Feb 5, 2021 in Business

Marketing Principles

Introduction

Boots UK is a pharmaceutical, healthcare, beauty, and family company founded in 1849 by John Boots. It operates in high streets of the United Kingdom and other countries. The organisation is a subsidiary of Alliance Boots after the merger of the Boots Company PLC and Alliance UniChem PLC in 2006. The organisation conducts operations in Europe, Asia, and North America. With over 2500 stores in the local community pharmacies and big destinations that sell beauty and health products, the company brands itself as a leader in the provision of fast moving consumer goods with the aim of helping its customers feel and look better. Therefore, the company offers excellent services and products delivered by professionals and experts.

With a head office in Nottingham since its establishment, Boots UK has undergone a change in names and products listings. It has had mergers with several companies that helped to diversify its products. Through research, the company added new services to its line of offering such as laser eye surgery services. It had a short stint venturing into wellbeing services that saw it offer services like treating facials, nutritional advice, as well as homoeopathy, but later abandoned them in 2003. From then, after the merger with Alliance UniChem, Boots UK has focused on beauty products, and as a result has launched several of such products for men, women, and children. One of these new products is the organic shampoo line of products that seek to give consumers alternative choices of beauty products in the market. Apart from conducting business activities, Boots UK also contributes to the corporate social responsibility, like the partnership with Macmillan to help cancer patients. The company also ran Boots Museum with numerous historical items before it was closed down due to high running cost.

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Definitions of Marketing

Marketing is a dynamic concept and its definitions have been varying depending on the context in which the definition is presented. The American Marketing Association Board of Directors defines marketing as any activity including processes for making, communicating, delivering, and exchanging goods and services contained in a set of institutions, and which holds some value to the customer, partners, clients, or the larger society. Furthermore, the board notes that good marketing should be implemented through marketing research as a function to link the consumers, customers, and community with the marketer on the feedback basis. This is essential in identifying and defining the marketing prospects and challenges. As might not be expected, the actual purpose of marketing is to create, improve, and evaluate actions of business with a view of improving customer experience with the product or service. More importantly, marketing should be implemented through relevant information that assists in addressing the barriers for consumers and designing of methods to collect information; manage as well as implement the analysis of that information. It should also address barriers relating to communication of the relevant information to clients, consumers, and partners. For instance, Boots UK has invested into the market research for a long period. This has led it to venture into beauty products like organic shampoo. The kind of marketing that is done by the company through brand name recognition, as well as other channels of communication helps to put the company above the rest in terms of beauty products.

Marketing can also simply be viewed as an activity that involves steps and strategies aimed at ensuring that the available products not only reach the consumer, but also satisfy their needs. This is done while ensuring that the company makes profits through offering products and services. As an activity, marketing involves many approaches as it fundamentally incorporates everything necessary to get the product or service from the production line into the consumers hands. As such, marketing is an amalgam of activities involving designing of products that are appealable to the final consumer. This is done by the use of tools such as marketing research. Marketing also involves the activity of promoting the product in the market, so that the target consumers are aware of the existence of a given product in the stores. Promotion is a function of advertising, public relations, and marketing communications. Promotion is designed to ensure that target consumers have knowledge of the product and its price, as well as its availability within their proximity. The final activity that defines marketing is the act of putting a price tag on the product.

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Recommended Marketing Orientation

According to Kohli and Jaworski market orientation inculcates an organisational production of market intelligence and the dissemination of such intelligence across different departments within the organisation for a responsive action. Conversely, Narver and Slater (1990, p. 69) noted that market orientation deals with the culture of the organisation that most effectively and efficiently helps to introduce necessary steps and actions for creating a superior value for consumers. Therefore, it provides a perpetual improvement in the performance of the company. In light of these views, Boots UKs new organic shampoo products will require to undergo through a focused market research to analyse the current shampoo products in the markets and the niches that the company can operate in. This will not only help the organisation to evaluate the market, but also to determine the demand and supply dynamics of shampoo products. It will also help to establish new markets and market niche in shampoo products besides providing information on the content and pricing of the organic shampoo.

