Marketing Strategy For A New Product Idea

In order to complete this particular unit I must produce a marketing case study, which will outline the strategy for the development of an existing product into the market place.My work is going to involve full research into the main concepts of marketing and I will be identifying the best possible marketing strategies to adopt.The assignment will examine the following in some detail:

• The main definitions and principles of marketing
• The analysis of the external market environment
• The concept of marketing research
• The analysis of marketing tools
• The analysis of relevant marketing strategies to adopt

Introducing the VRX-2000: Vinyl Recorder

Throughout this unit project my main aim is to develop a marketing strategy for a new product idea.

I have based this project therefore on the marketing of a new and exciting product called the VRX-2000: Vinyl Recorder.

The VRX 2000 is a compact machine, only 18Kg in weight, and it has changed all of the rules about what vinyl cutting and mastering is all about.

The Vestax stereo cutting head cuts directly into the vinyl without any mother plates or processors unlike its competing cutting machines situated in acetate cutting houses, making the recording is instantly playable even on so0mething simple as a house hold LP player. This machine has been a rumour for some years, but it is now a reality.

Bring on the vinyl revolution

There have been many efforts by other manufacturers to capture the attention of the world’s DJ’s with new formats and fancy gimmicks, but the truth remains – Vinyl is the only real format for DJ’s to mix.

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Dramatic Comeback for Vinyl

Vinyl, the preferred playback medium for decades of music listening suffered badly during the technology boom of the 80’s, and was filtered out of domestic sales through first the audio cassette, and then the compact disc (CD). Commercial record companies stopped vinyl production, and the popularity of vinyl was taken over by the CD.So vinyl was forced even further underground. Throughout the club house boom of the late 80’s, the evolution of techno / trance in the 90’s, and throughout the continual standards set by the turntablists and hip hop / scratch DJ’s that pioneered the art of turntablism, there is one consistent factor that has kept vinyl alive: Vinyl is the preferred format for the majority of the world’s professional and more so non-professional DJ’s.

In more recent years, the popularity of club culture and hip hop / turntablism has increased the global sales of vinyl. Recent trends have seen many popular live bands and R’n’B artists incorporating a DJ into their line-up. Throughout this time, the DJ’s of all of the different music scenes are constantly searching for the latest sounds, or the hardest to find records to enhance their performance as a Dj. The older generation i.e. mums and dads mite say that the 12″ record format died along time ago along with there youth, but in the UK, there are certain specialised music scenes where 12″ vinyl is still thriving within music shops and there is still a lot of potential within this market.

As the music scenes within the UK are maturing, the doors are opening for a next generation of producers. This is being made possible through new programmes that are being brought out on to the market which can be run on a simple everyday house hold PC. These new programmes that are taking the music scene by storm could mean that the expensive hiring costs to use a music studio could be a thing of the past. Not all dance music tracks are pressed in commercial quantities, and as a result of this many unofficial releases make their way to the shelves as bootlegs or white label records. High profile DJ’s, promoters and records shops receive one-off pressings from producers and record labels, testing a release’s popularity before committing to quantity vinyl pressings. These one off pressings are referred to as acetates, or more commonly within the dance music industry as “dubplates”, and they hold a very important role for both DJ’s and dance music producers alike. It is these dubplates that often make or break the next biggest music track that would be to enter the national charts.

With access to a VRX – 2000, DJ’s can produce their own music through the new programmes that are available on the market then within their own home copy their production straight on to acetate ready to mix. Various sounds and loops can also be compiled on to acetate for DJ’s to use in their sets. This would reduce the amount of records needed in DJ battle situations and it will also allow DJ’s to have their own personalized mixing tools made up of specific sounds unique to the user. Within this project I will recommend the best strategies that can be used within marketing to help launch this new product onto the market place.In order to successfully devise a marketing strategy a business must first examine the:

• Main principles of marketing
• The needs of customers
• The external business environment
• The relevant marketing models and tools

After these aspects of marketing have been examined and fully analysed only then can suitable strategies be recommended based upon:

• The features of the product
• The suitable pricing to adopt
• The best places to sell and distribute the product
• The best promotions to use launch the product

The main principles of marketing

Marketing is essential to the success of any business or business idea. The primary aim is to enable businesses to meet the needs of there actual and potential customers.Below is a definition of marketing quoted from the chartered institute of marketing:The management process responsible for identifying, anticipating and satisfying customer requirements profitably.Within that definition there are key words:

• Management process – the use of this term indicates the level of importance of marketing to management decision making. Identifying -* Anticipating -* Satisfying -* Profitability

• If a business idea is to be successful there needs to be an understanding of t5he following marketing principals: the following: * The understanding of the customer needs – understanding customer needs within an organisation like Vestax is a very important factor of marketing.

