Monday, October 14, 2019
Alternative marketing strategies to increase market share
Alternative marketing strategies to increase market share The aim and objective of this report is to provide recommendations on ways for Natural Way Products to increase the brands market share. Based on NWPs current market share status the most effective strategies to implement incorporate a mix of market penetration and market development strategies. It is recommended that NWP maintain their current reputation in their current market as its a vital part and one of the businesses main strengths to their ongoing business. Recommendations for implementing the market penetration and market development strategies involve focusing on customer relationship management, looking for potential alliances with businesses already in the national market, using alternative media channels and look at product promotion via their current online distribution channels while tailoring the marketing campaigns to each target segment. NWP is a small, independently owned New Zealand company currently holding an estimated 10% market share in New Zealand aiming to achieve a 15% share within the next five years, and expand sales to the South Island and Australian market. The purpose and objectives of this report is to identify different market growth strategies and advise Jacqui Thompson of Natural Way Products (NWP) recommendations in order to achieve a greater market share in the New Zealand natural skincare market. This report outlines the recommended solutions for Jacqui to implement in order to achieve the companies objectives. These recommendations focus on how NWP can strive to achieve the desired growth in market share specifically using the market penetration and market development strategies using geographic expansion methods and product promotion. It is assumed that NWP have available funds to allocate to the marketing strategies recommended. With restricted access to current customer market feedback it is assumed that the points of difference stated by Jacqui are correct and therefore hold the advantage over competitors offerings. It is also assumed that the market share estimate is correct and current and that the brand Zaras is a reputable brand. 2. DISCUSSION Natural Way Products situation analysis: 2.1 Strengths: Successful established and reputable brand name and product line Current 10% market share Current experience, knowledge and resources already in place Quality and reliable products Uses some locally grown and entirely natural herbal ingredients Offers different channels of distribution through online sales and retail outlets. 2.2 Weaknesses: Currently limited to small market segment offering slower growth potential Products made in small batches risk with the more produced the less attention given as demand increases. 2.3 Opportunities: Create additional services to competitors by enhancing current features of online system Influential media awareness focus on natural-based products Look for low cost opportunities and ones that leverage current capabilities Product variants provide opportunity of selling more to the same market Opportunity for growth in new locations and underrepresented geographic markets Marketing costs are less in this digital age and easier to implement Partnerships or alliances with other businesses 2.4 Threats: Risk of retaliation from larger competitors Impact of global economy and environment on local business Little scope for using existing expertise if trying to sell completely different products or services to different customers Effect of increased market share on actual and perceived quality Alternative strategies for growth in market share: 2.5 Market Penetration NWP could gain additional market share with its current products and current markets by encouraging customers to purchase more. They would be able to utilise current experience, knowledge and resources making growth in existing product markets more cost effective and less of a risk. NWP could further advertise their products leaning on their points of difference from competitors offerings in order to encourage more customers in their existing market to use their product, or current customers to use more of it. NWP could do this by launching special promotions and offerings (Boaz, 2006, p.212); increase sales representatives; expand to department stores; and introduce a loyalty scheme to entice customers into the market. With the forever increasing use of online marketing NWP could use customised marketing through their current client database and focus on expanding the services provided through their online ordering tools. With extra features and additional offers that create a competitive advantage such as same day delivery, free gift wrapping service or free delivery; or discounted online offers. It has been argued by Gorton (2007, p.37) that maintaining the client database using customer relationship management is also important and could be used by NWP to create custom reminder responses based on previous buying patterns and as reminders on special occasions. NWPs current reputation is one of the most important assets they have. Market penetration will be a useful strategy for NWP, while maintaining expertise and experience in a market already well known to the company they are at less risk and losing reputation and upsetting product quality and service delivery. The downside to using this strategy is that this limits market share growth to current markets offering slower growth potential as opposed to developing products in new markets. 2.6 Market Development NWP should consider domestic geographic expansion as a way to improve sales volume and share position. Changing from a regional operation to a national operation (Walker, Orville C. Jr Mullins, John W. , c2011, p.251) could be best implemented by NWP through an alliance with a business already in the market and also assist in stronger buying power from suppliers. This move does create a risk of retaliation from larger national competition as well as from current regional competitors. NWP could look at targeting non-users who would be interested in using the products through advertising and media channels or offering free samples to first time users. By marketing to potential customers and making them aware of the products NWP could invest in television, internet and magazine advertising, for example in womens health magazines, or during prime television slots in which the target market are known to be viewers. Focusing on media advertising as shown by Boaz (2006, p.209) does run the risk of being costly and ineffective if not advertised correctly. NWP already offer two channels of distribution but could look at further promotion through online sales and expanding the reach of current retail stores in which their products are sold. NWP should look to open up alternative distribution channels such as direct marketing using a sales team; introducing products into department stores under another brand name, and expanding the number of retail outlets. NWP could also target different age groups of women by tailoring the advertising campaign and packaging to appeal more to each market segment. The same expertise currently used in the company can be applied with ease to the new segment therefore reducing cost and risk. Expanding products into further market segments will be an effective strategy for NWP, using geographic expansion, their current distribution channels, and further advertising. It is also recommended (Snyder, Tom Burns, Brian, 2010, p.173) that a potential alliance with major customers or with other national like-minded businesses is likely to be successful in achieving growth in market share. 