Boots UK is well known for providing pharmaceutical products and services. Therefore, it might be required to form a dedicated department within the company to specifically deal with organic shampoo. Characteristically, Boots UK will need to develop a marketing approach that promotes discovery and satisfaction of the needs and desires for organic shampoo among the customers by introducing a wide range of products with different pricing and positioning. In order to understand the needs and desires of their customer, Boots UK must invest in market research before launching the line of organic shampoo products, so that items produced match the demand in the market. In this manner, the company will produce organic shampoos that are superior to the existing ones in the market. This way, they will be able to practice a form of coordinated marketing approach between consumers and Books UK.

Macro and Micro Environmental Factors

In order for Boots UK to successfully launch its new products, there will be a need to identify the internal and external opportunities and threats that the company might face. This commences with a thorough understanding of the marketing environment involving beauty products both in the UK and abroad. As observed by Harrell, the marketing environment is a collection of forces and actors outside of the marketing process. It has the ability to affect the management decisions and its capacity to create and sustain a positive relationship with its consumers. Among the micro environmental factors that are likely to influence the decisions at Boots UK is the companys culture, commonly known as organisational culture. This has to do with the way the company is perceived by its employees and customers. Boots UK is better known as a pharmaceutical company and most of its employees are experts in pharmacy. Therefore, inducing a new line of specialisation such as organic shampoo may not only be resisted, but also prove challenging to the management. The other factor is the suppliers, who are likely to change the competitive position of Boots UK in the organic shampoo industry. It is understood that the company will depend on suppliers for energy, raw material, labour, as well as capital. Michael Porter observed that the relationship between a company and its suppliers is an indication of the power equation between the two, and is largely dependent on the conditions, under which the industry is operating as well as the extent to they are dependent on the other.

Additionally, Boots UK will need to deal with the marketing channels both in the UK and foreign markets. Even though the company has established marketing channels in its home country and abroad, it is notable that these channels are dedicated to products other than organic shampoo. Market intermediaries will be important in promoting and distributing the new organic shampoo to final consumers. Among the intermediaries will be retailers, wholesalers, agents, distributing agencies, and financial institutions. Consumers also form important micro environmental elements as the products will be differentiated and positioned to meet the various customers needs. Identification and classification of customers will be essential in ensuring that the new products are affordable to all people in the market, who may want to purchase them. Another important micro environmental factor is the competitors. The beauty industry is flooded with cheap products from across the world. With this kind of environment, Boots UK will need to study the industry and understand the competition, so that pricing and quality of products presented to consumers match the cost of manufacturing. This will enable the company to sustain fierce competition.

On the other hand, macro environmental factors include the demographic characteristics of consumers. Most organic shampoo products in the market are targeted at women. However, in the recent past, men have also begun to use shampoo products for their hair increasingly. Children also are starting to use shampoo products. Understanding the consumer demographics will assist in developing products that are focused on a particular group of consumer. The other macro factor is the economic element that will involve the actual cost of producing an item and its cost in the market. Economics also will be a factor, especially in transporting the manufactured product from the plant to the consumer particularly in the international markets. If the cost of production and transport is higher than the cost of competitive product in the market, Boots UK may require reconsidering its decisions to make organic shampoo. Political conditions are yet another macro environmental factor that will influence the decision to produce organic shampoo. Political agreements between countries are likely to impact on the exportation of organic shampoo from the UK in a negative or positive manner. Cultural forces also can determine the reception of the new organic shampoo in some international markets. For instance, in some Muslim countries, where Boots UK has outlets, the use of beauty products may be prohibited by the religious authority and this will affect the sales. The important aspect for management at Boots UK is to analyse both the micro and macro environmental factors and to take a proactive step towards the factors before launching the product.