In order to anticipate change, companies like Vestax have to have a constant lookout as to what changes are taking place in the market place. For Vestax to find out the needs of the potential customer they would need to perform some market research. Market research is that vital link between buyers and suppliers. It fulfils this function by enabling those who provide goods and services to keep in touch with the needs and wants of those who buy the services. Understand and keep ahead of the opposition within the same marketone of the key factors in the market where Vestax will be launching the VRX-2000 will be the existence and strength of competition.

In a competitive environment, organisations like Vestax are forced to be on there toes just to keep ahead of the competition within the same competitive market. Vestax cannot allow rivals to gain advantages by offering lower prices on similar products.In order to be successful, the Vestax organisation will gear their activities to being better than their competitors, and keeping up with changes or improvements that competitors might make to similar products in the market. These decisions that have to be made may have substantial implications for the whole Vestax organisation and influence the future of the business for a long time to come. Finding out about competitors involves a considerable amount of research for Vestax. This would start by hem finding out as much as possible about competitors products and other elements of their marketing mix. (product, price, place, distribution and promotion). It is necessary to identify points of difference between an organisation like Vestax and its comptitors, as well as areas of competitive advantage. This process is often referred to as the competitive audit.

* Co-ordinate its functions to achieve marketing aims – Business strategy is concerned with the big decisions companies like Vestax have to make.

* Communicate effectively with the customers in order to satisfy their expectations – Today, the exchange of information is a sophisticated process that produces subtle messages and that uses emerging technology’s, such as the internet and digital television. An effective network of communication enable an company like Vestax not only to communicate with its customers, satisfying their expectations, but also to build an image with the world at large. Be aware of constraints on marketing activities – Vestax especially, who is involved in marketing activities, is faced with a number of constraints that may limit their activity. These constraints include internal and external constraints.

Establishing customer needsA company such as Vestax has to explore the potential needs of its customers and the activities coming from rival businesses within the competitive market before it goes about developing a marketing strategy.In order for Vestax to gain understanding of the market they are entering with the new VRX-2000, they would have to carry out extensive market research to gain knowledge of competing products in the market. Vestax organisational activities would take place in an environment where there is a certain degree of risk. By Vestax doing extensive research into the market they would be reducing and minimising the risk factor therefore providing an invaluable source of information to help the Vestax organisation in making decisions and developing strategies. The American Market Research Association defines market research as: ‘The systematic gathering, recording and analysis of data about problems related to the marketing of goods and services’.Within that definition there are key words:

• Systematic – in other words, using an organised and clear method or system.
• Gathering – knowing what you are looking for in your research and collecting the appropriate information
• Recording – keeping clear and organised records of what the research team find
• Analysing – ordering and making sense of the information that has been found in order to draw out relevant trends and conclusions
• Problems related to marketing – finding out the answers to questions that would help Vestax understand better both the customers and other relevant details to do with the marketplace.

Market research provides an invaluable source of information to help organisations such as Vestax to make decisions and develop strategies for products.For example, overall it would help them to:

• Identify their customers
• To use trends to forecast activities
• Improve their knowledge of consumers and competitors so that changing trends within the market place can be identified
• Monitor their market position and develop plans and strategies
• Improve their competitive advantage.

One of the most important things for Vestax to remember is that what comes out of there market research is only as good as what goes in. before doing any thing, Vestax would need to identify the information required, and then the type and nature of the questioning should all be carefully considered before any projects proceed. The information that Vestax would have collected through there market research may be described as either qualitative or quantitative in nature. Qualitative information is information that would informs the Vestax organisation about the opinions and preferences of individuals and cannot always be interpreted statistically.

Basically, qualitative research is about descriptions. This type of information that has been collected is hard to measure and categorise because it is based upon person view of what people have said in surveys, questionnaires etc. a few examples of these are: In my view… I personally think that… Yes I agree but also I think…Quantitative information is information that produces figures that can be examined statistically. An example of this would be, 18 out of every 20 people asked prefers butter to margarine.

Within market research there are two broad areas that can take place. If information does not already exist in an identifiable form within the organisation, means it will have to be collected first hand. This type of research is called primary research. Any information that is already published outside of an organisation like Vestax is known as secondary research data.

