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Table of contents
Chapter 1 Product development process
1.1 The necessity of new products
1.2 Process of generating ColaMax
1.3 Development approaches
1.4 Product failure and countermeasures
Chapter 2 The macroenvironment
2.1 Demographic force
2.1.1 Opportunities and threats
2.2 Natural force
2.2.1 Opportunities and threats
2.3 Cultural forces
2.3.1 Opportunities and threats
Chapter 3 The Product
3.1 The core product
3.2 The actual product
3.3 The augmented product
Chapter 4 Positioning , market situation & competition
4.1 Positioning of ColaMax
4.2 Actual market situation
4.3 Competition and opportunities and threats
Chapter 5 Price and placing of ColaMax
Chapter 6 Promotion mix
6.1 The ColaMax advertising
6.2 Sales promotion
6.3 Personal selling
The major reason why I wrote this report can be found at the fact that we had to practise the report writing within the scope of a foreign language. Further this report should help me as a student to make use of my know how in practice and after all I also hope that it will help those people who are in contrast to me creative but who do not know how to realise their ideas in a suitable kind of way.
Concerning myself I can inform the reader that I was born 1976 in a town called Kleve. Further I successfully finished the grammar school before I started my study at the Fontys Hogeschool - Venlo.
Within this report it is my task to come up with a successful new product but nowadays we are living in a time which is characterised by a high rate of product failures. This circumstance leads in the case of my product to the fact that I make use of several elements that cut down the risk of a product failure.
One of these elements deals with the process of generating a new product. It describes the development from a product idea to a testable product concept. Another failure preventing element deals with the macro-environmental forces and the Brain Reserve trend. Those forces and trends influence the company's environment by posing threats as well as by offering opportunities to companies. A successful company is able to predict those threats and opportunities which allows them to react in a proper kind of way. Relating to my product (ColaMax) I carefully analysed my environment to avoid any kind of unexpected threat as well as to use every possible opportunity.
A further important element deals with the product failure countermeasures as well as it deals with the pricing and positioning strategies. The countermeasures consist of three parts which are in detail general information about failure prevention, organisational measures and last but not least failure preventing guidelines. Relating to the pricing and positioning strategy it is important that companies adapt their strategies to their objectives. In the case of ColaMax I use all three kinds of failure prevention methods. Furthermore I use the good value strategy which allows me to penetrate the market in a short time period.
The last three elements deal with the competition as well as with the promotion mix and the different product levels. Relating to ColaMax I am the first company world wide that offers such a kind of cola. As a result of this circumstance I do not have direct competitors yet.
Further I use in the case of ColaMax the three promotion mix elements which are in detail the advertising, the sales promotion and the personal selling. I combine these three elements in a well thought way which should also bring additional efforts to my company. Relating to ColaMax I am after all of the opinion that it is going to be a success. This opinion is based on the fact that the circumstances are quite good as well as on the fact that I use the already mentioned elements in a well thought kind of way which increases the chance of a successful product.
Nowadays we are living in a time in which almost every day a new product is introduced into the market. The population which finally makes up the market decides whether a product is going to be successful or not. But before a company gets this final confirmation it already had to invest enormous amounts of money and time on the idea. This circumstance should point out that the development and production of new products is always connected to a certain degree of risk.
This report deals with several aspects that could help companies or individuals to realise their product ideas. Of course there are no 100% reliable techniques to develop and produce successful products but after all there are at least several aspects that cut down the risks which are connected to the development and production of new products. This report exists of six chapters which deal beside of other aspects with exactly those aspects. The subject of the first chapter is the product development which deals with the theoretical question why companies develop and produce new products as well as it deals with the concrete development of my product and the two different development approaches. Finally the product failure prevention concludes this Chapter.
The second chapter deals with German macro-environmental forces and Brain Reserve trends which are relevant for my product. Further it outlines the opportunities and threats for my product which are placed by those environmental forces and trends. The third chapter deals with the product. It describes the different levels of a product by means of a concrete example.
The subject of the forth chapter is the positioning as well as the market situation and the competition. In detail it deals with positing of my product and further the actual German market situation is described. Finally the competition concludes this chapter.
The fifth chapter handles the pricing and placing of my product and the subject of the last chapter is the promotion mix. It deals with those elements of the promotion mix which are relevant for my product. In detail this are the advertising, sales promotion as well as the personal selling.
