Factors Affecting Marketing Strategy Research Paper

  • Length: 6 pages
  • Sources: 6
  • Subject: Business - Advertising
  • Type: Research Paper
  • Paper: #58577921

Excerpt from Research Paper :

Marketing Strategy

The house brand product in question here will be Archer Farms ice cream. Archer Farms is Target's house brand used for a number of different food products. For the sake of argument, we will assume that Archer Farms ice cream is quite good and Target thinks that there might be some merit to selling it beyond their own stores. The brand does not receive its own marketing at this point -- it has no website, for example, and its Facebook page is a community page not run by the company. There is no disassociation between Archer Farms and Target at this point. This paper will examine how this market strategy might be undertaken.

Involvement

McNamara (2014) notes that involvement in the marketing context refers to "how much time, thought, energy and other resources people devote to the purchase process." Ice cream is a low involvement product based on that understanding. Many ice cream purchases are impulse buys, especially brands like Haagen-Dazs. Often, consumers do not intend to purchase ice cream, but they end up doing so anyway once they are in the store. However, the dynamic of ice cream as an impulse purchase is interesting, because its physical positioning within the store is not in an impulse zone, but rather in a freezer, and in Target this is usually a long distance from the checkout (Mehta, 2013). So while there is an impulse element to ice cream purchases, it is not entirely an impulse purchase. That said, it remains a low involvement product. Consumers typically purchase ice cream based on brand associations and favorite flavors. Buys are usually quite habitual. The most involvement given might be choosing what flavor, or debating one's sense of guilt prior to putting the ice cream in the cart - and let's face it, it always goes in the cart.

Quality Signals

Quality signals are typically used to improve the perception of quality (Akdeniz, Calatone & Voorhees, 2013). Thus, it is important to understand when branding what triggers signal quality to the consumers. With food products, and especially comfort foods like ice creams, signals include words referencing the natural or wholesome nature of the product, and rural imagery. These convey ideas about the ingredients and other elements of input quality. Alternately, ice creams can be marketed as quality with allusions to Europe, which is perceived to have high quality ice cream. Haagen-Dazs uses this type of quality signal.

Flavor is another quality signal. Unique or decadent flavors typically signal a higher quality of ice cream. Ben and Jerry's does this with quirky flavor concepts. Other companies use more evocative names for what are otherwise basic flavors - for example using "Tahitian vanilla bean" instead of "vanilla." The use of dated flavors like "Neapolitan" is likely to connote a poor standard of quality. Try Fig and Honey if you want to conjure up images of Italy in your ice cream flavors.

Other quality signals lie with pricing and packaging, and to some extent even product placement. Pricing should be high on a volume basis as consumers tend to link quality and price proportionally. Packaging to signal quality should be smaller. Large tubs of ice cream are definitely perceived as cheaper, lower-quality ice cream, meant for kids or other non-discerning consumers. Smaller packaging positions the ice cream more as an adult indulgence, for which a higher standard of quality is demanded. To an extent, distribution is a quality signal as well. Many boutique ice cream brands are marketed only in high-end food stores, with Whole Foods at the low end of that grouping. Ice creams that are marketed at regular grocery stores, convenience stores and others are usually perceived to be more ordinary in quality.

Advertising is another way to convey quality. Major premium brands tend to be well-supported with advertising, while boutique brands are not. However, mainstream ice creams usually receive almost no promotion. To do a national-level launch and connote a high level of quality appears to require some sort of advertising campaign.

Statistical Data

We are doing a national launch of premium ice cream. Most Americans can afford ice cream -- it is a relatively affordable indulgence. This one is going to be an aspirational brand. According to the U.S. Census Bureau (2012) there are 321 million Americans and there will be 403 million Americans by 2050. This is not rapid growth, but it is a fairly large market. The Census Bureau's Population Projections do not mention income levels, which is probably the most important thing for this product, even though all but the poorest Americans can afford Archer Farms at least once in a while. A total of around 75% of Americans are adults an in our target market. We are not targeting minors since they are less likely to seek out premium ice cream, and we are ignoring the over 80 segment since there are so few and they often do not live on their own anymore. The target market today is therefore between 200-240 million depending on how narrowly the adults are to be defined, the lower number being strictly the 18-64 cohort.

More important statistical data -- and data that is a lot easier to access -- is about the actual ice cream market. There were 1.53 billion gallons of ice cream sold in the U.S. In 2011, for a total market size of around $10 billion. Take home ice cream sales -- our segment -- totaled $6.8 billion. It is noteworthy that premium ice cream, defined as having lower amount of aeration and higher fat content, is the most popular product with consumers. 79.3% of consumers cited premium ice cream as their favorite (Armstrong, 2014). This supports the contention that American adults as a whole are the target market, since 80% of them prefer premium ice cream. If 80% of American adults 18-64 eat premium ice cream, that is 160 million people. That's a large enough target market with which to go nationwide. This market has grown in the past ten years, though to be honest we don't care about the past ten years. We aren't going in a time machine to sell this stuff -- we want to know if the market will grow in the next ten years and the answer is that it will.

Factors Affecting this Market Segment

Demographic trends show that this segment is set to grow in the coming years. This growth will be driven by the number of people under 18 that there are today who will become adults, and by positive net migration. As the baby boomers get older, some will graduate out of our target market, but they will still be of ice cream eating age. If we can become their brand of choice, they will still buy us even when we are not marketing to them specifically. Income and ethnicity are two other important factors when exploring this market segment -- a little bit of disposable income is preferred and some ethnicities appear to like ice cream better than others.

Reference Groups

With respect to basic food items like ice creams, there are three important reference groups. The first is friends/family, or those people with whom the buyer has regular communication. There is a significant word of mouth aspect, in particular where people need to break their buying habits and brand loyalties. The second reference group is the Internet, where strangers on the Internet talking up a product can influence somebody to buy it. People often Google new products to learn about them. The third reference group are family members for whom the buyer is buying. If the husband demands Archer Farms, the wife might buy it; if the wife demands it the husband really has no choice but to buy it.

Diffusion Rate

Go big or go home. Actually, the rationale for a shock and awe-type of diffusion is that Archer Farms already has national distribution in Target stores. The move to other stores would mean that we are focusing on stores with national distribution anyway, or at least major regional chains. All of this will be supported with an expensive national ad campaign, so we basically want to get this product out to all of our potential customers right away, without delay. Diffusion determinants are those things that help determine diffusion. In this case, deals with other retailers will be a major factor, while production capacity is a diffusion inhibitor. Capacity is not expected to be a problem. Getting deals from other retailers and distributors to carry the brand should not be a problem, either, since they tend to like products that are well-supported with advertising, as this will be.

Dimension

The best way to sell this product is to focus on the aspirational, luxury value that it has. In other words, there is a value proposition here vs. other luxury brands. Archer Farms will be positioned as a luxury brand but at a price point below those of other luxury ice cream brands. That…

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