Mm Case Studies

8/2/2019 Mm Case Studies

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Product life-cycle management (marketing)From Wikipedia, the free encyclopedia

This article is about the commercial term to describe the life of a product in the market. For the engineering

term, seeProduct lifecycle management.

Product life-cycle management (orPLCM) is the succession of strategies used by business management as

a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes

over time and must be managed as it moves through its succession of stages.

Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings

pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the

case of products. The product life cycle goes through multiple phases, involves many professional disciplines,

and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the

market with respect to business/commercial costs and sales measures. To say that a product has a life cycle isto assert three things:

Products have a limited life,

Product sales pass through distinct stages, each posing different challenges, opportunities, and

problems to the seller,

Products require different marketing, financing, manufacturing, purchasing, and human resource

strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are:

Stage Characteristics

1. Market

introduction stage

1. costs are very high

2. slow sales volumes to start

3. little or no competition

4. demand has to be created

5. customers have to be prompted to try theproduct

6. makes no money at this stage

2. Growth stage 1. costs reduced due to economies of scale

2. sales volume increases significantly
http://en.wikipedia.org/wiki/Product_lifecycle_managementhttp://en.wikipedia.org/wiki/Product_lifecycle_managementhttp://en.wikipedia.org/wiki/Product_lifecycle_managementhttp://en.wikipedia.org/wiki/Product_lifecycle_management


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.

The product life cycle

Each product has its own life cycle. It will be 'born', it will'develop', it will 'grow old' and, eventually, it will 'die'. Someproducts, like Kellogg's Corn Flakes, have retained theirmarket position for a long time. Others may have theirsuccess undermined by falling market share or bycompetitors.

The product life cycle shows how sales of a product change overtime. The five typical stages of the life cycle are shown on thegraph. Not all products follow these stages precisely and timeperiods for each stage will vary widely. Growth, for example,may take place over a few months or, as in the case ofNutri-Grain, over several years.However, perhaps the most important stage of a product life

cycle happens before this graph starts, namely the researchand development (R&D) stage. Here the company designs aproduct to meet a need in the market. The costs of marketresearch - to identify a gap in the market and of productdevelopment to ensure that the product meets the needs ofthat gap - are called 'sunk' or start-up costs.


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Nutri-Grain was originally designed tomeet the needs of busy people who had missed breakfast. Itaimed to provide a healthy cereal breakfast in a portable andconvenient format.1. Launch - Many products do well when they are firstbrought out and Nutri-Grain was no exception. From launch(the first stage on the diagram) in 1997 it was immediatelysuccessful, gaining almost 50% share of the growing cerealbar market in just two years.

2. Growth - Nutri-Grain's sales steadily increased as the

product was promoted and became well known. It maintainedgrowth in sales until 2002 through expanding the originalproduct with new developments of flavour and format. This isgood for the business, as it does not have to spend money onnew machines or equipment for production. The market


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position ofNutri-Grain also subtly changed from a missedbreakfast product to an 'all-day' healthy snack.3. Maturity- Successful products attract other competitorbusinesses to start selling similar products. This indicates thethird stage of the life cycle - maturity. This is the time ofmaximum profitability, when profits can be used to continue tobuild the brand. However, competitor brands from bothKellogg's itself (e.g.All Bran bars) and other manufacturers(e.g.Alpen bars) offered the same benefits and this sloweddown sales and chipped away at Nutri-Grain's marketposition. Kellogg's continued to support the development of

the brand but some products (such as Minis and Twists),struggled in a crowded market. Although Elevenses continuedto succeed, this was not enough to offset the overall salesdecline.

4.Saturation- This is the fourth stage ofthe life cycle and the point when the market is 'full'. Mostpeople have the product and there are other, better orcheaper competitor products. This is called market saturation

and is when sales start to fall. By mid-2004 Nutri-Grain foundits sales declining whilst the market continued to grow at arate of 15%.

5.Decline - Clearly, at this point, Kellogg's had to make a keybusiness decision. Sales were falling, the product was in


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decline and losing its position. Should Kellogg's let theproduct 'die', i.e. withdraw it from the market, or should it try toextend its life?

