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Critical Evaluation of the Marketing Mix - Essay Example

The first part provides critical review and evaluates separately each element of a cosmetics company marketing mix. The second part gives suggestions for future marketing steps in order to create more value for customers. Finally, some concluding remarks about the whole marketing process were given. Table of Contents 1 Introduction of the Alkaloid Company and “Swat skincare products” 1 2 Evaluation of the Marketing Mix of Swat Skincare Products 2. 1 Understanding Marketing Process 3 2. 2 products 2. 3 Price 6 2. 4 Placed 2. Promotions 3 Proposals for future marketing mix moves 9 4 Conclusion 5 References 1 Introduction of the Alkaloid Company and “Swat skincare products” ALKALOID AD – Skopje, The Parent Company (hereinafter: Alkaloid) is a company which more than 75 years exist in the business of drugs production, process of botanical raw material, manufacture of cosmetics and chemical products. It’s a Joint stock company established and with head office in Macedonia and is consisting of two profit centers: one Is Pharmaceuticals and the other is Chemicals, Cosmetics ; Botanical.

Major business activity of Alkaloid Is production and sales wide range of pharmaceutical, chemical and cosmetic products, as well as goods from herbal origin Alkaloid, 2011). Alkaloid’s Cosmetics Unit designs and produces skincare products, children’s skincare, soaps, hair care products, dental care products, men’s and women’s perfume collection, and household cleaners. It has developed five different lines of skincare products and In the text the emphasis is placed on Swat line more than twenty years.

The collection consists of fourteen different products, creams and balms, designed for facial and body care of women after the age of twenty (fig. 1). The ingredients that are used in their products are purchased from appliers that satisfy the high-quality standards and are in accordance with the requirements of the European directive for quality cosmetic products. The manufacturing process is carried out in accordance with the highest standards in the industry IGMP (Good Manufacturing Practice) (Alkaloid, 2011).

I Swat day and night cream with collagen 55 ml I I Swat anti-wrinkle cream 20 ml I I Swat cleansing milk with collagen ml I I Swat cream with fruit acids 55 ml I I Swat face tonic with collagen 150 ml I I Swat polyatomic day and night cream 55 ml I I Swat regenerative day and night cream 55 ml I I Swat cream with vitamin C 55 ml I I Swat day and night cream with apple stem cells and olive oil I cellulite balm 280 ml, 1000 ml I Figurer: Swat skincare product line 2 Evaluation of the Marketing Mix of Swat Skincare Products 3. Understanding Marketing Process I Swat anti- Every company requires well-planed marketing strategy to efficiently market a product or service. At the beginning, it is necessary to understand and interpret accurately marketing concept with the aim to thrive in today’s customer-centered marketplace. Kettle & Armstrong (2011) in narrowed business context define racketing as “the process by which companies create value for customers and built strong customer relationships in order to capture value from customers in return” (p. 5).

This marketing process is structured as five-step model in which the first four steps are focused on understanding the needs, wants and demands of consumers as well as creating value and building profitable customer relationships, and the last step is capturing value from customers in reward (fig. 2). Figurer: Simple Model of Marketing Process by Kettle and Armstrong (2011, p. 5) To create a product (service) hat will be recognized by consumers as unique, the manufacturer has available four basic components that can be combined in numerous ways to achieve “real value” for customers.

These four basic ingredients are core of marketing, known as the marketing mix or the “4 AS” of marketing – Product, Price, Place (distribution) and Promotion and are first proposed by McCarthy (Baker et al. , 2007). 3. 2 Product Widely defined, product is anything that company offers to the target market, a mixture of goods and services, intended to satisfy consumers ‘ needs and wants (Kettle ; Armstrong, 2011).

To this effect, before launching the product on the market the company should answer the following questions: whom the product is advantages, and how to create a perceptions, impressions and feelings for the product in the consumers ‘ minds vice versa competing products I. E. Differentiation and positioning (Ducat, 2004). Due to the heterogeneity of today’s market and in order to better recognize and respond to the needs and requirements of many types of customers, Hazer et al. (2006) and McKenzie (2006) suggest dividing the market into smaller segments or market niches based on the following four variables: geographic, demographic, cryptographic and behavioral. Whereas in the past the products were positioned to attract mass market, nowadays a product must be dedicated to specific market niche in order to distinguish from competitive product, therefore the proper positioning of the product is regarded as crucial for marketing success (Ducat, 2004).

