How a brand promise drives change in a multinational organisation A Philips case study

Page 1: Introduction
Philips was established in 1891 and made lightbulbs - a simple product. Throughout the years the company increased its portfolio into technology products that became too complex for most users. When Philips realised this, it decided to make life easier and so launched a brand repositioning all about simplicity. The term positioning refers to where products and brands are placed in a market. What is more vital is where customers see such products/brands being placed in the market. For example, customers might see products as giving 'good value' or 'poor value' for money. They may link a brand with 'high quality' or 'low quality'. It is key to carry out market research to spot appropriate positions to take in the market. An appropriate position is one that suits customers' requirements. The term 'repositioning' refers to a conscious strategy to alter the site of products/brands in the market. The new 'best' place should be based on market research.

'sense and simplicity' is the brand promise that Philips has identified through its research as the best one to take. The map below shows how the company has repositioned itself. It illustrates two key dimensions: 1. simplicity 2. value-for-money technology products. You can see that Philips' new position in its markets is based on continuing to provide value-formoney, high-tech products. In addition the new position is based on easy-to-understand goods and clear exchanges with its market. Since the launch Philips has made great progress. This has been recorded by achieving milestones along the route. Good examples are the creation of a Simplicity Advisory Board (SAB) and the launch of a range of thriving products such as Senseo, a coffee machine that is stylish and simple to use. The triumph of these milestones is outlined in this case study.

Page 2: Creating a repositioning strategy

The stages involved in moving a product are: 1. carrying out research to find out the weaknesses of the starting position 2. researching a right direction to take 3. making plans and taking actions to improve the position.

A problem that faced Philips in 2003 was that its media investment was rather unfocused and was spread thinly between too many different product segments. The table shows just four product areas and the target audiences for each, which were being addressed. In addition Philips' products were marketed under lots of names, using a range of different advertising approaches. It was no wonder that there was great confusion in customers' minds. The challenge facing Philips, therefore, was to create a clear vision that would help the company to reposition itself and all of its related brands. A brand promise was then set out that is clear and easy to follow. The brand promise is 'sense and simplicity'. In the current high-tech age, consumersare faced with many hard product choices. What most of us want are clear-cut communications about the benefits that these products will provide for us. This is as true of medical professionals ordering brainscanning equipment for a hospital as it is when you or I want to buy a light bulb, electric toothbrush or cordless kettle.

This is why the brand promise 'sense and simplicity' is so important to Philips. This entails three main elements: Philips | How a brand promise drives change in a multinational organisation

Page 3: Creating consistency and direction

In order to move forward it was vital to identify the key issues. The problem facing the company was lack of constancy and direction. Resources were being spread too thinly across too many products, with developments in too many countries. Decision making within the wider Philips organisation had become patchy. This was plain to see - there were too many products, too many markets and a lack of consistency in advertising. For the consumer it was hard to tell what was and what was not a Philips product.

The first challenge was to change the Philips image. This was built around 'sense and simplicity'. The message that Philips is getting across now is that everything it does is focused on meeting customer needs. All that Philips does today is based on this concept. The message is spread through the organisation, making sure that all business processes are founded on 'sense and simplicity'. Everyone who comes into contact with Philips, whether they be employees, customers, shareholders, suppliers or other stakeholders, should see this brand promise. For example, it is shown in the company logo, and all the company operations from top to bottom. 'sense and simplicity' is shown in all the new products that Philips develops, as well as in existing ones. When the company designs a new electric kettle, its concern is to provide a stateof-the-art, easy-to-use product. The same principle applies to medical equipment, flat screen TVs, food mixers, male and female razors and so on. New Philips' products are:

advanced - based on market leading technologies designed around you - based on the findings of careful customer research easy to experience - easy to use.

Philips is also looking at all of its existing products to make sure they fit the needs of 'sense and simplicity'. The third key element of 'sense and simplicity' is communications. All Philips' exchanges should be easy to understand. The message given is directed at the target audience and is simple to follow.

One of the key simplicity milestones has been the launch of the Simplicity Advisory Board (SAB). This is a think tank of independent experts from the fields of information technology, healthcare, fashion, design and architecture. It has been able to give an outside-in view of what simplicity means and how this can be valid across the organisation. The members of the board were chosen for their wideranging knowledge and expertise.

Page 4: Illustrating the strategy - products

We can show the new repositioning strategy by taking the example of some of the high-tech products that Philips has just worked on. A good example of this is Senseo. Senseo Coffee System has been developed through a partnership between Philips and Sara Lee, a Fast Moving Consumer Goods (FMCG) supplier. The key aspects of Senseo are:

cool design easy-to-use technology amazing coffee.

Between 2001 and 2005 more than 10 million of these coffee machines were sold in eight countries - an impressive total. The product embodies what Philips is trying to achieve in everything it does. This is to join an exciting state-of-the-art product with simplicity. The coffee makers are combined with Douwe Egberts Senseo coffee pods to give customers

Last year, Philips launched its own Simplicity Event. This provided Philips with an opportunity to share, with stakeholders, how far it has come in its commitment to 'sense and simplicity'. Products that already deliver this promise were exhibited, together with living prototype demonstrations of how Philips envisions simplicity in the future. Senseo is one example of 'sense and simplicity' in action, other living prototypes include:

'Chameleon' - a lamp shade that changes to match any colour you show it. 'In Touch' - a mirror that transforms into a touch screen message centre, providing an alternative to leaving messages on answer phones or stuck on a fridge. 'Momento' - a glass ball, small enough to fit into the palm of your hand, offering a completely new way to share video memories. Once shaken its built in sensors will prompt the existing clip to dissolve and another to appear.

As well as supplying consumer products that are simple and easy to use, Philips also applies 'sense and simplicity' to all areas of its work. For example, in the world of medical products it has created the AmbientExperience so that medical scans are less frightening for the patient. In the Ambient Experience suite, a patient can choose a relaxing visual that can be projected onto the ceiling and doctors say that this ambience helps relax the patient and makes the scanning process easier and quicker. Philips is embedding 'sense and simplicity' into a wide range of high-tech medical products. 'sense and simplicity' is not just about making new products, however. Easy-to-understand processes are also vital. For example, Philips has invested in a 'Welcome' project. Philips believes that customers should have a pleasing experience from the start. Welcome therefore seeks to make sure that all Philips packaging is simple to unwrap.

Page 5: Communicating "sense and simiplicity"

At the heart of business success is good communication. This means sending messages from individuals or organisations to others (receivers). Good contact involves:

communicating a brand promise, in this case 'sense and simplicity'

in a clear and easy to understand way to the right target audience using the right media.

There are a number of ways that Philips does this: 1. As it is a global company, it is important to direct contact from the centre. This ensures that the 'Philips message' is conveyed consistently. 2. Philips believes that there should be a single insight for each product (not mixed messages). 3. All creative work carried out by advertising agencies must be based on the 'sense and simplicity' promise. 4. Television and print (for example, magazine) adverts are presented in a standard way - at least three Philips adverts in a single magazine - in a campaign that might last for eight publications of the magazine.

Page 6: Conclusion

'sense and simplicity' is the brand promise for the Philips organisation. The need for change was seen as a result of customer research. Products and processes need to be made with the customer in mind. Modern consumers want to be able to use and benefit from high-tech products. They also want to find that these products are simple and easy to use. Philips has therefore transformed all aspects of its planning. It has also looked closely at operations to make sure that 'sense and simplicity' drives everything that the company does. 'sense and simplicity' is a promise that involves Philips working closely with its customers through market research. It also operates with outside experts, such as the Simplicity Advisory Board, to create an outside-in way of working.

Brand repositioning and communications A Philips case study

Page 1: Research
Market and product research lie at the heart of any successful business. Market research involves talking to customers to find out what they want and then supporting these findings with product research which involves supplying products with the benefits that customers want.

Philips is a global company so the research that it carried out took place on a global scale. Philips involved more than 1650 consumers and 180 customer companies around the world to make sure that it repositioned its brand in an appropriate way. Philips also undertook BEAT (Brand Equity Assessment Tool) research involving 26,000 respondents. Qualitative research involves working with relatively small focus groups which in this case consisted of Philips' consumers and professionals (trade and opinion leaders, e.g. hospital surgeons who use its scanning equipment). Using qualitative research makes it possible to find out a lot of detailed information e.g. current perceptions of the company and its products, the types of new products and the image that consumers would like to see Philips develop. Quantitative research typically involves questionnaires and surveys to bigger samples of consumers enabling statistical analysis of the results. The research was designed to:

enable Philips to have a better understanding of its existing position in the market identify and test new routes for moving the brand forward check the effectiveness of the chosen route.

Philips' market research was designed to help the organisation to define appropriate brand positioning. A combination of qualitative and quantitative research was carried out in:

UK Germany France Netherlands Brazil Hong Kong China USA.

The research examined Philips' performance versus average performance in the market. The results showed that, for example:

consumers believe that they can 'rely on Philips products' that Philips' products 'make my life better'.

The characteristics that professionals most valued about Philips was the company's 'development of new and exciting products', that 'Philips products are reliable' and that Philips produces 'high quality products/services'. Currently, 80% of the company's total sales are made to a core target group aged 35-55, which consists of affluent, well educated decision makers.

Page 2: Findings
The results of Philips' market research was to show that the core target group typically disliked the unnecessary hassle created by technology. The research showed that simplicity is what people expect of technology. This is applicable to a doctor working under pressure in a hospital with advanced medical equipment as well as to a consumer operating a DVD recorder. Simplicity is equally relevant to Philips' customers, be it in Healthcare, Lifestyle or enabling Technologies.

The findings indicated that the company had substantial strengths based on the reliability of its products and the belief that the company develops new and exciting products. Research also indicated a clear gap in the market. The only company with a positioning close to 'sense and simplicity' is Apple, who only have a limited product range. However, the research findings also indicated some weaknesses, in particular:

consumers felt that Philips does not lead on innovation professionals felt that Philips did not have as clear a sense of direction as some of its rivals.

The findings therefore presented Philips with the challenge of developing a clear and focused position for its brand.

Page 3: Brand positioning

A vision is a clear picture of what you want to achieve. Philips' vision is to produce products that always put the customer first. The challenge facing Philips, therefore, is to better understand what people really need.

Philips' new brand positioning is all about promising customers a more comfortable and more straightforward relationship with technology and with Philips. It believes that somewhere along the way the promise of the Technology Revolution to make our lives easier, simpler and better is not being delivered. In many respects the technology industry has made things more complex. Philips is, therefore, offering a solution. Research showed that people are asking for greater simplicity in their lives and in their dealings with technology. They want technology that gets the job done without drawing attention to itself. Most users are put off by the need to read and understand a complicated manual before they can try out their new purchase.

With this in mind, Philips is continually bringing new and exciting products into its portfolio, which at the same time are simple to use. Philips' new position 'sense and simplicity' is based on three essential pillars, that:

'Products are designed around you'. 'Products are easy to experience'. 'Products are advanced'.

All its activities must now be driven by insights into how consumers/customers seek to experience the benefits of technology. Philips is becoming more market led, driven by the needs of the customer.

