Foundations of Marketing - Essay Example

Analysis Of Innocent Case Study Number Module Foundations Of Marketing Word Count 1500 words Question 1 - 526 Question 2 - 673 Question 3 - 301 1. To what extent do you believe that Innocent is a product orientated company? When companies engage in business, their decisions are usually guided by philosophies and visions, which are at the root of each business venture. These philosophies and priority of interests influence the marketing concepts, which an organization would choose. A company can choose from five alternative concepts or orientations as production, product, selling, marketing or societal marketing orientation as the basis of its marketing activities (Armstrong & Kotler 2000). When a company bases its operations on a production orientation, the thinking adopted is that “consumers favour products that are available and highly affordable” (Armstrong & Kotler 2000). The focus is on improving production and distribution side of the business. The product concept holds that consumers choose products, which are of superior quality and carry innovative features. Continuous product improvement gets the priority. Product orientation carries the danger of being susceptible to marketing myopia where the company fails to see the broader market needs which it is fulfilling but concentrates too closely on the product itself (Levitte 1960). Many organisations still favour the selling concept where the focus is on large-scale promotional and selling efforts. However with the customers getting more and more sophisticated and possessing high level of product and market information, hard selling tactics are no longer the preferred mode. The forth alternative is the marketing approach where the underlying belief is that “ achieving organisational goals depend upon determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competition” (Armstrong & Kotler 2001). The main focus lies in identifying and meeting the customer needs effectively and profitably. Final and newest marketing concept is societal marketing where the focus is to balance the needs of the company with consumer’s short-term needs as well as overall long-term needs of society. Considerations such as environmental safety, nutrition, economic problems, population problems etc are considered in the marketing process under societal marketing (Armstrong & Kotler 2000). Having discussed the alternative marketing concepts available for adoption by an organisation, the degree to which, Innocent’s marketing activities are being driven by a product orientation is to be assessed. Analysing its operations from its inception in year 2000, it is clear that the company places a high priority on its product. However this focus alone does not make Innocent a product oriented company. Rather, it can be seen that the company has placed a greater weightage on the product aspect as a part of its integrated marketing strategy. The company has expanded its product range from original smoothies line to thikies and juices and other items, which indicate that the focus is on broader on consumer need of “convenient ways of consuming natural fruits” rather than having a myopic product view of producing a “Best Fruit Smoothie.” The company has also invested in advertising and promotions, building its brand name as well as expanding the overall market size, which are driven more by a marketing orientation than a product orientation. Thus it can be said that Innocent’s marketing activities are driven by a marketing orientation and only a very little degree of product -oriented thinking governs its emphasis on product quality. Word Count – 525 2. The ways in which Innocent is using the 4Ps to create an integrated marketing mix Modern marketing calls for a total marketing mix, which integrates and links with its marketing strategy to convey the marketing mix offer to the targeted market. When considering the marketing mix, the concept of managing and striking a right balance between the “4P” s comes in to play. 2.1 Product Element Broadly defined, the products include “physical objects, services, persons, places, organisations, ideas or a mix of these entities” (Armstrong & Kotler 2000). There are three levels, which form the overall product, which includes the core product, actual product and augmented product. The core product is the actual key benefits or problem solving offered by the product. Innocent’s key benefit offered is “Goodness of Natural Fresh Fruits in Ready Made Convenience.” The second level forms the actual product and includes quality, features, design, brand name and packaging. Innocent has placed much focus on this aspect and by building its product range, offering different pack sizes such as the 1Lt “take home” carton and by building a strong brand identity within a short span of time. Its commitment to product quality is reflected in the company’s hesitancy in entering far away markets as USA where overnight deliveries are not viable. At the third level of augmented product, the company may aim to offer additional services and benefits as free nutritional guides, recipe ideas and other services. 2.2 Price Element Price can be defined as the “sum of values, which a consumer exchanges for the benefits derived from a product or service” (Armstrong & Kotler 2000). In the case of Innocent, the price element of the marketing mix has chosen a premium pricing strategy where the Innocent prices are almost double as its competitors. However this strategy has proven successful as the product being offered in return for the premium price is also of premium quality and customers have accepted that a high content of natural fresh fruit does not come cheap. 