chapter market development

8/21/2019 Chapter Market Development

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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


2/30

define

• Market development involves creating or

expanding a market for new or existing products

and/or increasing the value of these products

• few consumers today are aware of the pricklypear, however, but farmers who grow this cactus

plant


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Promotion: Strategic and Tactical

Objectives

• wareness

• Trial

• ttitude toward t!eproduct

– Beliefs

– Preference

• Temporary salesincreases

Emerging

Markets/

New Products

Mature markets

/established

products


5/30

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$'%mplementing strategy

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(uency, switching,

price sensitivity)

SS#SS %, R#0#*+-T#

SS#SS %, R#0#*+-T#


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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 cycle!

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

to get more people to actually try the product

• *his may 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 simply not enough time or money to try

everything available!


7/30

Strategies, Objectives and t!e "ierarc! of

effects

• f a product category catches on, emphasis may

then need to switch to brand differentiation and

the firm may need to work on getting consumers

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

most consumers opinions have largely been set,

temporary sales increases, usually through price

promotions, may be the only realistic ob%ective!


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Market Development: T!e Objectives

,#)R#S# )'%S-M#R PR$)# S#%S$T$*$T/

-#osts a little more, but its worth it. 0achy farms chicken ads

#ampbells soup ads

T M'R# P#'P+# T' B-/ PR',-)T

$ungry Man dinners $ot 1ockets ads 2ariety seeking advertising &pam luncheon meets advertising

T PR',-)T -S#, 1'R %#2 P-RP'S#S-+range %uice3it isnt %ust for dinner anymore. -4eef3its whats for dinner.

&pam luncheon meets advertising 4aking soda ads

,#*#+'P PR#1#R#%)# R#+T$*# T' 'T3#R PR',-)TS 'R BR%,S

5raft cheese ads suggesting that 5raft has more calcium *otal cereal ads suggesting vitamins

-#oke is the real thing. -*he 1epsi generation. -*he night belongs to

Michelob. 6lorida orange %uice -Maxwell3its good to the last drop. 1rogresso and #ampbells soup ads

T )-RR#%T -S#RS T' -S# M'R#

-&nickers satisfies you". -7sk for 789 &teak &auce. -7 sandwich %ust isnt a sandwich

without miracle whip. -4eef3its whats for dinner. -*he ncredible, :dible :gg. 6ast food restaurant advertising


9/30

Market Development Iss#es

$%)R#S#,

S+#S '1

PR',-)T

,#)R#S#

)'%S-M#RPR$)# S#%S$T$*$T/T M'R# P#'P+#T' B-/ PR',-)T

T )-RR#%T

-S#RS T' -S#

M'R#

T PR',-)T

-S#, 1'R

%#2 P-RP'S#S

,#*#+'P

PR#1#R#%)#

R#+T$*# T' 'T3#R

PR',-)TS 'R BR%,S

,$STR$B-T$'%

#%3%)#0

M#%T

,*#RT$S$%&

S+#S

PR'M'T$'%

('$%T

*#%T-R#S.

)'0

BR%,$%&

TR$+

2R#0

%#SS

B-/$%&

)'%0

*#%$#%)#

!“Big picture

only”4details

not important5


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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 of ob6ectives


11/30

Some Tools

• dvertising – wareness

– Trial

– Preference

– Reminder

– %ew uses

• ,istribution – vailability in

retail stores

– 7uality of

placement wit!inretail stores

• Price.sales promotion – )oupons

– Sales

– *alue

– Premium• (oint ventures.co0

branding

• ,emonstrations

• Product investment

– 7uality – ,ifferentiation

– Packaging

– -sability convenience


12/30

Setting strateg $

• mproving (uality, for example, might be

achieved either by increased research and

development, the use of higher (uality materials,

or by investing in new manufacturing technology!• *he most appropriate choice will depend on

factors such as cost and effectiveness, but may

also depend on risk!


13/30

Tactics and implementation $

• f a decision as been made to position a product

as a premium brand through advertising, specific

ads must be developed and tested and

appropriate media and advertising schedulesshould be resolved!

• When implementation begins, results need to be

monitored!


14/30

%ons#mer adoption of new food prod#cts$

• +ne way to spread new foods is through

massive advertising! *his strategy has been

used in marketing the $ot 1ockets;

convenience products! Many foods also spreadas some groups of consumers -imitate. others

they see consuming them, and some are

encouraged to try new foods based on word8of8

mouth communication!


15/30

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

)ses

7

?M*:< @A+U1

M:


16/30

*evels of market development$

•


17/30

%ommodities Market Development Programs

• Typically regional4e8g89 1lorida orange 6uice:

$da!o potatoes: 3awaiian sugar cane:

2as!ington pples: Te;as beef

• $ntention is to differentiate• )ompulsory 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


18/30

*evel of Market Development

• +evels

– )ommodity

• ,ifferentiation from competing commodities

• $ncrease in demand for commodity – )orporate product category


19/30

+ffects and O#tcomes

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20/30

Definitions

nnovation> “n idea9 practice9 orproduct perceived to be new by t!e

relevant individual or group8”


21/30

To &dopt o 'ot to &dopt: "ow ,ill %ons#me s &nswe t!e

-#estion.

• &ome causes of

resistance to adoption

– Perceived risk00financial

and social

– Self image

– #ffort to implement

and.or learn to use t!e

product

– $ncompatibility

– $nertia.overw!elming

e;isting c!oices


22/30

Tpes of Innovations

• 1as!ions4tastes goback and fort! overtime4e8g89 food fatcontent

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


23/30

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doption of $nnovat

Innovators

2.5%aggards

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Innovators and Imitators: The Lifecycle of A Product


24/30

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T!e S0S!aped ,iffusi

100% adoptionor saturationpoint

One Diusion Pattern!icely "alanc


25/30

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


26/30

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

• Risk to e;pected benefit ratio


27/30

Pioneering &dvantage

• )onsumer e;pectations are usually s!aped

by t!e first encountered brand

• Satisfying and awareness by consumers

• 'rder of entry vs8 pioneering advantage

• Positioning of e;isting pioneer vs8 strategy of

first entry


28/30

Bargaining Power

• $mpact

– Price

– )onditions

• Returns

• Time of payment• $nterest or finance

c!arges

• 7uality or ot!er

ad6ustments

• Transportation or ot!erservices

• Sources

– Size9 number9 and

concentration of firms

– Supply control

– -ne?ual information – ,iversification


29/30

Marketing Orders and &greements

• Mandates intended to “stabilize” markets

• Types of issues

– &rades9 size

– Packaging – Market allocation


30/30

Market Information

• Some issues

– )rop forecasts

– ,emand forecasts4?uantity

and prices

•&overnment informationprograms

• Problems

– Price specification

chapter market development

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