Product Portfolio & PLC

Question: This assignment has been designed to allow students the opportunity to explore the underlying importance of marketing and a marketing philosophy within organisations, and to society as a whole Assessment Task Most organisations offer more than one product or service..The advantage here is that the various products the product portfolio can be managed so that they are not all in the same phase in their life cycles. Having products evenly spread across life cycles allows for the most efficient use of both cash and human resources. Answer: Introduction This research study focuses on the aspects of strategic marketing and expansion of a company by using strategic planning. The study highlights the use of techniques of expansion by portfolio analysis and product lifecycle management. The contention present before the research is that, Most organisations offer more than one product or service. The advantage here is that the various products the product portfolio can be managed so that they are not all in the same phase in their life cycles. Having products evenly spread across life cycles allows for the most efficient use of both cash and human resources, (Hollensen, 2015), which highlights that the strategic planning by product portfolio, i.e. introduction of a variety of products by a company is advantageous, and the same is more beneficial in terms of money and resource if the products have variant life cycles (Medway, Warnaby and Dharni, 2010). The report explains the theories of strategic marketing by applying the concepts of it to a chosen industry, in the present case it is Cadbury which is one of the biggest confectionary company, offering milk chocolates and other variants such as biscuits, beverages etc. There has been a shift in the market trend and the planning techniques that companies use, earlier the focus was on production techniques which then shifted towards the product and then to sales and now the companys focus on marketing strategies for expansion and sustenance (Ofek, 2010). Strategic Marketing Strategy is a systemic planning, after taking into consideration the external and internal environment and planning according to the affects that may be caused. Strategic planning is a planning done for the long run, which includes various steps which could not be undone later, as a lot of resource and capital is already involved in it. Strategic planning differs from marketing planning also, as strategic planning procures a framework for marketing planning and sets procedures and tasks to fulfil the marketing planning strategies. Strategic planning is again long term and is for the overall working of the organisation, however, marketing planning is a short term phenomenon made to fulfil a marketing strategy for a certain specific task of marketing. Levels of strategy development It is important for small scale or large business corporations to develop strategic plans to fulfil their objectives of marketing in order to sustain their products and business (Kuester, Homburg and Hess, 2012). The strategic planning is done in a systemic way that is divided into three levels: Corporate strategies: this is concerned with allocation of resources within a corporation. It involves allotment of resources to various lines of the same corporation (Designing product and business portfolios, 1981); the allotment is done in a strategic manner so as to make optimum use of resources. The strategic is made to develop a mission and vision and goals that are to fulfilled by the firm at the corporate level, this involves three types of formulation of strategies: Expansion strategies: expansion strategies include planning for a firm to expand its business in the market by either through concentration of its products, by penetrating into the market, diversification of its goods etc. expansion could be done by integration techniques also which involves combining various other activities of a firm with the existing activities. Integration could be horizontal, vertical, backward or forward. Internationalisation and digitalisation are other expansion strategies (Wilson and Gilligan 2005). Stability strategies: these strategies aim at improving the functions and the quality of the goods and services provided by a company. It is focused on satisfying the customers and improving the performance of the firm in the market. Retrenchment Strategies: these strategies are followed or developed when a company wants to decrease its product line or wants to close down or divest its business. This is done by sale, liquidation, reducing or eliminating its products etc. Business Unit Strategies: these strategies are made for a particular product or division of a corporation or business. These strategies includes strategies related to cost, pricing, sales, packaging etc of a product, its timely production, delivery, brand image, innovation, technological improvising is all a part of these strategic planning. Functional Strategies: these strategies relate to marketing, production, human resource and finance. The marketing and human resource department follows the instructions of the top management to fulfil the planning scheme of the management. Stages of Strategic planning There are various stages involved in strategic planning, as discussed it is a systemic phenomenon and therefore involves a procedural planning divided into 3 stages: Strategy formulation- this is the stage of determining the objective of the company, as to what it wants to do (Cravens, 1982). This stage determines the mission and goals and objective of the company. This planning stage sets out the core objectives that the company needs to fulfil. Mission statement is the first set of document prepared that enlists the repercussions of the external and internal environment that can affect the organisation in the future as well as in the present. Strategy implementation- after the formulation of the strategies the implementation part comes into picture. This stage involves information system, leadership, corporate culture, business governance and ethics along with functional strategies. Strategy evaluation and control- the effectiveness of a strategy can only be checked after it is implemented, therefore it becomes necessary to manage and control the strategies so implemented. In order to evaluate the strategies it is necessary that there exists proper communication channels in all the aspects where those strategies can leave their impact. Monitoring the affects and the strategic steps taken along with rectification and immediate reassessment of strategies in case of