Pricing_and_Creating_a_Plan

Christina Bowman American Intercontinental University Unit 4 Individual Project MKTG 205 – Principles of Marketing May 20, 2012 Abstract This paper will talk about the marketing strategy, the pricing strategy, and the distribution channels of the product Xtra. This will combine everything that has been taught about marketing though out this class. PRICING and CREATING A PLAN Introduction Marketing is to produce and to provide a product or service that consumers want or need. The product that is being marketed here is a laundry detergent Xtra. This will show the final plan of how it will be marketed to the consumers. Definition of Marketing The three sources that I used are the Dictionary of Business (2006), Dictionary of Economics (2009), and the Dictionary of Finance and Investment Terms (2006). My definition of marketing is to produce and provide a product or service that consumers want or need based on the 4P’s of marketing. Introduction of Product/Service The product that I chose from the list is laundry detergent. The brand I chose is Xtra. The company that produces this product is Church and Dwight Co INC., they are most recognized for the brand name Arm and Hammer. Based on my definition this company is considered a good marketer. This is based on the fact that they have been around for many years. They make all types of products from house hold items to personal care products (Church & Dwight Co Inc. (CHD) Stock Description , 2011). Situation Analysis -- Marketing Environment Forces Impacting Product/Service The first market force is Competitive. Competitive is the fourth environmental force (Kerin, 2011). This type of market force is known as companies competing for the consumers business. Xtra is a laundry detergent that is sold at a lower price. The company that produces this product is Church and Dwight Co INC., they are most recognized for the brand name Arm and Hammer. They make all types of products from house hold items to personal care products (Church & Dwight Co Inc. (CHD) Stock Description , 2011). By selling this product at a cheaper price it is competing with other companies that sell other laundry detergent at a higher price. Xtra is in competition with products like Sun Products Corporation, The Clorox Company, and Tide. This force will have impact on this product because it is pressuring the company for prices that customers are looking for. If the company is unable to maintain price terms the customers could increase product purchases from competitors. This could harm the company’s sales and profitability (Church & Dwight Co Inc. (CHD) Stock Description , 2011). The second market force is technological. Technological is the change in the results of the research. Kerin (2011) states, that technology is the third environmental force. Technology plays a big part in marketing a product. Technology plays a role in how laundry detergent is made. It is the big machines that mix the ingredients to make the powder and liquid detergent. Church and Dwight Co Inc. conduct its research and development primarily at its facilities in New Jersey. Technology and basic research to develop different types of products with distinctive features are used and to maintain convenience and value to its customers. This type of force will impact Xtra because with the way technology is changing the company has to maintain the quality and the service of the product. This is why the company hires outside contractors for general research and development in areas beyond its expertise (Church & Dwight Co Inc. (CHD) Stock Description , 2011). The third marketing force that will impact my product is regulatory. Regulatory is the fifth environmental force, according to Kerin (2011). Regulation consists of state and federal laws that business must follow. These regulations are put into place to protect both the company and the consumers. State and federal laws help to ensure that the ingredients used to make the products that they sell are safe for the environment and for the consumers that may use them. These laws also protect competition, product, pricing, distribution and advertising. A company may use self-regulation; this is where the industry attempts to police itself (Kerin, 2011). Companies must comply with different states and countries environmental regulations. There are also regulations that companies must follow for waste disposal. This will impact Xtra because if the company does not follow these regulations they may be fined or they may be closed down. One thing that Church and Dwight Co Inc. may have to be aware of is that Phosphates that are frequently used in some powder laundry detergent are illegal in many states and foreign countries. Marketing Strategy: Target Market(s) & Positioning The first target market is geographic. Xtra can use this market because it can go on the region and city size. Xtra is a laundry detergent; therefore everyone in every region of the earth has to wash at some point. They can use the city size to determine how much of the product to be sold in that city. The second target market that Xtra can use is behavioral. They can use this because of the type of stores they want to sell the product in. They can sell it in grocery stores and the dollar stores within the cities. They can use direct marketing, like the internet. They can use usage rate and user status based on how much the consumers use the product and if the consumers are first-time users or regular users. Xtra can also use awareness by advertising in the sale papers (Kerin, 2011). The laundry detergent Xtra can differentiate itself from its competitors by offering it at a lower price than the leading brands. It can make its detergent twice the formula to fight the toughest stains. The competitors promise to give you more for your money but they cost more than Xtra. Xtra can make its packaging more bio-degradable. Product positioning is how the consumers see the product. There are two ways that companies position a product. The first approach is head to head positioning. This is where the company competes directly with other companies that are sells the same type of product within the same target market. The second approach is differentiation positioning. This is where a company will seek less-competitive, a smaller market in which to locate a brand (Kerin, 2011). The positioning statement for Xtra is cleaner clothes for less. Product/Service Overview and Strategies to Consider The type of product that I chose is convenience. This is because the product is Xtra, this is a laundry detergent. Convenience is a product that consumers purchase frequently, conveniently, and with a minimum of shopping effort (Kerin, 2011). The marketing considerations needed for this product based on its classification would be what stores it will be sold in. For example, the dollar stores, the grocery stores and other retail stores that sell laundry detergent. Another consideration for this product would be the price. The most important decisions that I will have to make in developing this product compared to my competition would be to use the best ingredients and to make sure the product do what it says it can do. I would also put coupons in the Sunday papers for a dollar off. The price is already low. This is one marketing strategy to get the consumers to buy it. Pricing Strategy I think the best pricing method that would be used for my product is competition oriented. Under this strategy, the method that I would use would be above-, at-, or below-market pricing. This is where one sets the price of the product in order to compete with other companies that may sell the same type of product (Kerin, 2011). The price policy that would work well with this product is the one-price policy, which is also known as fixed pricing. This is having one price for all buyers of a product or service (Kerin, 2011). This is because there are many other laundry detergents