Chapter 1 : PRODUCT DEVELOPMENT PROCESS
1.1 The necessity of new products
In the last 30 years companies produced a flood of new products. Many of them are meanwhile a standard component in every household like for example a compact disc player or a microwave oven. The question now is why so many new products have been invented and produced by the companies because these processes require high financial investments as well as a certain degree of time and finally they are always connected to risks. The answer to this question is not as difficult as it may seem when it is divided into two aspects. The first aspect deals with the market situation . Since the market situation is characterised by a hard competition and the consumers are spoilt by a great variety of products, companies have to recognise suitable customer needs and market-chances and react with appropriate products to ensure that they will participate in the hard battle for profits. Of course those companies which recognise a chance or a customer need first will also be ahead to its competitors when meeting the demand and consequently the companies are even battling each other for new products.
The second aspect deals with the developments in several other sectors. Many sectors like for example the technology or the taste of groceries are influenced by macro-environmental forces which will be the focus of attention later on. This means for instance that consumers prefer a other taste than they did some time ago or simply that the technology changes. We can see such technological changes for example almost every month at the computer trade. After all the changes in those sectors require new products because the companies cannot rely on their "old" ones which do not meet the expectations of the consumers.
1.2 Process of generating ColaMax
The answer to the question why I produce a new kind of cola is quite simple because I am of the opinion that there is a gap in the cola market. To come up with a product that offers more than just a good taste I made among the need - problem identification technique use of the attribute listing technique. The attribute listing implies that first of all an existing product is described including all its major features and then participants try to modify each of the features of the existing product to increase the total value of it. The other technique the need - problem identification tries to get information about the customers needs, problems and ideas by asking those.
The attribute listing technique showed that conventional cola is characterised by the more or less sweet taste, the refreshing and thirst quenching effect as well as by the carbonic acid and a varying content of caffeine. During the attribute listening technique I varied those basic components. Further the need- problem identification provided me with valuable information about the ideas and needs of the customers and so I finally obtained a cola which contains beside the basic elements some minerals like for example calcium and magnesium, glucose as well as some vitamins. Further ColaMax contains a higher concentration of caffeine. The next step was that I once more checked the quality of the idea by asking some of my cola fanatic friends. Then the idea was checked by a acquaintance, who works as a chemist and after he gave his okay I started developing a testable product concept. In this context we must distinguish between a product idea, a product concept and a product image. In my case the product idea is the cola with its already mentioned additional features. Concerning the development of the product concept I had to take several questions into consideration like for example who will use this product, what primary benefit should this product provide as well as the question when will people consume this drink ? By answering those questions I formed the following concepts.
- a drink that is consumed at the breakfast or at the mid morning lunch by adults and teenagers who want to get the necessary energy for a powerful start in the morning · a drink that is consumed to compensate a sudden drop of performance by adults and teenagers who have to cope with certain demands.
- a drink that is consumed by teenagers and adults who do not like the taste of coffee or who want a healthier alternative to coffee.
And finally the product image is the picture that the consumers acquires of my new cola which should be a high quality drink.
The next step was to test those product concepts which I realised once again with the help of my cola fanatic friends. I presented them the following elaborated version of the product concept.
My new product is a cola flavoured soft drink that supplies the consumer with energy , minerals and vitamins in a convenient and well tasting way. The product would be only offered in one taste, the typical cola taste. The product would be offered in solid 0,33 litre plastic bottles which would also be obtainable in six-packs. Further there would be a 1,5 litre bottle which would be also obtainable in boxes of 7. The price for ColaMax would be at 0,79 DM for a 0,33 litre bottle and at 2,89 DM for a 1,5 litre bottle. Both bottles would of course be returnable bottles.
After receiving this information I asked my friends to answer several questions concerning the gap level between the new product and the existing products, the perceived value as well as the purchase intention, purchase occasion and frequency.
When I summarised those answers I came to the conclusion that my product has a broad and strong consumer appeal.
Now the last step that I had to realise before proceeding with the realisation of the concept was to build a preliminary marketing strategy plan. This strategy plan consists of three parts. The first part describes the target market size, structure and behaviour, the planned product positioning; and the sales market share as well as the profits goals sought in the first few years.