Strategic use of the product life cycle

When a company recognises that aproduct has gone into decline or is not performing as well as itshould, it has to decide what to do. The decision needs to bemade within the context of the overall aims of the business.Strategically, Kellogg's had a strong position in the market for

both healthy foods and convenience foods. Nutri-Grain fittedwell with its main aims and objectives and therefore was aproduct and a brand worth rescuing. Kellogg's aims includedthe development of great brands, great brand value and thepromotion of healthy living.Kellogg's decided to try to extend the life of the product ratherthan withdraw it from the market. This meant developing anextension strategy for the product.

Ansoff's matrix is a tool that helps analyse which strategy isappropriate. It shows both market-orientated and product-orientated possibilities.


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Kellogg's | Extending the product life cycle

Extending the Nutri-Grain cycle - identifying the problem

Kellogg's had to decide whether the problemwith Nutri-Grain was the market, the product or both. The

market had grown by over 15% and competitors' marketshare had increased whilst Nutri-Grain sales in 2003 haddeclined.The market in terms of customer tastes had also changedmore people missed breakfast and therefore there was anincreased need for such a snack product.


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Extension strategies

The choice of extension strategy indicated by the matrix waseither product development or diversification. Diversification

carries much higher costs and risks.Kellogg's decided that it needed to focus on changing theproduct to meet the changing market needs. Researchshowed that there were several issues to address:

1. The brand message was not strong enough in the face ofcompetition. Consumers were not impressed enough bythe product to choose it over competitors.

2. Some of the other Kellogg's products (e.g. Minis) had

taken the focus away from the core business.

3. The core products ofNutri-Grain SoftBake and Elevenses between them represented over

80% of sales but received a small proportion ofadvertising and promotion budgets. Those sales thatwere taking place were being driven by promotionalpricing (i.e discounted pricing) rather than the underlyingstrength of the brand.

Implementing the extension strategy for Nutri-Grain

Having recognised the problems, Kellogg's then developedsolutions to re-brand and re-launch the product in 2005.Fundamental to the re-launch was the renewal of the brandimage. Kellogg's looked at the core features that made the


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brand different and modelled the new brand image onthese. Nutri-Grain is unique as it is the only product of thiskind that is baked. This provided two benefits:

the healthy grains were soft rather than gritty the eating experience is closer to the more indulgent

foods that people could be eating (cakes and biscuits, forexample)

The unique selling point, hence the focus of the brand,needed to be the 'soft bake'.

Researchers also found that a key part of themarket was a group termed 'realistic snackers'. These arepeople who want to snack on healthy foods, but still crave agreat tasting snack. The re-launched Nutri-Grain productneeded to help this key group fulfil both of these desires.Kellogg's decided to re-focus investment on the core productsofSoft Bake Bars and Elevenses as these had maintainedtheir growth (accounting for 61% ofSoft Bake Barsales).Three existing Soft Bake Barproducts were improved, threenew ranges introduced and poorly performing ranges (suchas Minis) were withdrawn. New packaging was introduced tounify the brand image. An improved pricing structure forstores and supermarkets was developed.


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The marketing mix

Using this information, the re-launch focusedon the four parts of the marketing mix:

Product improvements to the recipe and a wider range offlavours, repositioning the brand as 'healthy and tasty',not a substitute for a missed breakfast

Promotion a new and clearer brand image to cover all theproducts in the range along with advertising and point-of-sale materials

Place better offers and materials to stores that sold theproduct

Price new price levels were agreed that did not rely onpromotional pricing. This improved revenue for bothKellogg's and the stores

As a result Soft Bake Baryear-on-year sales went from adecline to substantial growth, with Elevenses sales increasingby almost 50%.The Nutri-Grain brand achieved a retail sales growth rate ofalmost three times that of the market and most importantly,growth was maintained after the initial re-launch.


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Conclusion

Successful businesses use all the tools attheir disposal to stay at the top of their chosen market.