2.7 Product development With 15 years of business and products already proving to be successful NWP could introduce more products to the market under their recognised brand name Zaras. Ideally NWP would need to offer a new product not currently offered by competitors and could make this offering more attractive than competitors by providing initial discount offers for first time users and then continuing at full price once theyve obtained repeat business. NWP would benefit from using their existing customer database to find out their preferences and to gain feedback for potential new products. If using this strategy NWP would benefit from integrating current users into the innovation process by asking for new product ideas from them and pursuing the most popular of those ideas. NWP could also look at packaging existing products in new ways to appeal more to the current target market. Or try promoting the current product in department or retail stores under an alternative brand name. Unless risk management is closely monitored this could be an ineffective strategy for NWP (Leithhead, 2011, para.3). Managing the risk involved in product development could put pressure on NWP as resources would need to be reallocated to the development of the new product. Product development could be costly and unrewarding for NWP. If resources are stretched to develop new products the quality of their existing offerings could suffer. Identifying critical resource limitations, recognises Gorton (2007, p.27), is essential to avoid a negative impact on the quality of current product lines. 2.8 Diversification Diversifying the current product range could help reduce NWPs overall business risk through offering products in different customer categories. NWP already have an established brand name under the name Zaras giving an advantage should the new product or target markets be unsuccessful NWPs other product lines are unlikely to be affected. Zaras would help in leveraging new products belonging to the same brand and help the company to spread their customer base while also helping the company develop its product portfolio through introduction of complimenting products in the market (Keller, Philip Kotler, Kevin Lane, 2009, p.28). NWP could introduce a diverse pricing strategy with lower quality, cheaper to produce products; however this would be going against the core values of the company which is not advisable. The huge risk with this strategy for NWP is there is often little scope for using existing expertise as it involves selling completely different products to a completely different market. This would make NWP vulnerable to a major reaction from competitors as they attempt to enter into other markets with products that could affect competition. Diversification strategy is similar to starting an entirely new business (Holden, Philip R., Wilde, Nick, 2007, p.75) also involving high risk and is not recommended for NWPs growth strategy at this time. 3. CONCLUSIONS Attempting to increase usage among current customers is less threatening to a competitor which avoids bigger competitor responses. The downside to using market penetration is that it limits market share growth to current markets offering slower growth potential as opposed to developing products in new markets. Using market development in similar segments the company can apply current expertise with ease to the new segment therefore reducing cost and risk. Domestic geographic expansion is an effective way to improve market share. Increasing use of online marketing makes a focus on expanding the services provided through current online ordering tools a useful avenue for growth in market share. An effective way of targeting non-users is through further advertising and media channels or offering samples of the products for first time users. NWP should consider the effect of increased market share on actual and perceived quality before pursuing increased market share too many customers can strain the firms resources, hurting product value and service delivery. Unless risk management is closely monitored product development and diversification could be ineffective strategies for NWP. Introduction of a diversified pricing strategy with lower quality, cheaper to produce products is an option for different markets and potential market growth; however this would be going against the core values of the company which is not advisable. Managing the risk involved in product development could put pressure on the companys resources. 4. RECOMMENDATIONS Inform current and valued clients of continuous delivery quality and services provided to build further customer satisfaction and maintain customer loyalty. Focus on developing products in new markets. Create/amend marketing budget to determine affordability of marketing techniques for tailored campaign targeting a younger/older generation specific to appeal to each target segment. Contact potential partners and retail outlets in the South Island and Australian markets for geographic market expansion. Create/amend marketing budget to determine affordability of marketing techniques for enhancements on NWP online ordering system with extra features and additional offers. Contact media channels such as womens health magazines and other media and advertising channels. Advertise offering samples of products either in-store or by online ordering in order to target non-users within the target market. Ensure NWPs increase in product sales will not impact firms resources through reallocation and reviewing of quality product and service delivery. Employ management to maintain specific target markets. Employ risk management specialist management and implement risk management plan to monitor changes in market and customer satisfaction. Focus existing expertise on market development and market penetration strategies.