Global Strategic Marketing & International Research Reports Examples
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For a new brand entering a stable market proposing a price upgrade of 20% versus average sector price, the best strategy to penetrate very quickly and gain market share would be to innovate a brand that is of high quality, and then market it as a high quality brand. An article in a strategy and business website says that innovation and offering high quality products “provides a significant and sustained market-share advantage” (Kalyanaram and Gurumurthy, 1998). Therefore, a brand that is entering a stable market at a higher price than the sector price would need to distinguish itself as a high quality product.
Setting a brand as a high quality product will do several things. First, it will justify a higher price for it. People will not mind paying more for a high quality product as they will perceive the product to be better than the other products in the market. A good example of this is when Apple introduced the iphone to the mobile market. When the iphone was introduced, it was introduced as a high quality product that would have new features and would be able to do several things that other phones in the market at the time would not do. Joel West and Michael Mace discuss in an article that the iphone was the first to have a wide touch screen and missing the dialing key pad (2007). For this reason, the iphone being priced at a higher price was not a deterrent factor in attaining market share.
Another thing that a high quality product does is attach a competitive edge to the product. One of porter’s five forces is product differentiation, which gives the product a competitive edge. A high quality product is easily distinguished from other products in the market, and it is able to gain market share. Iphone is a phone distinguished from other phones as a quality phone. Apple invests in research and innovation to ensure that this quality is maintained and improved. The competitive edge sets the product apart, making it look different from the other products in the market. This is particularly important when entering a stable market, as any new entrant in such a market needs to set itself apart.
With a high quality product, it is easy to retain loyal customers for current and future related products. Apple introduced the iphone when it had never had mobile phone customers before. By 2012, there were 44.3 million iphone users in the United States only, and by 2014 there were 63.2 million iphone users in the United States only (Statista). Apple created retained loyal customers, whose numbers keep on increasing. The main way Apple was able to do this is by offering a high quality product that has better features and functions better than other mobile phones in the industry. With loyal customers, a product will be able to retain, and in some instances increase market share despite having a product that is priced higher than other products in the market.
Coupled with having a high quality product, it is essential that the product is highly marketed, to inform the market of its presence. Keeping in mind that this is a new brand in a stable market, customers are probably already using another brand, and would need to be notified of the new brand and told why they need to switch to the new brand. Before the iphone was available for purchase, it was highly publicized, so much so that “the term “iPhone” could be found (by Google) on some 60 million pages on the World Wide Web” (West and Mace, 2007). Creating this hype helped notify the market of a new entrant and the reason why this new entrant is better than what already existed.
Having done all these, it is essential to know the target customer and focus on this customer. This will enable a company to tailor the products and the marketing strategies to meet the needs of the target customers. The company would need to know where to reach the target customers, how best to reach them, and the language to use in order to get their attention. Following these strategies will help a new brand priced at 20% higher than the sector price entering into a stable market to quickly gain market share.
Mace, Michael and West, Joel.. (2007) “Entering A Mature Industry Through Innovation: Apple’s iphone Strategy.” Druid. [ONLINE]. Available from: http://www2.druid.dk/conferences/viewpaper.php?id=1675&cf=9 [Accessed 22 April 2015].
“Number of iPhone smartphone users in the United States from 2010 to 2014 (in millions).” Statista.com [ONLINE]. Available from: http://www.statista.com/statistics/232790/forecast-of-apple-users-in-the-us/ [Accessed 22 April 2015].
Sales Management and Commercial Structure
Introducing Spirit of the Forest to the Spanish market will require careful and specific steps, as the energy drink alternative, Red bull, is already well known and consumed in Spain. The initial step is to ensure that the product has already been highly marketed to the target customer, young people and athletes, highlighting its superior traits to Red bull. Without knowledge of the product, the customer will not know of the product, or why it would be a better option than the widely known Red bull. The goal of the marketing efforts is to create value of the Spirit of Forest in the mind of the consumer. One way to market the product is by having advertisements on mediums that the target customers use. Young people would like be on the internet, watching t.v., or playing games. These would be where the commercials would be placed. For athletes, any sports channels, magazines, and any games on t.v. would be where the commercials targeted to the athletes would be placed. In addition to having commercials, the product can be introduced to the target customer by providing samples. These can be offered in schools, and during games. One other way to market Spirit of the Forest is to have a sponsor; a well-known Spanish athlete who stands behind the product. With this backing, people will be more comfortable trying a new product as moving away from the widely used Red bull.
One aspect to keep in mind is the buyer process of the target customer. Does the target customer base purchase decisions on price, availability, or quality of the product? Would the target customer view a product as less valuable if it was cheaper, or would they go for a cheaper product? Given that the target customers are young people who may not have much discretionary income, having a lower priced product would encourage purchase. For the athletes, the fact that Spirit of the Forest is a natural energy drink will appeal to them, and therefore encourage them to pick Spirit of the Forest as opposed to Red bull. Consequently, it is essential that the advertisements geared towards young people focus on the lower price for Spirit of the Forest, while the advertisements for athletes focus on the fact that Spirit of the Forest is a natural drink.
Another aspect to keep in mind is how best to reach the target customer when introducing the product; the distribution channels to use in order to best reach the target customers. Any big retailer would be a possible distribution channel. In addition, any sporting goods store would also be a good option as a distribution channel. One key factor to consider is that most retailers avoid having too much inventory in their stores. For this reason, Spirit of the Forest could be stocked in small quantities to begin with and then going forward stocked based on demand. Then we would direct anyone who we have offered samples to buy more of the product from these stores.
Given that Spirit of the Forest is a new product, it is essential that the sales plan incorporate the long term and the short term market share goals. To begin with, Spirit of the Forest would look to gain a 10% market share in the first year, and experience a 10% growth of market share annually. The market share would not only come from Red bull consumers, but also people who do not take energy drinks. Spirit of the Forest is offering a natural energy drink, which was not offered before in this market, and therefore would attract new customers. Revenue goals should also be set based on the proposed price of the product and the 10% proposed market share at the end of the year. Having these goals enables the company to envision what practical steps need to be done in order to achieve these goals.
Having a sales team is key in executing a sales plan. For this reason, it is essential to have a core sales team that understands both the inner workings of the company, as well as the Spanish market and how to go about selling products in the Spanish market.
Steps to take when implementing the Sales Plan
Carry out market research on what are the energy drinks drinking habits, and what would be the best ways to reach the target customer and grow market share in the Spanish market. This information will mold how the sales plan will be executed.
Heavily market the product to the target customer as a natural product that is cheaper than Red bull- As discussed above, this step is essential in order to communicate the value of the Spirit of the Forest to the target customers
Set up a sales team that is familiar with the new market and the company- The best sales people would be from within the company as they would understand the goals and objectives of the company, and thus translate these goals and objectives to their selling efforts. However, because this is a new market in another country, the need to have an understanding of the market is high, and therefore hiring sales people from the country would be beneficial. The sales team should be made familiar with the revenue and market share goals that have been set.
Identify the areas to offer samples and set up the process of offering these samples to target customers- As discussed above, these places would be schools and at game events
Identify and contact the various distribution channels. These distribution channels will be where to direct the target customers once they are offered the sample drinks. Also, we will ask that the Spirit of the Forest be placed at the front in the stores to create awareness.
Send the sales team to the market and have them execute the plan.
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