Kellogg's was able to use a number of business tools in orderto successfully re-launch the Nutri-Grain brand. These toolsincluded the product life cycle, Ansoffs matrix and themarketing mix. Such tools are useful when used properly.Kellogg's was able to see that although Nutri-Grain fitted itsstrategic profile a healthy, convenient cereal product it wasunderperforming in the market. This information was used,along with the aims and objectives of the business, to develop

a strategy for continuing success.Finally, when Kellogg's checked the growth of the re-launchedproduct against its own objectives, it had met all its aims to:

re-position the brand through the use of the marketingmix


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return the brand to growth improve the frequency of purchase introduce new customers to the brand.

Nutri-Grain remains a growing brand and product within theKellogg's product family.


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KITcat

Kit Kat: Revitalising aBrand LeaderA Nestle case study

Page 1: Introduction

All products have a life-cycle. It starts with preparations for the

product's launch, followed by the launch itself. Some products

are an immediate success; they capture public imagination.

Often this results from well targeted, exciting promotional and

advertising activity and from careful market research that has

identified a genuine gap in the market. Other products take

longer to come to consumers' attention, and longer still to

become popular. Some new products flop, and soon

disappear from sale.

The growth stage comes next. Growth can take weeks or

months (e.g. the latest fashion clothes) or years (e.g. the

typical packet or canned food and drinks found in

supermarkets). Eventually the maturity stage is reached,


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where sales of the product and consumers' level of product

awareness are both high. At this stage, products risk going

into decline, largely because they have become too familiarand are seen as less exciting than recently launched

alternatives.

The life-cycle of a product

Marketing departments are expected to ensure that productsdo not go into decline. Mature products need new life injectedinto them, to keep the buying public interested and aware ofthe product's benefits. This case study provides a classicexample of how to put new life into a favourite, leading brand:Kit Kat.

Why Kit Kat needed revitalising

Kit Kat is the UK's best-selling chocolate bar. However, in thecompetitive modern world consumers' tastes continuallychange. As a result, even the most popular icons have to re-invent themselves from time to time in order to keep theirappeal and stay 'on top'. For example, pop stars adjust their

image, film animators amend their favourite cartooncharacters, and car designers re-design old favourites suchas the VW Beetle and the Mini. One secret of success is toretain enough of the old image to keep the loyalty of presententhusiasts for the product, whilst making sufficientinnovations to attract a whole new group of consumers.


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In the world of popular chocolates and sweets, there has beenin recent years an ongoing revolution in modifying products. Inprevious times, sweets and chocolate bars remained in moreor less the same form for many years. Today, however,modern sophisticated consumers constantly seek novelty andchange, and consumers have become the driving forcebehind product modification. Take Smarties, for example,which have undergone a series of changes in recent years.Until the late 1980s, Smarties came in well-establishedstandard flavourings, colours and packaging. Then:

1989 Nestl introduced blue Smarties

1991 Printing on sweets was introduced 1992 Green chocolate arrived 1995 The standard range of Smarties was relaunched

with colourful new packets 1997 Giant Smarties were launched 1999 Smarties ice cream was launched 2000 Mini Smarties came on the scene 2001 Tetrahedon pack for Mini Smarties

Every alert, market-focused producer recognises the need forregular change. This is required because: consumers want and demand change rival firms are constantly re-inventing themselves and

their products innovation and inventiveness keep an organisation

flexible and able to respond to further change.Although Kit Kat continued to be the Number 1 confectionery

brand, by the late 1990s its volume sales were falling. Facedwith several increasingly attractive competitive offerings,consumers began to see Kit Kat in its traditional form aslacking in excitement and interest, with purchases beingdriven more by habit than positive choice. Although the four-finger Kit Kat continued to be highly popular with its core


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target market of 25-40 year olds, it was losing popular appealwith younger consumers.The image problem was most evident among core countlineconsumers ie 12-20 year olds. In this important age group,while Kit Kat had been part of 'growing up' and may also havemade regular appearances in lunch boxes, it was hardlyrelevant to their lifestyle. The traditional four-finger Kit Kat didnot seem relevant to them. In 1999 therefore, Nestl felt itwas time for some re-invention. The company decided todevelop a new format of Kit Kat whilst still retaining the four-finger variety with which consumers are so familiar.

