Semester “FALL 2010”
“Marketing Management (MKT 501)”
Assignment No. 02 Marks: 15
“Case Study”
Zeeshan was born in a milk man’s home 20 years ago. He has three brothers and two sisters living in a typical middle class house. His father has 15 milking units (Buffalos & Cows) which provide living for him and his medium size family. Zeeshan fortunately won a contract of milk supply to a multinational company 5 years ago when used to buy milk at the rate of Rs. 30 Per litre at a normal profit for Zeeshan’s father. Supplying milk to multinational company is a certain business but it provides no growth opportunity.
Zeeshan completed his studies MBA from VU Pakistan in 2009. Instead of going for a job, Zeeshan preferred to join his father’s business soon after the completion of studies. After joining business, Zeeshan very quickly learnt the mechanics of business. His understanding of the supply chain enlightened him that only those could grow in the current competitive world who serves the final market with a strong brand. Zeeshan also learnt that multinational company, whom they were supplying milk, sold one litre of milk at Rs. 60 per litre after packaging and processing the milk.
His limited research shows that middle class families are not satisfied from the price and quality of unbranded milk due to different seasons. Being motivated for growth based on all his findings, Zeeshan decided to reshape his current business into a fresh branded milk business which could supply milk to middle income households in nearby towns. To be on the safe side Zeeshan cut 50% milk supply to multinational company with a plan to abandon it if his new idea works.
Required:
Zeeshan needs your help in following areas:
Question # 01: Suggest a suitable pricing strategy for Zeeshan’s business.
Question # 02: How can Zeeshan position and differentiate his brand in the minds of customers?
Important Tips
1. This Assignment can be best attempted from the knowledge acquired after watching video lecture no. 1 to lecture no 31 and reading handouts as well as recommended text book).
2. Video lectures can be downloaded for free from
Schedule
Opening Date and Time January 10, 2011 At 12:01 A.M. (Mid-Night)
Due Date and Time January 13, 2011 At 11:59 P.M. (Mid-Night)
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For Question#1
1. Penetration pricing: Here, the company charges a low price initially in order to create a large sales volume and achieve the maximum and quickest penetration of the market. The intention of charging a low price initially is to expand the market and keep it exclusive and unattractive to competitors. The aim is to build up the largest sales volume possible and thus maximize the economic benefit of large scale production. The price is eventually raised when the product had become well known and accepted and potential competition has disappeared.
A penetration price is most suitable if:
(i) The product is new and low introductory price will lead to huge sales and a quick recouping of the initial investment
(ii) Sales are sensitive to price even in the early stages of introduction
(iii) A large market exists and high sales volume will create economies of large scale production
(iv) The product can easily be imitated by competitors and thus faces a powerful imminent competition immediately it is introduced. With a low price; potential competitors may disregard the product and the economic opportunity it offers and so may be discouraged from entering the market.
Question#2 Helping Materials...
Product Positioning To-Do List:
1. Conduct a market segmentation.
2. Define your target market.
3. Identify the product attributes.
4. Data collection from the target market (customers and potential customers) on the identified product attributes.
5. Determine the product’s share of heart and mind (of the total potential mindshare). Being ‘first’ in the market usually is a significant benefit in mindshare.
6. Place your product in the right ‘space’ (e.g. luxury market; economy market; high value, low volume; health; snack; etc.)
7. If position is a graph, determine what your product’s ideal position on that graph might be (e.g. nutritious, high cost snack).
8. Determine what you need to do to reach that position in the minds of your market.
More Material for Question#2
Product Positioning and Differentiation
Does your positioning strategy focus on, and align with, your product differentiation strategy? Is your product or service unique, better, economical, profitable (for the market), or does it have other distinctive criteria that will differentiate it from the many other products and services available?
These points of differentiation must be important and valued by your customers (for example, being marketed as an economical product in a luxury goods market would be a significant positioning mistake).
When introducing new products, your new product plan needs to be focused on differentiation and positioning strategies and tactics.
Positioning your product needs to be focused on delivering a valued and distinctive product to a specific market and delivering in a way that customers accept (that's the hearts and minds part of the equation). Good product positioning will make it easy for your intended customers to define why they want to buy the product (they will see the unique benefits).
Small businesses typically do not have large marketing budgets. But no matter what kind of budget you have, you need to focus on getting product positioning right (it will pay for itself).
Conduct marketing research (you can use free online surveys) on your product. How do your customers view your product? How do they view your organization? Ask your customers to describe what they think of when they think of your brand and/or your business’ name (it’s a good idea to do this in a way that allows anonymity to encourage honest feedback).
Customers have an image of your brand as either a positive or a negative, based on their experience, their perception of your brand and their understanding of your product benefits.
That positive or negative image will determine whether or not they buy your product and how much they will pay for it (how much value they attribute to it). So make sure you carefully focus on your pricing strategy as an important part of your positioning.
Focus your efforts on positioning or ultimately you will need to re-position your product (changing and/or improving your product’s identity or brand). Re-positioning is very hard to do successfully. Work on the relationship between product differentiation and product positioning. Overcome the ‘noise’ in the marketplace and be recognized for having a unique product.
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