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Target Market and Market Segmentation

Discuss about the Marketing Strategy Report for Donald B.

The objective of this report is to discuss the marketing strategy of Donald B, which is a new entrant in Australian chocolate industry. This player has two stores situated in Melbourne. The company wants to improve its brand awareness and its penetration in the Australian market. The report would discuss the marketing mix for the company and would analyze the role of marketing for sustainable business operations. It is expected that this report would help the management of Donald B to penetrate in Australian market and achieve its business objectives.

A good marketing strategy is one that follows the business strategy of organization (Schmidt, Spann & Zeithammer, 2014). It is important that marketing function of Donald B should support the business objectives, mission and vision of the organization. The various elements of marketing strategy for Donald B can be discussed as:

In Australia, the chocolate market is segmented into different categories including the trends of the industry. However, the market is segmented by its type, age group, category, end user and the distribution channel. The key target market for Donald B is all the consumers who like chocolate in Australia. However, the chocolate market in Australia is a large market and the segmentation variables like demographics, behavioural, intent, income variables, etc. can be used to create focused target market (Tudor & Negricea, 2012). The different elements of target market for Donald B can be discussed as:

  1. Geography: Melbourne (to start with and then gradually increase to different parts of the country)
  2. Demographics: Male & Female, 14 to 34 years
  • Income level: Medium and High-income group as Donald B will charge premium for its quality products
  1. Behavioural: People who likes chocolates and enjoys chocolates

The above variables of target market would help Donald B to have a focused approach while reaching out to its target market. With the above variables, the company can have specific marketing campaign to reach out to its target audience (Schmidt, Spann & Zeithammer, 2014).

Once the target market is established, the next step is the positioning. It is important that brands should have strong positioning in place so that end-consumers can relate to the brand. The positioning of Donald B is to operate as a high-quality product that provides nice taste to consumers. The company is not a mass market player and it operates in a niche market. With this positioning, Donald B does not want to target all the audiences in the market (Schmidt, Spann & Zeithammer, 2014). It wants to be selective in its approach wherein it can target the people who prefers good taste in chocolate and are willing to pay the premium for good taste. This positioning approach appears to be best option for Donald B as the market is not saturated and there is a place for new players to enter the market and capture the market share. With this positioning approach, Donald B should be able to establish a set of loyal customer base that would help the company to grow further.

Positioning

Once the overall marketing strategy is devised, the next step is to develop the different elements of marketing mix. Schmidt, Spann & Zeithammer (2014) argued that different elements of marketing mix actually add strength to the entire marketing strategy and market plan. Therefore, it is important that marketers should realize the application of marketing mix on consumer behaviour (Zhang, Watson, Palmatier & Dant, 2016). Different elements of marketing mix and its applications on consumer behaviour of Donald B consumers can be discussed as:

The basic product of Donald B is chocolate. Pestun (2016) argued that chocolate is one of the most important elements of marketing mix and it is important that other elements of marketing mix should be stitched with the product element. The key product in this case is chocolate. However, overall product offerings from Donald B also include various service elements. For example, consumers would buy any chocolate not only because of its unique product quality but also because of its unique service attributes. In the current economic scenario, consumers want to associate with the companies that provide excellent service (Hunt, 2018). Under any circumstances, Donald B cannot compromise on its service qualities. Therefore, overall product and service offerings from Donald B would include both tangible and intangible attributes. The tangible attributes would be associated with the underlying product of the company and the intangible attributes would be associated with the underlying services of the company (Pestun, 2016). These tangible and intangible attributes of product and services for Donald B can be shown as:

Tangible & Intangible attributes of underlying products and services of Donald B

Tangible attributes for Product

Intangible attributes for services

        i.            Taste of the chocolate

        i.            Atmosphere of the shop

      ii.            Size of the chocolate

      ii.            Behaviour of the salesman

    iii.            Overall finishing of the chocolate

    iii.            Hygiene conditions

    iv.            Packaging of the chocolate

    iv.            After sales service

      v.            Longevity/ Shelf Life of the chocolate

      v.            Knowledge of sales executive

It is important that the management of Donald B should focus on all the key attributes of products and services for the chocolates of Donald B.