Project Tyson

Project Tyson resulted in the launch of Kit Kat ChunKy, asuper size Kit Kat finger with a real mouthful of chunky milkchocolate. This 'heavyweight' idea assumes that youngerconsumers are looking for novelty, interest and even

excitement when they buy a chocolate bar. While most of usare loyal to the chocolate products we buy regularly, we alsoseek novelty.Project Tyson, as with all Nestl projects, followed Nestl'sinternal advertising code of conduct, which reflects theindustry position on advertising to children. The project teamensured, for example, that the promotional campaign wouldnot encourage children to pester their parents for products nor

would it encourage children to eat confectionery frequentlythroughout the day, in preference to properly balanced meals.To find out exactly what consumers were looking for, Nestlcarried out detailed market research, including detailedqualitative research. Many pairs of young people were invited


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to give their views on different formats for the new product egwhether they preferred one or two fingers, what flavours theypreferred (caramel, peanut butter, orange jelly, chocolatelayers etc). Researchers also considered the mostappropriate form of packaging to add further interest andattraction to the product. Other forms of market researchincluded group discussions with young people who, typically,were regular consumers of chocolate bars. A survey groupmight consist of, for example, males and females who were:

17, 18, 19 or 20 years old of different ethnic origin

from different parts of the UK a mix of students and non-students.

Using focus groups in this way, researchers were able tocompile data on the views and feelings of representativesamples of the targeted groups of consumers.The research provided clear evidence that:

the targeted population of 12-20 year olds were attractedto the idea of the single Chunky finger

Project Tyson could be a winner.The research also identified the type of packaging with thegreatest appeal - a mainly red and silver flow wrap. It alsobecame clear that Kit Kat Chunky would inject new interest inKit Kat across a broad range of consumers, including youngchildren and older adults.The research examined different types of wrappings andformats. In particular, it compared two-finger and single-finger

variants of Kit Kat Chunky.The single-finger proved to be most popular with the 12-20year old group, and was also the most distinctive form that thenew product could take. The research also indicated that atwo-finger variety would, in some ways, compete with thefour-finger variety. This would lead to Kit Kat competing


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against itself; not a very good idea! By contrast, the single-finger Kit Kat Chunky provided a promising line extension.

Objectives for the launch

A wise company will look to justify every new venture in strictbusiness terms: it will set tough performancetargets. These inturn can be converted into production targets, cost estimatesand revenue projections.

Quantitative objectives

Nestl set demanding quantitative objectives for the launch.Nestl aimed to:

achieve 90distribution in all sectors of the confectionerymarket within the first four weeks after the launch

sell 50 million units (ie 2,750 tonnes of product) in 1999,

the year of the launch increase sales in subsequent years.

Qualitative objectives

Nestl also set several qualitative objectives. These were to:

broaden the number of occasions on which peopleconsume Kit Kat, with the vision that Kit Kat would be thenatural choice for all breaks

increase Kit Kat's market penetration by enticing newconsumers to the brand, and by persuading lapsed users


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to return to the product, with particular emphasis on the12-20 year old segment

create real innovation in the countline market.

Supporting the launch: media, PR and point of sale

For a new product to grab public attention quickly, it is vital tosupport its launch with well-targeted advertising andpromotional activities. Chunky was supported by twodedicated television adverts complemented by a phone sitecampaign. The advertising was a big departure from previous

campaigns in that it focused on the targeted age group. Itconcentrated on 17-18 year olds in order to capitalise onaspirational identification from the younger groups, withoutalienating older consumers.In addition, Nestl invested in a range of public relationsactivities through radio and the national press. A detailedpoint-of-sale campaign supported the launch with attractivedumpbins in stores, and posters for shop windows. Field sales

staff were involved in a detailed communication exercise toraise awareness in all forms of distribution channels.