To this end in 2010 Alkaloid has created a new regional structure and organization of the market in which they operate into three main geographic regions: the EX. and CICS region, the region of Serbia, Croatia, Bosnia and Montenegro and the region of Macedonia, Albania and Spooks. For the sale of Swat, the company has selected only two regions, second and third mentioned above, where most of the countries are former Yugoslav republics.

In this case regional market positioning is a positive move since in these countries Swat products are well established and the consumers are with similar cultural and linguistic heritage (behavioral segmentation), and due to the saturation of the EX. market with avowed cosmetic companies (there are around 1. 500 suppliers, producers and distributors of cosmetics in Europe according to Euro pages). After market segmentation and target roof determination (women after age of twenty), the company can focus on building the distinct image of the products.

Every product, according to Kettle ; Armstrong (201 1), needs to be observed as a set of three levels, and each of them is adding more benefits to the product. First level is core product or “what is the buyer really buying” (p. 225), and regarding cosmetics, especially skincare, today they are not only the matter of good hygiene, but are also designed to beautify and promote attractiveness or change the appearance (Chant et al. , 2011; Clement, 2007). In that ensue, Swat regenerative day or night cream – both options help your skin self – regenerate, regain elasticity and freshness and smooth tiny wrinkles.

The second level is actual product – product features that distinguished it from competitors and regarding cosmetics the strategy at this level embraces the brand name, quality and physical features, which intertwines and complements each other. The brand name or trademark is any word, name, symbol, design or other attribute that identify one product or service as distinct from other (Bennett, 1995, cited in Sharkskin, 2009). Second category of trademarks associated with brand name are decorative (color, packaging, shape) and informational like slogans Jacob, 2011 cited in Sharkskin, 2009).

Importance of the brand name for the company is reflected in the power to turn cosmetic lines in must – haves for the most of consumers and to attract them to buy the product again (Karachi, 2011 and Tendril, 1999). In other words, the product should be luxurious and it means at the same time to contain exotic ingredients with immediate effect (sea pearls, D-contralto, caviar, stem cells, collagen), superior quality ND stylish package, since women today are fashion conscious and more demanding (Wausau et al. 2012; Karachi, 2011; Newman, 2003). As brands fight for consumer (Fall, 2011), the packaging with its distinct shape, color, weight, size, have to be eye- catching and to sends message about the brand from the shelf (Eaves, 2012). And the old statement, “what you see is what you get” should be: “what you see is what you choose” (Clement, 2007, p. 918). Finally, in accordance with existing trend among cosmetic manufacturers, oftentimes the packaging is made of materials that are CEO- friendly and can be recycled (Rook ; Situational, 2008).

The extensive experience and the 75-year long tradition, the base for the perceived quality of Swat product line are reflected in the recognizable company logo and slogan which are constantly upgrading (fig. 3). “Swat” name originates from one of the trainings in the Hindu Gymkhanas philosophy and in a nutshell it means goodness and purity, appropriate name for cosmetic line (Realize Beauty, no date).

The company strives to satisfy consumer’s needs and to create a distinctive product using genuine ingredients, following the contemporary trends in cosmetics technology combined with usage of innovations in cosmetology and cooperation with international institutions and experts. Moreover, as shown on figure 1, packaging provides not only information about the product, but also has fashionable design and shape that are in compliance with the quality, which is replenished by the use of unique ingredients such as collagen, vitamin C, fruit acids, apple stem cells, olive oil etc.

Furthermore, all the production is in accordance with the highest standards in the industry IGMP and the packaging is CEO-friendly (Alkaloid, no date). Figure 3: The logo with slogan of Alkaloid, the old and new redesigned logo of Swat Customer care service, the third level that augments actual product is important part which refers to customer care after the purchase of the product. Swat consumers are able to contact the manufacturer about the product satisfaction and to leave comments on the company website which can be constructive for further products improvement. . 3 price Price is the most important item and the only “P” of the marketing mix which generates revenue and can have a major influence on profit, thus should be regarded same as promotion and advertising strategies (Mammalians, 2011). The rest three As lead to expenditures since is money consuming to produce and design a product, to distribute it and to promote it. Price is the value that consumers will exchange for the offered product and plays an important role in positioning and differentiating the product in the market regarding the competitors.

