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Executive Summary
This report is designed to explain and evaluate a company's marketing strategy in a competitive industry. The whole report briefly introduces the company's background and its product. Through the analysis of the product life cycle and the explanation of why brand is so important especially in a maturity period, this report lists all efforts that have been done by Colorado to build its brand to stay longer in the maturity period. In particular, the report lists the process of targeting market and describes the positioning strategy and results. Pricing process and strategy is also mentioned in this report. While introduce the factor when pricing, the most suitable solution like value pricing has to be adopted to retain customers and defeat competitors. As a part of marketing, distribution channel has to be identified clearly as Colorado has done. In Colorado's case, it looks simple because it is conducting a direct marketing strategy. Through tracking the promotion mix that are currently using by Colorado, it is suggested that much more efforts such as strategic database and staff training should be done to enhance its IMC plan.
1.0 Introduction
Marketing is extremely important and necessary in today's business world. For a company in the shoes and apparel retail industry, the threat is not largely from external environment like competitors but from itself. If it cannot conduct marketing as a scientific way, the company may have no possibility to survive in the competition. That is why many selling concept holders disappeared although they do have experience a short honeymoon. Colorado's marketing practice is attractively because they hold the marketing concept and conduct their own marketing. Through the analysis below, it can be seen that brand, target market, positioning, pricing and integrate marketing communications are always the concern gone through its marketing practice. Obviously the company will continue to stick on the way to implementing marketing practice.
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.0 Company Background & Product Analysis
Colorado Group is Australia's largest specialty footwear retailer as measure by the number of retail stores. It operates over 00 retail outlets across Australia, principally under the names Mathers for Shoes, Williams the Shoemen, Colorado Adventurewear, ¡®Lynx', ¡®JAG' and ¡®DKNY'. Of late, the company acquired a new brand called ¡®Diana Ferrai' which was one of Australia's favorite womens footwear brands. After the introduction of its ¡®Colorado Adventurewear' brand in 1, Colorado has expanded its products into both specialty footwear and apparel categories.
Obviously Colorado's products should be classified into consumer goods. However, if identifying Colorado's products in detail, they can be attributed to specialty goods because they are with unique characteristics and brand identification that consumers are willing to pay extra to get the products. While many marketers classified product into three levels that is core product, actual product and augmented product, Kotler (000) identified that in planning it market offering, the marketer need to take account of five levels of the product including core benefit, basic product, expected product, augmented product and potential product. Core benefit is the most fundamentally level. For Colorado, the core benefit is that customers can enjoy outdoor fun by spreading themselves. At the second level, the marketer must turn the core benefit into a basic product. Colorado's basic products can be divided into seven product categories Men's tops, men's bottoms, men's shoes, accessories, women's tops, women's bottoms and women's shoes. At the third level, the marketer has to prepare an expected product to meet customer's minimum expectation. On the one hand, Colorado has expanded it product categories through a series of acquisitions. On the other hand, the company continuously makes efforts in maintain its product quality. Both efforts enable Colorado to get expected product to satisfy its customers. At the fourth level, Colorado prepares augmented products that exceed customer expectations. For examples, knowing that consumers are becoming more and more aware of protecting environment, Colorado use only recycled package to meet consumer's expectation. As to warranty, the company promised to guarantee its product to the last. In addition, all Colorado stores are designed to present a natural and outdoors image to stimulate customer's sense. At the fifth level stands the potential product. Colorado never stops its effort in searching for new ways to satisfy its customers. Colorado has established a strong presence on its web. Although sales volumes remain small, this attempt has proved an important avenue to build relationships with Colorados loyal customer base.
As table 1 shows that Colorado's product-mix consists of four strong product lines tops, bottoms, shoes and accessories (See table 1). These product lines are consistent insofar as they are consumer goods go through the same distribution channel and perform very close functions for the buyers.
Table1 Product-Mix Width and Product line length for Colorado
ProductLineLengthShoesTopsBottomsAccessories
Mathers ColoradoColoradoColorado
WilliamsColoradoDianna FerraiDKNYJAGDKNYJAGDKNYDKNY
Source Modified by Product-Mix Width and Product-line length for P&G Products, Kotler, P., Marketing management, the millennium edition, 000, pp.
.0 Branding
As above introduced that Colorado has build up a series of brands. For example, its ¡®Colorado adventurer' brand emphasis on outdoor lifestyle. In fact, the company has adopted multi-brand strategy since the very beginning. Brand ¡®Mathers' offers customers branded, quality footwear at mid to upper price. Its primary target customers are families who look for variety, familiar brands, fashionable styles and attentive service. ¡®Colorado adventurewear' is a concept embracing the values associated with a casual outdoor lifestyle. It was designed for everyday wear that is relaxed, natural and durable. Others like ¡®Williams', ¡®JAG¡± are all connected with each other at different level. Multi-brand decision has brought a lot of gains to Colorado Group. Firstly, multi-brand can enhance customer's loyalty by capturing customer's attention. For example, customers who like ¡®Colorado adventure' will be more likely to accept ¡®JAG'. Not only because ¡®JAG' are similar to ¡®Colorado adventure' by demonstrating leisure lifestyle, but also people would be more likely to agree that the similar brand have similar value that they can enjoy. Secondly, creating new brand develops efficiency within Colorado Group. Brand mangers compete to outperform each other, while resources like human capitals and fixed assets can be used more efficiently. Finally, a multi-brand strategy can attract more customers because each brand can attract a separate following. While ¡®Colorado adventure' attracts customers mainly aged from 18-5, ¡®Mathers' attract family members at different age. As a result, the more customers Colorado have, the more profit it can earn.