The success of the launch

The launch of Kit Kat Chunky proved to be one of the bestmarketing success stories in recent times. Over 50 million

bars were despatched within the first few weeks of the launch.Kit Kat Chunky almost immediately became the best sellingcountline, and this success story has continued. Nestlprovided excellent support for retailers by providing them within-store promotions and a smooth supply of the product in


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order to meet the massive customer demand. Within 6months, more than 20 percent of the UK population of the UKhad tried the product, and repeat rates have been very high.Both the quantitative and the qualitative objectives for thelaunch were quickly met. The most successful aspect of thelaunch and subsequent marketing activity has been that ofrevitalising interest in the Kit Kat line, particularly among the12-20 year old age group. There has been a clear knock-oneffect into other age groups and only a limited negative effecton the sale of the traditional four-finger Kit Kat. In addition, theKit Kat Chunky is a versatile product with an ability to inject

new ideas into the market focused at 12-20 year olds eg byproducing varieties such as orange flavoured Chunky.

Conclusion

The launch of Kit Kat Chunky has shown that intelligentinnovation and adaptation, supported by meticulous market

research and product promotion, really can extend asuccessful product's life-cycle significantly.

Amway


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Introduction

Founded in Ada, Michigan in 1959, Amway has become oneof the largest 'Direct Selling' companies in the world with

nearly three million Independent Distributors.Direct selling involves dealing with customers 'Face-to-face'so that personal attention can be given to each of theirrequirements. Direct selling differs from traditional retailing asit often involves selling to consumers on a one-to-one basis,usually in the comfort of their own homes.The industry has grown rapidly over recent years and iscurrently estimated to be worth 40 billion a year world wide.

This case study examines this growth which has helpedAmway to become one of the industry's market-leadersinfluenced by changing lifestyles, demographics andeconomic recession.

Direct selling forAmway is undertaken by its own independent distributors.Their own income is based on the goods they sell, bonusespaid by Amway and the volume of sales generated throughtheir own distributor network. These distributors sell to peoplethey know or meet. Amway distributors operate as their ownindependent businesses.Amway is a long-standing member of the Direct Selling

Association (DSA) in the UK and Republic of Ireland. TheDSA regulates the industry by providing a Code of Conductendorsed by the Office of Fair Trading (OFT).Amway has developed into a global corporationmanufacturing over 450 products and employing more than


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12,000 people in over 80 countries and territories around theworld.To supply a global base of customers, Amway manufacturesproducts ranging from household cleaners to cosmetics, foodsupplements to housewares. It also markets products onbehalf of other leading manufacturers, such as Kenwood,Aiwa and Philips.

The ARTISTRY* Range Of Cosmetics

Over the last 31years Amway has invested heavily in the development of theArtistry range of Skin Care and Cosmetics. The rangecomprises approximately 3,257 individual lines which are soldin over 30 countries throughout the world.Based upon a recent Euromonitor study of global sales data:

Artistry is among the world's ten largest brands of facialskin and colour cosmetics

Artistry is the largest direct sales brand of facial skin careand colour cosmetics in the world.

Product Development

Research and development play a vital commercial rolecreating better products through improving operationalprocesses and helping the whole business focus upon itscustomers.


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Artistry products are the result of years of research,development and testing, supported by modern manufacturingprinciples. Amway's research is proactive, taking the lead in amarket by researching the newest ingredients in the industryfor continuing development of new formulae using state-of-the-art manufacturing techniques.This case study focuses upon how Amway has recentlyinjected life into the product life-cycle for its Artistry range tomaintain this proactive position and keep ahead of itscompetitors.

Global Marketing

Amway is a global organisation which markets products ininternational market places. Planning for global markets is amuch more complex process than for domestic markets. Itpresents many more risks than operating in a domesticmarket where goods are sold in only one local area. Globalmarketing involves recognising that people from all over the

world have different needs, i.e. values; customs; languages;rules and currencies.

Though it is said thatconsumer needs around the world are converging, there arecommonly accepted needs and wants that go beyond nationalbarriers. The marketing mix consists of a complex set ofvariables which an organisation combines together in order toensure that both global and local corporate objectives areachieved.


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Standardising elements of the marketing mix is key tooperating successfully in the global marketplace. As a result,common needs and wants are identified across countries. Atthe same time, parts of the marketing mix requiring adaptationare identified so that it can be developed to cater for localdifferences. This requires a thorough understanding of everymarket in which Amway operates.Many advantages arise from competing in a globalmarketplace, including:

economies of scale - over a larger output, costs per unitare decreased to provide the supplier with a competitive

advantage. Amway is able to spread its research,development, technology and distribution costs so that itcan maximise its production efficiency

the development of new business opportunities - innumerous countries, markets are growing faster than inEurope and America. Overseas markets offer theopportunity to compete in different marketplaces andextend the life-cycle of products

to meet the tastes of consumers from different nations -over recent years there has been a convergence oftastes resulting in a more global marketplace.

