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Company G. wishes to launch a line of small appliances. The marketing plan is designed to guide the process of bringing that line to market. The line will initially begin with a couple of products, but will eventually expand to fill a broad portfolio of products. Within Company G, the small appliances line has been developed not only to take advantage of an opportunity in the market, but is designed to give Company G. A growing product line in order to bolster stagnating revenues. This plan will outline the process by which the line will be marketed.
With its new line, Company G. has the objective of becoming a premium player in the small appliance industry. These new appliances will bring professional quality into your kitchen, but at domestic prices. Our mission is to help you cook your best.
The target market for the company's new line is the middle-income younger consumer. This consumer will be university educated, but not in a financial position to purchase the high end kitchen products currently on the market. Yet, this consumer has a high degree of knowledge about food. He or she watches cooking shows, and has a high level of exposure to global food, if not fine dining. Our target consumer will range from 25-35, and may be starting a family. This consumer is urban, and prefers to shop in boutique stores or online, rather than in traditional department stores or discount stores. This customer wants to have a wide range of kitchen gadgets, but needs to be able to afford them. A professional by trade, our target consumer places emphasis on variety in cooking, and seeks to make the most of his or her limited time in the kitchen.
There are four main marketing objectives. The first is to develop a range of at least one dozen products. At present, the first product will be a blender, but this will be followed by hand mixers, coffee and spice grinders and other similar motorized products. The target price for the range will be 20% higher than the baseline product but 50% lower than the super-premium benchmark, to the extent that these objectives are not mutually exclusive. Distribution should be nationwide within three years in stores, but initially will be focused on the West Coast markets. Internet distribution will be national immediately through a deal with either UPS or FedEx. The product's promotions should reach at least 40% of the target market within the first year, and the objective is that brand recognition will be achieved with at least 50% of the target market within two years.
Competitive Situation Analysis
The small appliance industry is subject to intense competition. There are a number of players in the market, covering all different segments. Some competitors compete broadly -- firms like Braun or Procter-Silex for example -- while others specialize. Many compete as low cost producers, while there is also intense competition in high end as well. The middle -- where our company intends to compete -- is not as intense but still faces competition from the highest products of the low-end producers and the lowest products of the high-end producers.
Porter's five forces model helps to understand the forces that impact a firm's pricing power. The forces are the power of buyers, the power of suppliers, the threat of new entrants, the threat of substitutes and the intensity of industry rivalry. In this industry, buyers have high power. They are well-educated about the products, and comparison shop, giving the buyers bargaining power. They are often price sensitive as well. Suppliers have relatively low power. These include manufacturers and parts makers. They tend to be located in Asian countries and compete vigorously with one another for contract manufacturing and assembly business. Low switching costs for small appliance marketers gives them high power over suppliers as well. There are few barriers to entry. Distribution and capital intensity are among the bigger barriers, but are not difficult for a large multinational to overcome. There are some vague substitutes -- non-electric devices, eating out, etc. -- but these are generally weak. Thus the threat from substitutes is relatively low. Within the industry, there is only limited intensity of rivalry. The industry is not especially concentrated, many firms operate in other businesses and there is a healthy diversity of rivals. Overall, the industry is relatively positive with respect to the five forces. Firms in the industry should be able to enter the business and develop some degree of pricing power. That said, most positions in the industry have already been staked out, meaning that for a new firm to become established will take a lot of hard work.
Company G. is a long-established company with a solid brand name and a deep war chest. Although it has never competed directly in small appliances, it has competed in complementary businesses so its brand will be well-known to consumers. G has put a significant amount of resources, both human and financial, behind this effort, including some top R&D staff to develop the best products. The company has strong arrangements with manufacturers overseas because of prior contractual arrangements with these companies. That said, there are a number of weaknesses. Company G. does not have strong distribution for small appliances as these pass through channels the company has not traditionally used. Its brand has suffered in recent years due to quality defects, which is one of the reasons the firm wants to differentiate. In addition, its products have not established themselves among consumers, as this is a new line of business for G.
The move into small appliances is to capture an opportunity that G. believes is in the market. The so-called 'baby boom echo' is now passing into adulthood, representing a large demographic with sophisticated food tastes and experience as a result of growing up with food television, online recipes and a plethora of ethnic dining. The needs of this generation are generally not being met by the current crop of small appliance makers -- they cannot afford high end equipment but require something more sophisticated than what might be found at Wal-Mart. There are also opportunities to take the line overseas to countries with similar characteristics, such as Canada, the UK or Australia, or even to developing nations with similar economic profiles to 20-something adults in the U.S. That said, the existing players in the industry represent a significant threat to all new entrants. The existing distribution channels pose a threat as the best of them do not reach this target audience to an ideal degree. In addition, the prolonged economic downturn threatens our target market as younger workers often suffer more during economic distress, and would therefore be forced to cut all unnecessary items from their budget, small appliances included.
Three product strategies are: to launch multiple products; to position those products in the desired place as measured by customer surveys; to have the products fall within specs for defects and returns. Three price strategies are the 20% premium to the standard products, the 50% discount to the high end benchmark products and to maintain the target gross margin. Distribution should be regional in the first year; national online in the first year; and 80% of the target market should have to travel no more than 30 miles to find one. Promotion strategies will include achieving targeted brand exposure levels, to achieve targeted brand positioning levels and to bring the promotion in line with the promotion budget.
These strategies work together in a number of ways to help the company achieve its goals. For example, the productions specs element of the product strategy will support the efforts made with respect to product positioning. The desired positioning for this product is supported also by the containment of the gross margin, as this will prevent prices from rising too high for out target market. The product line is intended to reach the mass market, and this is supported in the distribution strategy. Most of the strategies are specifically actionable and contain elements that can be measured. The latter is necessary for the development of strong control mechanisms that will ensure optimal performance.
Tactics and Action Plan
The action plans relate to specific activities that need to be conducted in the context of this marketing effort. The elements of the action plan will include the action, the time frame and the party responsible. The objective of the action plan is that it will help the firm to divide the responsibilities, coordinate the efforts of different departments and understand how the work of the different departments complements the work of the other departments. The plans at this stage are outlined, but eventually there will be dozens if not hundreds of responsibilities contained in these plans, leading to job descriptions composed by human resources that will ensure each task has the adequate human resources designated for it, and a budget from finance that will ensure adequate…[continue]
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