Philips is undergoing a change process to make sure that products and services are convenient and easy to experience, in order to remove the hassles often associated with technology. At the same time, however, products must continue to

deliver the benefits associated with innovation. These principles can be illustrated by considering the widely used Sonicare electric toothbrush as shown in the chart.

Page 4: Communicating the brand positioning

Clear communication is essential in business if appropriate messages are to reach the relevant target audience. Philips needs to communicate its new position to relevant customers/ consumers and to the market as a whole.

Advertising campaigns designed to communicate its repositioning exercise focused on a core target group, consisting of the 20% of people doing 80% of the buying. The affluent decision makers in the 35-55 age group identified earlier. The campaign was designed to be true to the concept of Simplicity. To get the message across, Philips sought to use a different language than the ones we have come to expect from a technology company - fresher, cleaner, more human. Every advertisement and insert that is used in the campaign tells part of a story. One advertisement reinforces another, so for example multiple insertions are used in consecutive TV commercial breaks. The advertising campaign is a global one and features existing Philips products that fit the new brand positioning. The campaign cost around EUR80m and was run via broadcast, print and online in the Netherlands, Germany, France, Italy the United Kingdom, the USA and China. Communication has been to a range of audiences in addition to consumers, including Philips' employees, the media and the marketing community, through integrated PR activities and an advertising campaign. As well as the television advertising campaign, Philips has used a variety of media including the Internet, face-to-face launches and poster campaigns.

Page 5: Conclusion
Philips has always been associated with value for money high-tech products. However, in the past it would have benefited from having a stronger brand image. The repositioning exercise based on 'sense and simplicity' helps the wider public to better understand Philips as a consumer focused organisation that is continually providing appropriate simple-to-use solutions for everyday needs through the application of the latest technology.

A Singapore Airlines case study

Page 1: Introduction

Premium brands capture the public imagination when they stand out from the rest. Obvious examples are Earl Grey tea which connoisseurs recognise for its distinctive name, flavour and taste, Rolls-Royce for its pedigree of no-expense-spared luxury and Parker pens for their stylishness coupled with functionality. Another premium brand that is widely respected in this country is Singapore Airlines (SIA) which is particularly well known for the quality of its product offering and excellence of service standards. Singapore Airlines customer service standards are symbolised by the distinctive uniform of its flight stewardess, a sarong kebaya in batik material designed by Parisian couturier Pierre Balmain, reflecting its Asian heritage.

In the modern service economy, it is frequently customer service that differentiates one product from another. A prime example is the airline business, where passengers may be travelling for many hours. During these periods people want to relax in comfort, knowing that their individual needs are being catered for. SIA aims to provide the best product for its passengers, plus the best customer service available. This case study highlights how SIA is achieving an advantage in the competitive airline industry. After operating as Malaysian Airways and then as Malaysia-Singapore Airlines, SIA was officially launched in 1972. Today SIAs network reaches out to 93 destinations in 42 countries, serving Asia, Europe, North America, the Middle East, the South West Pacific and Africa. Its regional airline subsidiary SilkAir serves 21 destinations in 8 countries. SIA has also created a number of strategic alliances with other major world airlines to serve other markets jointly. Remarkably for the airline industry SIA owns all its aircraft, unlike many other airlines who lease a substantial part of their fleet. It also has one of the youngest fleets of any major airline, with an average age of just over five years.

Page 2: SWOT analysis

SIA initially needed to carry out an analysis of its operating environment. The traditional business tool for doing this is a SWOT analysis (strengths, weaknesses, opportunities and threats). The strengths and weaknesses are factors internal to the organisation.
Strengths and weaknesses

SIAs key strength lies in the location of Singapore as an important crossroad of the world. Singapore is a relatively small country which has been one of the economic success stories of the last 25 years. As with other South-East Asian economies Singapores success lies in the strong trading links that the country has developed in the global economy. As a former British colony which gained independence in 1965, it had to market its services globally to be successful. In its early days the airline was much smaller than its rivals. This was a major internal weakness. SIA, as the national airline, was faced with an intensely competitive global market in which the big players like British Airways operated on many routes with large fleets of aircraft. Until recently many countries have restricted access to air routes and airports in order to protect their national airlines against foreign competition. Today all this is changing, as, along with many other areas of international trade, there is strong pressure to open up markets and allow greater competition. However, in the early years SIA had to work very hard to secure the right of access to many important countries and airports. It took many years of struggle to achieve landing rights at Heathrow, followed by Manchester. Most recently SIA is seeking access to transatlantic routes from the UK. SIA is committed to the notion of 'open skies', i.e. open access of routes to airlines with the consumer deciding with whom he or she wants to fly. It continues to be a bone of contention for SIA that while Singapore has opened its own airport to other airlines, SIA is still restricted from access to other routes, e.g. transatlantic.
Opportunities and threats

The main opportunity facing SIA was the rapid growth in air transport for both passenger and cargo. Today the globe is a much smaller place, people can move rapidly from one continent to

another in a matter of hours and more people have the disposable income to afford this. However, there are threats to an airline like SIA from the major national carriers of much larger countries, and restrictive regulation of air routes. The SIA Group is Singapores largest private sector employer with a 28,000 strong workforce. The airline is committed to the development of its human resources. The airline has been able to develop its distinctive competitive edge in customer service through its people. From an early date SIA recognised the importance of customer service in gaining and retaining customer loyalty. SIA has always placed great emphasis on quality training for staff, which has established its cabin crew as the 'hallmark' of efficiency and customer service. This has led to greater competitive advantage.

Page 3: Extending the offer

Product innovation and service excellence form the pillars of SIAs operational philosophy. SIA strives to continually 'raise the bar', by setting new product and service quality standards for the aviation industry. In the 1940s in-flight refreshments comprised a thermos flask of iced water; this was later extended to sandwiches and cold drinks; today customers expect a lot more. There is a great opportunity for airlines to offer added value for their passengers. This is achieved through a host of additional extras that make up the customer service package. As the industry is so competitive, standards are continually improving. SIA has been at the forefront of developing new initiatives over the years including:

In the 1970s: first to offer free headsets, a choice of meals and free drinks in Economy class. In 1991: first with satellite-based in-flight telephones.

In 1995: the introduction of Kris World, a state-of-the-art in-flight entertainment and communications system across all three classes (First Class, Raffles Class and Economy Class).

Page 4: 'Raising the bar' through trainingn

Initial training for SIA cabin crew lasts for three months. It is designed to support staff in learning to anticipate and meet the needs of all passengers, e.g. during the course trainees are encouraged to visit old peoples homes and to work with children while they are undergoing training. Other aspects of training include grooming and make-up, plus detailed Health and Safety Training. The main emphasis is on top quality customer service and attention to detail. Language training is important and staff will be able to speak a number of international languages including English. Training encourages team spirit and staff understand that they are ambassadors for Singapore. For many visitors SIA staff will be their first glimpse of Singapore, so it is vital to create a positive impression. By continually pushing up the level of service SIA is creating a standard which others find difficult to follow. SIAs policy is that all promotion should come from within the company, so there is plenty of scope for staff development. Scholarships exist within the company to send cabin crew to University (as long as they come back!). SIA has its own management development centre which employs top quality trainers (including professors from Harvard University)

Page 5: Developing competitive advantage

Most recently SIA has developed some product innovations which gives it further competitive advantage.

Investment in leading-edge technology has seen SIA achieve an industry leadership position in the field of in-flight entertainment. With KrisWorld, customers have access to 22 video channels, 12 audio channels, 10 popular video games, realtime news, information on popular SIA destinations and a personal in-seat telephone. WISEMEN is a major enhancement of KrisWorld being the first in-flight entertainment system to offer both video and audio on demand. SIA customers were the first to experience in-flight surround sound offered by Dolby Headphones. The revolutionary technology brings high quality cinema-style surround sound to in-flight film viewing in all three classes. SIA has taken in-flight dining to new heights with the formation of its International Culinary Panel (ICP) and the introduction of World Gourmet Cuisine. Comprising eight world-renowned chefs including the UKs Gordon Ramsay - the ICP has created world-class menus for all SIA flights, including signature dishes exclusively for SIA. Other members are Georges Blanc of France, David Burke and Nancy Oakes of the USA, Dietmar Sawyere of Australia, Yoshihiro Murata of Japan, Satish Arora of India and Yeung Koon Yat of Hong Kong. Customers on SIA can enjoy an extensive selection of wines and champagne from the worlds major wine-producing regions. SIA has also created unbeatable packages in each Class (students can view the interiors of SIA planes by following a virtual tour on the Singapore Airlines website).
Meeting the needs of different markets

First Class passengers are able to enjoy individual compartments (Sky Suites) on 747 flights, providing a private space including sleeper beds. Cabins are fitted out in leather and burr wood to provide a luxury feel. All amenities and linen

have been redesigned, mostly by Givenchy. To top it off, each individual compartment has a 14inch personal video screen, specially produced for SIA, by Sharp of Japan. Raffles Class passengers have new seats designed by the Swiss firm Ludeke Design, giving a generous recline and the longest business class seat pitch among major airlines offering three classes. The cabin colour scheme is blue and rose cloud with alternating seat fabrics to impart a touch of style and elegance. SIAs leadership in Economy Class is underlined by KrisWorld the most sophisticated range of video and audio entertainment. Seats have been updated to provide more room and comfort. Passengers are able to enjoy World Gourmet Cuisine and even champagne.

Page 6: Conclusion

SIA provides an excellent example of continuous improvement in the face of extensive global competition. Staying ahead of the field means that a company can never afford to stand still. This case study has shown how SIA is always seeking to improve the service it provides to customers and how it is constantly striving to improve customer service. SIA has been able to successfully differentiate its product by continually providing the benefits to meet the needs of the modern air traveller whether a child, a young person, a tourist, a business traveller, a film star or a Prime Minister. By steadily improving the quality of products by using the worlds best designers and chefs, SIA is able to create the synergistic benefits that stem from working with the best employees in the world. While passengers are invariably delighted with SIA, they can be sure that SIA is working to make their next flight even better.

A Kraft Foods UK case study

Page 1: Introduction

In a competitive market, the organisations most likely to meet their objectives are those that are capable of leading rather than following changes within that market. Managers therefore need to build a business that is capable of responding quickly to changes in both consumer requirements and the business environment. This means not only constantly developing innovations but also being able to launch them into the market place. Successful organisations consist of different people united in a common purpose or corporate goal. Within every organisation the key element in keeping people focused is a corporate strategy that builds the business so that it can adapt and move forward through time. In order to change, a business must plan ahead so that the actions of each of its parts fit together and are coordinated to meet the corporate goal. This case study illustrates how Kraft Foods' management accountants act as financial planning analysts to support the process of brand development. The study highlights how Kraft's forward planning and supporting processes of investment/forecast analysis supports its core brands in a fast-changing market place.

Page 2: Planning analysts

The word 'accountant' conjures up the stereotype of somebody sitting in a office, often on their own, inspecting and auditing books, from which they produce historical financial reports. In a fast moving commercial environment such as that at Kraft, the difference could not be starker. In order to achieve the corporate goals, Kraft employs accountants in planning analyst roles who work within customer and consumer marketing teams. The role of planning analysts is to:

help decision making processes provide detailed value added analysis rather than accounting reports - i.e. why? rather than what? help the brands to deliver value for customers, yet at the same time develop their distinct position within the market place enable the teams to understand events and trends help teams plan for the future.