The Concept of Segmentation and Segmentation Criteria

Segmentation refers to the process that a company undergoes to divide the market into various classes in accordance to the different customers characteristics requiring different products. The consumers may be placed in the same group based on similar features, perception, gender, tastes, economic ability, and others. This is aimed at arousing similar response with regard to a given newly launched product tailored to enable the company to meet the various needs of that group. Targeting, on the other hand, involves an evaluation of the attractiveness of each identified segment in terms of buying power, growth of market, competition, and size. As such, in order for a company to successfully attract a target market, it must identify a segment for that market. It denotes pulling apart the whole market and distinguishing its units in disparate and manageable units based on identifiable factors, such as demographics.

As Boots UK will be targeting many characteristics of consumers, it is recommended that targeting strategy focuses on distribution, pricing, and promotion of the new products through advertisements, marketing communication, as well as other channels within a specific segment of the market. For instance, the organic shampoo products that are specially designed for men can be promoted through advertisements in sports channels, which are popular among male fans. On other hands, those that target women should be advertised through fashion and wedding shows, which are popular with female fans. The same will apply to children and other segments.

Factors that will Influence Buyer Behaviour and Proposed Positioning Strategy

Buyer behaviours are dynamic and evaluation of influencing factors must be continuous. Boots UK is a fast moving consumer goods company, and the consumers of its organic shampoo products will be looking at the price and quality of the products. The beauty industry is flooded with many brands, which gives consumers many options. Thus, price will be an influential element when it comes to buying decisions. Most customers will, however, be influenced by the brand preferences and their lifestyle. The sources of information about the new products will also impact on buyer decision, as well as the trends, peer influence, and the perception of essentiality of the product. Most buyers will, however, be influenced by the social factors. They include the aspirations and preferences of a given group or segment, as well as the roles, status, and family obligations, to which a buyer is attached. Cultural factors, such as the cultural setting of the consumer and their social class, will also determine who buys and who does not buy the new product. Cultural factors inform the decision and value processes. Individual characteristics such as lifestyle, age, occupation, economic conditions, self-concept, as well as personality will equally have a big role to play in the decision of whether one buys the new product or does not. Consumers also need to be psychologically prepared for the new products. Their motivation will influence purchasing decision regarding the new product. In essence, Maslows hierarchy of needs has an effect on the decision making about a new organic product.

In line with the identified factors, a strong positioning strategy will be required for the Boots UK to launch the new product successfully. Positioning is the process, through which a company creates an image or identity/value in the minds of consumers in terms of organisation, brand, and the product. Boots UK already has a brand name, having been operated in the European market for over a century. However, the line of a product is different from what the company is known for. Therefore, the organisation will require a new approach in order to position itself as a beauty product manufacturer. It is proposed that Boots UK positions its shampoo products in accordance to the portfolio of consumers, so that branding and packaging of the new product reflects the segment it targets. It can also position its product based on high quality image when compared to its competitors. The pricing, promotion and other value related activities are to be presented based on target market characteristics. Nevertheless, the approach to positioning is essential in ensuring that the company remains ahead of its competitors. For instance, the customer benefit approach will be recommended for Boots UK so that it is able to put the brand behind the competition. This can be done by launching organic multi-functioning shampoo. For instance, it may be an anti-hair fall as well as anti-dandruff.

