The marketing objectives of Thorntons reflect upon the current situation of the organization and the target position set by the company to be achieved for the year 2005. From the Thorntons Marketing plan it is clear that the company generates a major part of its revenue from Cafes and hence the objective of increasing the number of Thorntons cafes in the target market and better positioning of the franchises will increase the sales for the company. Alongside, the brand image of Thorntons for quality and service will further strengthen by the increase in the market share in the café range of outlets thus strengthening the position of the company.
Furthermore, since it is clear that the company’s major sales is mainly during the last three days to Christmas and the increase in the online customers, it is imperative to maintain a robust and quick response website that is not only efficient in handling the orders but mainly user friendly in nature in order to increase the number of online customers. This objective will not only increase the company’s revenue generated through the internet shopping but also increase the market share among the online customers for chocolates and cakes in order to establish a competitive position in the target market.
The amount available for the purpose of the marketing which is 5% of the annual turnover (£8m) is allocated to the three major elements as follows.
1. Advertising and Public Relations: £4m. Since advertising is essential to reach the customers with the appropriate message about the products in order to create awareness as well as increase the sales, 50% of the total budget is allocated for advertising and public relations.
2. Website £1m. As discussed before, the need for a robust and user friendly website to increase the online sales is high and hence the overall restructuring of the website to make it user-friendly is planned to be accomplished with an expenditure of £1m.
3. Promotions/Other £3m: Since the company’s main income is during the festival seasons like Christmas and New Year, the need to implement efficient promotional strategies to increase the sales during that part of the year is essential and hence £3m of the budget is allocated to meet the expenses towards promotion and other expenses.
From the analysis of the contribution margin in the data analysis, we can see that the contribution of the investment on marketing is substantially high and this is expected to rise in the subsequent years with increase in sales. This makes it clear that the current allocation of the budget is appropriate to meet the demand of this year as well as cater the requirements for subsequent years. the allocation of the £1m for the website restructuring can be eliminated or reduced to a minimal value for the year 2006 and further in order to maintain the restructured website rather than spending upon the restructuring frequently.
The marketing plan for the year 2005 as discussed in the analysis mainly concentrates upon increasing the sales through the focusing the sales in Thornton’s cafes and seasonal products like ice cream. By effective pricing technique, unfavourable weather conditions can be addressed by efficient pricing of the products and special promotions to encourage the customers to buy the products. The channelling of the products and marketing the products based upon efficient forecasting of the demand aims to increase the sales during the quiet time of the year.
From the budgeting it is also clear that the investment on advertising and public relations is high and in order to efficiently meet utilise this amount the marketing plan devised in the analysis will judiciously allocate the resources in order to increase the return on the investment (ROI). Alongside, from the analysis it is clear that the advertising is the vital element for the increase in sales and hence a higher allocation or a flexible approach to the allocation of the resources to the advertising is adopted in order to maintain a balance between the advertising and promotions. Since it is evident that promotion is a form of advertising, the allocation of the resources can be proportionately split between the two in order to increase the return on investment (ROI)
Frances Brassington and Stephen Pettit (2003) argue, “Advertising plays the vital role of communicating the information about the product and corporate culture to the target customers in the market”. In the light of the consumer industry, which is under debate in this report, advertising is the primary tool for the competitors to reach the customers in the consumer industry who comprise of everyone in the general public as argued by Isla Gower (2004) . Since the demand in the consumer industry is highly fluctuating and with the exhausting choice of products presented to the customers at all price levels, has apparently created the need for establishing a strong customer base through effectively communicating not only the product information but mainly the corporate culture of the competing organization in order to gain the long term benefit of brand image in the target market.
The process of advertising as explained by Frances Brassington and Stephen Pettit (2003) works by the process of communicating the company’s message about the products and services to the target market. From the above statement it is clear that the process of advertising is mainly to communicate the message of the company which is secondary to the actual message that is conveyed to the customers since the information contained in the message is the key for the success of a product in a given target market. The initiative of Procter and Gamble to partner with other big organizations in the industry in order to identify the advertising effectiveness is proves the company’s initiative to effectively deploy its resources for advertising to increase the sales and revenue to the company.