The Product LIfe - Cycle

Markets are in a constant state of change. Over a period oftime, tastes and fashions alter and the technology used to

produce goods and services moves on. As a result, there willalways be a demand for new products as old ones becomeredundant.According to the product life-cycle concept, all products movethrough four life-cycle phases.


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During the introductory phase growth is slow and volumeis low because of limited awareness of the product'sexistence.

Sales rise during the growth phase and profit per unitsold reaches a maximum.

As products reach maturity, growth in sales starts to leveloff. Organisations have to invest heavily to extend thelife-cycle while competition becomes stronger.

When sales start to fall a product is said to be in decline.In a global environment, managing and maintaining themarket share for fashion products is particularly demanding.

Cosmetic manufacturers are constantly challenged bydifferent changes in the fashion industry. If these changes arenot properly managed, products could quickly move intodecline

Injecting New Life Into The Artistry Life - Cycle

To prolong the life-cycle of a brand or product range, anorganisation must inject new life into the growth periodthrough readjusting the ingredients of the marketing mix.

In 1996, to ensure

the Artistry range would stay in line with evolving markettrends and tastes, Amway set about upgrading its brand withthe additional objective of increasing its globalcompetitiveness.Amway engaged in world wide market research to gain acomprehensive understanding of the needs and wants of


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target markets. Market research is the systematic gathering,recording and analysing of data about positives and negativesrelating to the marketing of goods and services.Through acquiring a substantial know-ledge of eachmarketplace, the marketers could identify elements of themarketing mix which could be standardised, in addition toelements requiring change.

The Needs Of The Targeted Markets

Market segmentation is the process of breaking a market intosections which match consumer needs. Where segments areidentified as having requirements that can be met by anorganisation, they can then be targeted.Research of international markets commissioned by Amwayaimed to gain a broader understanding of the Artistry user. Itindicated that the overall profile of the Artistry user wasconsistent across all geographic regions. The Artistry woman:

leads a busy lifestyle appreciates quality cosmetics rates skin care as highly important 'transforms' herself when wearing cosmetics values a natural appearance desires a variety of shades so she can create any look

she wishes.However, the Artistry woman is attracted to images which are

regional or country specific. For example: in Thailand the Artistry woman is attracted to a classic or

traditional image in Taiwan the image desired is classy and elegant


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in Germany the Artistry user is attracted to glamorousand luxurious images as well as scientific and clinicalimages

in the USA Artistry users prefer scientific and clinicalimages

in Australia a moderate image of pampering was found tobe appealing.

Finding the right marketing mix would require finding thecommon ground between the geographic differences andpreferences highlighted by the research. The solution cameabout through:

1. developing a product range suitable for all markets2. developing universal packaging3. undertaking a global promotional campaign that met with

regional image requirements.

Universal Packaging

Packaging is particularlyimportant as part of the 'product surround' in the cosmeticsindustry. The functions it serves include:

protecting the product which it contains acting as a communication tool - conveying messages

about the image and ingredients of the product and themanufacturer

creating brand identity between the numerouscomponents.

Packaging for Artistry products is one element of themarketing mix that is globally standardised.


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More than $2.5 million was invested by Amway in high qualitypack-aging communicating one theme, designed to positionthe cosmetics in the high quality premium sector. Differentlanguages and product information ensure that the messageis communicated to all targeted markets.

Global Promational Campaign With Regional Image Requirements

One of the biggest challenges for global businesses isdesigning promotional and advertising materials that go

beyond national and cultural boundaries.The revision of Artistry was backed up with a promotionalcampaign designed to:

build brand awareness increase sales of the Artistry range maintain a consistent global image to meet specific

market needs.The challenge was how to advertise the brand with images

that would be appealing and meaningful across a range ofnationalities.A model was chosen as the face of Artistry world-wide. Aportfolio of promotional material was produced using this'signature model' in six different styles communicatingdifferent moods and images.From this portfolio, Product Merchandisers of each regioncould choose the advert containing the best images for each

marketplace.


