Marketing of Multi Brand Companies and Single Brand Company - Essay Example

?Question 2. Examine the extent to which multi brand companies such as Unilever and General Foods find it easier to extend their products/brands thana single brand company such as Adidas or Nike do.  Multi brand companies such as Unilever and General Foods finds it easier to penetrate in the market due to various reasons, which are associated with effective marketing. Effective marketing can be described as the quality of how the vendors go to the market with the purpose of making the most on their expenditure in order for the business to realize good results for both the long-term and short-term periods. The effectiveness of the market leads to continuous growth in the earnings of the company, which can be seen in the rate of return of investments. There are various reasons, which lead to the effective marketing of certain brands than others in the same market. This paper looks at the reasons, which make certain companies such as Unilever, and Good Foods brands gain market dominance quickly than other brands such as Nike and Adidas. One main reason why companies gain market dominance quickly than other brands is the capital invested in the company. This is because these companies have enough capital obtainable to pay for set-up costs and any preliminary losses. These companies’ gains these funds from two main sources. This are from other departments of the company, such as Unilever getting the finance to fund its tea processing from the soap-manufacturing department, or in the other countries where the company has invested, such as a Unilever brand operating in the US borrowing money from a Unilever brand operating in UK. The first strategy of borrowing from a different department is known as diversification process and is usually associated with big companies. The second strategy is known as globalization of markets which results from pressures from competing companies in the same market. The aim of these strategies is to mount up the competition within a given market for a particular period (Broda & Weinstein, 2007, p.5). The established brands also get government assistance to shield them against competition until such time when they can contest with recognized firms and, censoriously, expand into extraneous markets. This can been seen in history whereby the legislature enact laws which is a political strategy to develop the national economies that has provided critical protection and support to by creating barriers of entry into the market. Examples of political strategies used are the formation of many licenses, which a company has to fulfill in order to be allowed to operate in a given country. Moreover, some countries create barriers of entry in increasing the tax payable to the government by a foreign company. For instance, in Kenya, a company has to pay a tax of 30% of its total earnings in order to be allowed to operate in that country (Creamer & Neil, 2008, p.8). Furthermore, these companies benefit from excess demands, which surpass their supply. Unilever Company and Good Foods Companies deal with highly perishable goods and which are necessities. These goods enable the company to have regular demand since, for people to live they have to have the necessity as compared to the luxury goods produced by Nike and Adidas. The regular demand enables the company to have a high profit level allowing them to expand. Consequently, this company uses this profit to form a good base by investing in newer markets and developing brands, which will in turn make profit for them (Creamer, 2008, p.5). To buy a product from Nike and Adidas companies, a customer has to spend a lot of money as compared to buying a product from other sporting brands such as Puma and Umbro. By raising their products prices, these companies’ makes mistakes by becoming complacent thus allowing other big firms to develop and therefore undermine their position in the market. In addition, they allow other smaller companies such as Legea, to expand and therefore increase the competition (Hall & Mark, 2000, p.5). Besides, companies face competition from the results of effective advertising and promotional strategies. Advertising involves the use of media to inform the public of a certain brand and may carry detailed information such as the price and the components of a certain brand. The products from Unilever Company and Good Foods are mostly food products and their complementariness. They therefore make detailed advertisements on the media, which attract many people. In addition, their products are cheap and easily affordable by most people. In contrast, sports brands such as Nike and Adidas uses a lot of money in their advertising and promotional strategies. For instance, these companies use a lot of money on sponsorship of certain events and players in big teams. However, this promotional strategy markets them more than advertising through the media (Hoeberichts, & Stokman, 2006, p.7). Question 3. Examine the problems supermarkets face with different pricing strategies for their food and their fuel, analysing the factors associated with setting the right price in a price conscious market The issue of pricing has always been a challenge to many firms, which deals with commercial products and services. Among the most affected firms are the supermarkets and the other large retail companies such as the departmental stores. This is because of the regular price movements, which is subject to many other factors such as the demand and the supply of these products. Such firms have to come up with the best pricing strategies in order to attract customers and curb the issue of competition. The issue of strategic pricing involves three main aspects in order to advance the profits. Large companies such as supermarkets face various challenges on pricing. One of the main challenges is cost pricing. The challenge of cost pricing happens in that the supermarkets have to set the right price in order to accommodate the cost of purchase and delivery of those products in the supermarkets. It takes into consideration all the costs incurred until the product or the services reach to the customer (Hoeberichts, & Stokman, 2006, p.7). Another challenge that supermarkets encounter is the challenge of premium pricing. This occurs whereby a supermarket has to set a high price whenever they have a unique brand. In order to benefit from this challenge, the supermarket has to have a considerable competitive advantage and the vendor is safe in the gen that they can charge a comparatively higher price. In addition, supermarkets face the challenge of penetration pricing. The supermarkets implement this strategy in order to gain a large market share. Afterwards, the supermarkets increase the price of the products they sell to be at par with the price from other competitors (Hall & Mark, 2000, p.5). Moreover, the supermarkets face the challenge that comes along with advertising and promotions. Advertising involves the use of the media to disseminate information to the public. Very high costs are incurred in the use of this strategy. Companies also have to come up with the best advertisement so that they can attract more customers. In addition, the supermarkets face other costs in promotion. This happens in that the supermarkets have to use some of the profits revenue to promote a certain brand. For instance, soap can be sold and toothpaste attached alongside. This product is sold at the same cost, as it is one product. It is the supermarket or the promoting company, which bears the loss in such promotions. In addition, companies face a challenge in price skimming. This occurs where a company has to charge an upper price since it has a substantial competitive advantage. However, the advantage tends not to be sustainable. This high price attracts competitors in the market and consequently, the price falls due to increased supply (Creamer, 2008, p.5). Various factors are associated with price setting. One of them is mark-up pricing. The markup pricing is the difference between the cost of the product in the factory and the retail price set up by the retail vendor such as the supermarket. It is also known as the profit margin. Secondly, the retailors have to consider the mark up on retail. This is got by dividing the dollar markup by retail. when using this strategy, the retailors have to take into consideration the initial markup which should always be higher than the in order to cover the cost of price reductions, the discounts, decrease and other projected expenses, and still realize a satisfactory profit (Creamer & Neil, 2008, p.8). Works Cited Broda, C & Weinstein, D 2007, Product Creation and Destruction: Evidence and Price Implications, NBER Working Paper 13041. Creamer, K & Neil A. 2008, Price Setting in South Africa 2001–2007 - stylised facts using consumer price micro data, Journal of Development Perspectives, 1(4): 93-118. Creamer, K 2008, Price Setting Behaviour in South Africa – Stylised Facts using Producer Price Microdata, unpublished paper, University of the Witwatersrand. Hall, S & Mark, W 2000, Are UK Companies’ Prices Sticky? Oxford Economic Papers 52 (3): 425-446. Hoeberichts, M & Stokman, A 2006, Pricing Behaviour of Dutch Companies: Results of a Survey, ECP Working Paper 607. Read More