Isla Gower (2004) argues that the competitors in the consumer industry especially under the category of the Fast Moving Consumer Goods spend vast sums of money in advertising their products not only for communicating the product information but also for establishing their position in the target market in order to create a brand image. Philip Kotler (1988) says that the advertising effectiveness is concerned with the extent to which the company can retain their position in the target market whilst the efficiency of the advertising attributes to the actual contribution to the sales.
From the above arguments on the process of the advertising it is clear that the message conveyed by the advertisement has a direct effect on not only the sales but also on the long term elements like branding, market share and corporate performance.
Malcolm McDonald (1999) argues that advertising effectiveness contributes to a strong brand image because of the fact that the message conveyed about the products and promises by an organization actually reflects upon its attitude towards customer service and through efficiently accomplishing the promises and providing effective customer service, the company actually strengthens its position in the target market. the effectiveness of the marketing plan is thus enriched and the brand image of the organization that contributes to the stability and popularity of the company’s products to generate revenue through increased sales is thus also strengthened. Alongside, the fact that an advertisement is the actual element of the marketing mix that reaches the customers either through media or direct marketing, the effectiveness of advertising directly contributes to the effectiveness of the marketing plan of an organization as argued by Marian Burk Wood (2004) .
Corporate performance of an organization as argued by Frances Brassington and Stephen Pettit (2003) corresponds the overall performance of the organization not only in term of sales but also in terms of market share and customer service. this makes it imperative for the organization to present themselves as a competitive and successful brand in the target market which can be achieved only through effective advertising. The fact that the brand loyalty of the customers in the target market is the ingredient for product innovation and market development makes it clear that an organization through advertising effectiveness can enhance its corporate performance.
Since it is evident that the advertising is not only the communicating tool but the final stage of the entire marketing plan and forms the critical element of the marketing mix of any marketing campaign by an organizations, it is thus essential for the competing organizations in any business sector (FMCG Market in this case) to gain advertising effectiveness in order to achieve competitive advantage in the target market and leverage revenue.
In the light of the above arguments, the venture of Procter and Gamble in partnering with other leading conglomerates for measuring advertising effectiveness is thus justifiable. This will not only increase the return on the investment (ROI) by the organizations on advertising but will also provide room for identifying potential errors to improve performance.
Market segmentation is one of the most argued and highly deployed strategies of competing organizations in the UK business sectors. The fact that by segmenting the target market efficiently and providing customised products and service, an organization can gain increased sales (Philip Kotler, 1988) is increasingly saturated with the extensive use of this strategy as argued by Simon Zadek (2004) .
The extensive use of the segmentation strategy itself was the result of imitating the competitors rather than creative marketing through identifying new markets for potential customers in new geographical locations as argued by Simon Zadek (2004). Furthermore, he argues that even though the strategy of identifying new markets is not always an easier alternative, the ability to sustain business development in a new market through implementation of the existing innovative strategies like segmentation in the new market space will not only generate increased revenue but also provide the advantage of the first starter in the market.
The advent of the Internet and the electronic commerce has broken the barrier of geographical limits to business development and has provided the competitors in the market to create new market spaces in through effectively identifying new markets for the products as argued by Gerry Johnson and Kevan Scholes (2001) . The increase in the Internet users and the overall growth in the electronic retailing have created endless opportunity for the competitors to reach new customers with efficient and cost effective means of electronic advertising and promotions so as to create new market spaces.
Alongside, in the case of the traditional business itself, Frances Brassington and Stephen Pettit (2003) state that the competitors in any business sector can gain competitive advantage through expanding into new target market and deploying the strategies of product customisation and market segmentation. Furthermore, the authors argue that not only by identifying new market spaces a company can gain competitive advantage, but mainly through effective communication of the company strategy (mission, vision etc) to the managers and employees is necessary for the successful dominance of the market space by the company.