The target market for my new cola is people between the age of 15 and 59 who cannot afford it to have a sudden drop of performance and who are receptive to a new, convenient and inexpensive form of energy spending soft drink. The company brand will be positioned at a standard cola price and high quality place. I will aim initially to sell 100.000 small bottles and 35.000 big bottles with a loss in the first year not exceeding 1 million DM. During the second year I will aim for 350.000 small bottles and 100.000 big bottles with a planned profit of 900.000 DM.
The second part of the marketing strategy outlines the product's price, distribution strategy, and marketing budget for the first year. In the case of the new cola there only will be one taste. The 0,33 litre bottles will also be obtainable in six-packs and the 1,5 litre bottle will also be obtainable in plastic boxes of 7 bottles. The 0,33 litre bottles will be offered to the retailers in boxes containing 72 bottles. The big bottles will be offered to the retailers in the mentioned plastic boxes. There will be 27 plastic boxes on a palette. For the first two months, dealers will be offered one plastic box free for every four boxes they buy. Free 0,33 litre samples will be distributed in supermarkets and in the pedestrian precinct. The total promotional budget will be 1.500.000 DM and a national advertising budget will be 900.000 DM. Two third will go into print media and one third will go into display media. The remaining amount will be used on sales promotion and personal selling. During the first year 50.000 DM will be spend on marketing research to receive information about the market's reaction and buying rates. The third part of the marketing strategy plan describes the long run sales, profit goals and marketing mix strategy over time. I intend to win a 35% market share and realise a profitability of at least 15%. To achieve this the product quality will start high and will be improved over time through technical research. The price will set at the average cola prise and will stay as constant as possible during the following years. The total promotion budget will be increased each year about 15%. The marketing research costs will be the same.
1.3 Development approaches
In principle there are two different ways in which a company can come up with new products. One of them is the market oriented approach which implies that a company looks for the customer needs and then develops a product that meets these needs. So the customer stands at the middle of the entrepreneurs attention. Also the competition is in case of the market oriented approach of considerable interest and so the companies must carefully observe their competitors before they finally proceed with the development and production of their product. The other way which is called product oriented approach implies that the companies investigate a product and its opportunities instead of looking at the specific needs and wants of the consumers. To realise such an approach the companies must come up with products which differ from all the products that are already on the market.
In case of ColaMax I used the market oriented approach which implies that I first looked for the customers needs and wants before I developed ColaMax. I preferred this method because there are already some drinks like for example Red Bull and Isostar which also come up with energy spending elements. But finally those drinks are positioned at other segments and so they do not directly compete with my ColaMax. Further the fact that people look for a drink that comes up with elements of the conventional coffee (e.g. caffeine) as well as energy spending elements to compensate a sudden drop of performance confirms my product concept.
1.4 Product failure and countermeasures
Like already mentioned the fact is that companies have to develop and produce new products but the circumstance that there is a high failure rate at the one hand, as well as the fact that the companies have to invest huge amounts of funds as well as a certain amount of time to develop and produce a certain product at the other hand, shapes a perfect vicious circle for the entrepreneurs As a result of this perfect vicious circle companies have to find at least a interim solution to cut down the risk. Of course there is no 100 percent reliable method of finding such a solution but there are at least a few widespread reasons that increase the risks of a failure which can be easily avoided as well as some guidelines and organisational measures that cut down the risk of a failure.
A widespread reason for a product failure could be for instance be that a company has a real good idea but it is to optimistic concerning the market size. As a result of this it overestimates the market. In case of ColaMax I tried to avoid such an overestimation by performing some tests in combination with some statically predictions.
A further widespread reason could be that a good product is wrong positioned and so the actual target group is for instance not willing to pay the high price or they do not even know about the existence of the product because it is too poorly advertised. Concerning ColaMax I use the good value strategy which has the positive side effect that the price is rather low and so people do not have to pay a high price. Further I defined a clear target market which also decreases the risk and finally I also planned a quite wide ranged promotion which should make it almost impossible to ignore the existence of ColaMax.
The last widespread reasons can be found at enthusiastic high level executives that push their ideas whether it is wise or not. To avoid such a mistake I made use of a survey as well as some statistical methods which showed that people are interested in such a product. I also used some guidelines to decrease the risk of a failure. In my case it was for instance useful to compare successful new products with each other and to look for common characteristics because this technique showed me that consumers are keen on products with a higher quality , new features and last but not least a higher value in use. So finally I took this consumer behaviour into consideration by adding new features as well as realising a high quality product.