For example, this role involves 3 types of planning: 1. forward - strategic planning for the long-term future of the business 2. budgeting - setting and managing budgets across the business 3. forecasting - managing the business and making sure that activities meet annual and quarterly forecasts.

The demanding role of a planning analyst is supported by a process of professional development. Kraft encourages its financial managers to take qualifications such as those provided by the Chartered Institute of Management Accountants (CIMA), a professional accounting body. It actively supports their learning through paying for courses and adopting a flexible approach to allow managers to balance their workload and their learning.

Page 3: Corporate goals, vision and strategies

The starting point for planning is to set a corporate goal or target. With this, a business sets out a vision of where it wants to be and how it wishes to be viewed by others. The Kraft vision is to be recognised as the undisputed leader in the global market for foods.

In pursuit of this aim, Kraft has devised strategies that are intended to ensure that:

its products become consumers' first choice retailers and other customers view Kraft as an indispensable partner it is well placed to form alliances people are keen to work for the company it is viewed as a responsible business enterprise it is acknowledged as a high quality performer in its sector.

In order to achieve these goals Kraft aims to:

accelerate the growth of core brands extend awareness of these brands into developing countries strengthen the portfolio of brands improve quality and service at the lowest cost develop company values that are supported by committed employees.

To support these goals, Kraft has established a set of core values that help to guide employees. These set out the aspects of its day to day operations that are vital in helping it achieve its goals. These values include:

a strong belief in staying focused showing a willingness to innovate, demonstrating commitment moving quickly to reach and implement decisions practising teamwork demonstrating trust and confidence in fellow employees turning strong results orientation into a passion to win.

Within the context of this case study, these core values emphasise how it is essential that employees from all backgrounds and levels of experience work together to support the organisation's core brands. To achieve its strategies/objectives and ultimately its mission Kraft has structured its organisation in 'Category Teams' to ensure a cross functional approach to its decision making. As a key member of this team the planning analysts physically sit within their teams to help communication and co-operation. This approach enables the planning analyst to be at the heart of the decision making process.

Page 4: Managing the product portfolio

One of Kraft's aims is to ensure that its products become consumers' first choice. To achieve this, Kraft has identified and developed a range of distinctive key brands which are known within the company as its Power Brands. Kraft concentrates on the innovation and rapid development of these Power Brands, with a view to having new, exciting products 'out there, now'. The major element in managing and developing these Power Brands to ensure that they provide more value for consumers, is to use the experience of key managers to make important planning decisions about their future. Fixing tight deadlines for product launches and then achieving those deadlines calls for careful, co-ordinated planning to ensure that the:

necessary production capacity is available

marketing effort is ready sales and supply chain effort is ready funds to support the venture are in place whole exercise stays within budget.

Page 5: New Product Development

Every year Kraft introduces new products across a range of consumer markets, and this involves a considerable amount of investment and planning. Working within the product teams, planning analysts work together with Kraf's Research and Development Division to analyse market opportunities for the Power Brands and discuss how to introduce new products to the market. This means that they help plan the future rather than just recording the past. The planning process involves using the budget to co-ordinate the whole business, including operations and organisations within its supply chain. This is vital to ensure the demand for NPD is met with enough supply of product. A business is only as strong as its weakest link in its chain. This planning approach, combining expertise from across the business, does more than simply focus everybody within the business upon goals; it also helps the organisation to develop a business plan that ensures the effective investment of funds.

Page 6: Forecasting and evaluation

Having created an operating plan within the annual planning cycle, a business must monitor the plan to ensure that targets for growth, sales, profitability and cashflow are met.

Using their analysis of variance between actuals, plans and forecasts, planning analysts work with the business teams to develop suitable plans of action. Where actual outcomes differ from forecasts built into budgets, it is essential to discover why. Planning analysts work with sales and marketing managers to help identify reasons for change, e.g. has a competitor entered the market, or has there been an unanticipated shift in consumer tastes? In this way, planning analysts are analysing information with marketing managers and together they are developing strategies to keep the business plans on course. For example, by using a Promotional Control Evaluation (PCE) tool, planning analysts are able to measure the impact of promotions. This enables the optimum promotion being placed at the

right time for the consumer in the most suitable market, thus maximising the opportunity for everyone concerned.

Page 7: Manufacturing and supply chain variances

In planning financial activities it is important to have a target or standard to achieve. Variances can be used as a way of checking the progress of strategies, corrections or changes to business activities to put the business back on track to improve performance.

Within Kraft, variance analysis involves detailed reviews that are linked to activities across the business. For example, variances between forecast sales and actual sales will affect other variances such as manufacturing costs. This is particularly true of production processes that carry high overheads. The operations accounting and other budget planning analysts play an important role in ensuring that plans and forecasts are based upon reality. They use their experience of the business and management accounting techniques to construct annual plans. These managers work with the business teams involved with the supply chain and various marketing departments to co-ordinate their spending and investment programmes. They also then have to co-ordinate these plans. Kraft sources its materials from 23 different locations within 10 different countries. This brings complications such as fluctuating exchange rates for foreign currencies and different levels of import duties. Any variance between actual volume sales and predicted volume has an impact upon the supply chain. As the supply chain budget is the largest of the overhead budgets, it is essential to manage and monitor supply chain costs to ensure that the business' annual plan is not damaged.

Page 8: Traditional financial controls

In order to meet Kraft's business objectives, its planning analysts work with other financial managers to ensure that transactional accounting and financial controls work efficiently.

The budgeting process provides the basic information from which cash flow forecasts and balance sheet targets can be calculated and agreed. Having highly qualified planning analysts working across the business ensures that financial controls are compatible with the performance of the business. A Business Projects and Controls team evaluates the key business processes within Kraft. One of its main aims is to ensure controls are maintained in a practical manner. Kraft is keen for its product managers to develop the company's Power Brands but to do so firmly within the procedures and disciplines laid down by the company to support the growth of the business as a whole.

Page 9: Conclusion

The strong link between the corporate strategies developed within Kraft and the performance of Power Brands is underpinned by the way in which teams comprising of business and wellqualified planning analysts work together. Kraft is building its performance around skillful managers who operate within clearly defined forward plans that are carefully developed. The plans are closely tied to systems that make use of practical and tested methods of control. Kraft's management structure reflects the strength of its management teams who use shared expertise to make corporate decisions. Within these teams, planning analysts have an active role that enables them to focus upon adding value for customers in a way that improves the competitiveness of the whole organisation.

The Times 100 / HMV UK / Building on a brand / Introduction

Building on a brand A HMV UK case study

Page 1: Introduction

HMV has one of the world's most instantly recognisable trademarks and its name is inextricably linked with the history of recorded music. Few, if any companies, have been more successful at establishing a brand image and associating it with its trading heritage, quality and service. This case study considers the importance of branding and the value of an established brand name when a company is looking to expand and to adapt its business in response to changing market conditions.

Page 2: HMV
In 1921 HMV opened its first store in London's Oxford Street. Shopping in HMV's first store was very different from today? retailing experience. The shop sold mainly HMV branded goods. It was also fairly exclusive; some customers had accounts and were often served on a one-to-one basis. Outside of London, HMV products could only be purchased from exclusively appointed dealers. By the late 1950's and early 1960's all this changed: The 45-rpm single format was introduced and artists like Elvis and The Beatles heralded the start of a rock 'n' roll revolution. HMV began to expand and set up stores in major cities like Manchester, Leeds and Glasgow. Each stocked thousands of titles produced by different manufacturers as record buying became a mass market phenomenon. Many consumers built large record collections. They shopped at the stores that held the greatest variety of stock and made buying music an enjoyable experience. Since the 1960s, HMV has broadened its product range in response to changes in home entertainment trends. It is now the UK's leading specialist retailer of music, DVD and computer games. The company has a 25% share of the domestic music market (source: CIN based on unit deliveries), and also accounts for over 20% of all DVDs and VHS videos sold as well as

approximately 10% of computer games. HMV has over 150 stores around the country, and also has chains in Europe, North America and Asia Pacific.

Page 3: The importance of a brand

Branding helps make products and services distinctive from those offered by rivals. Brands are generally based around a trade name e.g. HMV, Coca-Cola and Nike. A brand will usually incorporate a logo e.g. 'Nipper' the dog listening to His Master's Voice through a gramophone.

Equally important, branding is about creating brand values that customers come to associate with the product. HMV's core brand values are based firmly on customer service - the company seeks to give people the widest possible access to recorded music and home entertainment products through:

outstanding product range across all genres knowledgeable and dedicated staff heritage & authority support for British Artists and New Music.

These are qualities for which HMV is recognised, appreciated and trusted by its customers.

Page 4: Building a brand

HMV has been building its brand for over 80 years through:

stocking the widest possible range of titles, based on trading experience and an appreciation of customer requirements building a relationship with its customers - always seeking to be the first to offer new products, releases and 'added-value' wherever possible

recruiting and training knowledgeable staff, dedicated to providing the best possible service creating vibrant and stimulating store environments in key shopping locations.

HMV reinforces its positive brand image through advertising and other promotional activities. The company currently uses the advertising strapline 'Top Dog for Music, DVD & Games'. This clever play on words is simple, versatile, and immediately conveys its offer to the public.

Customers are likely to be loyal to a brand in which past experience has built trust. John Lennon was a frequent visitor to HMV's Oxford Street store, whilst Michael Jackson is also a regular shopper. Brand loyalty is important because, as with many other sectors of retailing, there is fierce competition between rival stores.

Page 5: The market

The market for pre-recorded music is becoming increasingly polarised. At one end are 'discount' retailers who may use products as loss leaders to gain share from each other. At the other end are specialist stores like HMV, which focus on providing a quality service based on added-value, product knowledge and range. HMV believes in providing music, DVD's and games for people in whatever format they require. HMV? customers are broadly based and have a wide range of 'eclectic' tastes rather than being confined to a particular niche market - many modern consumers want to dip into several different types of music. While HMV has to meet the requirements of a broad market place, it also has to keep the dedicated enthusiast, who may have specific interests, happy. HMV communicates with its target audience through advertising in appropriate specialist media, and supports this in-store with effective merchandising and expert staff.

Not all cities can support stores of similar size. Electronic stock control and ordering systems help overcome this problem. If the local smaller-town HMV does not have what you want in stock, it can rapidly find an HMV store that has the item and will arrange for you to receive it as soon as possible. The brand image is thereby sustained.

Page 6: The retail experience

For many people, shopping is a pleasurable, social experience. Interacting with staff in vibrant store interiors creates its own buzz and, for many, beats Internet browsing and downloading. Spending time in a music store is something we are all familiar with from an early age. Indeed, you probably still have an affectionate memory of your first record or CD purchase, and of the excitement and anticipation of that experience.

