chapter 14 market development .ppt

8/16/2019 Chapter 14 market development .ppt

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Market Development, Information, and Bargaining

Power

• Reasons for market

development

• Strategy in market

development

• Tools and outcomes

• Participation in

commodities market

development• Bargaining power and

market “stabilization”

• Market information


2/29

define

• Market development involves creating or

expanding a market for new or existing products

and/or increasing the value of these products


3/29


4/29

Promotion: Strategic and Tactical

Objectives

• wareness

• Trial

• ttitude toward t!eproduct

– Beliefs

– Preference

• Temporary salesincreases

Emerging

Markets/

New Products

Mature markets

/established

products


5/29

Marketing Strateg

MR"#T$%&

'B(#)T$*#SWhat we want to

accomplish

T''+SUse resources such

as distribution,

advertising, sales

promotion,

demonstrations

T)T$)S

%,

,PTT$'%Implementing strateg

as things change!More tough choices"

)'%S-M#R.

MR"#T

R#SP'%S##onsumers or

intermediaries

respond

STRT#&/$ow to best use

available resources

to accomplish ob%ectives

under circumstances!Make tough choices"

'-T)'M#&ales are influenced

'e!g!, volume,

fre(uenc, switching,

price sensitivit)

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6/29

Strategies, Objectives and t!e "ierarc! of

effects

• *he promotional activities needed for a given product will

depend on factors such as its current stage in the

product life ccle!

• +nce more people know, a significant challenge is going

to get more people to actuall tr the product

• *his ma be difficult to accomplish because of the high

cost of the product and the vast number of choices of

other products that consumers can consume!

• *here is simpl not enough time or mone to tr

everthing available!


7/29

Strategies, Objectives and t!e "ierarc! of

effects

• If a product categor catches on, emphasis ma

then need to switch to brand differentiation and

the firm ma need to work on getting consumers

to hold favorable beliefs about their brand!• In later stages of the product life ccle, where

most consumers opinions have largel been set,

temporar sales increases, usuall through price

promotions, ma be the onl realistic ob%ective!


8/29

Market Development: T!e Objectives

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9/29

Market Development Iss#es

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!“Big picture

only”4details

not important5


10/29

Strateg Iss#es

• ,eciding on ob6ectives – Realism

– Suitability for • )ompany strengt!s

• )ompetitor positions• Market structure and c!ange

• 3ow muc! to spend on ob6ectives – )ost of advertising and.or ot!er promotion relative to gains

– Most appropriate ways of ac!ieving ob6ectives based on

• )ost• #ffectiveness

• Synergy

• )onsistency 7strong8 of ob6ectives


11/29

Some Tools

• dvertising – wareness

– Trial

– Preference

– Reminder

– %ew uses

• ,istribution – vailability in

retail stores

– 9uality of

placement wit!inretail stores

• Price.sales promotion – )oupons

– Sales

– *alue

– Premium• (oint ventures.co0

branding

• ,emonstrations

• Product investment

– 9uality – ,ifferentiation

– Packaging

– -sability convenience


12/29

Setting strateg $

• Improving (ualit, for example, might be

achieved either b increased research and

development, the use of higher (ualit materials,

or b investing in new manufacturing technolog!• *he most appropriate choice will depend on

factors such as cost and effectiveness, but ma

also depend on risk!


13/29

Tactics and implementation $

• If a decision as been made to position a product

as a premium brand through advertising, specific

ads 'advertisement) must be developed and

tested and appropriate media and advertisingschedules should be resolved!

• When implementation begins, results need to be

monitored!


14/29

%ons#mer adoption of new food prod#cts

• +ne wa to spread new foods is through

massive advertising! *his strateg has been

used in marketing 'the convenience products)!

Man foods also spread as some groups ofconsumers -imitate'cop). others the see

consuming them, and some are encouraged to

tr new foods based on wordofmouth

communication!


