Page 1 A) ABSTRACT This report is intended on describing unique Marketing strategy (4 Ps) of different companies in succeeding their way. The Product, Pricing, Placing and Promotion are looked into separately and sub sections (2 companies each) in order to make the readers more comfortable. The Marketing Mix model (also known as the 4 P’s) can be used by marketers as a tool to assist in implementing the M. strategy. M. managers use this method to attempt to generate the optimal response in the target market by blending 4 (or 5, or 7) variables in an optimal way. It is important to understand that the MM principles are controllable variables. The MM can be adjusted on a frequent basis to meet the changing needs of the target group and the other dynamics of the M. environment. The function of the MM is to help develop a package (mix) that will not only satisfy the needs of the customers within the target markets, but simultaneously to maximize the performance of the organization.
Transcript
Page 1
A) ABSTRACT
This report is intended on describing unique Marketing strategy (4 Ps) of different companies in
succeeding their way. The Product, Pricing, Placing and Promotion are looked into separately
and sub sections (2 companies each) in order to make the readers more comfortable.
The Marketing Mix model (also known as the 4 P’s) can be used by marketers as a tool to assist
in implementing the M. strategy. M. managers use this method to attempt to generate the optimal
response in the target market by blending 4 (or 5, or 7) variables in an optimal way. It is
important to understand that the MM principles are controllable variables. The MM can be
adjusted on a frequent basis to meet the changing needs of the target group and the other
dynamics of the M. environment.
The function of the MM is to help develop a package (mix) that will not only satisfy the needs of
the customers within the target markets, but simultaneously to maximize the performance of the
organization.
Page 2
B) INTRODUCTION
"Marketing mix" is a general phrase used to describe the different kinds of choices organizations
have to make in the whole process of bringing a product or service to market. The 4Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960
by E J McCarthy.
The 4Ps are:.
PRODUCT-
The product is either a tangible good or an intangible service that is seem to meet a specific customer need or demand.
All products follow a logical product life cycle and it is vital for marketers to understand and plan for the various stages and their unique challenges.
It is key to understand those problems that the product is attempting to solve.
PLACE-
The place is all about with how the product will be provided to the customer. Distribution is a key element of placement.
The placement strategy will help assess what channel is the most suited to a product.
How a product is accessed by the end user also needs to compliment the rest of the
product strategy.
PRICE-
Price covers the actual amount the end user is expected to pay for a product. How a
product is priced will directly affect how it sells.
This is linked to what the perceived value of the product is to the customer rather than an
objective costing of the product on offer.
If a product is priced higher or lower than its perceived value, then it will not sell. This is
why it is imperative to understand how a customer sees what you are selling.
If there is a positive customer value, than a product may be successfully priced higher than its objective monetary value.
PROMOTION-
The marketing communication strategies and techniques all fall under the promotion heading. These may include advertising sales promotions, special offers and public relations.
Whatever the channel used, it is necessary for it to be suitable for the product, the price and the end user it is being marketed to.
It is important to differentiate between marketing and promotion.
Promotion is just the communication aspect of the entire marketing function.
Page 3
C.1) PRODUCT
Product is anything that can be offered to a market that might satisfy a want or need. In
manufacturing, products are bought as raw material and sold as finished goods. A product can
be classified as tangible or intangible.
A tangible product is a physical object that can be perceived by touch such as a building,
vehicle, gadget, or clothing.
An intangible product is a product that can only be perceived indirectly such as an insurance
policy.
A product needs a name: a name that people remember and relate to. A product with a name
becomes a brand. It helps it stand out from the clutter (cover or fill) of products and names. [1]
1.1) UNIQUE PRODUCT
Some products are very unique in nature as they have characteristics that differentiate them from
other products that belong to the same category.
As an umbrella is a device consisting of a circular canopy of cloth on a folding metal frame
supported by a central rod, used as a protection against rain. [2] Rather than simply developing
the existing umbrella design Gerwin Hoogendoom set to work to create a unique aerodynamic
canopy which was able to point into the wind and remain stable even in extreme wind condition
not simply satisfied with wind tunnel testing, this new design subject to extreme testing in racing
car, parachute jumps and even water skiing to demonstrate that the SENZ storm proof
umbrella range could really handle any conditions yet still maintain both rigidity and its
weather proof in capability.[3]
SENZUMBRELLAS.COM:
Senz was started in 2005 by Gerwin Hoogendoom who, as an industrial designer, felt there was
an opportunity to create the ultimate, storm proof umbrella.[3]
Guest must serve themselves using a coffee machine and kettles.
Complimentary snacks, including fruit and vegetables, can be prepared in the kitchen.