Part of a brand's image relates to store design and operation; an HMV store needs to look, feel and sound just how its loyal customers have come to expect. Consistency brings with it recognition and reassurance, the kinds of feeling that cause many people who are 'out shopping' to drift into music stores rather than walk on by. Buying music, DVD's or games is often a shared experience. It is something to be enjoyed and then talked about with friends. Like other enlightened retailers, HMV seeks to make the purchasing experience as intimate and enjoyable as possible. That is all part of the brand. HMV is committed to the retail experience and believes that record stores will remain central to the way the majority of buyers will seek to purchase their music and home entertainment products for the foreseeable future. However, HMV has also embraced new technologies and other shopping channels, such as the Internet in order to broaden the choice available to its customers. Indeed, in 1997 HMV was one of the first music retailers to launch a website www.hmv.co.uk. Just one year later it became transactional and by 2001 it had passed the breakeven point and registered a profit. A significant development in 2002 saw it tie up with content provider OD2, to make more than 125,000 songs available on-line for paid-for downloads.

Successful marketing involves providing customers with the best possible combination of product, promotion and price. To achieve this, HMV seeks to:

use its accumulated retail knowledge and market research to understand their requirements, and to communicate through the most appropriate forms of advertising and marketing activity create a compelling retail offer, based on a comprehensive range of titles, which seeks to add 'value' through regular campaigns and other promotional offers support this offer in-store through targeted promotion and merchandising, including the use of in-store radio and listening posts and the latest plasma screen video walls.

Page 7: Looking forward

The big opportunities for retailers in the music industry are the:

rapid developments in technology and the products on offer changing nature of customers' expectations.

Over the years HMV has stocked and sold it all, including: 78s; LPs; audio cassettes; CDs; Mini Discs and now DVD. As the leading specialist retailer in this market, HMV has to be part of this process of change, and to anticipate where the market is heading and to plan accordingly.

As a customer-focused company, HMV seeks to provide what consumers want, whilst recognising that new technology and new products help to shape their requirements. A great deal of judgement is involved in deciding which products to stock in depth and give space to. Not

every product, however initially appealing, turns out to be a winner; and not every recording artist proves to be a stayer. Successful retailers are therefore the businesses who 'get it right' more often than not. In the rapidly changing music market, it is very difficult to predict what the new technologies and mass markets of the future will be. HMV has sought to position itself at the forefront of new developments so as to be able to respond to changes in consumer requirements as and when they happen. The key to success lies in understanding changes in customer requirements - finding out what they require rather than seeking to force change on them. HMV has always recognised the importance of looking into the future in order to be at the leading edge of change. Currently the new Oxford Street store is helping to pioneer futuristic innovations, whilst it also frequently stages exhibitions around enduring cultural icons like Elvis Presley, The Rolling Stones and The Beatles to remind people of its own rich heritage. Although HMV's brand values are drawn from its heritage it also recognises the vital importance of looking to the future and promoting New Music. In 2002, and to great acclaim, HMV launched its 'playlist' sampler. This features exciting new talent and is given away free with all New Music purchases. As a music specialist, HMV has always supported emerging artists and championed new music, seeing itself as a showcase for their talents in order to bring them to a wider audience. The chain stages many in-store personal appearances (PAs) - usually album signings, but increasingly also live performances. Over the years it has hosted appearances by superstar artists like Paul McCartney, Tina Turner, Robbie Williams, The Spice Girls and Kylie Minogue, whilst recently Stereophonics, Coldplay and David Bowie have all made appearances. Ultimately, it keeps coming back to HMV's basic trading ethos of giving people the widest possible access to recorded music. Picking winners is not easy, but through HMV's retail experience and knowledge, combined with its instinctive understanding of its customers, the company is able to work with record companies and other suppliers to make informed judgements in support of major product releases and new formats like DVD. The music industry has always lived in 'interesting times' and is not for the faint-hearted. Given the scale of the HMV operation, the sums committed to 'getting it right' in response to changing products and changing retail patterns are enormous. A long history does have advantages; in changing times, having a positive brand identity not only gives HMV an important competitive advantage over of its rivals, it also helps to create the basis of continued growth in future.

Page 8: Conclusion

As one of the world's most recognised names HMV realises the importance of adapting to meet the requirements of customer demands. Brand heritage and reputation are key factors in giving an organisation status and competitive advantage but these strengths must be built on continuously in a market place characterised by ever-changing developments in technology and rising customer expectations. HMV has been successful in rising to this challenge by developing a range of exciting and innovative new ideas designed to enhance the brand and its reputation into the future.

A Cadbury Schweppes case study

Page 1: Introduction

This case study examines an exciting new product idea from Australia - the Yowie - and shows how it is a good example of Cause Related Marketing. Everyone is familiar with Cadbury's Dairy Milk - it is one of the nation's favourite chocolate products. In Australia, Cadbury Schweppes has found a way of adding more value to Cadbury's Dairy Milk. This has been done by shaping and packaging the chocolate into fun characters, known as the Yowie, in such a way as to fuel a vast consumer interest. In addition, the product has been paired with a key area of consumer concern and interest - the environment - by combining the product with an educational content, such as theme-related toys, books and CDs.

Page 2: What is cause related marketing

Marketing is 'the management process responsible for identifying, anticipating and satisfying customer or consumer requirements profitably'. Marketing involves finding out exactly what the customer or consumer requires and then providing goods and services in a way that delights them. In essence, this involves providing the best possible marketing mix, i.e. the right goods, at the right time, in the best possible places and with the most desirable level of promotional activity. Today, the term social marketing is used to refer to the way in which modern marketing is concerned with meeting the wider needs of the society in which business operates. Social marketing recognises that consumers' brand requirements are important but it also takes into account the needs and expectations of the wider community. Cause Related Marketing has become an important ingredient of this marketing mix. Cause Related Marketing is a commercial activity by which businesses and charities (or causes) form a partnership with each other to market an image, product or service for mutual benefit. It is a marketing tool used to help address the social issues of the day, through providing resources and funding, whilst at the same time addressing important business objectives. Examples of Cause Related Marketing in the UK include a partnership by Cadbury Limited and Save the Children which raised funds for Save the Children and focused community programmes to the benefit of Cadbury's corporate image. Another good example from the retailing industry is Tesco's 'Free Computers for Schools' which is based on parents and friends of schools collecting vouchers in proportion to the amount of money they spend in Tesco stores. When Cause Related Marketing works well, everyone wins - the company, the cause and the consumer. In business terms, this is known as a win/win/win situation.

Page 3: Cadbury Schweppes marketing objectives

Cadbury Schweppes is a marketing focused company. Its success relies on satisfying the needs of its consumers. It is able to do this by continually listening to consumers and learning about their changing requirements. In response to these requirements, Cadbury Schweppes seeks to create new products, build on existing core brands and find new ways to add value to existing products. A key marketing objective for large business organisations is to focus on the most profitable opportunities in global markets in their particular product category. This can take the form of value or volume or a mix of both and can be seen in all forms of mass consumption products from shampoo and toothpaste, to baked beans, confectionery and beverages. The logic is simple - by gaining the visibility, profitability and volume in the global market, a business is best placed to provide its consumers with quality products and the best value for money. In this respect Cadbury Schweppes is representative of leading-edge international business practice focusing on the two growth markets of Beverages and Confectionery, which between 1992 and 1997 increased in volume by 25 per cent and 20 per cent respectively. Another marketing objective is to increase the volume of sales and market share by a process of innovation - in products, packaging and route to market. Innovation is the process of developing better solutions and methods of conducting business. Having a culture of innovation helps companies stay ahead of the competition. Innovative business organisations place great emphasis on being able to take advantage of new opportunities - identifying changes in the business environment and, after evaluating market research information, allocating resources to capitalise on these opportunities. An organisation which is in touch with the changing business environment and its consumers' changing perceptions, interests and needs will be able to create innovative products which best satisfy consumer requirements. The development of Cadbury's Yowie in Australia exemplifies these marketing objectives and provides a good lesson in how to use Cause Related Marketing effectively. Yowie is an exceptionally successful product which has won a large share of the children's confectionery market in Australia. It was voted best new confectionery product in the world in 1997 by the world's grocery press. It is a value-for-money, exciting and entertaining chocolate product which is related to an important cause - the environment. In this way, the Yowie typifies the innovation process of adding more value to a product in a socially desirable way. This type of Cause Related Marketing is central to Cadbury's marketing strategies - to give consumers the benefits that they want.

Page 4: Business in the Community

Many people in industry believe that if the community in which the business operates is not healthy, then the business will suffer. It follows then that business has a responsibility to contribute to the health and prosperity of the community. There are many ways in which companies can help, from seconding personnel to community projects to straightforward sponsorship. At one extreme is the corporate donation, i.e. pure charity, and at the other extreme is the example examined in this case study - Cause Related Marketing - where businesses and good causes work together for mutual benefit. Cadbury Schweppes is an organisation which has been at the leading edge of community involvement for some time. It has been involved in partnership activities with Save the Children and in seconding managers to work with other charities and community groups. Cadbury World educational experience (a fun themed tour outlining the history, operations and achievements of the company over the years) exemplifies Cadbury's commitment to education. As part of its community involvement, Cadbury Schweppes spearheaded 'Business in the Community' Cause Related Marketing campaign. The Company's Chairman, Sir Dominic Cadbury, was the first Chairman of the 'Business in the Community' working party, set up to investigate and promote Cause Related Marketing. Business in the Community was established in this country in 1982 to inspire businesses to increase their contribution to social and economic regeneration by making corporate responsibility an essential part of business life. It is a charity with a membership of over 400 companies, including over 75 of the FTSE 100. Members are encouraged to use their skills, expertise, products and profits to promote the economic and social regeneration of communities.

Page 5: Taking cause related marketing forward

'Business in the Community' has carried out detailed research into current perceptions of Cause Related Marketing to provide the market with evidence of the potential this marketing approach offers both businesses and charitable causes.

Some of the key findings of the research are that:

Consumers support cause related marketing when it is planned, implemented and communicated appropriately Cause Related Marketing offers a unique means of emotionally engaging the consumer Cause Related Marketing remains a relatively untapped opportunity The success of a Cause Related Marketing programme relies on a convincing partnership Cause Related Marketing provides everyone with the opportunity to benefit and make a difference Cause Related Marketing provides a win/win/win opportunity.

Page 6: Causes and issues of concern to todays consumers

Research shows that the most important 'causes' to consumers are in the area of medical/health, schools/education and training, and environmental issues. Whilst many effective relationships already exist between businesses and causes, it is also clear that some businesses have focused on business/cause partnerships supporting issues with which the consumer is not strongly attuned. It is essential that in developing partnerships, business and the causes clearly identify their target audiences. The partnership must understand the consumers' interests and motivations and develop programmes accordingly.

Page 7: Meeting consumer requirements

Successful marketing, therefore, involves identifying the range of benefits that most fully meet consumer requirements. Today, for example, consumers do not buy petrol simply to get them from A to B. They want to buy petrol which will get them from A to B but with limited damage to the environment. The oil company that produces the most environmentally friendly petrol will, therefore, have a considerable advantage over rivals. The same principle can be applied to most other product categories. Consumers today are conscious of the total impact of the products that they buy, including aspects of environmental concern and wider business ethics. This is a growing trend which is likely to continue into the future. Acting in a responsible way should no longer be seen as an optional extra for businesses. Businesses that are sensitive to the attitudes of consumers are able to build competitive advantage by making appropriate changes. It is important therefore that marketing understands and responds to the attitudes of today's consumer.