Further I used a well defined product concept which implies that I had to define and estimate the target market carefully as well as I had to estimate the product requirements and benefits. Like already mentioned I also used some organisational measures which implies that I defined the exactly business domains as well as the product budged and the idea acceptance. After all I tried to reach an optimal situation by combining the organisational aspects with the general guidelines because I am of the opinion that a successful new product development requires a total company effort.
Chapter 2 : THE MACRO-ENVIRONMENT
Companies operate in a large macro-environment of forces that shape opportunities at the one hand as well pose threats at the other hand. The companies cannot change these influential forces but they have the opportunity to react and adapt to them. To realise this companies must be acquainted with their macro-environment as well as with the trends which can influence their environment. The macro-environment contains six major forces and Faith Popcorn identified ten trends at the American market which also apply to the German one. But not every product is influenced by all the environmental forces and trends because this finally depends on the product itself. Following the focus of attention will be on those macroenvironmental forces and trends that indeed influence my product.
2.1 Demographic force
The demographic force is one of the major macro-environmental forces. It deals with aspects like for example age , gender and the occupation of the population. Companies have to inform themselves about such facts because in the end it is the population that makes up the market. During the last years the German demographic forces changed which is partly based on the fact that many couples prefer to work instead of starting families which affects the birth rate. Further also the great efforts that the medical sector made, influences the demographic area because nowadays there are for example medicaments for diseases that once have been fatal. As a result of those developments the German population is becoming obsolete.
2.1.1 Opportunities and threats
This situation could pose a threat for my company because the Beverage Industry Digest reports that people between the ages of 24 and 44 represent the largest group of soft drink consumers. But finally the down ageing trend, which implies that people want to stay young, is in this context of considerable interest because at the one hand the population is indeed obsolete but at the other hand the down ageing trend leads to the fact that the down agers act like youthful people. So if the ColaMax advertising's convey a youthful style it could perhaps also motivate older people to buy ColaMax which would enlarge my target group. But not only the down ageing trend places a opportunity because also the 99 lives trend is of considerable interest. This trend is in full swing because nowadays many couples want to combine their family live with their career and as a result of this they often suffer from a lack of time. Therefore also the 99 lives trend could offer an opportunity to ColaMax because it is easier to open the refrigerator and to take out a bottle of ColaMax instead of making a cup of coffee and consume some vitamins and minerals in form of fruit and bread. Further their lack of time could lead to the fact that those people prefer to breakfast at fast food chains and so a additional opportunity could be to offer ColaMax at those fast food restaurants
2. 2 Natural force
A further macro-environmental force is named natural force which for instance implies the opinion of consumers concerning ecologically friendly products and production methods as well as it implies issues that the government releases to guarantee that companies use ecological friendly production methods. In Germany people are getting more and more conservation conscious and also the number of issues that the government releases to protect the environment increases rather fast.
2.2.1 Opportunities and threats
In this context there are two important trends that reinforce this development. In detail this is the save our society trend as well as the staying alive trend. Both do try beside other aspects to make people more and more conservation conscious. This could pose a threat for my ColaMax-company because even the returnable plastic bottles are not a totally environmental friendly solution. As a result of this situation I should carefully think about the advantages and disadvantages of the conventional bottles and try to find a environmental friendlier solution which could in case of success lead to the fact that my company would obtain a environmental friendly reputation.
2.3 Cultural force and trends
Companies also have to be aware of cultural forces because the consumers basic values are of a high persistence. As a result of this circumstances the companies have to react and adapt to those basic values. In Germany the basic values are of considerable interest because especially older people trust in their conventional values and so many of them almost seem to ignore the existence of new products and services . The best example for this behaviour is nowadays the internet because many of the elderly people do not want to use this medium because they are of the opinion that it is newfangled medium or just a gadget.
2.3.1 Opportunities and threats
This inflexibility poses a threat for my product because even if I do not attack the conventional coffee which is drunken at breakfast some people still prefer the conventional coffee at their breaks instead of a soft drink like for example ColaMax. In context with the basic values there is also a trend that poses a threat. This trend is called staying alive and it implies that people want to live in a healthy kind of way. As a result of this they will not drink any kind of cola and so if this trend becomes widespread the amount of consumer will decrease.
