This assignment is designed to look at products and services, their characteristics, life cycle stages and new product development. It will also look in more detail about the marketing mix, mainly at the differences between selling goods and selling services, and the importance of price in the purchase decision and the distribution and communication channels used within the organisation. The report will relate all theoretical concepts to a work environment. The work environment I am going to link with this marketing report is the company I work for, TD Travel Group.
TD Travel Group is an independent corporate travel organisation that takes the frustration and confusion out of business and group travel arrangements using its specialised services. TD Business Travel Management co-ordinates air travel worldwide as well as catering for car rental, rail tickets and sea crossings. They also offer a number of specialist facilities including organising currency, the procurement of passports and visas and running a 24-hour emergency help line.
The Special Events department takes a fresh approach on every brief in order to deliver a perfectly organised event, whether it is a conference or a skiing trip. TD Roomfinder use their years of experience in the business of dealing with hotels in order to ensure the best deal for their clients looking at both cost and suitability to the individual. These three areas of TD Travel Group work together to save their clients both time and money and making TD the most professional and comprehensive business travel service around.
Marketing is the all-embracing function that links the company with the customer to get the right product to the right place at the right time. Marketing decisions are made through the marketing model, based on the findings of market research, and carried out through the marketing mix. At all stages in the marketing process, the firm needs to work closely with the production department and research and development to ensure that what is promised is delivered. Marketing activities are all the actions an organisation can take to achieve its marketing objectives.
These would include market research, product mapping, market positioning and carrying out the different elements of the marketing mix. In the introduction or early stages, the product is a problem solution and prices are high, margins are high and order volumes are low. As acceptance of the product grows, the prices and margins start to come down while order volume increases. Achieving economy of scale in production reduces the product cost, making it more accessible to customers and resulting in a growth phase.
As market saturation is approached, the growth rate tapers until the product reaches maturity with low prices, low per unit margins and relatively flat sales. It is important to know where your product is in its life cycle, as different stages require different strategies. The profit picture, as well as the sales picture changes throughout these stages. These general relationships can be seen in the graph below: A particular firm’s marketing mix usually must change during the PLC. Customers’ attitudes and needs may change over the PLC. The product may be aimed at entirely different targets at different stages.
For example, an automobile is a product that provides personal transportation, but our choice of vehicle changes as our needs and situations change. The Product Development stage begins when the company finds and develops a new-product idea. This involves translating trends in the macro environment, taking diverse pieces of information, and incorporating them into a product concept. The best example of this in the travel industry is about three years ago, when airlines decided to drop commissions paid to agents from 9 percent to 4 percent, and some airlines such as BA, to no commission at all.
Earning such low commissions would have definitely put smaller agencies out of business, instead, managers of independent agencies met and discussed ideas, and as a result service fees were introduced. Some agencies charge their accounts an annual service fee, in the case of TD Travel Group; we charged a service fee for any BA flight tickets issued, and any flight tickets under i?? 300. 00. As the airline payment policies have changed over the last couple of years, so have our service fees. We now charge a service fee for every transaction made (i. e. every flight/rail ticket issued).
Product concepts typically undergo several iterations, involving considerable time and money, before they are exposed to target consumers via test markets. Concepts that survive test market scrutiny are ready for market introduction. “Time to market,” or the amount of development time necessary to move from product concept to finished product, can be critical, especially when competitors are working on similar products. Forward-thinking marketing managers are using interactive concept testing via the Internet to obtain faster feedback from target customers and to shorten their product development timetables.
During the product development stage, sales are zero and profits are negative (i. e. anticipated future profits are being invested in product development). In the Market Introduction stage, sales are low as a new idea is first introduced to a market. Customers aren’t looking for the product, and may not be aware of its benefits or advantages over current offerings. In fact, they may not even know about it. Informative promotion is needed to tell potential customers about the new product concept. Even though a firm promotes its new product, it takes time for customers to learn that the product is available.
Money is invested in developing the market in anticipation of future profits. When service fees were first introduced, some clients (mainly smaller ones) stopped using TD travel Group thinking they could get flight tickets off other agencies or the internet with no service fee charges. This being true some customers were lost for a few months. As soon as these customers realised that if they needed to change their tickets or get a refund on the tickets purchased from the internet, they couldn’t, or if they could it was taking them hours to get through to the companies on the phone, they soon came back to us realising that paying 20. 00 per internet booking was well worth paying for the service they received from us.
Most companies experience losses during introduction because they spend a lot of money for promotion, product, and place development. Of course, they invest the money in the hope of future profits. In the Market Growth stage, industry sales grow quickly — but industry profits rise and then start falling. The innovator begins to make big profits as more and more customers buy. But competitors see the opportunity and enter the market. Some just copy the most successful product, or try to improve it to compete better.
Others try to refine their offerings to do a better job of appealing to some target markets. The new entries result in much product variety. This is the case with independent travel agencies, they all charge service fees, but these fees will vary slightly with all agencies. For example, we charge i?? 20 per internet booking whereas a different agency may not charge, or refuse to do it at all, but they may charge for making hotel reservations whereas we don’t charge for making a reservation, only if we have to prepay the hotel for the client would we charge them.
This is the stage where industry profits are largest, but it is also when industry profits begin to decline as increased competition creates downward pressure on prices. Most clients realise they are paying for the service they receive and don’t shop around at all. Those that do always come back to us in the end as they know that we can answer their questions in minutes when it may take them hours.