers make their purchases from retailers. Marketers often sell products that serve both business users and consumers through more than one channel. Other market factors also affect channel choice, including the market’s needs, its geographic location, and its average order size. To serve a concentrated marker with a small number of buyers, a direct channel offers a feasible alternative, But in serving a geographically dispersed potential trade area in which customers purchase small amounts in individual transactions—The conditions that characterize the consumer goods market—distribution through marketing intermediaries makes sense (Boone & Kurtz, 2014).

Product factors

Product characteristics also guide the choice of an optimal marketing channel strategy. Perishable Goods, such as Fresh fruit and vegetables, milk, and fruit juice, move through short channels. Trendy or seasonal fashions, such as swimsuits and skiwear are also examples. Vending machines represent another short channel typically customer can buy Skittles, SunChips, or a bottle of Dasani water from a vending machine. But how about bike parts? By installing a vending machine that sells basic hike parts like patch kits, pumps, inner tubes and brake pads, bicycle retailer offers 24-hour service to bicyclists in and around Brooklyn, New York (Boone & Kurtz, 2014).

Complex products, such as custom-made installations and computer equipment, are often sold directly to ultimate buyers. In general, relatively standardized items that are also nonperishable pass through comparatively long channels. Products with low unit costs, such as cans of dug food, bars of soap and packages of gum, typically travel through long channels. Perishable items—fresh flowers, meat and produce—require much shorter channels.

Organizational and Competitive factors

Companies with strong financial, management and marketing resources feel less need for help from intermediaries. A large, financially strong manufacturer can hire its own sales force, warehouse its own goods and extended credit to retailers or consumers. A small firm with fewer resources may do better with the aid of intermediaries. Christine and Robert Hackett founded Petropics, a small, Hawaii-based pet-food company that makes gourmet, whole-food dog and cat foods in Hawaiian-themed flavors, such as Lanai Luau for cats and Maui Luau for dogs. Petropics sells its products through local retailers and on the Web with big e-tail partners like Amazon and the Pet Center.

A firm with a broad product line can usually market its products directly to retailers or business users, because its own sales force can offer a variety of products. High sales volume spreads selling costs over a large number of items, generating adequate returns from direct sales. Single-product firms often view direct selling as unaffordable (Boone & Kurtz, 2014).

The manufacturer’s desire for control over marketing its products also influences channel selection. Some manufacturers sell their products only at their own stores. Manufacturers of specialty or luxury goods, such as scarves from Hermès and watches from Rolex, limit the number of retailers that can carry their products (Boone & Kurtz, 2014).

Businesses that explore new marketing channels must be careful to avoid upsetting their channel intermediaries. Conflicts frequently arose as companies began to establish an Internet presence in addition to traditional outlets. Today, firms look for new ways to handle both without damaging relationships. In an aggressive social media campaign, the athletic apparel and equipment manufacturer Under Armour recently unveiled a revamped website to showcase its new products such as shoes, athletic bags and hats. The site also has live chat and customer review apps. However, retail sales—most notably through Dick’s Sporting Goods and The Sports Authority—still account for 26 percent of Under Armour sales. The new website also features a much more conspicuous brick-and-mortar store locater. John Rogers, Under Armour’s vice president of global e-commerce says, ‘The new store finder ensures consumers can find all stores near them to touch, feel, and try on Under Armour gear, but online we focus on telling the innovation and leadership product stories that create strong desire for our products across all distribution channels.’ (Boone & Kurtz, 2014).

Table below summarizes the factors that affect the selection of a marketing channel and examines the effect of each factor on the channel’s overall length.

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(Boone & Kurtz, 2014).

8.0 Conclusion and Recommendations

The SWOT, PLC and BCG matrix are used to compare, analyse and map the product lines of both competitors. The general characteristics of PLC and BCG matrix are used to justify the current stage and position of these products lines. For Competitor A, the analysis shows that the Facial Wash is in introduction stage and in question mark quadrant. The Whitening Cream is in growth stage and in star quadrant. The Moisturiser is in maturity stage and in cash cow quadrant. The Sun Block Cream is in decline stage and in dog quadrant. For Competitor B, the analysis shows that the Whitening Cream is in introduction stage and in question mark quadrant. The Facial Wash is in growth stage and in star quadrant. The Moisturiser is in maturity stage and in cash cow quadrant. The Sun Block Cream is in decline stage and in dog quadrant.

After analyzing the products lines the 4 Ps strategies are developed. For competitor A, Facial Wash - should modify the product, lower price, increase awareness and use selective distribution. Whitening Cream - should extend the product, cut price, persuade customers and use intensive distribution. Moisturiser - should diversify, match price to competitor, promote new feature and use intensive distribution. Sun Block Cream - should improve, cut prices, remind the customers and use selective distribution.

Competitor B, Whitening Cream - should offer same product, use cost plus pricing, increase awareness and use selective distribution. Facial Wash - should improve quality, stabilize prices, increase advertising and use intensive distribution. Moisturiser - should differentiate, use skimming pricing, promote new features and expand market reach. Sun Block Cream - should drop weak product, reduce prices, remind the customers and use selective distribution.

The possible types of disagreement between the competitor A and the channel distribution include vertical channel conflict, horizontal channel conflict, multi-channel conflict and inter type conflict. The factors influencing the selection of a marketing channel include market factors, product factors, organizational and competitive factors. There are many other factors which come under these main factors and these factors vary with the channel length.

For both competitors it is recommended to understand the current positions and stages of product lines and implement the 4 Ps strategies suggested in this report. Both competitors need to understand the factors influencing the marketing channel distribution to choose best channel for the products. In addition to this Competitor A need to understand the types of channel conflicts in order to improve the current insecure distribution channel.

9.0 References

S HH Kazmi. (2007). Marketing Management. New Delhi: Anurag Jain for Excel Books.

Boone, L & Kurtz, D. (2014). Contemporary Marketing. Canada: Cengage Learning.

Lamb, C., Hair, J. & McDaniel, C. (2011). Marketing. USA. South Western Cengage Learning.

Adam Khaleel

Sunday, December 20, 2015

Module Name: Marketing Strategy

1.0 Executive Summary