Pricing strategy
To ensure that the new soft drink is effectively launched in the market, the management of Triwa Incorporation considered both the internal and external factors that affect the price of a product. To determine the external factors affecting price, the management through the marketing department conducted comprehensive market research. The objective of the research was to determine the best pricing strategy to adopt in setting the price of the new soft drink product. The variables that were considered in the research include consumers and competitors.
The findings from the research indicated that the consumers are price sensitive. In launching the new soft drink in the market, the management of the firm has the objective of developing the firm’s competitiveness in terms of pricing. It has considered integrating two pricing strategy which includes penetration and psychological pricing strategy. Through penetration pricing strategy the management will set the price of the new soft drink at a relatively lower level compared to that of the competitors. Currently, the soft drink industry is becoming saturated due to an increase in the number of firms entering the industry. As a result, firms are devising strategies n how to remain competitive. According to Ralph (2000, ¶ 7), a penetration pricing strategy enables a firm that is introducing a new product to survive in a market characterized by intense competition. On the other hand, the psychological pricing strategy will involve setting a price point of $4.99 per can of the soft drink to the final consumer.
This price was determined by considering the production cost. The management came to a consensus that this price is effective to both the firm and other parties within the supply chain. This is due to the fact that the cost of production is relatively low at $1.99 per can. As the soft drink moves through the supply chain, price tends to increase. This means that other parties in the supply chain will be willing to supply the firm’s product since they will also benefit. Psychological pricing strategy will ensure that the price evokes a positive emotional impact on the consumers culminating in a purchasing decision. According to Kris (2008, ¶ 3), consumers tend to purchase products whose ending digits are uneven. This is due to the fact that they attach a high value to such products compared to those whose price is even. It is the objective of the management that this pricing strategy will result in the firm selling a large volume of soft drinks. Increased sales volume will enable the firm is able to cover both the fixed and variable costs involved in the production of the soft drink.
Channels of distribution
The management of the firm is committed to ensuring that the new soft drink product is easily accessible by the consumers within the entire market. This will enable the firm to attain a highly competitive advantage through an effective distribution strategy. To achieve this, both direct and indirect forms of distribution have been considered. The direct distribution channel will involve establishing distribution outlets in all the regions within the United States. Through these outlets, the management will ensure that the product is directly accessed by the customers. In addition, the distribution outlets will be able to supply the product to the wholesalers and retailers. According to Neves and Evaristo (1999, p.8), the use of distribution outlets ensures that a firm attains a minimum delivery time. This means that the new soft drink will always be available in the market. This will result in the development of customer loyalty towards the product.
In the international market, the firm will supply the product through the use of agents. This will enable the product to effectively penetrate the global market. These agents will be selected using comprehensive criteria such as their knowledge of the local soft drink distribution chain, quality of supplying equipment such as distribution trucks, skills of the human resource and their location. On the other hand, indirect distribution will involve supplying soft drinks to the national and regional supermarkets that are widely recognized. In addition, the distribution channel will also involve supplying soft drinks to the major hotels and restaurants. These firms have been able to develop a large customer base and also customer loyalty. Therefore, distributing the product through these firms will ensure that a large number of customers access, purchase and consume the firm’s product.
Both road and railway methods of transportation will be used in supplying soft drinks to the market. The use of a road network will be effective in supplying the product to the domestic market. This is due to the fact that the US has a good road network. In supplying the soft drink to the international market and some regions in the domestic market, water transport through ships will be used. From the ports, the product will be received by the appointed agents to be supplied to the foreign market. The management of the firm considered these forms of transport due to the bulky nature of the soft drink.
Promotion strategy
Product awareness is an important element in marketing a product or service (Shakir, 2008, ¶ 1). The management has formulated a strategy to ensure that there is comprehensive product awareness. This has been achieved by integrating the concept of Integrated Marketing Communication. Integrated Marketing Communication (IMC) enables a firm to establish communication between the firm and its target market. Michael (2006, ¶ 3) asserts that it is important for firms to integrate IMC in their promotion strategy considering the increase in the degree of competition. To ensure that there is effective product awareness, the management has incorporated various forms of IMC in its promotion strategy. These include personal selling, sales promotion, advertisement, public relations, online and social marketing.