Chapter 3 : PRODUCT
The final product, in our case the ColaMax, consists in all of three levels. It can be separated into the core product, the actual product and the augmented product.
3.1 The core product
Applied to ColaMax the most basic level, the core product, is at the one hand characterised by the physiological urge because the main reason why people buy a drink is because they are thirsty and as a result of that they want a thirst quenching product. At the other hand it is also characterised by the energy spending macro-environment as well as by a certain image that is connected to a drink like ColaMax.
3.2 The actual product
The actual product is characterised by five elements who are added to the core product. Those elements are in detail the quality level, features, design, the brand name and the packaging.
Like already mentioned a product is characterised by a certain degree of quality. The final quality consists of two different categories. In detail this is the functional and the non- functional quality.
ColaMax comes up with several functional quality elements. First of all it is a thirst quenching soft drink which also supplies the consumer with minerals, glucose, vitamins as well as caffeine and so ColaMax does justice to the most fundamental product quality, the utility of use. A further aspect , the reliability of products, must be adapted to the soft drink sector, which means that ColaMax must be made preserve because the period between the production and the final consumption can cover several days, weeks or even months. The last aspect concerning the functional quality, the human features, is realised by the convenience of ColaMax because it contains several vitamins and minerals as well as the caffeine and finally it is easier to open the refrigerator and take out a bottle of ColaMax instead of making a cup of coffee and eat some fruit.
But also the non-functional qualities are of considerable interest because consumers often decide about the quality on their own. During this process they do not only pay attention to the functional quality but also to the non-functional quality. The non-functional quality consists of aspects like for example appearance of the product as well as the package and label. Relating to ColaMax those non-functional aspects have been taken into consideration. The package and the label are described in context with the packaging and the appearance of the product is mentioned in context with the design.
ColaMax also comes up with new features. It does not only contains the conventional cola components like for example carbon acid, sugar and caffeine but it also consists of vitamins, minerals as well as glucose which is a newness in this sector.
The design element is not very interesting for this product because like the "Crystal Pepsi " showed it seems that the consumers prefer the conventional look of cola instead of one that looks for example like mineral water. So ColaMax finally also comes up with the conventional cola look which means in detail that ColaMax is a dark brown liquid.
Concerning the brand name I went in contrast to most of the other cola producing companies like for example Pepsi Cola, Coca Cola or Afri Cola for an individual brand name. One reason for this decision is the unknown reputation of my company which bases on the fact that ColaMax is my first product. Further I am of the opinion that it is rather unimportant at the moment if people remember my company name because it would cost extra time and funds to make my company name well known. Furthermore ColaMax is like already mentioned my first product and so it should be enough if the people remember my product name and perhaps recognise the specific layout of the label.
In the case of my new kind of Cola I chose for a quite simple brand name that also suggests something about the product itself which should make it easy to remember the brand. The brand name "ColaMax" can be divided into two parts. The first part describes the kind of soft drink, in this case cola. Further the second part alludes to the maximum of energy which is realised by the higher caffeine concentration as well as by the vitamins, glucose and minerals. The fact that the brand only makes use of two typical words makes it easy to translate it to other languages and ensures that the pronunciation is quite simple. ColaMax is also distinguishable from other brand names because most of the companies use in contrast to me their own company name in combination with the product name. The hard competition in the beverage sector has lead to the fact that I protected the font as well as the colours and the name which I used on the label by law.
Also the packaging element is rather important because finally the product must attract attention when it stands in the shelves. In the case of my cola I realised this aspect by using a conspicuous label as well as a totally new bottle design.
The ColaMax label conveys the energy of this drink by using a rather popular dark blue as background colour combined with yellow / orange arrows in the front. Further I used a quite conspicuous yellow / orange coloured font as well as a special graphical filter that makes the label look wet which should convey the fresh and thirst quenching feature of this drink.