For example, ‘Amazon’ the leading electronic retailer, adopts the policy of staff development and personnel training for both the managers and the operational staff as part of the company’s overall strategy which not only enables the organization to deploy its strategy effectively but also encourages the its personnel to effectively perform their job roles in order to enhance their performance. This approach of the company (Company overview, 2004 ) is the vital ingredient for the growth of the company from an online book retailer to a comprehensive electronic retailer with a vast product range.
Another strategy of Amazon that increased its sales is the meticulous presentation of related products to a customer thereby enabling cross selling of the products online. Even though, the competition in the online retailing is tremendously increasing, the market survey by Keynote Plc on electronic retailing has proved that Amazon is the market leader in the category of books and electronic products retailing which is mainly because of the efficient deployment of its strategies in the entirely new market space (electronic business in the 1990s).
Apart from the idea of effective communication of the strategies to the managers and the employees, Frances Brassington and Stephen Pettit (2003) further argue that lucidness in the communication to the managers and staff by the corporate is essential for the successful implementation of the strategy itself. This is further justified by Richard Lynch (2003) who argues that the clarity in the communication and especially the clarity in the strategy of the company are essential in order to effectively deploy its human resource in order to gain dominance in the new market space.
Also, Richard Lynch (2003) argues that a company by identifying new markets for its products actually endeavours in business development where the company has the potential to gain dominance in the target market through not only being the first starter but also providing quality goods and services as opposed to market penetration where the company faces stiff competition from the existing competitors. It is indeed justified by Richard lynch (2003) that the risk of failing in the new market space or market area is a potential threat but the increase in the stiff competition from the competition is also equally high in the current business trends making it further difficult for the company to grow since the customers already have providers for their needs whilst in the former case the customer’s needs are yet to be satisfied which is a potential advantage for the company to grow rapidly in the market.
Philip Kotler (1988) argues that price of a product is the vital element that not only decides its sales but also its position in the target market. This is because of the fact that the price of a product decides the affordability of the customer to buy the product and reflects upon the quality of the product. Furthermore, the strategy of pricing not only enables the organization to strategically position itself in the target market but also provides room for the company to identify potential customers and accomplish the process of product customisation in order to efficiently price the goods and services.
Marian Burk Wood (2004) argues that the pricing of a product is critical because it is the major factor that decides upon the overall position of the product in the market. With the growth of retail chains like Asda and TESCO in the UK, the traditional idea of quality comes with high price of the product has been erased and thus the need for efficient pricing is not only to reflect upon the quality of the product but mainly upon the needs of the customers in the target market. The increase in the sales of the own label products in the supermarket chains has proved that pricing not only increases the sales but mainly enables the company to strengthen its brand position in the target market.
JSainsbury Plc for examples has seen increase in its sales after a terrific decline in the early years of the twenty-first century though effectively promoting the economy range of the own label product along with the premium range of products that were sold by the retailer for more than a decade under their own label. The introduction of the ‘Sainsbury Basics’ range of products in every product line is the primary factor for the increase in sales of the company both in volume of sales and in the generation of revenue. The announcement of profit by the retailer in their annual report published in June 2005 (JSainsbury Plc, Annual report, 2005 ) proves the company’s success in the utilising its existing brand image under premium range of products to promote its economy range of products without compromising quality.
Furthermore, Frances Brassington and Stephen Pettit (2003) argue that the price of a product reflects not only upon its quality but also the value of the product, which makes it unique from its rival products. This is mainly because of the fact that in the intense competing business environment, the customers are surrounded by an exhaustive range of products making it essential for the competing brands to distinguish themselves not only by pricing but also mainly through conveying the value of the product and associating this with the price of the product. The growth of Hutchinson 3G in the year 2004 is a classical example for the above argument.
The company when launched in the year 2003 faced decline in sales and did not meet its target sales for the first year even though the product was unique in terms of video conferencing on the phone, Internet bundle features etc., This was mainly because of the sky high price and poor performance of the handsets in the initial years of launching the product which was rectified by not only providing high performance handsets (LG series) but mainly through efficient price plans of the mobile phone tariffs which is the backbone for the growth of the company in the year 2004 (Financial Times, 2005 ).
