Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
Business Marketing brand manager was quoted as saying, "You may think you define your relevant market." Comment.
Brand management, as a recognized organizational objective, is attributed to Neil McElroy in 1931, who was then a junior marketing manager assigned to advertising Camay soap, and who later become Procter & Gamble's CEO. The intended purpose of brand management was to solve sales problems through the use of research to understand weakening sales in distinct markets, followed by the design and implementation of strategies to turn around these markets. Strategies used many marketing tools including advertising, pricing, promotion, packaging and displays (Aaker & Joachimsthaler, 2000). This desired objective of brand management has remained the primary role of brand managers since McElroy explicitly stated his intent in 1931. However organizations in general, and brand managers in particular, need to be aware that forces other than the strategies of brand managers will affect brands, including how target markets are defined.
The definition of target markets for specific brands is influenced by factors internal to organizations such as other products within an organization (new products, line extensions, brand extensions and co-brands), and other employees within an organization (such as sales staff and senior management). External factors can also influence how markets are defined, including competitors, the distribution channel (wholesalers and retailers), the media, and consumers including consumer preferences and brand loyalty. Each of these factors will be briefly explored in the remainder of this paper.
Within organizations, the assumption can be made that all products and employees work collectively toward market domination. However competition for markets occurs internally to organizations, as well as externally. Organizational teams can develop new products and extend brand or product lines. The impact is that markets for existing products can be displaced by new products, thereby reducing the ability of brand managers to solely define their markets. Other employees within an organization can supersede the brand manager's authority to define markets. Senior managers have made decisions that place products in markets that were not previously the focus of brand managers. Sometimes these decisions are strategic and fulfill a larger organizational objective, but often these decisions are irrational and driven purely by personal motives. Sales staff can also play a key role in defining markets for any given brand. While sales staff generally work in cooperation with brand managers to develop and retain brand markets, sales staff may also circumvent the brand managers work by focusing on different markets or ignoring desired markets. The end result is that players within organizations other than brand managers alone can, and do, define relevant markets.
External to the organization, a variety of factors also affect how markets are defined. Competitors can directly influence market definition, particularly in direct-competition situations. A competitor may change its product's image to appeal to a younger and cooler market, thereby implying in its advertisements that the old and uncool are left with the choice of adopting its product, or staying with the competition's product. This type of competitive strategy directly affects how competitors' markets are defined.
Parties within the distribution channel can also influence market definition through actions such as co-branding. The media can contribute to market definition by the coverage that is given to products - positive, negative or indifferent. Consumers also affect how markets are defined, through their response to advertising campaigns, or changes in price, packaging and displays. Consumers will determine their own level of brand loyalty, and will self-define if they fit within a given brand's image, or switch to align personal values with alternate products. The ability of consumers to influence how markets are defined is significant, and must be recognized by brand managers as strategies are developed to match brands with markets.
In conclusion, brand managers play an important role in defining the relevant market (or markets) for their respective brand (or brands). However brand managers must be aware that other factors also influence the markets in which their product is placed. To ensure the ongoing successful placement of brands within these markets, brand managers must ensure that their brand strategies address both internal and external factors that influence their defined markets. By taking this approach, the brand strategy will remain strategic through the recognition and incorporation of factors beyond the brand managers' direct control in the definition of markets.
What competitive factors would lead to different allocations of the promotion budget for advertising and sales promotion?
The purpose of a promotion budget within an organization is to generate and retain interest in the products and services being offered, with the ultimate goal of maintaining and expanding market share, sales revenue and profits. However promotions budgets, like most resources, are finite. Thus a need is created to establish clear objectives that will be achieved through the use of the promotion budget, along with specific actions that will support the implementation of the planned promotion budget. Several factors must be considered when setting promotions objectives and priorities; competitive factors must be factored in the decision-making process, which in turn will guide how finite resources are apportioned between various strategies including advertising and sales promotions.
A few possible competitive factors that must be considered include the overall state of the product (where the product falls in the product life-cycle, ranging from new, growing, maturing and declining), the nature of the industry (competitive, monopolistic, barriers to entry and exit), and the overall state of consumers (demographics, economic, environmental and political factors). Each of these factors must be dealt with differently, using advertising in some cases, sales promotions in other cases, and other strategies (publicity and personal selling) in yet other cases, to effectively mitigate these various competitive factors. When responding to these various competitive factors, marketing managers must bear in mind that the primary role of advertising is to inform, persuade and remind customers of the product's virtues, while sales promotions serve to generate sales through consumer interest and incentives at the point of sale.
For new and declining products, a combination of advertising and sales promotions is desired, while products in the growth and mature stages of the product life-cycle can often be supported best by advertising. New products and products in decline share the same challenge of penetrating new markets through the creation of product awareness and desire. Often sales promotions can provide the incentive to make the purchase once awareness is created through advertising, thereby generating ongoing interest in these new and declining products. During difficult economic times and during periods of high competition, sales promotions can be very effective in persuading consumers to buy one product over another by influencing the decision-making process at the time the decision is being made.
Advertising can work effectively in monopolistic-type industries, to maintain interest in and support for the monopoly's products. In highly competitive industries such as those catering to impulse purchases (fast food, snacks, beverages), sales promotions can effectively switch a consumer from an intended purchase to the one being promoted. For this reason, many companies offer product samples in stores, such as food and beverage samples in supermarkets.
Advertising can be extremely effective in addressing consumer preferences or trends. For example, the public's interest in environmental and social issues has created the opportunity for companies to differentiate themselves by advertising an individual corporation's environmental and social achievements. Sales promotions will not be nearly as effective in generating a feel-good sense about these issues as can a well-structured advertising campaign. However sales promotions can be used effectively to increase volumes of sales by offering quantity discounts.
Advertising can also be useful in creating awareness for products as consumers advance through their own life stages, from being young and single to married-with-children to retired-without-children to late-lifers. The need for new products arises as individuals progress through life stages; advertising can create awareness for new products that would otherwise remain unknown to persons as they age. Advertising can also create awareness of new uses for products that are currently being used, such as using baby lotion as make-up remover in mid-life and as a skin moisturizer in later life.
In conclusion, advertising works best when competitive factors create the need for information, persuasion and reminders for consumers, while sales promotions work best when competitive factors dictate the need for on-site sales incentives to generate consumer interest and action. Where resources permit, a combination of advertising and sales promotions will often be the most effective strategy, but the finite nature of resources generally requires the application of one strategy over another. By providing an analysis similar to the one presented in this paper, organizations will be able to make the most effective use of their limited resources based on the specific competitive factors being faced at any given point in time.
Discuss the concept that some information may be too expensive to obtain in relation to its value. Illustrate.
In the field of marketing, market research is an important source of information. Beckman, Kurtz and Boone (1997) define marketing research as "the systematic gathering, recording, and analyzing…[continue]
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