Products Marketing Mix

Product development follows the analysis of consumer demands and characteristics of the market. Boots UK is determined to launch organic shampoo that will be accepted by the consumers. The development of organic shampoo follow the existing economic and social factors in the market. Pricing and quality of the new product are critical elements that ensure that it is able to compete effectively with some of the already existing shampoos. Distribution channels play a crucial role in delivering the product to the consumer. Boots UK will use wholesalers, retailers, distributors, agents, and financial institutions to distribute the new product to various markets across the world. Several pricing approaches will assist the company to launch the new products in the market successfully. Among potential pricing methods is the cost-plus pricing which involves setting the price at production cost. The set price includes the cost of goods plus the fixed cost at the current volume together with a specified profit margin. This kind of pricing depends largely on proper calculation of the sales volume in order to operate a profit. The other method that could be employed is the target return pricing, which is basically the setting of a price to ensure a return-on-investment. The disadvantage of this kind of pricing strategy is that the new products sold may have the same production cost, and therefore interfere with profitability of the company. However, because Boots UK is a veteran product manufacturer, setting the price using this target return pricing will draw its profitability.

Integrated marketing communication involves developing various strategies for marketing as well as carrying out creative campaigns. This entails that several marketing approaches, including advertising, promotion, social media, and public relations are utilised. It is mainly aimed at ensuring that the ultimate goals of the brand are achieved. Integrated marketing communication applies the aspects of the 4 Ps: pricing, product, promotion, and place. It also entails the organisational culture, which comprises of the vision and mission, attitudes and behaviours of employees, and the communication channels within the company. On the other hand, promotional mix will ensure that the five aspects of promotion are included in the promotional activities for maximum appeal of the new products to consumers. The elements of the promotional mix are sales promotion, direct selling, advertising, personal selling, and public relations. Boots UK will need to include all these aspects of the promotional mix in order to launch the organic shampoo in the market competitively.

Evaluation of Marketing Mix Variables

Marketing mix is the combination of four variables which could be controlled by management. The variables are price, promotion, place, and product. These variables must be blended in a manner that satisfies the needs of customers in a particular segment. Product, which actually plays the role of satisfying the needs of the consumers, is important since it must be identified, justified, and quantified. For Boots UK, this variable is essential as far as positioning and differentiation is concerned. Consumers in different categories and markets will demand organic shampoo products, which are differentiated according to their personal preferences and purchasing power. This brings in the issue of price, so that pricing is based on the purchasing power of each segment. Moreover, promotion as a variable will also impact on the success of organic shampoo. For instance, for young people segment promotion may make use of modern technological marketing channels, such as online advertising and event marketing, which are popular among the youth. Lastly, distribution channels have to be identified under the variable of place.

Because the new product from the company is targeting particular segments, developing a marketing mix approach will be depended on a number of factors. For instance, advertisement will cut across all segments. The same will be true for personal marketing. This will be easier implemented from a producer to consumer point of view. For business to business services, direct marketing will be easier to implement. Domestic marketing may be applied through advertising and personal selling. In the case of international marketing, a number of factors, such as social, political, and economic, are involved and may delay or hamper the success of the product. Moreover, international marketing is susceptible to macro environmental factors, which might negatively affect the process of marketing the product. With all these measures under control, the company will be able to ensure it remains competitive in the industry where it operates.

An important aspect for the management at Boots UK is to recognize that research and development of new organic shampoo must be founded on both international and domestic marketing principles. Nevertheless, the differences between the two forms of marketing are essential in developing the new product. For instance, the sovereign political entities, which require goods and services to move across boundaries under different restrictions, such as customer duties and tariffs, exchange, controls, local taxes among others, will apply in international marketing. It is also important to consider the legal systems in the home country as well as different countries of importing, as their existence makes the task of doing business more difficult. This is not the case with domestic marketing where legal systems are familiar. Cultural differences will also form an important aspect of product development just like the differences in marketing infrastructure in domestic and international markets.

Conclusion

The beauty market is arguably flooded with many beauty products. However, with the experience that Boots UK has as a fast moving consumer goods company coupled with strong research and development approach, the new organic shampoo will appeal to the target customers. It is recommended to use a strong marketing approach that will ensure proper segmenting of consumers and good differentiating and positioning of organic shampoo to be done. It will enable the company to attract customers in both domestic and international markets. Thus, the elements of price, promotion, place, and product will be a crucial factor in ensuring success to the companys new product.

 

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