4.0 Product Life Cycle Stage
It is true that management is aware that each product will have a life cycle, although the exact shape and length is not known in advance. General speaking, firms that selling shoes and apparel should be put into maturity stages. The reason is the product has achieved acceptance by most potential buyers. From this point, Colorado is staying at the maturity stage (see table ).
Table
Source Modified by Sales and product life cycles, Kotler, P., Marketing management, the millennium edition, 000, pp. 04
In this period, the sales growth seems slowdown and the profits stabilize or decline because of increase competition. As Kotler (000) said that branded products could have a short or long product life cycle, well-built brand have a very long product life cycle. The problem for Colorado is how to cope with the problem of marketing the mature product. In practice, to ensure they can stay longer in the maturity stage Colorado has adopted a chain of strategies
lDevelop new brand product to attract customers From ¡®Mathers' to ¡®DKNY¡±, the company continues to develop related brand.
lOffer customers added value to satisfy customers For examples, ¡°Vanilla and chocolate biscuits are placed on the counter to provide customers with complimentary gift.¡±
lFocus niche market to avoid extensive competition while many other garment retailers compete on a widely range, Colorado advocates the concept of outdoor life and thereby develop a new brand called ¡®Colorado adventurer'. People between -5 are the mainly customer they aim to.
5.0 Target Market
As a retailer, Colorado realized that it could not make consistent decisions on product assortment, store decor, advertising messages and media, price, service level. In order to target its market, the company has taken account of many aspects such as geographic, demographics, psychographics, benefits sought and lifestyle characteristics.
uGeographic segmentation Colorado divided the market into different geographical unit. In Australia, Colorado has opened 74 stores in QLD, NSW, ACT, VIC, TAS, SA, WA and NT. Meanwhile the company set up 6 stores in neighboring country New Zealand.
uDemographic segmentation Colorado marketing managers has targeted their customers primarily on women and men between -5 years and secondarily on people above 5 years. As to income factor, Colorado aims to middle income class. No particular attention has been given to education, religion and occupation aspects.
uPsychographics segmentation Colorado positions its products to serve for people who are ambitious, adventurous and have active lifestyles. Because demographics show that people aged between -5 who usually have stable income are more likely to enjoy a leisure lifestyle.
uBenefits segmentation Colorado classified buyers according the benefits they seek. Those who travel for adventure may like ¡®Colorado adventure', while family members may accept the offer form ¡®Mathers' because of its reasonable price. Fashion followers would prefer ¡®DKNY' and ¡®Dianna Ferri' because of the modern design and lovely color.
6.0Positioning
As Colorado has decided which segments of the market it will enter, the company thereby decides what position it wants to occupy in those segments. Although it has developed different brands to assist its overall performance, the company basically positioned their products with leisure lifestyle. Firstly, Colorado positioned their products at the middle-price/high quality level in the market segmentation. To ensure its high quality, Colorado's shoes are made of natural fibers, which can last the product life. Secondly, Colorado can smoothly expand its sales because Colorado's target market results in a sufficient number of buyers with strong purchasing power. Thirdly, Colorado uses differentiate strategy to position its product as a symbol of outdoor lifestyle. The product lines range from fashion apparel to footwear and accessories, designed for everyday wear that is relaxed, natural, durable and original. Unlike sports brand, Colorado's products make people feel more leisurely and comfortable.
7.0Pricing
Colorado uses not only one kind of pricing strategy. On the one hand, rather than develop single products Colorado develops a series of product with different brand. Naturally the company adopts product-mix pricing, which means a retail store of Colorado carries different brand at different prices. Customers will associate comparatively low, middle and slightly high products with different brand and different price points. For examples, the price of ¡®Mathers' shoes is slightly lower than that of ¡®Colorado' although they have very similar costs. On the other hand, Colorado meanwhile adopts high-value pricing strategy, which means its products have the same quality as those products covered by premium strategy but charge less. As shoe and garment marketing are very competitive today, Colorado continues its efforts in adding more value to customers. These values included
lAmazing shopping experience rustic, natural image was reflected in the shop; music and even goldfish was selected to make customers happy; little gift was used to tempt customers.
lOutstanding quality and long using life guarantee
There are some factors the company should consider when setting prices. First is selecting pricing objective, if the aim is to expand market share, it should consider a lower price. But if the aim is to maximize profits, then the concern should be raise the price. Second is reference price. Rosch (175) defined reference as the standard price against which consumers evaluate the actual price they are thinking. Colorado has to take account of this factor when it develops a new brand. Because consumers may compare the price of new brand with the reference price, and if they think the price is far excess the reference price they will not accept the new brand. Costs is another concern, if the costs of a new brand cannot support Colorado's high-value strategy the company must abandon this brand. Otherwise, it will finally suffer loss and lose the brand.