emergencies and crisis form a part of this stage. Development of marketing strategy Marketing strategies needs to be developed in order to stand out from the people who are involved in the same field. It is important to keep a check on the quantity, availability, after services, pricing, promotion, brand image of the products so as to stand out in the crowd of products available in the market. Marketers use various techniques to stand out in the market and formulate marketing strategies which are as follows: Portfolio analysis- this is a systemic method that involves formulation of present and future portfolio of a business, i.e. the shaping of the products and services of a business. Ansoff matrix- this is a matrix that maps the growth of the product in the market. Product Portfolio Portfolio analysis is a systematic method that scrutinises the products and services that are a part of are offered by an organisation and form a part of their portfolio. An analysis of the products that are offered by the business helps in allocation of resources as per the requirements so analysed and helps in knowing what product should remain and which one should be done away with time (The Guardian 2012). A single organisation can provide goods of all variants, such as ITC group has their chain of hotels, they have cosmetic products etc, these all variety of products offered by ITC group becomes a part of their product portfolio. With time it becomes important that the products and services that are not in demand or whose demand and use has been reduced or done away with, such products and services are either eliminated or innovated in the market so as to create a demand of it again between the customers. Portfolio analysis helps keep a check of these factors and helps in taking steps and formulating strategies to bring about changes in the product line of a business. Advantages and Disadvantages of Portfolio Analysis Advantages: It helps the management allocate resources according to the requirement. It maximises return on the investment on innovation of products. It stimulates the management about the financial aspect of a product for its growth and expansion. It helps the management to know about the proprieties. It helps bring balance between the various product lines or departments of the same organisation. It helps maintain a competitive edge in the market. Disadvantages or Limitations: There is a difficulty in determining product segments. Since the evaluation is subjective in nature therefore the cash flow estimate is not accurate. It is difficult to value certain products and assets and therefore it becomes difficult to analyse a portfolio that has these kinds of products. THE BOSTON MATRIX This is an analysis model to analyse the product and services keeping in consideration the growth of a product in the market and the share that it has in the market. This method helps in knowing what is the current position of the product in the market. It has 4 parts for its analysis: A star- high market share and in a high market growth. Shows that the market is in the growing phase. Cash cows - high market share in a low market growth market. Shows that the market has reached a level of maturity. Question marks (or problem children) - low market share and high market growth. Shows that there is competition in the market. A dog - low market share and is in a low-growth market. Shows that there is no scope for that product in the market. Product lifecycle A product life cycle shows the growth and sales of a product over a period of time. A product goes through various stages in the market over a period of time and marketers allot resources to it strategically that impacts the growth of that product (Iriobe, 2009). Even the expenditure incurred on promotion of a product changes with time and hence every product has a product lifecycle in which various resources are distributed according to the strategic planning done for a product and a lifecycle of a product is made. Research indicates that firms should reduce the advertising cost of a product over the life cycle of it, although researchers have even stated that there is no impact of advertisement on the life cycle of a product. Studies indicate that the life cycle of a product is affected by various factors over time that include allocation of advertising and other marketing mix variables, such as sales force etc. Cadbury and its Strategic marketing Cadbury is a well known chocolate brand that offers a variety of chocolates, cakes, drinking chocolates etc. Cadbury brand was established by John Cadbury (Birmingham, England) in 1831. Cadburys colour purple has been associated with it and well recognised and Cadbury has also obtained a colour trade mark for its milk chocolates. Cadburys recognition level is around 96% along with brands such as McDonalds and Coca Cola. Cadbury targets all age group of customer with its variant product mix. Dairy Milk is one of the most famous milk chocolates amongst the youngsters as well as the old nooks. Cadbury Product Portfolio: The most commonly bought product of Cadbury includes its dairy milk range that consists of plain Dairy Milk Chocolate, Fruit and Nut, Dairy Milk Whole Wheat etc. One of the least common products of it is the whole Nut Bar which is considered as a dog product and therefore that acquires the least percentage of the market and its demand and growth is too less. Although after the product analysis the chocolate is still in the market as it generates revenue of 40 million each year (wordpress n.d.). Dairy Milk Product Lifecycle (My Media Watch, 2015): Introduction- 1824- Cadbury Dairy Milk was invented by John Cadbury. 1904- George Cardbury perfected the recipe for milk chocolate. 1905- Cadbury launched Dairy Milk into the market of UK. 1928- Heavy investments began in U.K for the promotion of Cadbury Dairy Milk through advertisements focusing on its high milk content Growth- 1928-1933- Fruit and Nut and Whole Nut was introduced. Maturity- 1913- Dairy Milk became the best selling product of Cadbury in U.K. Decline- Consumers have started shifting to other chocolate brands and categories such as Bournvilles dark Chocolate. It is necessary to determine the market standing and share and to make marketing strategies according to the determinants, to know the position of the company SWOT analysis is one of the most commonly used environmental analysis framework, other methods are PEST Analysis that focuses on the external and the internal environment that affects the growth and expansion of a company. SWOT Analysis of Cadbury Strength 1. It is the topmost chocolate brand and has developed customer loyalty over the period of time. 2. It has the most famous celebrities as its brand ambassadors. 