Various methods of advertisement have been considered. These include the use of mass media such as newspapers, radio, and television. The choice of the television, newspapers, and radio station in which to post the advertisement will be made by considering a number of factors such as the cost and their geographical coverage.
The firm will also incorporate the use of outdoor advertising through the use of billboards and its distribution vehicles (Kayne, 2004, ¶ 2). This will be achieved by entering into a lease contract with well-recognized advertisement companies whose billboards are strategically located. Considering the fact that the firm owns a number of distribution vehicles, the management has come to a consensus to use them in creating product awareness in the domestic market. This will be achieved by painting these vehicles with pictures of the new soft drink.
Personal selling will mainly be used in creating awareness for the institutional customer. Personal selling involves oral communication with potential customers. This will enable the firm to explain to these customers the benefits that they can achieve by purchasing the product for their clubs thus increasing the probability of closing a sale. In addition, personal selling will enable the firm to establish a good relationship with these clubs. This means that there is a high probability of institutional customers developing customer loyalty.
Product awareness through public relations will be achieved by sponsoring various sporting events. This will enable the firm to make contact with potential customers. In addition, public relations will be conducted through organizing trade show campaigns aimed at educating the public on the importance of consuming soft drinks that have both energy-giving and nutritional value.
To create customer loyalty and increase the volume of sales, the management will also use sales promotion. This will be achieved by integrating the concept of ‘Buy 2 get 1 free.’ This will enable the consumers to become less sensitive to the existing competition.
On the other hand, the management has also incorporated the use of emerging social networking tools such as blogs, wikis, Twitter and YouTube. Currently, social networking tools are increasingly being utilized by business organizations in creating product awareness. This results from an increased innovation in information technology. Through these tools, firms have been able to create product and service information for a large number of potential customers. According to John (2009, ¶ 2), YouTube is an effective method of creating product information. This is due to the fact that it is cost-effective and does not require specialized knowledge to post advertisements on YouTube. In addition, YouTube is accessed by a large number of individuals around the world daily. To ensure that the video advertisement posted on YouTube results in an actual sale, the management will use visuals of models and celebrities endorsing the soft drink. This will help in creating a positive impact in the minds of the consumers.
The firm will also enter into a contract with major search engines such as Google and Yahoo. This will enable the firm to post its advertisement on the homepage of these companies’ websites. This will enable the firm to reach a large number of potential customers both in the domestic and foreign markets. Product awareness in the international market will enable the firm to effectively venture into the foreign market through either exportation or foreign direct investment.
The management of the firm has also considered developing a blog in which it can post its new product information. This will be achieved by designing a website in which the blog will be integrated. The blog will act both as an informative and interactive tool. This is due to the fact that the potential consumers can be able to post their comments regarding the new product.
Promotion plan and budget
Promotion budget
The management of the firm has considered that the firm will incur certain costs in the process of creating product awareness in the market. In addition, it is also cognizant of the fact that product information should be continuous. As a result, it has set a certain amount of money to ensure that there is effective product promotion for a period of one year. The expected cost is illustrated in the budget below.
Reference list
Evaristo, M &Neves, M.F.(1999). The orange juice distribution channels: some characteristics opportunities and threats. Sao Paulo, Brazil: University of Sao Paulo. Web.
John, B. (2009). Widen your online marketing with You Tube advertising. More Free Information. Web.
Kris, B. (2008). Is psychological pricing an effective strategy?. Web.
Kayne, R. (2004). What is outdoor advertising?. Web.
Michael, B. (2006). Importance of implementing integrated marketing plan for your small business. Associated Content. Web.
Ralph, W. (2000). Pricing strategy as part of your internet marketing plan. Web.
Shakir, A. (2008). Enhance product awareness: methods and steps to increase product awareness and popularity. Enzine Articles. Web.