Assignment 2: Place (Distribution Strategy) and Promotion

Marketing Plan: Product and Pricing

January 9, 2019

Marketing Plan: Product and Pricing

The Product

Consumers normally view a product a physical item which they need to meet a particular need. However, it is imperative to recognize that the nature of a product can be explored further by looking its three different levels which can be considered as three different products which include the core, actual and augmented products, (Aghazadeh, 2015). This is what is referred to as the three levels of a product. The Core product is not an actual physical and tangible thing. It can not be touched or felt because it represents the benefit of the product which generates its value to the final consumers. In the case of the water, the benefit to the final users is quenching their thirst as well as improving their health by providing additional mineral with nutritional value to the final consumers of the bottled water.

A. Product Levels: Core, Actual and Augmented

Second, actual product refers to the tangible product. It is the final product that will be purchased and used by the targeted customers. The customers are able to get value out of the product. For instance, customers can look at the packing and the content information to determine whether or not the content of the water is good for their health. Also, consumers may look at the product, touch the packaging and feel it. This makes the customers have a better understanding of the product in terms of what it looks and feels like.

Lastly, the Augmented product refers to the non-physical part of the product which is made up of the value added to the product for which they may or may not opt to pay for the premium prices. When customers buy the bottled water, part of the augmented product is determining whether the packaging material is recyclable or biodegradable as it is the case for plastic bottling materials. The consumers might not have a problem paying premium prices when they know that they are doing so to protect and conserve their environment as well as argued by Akbar et al. (2017).

B. Product Life Cycle

The product life cycle refers to the period when a product is developed, introduced into the market and when it is finally removed from the market. It is divided into four stages which include the introduction, Introduction if the first stage and this the point where the idea is implemented through research and development. The product is produced if the idea is determined to be feasible and potentially profitable.

C. BCG Model

The BCG Matrix is a model developed by the Boston Consulting Group and it focuses on helping businesses to develop profitable products and services for the current time as well as the future. It provides an effective framework that the business can utilize to analyze the growth and market share of the business. The model utilizes a chart with four quadrants. The vertical line shows the market share while the horizontal line shows the growth rate. The four divisions include the stars which include the products with the best markets share and thus generate the most cash for the company. Cash cows represent leaders in the market place that generate more cash than that which is consumed. Dogs refer to the unit of production with low growth rate and low market share. Finally, question markets refer to the products or services that consume a lot of money but have minimum returns.

Services Marketing

Services marketing is a type of marketing that focuses on selling things that are intangible such as medical care services and hospitality services. In this case, the processes will not focus on selling the actual product to the customers but focusing on the services appeal to the customers. The business will strive to communicate with the targeted customers that it is committed to offering unparalleled quality services when they are seeking to buy the products offered by the company. This helps the company to make the customers see that settling for the products and services offered by the company gives them more value for their money. For instance, through the making activities, the company can inform its customers that it offers quality after-sale services and discounts to the customers who return their water bottles for refills.

Price Determination and Pricing Strategy

Even though the management of the company may have the desired price of the product in mind, it is imperative to point out that the price of the product will be determined by internal and external factors. The goals associated with pricing make up the internal policy for the business and these should be aligned with several factors such as costs, demand, competition, sales channels, life cycle, and the government. Demand and competition are external factors while the others are internal. When any of these factors are affected either negatively or positively, then there will be a corresponding effect on the price of the product. The effect can be either negative or positive depending on its nature.

A. Supply and Demand

Specifically, the supply and demand will affect the pricing of the product based on the law of demand and supply. In order to realize the long short- and long-term objectives, the company will ensure that an increase in demand does not result to a corresponding increase in the prices of the products as it is the case for perfect competition. The move is aimed at ensuring the company maintains a high inventory turn over which increases the revenues for the business. Moreover, the move will also go a long way in attracting customers and maintaining their loyalty to the company or the brand. According to Feng et al. (2016), having stable prices will also give the company a competitive advantage over its major competitors in the market. This helps the business the sustainability required to realize its long-term goals and objectives.

B. Competition

Competition is an external factor and the company does not have control over it. What this means is that the business has to take all the necessary measures to ensure that it is in a better position to compete effectively in the market. The water market is composed of major industry players such as Coca-Cola with the Dasani brand among many other global as well as local companies. For this reason, it is imperative for the company to ensure that it sets a price that is not too low or too high compared to the competition. The strategy will see to it that that company is able to appeal to the customers to pay for a more quality product at the market price which gives the company advantage over the major competitors as argued by (Aldrich et al., 2017). However, it is also important to point out that the market forces will also influence competition and the price of the product. For instance, government regulations may increase the cost of production forcing most of the competitors to increase their prices in order to minimize realizing the negative effect on the profit margin.

C. Objectives and Strategies

The objectives and strategies focusing on the pricing for the final product are aimed at making the product more appealing to the customers. In order to achieve this, it is important for the business to communicate a clear and concise message to the final consumers. The consumers should be able to get the major benefits of using the products which makes it stand out from the variety of competitors offering the same product. To achieve this, the marketing team will put more emphasis on the value, quality, and benefits of the product to the final consumers. For instance, the marketing message will let the consumers know that buying and consuming the product does not only quench their thirst but also offer them various health benefits to their bodies.

References

Aghazadeh, H. (2015). Strategic marketing management: Achieving superior business performance through intelligent marketing strategy. Procedia-Social and Behavioral Sciences, 207, 125-134.

Akbar, F., Omar, A., & Wadood, F. (2017). The Niche Marketing Strategy Constructs (Elements) and its Characteristics-A Review of the Relevant Literature.

Aldrich, B. R., Alkhaledi, F., Pelland, G., & Toomey, J. T. (2017). Developing a Sustainable Pricing Strategy for the Worcester Regional Food Hub.

Feng, D., Sun, T., Fang, C., Shi, Y., & Xu, S. (2016). Optimal demand contracting strategy under uncertainty and its implication for advanced pricing. IEEE Transactions on Smart Grid, 7(4), 1876-1885.