The bottles (0,33 / 1,5 litre) are also distinguishable from the others because the ColaMax is offered, like already mentioned, in a new bottle design. The 1,5 litre bottle is about 34 cm high and has a diameter of 9 cm. The 0,33 litre bottle is about 15 cm high and has a diameter of 5,5 cm. Both are made of a transparent plastic. At the middle of the vertical length there is a narrow part which only has a diameter of 7 respectively 3,5 cm. This part is about 7 resp. 5 cm high. The opening of the bottle is the conventional style. To avoid that the bottle tips over, the bottom of the bottle has four notches which are about 1,5 cm respectively 1 cm deep. Further the screw cap is blue and contains on its top the brand name. Both kinds of bottles are of course returnable bottles because nowadays companies should act in a conservation conscious kind of way.
3.3 The augmented product
Finally the augmented product is characterised by additionally elements that makes our cola distinguishable from others. In my case there are no comparable products yet but I still want to come up with extra features to emphasise the fact that ColaMax is more than just a conventional cola. I realise this by offering the consumers a free service number that allows them speak to a feeding adviser who can explain them why the additional features of ColaMax improve the benefit of the product as well as he can answer all kind of questions concerning the product.
Chapter 4 : POSITIONING, MARKET SITUATION & COMEPTITION
4.1 Positioning of ColaMax
Concerning the primary target group of ColaMax I aim at people between the age of 15 and 59 who have to cope with certain demands and who cannot afford it to have a sudden drop of performance. I am aware of the fact that the Beverage Industry report comes up with the fact that people between 24 and 44 years build the major target market but finally I think that it makes sense to increase the target market of ColaMax to maximise the profits. This opinion is confirmed by the fact that Germany has a achievement oriented society because this leads to the fact that almost everybody who studies or who is employed, has to deal with certain demands and finally is eligible. Furthermore I positioned my product at a low price and a high quality level to penetrate the market. This method is called good value strategy. Finally I positioned the energy spending ColaMax at the sector of the daily life which makes it distinguishable from other energy spending drinks which are for example positioned at the sport sector. In comparison with the conventional cola the major product advantages of ColaMax are the higher caffeine concentration as well as the vitamins, minerals and glucose which are added to the conventional cola features.
4.2 Actual market situation
In Germany live about 81.66.1.000 people who finally build up the market. About 16 percent of the population are under the age of 15 years and about 21 percent are above the age of 59 years.
The remaining 63 percent contains those people who are between 15 and 59 years old. These 63 percent are like already mentioned of considerable interest for my company. But finally not the complete 63 percent build up my target market because it also contains people who are not interested in such a kind of drink. Also those people who refuse such soft drinks like for example the "staying alivers" must be subtracted. After all the target market will approximately comprise 15.000.000, about 30 % of the people between 15 and 60 years.
4.3 Competition and Opportunities & Threats
At the moment there are no direct competitors who offer a comparable product to ColaMax. Of course there are companies which also offer energy spending drinks like for example Red Bull or Isostar but those companies positioned their products at other segments and so they do not directly compete with my product. This situation creates a great opportunity for my company but in the case that ColaMax will be a success it will only be a matter of time until the big companies like for example Coca Cola, Pepsi or Afri Cola will also come up with "me too" products. Those "me too" product will pose a threat for my company.
Chapter 5 : PRICE AND PLACING OF COLAMAX
The price is the only element in the marketing mix that produces revenue and so it is important for a company. A company should be aware of the fact that there are several pricing strategies. The price of ColaMax is about the standard price for a conventional cola and so finally people can obtain a cola with additional features for the price of a conventional one. In detail the price for a 0,33 litre bottle will be 0,79 DM and the 1,5 litre bottle will cost 2,89 . In the case of ColaMax I make use of the market penetration pricing which implies that I offer my product at a low price to penetrate the market quickly and deeply. Furthermore the fact that I make use of the good value strategy which means that I offer high quality for a low price should also attract people and so finally I speculate on a large amount of buyers. A large amount of customers would lead to falling costs because for example the fixed costs a piece decrease. Finally this strategy also has the positive effect that it increases the entrance barriers for other companies who want to come up with "me-too" products.
Concerning the profit I use the "cost plus" strategy which implies that I add a certain amount of money on my costs a piece. In the case of the 0,33 litre bottle I add the amount of 0,25 DM on the 0,40 DM cost price and concerning the 1,5 litre bottle I add 1,10 DM on the 1,30DM cost price.