It is important that products should be analysed at different levels as it satisfy different needs of people. The three levels of products are Core Product, Actual Product, and Augmented Product (Samaha, Beck & Palmatier, 2014). The chocolate product of Donald B at these three levels can be discussed as:

  1. Core Product: The core product consists of the key benefits of the product. In this case, the core product would be the benefits that comes from eating the Donald B chocolate. The satisfaction of taste buds with the Donald B chocolate is the core product of the company. At the very core, the product is all about its unique offerings and it does not include any of the additional features like packaging, service, etc. Zeriti, Robson, Spyropoulou, & Leonidou (2014) argued that the core product is the basic thing that the consumers would look for and therefore, the product should be designed in a manner that is not easy to imitate.
  2. Actual Product: The actual product consists of various other features and attributes of the product like quality, quantity, colour, etc. In the case of Donald B chocolate, the actual product would consist of quality of chocolate, the packaging of the chocolate, branding associated with it, its fashion appeal, etc. It is important that marketers should have a deep focus on actual product as actual product help marketers to develop a niche in the market (Schmidt, Spann & Zeithammer, 2014).
  3. Augmented Product: The augmented product mainly consists of the services provided by the organization (Hunt, 2018(). In the case of Donald B chocolate, the augmented product would ne warranties provided by the company, after sales service, delivery of chocolate through various distribution channels, etc.

For a small value product like chocolate, pricing could be the most important element of marketing mix (Zeriti, Robson, Spyropoulou, & Leonidou, 2014). Generally, the pricing strategy of any organization is in line with the overall business strategy. The business strategy of Donald B chocolate is to focus on product differentiation. The company wants to focus on high income users who are not price sensitive and the users who are willing to pay premium price for the premium product. Zeriti, Robson,  Spyropoulou, & Leonidou (2014) argued that there are various kind of pricing strategy like price skimming, cost-based pricing, competitor-based pricing, etc. It is important that organizations should analyse and assess the consumer behaviour before deciding the best pricing strategy. The recommended pricing strategy for Donald B chocolate is competitor-based pricing. The competition is high in the chocolate segment in Australia and Donald B chocolate is a new entrant. Therefore, it would make sense for the organization to assess the pricing strategy of competitors and then establish the price points similar to the price points of competitors (Schmidt, Spann & Zeithammer, 2014). It is also important that Donald B chocolate should follow the right set of competitors to get the price points. For example, Nestle is a competitor of Donald B chocolate; however, Nestle also produces chocolates for mass market. Therefore, it would not make much sense for Donald B chocolate to follow the price point of Nestle. Whereas, Donald B chocolate should follow the price points of premium chocolates brands in the country like Hershey (Payne & Frow, 2017).

Marketing Mix

Once the product is finalized and pricing strategy is decided, the next step for Donald B chocolate is to decide the distribution strategy for its products. There are two key distribution channels that Donald B chocolate should analyse, offline distribution channel and online distribution channel (Verhoef, Kannan & Inman, 2015). It is recommended that Donald B chocolate should focus on both offline and online distribution channels. In this era of technology, no company should ignore the power of online distribution channel. The specific distribution strategy for Donald B chocolate for offline and online distribution channels can be discussed as:

  1. Offline distribution channels: For offline distribution channel, Donald B chocolate should open the speciality stores in Melbourne. With the speciality stores, the company should be able to create a buzz in the market. The objective of speciality stores would be to drive more consumers to the store of Donald B. The company should sell its chocolates at its speciality stores and at the same time, consumers should be offered free sample of the chocolates at the speciality stores (Jaworski, 2018).
  2. Online distribution channels: The channel of online distribution is a powerful channel for organizations in the retail sector (Jones et al., 2015). Usually the products in the retail sector are low value products that can be easily sold on online distribution channels. It is recommended that Donald B should sell its chocolates on various e-commerce distribution channels like Amazon. In addition to Amazon, the company can also try to sell the products through its own online distribution channel (Verhoef, Kannan & Inman, 2015). However, it could be a costly affair for company.

Donald B is a new player in the market and every new company needs to invest a lot in the promotional strategies. In today’s time, social media platforms are the most efficient and fastest way to target customers. Therefore, it is recommended that Donald B should invest heavily on social media promotions (Gupta, Tyagi & Sharma, 2013). At the same time, the company should also invest on other promotional elements like TV advertising, Newspaper advertisement, bill boards and hoardings, etc. The advertisement mix for Donald B can be highlighted as:

Advertisement Mix for Donald B

Type of Advertisement/ Promotion

% allocation of budget

Key Platforms

Social Media Marketing

50%

Facebook and Twitter

Newspaper marketing

20%

Australian & Sydney Herald

Event based promotions

20%

Events like parties, music events, games, sports, etc.

