A market leader in pharmaceuticals should emphasize in its marketing strategy its competitors primarily and the consumers secondarily. There are two main reasons for this. As an industry leader, the company should strive to portray itself as ahead of its competitors. Strategies recommended include using the advantage in economies of scale to undercut competitor’s pricing and achieve greater distribution through the health care system. Brand extensions can help to defend market position against the threat of competition (no author, 2009). Pharmaceuticals also give direct benefits to consumers. Moreover, when consumers search for pharmaceuticals they often compare different brands against each other. Therefore, a brand can attain competitive advantage by communicating more effectively to the consumer about the benefits of its products.
A market follower in a mature market should focus on comparisons with its competitors. The marketing message should convey the reasons why consumers should switch from the leading brand to the following brand. This can mainly be done by demonstrating direct superiority over the leading brand in terms of the qualities consumers value the most.
A market nicher in interior design needs to have a wholly customer-centric message. The service is tailored to each customer. The customers are not interested in mass market offerings so benchmarking against industry leaders is irrelevant. Additionally, the entire service is focused around meeting the customer’s needs so the message needs to convey this.
A market challenger in this scenario needs to build economies of scale in order to compete. They must do this with a combination strategy that not only demonstrates superiority to the leading product but also conveys a strong sense of direct benefit to the consumer. In this industry, it is imperative that the firm be seen as the best company with the best products — anything less and they will fail to achieve the economies of scale needed to effectively compete.
2. The resort should price the services separately. The willingness to pay factor is important to consider here (Rao, 2009). The consumer typically sets their hotel budget, but the activities budget is separate. Thus, if the hotel adopts a pure-bundle strategy, the higher room price will be perceived as a lower value than competing hotels. While the extra services provide higher value, if the consumer is not interested in those services, they will base their views on the higher room rate, not the package of services. In order to build repeat business and longer stays, the hotel must have its rooms at a price point that is perceived as competitive. Consumers do not mind having to pay for certain types of extra services. By leaving those services to the consumer’s option, the hotel would maintain its value proposition, and still be able to capture significant revenues from those services, since guests are not averse to paying for extras like volcano tours, massages and scuba diving.
3. Before making a decision, there are several points of information I would need. The first is with respect to our usual performance per dollar of advertising. The figures presented seem good, but most organizations have limited budgets. I would need to know the opportunity cost of spending the $500K on this campaign — it may not be the best value for money.
The second thing I would want to know is the details of the additional spending. The spending must fit with our overall brand development strategy. It should support our current endeavors and not conflict with the brand image we are seeking. Moreover, the ads should target our existing target audience — if not I would need to know that ahead of time. Additionally, the decision of whether to apply the money to customer attraction or retention is a strategic matter (Lewis & Otto, 2005), and therefore this $500K should be considered as a strategic move within the context of the overall marketing strategy.
The third thing I would want to know is what sort of profit we can expect for that additional $2 million in revenue. If the additional revenues do not generate a level of profit above $500K, then the campaign would lose money on a net basis. So we need to know if the campaign will pay for itself.
Lastly, I would be curious as to why the additional funds are needed? I would need to be sure that the existing marketing budget is being used to maximum efficiency. If the same additional sales can be gained through current funding levels, the increase would not be approved. If the current campaign is operating at maximum efficiency, then I would consider the increase.
4. Advertising can be used to create buzz in several ways. One is to create a campaign that captures the public’s imagination — a contest, mystery or other element that generates buzz. The campaign can be conducted with a saturation strategy, with the buzz being created as a result of the campaign being drilled into consumers’ minds. The campaign could generate buzz through controversy as well, as media stories circulate about the campaign and the reaction to it.
There are dangers inherent with creating such buzz, however. A controversial campaign can offend consumers, and compel them to avoid the brand. A saturation strategy can become grating, again with negative consequences. Additionally, a saturation strategy can be expensive, which reduces the profit potential of the campaign. Creating a campaign that captures the public’s imagination is a good strategy, but tricky to execute. The campaign could be expensive or fall completely flat if the execution is not precise. In most cases, buzz can result in backlash against the brand, in particular if consumer’s view the buzz as having been contrived by the company (Khermouch & Green, 2001).
No author. (2009). Strategy of Challenger, Leader and Follower. Scribd.com. Retrieved October 14, 2009 from http://www.scribd.com/doc/19487123/Strategy-of-Challenger-Leader-and-Follower
Rao, Vithala. (2009). Handbook of Pricing Research in Marketing. Edward Elgar Publishing: Cheltenham, UK.
Lewis, Barbara & Otto, Dan. (2005). ROI isn’t the only factor to consider. Marquant Analytics. Retrieved October 14, 2009 from http://www.marquantanalytics.com/ar08CMOCT.html
Khermouch, Gerry & Green, Jeff. (2001). Buzz marketing: Suddenly this stealth strategy is hot — but it’s still fraught with risk. Commercial Alert. Retrieved October 14, 2009 from http://www.commercialalert.org/news/archive/2001/07/buzz-marketing-suddenly-this-stealth-strategy-is-hot-but-its-still-fraught-with-risk
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