Quality leadership. Use price as a tool to designate high quality and position the product as a quality leader.
Survival. Whenever the market situation is in decline or at overcapacity, a company may choose a pricing level that covers the costs and allows it to remain in the market even though the profits may be affected. This is usually a short-term strategy.
Status quo. A company may choose price stabilization, thus avoiding price wars and maintaining a moderate profit level.
'Nutri Mix' will be positioned as a medium priced product, just like other healthy breakfast cereal products on the market, such as Weet-Bix from Sanitarium Health Food Company. The product won't have a line of cereals for specific medical problems (e.g. gluten free), so there won't be any highly priced product in the initial phase.
Some of the most common price strategies refer to predatory, penetration and skimming pricing. The first refers to selling the products at a very low price meant to drive competitors out of the market or create barriers to enter the market, while the second refers to setting lower prices for the products in order to attain a larger, if not dominant market share. Generally, penetration pricing is used when entering a new market or attempting to increase a relatively small market share. The strategy requires high demand elasticity, so that the demanded quantity for the product using the strategy changes easily when its price changes. Skimming prices strategy involves adopting a relatively high price for a product at first and a lowering of the same price over time, thus allowing the company to recover its sunk costs faster (Wikipedia, 2009). Considering that healthy products are prices slightly higher than normal food products in most existing markets, 'Nutri Mix' will also fall in this category and be prices above the normal breakfast cereal in supermarkets, but at the same level with competing products on the health food niche. Therefore, skimming prices is the strategy that will be adopted initially by the company.
Place
This strategy refers to the establishment's location, the logistics, market coverage and infrastructure endowments (e.g. internet). Distribution-related decisions include: distribution channels, warehousing, transportation, inventory management, market coverage, reverse logistics, order processing and distribution centres (NetMba.com (a)).
Some of the most common distribution channels available to companies can be defined as below:
Direct selling. It implies selling the products/services by dealing directly with the customers, rather than use intermediaries. Traditional methods include telephone selling, mail order or door-to-door selling. Recently more methods have been developed including telemarketing, online shopping or radio selling. In the 1990s, direct selling was increasing a lot in Australia as was all over the world. The results of a consumer survey study indicated that consumers had a negative perception towards network marketing, while holding a low positive view of direct selling (Kustin & Jones, 1995). Despite relatively positive results regarding direct selling, this is not seen as an appropriate distribution type for food products, 'Nutri Mix' being included here.
Advertisement. Advertisements are strongly related to advertising. Advertising is a form of marketing communication through which customers are persuaded to purchase and buy more of a brand or products/services. Advertisements are the adds that support the advertising activity and they are created to increase consumption of the a given product/service or reinforce brand image or brand loyalty. For distribution purposes, advertisements are usually used for consumption goods, 'Nutri Mix' falling in this category. However, this will be discussed further in the promotions section of the 4Ps.
Distributor. A distributor is a company that markets or sells merchandise, especially a wholesaler. It is also the company that sells to the retailers.
Retailer. Retailers are companies that sell directly to the consumers and can range from large businesses such as Wal-Mart to small businesses such as non-chain locations managed independently, like a family bookstore.
Agent. Agents usually sell on behalf of the producer and work on commission.
Given that Healthy Co. Pty Ltd. is just entering the market with a brand new product, the company won't have the capacity to handle a distribution channel with a few links (e.g. distributor for a large retailer). Therefore, the distribution will be done via at least one distributor and one retailer. The products will get to the consumer through a large retailer, although later on the company will consider distributing its healthy products through small healthy food shops.
Promotion
This strategy refers to the advertisement, the promotions used to attract customers, the direct sales, the overall sales activity, the public relations and media. Promotion-related decisions refer to: promotional strategy (e.g. push or pull), advertising, sales promotions, sales force & personal selling, PR & publicity and marketing communications budget (NetMba.com (a)).
According to About.com (2009), integrated marketing communication (IMC) is a "management...
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