The price for the retailer will be at 0,65 DM / 2,40 DM and in case the retailer orders at least 500 of the 0,33 litre bottles or 200 of the 1,5 litre bottles I will offer a 5% quantity discount. Concerning the placing of ColaMax I first want to be present in some characteristic geographical areas like for example Berlin to test the product. In case of a positive result I will be present in whole Germany. To realise this I will use the single stage horizontal distribution which implies that I will directly deliver the retailers. This means in detail that I will rent about 7 storehouses at several tactical wise areas which I will supply according to the demand. Those storehouses will directly supply supermarkets, shopping centres as well as kiosks. Further I would perhaps supply the canteens of big companies to increase the number of sales. To transport the products I will lease several trucks.
CHAPTER 6 : PROMOTION MIX
Nowadays companies need more than just a good product, an attractive price as well as a good organised distribution to be successful. The key factor in this context is the communication with the customers. This key factor can be realised by a promotion plan which consists of several elements. These elements are in detail the advertising, sales promotion, public relation as well as the personal selling. In this context it is important that companies generally do not use all these elements but instead of this they only use a few of them to decrease the costs. In the case of ColaMax I have a 1.500.000 DM budget. I will use 900.000 DM on the advertising element and the remaining amount on the other elements. In all I make in the case of ColaMax use of three elements which will now be the focus of interest.
6.1 The ColaMax advertising
Nowadays advertising is very widespread method of communication. People are for example confronted with advertising's when they turn on their televisions , when they listen to the radio or when they take a look into a magazine. This circumstance leads to the fact that the effectiveness of advertising's decreases. Thus nowadays it is important that the advertising's come up with good ideas and with well though out realisations to arouse interest. To come up with such a realisation a company has to deal with the advertising objective, the executive style and the message. Furthermore it has to be aware of the different mediums which can be used to realise its advertising because every medium is marked by different characteristics. Relating to ColaMax I use two different advertising objectives. In the first few weeks I use a informative and persuading advertising because ColaMax is a totally new kind of cola and as a result of this the consumers are probably not aware of the advantages of ColaMax. To change this and to set up an image the advertising deals with the thirst quenching as well as with energy spending features of ColaMax. After 12 weeks I will replace the informative advertising by a reminding and persuading one because now the people are probably aware of these features and so now it is important to keep ColaMax in their minds. Concerning the execution style I use the lifestyle technique. This technique implies that the advertising emphasises the fact that ColaMax fits good to several lifestyles. In detail the ColaMax advertising will show a longhaired student, a farmer and a businessman who all have in common that they have to cope with certain demands.
The message of the advertising consists of three elements. The first one is the content, the second is the format and the last one is the structure of the advertisement. Concerning the content I combine the rational appeal with the emotional appeal because at the one hand I clearly describe the elevated benefits of ColaMax in comparison with a conventional cola and at the other hand I use humour to attract more attention and to make the advertisement more attractive.
The advertisement also needs a strong format for the message. I realise the strong format in the case of the display and print media by using the same colours which I also use at the label of the bottle, by a pithy headline and by the already mentioned picture of a long-haired student, a businessman and a farmer. During the campaign I regularly modify the picture by exchanging the heads of these three persons which leads to the fact that the three persons look quite stupid. The headline will be in detail : " If you once again loose your head - relax and drink ColaMax".
The structure of the advertisement is quite simple. The slogan of ColaMax is "The ultimative taste of energy" and so I already drew the conclusion of the message. This technique is quite usual in the beverage sector because such products are low involvement products and so people do not really want to think about rhetorical questions. Further the advertisement presents a one side argument which means that it only presents the positive aspects of ColaMax. Finally the most important aspects are at the end of the advertising because I am of the opinion that people often only remember the endings of advertising's and so they remember the unique benefit of ColaMax.
6.2 Sales Promotion
The advertising campaign offers reasons for buying ColaMax but this is not enough because finally people must try the product themselves to convince themselves about the high quality of ColaMax. Further it is important that ColaMax is offered in as many stores as possible to make it easy for the consumer to buy my product. Those two aspects lead to the fact that I also make use of sales promotion.
In the case of ColaMax I make use of two different kinds of sales promotion. In detail this is the consumer promotion as well as the trade promotion. Like already mentioned I make use of the consumer promotion to entice consumers to try my ColaMax and further I make use it to build a long term market share. To realise those two aspects I use three promotion tools which are in detail free samples, price packs as well as contests.