3. It uses an excellent promotional technique through advertisement that easily makes people fall for it and caters people needs and accessibility. 4. It is the first brand that comes to peoples mind in the field of chocolates. 5. It has created its brand loyalty among its customers. Weakness 1. There is a limited shelf life of its eatables. 2. It has been made controversial many times and has also been tainted due a scandal. Opportunities 1. It has an untapped rural market 2. Its packaging is one of the most attractive packings which also extends its preservation life. 3. It has an upper hand in the market due to its brand worth. 4. Its sugar free category has also attracted more people and covered the ones who could not have taken joy of its products. Threat 1. Not common between health conscious people. 2. Raw material costs have increased and inflation results in decrease of sales. 3. Health consciousness amongst people. 4. Other substitutes are available in the global as well as the local markets. PEST Analysis Political- U,Ks political environment has created a huge impact on the working of Cadbury, as the Labour laws and the policies of the union create a great impact on the internal working. Economic- even during the global crisis Cadbury maintained to keep its sales stable although there was a decline in the disposable income of the consumers. Social- the introduction of Cadbury was due to social factors, as the inventors of Cadbury were against alcohol and the basis of their business was tea, coffee, liquid chocolate. Cadbury has been into various controversies but has always come out of it fighting the rigours of the social impacts. Technology- Finally, technology has changed Cadburys production and packing process over the years, starting with the introduction of new brew machines to blend coffee and cocoa gains. After analysing the strengths and weaknesses as well as the external and internal environment of a company it becomes easy to strategically plan in a way so as to eliminate and overcome the weaknesses according to the opportunities and keeping in mind the existing threats. Marketing strategies of Cadbury Advertising- Cadbury has taken a special place when it comes to chocolates, as everyone first think of Dairy Milk. But Cadburys director of marketing felt the need to bring back the craze for Dairy Milk between the people as it had become passive. In order to do so, they planned for an advertisement commercial that came out to be as the Gorilla Ad Campaign. The purpose of the campaign was to instill people with the love for Dairy Milk again and from being seen as manufacturers of Dairy Milk to as producers of happiness. The Gorilla Ad Campaign had such an impact on the people that Cadbury was able to bag a Yellow Pencil and a Black Pencil at the DAD Professional Awards (DAD. (n.d.). Brand Positioning and Repositioning- Brand positioning is one of the metods of making the brand known to a target audience and communicating an image that is created of that brand amongst the people. It is technique of creating an image of the brand or a product in front of the audience, to fight competition. Repositioning can be done in the following way: Image repositioning- in this the market for that product remains unchanged only a change in the image of the product is made before the target audience. e.g. Cadbury Snack. Intangible repositioning- the same product is used but the target segment is different e.g. Lucozade change from targeting the sick to targeting athletes. Product repositioning- the product is reshaped or is made more attractive to the people, e.g. introduction of angry birds in gems to attract the kids. Tangible repositioning both the product as well as the target segment is changed, e.g. introduction of Bournvita as a beverage as well as currently biscuits, gave an opportunity to Cadbury to enter the heath sector. Product Extension- in this strategy of growth and expansion, the existing product is extended by the company so as to add a line of products taking advantage of the current share of the existing product that is in demand. Like Cadburys bournvita, a health drink has a large share into the heath and nutritious food market, Cadbury introduced its Bournvita biscuits and attracted the existing market share of the beverage to the recently introduced biscuits. Recommendations It is necessary that Cadbury increase its health and nutrition product line as that is one of the drawbacks of Cadbury, as health conscious people avoid the consumption of its products. It is necessary that Cadbury increase the shelf life of its products, as it melts easily. Although there has been an extensive research on heat resistant packaging and techniques, yet it has not come into existence. As other substitutes are available easily and there is a low cost in shifting therefore t is necessary for Cadbury to come up with innovative techniques to bind the customers to its products. Brand Positioning and repositioning is necessary for Cadbury for its common products, as with time people tend to get bored and with the market flooded with new options, the target audience might shift to new and better alternatives. Conclusion Marketing Strategies are designed in order to achieve certain objectives that are set by an organisation. The marketing strategies help an organisation to grow and expand the business rationally and in a planned manner. It is through the implementation of these strategies that an organisation can prosper, and the implementation is dependent upon the actual performance. It is important that there is flexibility in the strategies adopted by an organisation so as to overcome problems and difficulties in unexpected circumstances as a market is never stable and hence sudden decisions depending upon the situation of the market needs to be taken in case of emergencies. The market is evolving and these strategic marketing planning is implemented so as to understand and capitalise these changes that are occur in the markets at a global level. References: DAD. (n.d.). Case Study: Cadbury Gorilla. cadbury.co.uk. (2016).Products. Hollensen, S. (2015) Marketing Management: A relationship approach. 3rd ed. Harlow Pearson p257. Hutt, M. and Speh, T. (2010).Business marketing management. Mason, OH: South-Western Cengage Learning. Iriobe, O. (2009). Product Life Cycle: A Key to Strategic Marketing Planning. Kuester, S., Homburg, C. and Hess, S. (2012). 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