Radio & Direct marketing

10%

Various radio channels in the country


The above promotional mix should be used for the first year of marketing. After the first year, the management should study the Return on Investment on various types of promotions and then decide the promotional mix for next year (Hunt, 2018).

The extended marketing mix (7P's) is the combination of seven elements of marketing that aim to work together to achieve the objectives of a marketing strategy. These 7 elements are: product; price; place; promotion; people; process and physical (Lonial & Raju, 2015). The four core elements of marketing mix are discussed above. The remaining three elements of marketing mix or extended marketing mix can be discussed as:

  1. People: The people means the person or service executive who make the contact with the customers. For any organization that wants to focus heavy on the service aspects, people is the key thing. It is important that people should provide good experience to consumers. From the perspective of Donald B chocolate, the service executives should be knowledgeable enough to answer the queries of customers about product. At the same time, the store executives should treat customers with respect (Priluck, 2015). The store personal should establish positive rapport with customers. They should also be dressed professionally so that customers get a positive image about the company and brand of Donald B with their interaction with store executives (Rani, 2014).
  2. Process: The process means various processes and procedures that organizations have in place to ensure that the operations of the business are taken care of. The basic or the fundamental processes that Donald B should take care of, are sales process, inventory processes, billing processes, etc. It is suggested that the company should use any Information System like ERP system to manage its processes (Gummesson, Kuusela & Närvänen, 2014). At the same time, organization should have the plan of continuous quality improvement through process management. It can happen only when the marketers are align with the business direction of the company (Hunt, 2018).
  • Physical Evidence: The elements of physical evidence means the way store is organized (Hunt, 2018). It is important that Donald B should have a deep focus on physical evidence as good physical evidence like nice stores and good interior designers attracts customers. With aesthetic design and appealing interiors, Donald B can actually lure customers to spend more time in the store and the chances of purchase increases as the customers spend more time in store. The elements of physical evidence for Donald B would include colour of the walls, the aisle of the store, the interior designing, design of the rood, etc.

The organization, Donald B, is a new entrant in the market. However, it is important that it should focus on the principles of sustainability and Corporate Social Responsibility. In recent years, Corporate Social Responsibility (CSR) has been addressed and managed by all types of companies and organizations in several ways. It has also led both business people and marketers to articulate varied interests on the incorporation of this concept into their activities. Therefore, it is important that the marketers of Donald B should develop a business case for the use of sustainability and corporate social responsibility along with its marketing activities. At the same time, it is important to evaluate the ways in which marketing managers can apply CSR-related activities to generate value for their various stakeholders (Hwang  & Kandampully, 2015). It is just as important to advance knowledge on CSR implementation in the field of marketing through this literature review and corresponding empirical evidence. It is important that Donald B should establish marketing as a vertical function and CSR, sustainability and business ethics should be established as a horizontal function (D’Souza et al., 2018).

Product

This decision of interlinking marketing activities with CSR and sustainability also makes effect on financial strategies of the business organisation, as they analyse future cash flow and analyse ratio of ROI based on innovation accounting to plan the present investment of the business. It also has come to know from the statement of Wong & Yazdanifard. (2014), that there are three vital step of innovation accounting and it helps to identify the decision making point of the business. whether it is for products or for business oriented decisions. Based on this measurement the management of a business organisation takes the decision about changes in present financial policies. Church & Rotolo (2013) highlighted that innovation is not effective for start-up businesses with limited capital, and innovation needs more cost to be effective, so that it may effect on new business in negative way and the finance management may fail to make the balance between cash in and cash out and it will reduce value of intangible assets of the firm. In this regard, Barrientos (2014) also mentioned that innovation accounting increases the possibility of success of innovation due to proper monitoring on the process. Therefore it can be said that innovation accounting has significant effect on financial management of a business organisation. In turn, innovation accounting is deeply linked with the marketing principles embedded in CSR and sustainability policies for Donald B. It is important that marketers of Donald B should have a long term plan in place about the investment that needs to be done for CSR and social principles (Hoppner, Griffith & White, 2015).