out there and they are all in competition for the public’s business. People base these products on their prices and their quality of service. My product will be affordable for anyone that may have a low income or no income. The factors that will impact my pricing strategy would be the use of the product. People want a laundry detergent that they can trust to get their clothes clean and don’t have to pay a lot for. By pricing this product at a cheaper price than the competitors and making the product do what is promised of it will ensure the fact that the consumers are more likely to buy it. Distribution Channels Channels of distribution are the different paths that goods passed through in moving from the producer to the consumer. The Distribution Channels are Direct and Indirect Distribution. Direct is where a company sells it product directly to the consumers. Example of this would be a furniture company that sells the furniture to the consumers right from the factory instead of the consumer going to the furniture store. Indirect is where the product is sold through a third party. An example of this would be clothes. The consumers buy the clothes from the stores and the stores buy from the factory or a third party (Kerin, 2011). There are four channel organizations that companies uses to get their product or service out to the consumers. The first channel is conventional, this is a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits. Conventional channel network tends to be fragmented because manufacturers, wholesalers and retailers bargain aggressively with each other over the prices and others. The second type is vertical; a vertical marketing system is a network of two or more levels of channel members as in the case of arrangement between manufacturers and wholesalers, wholesalers and retailers or between a manufacturer and a number of wholesalers and retailers. There are three types of Vertical marketing system. They are corporate, contractual and administered vertical marketing systems. The target market is to have the product in every store that sells laundry detergent. This would be in every grocery store, every dollar store, and in every laundry mat that has the vending machines. They want a channel of distribution that they can just go and pick up the product whenever it is convenience for them. The consumer wants to be able to pick the product up when they are doing their grocery shopping or when they may be running low on money. There are two major types of channel members. The first one is direct channel, this where the company sells directly to the consumer. The second type is indirect channel. This is where the company depends on others to sell to the consumer. Under indirect there are three forms that can be used. The first form is the producer sells to a retailer and the retailer sells to the consumers. The second form is where the producer sells to a wholesaler the wholesaler sells to the retailer and then the retailer sells to the consumer. The third form is the producer has an agent that sells to the wholesaler, then the wholesaler sells to the retailer and then the retailer sells to the consumer (Kerin, 2011). For the product Xtra, the best channel member would be the indirect channel. This is because the company can sell to the retailer and the retailer can sell to the consumers or either the company can sell to a wholesaler and they can sell to the retailer and the retailer sells to the consumers. Xtra uses indirect they will be able to reach more consumers. Xtra will use intensive distribution. By using this type of distribution the product can be found in every store that sells laundry detergent and the consumers can get it without having to wait. A consumer can go to any area and will be able to buy Xtra from that store without having to wonder if that store sells it. The channel organization that is recommended is multichannel. The reason for this is because there is one main company that sells its products more than one way. For example, Xtra can sell in stores but it can also be sold in catalogs for people that do not go out of the house can buy it. With a multichannel distribution system the company is reaching more customers in more than one way. The company sells to the retailer, and then the retailer offers the product in their catalogs that is sent out to people homes and offices. The dry cleaners can also have a better chance of finding the laundry detergent in a catalog that they use to order their detergent. Integrated Marketing Communications One may ask what is Integrated Marketing Communication' Kerin (2011) explain it as to provide a consistent message across all audiences. Companies must have IMC as a key element in their customer experience management strategy. Communication is the process of getting a message to others and there are six elements that are required. The first element is a source, the second element is a message, the third is a channel of communication, the fourth is a receiver, the fifth is encoding and the last element is decoding. One must have all of these because without one or more of these elements the communication barrier would be broken. There are five promotional alternatives companies may use to communicate with its consumers. They are advertising, personal selling, public relations, sales promotion, and the last one is direct marketing (Kerin, 2011). Promotion Mix Strategy Promotional strategies can assist in moving a product through the channel of distribution. This is where the push or pull strategy comes into play for a manufacturer. They can choose to use one or both. The product Xtra will use the push strategy. This is because the push strategy is directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product [ (Kerin, 2011) ]. Since Xtra is a convenience product this would be the best strategy to use because I would want the channel members to have the product in stock when the consumer wants it. Message Strategy The general message that will be communicated to my target market across all promotional tools will be that with Xtra, you can wash your clothes with a detergent that gets them clean and cost less than the leading brands. Promotion Tool #1 The first promotion tool that would be used is advertising. This would be the best way to get consumers to see the product. They can see the bottle that the product is sold in and they can see what scents it may come in. The forms of the promotional tool that I will use will be advertising on the TV and in magazines. This is best way to reach more consumers at once. Using these forms of advertising will reach consumers all at once. Promotion Tool #2 The second promotional tool that I would use is sales promotion. This in conjunction with advertising will get consumers to at least try the product. The form of promotional tool I will use is coupons and samples. By offering coupons in the Sunday paper and in the stores paper will grab the attention of consumers. By offering samples at local laundry mats this will give the consumers a chance to use the product to decide if the like it or not. Promotion Tool #3 The third promotional tool that I would use with my product would be public relations. The form of the promotional tool that I will use would be through a product announcement. This would be a story in a newspaper or magazine so that consumers can read about the product and how much the product cost. Conclusion Promotional mix is the combination of one or more of these communication tools. All of these tools can be used to inform prospective buyers about the product, it can persuade them to try it, and it can remind them later about the benefits they enjoyed by using the product. References Church & Dwight Co Inc. (CHD) Stock Description . (2011). Retrieved April 27, 2012, from Seeking Alpha: http://seekingalpha.com/symbol/chd/description Kerin, H. R. (2011). Marketing (10th Edition). New York: McGraw-Hill/Irwin.