2.3 Place Element Organisations use intermediaries in the process of taking their product to the consumers. Distribution Channels are formed with a “set of interdependent organisations involved in the process of making a product or service available for use or consumption by the consumer or business user” (Stern et. al. 1996). In the case of Innocent, the company uses a mix of channels to deliver the product to its customers. The product availability has been ensured in not only sandwich stand style locations but in all major supermarket chains as Harrods and Harvey Nichols. In addition the company is also exporting to few European countries probably through local agents. A total of 4,000 retailers including small sandwich shops and large supermarkets are carrying the product, which indicates effective use of Place element. 2.4 Promotion Element Promotion element in the marketing mix is used to communicate the features of the rest of the marketing mix elements to the targeted consumers. The key elements of the promotional mix include advertising. Personal selling, Sales promotions and Public relations activities (Belch & Belch 2004). Today most companies adopt the concept of Integrated Marketing Communication (IMC), which prompts a company to coordinate all promotional elements and marketing activities to convey a cohesive message to the customer (Fitzgerald 1988). Innocent is currently planning to use national TV advertising with its new promotional budget of 2.5 million. Innocent has made of Direct marketing tools such as websites to create and emphasis its slightly hippy and fun brand and corporate image. The company also uses Sales Promotions such as distribution of product samples through its branded fleet of distribution cum promotional vehicles. Innocent’s Public Relations activities include tree-planting projects, community service in developing nations as India and sponsorships of events such as “Fruitstock” festival. It can be concluded that Innocent is utilizing all four Ps of the marketing mix to its advantage by placing varying degree of importance and weightage to suit the target market. It is also evident that the company is changing the marketing mix to suit different stages of the product life cycle so that effectiveness is enhanced. Word Count - 673 1 3. Richard Reed has said, ‘we do believe that Innocent has got a very, very strong set of principles that are non-negotiable’ and Adam Balon has said ‘at the root of it we’re just a bunch of people who make nice drinks and hope that anyone who buys them likes them.’ What are the risks and rewards of this sort of approach? (25% of marks) Long term future and goals of a business are shaped by the vision of its founder. The vision is often similar that of a dream which has to be converted to reality through a set of business strategies (Thomson & Strickland 2001). Such thinking and vision of the founders or CEOs of organisations not only influence the business decisions and strategies but also how the attitudes of the rest of the company personnel are shaped. Although Innocent has been founded by three co-founders, Richard Reed is probably the driving force in terms of providing strategic direction for the company, as it was initially his idea to launch a product as Innocent. He is strongly committed to the core values and product principles of offering a pure and fresh product with high fruit content. Such thinking will carry the reward of having strong foundation and a singular driving force, which underpins all organisational activities. In the long run such commitment will be rewarded by customer loyalty and trust. It will also influence the thinking of the rest of the company personnel. However, all organisations operate within turbulent business environments and some factors are beyond control. Companies need to rethink and revamp even their long-term strategies to survive such influences. If Innocent does not stay flexible in terms of its strategic intent, it can be susceptible to failure. On the other hand, Adam Balon shares a different business view, which is rather light hearted and in line with the company’s projected image of hippy and easygoing culture. Howe ever the risk of taking the business too lightly is associated and it deviates from the basic marketing principles, which aims to identify what the customer needs and would like and then supplying it rather takes a product oriented approach which underpins his statement. Word count - 300 References: Brassington F & Pettit S. (2006) Principles of Marketing. Prentice Hall, Harlow、 Armstrong, G. & Kotler, P. (2000) Marketing: An Introduction. 5th ed. London: Person Education Inc. Levitt, T. (1960) “Marketing Myopia” Harvard Business Review, July – August pp 45-56. Belch, G. E. & Belch, M. A. (2004) Advertising & Promotion: An Integrated Marketing communication perspective. Illinois: Irwin. Publishing Fitzgerald, J. (1998) “Integrated Communications,” Advertising Age, February, p.18. Stern, L., Adel, I., Ansary, E. & Coughlin, A. (1996) Marketing Channels, 5th ed. Upper Saddle River, NJ:Prentice Hall. Wisner, B.(1996) Applied Marketing. New Jersey: Prentice-Hall Inc. Thomson, A. A. Jr. & Strikland, A. J. (2003). Strategic Management Concepts and Cases. 13th ed. New York: McGraw-Hill Publishing Company Ltd. Read More