Page 8: Introducing the Yowie

Launched in Australia in 1997 to great acclaim, Cadbury's Yowie is the first chocolate brand to combine an entertaining educational programme about the environment with a new concept in children's confectionery and new folklore for the children of Australia. In their first year, 31 million Yowie were sold, which represents two and a half Yowie for every man, woman and child in Australia. The Yowie are distant 'cousins' of some of the best-known but mythical Australian creatures. Each has its own environmental domain and distinct personality. There are six chocolate characters:

Rumble is the Redgum Yowie - he guards the plains and deserts Ditty the Lillipilli Yowie looks after the flowers Nap the Honeygum Yowie is keeper of the trees Squish the Fiddlewood Yowie keeps the rivers clean Boof the Bottlebrush Yowie loves the bugs and butterflies Crag the Mangrove Yowie watches over the wetlands.

Yowie are more than a chocolate product - they are a total package. Each Yowie contains an easy-to-assemble model animal that is an exact replica of the creature found in the Australian bush, which children can collect and swap, including:

the Sulphur Crested Cockatoo the Bilby (a marsupial that looks a bit like a rabbit) the Numbat (a little stripy creature that is one of the world's rarest animals) the Western Swamp Tortoise the Yellow Faced Whip Snake the Bandy Bandy (a snake that gets its name from its black and white stripes) the Koala Bear the Dingo the Platypus the Green Tree Frog (one of Australia's best known frogs which climbs high in the tree tops where it shelters from the sun in tree hollows).

In addition, consumers can send away for a Yowie kingdom map for children to create their own Yowie world. There is a pack of games and information so they can find out more about Yowie and the environment and a best selling series of Yowie books brings each of the characters to life.

Page 9: Yowie and cause related marketing

The Yowie is a product which serves to educate children about the environment and its value. The Yowie and its associated products, i.e. models of Australian wildlife, information packs, storybooks, CDs etc. are based on detailed research and have been written by some of Australia's leading educationalists and children's story writers. Yowie combine fun and enjoyment with a strong educational message about the environment and the natural heritage of Australia. Australia is considered to be the cleanest western culture on earth - cleanest air, cleanest water, cleanest beaches, cleanest environment. Many Australians believe that in the future, Australia will become the most favoured country as a playground and holiday destination. It will therefore come to represent, in the eyes of millions of children, what nature, wildlife and conservation are all about. In creating the Yowie, Cadbury has recognised that the environment is an important issue with children today and has positioned Yowie as champions of the environment.

The Yowie has helped Cadbury to meet its marketing objectives of innovation, i.e. looking for new ways to add value to existing products, and to build on core brands like Cadbury's Dairy Milk. Through its environmental theming and by combining the things children love best - chocolate, books and toys - Yowie are intended to educate children about the environment. The Yowie has provided Cadbury Australia with the opportunity to develop a new dimension in children's confectionery and cement its market leadership position.

Page 10: Conclusion

The development of the Yowie provides an excellent example of innovation and Cause Related Marketing.

Cadbury Schweppes is helping to further children's knowledge and understanding of the environment in a practical way whilst developing and extending its traditional Cadbury's Dairy Milk product.

By choosing Yowie, children can enjoy Cadbury's Dairy Milk chocolate and, at the same time, learn about environmental issues in a fun way, collecting and playing with a range of toy animals. The fact that Yowie and their associated products are both entertaining and educational means they are appealing to both children and adults, thereby increasing sales potential. The net result is that Cadbury Schweppes is better able to achieve its business goals, whilst raising awareness of an issue which young people feel to be important. To ensure consumer safety, Cadbury Australia was careful to print the following statement clearly on individual packaging and on the instructions inside the product: 'capsule contents not suitable for children under 3 years. Small parts may be swallowed or inhaled.' This consumer safety notice complied with Australian safety regulations.

Identifying customers and meeting their needs An Argos case study

Page 1: Introduction

Marketing is about making sure that a business is providing the goods and services that customers want. It involves identifying and anticipating what consumers want today and will want in the future. The marketing department then plays an important role in taking these goods and services to market through all the channels the business sells through. This case study focuses on the way in which Argos makes sure that it meets the needs of its customers. Argos was founded in 1973 and is now the UK's leading general merchandise retailer with sales of over 3.3 billion. Argos is owned by GUS plc and is part of the Argos Retail Group with over 580 stores in the UK and Republic of Ireland, as well as distribution centres, call centres and its head office in Milton Keynes, employing over 23,000 people in total. Approximately 98% of the UK population live within 10 miles of an Argos store. In the modern world of retailing consumers can have their needs met in a variety of ways such as High Street shopping, out of town shopping centres, and by direct delivery from Internet orders. Competition among retailers is increasingly getting tough. Differentiation is therefore the key to developing a compelling competitive advantage and winning loyal customers. Differentiation is the process of making your business stand out from rivals - making it different and better.

Marketeers at Argos therefore are continually concerned with addressing the questions:

Who are our customers? (Argos needs to find out as much as possible about its customers in order to meet their needs.) Are we offering the right combination of choice, value and convenience? How can we create a compelling competitor advantage? (How is Argos different from the competition?) How can we defend what business we already have and how can we grow? How do we effectively communicate to our customer base?

Since it first started, Argos has established a very strong, trusted brand focused on value, choice and convenience. It is the UK's number one retailer for toys and small electrical appliances; it has a major presence in many other markets including DIY and gardening, consumer electronics and furniture and a significant market share in jewellery (being No.1 in terms of volume) and sports equipment.

Consumers are offered a multi-channel approach to shopping. Argos publishes two catalogues a year, the spring/summer edition in January and the autumn/winter catalogue in July.
Argos | Identifying customers and meeting their needs

Page 2: Mission statement

All organisations need to have a sense of direction or purpose. This is usually set out in one or a few short sentences known as the mission statement. Argos' mission statement is: ' Argos publishes two catalogues a year, the spring/summer edition in January and the autumn/winter catalogue in July.'

This statement clearly sets out the main areas which differentiate Argos from its rivals, namely by offering its customers:

value for money, and convenience (mainly through use of the catalogue at home).

Meeting customer needs

Argos recognises that its many customers have different needs and prefer to shop in different ways. About 80% of Argos customers have already decided what they want to buy before visiting the store.

One of the prime reasons these customers choose to shop with Argos is because they know that they will get value for money. In general, retail space is very expensive. The more goods there are on display in a shop, the more space is taken up and the higher the prices as you will only be too aware when you examine prices in High Street shops. Argos is able to offer the customer value for money prices, because it has a low cost business model with limited product displays. In addition it benefits from economies of scale because as a popular national chain, it is able to buy in bulk and, by organising national distribution systems, is able to reduce logistics costs to a minimum.
Convenience

Argos provides a very convenient way for customers to shop. They are able to look through a catalogue at their leisure and choose from an extremely broad product range. The range of what is offered is not limited by the display space in-store and can be accessed in a variety of ways.

Page 3: Customers and segmentation

Within markets, not all groups of customers are the same - they do not have the same taste, and incomes or want the same things. It is helpful to think of a market as an orange. When you look at the orange from the outside you see a shiny orange skin that all looks the same. However, when you peel off the skin you find that it is made up of a number of segments, each of which exists within the whole. The segments in an orange are more or less identical, but in markets, by contrast, they are different in terms of size and character.

A segment, therefore, is a group of consumers who share common characteristics, that are different from other groups. Different segments may require different versions of the product, they may pay different prices and they may buy the product in different places.

The most common way of segmenting a market is by demographics. Demography is the study of population. Demographic segmentation recognises that different sections of the population have different buying patterns and preferences to others. For example, there is a difference in taste and spending patterns between the old and the young, between men and women, according to locality etc. Argos tested out demographic approaches but found that this was not a very accurate basis for segmentation. A much more helpful basis has proved to be the frequency of visitors (i.e. the number of times customers visit the website, or visit stores). A distinction is often made in business between the internal and external customers of an organisation. The external customers of a retailing business are the shoppers who want to be served in an efficient and friendly way. Internal customers are fellow employees that we work alongside in a place of work. If we treat them as customers then we help them to serve external customers well. The Argos way of working is built on a belief that the external customer is the most important customer. Argos people are a team of colleagues who work together to meet customers needs.

Page 4: Strategy
A strategy is a general plan which an organisation puts into practice to achieve particular end purposes (also known as objectives). There are all sorts of general strategies that a company might employ such as expanding into new countries or new markets. Argos' strategy today is one of growth. Growth can be achieved in a number of ways such as opening new stores, increasing the product range, expanding the website or increasing the value and volume of sales. Argos' strategy involves driving frequency and maintaining the loyalty of existing customers. There is a significant amount of customers who buy infrequently from Argos. Argos classifies this group as the 'Don't quite get its'. Advertising on television and through other media is an important way of attracting this audience. Through advertising the 'Don't quite get its' are able to appreciate the range that Argos offers, and the value for money of the offer. For example, at

Christmas time Argos adverts illustrate the way that a shopper can buy all of their presents through the Argos catalogue.

In comparison large numbers of people regularly shop at Argos - these are the 'Get its'. Argos' approach with this segment of the market is to increase the amount they spend in every purchase.

Argos has introduced an ever-expanding product range especially since its Home Delivery Service was introduced. Argos has focused on convenience for customers. Research showed that customers regard speed to be the top criterion when choosing to shop from Argos.

Growth therefore comes from driving frequency of purchase, and increasing the expenditure per customer on Argos products.

Page 5: Harnessing technology to meet customer needs

Many consumers today are cash-rich but time-poor. Fortunately most people (particularly the young) have high levels of competence when it comes to using modern technologies such as mobile phones and computers. Argos therefore uses a variety of modern channels to communicate with customers and to provide them with avenues for enquiring about availability of stock, and for making purchases.

Many customers like to browse the Argos catalogue in the comfort of their own home. A large proportion of orders are still made in store, but an increasing proportion are being made online and by telephone.

There are a number of channels for receiving goods including collection from the store and using the home delivery service. In line with the development of new technologies and market research. Argos has also introduced new innovations such as text and take home and Quick Pay kiosks.

Page 6: Conclusion

Argos' unique shopping experience is popular and successful because it is focused around meeting customer needs. Argos has gained competitive advantage over rivals by differentiating itself on the basis of providing the best value for money for customers through the most convenient shopping experience. The market has been carefully segmented according to the way in which customers use the stores to make purchases. Argos' strategy is to continue to grow through attracting new customers while rewarding existing customers for their loyalty. By embracing new technologies in a busy world, Argos continues to provide the channels that are most appropriate to the modern retailing experience. Argos' turnover continues to grow, so that, for example, turnover was 1,552m in the six months to the end of September 2004 compared with 1,377 in the same period in 2003. The larger part of this growth came from new stores, but there was also a significant increase in sales from existing stores at a time when other retailers were struggling.