There’s also a piano, a record player and unlimited Wi-Fi to provide entertainment.
Customer can help themselves to coffee from the professional machine, or have it made
for them [17].
Figure 2.2.11: Self Service of Ziferblat.
PRICING STRATEGY ADOPTED BY ZIFERBLAT
Ziferblat uses PAY PER MINUTE pricing strategy[18].
Pay per Minute pricing is basically a payment structure in which a customer has access to use
potentially unlimited resources for free except the time they spend there.
In ziferblat customer can use the space as they like. Sit and work here with their computer, can
draw pictures, read a book, invite their friends or meet someone new and have a chat with them,
and everything is for free here, except for the time people spent time costs three pence a minute.
They charge 6 pence per minute and that’s all.
Page 23
Ziferblat using interesting type of pricing strategy. They are essentially renting out working
space under the most flexible terms and conditions possible. While it’s billed as a ‘cafe’, their
pricing model is more in lined to a co-working space, though pricing by the minute is what
makes them innovative.
Ziferblat charging customers 3p per minute probably doesn’t yield a hefty profit margin.
However, the concept itself doesn’t feel like a gimmick. It’s a model that could have a bright
future[19].
UNIQUENESS OF PAY PER MINUTE PRICING STRATEGY
Innovative strategy :
Idea of paying the time rather than the consumption is really innovative[20].
Developing strategies :
From the business point of view it is improving its build a clear social media communication
strategy and developing a revenue strategy [17].
Treating customer as micro tenants :
The key difference between Ziferblat and the other standard coffee chains is that they are
not treating customer just like someone they want to get money from. It is really significant
that they don’t call people as their customers, they call their customers as micro-tenants[17].
Making people comfortable as they like :
They want people to be there and to share the space in a way they feel comfortable [17].
..
Page 24
Uniqueness.
Absence of direct competition
Internationality
Appropriate choice of area
Flexible pricing system
Vegan/vegetarian friendly
Government support.
Partnership with
universities’ student.
Capture large number
customers.
Expansion.
Organise get-together.
STRENGTHS OPPORTUNITIES
Page 25
C.3) Place (Distribution) Strategy
Place or distribution strategy refers to how an organization will distribute the product or service
they are offering to the end user. The organization must distribute the product to the user at the
right place at the right time. Efficient and effective distribution is important if the organization is
to meet its overall marketing objectives.
Distribution channels in marketing are one of the classic “4 Ps” (product, promotion, price, place a.k.a.
“distribution”). They’re a key element in your entire marketing strategy — they help you expand your
reach and grow revenue.
B2B and B2C companies can sell through a single distribution channel or through multiple channels that
may include:
Figure 3.12: Channels of Distribution.
In determining the best structure (or structures) for your business you’ll need to consider the
following questions:
What is the most convenient means for customers to obtain the products or services they want?
What is the specific level of customer service standard required? What is the most cost-efficient way of providing accessibility and service? How many customers are there, where are they located, what is their average transaction
value? What structures do your competitors use and how efficient are they?
Page 26
3.1)A UNIQUE DISTRIBUTION STRATERGY IN CAR INDUSTRY
When we talk about car industry, before a car can be sold to a consumer, it has to be sold from a
manufacturer to a dealership. You don’t buy your Ford Focus from Ford; you buy it from your
local Ford dealership.
Tesla Motors Inc. an American automotive company has a much different distribution
strategy from that of other car manufacturers including Ford (F), Fiat Chrysler (FCAU), and
General Motors (GM). Unlike legacy automakers, Tesla does not have a dealer network.
According to Tesla CEO Elon Musk,
“Existing franchise dealers have a fundamental conflict of interest between selling
gasoline cars, which constitute the vast majority of their business, and selling the new
technology of electric cars.”[21]
Tesla Motors, Inc. (TSLA) an American automotive and energy Storage Company that designs,
manufactures, and sells electric cars, electric vehicle, power train components, and battery products.
Founded in 2003 by Elon Musk (Current CEO), JB Straubel (CTO), Martin Eberhard, Marc
Tarpenning, and Ian Wright. [22]
Market Cap As of May 2015 $25.5 Billion
Country United States
CEO Elon Musk Employees 10,161
Sales $3.2 B
Headquarters Palo Alto, California[23]
Tesla Roadster
First manufactured product, offered from 2008-2012
Model S
Currently only vehicle offered, 2012-present
Model X
SUV, expected to be sold in early 2016
Figure 3.1.1: Logo of Tesla Motors
Page 27
Model 3
Expected to be offered in 2017 Target Price: $35,000
IPO: January 29, 2010, raised US$226 million
First American Car Company to go public since Ford (F) in 1956 Turned first profit in
Q12013
Business Level: Focused Differentiation
Target early adopters with high income. Model X target audience includes women, who make up a larger proportion of luxury SUV buyers.
