MARKETING MIX FOR CHOCOLATE PRODUCTS The purpose of the marketing mix should be to create a product that offers the greatest value for the ...
MARKETING MIX FOR CHOCOLATE PRODUCTS The purpose of the marketing mix should be to create a product that offers the greatest value for the price, according to the taste and eating habits of the target consumers, which will be easily accessible, attractive and desirable for consumers. In the struggle for a better market position, based on the results from the survey, the following competitive steps can be implemented: Differentiation of products - through technical, informative or distribution differentiation of products; Change in prices -
price increases according to consumer opinion for appropriate price and adjustment to competitors prices, for gaining a temporary advantage; Creative use of distribution channels - using vertical integration forward or backwards, or use channels that are new and unconventional for the industry, such as chocolate bars, bakery shops, fast food restaurants, etc.; Creating an effective and efficient communication with customers that will build an unbreakable connection with the community, affiliation and love for the brand product and the company. The product Domestic products are in the stage of maturity of the life cycle, most consumers are not familiar with them, and are seen as cheap products, with medium to low quality, too sweet, not enough available and without a recognizable name or brand of the product. The proposal regarding the policy of chocolate products is towards change from commercially oriented into proactive market-oriented politics and products, which can be achieved in two ways: Through innovation of products or their differentiation in order to adapt to the needs and wants of consumers and separate them from competing products on the market; Through elimination or removal of products that do not suit the needs and demands of the market. According to the above, especially from the influence of the life cycle of products, a strategy of modification of products can be applied by increasing the forms in which it appears, by improving quality, adding new features and upgrade the aesthetic features. In the assortment of chocolate products a combination of the corporate brand and individual product brand should be applied, i.e. a multi brand strategy which reduces the risk of concentrating only on one brand of product, and also in long term it is important a complete portfolio of chocolates to be offered. The focus of the company should be on few key product lines: milk chocolate (100gr), boxed chocolate (150-250gr) and molded bars (30-35gr), as they are expected to be the markets with the largest future growth. The packaging of the products can be a mixture of modern and retro design, a combination of three colors - black and white with red detail, both to attract consumers who prefer modern and those who would like the retro design and build a connection between the present and the past. The packaging must protect the product from moisture, keep it fresh, be attractive and appealing, and make it easier to recognize the product and also be appropriate if the product is bought as a gift. The success of the product or brand, according to survey results will depend mostly on: distribution network; standards for quality; continuity of research; development of new products and communicational support. Figure 18. Proposal for packaging design for milk chocolate, boxed chocolate and molded bars The price The great importance and impact of price and price increase on gross profit in a company was proved in 1992 (McKinsey & Company, 2003) when the results of a research of 2400 companies, have shown that increases in the price by 1% leads to increase in profits by 8%, while reduction in fixed and variable costs by 1% leads to two times smaller increase in profits, while increasing the sold amounts by 1% leads to three times smaller increase in profits. Considering that the price determines the scope and structure of sales and size of the financial result in the determination of the price policy several factors should be taken into account: cost, corporate objectives, strategy, marketing mix, product life cycle of products demand, competition, positioning, etc. The procedure used in determining the prices of chocolate may involve several stages, including: main objectives of the price formation, cost analysis, price analysis and competitors pricing policies. When introducing a new or improved product to market, the company can use four alternative strategies of price/quality (Kotler P., 2001, p. 604): 1.Strategy of high prices - high quality (premium strategy) 2.Strategy of low cost - high quality (good value strategy), 3.Strategy of high prices - low quality (strategy of over - charge) and 4.Strategy of low prices - low quality (strategy of economy). When the product is in the stage of maturity in the life cycle, the main objective of the price should be - matching to the one of the competitors or beating the competitors’ prices (Kotler P., 2001, p. 538).
Analysis of demand show that the demand for chocolate is not price elastic, i.e. that consumers’ are willing to pay a higher price for quality product. In terms of competition, the company should not attack the market leaders, but fight at the level of enterprises of its size and smaller, and in terms of pricing - determine lower prices than the ones of the market leaders, and higher prices compared to competitors that are being attacked. Thus, as a method of pricing a combination of the value for the buyer that can be detected through conjoint analysis and experimentationxxviii and adaptation to the competitive prices should be applied. Simultaneously, the quality and taste of the modified products will have to justify the higher prices. This price will occasionally have to suffer corrections, or adaptations for special events - holidays and promotional prices for cleaning of supplies. For wholesale sales price the system of discounts can be taken into consideration – cash discount for immediate payment, in order to maintain liquidity, and quantitative rebate for buying larger quantities of products at once or over a period of time. The selling price to retailers can include functional/trade discount – participation in the promotional activities of the company. The place The success of consumer products largely depends on the distribution. Distribution as an element of the marketing mix brings the products to market, intensifies the demand for existing products, and provides better position of the company on the market and others. In the design of marketing channels a great role play the resources of the enterprise, the objectives, the nature of the product and positioning strategy. If the goal is increasing the market share, then it is better for the company to develop direct sales to the end consumer, because in that case the costs for the sale force are lower than in case where intermediaries are engaged. On the other hand, if resources do not allow the company to significantly expand its retail network as an alternative option is inclusion of intermediaries in the process, whereby instead of selective distribution, the company needs to use intensive distribution, involving as much as possible mediators at every level of the channel. Chocolate is a category of the product that is essentially a subject of pull - strategy, but the members of the channel allow greater product visibility, which is of great importance because it is a conventional product and a subject of impulse purchase. This means that the best strategy would be combination of the pull - and push – strategy. The product should be made available in most supermarkets and discounters, and in as much as possible conventional stores, i.e. the product should to be placed in at least all those retail outlets where products of the direct competitors are placed. For example, the product should be placed in stоres at busy locations - near schools, city’s downtown, near green markets, near fast-food restaurants, gas - stations, as well as kiosks, in order to expand and deepen its distribution network, in order to maintain intensive instead of selective market presence. According to the preferences and habits of consumers, they are willing to buy competitive brands when a company's brand is insufficiently available, which is the most expensive price that can be paid - loss of existing and potential customers. In the retail stores, chocolate products should be placed on a visible position, in the same category of competitive products,
but separated from them in specially designed and branded shelves which will increase the visibility of products, and allow storing multiple types of the brand products together in order to create consumer awareness for them and look more attractive than competing products. Due to the impulse purchase of chocolate, molded bar chocolates can be placed near the pay –toll. The company should consider placing the products in innovative channels, for example: most visited local cafes in the cities, in icecream shops, in restaurants, fast food chains, at bookstores and gift – shops, where the products can be offered as a dessert after eating or increase enjoyment while reading a favorite book
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