Primary research methods

Any information that is original and is obtained outside of an organisation like Vestax is referred to as primary data. It is research that is conducted by or on behalf of the organisation, is specific to its needs and would involve a range of methods. Listed below are some common primary research methods that an organisation such as Vestax would use:

Questionnaires – interneto Discussionso Surveys – telephone and postal interviewso Face-to-face interviews – street surveys, household surveys and shop surveyso Panels – consist of groups of customers who agree to provide information about their attitudes or buying habitso Phone-in pollso Testing trough pilots – small scale experimento Testing through field trials – selected customers may be asked to test a product before its release to the buying public.Secondary research methodsSecondary marketing information can be obtained from both internal and external sources.

Internal sources

Internal information would be information that is already being held within the Vestax organisation. This sort of information would more often than not be kept in databases. These databases would be accessible across the whole organisation for uses to look up relevant information.Information that Vestax would already have on existing customers would form the core of the database, with sales invoices being the most valued source of data. An invoice is create for financial purposes but as well as that it is convenient for stored information on existing customers that have brought products from the organisation in the past. A customer invoice would contain information such as the following:

• Customer title – gender, job description and other forms of identificationo Customers address – helpful to Vestax when wanting to send details of a new product they are promoting.
• Items ordered – this would contain information, which would include the customer’s product interests and quantities ordered. External sourcesExternal data exists in the form of published materials, collected by some one else. It can give Vestax a broader dimension to data previously collected.
• A few examples of these published materials are below: Government statistics
• The media – newspapers, magazines, TV and radioo
• The internet – rapidly becoming an invaluable research tool which provides an organisation such as Vestax with a rich resource of informationo
• Directories – business directories provide general information about industries and markets relevant to Vestaxo
• Market research companies – commercial markets research companies offer a range of services selling data that Vestax would require from a variety of sources.

There is a wealth of information from secondary sources that are available to the marketer.

Information is big business to a company like Vestax and usually companies would make a very nice profit through gathering information about markets. Various government departments or governmental bodies produce statistics and information on a wide range of markets as well as on the economy and changing social trends.Using market research information to make decisionsThe real benefit of obtaining information through market research is determined on how much it improves the marketer’s ability to make decisions. Good quality information that has been collected will enable decisions to be made that satisfy the need of the target market and also in helping the organisation meet its aims and objectives.

Vestal must constantly monitor the size and potential of the market they would be competing in they must analyse the sales and trends as well. If an organisation like Vestal knows the total size of the market, from this they can then work out how much of the market it has. This is known as market share. From this, Vestax can develop appropriate strategies to start increasing its growth of its market share. The use of market research presents a change from problem solving by intuition to decision making based on scientific gathering and the overall analysing of information. The great advantage is that market research provides information systematically upon which managers may base product decisions. The disadvantage of all this is that if market research was totally dependable, it would mean that businesses like Vestax could use market research into the design of products and then be completely confident as to how consumers would respond to them. This would mean that all new products being launched on the market place which had been research into before hand would sure to be a success.

Similarly this would mean no products would flop because firms would receive an advance warning from their research departments and take any necessary measures. If an organisation like Vestal knows the total size of the market, from this they can then work out how much of the market it has. This is known as market share. From this, Vestax can develop appropriate strategies to start increasing its growth of its market share..Marketing analysis is used to identify some key factors in identifying the following:

Any change in the markets for different products and businesses – the size and potential of the market that Vestax would be entering this product in would have to be constantly monitored for change. They would have to make sure they analyse sales of trends as well as the size and potential of the market must be considered. If Vestax knew the total size of the market it would greatly work to their advantage as an organisation can work out what percentage of the market it has and then develop a strategy that helps it increase its proportion of the market. This is called marker share.

Profit opportunities – as products go through their product life cycle the profitability of different products are constantly changing. Marketing analysis would help to direct Vestax towards those activities where profitability and other business objectives can best be satisfied.

The needs to make changes to the product mix – the product mix for any company comprises all the products an organisation provides for its customers. Research undertaken by Vestax will help management to understand the sort of decisions they would have to make about the product mix.

Changes in consumer behaviour – the whole process of buying a good or service is not as simple as it might first appear. A customer does not usually make a purchase without thinking carefully about his or her requirements. Market research will help an organisation just like Vestax to understand why customers make particular decisions, especially through the analysis of buying patterns.

Changes in activities of competitors – an organisation such as Vestax must at all times be aware of its competitors and the nature of what they are doing. Competition exists when two or more organisations act independently to sell their products to the same potential consumers. In some markets there may be a great deal of direct competition.