15/29

%ons#mer &doptions of 'ew (oods or 'ew (ood

)ses

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16/29

*evels of market development$

• 1evelopment efforts ma center at several

different levels!

• &ome growers ma want to promote their food,

hoping that preference will be developed relativeto other food categories

• 0lternativel, development efforts can focus on a

branded product, a brand 'e!g!, all #oca #ola

branded products),


17/29

*evel of Market Development

• +evels

– )ommodity

• ,ifferentiation from competing commodities

• $ncrease in demand for commodity – )orporate product category 7e:g:; )oca )ola

drinks8

– Product category brand

– Brand 7product line8


18/29

%ommodities Market Development Programs

• Typically regional4e:g:; "ampot Pepper; "g

Speu Palm Sugaras beef

• $ntention is to differentiate• )ompulsory 7re?uire8 participation in

advertising programs

– ,evelopment is not wort!w!ile for t!e individual

farmer – T!e individual farmer is assumed to benefit from

overall campaign


19/29

+ffects and O#tcomes

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:olumes

2rices

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20/29

Definitions

Innovation@ “n idea; practice; orproduct perceived to be new by t!e

relevant individual or group:”

1iffusion process= “T!e manner inw!ic! innovations spread t!roug!

t!e market:”


21/29

To dopt or %ot to dopt@ 3ow 2ill )onsumers

nswer t!e 9uestionA

• &ome causes of resistance

to adoption

– Perceived risk00financial and

social

– Self image

– #ffort to implement and.or

learn to use t!e product

– $ncompatibility 7actions or

ideas not acceptable8

– $nertia.overw!elming

e>isting c!oices 7lack of

desire or ability to c!ange8


22/29

Tpes of Innovations

• 1as!ions4tastes go back and fort! overtime4e:g:; food fat content

• 1ads4product is “in” for a s!ort time andt!en fades

• Trends4consumption of a food producteit!er increases or decreases consistentlyover time


23/29

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Innovators

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Innovators andImitators (Copy from sb/sth else):

The Lifecycle of A Product


24/29

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"ne #i$usion Pattern%%&icely 'alanc


25/29

Implications for (oods

• Many substitutes and individual tastes

• Trying new foods for variety is common

• Social opportunities for trial

• 1ood tastes tend to be “learned” early in life

– Best opportunities for spread are wit! younger

consumers


26/29

Infl#ences on t!e Speed of Diff#sion

• Risk to e>pected benefit ratio 7relativeadvantage84usually not an issue forfoods

• 'bservability4is t!e product

consumed in public• Product pricing4scarce foods are

“rationed” t!roug! cost

• Trialability4usually easy for foods

• Switc!ing difficulties and learningre?uirements. ease 7easy8 of use4nota problem for foods eaten out but maybe for foods to be produced at !ome


27/29

Bargaining Power

• $mpact

– Price

– )onditions

• Returns

• Time of payment• $nterest or finance

c!arges

• 9uality or ot!er

ad6ustments

• Transportation or ot!erservices

• Sources

– Size; number; and

concentration of firms

– Supply control

– -ne?ual information – ,iversification 7A8

– Product differentiation

– )ontrol of resources

– 1inancial resources – Ratio of fi>ed to variable

costs


28/29

Marketing Orders and &greements

• Mandates intended to “stabilize” markets

• Types of issues

– &rades; size

– Packaging – Market allocation 7?uotas8

– Minimum prices

– )ontributions to researc!

– dvertising 7market development8


29/29

Market Information

• Some issues

– )rop forecasts

– ,emand forecasts4?uantity

and prices

•&overnment informationprograms

• Problems

– Price specification

7comparability of location;

time; and ot!er factors8

– %et vs: gross prices

7allowances and discounts8

– )ost vs: accuracy of

information

– )!anging market orientation

and scope of market

7proportion of buyers andsellers involved in open

markets8

– *oluntary 7volunteered8

cooperation

chapter 14 market development .ppt

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