Poland - a developing market A Cadbury Schweppes case study

Page 1: Poland a developing market

Why did Cadbury Schweppes choose Poland as its point of entry into the Central and Eastern European confectionery markets? Because there was a number of significant developments taking place there. The Central and Eastern European countries can be divided into two groups: those which fell originally within the Soviet Union, and others.The key difference is that the countries within the latter group only had communist regimes for 45 years and free enterprise still existed to some degree. The four most advanced countries within this group were Poland, Hungary, the Czech Republic and Slovakia, of which Poland had the largest population and percentage of private sector business, as well as a strong consumer market. It also had good prospects for investment, offered a skilled labour force and faced neither ethnic strife nor border disputes.

Having developed a stable parliamentary democracy and signed an association agreement with the European Union, Poland recognised that to shed its former communist image and face market forces with a proactive, commercial approach would require major changes in its culture and attitude. One way in which it could do this was to encourage development in Poland by its European partners, and Poland already had a good relationship with the UK, which has a Polish community of some 150,000.

These rapidly changing political, economic and social factors were key influences in Cadbury Schweppes'decision to enter Poland's developing market. Another strong factor was that, despite Poland having, at that time, one of the largest confectionery markets in Central and Eastern Europe, none of Cadbury Schweppes' major international confectionery competitors had established strong businesses there. Although the Company could have taken a 'wait and see' approach (running the risk of missing a vital opportunity to develop an early market lead), it decided that there were sufficient indicators to justify an investment in Poland.

Page 2: Market entry

Cadbury Schweppes had three 'route to market' options to consider in order to respond to Poland's market needs. The options were:

export from other Cadbury Schweppes companies acquire or form a joint venture with a local Polish company establish its own factory locally.

When Poland first left the communist regime the government pursued a policy of open trade which resulted in a flood of imports. To protect local industry the Polish government established import duties which were particularly high on goods such as confectionery. Under these conditions, exporting to Poland was not an economically viable option to Cadbury Schweppes. Cadbury Schweppes evaluated the leading Polish confectionery companies to assess their suitability for acquisition or joint venture. However, several problems, such as over-staffing or lack of investment, were found to be common across all of them.

So, having rejected the first two options, Cadbury Schweppes decided to explore local manufacture as the most appropriate route into the Polish market.

Page 3: Market strategy

Although the confectionery market in Poland was known to be large, market research was conducted to determine whether that market would be suitable for Cadbury Schweppes' products.

Tastes in confectionery vary the world over and Cadbury chose to manufacture products from its existing range which would particularly suit the Polish taste. It also decided to manufacture a range of budget-priced products under the name of Piasten, Cadbury Schweppes' brand in Germany. Having identified the product range and its acceptability to Polish consumers it was then possible for Cadbury Schweppes to forecast the potential sales which could be achieved in Poland. This information, together with estimates of the costs involved in setting up and running the manufacturing operation, enabled the Company to determine that the project was financially viable. In 1993 Cadbury Schweppes took the decision to invest more than 20m in building a factory and developing a new confectionery business on a greenfield site in Poland.

Page 4: Identifying the site

Cadbury Schweppes began by visiting Poland to evaluate sites in several locations to improve its understanding of the Polish infrastructure and administration procedures, and to assess the general employment situation and skills availability. The decision to develop a greenfield site at Kobierzyce, near Wroclaw in south west Poland, was based on a number of criteria:

overall cost geographical location climatic conditions availability of mains services access to highways and trunk roads distance from competitors large regional population.

A further factor was people. Cadbury Schweppes would be joining a local community and would work closely with the local mayor and his staff at Kobierzyce, who welcomed the new investment.

Page 5: Construction and engineering process

It is not an easy task to build a factory in a foreign country. It requires careful co-ordination and considerable expertise. Cadbury Schweppes appointed a team of engineering consultants to oversee all stages of the project, from selection of the contractors via a process of tendering, through to the completion of the factory construction.

The construction process was extremely challenging as the factory and offices, covering 9000 square metres, had to be completed, and production ready to start, within one year in order to meet the confectionery selling season of autumn to spring. Time was not the only challenge. Temperature within a chocolate manufacturing plant is a major consideration in a country such as Poland, where the weather varies from -15 degrees C in winter to 33 degrees C in summer. The air conditioning, refrigeration and heating of the plant were key issues, all of which had to comply with local quality, hygiene, safety and environmental standards. The local community also had to construct water pipes, electrical power lines and telephone lines to the factory, and all were completed on time. Building a factory is only one step in the implementation of a production facility. It is important to consider how it will operate, what production techniques it will use and what products it will manufacture. Cadbury Schweppes formed a technical team to design, engineer and procure all of the process plant and machinery required for the manufacture of the chosen product range. Also required is a team of company experts who specialise in the business of making chocolate and who understand the technical complexities of making quality products.

Page 6: Identifying and recruiting for the key management roles

Just as there are challenges in building a factory in an unfamiliar country, so there are challenges in filling all of the jobs necessary to run that factory.

A recruitment strategy had to be designed to meet those challenges: Should Cadbury Schweppes transfer expatriates to Poland? If so, how would they cope with the language barrier and the fact that there were no local English-speaking schools for expatriates' children to attend? Could quality local candidates be found? If not, would potential managers relocate to Wroclaw from Warsaw and other major cities? How important was experience within Cadbury Schweppes versus knowledge of the Polish market? Cadbury Schweppes' human resource management strategy for the Polish project was to identify local candidates wherever possible. This would give Polish individuals a sense of freedom to manage their business within a familiar environment and according to local needs, supported by resources and experience from other parts of the Cadbury Schweppes global company. However, there was a known shortage of experience locally, particularly in the finance and marketing functions, so the company anticipated that it would need to have a fair amount of expatriate involvement, particularly in the early stages of getting the Polish business operational. A multi-disciplinary team was formed to:

identify the key management roles to be filled within the Polish operation devise a recruitment plan to attract the best quality candidates prepare an induction and training process for new employees.

A structure for the top management team was devised. Job descriptions were then written for the key management roles. To do this, decisions about the degree of functional expertise required had to be traded off against knowledge of Cadbury Schweppes and its operations, local Polish experience and general 'know-how'. A recruitment consultancy was then chosen to identify a shortlist of candidates for the key positions. The consultancy used a combination of headhunting (where candidates are approached on a company's behalf) and job advertisements in Poland and the UK. Bearing in mind that Cadbury Schweppes was new to Central and Eastern Europe, this was very much a learning process for the team members concerned, as they knew little about Polish recruitment practice or what to expect in terms of quality and experience of candidates.

Some interviews were conducted via an interpreter, which added another level of complexity to assessing candidates. And, before making offers of employment, research was carried out to determine the salary and benefit levels which would attract the best candidates to join the company. The final decisions on recruitment were taken by the European Managing Director and the Managing Director of Cadbury Schweppes' German company, Piasten, who would be responsible for overseeing the development of the Polish company. Development of an induction plan ensures that new employees deliver effective work performance as quickly as possible after joining the company. As part of its induction plan for the Polish operation, Cadbury Schweppes brought key Polish employees to the UK to provide an overview of the Group's global operations, an introduction to the company's philosophies, values and history and then the confectionery industry and Polish market. The Polish team was also introduced to colleagues established businesses elsewhere in the Group, who would be able to provide information and advice when needed. In new ventures such as this, there is a real demand for company knowledge and experience, particularly in the early stages of development. Such opportunities are often taken up by existing Cadbury Schweppes managers who are encouraged to move internationally within the Group to gain wider experience, while transferring their knowledge newcomers. Cadbury Schweppes offers a series of career programmes for junior and senior managers to gain such experience and managers from the Polish business are already moving elsewhere within the Group!

Page 7: Community benefits

A new business brings many benefits to the local community. One of the benefits derived from this project was that the funds generated by the sale of land to Cadbury Schweppes helped to enable a new school to be built in Kobierzyce. Another key benefit was that, in an area of high unemployment, local applicants secured many of the factory jobs. Cadbury Schweppes is also committed to actively contribute to the communities in which it operates and to improve the environment in which people live and work. Its operating units support community activity through locally targeted programmes throughout the world. This may include financial support, commercial sponsorship and the provision of local facilities.

Discovering customer needs through research A Barclays case study

Page 1: Introduction
Barclays is a global bank. It provides a range of financial services in 56 countries. Barclays provides retail banking services to customers, whether they are individuals or businesses. It offers a broad range of financial products and services including current accounts, savings accounts and general insurance.

Within the UK, Barclays communications are designed to help customers 'Take One Small Step' to managing their money better every day. Different kinds of customers represent distinct markets for Barclays. The market for personal banking services is very competitive. Personal customers have a choice of banks on the high street or on the web to assist them in managing their finances. For example, they can have their salaries paid into accounts, pay bills through the bank or save money to gain interest on their savings. There is also a competitive market for business banking services. Businesses require different services such as credit management, payments for suppliers or loans and overdrafts to help them to survive and grow. For example, an expanding business may need a mortgage to buy a new building.
Market segments

Each market is capable of being further sub-divided into segments. A market segment is a part of a whole customer group that shares particular characteristics. These include such factors as age, life stages, geography or occupation. Within the market of personal banking, the segments could include categories such as students, graduates, 'new to work', mature, and families. By identifying different market segments, organisations can ensure they are providing products or services to meet the needs of these customers. In addition to this, appropriate promotional techniques can be used to reach the people in the separate segments. Through segmentation, Barclays has been able to devise appropriate banking

offers for customers in different segments. This approach is helping Barclays to improve its market share of the student accounts market. Barclays believes students constitute a very important market segment for the business. Students may be choosing a bank for the first time and Barclays hopes to retain these customers. By focusing on the specific needs of this segment, Barclays hopes to attract more student customers and keep them in the long term. Using market research has enabled Barclays to identify the right product offer that will meet their needs. The case study shows how market research enabled Barclays to improve its student account offer.

Page 2: Purpose of market research

The purpose of market research is to gather data on customers and potential customers. The collected data aids business decision making. This therefore reduces the risks involved in making these decisions. In order to create a product proposition that would attract new student accounts, Barclays needed to understand fully the needs of this target market. Before engaging on external market research, Barclays began by asking itself a series of key questions. It did this to ensure the business was fully aware of all the relevant issues and did not make incorrect assumptions. In asking itself these key questions at the start and reviewing internal customer data, Barclays was able to clarify its rationale for acquiring students. Firstly, students provide an opportunity for developing a long-term relationship. As the student market segment increases each year in September/October as the university term starts, Barclays has an annual opportunity to target new student customers who need an account and who might not yet have chosen a bank.

Secondly, the use of this data highlighted that in the years after opening their accounts, Barclays was able to establish a valuable long term relationship with students. This meant that students could now be seen as an extremely important market segment, and attracting new student customers became a significant opportunity.

This internal understanding was vital. With this background, Barclays designed a programme of market research. The purpose of this was to establish what students really needed from a bank. In this way it could offer appropriate products and services which would add value to students.