8.0Placement
Market channel decision is a critical concern in Colorado's business practice. As introduced before, the company has its own stores to sell its products. If consider only the number of intermediary levels Colorado's channel, it is actually a zero-level channel that means manufactures selling direct to customers. Table shows the types of channel flows, which include physical flow, title flow, payment flow, information flow and promotion flow.
Table
Source Modified by ¡°five different marketing flows in the marketing channel for forklift¡±, Kotler, P., Chandler, P., Gibbs, R., McColl, R., Marketing in Australia, nd, 18, Perentice Hall, Brunswick, pp. 441
As table shows that at the physical flow level the raw materials flow from suppliers via transportation companies to Colorado's warehouse and plants. Then the products flow to Colorado shops. Customers can thereby buy the products at the shops. As to the title flow, title to raw materials and components passes from the suppliers to Colorado plants. Title to the finished products passes to its own shops and then to customers. At the payment flow section, customers pay cash on counter or credit card through banks to Colorado shops, the shops collect money to Colorado manufacturers via bank transfer, and then Colorado sends the payment to its suppliers via banks. When consider the information flow, customers needs can be collected and sent to Colorado. Colorado can therefore produce the customer's favorite products and introduce new product information to customers. Finally, Colorado can promote their shops and product via advertising agency to increase its shop sales, while Colorado shops also use different promotion tools to attract more customers.
.0 Integrated Marketing Communications
Colorado is currently using an efficient promotion mix to reach the trade channels and the target customers. This promotion mix includes
lSales promotion coupons, discount given, seasonal sales are major tools that Colorado used to promote sales.
lAdvertising Colorado opts for advertising that is conducted in major cities, on buses and trams. In addition, they are considering run certain movie at cinemas to aim to target market. For example, Colorado has introduced a new television advertising campaign that targets 18-5 years olds. The aim is to position the label as a globally brand.
lInternet marketing An integrated marketing campaign incorporating online and in-store activity aims to recruit 100,000 online members and contribute 1% of sales in the first 1 months of 00. In-store activity includes promoting the URL on Colorado packaging, postcards. In its online presence, Colorado is providing shoppers with the opportunity to purchase online and earn discounts, free products and free freight.
lBrand management For each brand Colorado owns, it build a separately team to manage it efficiently. Brand mangers are given responsibility to develop brand images and expansion. However, the consistency within each brand is existed to enhance customer's loyalty and efficiently allocate company's resources.
The appliance of integrated marketing communications (IMC) has brought a significant success to Colorado. However, the company still needs to make further efforts to improve the power of IMC. On e is that Colorado must train all its employees in how to communicate. This is because customers responded more to employees' actions than to specific programs. Another is that the company must develop and enhance a strategic database to anticipate customer interests and improve customer satisfaction and retention. Internet marking that has been used in Colorado gives the company a chance to close customers and catch their preferences. If it has been efficiently used to enhance the database, the company will be more competitive than its competitors because they can respond quickly to meet customer's needs.
10.0Conclusion
True, Colorado is in the maturity period of the whole shoes and apparel industry. With the efforts of continuously brand development and integrated marketing communication, plus its accurate product position based on the understanding of its target market and its value pricing strategy, the company successfully penetrated its target market and retained its customers. Simply speaking, its success is based on its understanding to customers. The result is the company can stay in the maturity period longer to grasp sound profit. However, to compete and survive in a hard industry further efforts are suggested to do by the Colorado to enhance it IMC program. Thus, resource can be allocated reasonably to serve for target customers and thereby enhance efficiency and profitability.
11.0Bibliography
Online Source and Journal
1.http//au.biz.yahoo.com/p/c/cdo.ax.html [Accessed on 15 May 00]
.http//www.coloradogroup.com.au/ [Accessed on 15 May 00]
.http//au.biz.yahoo.com/p/c/cdo.ax.html [Accessed on 15 May 00]
4.Annual report 00, pp. 6 http//www.coloradogroup.com.au/investors_desk/financials/coloradoar0.pdf [Accessed on 15 May 00]
5.Larissa Kaye, Colorado moves into online arena, http//www.bandt.com.au/articles/e/0c00fe.asp [Accessed on 15 May 00]
6.B&T Weekly, 1 August 18
7.Rajendran, K. N., & Tellis, G., Contextual and Temporal Components of Reference Price, Vol. 58, No.1, January 14, -4
Books
8.Harker, M., Harker, D., Graham, P. & Baker, M., Marketing Trends in Australia, 1, Macmillan, South Yara, pp. 70,71,7
.Kotler, P., Marketing management, the millennium edition, 000, Prenhall, New Jersey, pp. 04,4,
10.Kotler, P., Chandler, P., Gibbs, R., McColl, R., Marketing in Australia, nd, 18, Perentice Hall, Brunswick, pp. 441
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