An example of direct competition for Vestax of this would be if technics were to bring out a vinyl cutter to compete directly with the VRX 2000.Understanding the business environment that the organisation is operating inUnderstanding the business environment would help Vestax develop appropriate marketing strategies, including the marketing mix,. Important external forces that influence marketing include the following:

• The customer – the buying behaviours of customers, including why they buy, their buying habits and size of the market
• The industry – the behaviour of organisations within the industry.
• Competitors – their position and behaviour
• The government and regularly bodies – their influence over marketing and competitive policies.

Pest Model

One useful way of analysing Vestax’s external environment is by grouping external forces nearly neatly into four areas using a pest analysis. Pest stands for Political, Economic, Social, and technological influences, all of which are external. These include:

• Political, legal, and fiscal factors – Business decisions made by Vestax are influenced by political, fiscal and legal taxations.
• Economic factors – Through the economic environment is influenced by domestic economic policies, it is also independent upon world economic trends.
• Social and cultural factors – For Vestax to understand the social and cultural environment involves a close analysis of society.

Technological factors – In marketing goods and services, businesses like Vestax must become aware of new materials as well as developments in the manufacturing and business process.Swot ModelA particularly useful approach to examining the relationship between Vestax and its marketing environment is a SWOT analysis. A SWOT analysis sets out to focus upon strengths, weaknesses, opportunities and threats that faces a company like Vestax at a given moment. This process includes both an internal and external element. For Vestax to carryout a SWOT analysis effectively, requires them to research into an organisations strengths and weaknesses with the external market forces in the business environment. As a result of Vestax carrying out a Swot analysis, they then go on to develop policies and practices that will enable it to build upon its strengths, minimise its weaknesses, seize its opportunities and take measures that will cancel out threats.

Constraints upon marketing activities

There are a number of constraints upon marketing activities that limit the sort of activities in which organisations engage. Before the 1960s consumers had few rights and had very little to say in the bargaining process. They even often had to rely upon their own common sense when purchasing goods. In recent years the term consumerism has grown within consumers and they are far more aware of their rights and also their bargaining powers. The need for consumers to be better protected and therefore insured against the actions of the organisation that they bought from arose. Some examples of these are below:

• Poor quality goods or services
• Breach of contract
• Misleading offers, information, advertising or labelling
• Monopoly control – this is when a business can charge what they like because they would be the only business with this product in the market so in effect they can charge what they want.

Consumers can now benefit from more freedom of speech, greater equality and improved knowledge of their rights giving the consumer more power. Consumers today expect a product to be safe and to perform and function well. The media including mainly of newspapers are there to bring the wrong doers to the public’s attention so the same thing will hopefully not keep repeating. Industry based constraintsThe ASA (advertising standards authority) was set up in 1962. This is an independent body that exercises control over all advertising that on the radio and television. The control which they have includes:

• Press – this covers national and regional newspapers and also magazines
• Out door advertising – this includes bill boards, transport and posters
• Screen promotions – including cinema commercials and advertisements within electronic media
• Sales promotions – such as on pack promotional advertising, competitions and prize draws.

The authority draws up its own codes, which they then put into use ensuring advertisements are legal, decent, honest and truthful. If the ASA feels that a company is breaching one of their codes they can use a number of sanctions to enforce its decisions against the company. Some of these sanctions are as below: Give a business adverse publicity generated by monthly reports of adjudicationso Can refuse a business of media spaceo Withdrawal of privileges. These privileges could include discounts and incentives resulting from membership of advertising bodieso Legal proceedings against persistent offenders with the appropriate regularity bodies.

Advertisers, agencies and the media whose representatives make up the code of advertising practice committee support the British code of advertising practise. This is the code that sets out the rules that those in the advertising industry have to agree and follow. The chartered institute of marketing has its own code of practice to which members are required to adhere. The code refers to professional standards of behaviour in securing and developing business, and demands honesty and integrity of conduct. The BSI (British standards institution) sets quality standards that are acceptable to manufactures and consumers. Goods of a satisfactory standard are allowed to bear the BSI kite mark on their products.

Developing marketing strategies

When Vestax is developing strategies, a range of options will be available to decision makers. The most appropriate strategy for an organisation will obviously depend on the nature of the organisation, the type of market it competes in and the functions of its competitors and upon what sorts of risks an organisation is willing to undertake. There are a number of factors that come under developing marketing strategies. These include:

• Market penetration – A key objective that Vestax must have is to improve their levels of market penetration. This penetration would involve more sales to customers without changing products in any way. Better marketing penetration helps Vestax improve their market share. Because Vestax is involved in such a large market, even a small increase in their percentage of market share can create significant sales, and studies have shown that there is a link between market share and profitability.
• New product development – New product may be one that; replaces an existing one, one that opens up a new market, broadens an existing market. A new development may involve an innovation, a technical breakthrough or it can even be a line extension based upon a modification.
• Diversification – This is a strategy for growth that involves developing products or business areas that are outside the organisations markets.