Conclusion

The above report discusses the marketing strategy for Donald B chocolate. With the above discussion it can be said that the company must continue with its strategy of product differentiation. The key thing for Donald B is to have an integrated marketing approach in place wherein the company uses both online and offline channels to reach out to consumers. To further increase the loyalty among consumers, the company can also use a loyalty program wherein the customers are awarded for the purchase that they make. The key to beat the competition and emerge as a market leader is relationship marketing wherein, Donald B takes its customers as its partners who advocates strongly about the brand.

References

Barrientos, S. (2014). Gendered global production networks: Analysis of cocoa–chocolate sourcing. Regional Studies, 48(5), 791-803.

Church, A. H., & Rotolo, C. T. (2013). How are top companies assessing their high-potentials and senior executives? A talent management benchmark study. Consulting Psychology Journal: Practice and Research, 65(3), 199.

Pricing

D’Souza, C., Marjoribanks, T., Young, S., Sullivan Mort, G., Nanere, M., & John, J. J. (2018). Environmental management systems: an alternative marketing strategy for sustainability. Journal of Strategic Marketing, 1-18.

Gupta, A., Tyagi, M., & Sharma, D. (2013). Use of social media marketing in healthcare. Journal of Health Management, 15(2), 293-302.

Gummesson, E., Kuusela, H., & Närvänen, E. (2014). Reinventing marketing strategy by recasting supplier/customer roles. Journal of Service Management, 25(2), 228-240.

Hoppner, J. J., Griffith, D. A., & White, R. C. (2015). Reciprocity in relationship marketing: A cross-cultural examination of the effects of equivalence and immediacy on relationship quality and satisfaction with performance. Journal of International Marketing, 23(4), 64-83.

Hwang, J., & Kandampully, J. (2015). Embracing CSR in pro-social relationship marketing program: understanding driving forces of positive consumer responses. Journal of Services Marketing, 29(5), 344-353.

Hunt, S. D. (2018). Advancing marketing strategy in the marketing discipline and beyond: from promise, to neglect, to prominence, to fragment (to promise?). Journal of Marketing Management, 34(1-2), 16-51.

Jaworski, B. J. (2018). Commentary: Advancing marketing strategy in the marketing discipline and beyond. Journal of Marketing Management, 34(1-2), 63-70.

Jones, M. A., Reynolds, K. E., Arnold, M. J., Gabler, C. B., Gillison, S. T., & Landers, V. M. (2015). Exploring consumers’ attitude towards relationship marketing. Journal of Services Marketing, 29(3), 188-199.

Lonial, S., & Raju, P. S. (2015). Impact of service attributes on customer satisfaction and loyalty in a healthcare context. Leadership in health Services, 28(2), 149-166.

Payne, A., & Frow, P. (2017). Relationship marketing: looking backwards towards the future. Journal of Services Marketing, 31(1), 11-15.

Pestun, I. V. (2016). The contemporary features of marketing in healthcare institutions. Socìal?na farmacìâ v ohoronì zdorov'â, 2(1), 57-63.

Priluck, R. (2015). Relationship Marketing: Loyalty in the Face of Product Failure and Blame--Abstract. In Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 87-87). Springer, Cham.

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Samaha, S. A., Beck, J. T., & Palmatier, R. W. (2014). The role of culture in international relationship marketing. Journal of Marketing, 78(5), 78-98.

Schmidt, K. M., Spann, M., & Zeithammer, R. (2014). Pay what you want as a marketing strategy in monopolistic and competitive markets. Management Science, 61(6), 1217-1236.

Tudor, E. D. U., & Negricea, I. C. (2012). Brand Positioning-a marketing resource and an effective tool for Small and Medium Enterprises. Journal of Knowledge Management, Economics and Information Technology, 2(1), 1-11.

Verhoef, P. C., Kannan, P. K., & Inman, J. J. (2015). From multi-channel retailing to omni-channel retailing: introduction to the special issue on multi-channel retailing. Journal of retailing, 91(2), 174-181.

Wong, K. & Yazdanifard, R., 2014. How Fast-Fashion Apparel Stores are able to Operate Sustainably in New Global Economy. Journal of Research in Marketing, 3(2), pp.274-278.

Zeriti, A., Robson, M. J., Spyropoulou, S., & Leonidou, C. N. (2014). Sustainable export marketing strategy fit and performance. Journal of International Marketing, 22(4), 44-66.

Zhang, J. Z., Watson IV, G. F., Palmatier, R. W., & Dant, R. P. (2016). Dynamic relationship marketing. Journal of Marketing, 80(5), 53-75.

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