The factors that influence the price are: production costs (fixed and variable), competition, company objectives, targeting and positioning strategies (Kettle & Armstrong, 2011). Based on these factors they suggest three major strategies for pricing: * Customer value-based pricing based on the consumer needs and perception of value), * Cost-based pricing (build upon costs for production plus mark up for profit) and * Competition-based pricing (setting prices depending on competitors’ prices, strategies and market offerings).

Which one will be chosen depends on the firm objectives and the characteristics of consumers (Tells, 1986). In case of cosmetics, when there are consumers with high brand loyalty the purchase is not influenced by price and they are ready to pay premium price for the perceived value of that brand (Karachi, 2011). In such case the company sets a high price for the offered high quality and this alee-based strategy is usually used in designer brands (e. G. Channel cosmetics) to skimming.

Another factor that plays an important role in price of the cosmetic products is cost for ingredients that are used, in particular those considered unique, and that can cause the price differences from product to product (Mammalians, 2011). In Swat line there are creams with collagen, vitamin C, fruit acids, apple stem cells and olive oil, which vary in price depending on cost, quality and effect of these ingredients. Most of the cosmetic companies are opting for competition based rising and assess a price associated with the prices of similar competing products (Alexander, 2005).

This strategy involves a group of pricing options and they are to set lower price, price the same or price higher over the competition. According to Tells (1986) penetration pricing is when company sets price below competitors but at the same time gives as good quality as competition, offering “more for the same” (Kettle ; Armstrong, 2011, p. 213). The purpose of this price strategy is to increase volume and win large market share – “the more they are buying from you, the less they are buying from competitors”.

In terms of price, Swat products are competitive with brands such as Grainier, Naive, Green Line, offering good quality at a reasonable price or “more-for-the-same”. 3. 4 Place The third “P” of the marketing mix, channel of distribution or the supply chain refers to the way the company will deliver the product to the final consumer. Gangland et al. , (2006) define the supply chain as network of companies from suppliers to end- users with aim to integrate supply and demand through coordinated company efforts.

In the case of cosmetic companies such a network requires establishment of injections not only with consumers, but also with suppliers and retailers, hence it’s composed of upstream and downstream participants. Marketers usually concentrate on downstream channels that targets consumers. According to Kettle & Armstrong (2011) companies have available various ways of forging distribution channels, and depending on the number of intermediaries involved can choose between two types: direct and indirect distribution.

In direct distribution the channel has no intermediaries involved, whilst in indirect distribution there are one or more intermediaries involved. The advantage of the direct channel is that the manufacturer has control over its products and opportunity for straight contact with the customers. Lately, the internet is used by many producers as an additional direct distribution channel achieving broad coverage with low operational cost (Kumar & Run, 2006).

On the other hand, intermediaries through their expertise, experience, contacts, increase sales efficiency through better availability of products to the target market and play a key role in fitting supply and demand (Kettle & Armstrong, 2011), and given the market segmentation, technological progress and the intensification of the competition, the use of numerous channels of distribution becomes the rule rather than the exception (Frazier, 1999). For instance, among thousands of skincare products manufactured by Alkaloid, the pharmacies will buy only a part at a time and most demanded once.

Based on the demand Alkaloid will be able to plan its production and expenditures in the future. After the firm has selected the distribution channel is obliged to constantly organize, motivate and manage all participants. Gangland et al. , (2006) based on their literature overview ND a research propose a framework for the design of distribution channel, channel This framework can be applied in the case of Alkaloid which has thirteen subsidiaries abroad, with production facilities located in Skopje and Belgrade.