Page 3: Types of market research

Barclays began a process that involved both primary and secondary research.
Primary research

Primary research involves finding out new information. It finds the answers to specific questions for a particular purpose. These enquiries may take the form of direct questioning. For example, it may include face-to-face surveys, postal or online questionnaires, telephone interviews or focus groups. This type of direct contact with people is valuable as it gives specific feedback to the questions asked. However, it is important that the questions are clear and that the researcher is trained. This will ensure that the results are not influenced. Although primary research can be expensive and timeconsuming, the up-to-date and relevant data collected can give organisations a competitive advantage. This is because their rivals will not have had access to it. Barclays' primary research process began internally with two key questions:

Who should our key customers be? What are their needs?

The insights from these questions provided a factual basis to work from.
Qualitative and quantitative research

After this an external agency was employed to carry out an opinion panel. This took the form of an online questionnaire. The results of this delivered data about the market itself, as well as Barclays' market share among this target audience.

Quantitative research presents information in a numeric way, such as graphs, tables or charts that can be used to analyse the information. For example, Barclays found from the questionnaire that 81% of students surveyed held a savings account and 32% an investment savings account (ISA). The opinion panel also provided qualitative feedback on what was of interest to students and what they wanted from an account. Qualitative research provides information on consumer perceptions, such as:

how they feel about products and services what they like or do not like what they would want from a new product.

The panel produced valuable insights which Barclays used to help re-evaluate its existing student account. It then used the information to develop new features and benefits to meet the established needs.
Testing

The enhanced student account proposition was then tested directly with 100 existing and new Barclays Student Additions account holders. This was carried out through bank branches and an online questionnaire. The sample group provided more qualitative feedback about what motivated students to choose a particular bank. Although small, the sample allowed Barclays to get a feeling for how students would respond to the proposition. For Barclays, it was important to know what motivated a student to choose a bank. Using existing students meant the bank was able to assess if the new offer would meet their needs. The expectation was that new and future students would also find it attractive.
Secondary research

Secondary research focuses on existing information. It uses published data that previous research has already discovered. This covers a wide range of materials, such as:

market research reports sales figures competitor marketing literature government publications, e.g. national statistics.

Secondary research may be quicker to carry out but may give less specific outcomes for the topic in question. This part of Barclays research revealed that student accounts in 2009 amounted to 0.4 million out of a total market of 5.4 million new accounts.

Page 4: Research findings

Numeric data gives a factual basis for planning - a snapshot of a situation. On the other hand, qualitative information can find out the things that really matter to consumers. For example, 80 out of 100 consumers questioned might say they preferred one brand of coffee over another. However, more valuable information comes from understanding what it is they prefer. Is it the smell, the taste, the packaging or the price? To meet student needs for a valuable, helpful financial service, Barclays needed to understand what students really wanted. By using student focus panels and staff working in branches with a high proportion of student customers, Barclays was able to discover students' concerns, priorities and strength of feeling.
Research outcomes

The outcomes of the opinion panel and the sample of student customers showed that:

students relied heavily on different forms of credit. These included an easily manageable bank overdraft to finance their time at university students wanted and often needed to own high-tech gadgets and electrical goods, such as laptops students wanted to have separate accounts to manage their student borrowing and spending any incentives offered would not alone motivate students to choose that product. They were expected as part of any deal.

This insight was a real help to Barclays when considering the most attractive proposition for students. Its objectives were to attract new student accounts. It also wanted to retain students as customers for life in a profitable relationship that met their financial needs. Barclays could now start to put together an offer that would embrace the main concerns of the target market. These concerns were financial security, credit availability, flexible banking and the right sort of incentives.

Page 5: Implementation and evaluation

In 2009, Barclays set up a working group to oversee the setting up of the new student proposition. It used the insight from the research to establish the key features and benefits of the student account. These features are valid for the life of students' studies:

no monthly fee to keep costs down for students an interest-free overdraft facility of up to 2,000 from starting the account. Previously this started at 500 in the first year and increased through the years of study. This extension helps students manage their finances. mobile banking and a network of local branches for ease of access to accounts.

Incentives

Of several incentives tested with students, Barclays found that an incentive based on a mobile or telecoms offer would have most appeal. This idea was tested further with students on university campus. The students expressed a clear preference for an incentive offering mobile broadband: 'The broadband offer looks good...Id definitely go in to find out more. Its good if the broadband offer is for the life of the accountyou may be in halls for the first year but not after that.' To establish this incentive, Barclays researched broadband providers. It then entered into partnership with Orange - the UKs number 1 broadband provider. Orange's strengths were a good business fit for Barclays and ensured that the offer had credibility and perceived value. Students who signed up for a Barclays student account were able to obtain a 25% discount on the monthly cost of whichever Orange mobile broadband scheme they chose.
Communicating the proposition

Having developed a student banking proposition that Barclays felt confident would appeal, it began to communicate the message and promote the new student offer. An innovative marketing plan was launched which involved:

a word-of-mouth campaign through '100 voices' which encouraged students to share their experiences of managing money whilst at college or university promotional literature available in branches nationwide. This proved useful information for Barclays colleagues as well as for students and their parents to take away

online advertising through barclays.co.uk direct mail to prospective students through the summer before going to university

Page 6: Conclusion
The Barclays student account proposition shows how it is crucial for a business to listen to its market. To do this effectively means targeting specific market segments to discover their needs. Barclays' new student account proposition was an 'insight-led' approach. Using carefully constructed and phased market research, the bank was able to gain an overall insight into the thinking of students. In the early stages of the research, it was discovered that the student segment provided an opportunity to develop a long-term relationship. It was found that students were not necessarily 'here today, gone tomorrow'. If the bank made a valuable and relevant offer, students were likely to remain lifelong customers. Barclays' initial target was to increase the overall number of student accounts by 25%. This target was exceeded with an increase of 34%. As a result, Barclays increased its market share of the student market, moving from third to second among the top four market leaders. The process of meeting customer needs is an ongoing one. Barclays has a continuing plan for re-evaluating its student proposition to ensure it remains relevant to the target audience.

How market research supports the new product development process A Beiersdorf case study

Page 1: Introduction
Market research is the process by which businesses find out about customers' needs, wants and desires. It makes possible the successful development of new products. This study shows how an international company, Beiersdorf, combines market research with new product development on its NIVEA Deodorant brand to provide exciting new products that better meet consumer requirements. Beiersdorf has a clear goal - to be as close as possible to consumers, regardless of which country they live in. Developing superior consumer insights is fundamental to the continued future success of Beiersdorf and its international brands like NIVEA, Eucerin and Atrixo. These are the result of more than 120 years of experience in research and development. Beiersdorf has launched many new brands and products into a variety of countries and categories. Being an innovation leader has allowed Beiersdorf actively to shape its markets and set new trends. These product launches have led to long-term global growth.

Page 2: The key stages of market research and new product development
Market research involves the systematic gathering, recording and analyzing of data about customers, competitors and the market. This links marketers to consumers by supplying essential information to solve marketing challenges and help with marketing decisions. Market research helps a company create and develop an up-to-date and relevant portfolio of products.

Creating new products

Beiersdorf's international Market Research team is based at company headquarters in Hamburg, Germany. The team's objective is to be the voice of the consumers within the organisation. Highquality market research has helped secure the long-term future of the business. Analysing and understanding the data gathered on consumers' behaviours, needs, attitudes and opinions minimises the risks involved in making marketing decisions. Market research in a global organisation needs the help and support of the company's overseas affiliate companies. Most affiliate companies (in the UK for example) have dedicated Market Research Managers. They help the central research team in gathering and interpreting consumer views. These views provide information or insights that ultimately result in the development of new products suitable for a global market. This case study follows the development of a new NIVEA Deodorant called Pearl and Beauty aimed at young women. This case study will give you a clear picture of how market research has helped New Product Development (NPD).

Page 3: Identifying consumer insights and product needs where to start?

Market research should start with the consumer and serves two purposes: 1) To inform companies about consumer needs and desires. What are the trends in the market? What do consumers want? 2) To give consumers the opportunity to talk to the providers of products and services so that their views are taken into account. Businesses exist in a fast-moving world with increased consumer choice. It is essential that a company knows its market and its consumers before developing any new product. Lots of questions need answering.

Consumer insights drive New Product Development. This information takes into account their behaviours, attitudes and beliefs. It is an expression of their wishes and desires. Businesses use consumer insights to create opportunities for their brands. It is the starting point that enables brands to fit meaningfully into consumers' lives. Across countries, consumers are different in terms of culture and lifestyle. NIVEA's challenge was to find similar insights from consumers across different countries. This was used to optimize product development.

Secondary research
In the deodorant category, NIVEA used many secondary research sources to discover consumers' views and their need for deodorants. These related to different markets and were supplied by local country market researchers. These included: i. A consumer Usage and Attitude study. This had been conducted a few years earlier across various markets (UK, France and USA). ii. An external study by Fragrance Houses. This covered the importance of scent and fragrance to people's well-being and mood.

Primary research
The research team felt therefore there was not enough recent knowledge about the consumer in the secondary research. They commissioned some primary qualitative research in key markets (Germany, France, UK and USA). This was aided by the local Market Research Manager. The aim was to understand the motivations for using deodorant amongst the female consumer. Primary research is used when there is no existing data available to answer your questions. The research involved small discussion groups of females. This helped researchers understand the beliefs and motivations of this group. There were several main findings: There is steady growth in females shaving. They wanted to look after their underarms throughout all seasons (not just in summer). Women cared increasingly about the condition of their underarms. Women desired attractive, neat underarms. This symbolised sensuality and femininity. The deodorant segment remained focused on functional rather than beautifying products.

Results of the research

The market research revealed an unexplored market potential for NIVEA Deodorant. The brand did not have a specific product that addressed 'underarm beauty' for the female consumer. No direct competitor was offering a product to meet these needs. So there was a clear opportunity to develop a new product. This would fit across different markets and with the current NIVEA Deodorant range.

Page 4: Turning consumer insights into product concepts

Consumers showed a need for a 'beautifying, caring deodorant'. The team generated ideas on how to address the consumer need. From these ideas the marketing team created 'product concepts'. These describe the product benefits and how they will meet the consumer needs. Several concepts were written in different ways. These explained and expressed unique product attributes. The company needed to know which concept was preferred by prospective consumers. It carried out market research to test whether the concepts would work. The research was conducted amongst the desired target market. For Pearl and Beauty, the desired target market was 18-35 year-old women who were beauty-orientated, followed fashion and looked for products with extra benefits. Quantitative research on the concept was carried out in two test markets (France and Germany). An international company like Beiersdorf must test products in more than one market to assess properly the global appeal. The concepts were tested monadically. Monadic testing means that the respondent of the test is only shown one concept. This stops the respondent being biased by seeing many variations of the same product concept. A number of criteria were used to test the concepts: 1) Deodorant category performance measures. These included wetness, dryness, and fragrance. The new concept must deliver generic core benefits. 2) Product attributes specific to the new product and NIVEA core values. The new Pearl and Beauty product has additional benefits to a 'regular' deodorant. For example, it leaves your skin feeling silky and gives you beautiful underarms. Consumers needed to understand and see these benefits. 3) The product needed to be relevant and motivate a consumer to purchase it.