This has not only increased the profitability for he company but has also established 3G as a unique brand that provides cost effective mobile phone price plan to the customers. Even though the technical performance like the reception etc are not competent to other brands like Vodafone in the UK, the efficient pricing strategy of the company is the backbone for establishing 3G as a brand in the mobile phone market in the UK. The argument of Philip Kotler (1988) that by pricing the products not only for meeting demand but also for the survival in the market in environments where the customer needs are volatile will enable the company to gain brand status and increase profitability clearly justifies the above argument.
The above arguments on pricing justify that pricing of the products not only contribute to the short term increase in sales (e.g.: promotions and Christmas Sales) of the product but also for establishing brand image and boosting profitability of the company.
Even though, the concepts of consumer behaviour and brand loyalty are extensively discussed by the academic authors in textbooks, the real world scenario of marketing is not always in par with the academic arguments.
In the FMCG industry for example, the consumer behaviour is rather random (Isla Gower, 2004) mainly because of the fact that the consumer purchases the products not only with respect to the needs but also with respect to his/her affordability. This complicated scenario of the consumer behaviour does not always provide accurate forecasting for the organizations through the use of academic methods of analysing consumer behaviour on a two-dimensional perspective (i.e.) analysing consumer behaviour with respect to either consumer needs or buying behaviour.
This scenario is profound especially in the category of Fast Moving Consumer Goods industry because of the nature of the goods that even though they are perishable, most of the products have alternative and also fall under the category of optional items to many customers who tend to restrict their expenditure. Hence, in the real world scenario, it is essential to analyse the consumer behaviour on a multi-dimensional perspective with room for innovation as argued by Dr. Lieh-Ching Chang (2005) , who justifies the multi dimensional approach to consumer behaviour in his research on analysing the consume behaviour in the light of sub culture and consumption.
Unlike consumer behaviour, which contributes to the sales, the brand loyalty is a more sensitive issues because of the reason that it affects consumer behaviour (Jason Lark, 2005 ). This is mainly because of the fact that the brand image of a product directly reflects upon the extent to which it can penetrate into the customers in the target market. Jason Lark (2005) argues that the traditional methods of branding like product quality and customer service are not successful in the real-world mainly because of the fact that the customers do not always possess the knowledge on the product quality or the services offered by the company.
The increase in the co-branding initiatives by many organizations where the Jason Lark (2005) says that an organization can establish itself as a strong brand in the target market by partnering with an existing brand in the market in order to reach the customers with their message on quality of the products and services. This further justifies that the managers in the real world scenario should assess the target market not only for the consumer behaviour but mainly focus upon innovative and methods of branding to maintain brand loyalty among the customers in order to increase positive consumer behaviour.
Apart from the above arguments on consumer behaviour and brand loyalty, the concept of market segmentation in the real-world scenario is far more complex than in theory. This is mainly because of the fact that consumers in the target market are not only dispersed in nature making the segmentation difficult, the buying behaviour of the customers are highly volatile and changes with respect to their needs making the segmentation unstable (i.e.) the customer base for a specific market segment is not accurately predictable. This issue of marketing is very critical especially in the electronic commerce scenario where the customer attitude towards a specific product is prone to changes faster than in the real world scenario. The example of Dell Inc the leading computer (laptop and desktop) and accessories online retailer justifies the above argument.
The approach of Dell to allow the customers to customise the configuration of the computers on a basic model is a classical example where the company actually implements the product customisation strategy without actually segmenting the target market. This is mainly because of the diverse requirements of the customers with respect to computers and computer related product, which results in an infinite number of segments in the market as argued by Jason Lark (2005). Furthermore, the fact that by encouraging the customers to customise the products the level of interaction of the customer with the company increases which enables to build a long term relationship for the company thus enabling the marketing managers of the organization to effectively increase their sales. Thus it is evident that even though the academic theories on marketing are justifiable, the real-world application of such strategies requires multi-dimensional approach rather than a singular approach as stated in the academic resources.
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