Other subsidiaries are responsible for warehousing and distribution and according to the Trade Registry Alkaloid can perform wholesale operations (business-to-business). Their products can be purchased at supermarkets, pharmacies, cosmetics specialty stores (Alkaloid, 2011). Table 1 : Framework for the design of distribution channels and management decisions, adapted from Gangland et al. 2006 3. Promotion After market segmentation, targeting and identifying the distinctive characteristics of the product, the company can work on promoting these differences to the target audience. According to Kettle & Armstrong (2011) every company has available five main types of promotional tools: advertising, sales promotion, personal selling, public relations and direct marketing, which can be combined in different ways with the aim to convey clear picture about their brand – modern concept known as Integrated Marketing Communications (MIMIC).

Most common way that cosmetic impasses use to reach target consumers are advertisements in the mass media through their ability to deliver the right message to the right audience (Barnes et al. , 2009). Except television, print media are second most used means of advertising, particularly women’s and fashion magazines that provide news for fashion, entertainment, celebrities and cosmetics (Barnes et al. , 2009).

Another important segment in cosmetics advertising is the verbal and visual content of the ad, due to the power of the message and attractiveness of the model to influence the audience to identify with them (Barnes et al. 2009; Maltose et al. , 2007). Thence, nowadays many companies spend huge sums to use celebrities as endorses for their brand and an ideal endorser should be a strong brand by itself possessing characteristics that match the characteristics of the product that need to be emphasized Negotiate et al. 2007). “Inspired by Beauty, driven by innovation” was the slogan of the campaign launched in 2011 on the occasion of the new redesigned and modernized look of Swat collection. For the purpose of campaign Alkaloid selected five women who pay high attention to their appearances, with impeccable complexions, famous at mommies scene and typical representatives of the age group for which the complementary line of the collection was designed (Alkaloid, 2011). Proposals for future marketing mix moves The importance that beauty has in contemporary society for both genders equally, led to development and progress in cosmetic industry and to significant increase in the number of male consumers (Tan, 2008). Therefore, Alkaloid may consider extending the target group for skincare products, especially anti-aging, on the male population given that few companies, like Naive for example, have developed such nines (Anon, 2008).

As aforesaid, because of the great impact of packaging in product selection (Eaves, 2012), from my point of view Swat products can still be improved in selecting vivid colors for packaging and connecting them with product features and target group, for example products with collagen in pink, anti-aging creams for Swat day and night creams look identical at first sight and may confuse consumers when purchasing, packages therefore must hold a visible difference.

Even though the pricing strategy of company is set properly, in order to increase sales and profit, or certain occasions like Christmas Eve, Mother’s day, a bundle pricing can be applied, offering few products at reduced price (Hanson & Martin, 1990). Another alternative is to propose discount prices to wholesalers to clear inventories when the expiration date of product is near – push strategy, (Mitchell, 2003).

Although for large companies like Alkaloid intermediaries have great importance in offering the product to the final consumer, with today’s popularity of the internet they can supplement existing distribution channels with online channels selling directly to consumers (Kumar ; Run, 2006). For example, on www. Kin. Ms/shop from 19,99 Euros monthly anyone can open online shop. Following the example of companies that sell online, Alkaloid may insert a link on their website to online stores where their products can be purchased.

Furthermore, in BIB markets when the manufacturer (Alkaloid) serves one geographic market with the same product line is common practice to use multiple channels (own and independent) simultaneously, that compete each other (As Vivian ; Anderson, 2005). This competition usually is quite vigorous leading to conflict between channels and undermining not only tautly, but also the brand they provide.

One way to overcome conflict is by differentiating offers from manufacturers on various grounds (brand name, products offered, trade terms) where each channel can find leading market (As Vivian ; Anderson, 2005). After the campaign in 2011 the promotion of Swat fell into oblivion, therefore the company needs to work intensively on every MIMIC segment. To restore the interest of buyers for Swat products, company should use the brand reputation and popularity by putting theirs trademark and slogan “Health above all” on skincare products.

Moreover, to achieve success on the international market the company should consider involvement of endorses famous in the domestic as well as in the regional market, alike the successful campaign for Swat perfumes in 2003, when the cover face was Groan Picnic, a famous Hollywood actor originating from Croatia Negotiate et al. , 2007). Based on research conducted by Rooks ; Situational, (2008) and Larch et al. , (2001) the consumers who are willing to pay more for “green” products are adult females, the same target group of Swat, to be used for strong promotional campaign of green packaging.