Corporate Level: Related Constrained
Dominant business selling cars but also sells electric power train parts
Cooperative Level: Strategic Alliances
Panasonic, Toyota, Daimler, Mercedes Benz,
International Level: Transnational
U.S, Asia, Australia, Europe, and Canada. Centered in California. [24]
Figure 3.1.2: Tesla Delivery Country. Source: Internet
Page 28
TESLA’S DISTRIBUTION STRATEGY:
Tesla's strategy of direct customer sales and owning its own stores and service centers is a
significant departure from the standard dealership model currently dominating the U.S. vehicle
marketplace [25]. Tesla Motors is the only automaker that sells cars directly to consumers, with all
other automakers using independently owned dealerships, although some automakers provide
online configuration and/or financing. Tesla is indeed a different company with a different
strategy. To put it in CEO Elon Musk’s words,
“Our technology is different, our car is different, and, as a result, our stores
are intentionally different.”[21]
Figure 3.1.3: Tesla's Contact Point with Customers. Source: Tesla
ONLINE SALES: Tesla (TSLA) sells its cars online. It lets buyers book a car online, without
having to visit any of the dealers. Using a direct channel of distribution to connect consumers
with the product, especially a Web-based channel, can have several benefits. Most importantly,
web-based selling has:
Low overhead
Gives the product a potentially global reach.
Higher rates of profit as no intermediaries share the profits
Figure 13: Direct Distribution Channel (Used by
Tesla).
Page 29
Convenient for customers
Available 24 hours a day
Many customers appreciate the opportunity to give profits directly to producers and artists.
COMPANY-OWNED STORES: Tesla operates stores or galleries usually located in shopping
malls right alongside brands like Zara, Bloomingdales and Sees Candy — 22 in U.S. states and
Washington DC. Customers cannot purchase vehicles from the stores, but must order them on
the Tesla Motors website instead. The stores act as showrooms that allow people to learn more
about Tesla Motors and its vehicles. Secondly the showrooms are only the size of a small shop,
often only squeezing in a single vehicle into the space. This radical departure from car marketing
norms completely changes the traditional customer math.
Most cars dealerships would be lucky to get a hundred potential customers perusing the
cars on their lot each day. But because of their location, Tesla gets tens of thousands of people
walking right past their car, every single day.
Incredibly, many sales have come from people who had zero interest in buying a car until
they saw Tesla’s showroom (They were probably in the mall to buy a dress or see a movie).
Tesla believes in getting physically closer to your potential customers, so that they are more
likely to consider your product or service .
The galleries are located in states with more restrictive dealership protection laws such
as Texas and Michigan, which prevent discussing prices, finances, and test drives, as well as
other restrictions.
TEST DRIVES: Tesla Model S test drives are available at all Tesla store locations. The first
step is to request a test drive on Tesla’s website. A product specialist will then contact you within
one day to schedule a convenient time. Unlike other car companies, Tesla custom builds each
Model S for a specific customer. Test drives are about 15 minutes long and designed to
demonstrate the unique capabilities and performance of Model S. Tesla occasionally hosts test
drive events for those who don’t live near a store. You can reserve a test drive in advance from
our event schedule. [26]
Page 30
Patents
Marketing expertise
Innovative products
and services
Product Quality
Eco-friendly Product
Line
Increase Market
Share through High-
Growth EV Industry
Governments
promote clean
energy
Is Tesla Pursuing the Correct Sales and Distribution Strategy? The biggest challenge for a
company in setting up its own distribution network is capital, or rather the lack of it. It takes a
substantial amount of money to set up a distribution channel. For this very reason, vehicle
manufacturers including Ford (F) and General Motors (GM) team up with third parties to sell
their vehicles.
NO DEALERSHIPS, WHY? Tesla, however, is using a direct business to consumer model,
and choosing to sell their cars via company owned stores. Tesla's vice president of business
development, in an interview, "We don't think that we would succeed using an intermediary
model where we sell a product that someone else sells to the public."[27] There are a couple of
reasons why:
Tesla feels as though there is a “fundamental conflict of interest” for dealers trying to sell
both traditional gasoline vehicles and electric cars- they believe the products are just too
different to have a salesman fairly selling both.
Electric cars are so new and unique that the sales cycle is often longer. Customers require a
great deal of information and education before making a purchase, and Tesla would rather
entrust the responsibilities of “electric car education” to their own employees. Tesla-
dedicate1d salespeople can have the luxury to spend time educating, as opposed to a
salesman at a dealership whose main goal is a quick sale and its corresponding