Tools that can help analysing marketing strategies Along side any marketing strategy of Vestax’s there must be some kind of mechanism that enables the managers of Vestax to link their strategies with their marketing objectives. There are three different models that help managers evaluate the effectiveness of their strategies. These include:

The product life-cycle – the life of a product is he period in which the product appeals to its potential customers. When Vestax enters a new product or service into the market, the sales performance of the product/service rises from naught, reaches a peak and then goes into decline when there is less demand for it. A product life cycle may last for months, or even hundreds of years. To pre-long the life-cycle of a product or service, an organisation like Vestax would need to re-arrange their ingredients of the marketing mix.

Readjustments of the marketing mix may include:> Changing or modifying the product to keep up with or ahead of the competition> Altering distribution patterns to provide a more suitable place for the consumer o make purchases> The changing of prices to reflect competitive activities> Considering carefully the style of promotion.

Most large companies would produce a range of products, each of them having their own unique life style. By using life-cycles, marketers can plan when to introduce new lines as old products start to go into decline. The collection of products an organisation produces is a product portfolio.

The Boston matrix – through examining he life-cycle of a product helps to appreciate that products go through various phases from infancy all the way through to decline. Market share is important for business organisation. The Boston consultancy group have argued that the faster the growth of a particular market the greater the cost necessary to maintain position in the market.

Ansoff matrix – Ignor Ansoff was another person who went on to develop this theory further by outlining a product-market mix. Ansoff’s matrix looks at not just at the management of a product portfolio, but also he looked widely at market developments. The matrix matches existing and new product strategies that hinge upon whether the product is new or existing and whether the market is new or existing. The marketing mixThe marketing mix provides people with a useful way of looking at the marketing of products. Vestax would need o create a successful mix of:

• The right product or service
• Sold in the right place
• Sold at the right price
• Using the most suitable form of promotion.

The Four P’s of product, price, place and promotion is a straight forward way of looking at what has become an increasingly complex business environment. In recent times the original four P’s above have been expanded including three more P’s. These additional element are the people, the provision of customer service and process management. Pricing and the techniques of pricingPrice is the only element of the marketing mix that directly generates income. Other elements in the marketing mix are costs. The importance of price in the marketing mix varies. The price charged for products or services by Vestax is associated with a given level of sales. There are five strategies associated with the mix. They are as follows:

• Penetration pricing
• Price skimming
• Cost-plus pricing
• Value and price
• Competition-based pricing

Communicating with customers Vestax as a company, are the senders in the communication process and the consumers are the receivers. The senders will put its information onto a form that a receiver can understand. This might involve oral, visual, verbal or written messages to send out the ideas.

Advertising

Advertising is a simple method of communicating with groups in the marketplace in order to achieve certain objectives. Advertisements are messages send through the media that are intended to inform or persuade the people who receive them, i.e the potential consumers. Advertising must be a communication directed at a target market and should draw attention to the characteristics of a product that will appeal to the buying motives of the potential consumer. The ultimate purpose for Vestax to advertise is for the company to enhance buyers’ responses to its products by channelling their desires and preferences to the Vestax VRX-2000.

Public relations

The forces in the company of Vestax’s external environment are capable of effecting it in several ways. These forces may be social, economic, political, local and environmental and may be represented by a variety of groups such as customers, shareholders, employees and special interest groups. Public relations are the planned and sustained effort that Vestax makes to establish, develop and build relationships with its public. The purpose of Vestax building a good public relations is to that it provides an external environment, where the company will be know and will be popular and can prosper.

Sales promotions

Sales promotions will be used by Vestax to encourage customers to make a purchase. These activities that Vestax would introduce are effectively short term. These would be used to increase sales of certain products made by Vestax. Sales promotions are also used to respond to actions of competitors that could be bringing out rival products. These promotions are also used as an effective form of advertising.Product presentationProduct presentation is the form in which the product is presented. Consumers are increasingly seeing attractive packaging as adding value to a product, but the presentation factor is not a big one, as the initial product attraction of the VRX-2000 will be done through advertising in specialist magazines etc.

The basic function for the VRX packaging will be to protect its contents in transit, whilst in storage, and this plays a major part in determining its shape, size and the materials that will be most suitable to be used.Logistics and placementPhysical distribution involves getting a product from a to b. like product presentation, physical distribution management is an important part of the marketing mix. This would help a company meet its customers needs, profitability and efficiency.