The team chose the 'winning' concept. This best conveyed beauty while remaining relevant to the deodorant category and NIVEA brand. Next the research team tested various name ideas for the product and developed different designs for the packaging. Packaging design plays a very important role in helping to communicate the image of the product. Pearl and Beauty needed to communicate femininity and sophistication. Pink was a natural colour choice for the packaging. They also used a soft pearlescent container to emphasise the 'pearl extracts' in the product. Various design ideas were tested using quantitative market research. In addition, this helped to predict the volume of the new products that would be sold, the optimal selling price and the level of switching from existing NIVEA Deodorant and competitor products.

Page 5: Testing the product, brand positioning and advertising

Testing
The stages described so far produced a product concept that consumers felt was relevant and which they were willing to buy. The next stage was to test the product on actual customers. Many product launches fail, despite great advertising. A big reason is because the product fails to live up to the promises made. The Market Research Team conducted a product usage test. A de-branded sample of the proposed new product was given to the target consumer of females in several countries. Debranded means the deodorant was in a blank container so that the consumers did not know who made the product or what type it was. Very often consumers form opinions about products and services from advertising and packaging. This can sometimes be very strong and creates a bias in what they think of a product before trying it. The consumers were asked to use the new deodorant for a week. They kept a diary of when they used it and scored the performance of the deodorant against a list of criteria. These included: Did it keep you dry all day? Did you have to reapply it? Did you like the fragrance? Did it last all day? Was the deodorant reliable? Consumers applied the 'de-branded' deodorant under their right armpit and continued to use their current deodorant under their left armpit. This helped the users gauge if it was as good as or

better than the brand they normally used. This gave a measure of how likely the consumer would be to swap brands. The results of the test were very positive. Most consumers loved the fragrance and the feel of the product on their skin. They felt it performed as well as their current deodorant. Most said they would swap their brands after trying the product.

Brand positioning
Now the marketing team had a new product idea that consumers liked. It had a name and packaging design that were well received. They now needed to check how this fitted with the rest of the NIVEA Deodorant brand positioning and range. The brand position is the specific niche in the market that the brand defines itself as occupying. The NIVEA Deodorant Pearl and Beauty adds a touch of feminine sophistication and elegance to the NIVEA Deodorant brand's personality. This built on the core deodorant positioning. It made NIVEA Deodorant more appealing, modern and unique to trendy, young female consumers.

Using qualitative research to inform advertising

The next stage was to brief an advertising agency to develop communication to support the launch of the new product. Through market research the team could check whether the advertisements positively supported and communicated the new product. The company conducted qualitative research on some advertising ideas amongst various groups of the target consumers. It presented ideas in the form of 'storyboards' of what a TV advert could look like. The objective was to evaluate which were the best ideas in terms of: Did they stand out as exciting or different? Were they relevant to the consumer? Did they communicate the right things about the new product? Did they persuade the consumer to want to purchase the product?

Evaluating success
Once the product is launched and the consumer can actually purchase it, the research process does not stop. Continuous consumer tracking can be carried out to find out consumers' views of the new product. This involves interviewing people every day to find out whether they are using the product, what they think of it and why they would purchase it.

Beiersdorf uses other, secondary data sources such as consumer panel data and EPOS (electronic point of sale) data. These monitor the sales effectiveness of the product throughout the launch phase and through the product life cycle.

Page 6: Conclusion
New product development should start with an insight based on consumer needs. Throughout the NPD process, market research is a valuable tool for Beiersdorf to check viability and minimise the risk of the product launches. Being an international company, it is essential that Beiersdorf develops new products using the insights of consumers across markets and cultures. This ensures the products are relevant to a large number of global consumers and will deliver the maximum return when launched. This maximises return on investment for the company and results in happy, satisfied and loyal consumers.

Using market research to develop a product range A Coca-Cola Great Britain case study

Page 1: The soft drinks category

Coca-Cola GBoperates in the non-alcoholic beverage market. How these beverages are supplied to consumers varies enormously, from vending machines that supply single units to supermarket multipacks. In soft drinks alone, Coca-Cola GB has a broad range of over 80 products.

Page 2: Building the range

A business can enlarge its product range in two ways:

internally, through new product development based on market research externally, by acquiring related companies, and if appropriate, building on their existing range.

For example, in 1999 The Coca-Cola Company purchased, in various countries, soft drinks brands from Cadbury Schweppes plc, including Dr Pepper, Oasis, Kia-Ora and Malvern. The acquisition of Schweppes provided the opportunity to complement the range and to accelerate growth through new product development. Coca-Cola GB's approach to new product development is uncomplicated. It innovates to meet consumer demands; the consumer has a central role in the research and development process.

Page 3: Organising around the consumer

This case study focuses on the activities of Coca-Cola GB, an organisation focused solely on meeting consumers' needs in line with the Company's mission statement.

At the centre of Coca-Cola GB is its marketing department. Its primary purpose is to discover what consumers want and ensure the organisation delivers this.

Placing marketing at the heart of the organisation enables Coca-Cola GB to grow the product range in ways that best meet consumer requirements through developing:

new drink categories e.g. sports drinks new products within an existing category e.g. Winnie the Pooh Roo Juice new variants of existing products (brand line extensions/pack innovations) e.g. Fanta Icy Lemon.

Page 4: Category segmentation

By dividing a category into segments, businesses can identify different groups of consumer wants. It is then possible to design products to meet those requirements. Each segment within the overall range of Coca-Cola meets specific consumer wants. Coca-Cola GB carries out extensive market research to identify consumer wants in every segment of category in which it operates. For example, market research analysis of the demographics of consumers in Great Britain revealed a growth in smaller households. The appropriate product response was to produce 1.25 litre share-size bottles. A study of occasions when people drink sports drinks showed the importance of making it available in leisure centres. Other research showed that the famous original Coca-Cola glass bottle is best targeted at restaurants and special party occasions. Market research into where specific products are consumed influences the design of pack types e.g. a 2 litre bottle for family consumption at home and a smaller 500ml bottle for consumption 'on the move'.

Page 5: Market research

Market research means systematically gathering, recording and analysing market data. Primary research involves going 'into the field' (e.g. house-to-house or street surveys). Secondary research involves using existing

sources of information to research the market such as published reports or articles, or searching the Internet. There are two main approaches to 'primary' market research:

quantitative research: collecting information from a broad population sample e.g. by conducting extensive surveys, used when Coca Cola GB wants to gauge appeal across a wide audience qualitative research: working with small 'focus' groups. This involves far more detailed investigations, e.g. gathering a small group of 'typical' consumers to taste test products or to talk about their preferences and experiences of using different products. Qualitative research, whilst not representative of the views of the general population, provides greater insight into 'why' people think what they think.

Coca-Cola GB'sresearch process has five stages: 1. Identify opportunity

Does it fit into an existing or new product category? Who are the target consumers? What do they want?

Method: Desk research. 2. Explore solution What is the best solution?

a new product? a product extension? a new packaging concept? a new design?

Method: Qualitative research using focus groups and in-depth interviews one-to-one. 3. Measure suitability/effectiveness Evaluate the relative appeal of alternative solutions in terms of meeting consumer requirements. Method: Quantitative research through face-to-face, telephone/internet interviews 4. Test Market As it is very expensive for a company to launch a new product, before going for a full market launch it often pays to try out new product ideas in a 'test' market. This may be launching the product in just one region of Great Britain, with just one retailer or conducting a 'Simulated Test Market'.

Method: Quantitative research from participants in a test sample of consumers who physically live with the test product for a period of days. There are three stages: 1. concept research - to determine whether consumers like the 'concept' of the new product 2. product attributes - to determine whether the actual 'product' offering matches the 'concept' 3. volume assessment - to determine whether consumers will actually buy the new product and what, if any, existing products it will replace. 5. Track market performance This involves tracking the product's success once it has been launched e.g. by recording sales figures, numbers of people familiar with the product, etc. Method: Quantified continuous rolling study with consumers and/or analysis of Electronic Point of Sale data (sales information gathered via retailers' tills).

Page 6: Product development

Ansoff's matrix is a useful tool for examining a company's product range. This compares the alternatives of developing new products and new markets. There are four main options: 1. Market penetration: selling more of the same types of product to the same types of people. 2. Product development: building on existing relationships with consumers and on a creative ability to develop new products suited to consumer wants. 3. Market development: developing an existing product to cater for emerging markets. 4. Diversification: developing new products for new markets.

Coca-Cola Great Britain | Using market research to develop a product range

Page 7: Developing the range

The company's Business Intelligence and Planning Department is responsible for collecting the research and presenting it to the Consumer Marketing Department. The following examples illustrate ways in which CocaCola GB has developed its product range. 1. Coca-Cola Vanilla There had not been flavour innovation involving Coca-Cola since 1986 when Coca-Cola Cherry was launched. However, recently Coca-Cola Vanilla had a successful launch in the USA, so it was decided to test its potential in Great Britain. Product evaluation involved carrying out taste testing to identify the best formula/flavour for consumers' palates in Great Britain. At the same time, considerable effort was put into graphic development. It was important for the pack design to incorporate the Coca-Cola trade mark, thus remaining true to the Coca-Cola family, but also to differentiate the new flavour. Consumer focus groups were used to identify the preferred design. In addition a simulated test market was carried out. On the basis of the background market research it was possible to forecast likely sales volumes. This calculation was based on the type and level of support the brand flavour launch would receive (e.g. advertising, sampling, promotions, price and distribution), consumer perceptions and claimed behaviour (what the consumers said they would do). The results were favourable and supported the launch of this flavour in Great Britain. 2. Fanta Icy Lemon The development of this new flavour stemmed from listening directly to consumers who called the Company's careline to enquire about the availability of a lemon Fanta based on their experience on holidays abroad. As a result, the Company undertook a series of quantified product taste tests and once the preferred flavour was identified, Fanta Icy Lemon was launched in 2001. The launch was a great success and the brand has subsequently been complemented by a range of other flavours. 3. Coca-Cola Share Size 1.25 litre Bottle Desk research showed a growth in the number of smaller households, plus a change in the way we shop. The research identified a need for a bottle size that was ideal for top-up shoppers or 1-2 person households to share over dinner.

This was followed up by qualitative research to confirm consumer appeal in relation to alternative pack formats. Quantitative in-store test marketing was also carried out to measure rates of sale. This was supported by the scrutiny of retailer loyalty card data to identify types of households purchasing the new bottle size. 4. Powerade Desk research identified an opportunity for a new brand within the sports drink segment. Research was used to identify target consumers and desirable product positioning. Qualitative research using focus groups was carried out to assess the 'Powerade' proposition and the most suitable creative advertising. Quantitative product taste testing was also carried out to make comparisons with other products, already in the market place.

Page 8: Launch evaluation

For any new product launch, Coca-Cola GB evaluates its success, looking specifically at the various elements of the launch activity, including distribution, advertising, packaging and product taste.

Data is collected from leading marketing research organisations, the company's consumer careline, Coca-Cola bottlers, and a consumer tracker report that measures consumers' brand awareness.

Page 9: Conclusion

Coca-Cola GB seeks to develop intelligently its product range in order to 'benefit and refresh everyone'.

Building the range involves developing existing and new products in existing and new markets. The key to maximising consumer satisfaction lies in doing the market research properly and getting the range right.