Concerning the free samples I recruited some young and jobless people who fit to the image of ColaMax. Those people are dressed with a complete ColaMax outfit and they hand out free 0,33 litre bottles in supermarkets as well as at the pedestrian precinct.
Further there are price packs in the supermarkets so people can buy two 0,33 litre bottles for the price of one or three 1,5 litre bottles for the price of two. This campaign only lasts one month to prevent that ColaMax obtains a cheap reputation.
Finally there is a contest which deals with the question, in which connection people drink ColaMax. To guarantee that the consumers are motivated to participate there are about 500 prizes. The useful aspect of this contest is that I receive information about where people use this drink which I can use for future advertising's.
Like already mentioned I also make use of trade promotion because nowadays there is a huge amount of products but finally the supermarkets only have restricted shelf space. This situation leads to the fact that I must offer the supermarkets a reason to give shelf space for my product. I realise such reasons by offering them monthly a certain amount of money as well as by offering them promotional gifts like for example caps, T-shirts, pens and lighters which all contain the ColaMax logo. The supermarkets could use those promotional gifts to increase the sales of ColaMax by offering for example a T-shirt with every box of seven 1,5 litre bottles the consumers buy. Further I will offer the supermarkets a quantity discount of 5% if they purchase more than 500 of the 0,33 litre bottles or 200 of the 1,5 litre bottles.
Finally the used media has a huge effect on the range as well as on the rate of contact. Concerning ColaMax I use the print media as well as the display media. In detail I use several magazines which are connected to the interests of my target groups like for example Landwirtschaft Heute, Wirtschaftswoche, Pizz@ (Internet magazine). Further I use several newspapers like for example Rheinische Post and NRZ which are especially during the reminding advertising of considerable interest because people generally read the newspaper in the morning and as a result of that the advertisement will remind them of my product before they go to work. So perhaps they think about it again when they have their lunch breake or when they have a sudden drop of performance during their work. Concerning the display media I use huge posters which are placed in pedestrian precincts and near to traffic lights.
6.3 Personal Selling
Complementary to the advertising and the sales promotion I use semi-personal selling. In detail I use a order hotline which is free of costs for the caller. I realise this by a telephone exchange which registers the orders of whole Germany. Then it passes the orders to suitable storehouses who finally deliver the products to the supermarkets etc. . Further there is another hotline which is also free of costs which is intended as a hotline where people can ask all kinds of questions concerning ColaMax. Their questions will be answered by a feeding adviser. Of course this hotline will only be occupied several hours a day because it makes no sense to occupy this hotline 24 hours a day.
In addition I send every new customer a newssheets which contains the most important facts about ColaMax so the selling staffs of the supermarkets etc. are able to answer questions concerning ColaMax in case somebody asks them. But this part of the personal selling is only secondary.
Nowadays an appalling amount of new products fail which can lead to fact that companies have to cope with enormous losses. Now the question is why do I think that ColaMax will be a success in contrast to many other new products. The main reason for this opinion can be found in the fact that I am the first company world wide which comes up with such a kind if cola. As a result of this circumstance there are no direct competitors for my product which makes it easier for me to obtain a great share of the market. To realise a quick and deeply penetration of the market I use good value strategy which implies that I do not only offer my product at a low price but also offer a high level of quality. This strategy also has the positive side effect that it increases the entrance barriers to this segment which makes it harder for competitors to come up with similar soft drinks.
A additional reason for my optimistic attitude towards ColaMax is based on the fact that I made during the complete development and the production use of some organisational measures and guidelines that cut down the risk of a product failure. Furthermore I increased the chance of a product success by the fact that I carefully analysed the macro-environmental forces as well as the Brain Reserve trends which allowed me to predict some useful opportunities as well as some avoidable threats.
Finally a successful product also requires communication between the company and the customers. Relating to ColaMax I make use three elements of the promotion mix which are in detail the advertising, sales promotion and the personal selling.
P. Kotler / F. Bliemel , 1995, Marketing - Management, Stuttgart
H. Meffert, 1998, Markting - Grundlagen marktorientierter Unternehmensführung, Wiesbaden
F. Popcorn, 1997, Clicking - der neue Popcorn Report, München
- Quote paper
- Sebastian J. de Koning (Author), 2000, Mini Business Plan - Cola Max, Munich, GRIN Verlag, https://www.grin.com/document/101857