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Conclusion

The revisioninjected life into the Artistry brand to extend its life-cycleacross its global markets.The manipulation of the marketing mix for Artistry products

enabled the business to benefit from economies of scale inproduction, packaging and promotion of the Artistry rangewhile at the same time fulfilling the specific needs of regionalmarkets around the world.

An enterprisingapproach to amarketing re-launchA United Biscuits case study


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Introduction

Enterprising businesses must be able to re-invent themselves

and their products. This is because consumer expectations

change over time and other elements of the general business

environment also alter.

A successful, enterprising business knows when and howbest to change in order to please its customers.

This case study focuses on one of the UK's leading savoury

snacks, Phileas Fogg. The study analyses how United

Biscuits (UB) reinvented Phileas Fogg.

Part of a larger group - United Biscuits (UB)

The history of Phileas Fogg is steeped with innovation basedon a small enterprising business with exciting packaging andadvertising ideas. Today, like many other organisations in the


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food industry, Phileas Fogg is part of a much larger group:UB, a multi-national company. It was originally founded in1948 following the merger of two Scottish family businesses:McVitie & Price and McFarlane Lang, and now has thenumber 1 biscuit brand in the UK, Netherlands & Spain aswell as the number 1 nut brand (KP). UB also has strongbrands in France, Belgium, Ireland and Portugal, and is thesecond largest crisp manufacturer in the UK.It makes good commercial sense for small businesses likePhileas Fogg to join larger organisations like UB. As part ofUB, Phileas Fogg benefits from various commercial

economies of scale that can come from marketing, selling anddistributing products on a larger scale.UB has grown through both organic growth and acquisition, aprocess that has involved taking over and merging with othercompanies to become the leading manufacturer and marketerof biscuits and snack foods that it is today.The two main UK divisions of UB are:

McVitie's

'The first choice for biscuits' including well known favouritessuch as Jaffa Cakes, Penguin, Hobnobs, Digestives and RichTea.

KPOne of the UK's largest manufacturers of savoury snacksincluding Hula Hoops, Skips, KP Nuts and Phileas Fogg.


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Phileas Fogg has benefited from being part of a multi-nationalcompany. Higher levels of funding are available fordeveloping the brand and distribution costs are lower. Thereare improved opportunities for shared projects involvingresearch, advertising and promotion. The Phileas Foggbusiness has also been able to benefit from expertiseavailable elsewhere within the group.The challenge facing Phileas Fogg, however, was how toretain its innovative culture and individuality within a muchlarger organisation.

Being enterprising

The Phileas Fogg brand was born in 1983 in the steelworkstown of Consett in the North East of England. The steelworkswas closing down, creating high levels of unemployment inthe area. Four men installed a snack-making machine on thesite. With this they created their exciting product lines. One oftheir acquaintances ('Jeff' used a former ice-cream van to sellthe products to local shops and to passing customers.

That could have been the whole story, but it was only thestart. Fired with enthusiasm from the success of the venture,these entrepreneurs saw the opportunity to exploit a gap inthe market. In particular, they realised that they couldcapitalise on a potential niche market by catering for adulttastes that were not adequately met in the crisps market of


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the time. Their objective was to create a premium brand withthe distinguishing qualities of authenticity, quality andexcitement.Very quickly the new business was able to gain a competitiveadvantage over rivals through:

its innovative name: Phileas Fogg - a fictitious explorerfrom Victorian times

attractive packaging, promotion and advertising the novelty and range of its snacks.

Phileas Fogg was the first to develop tortilla snacks.Incredibly, it took seven years for a competitor to match this

innovative product. Phileas Fogg gained a reputation fordeveloping snacks based on foodstuffs and tastes from farflung corners of the globe. With its innovative approach tomarketing, the company ensured that Consett, and inparticular Medomsley Road, became as famous as the exoticlocations that inspired its snacks.The business has become increasingly adventurous in itsquest to develop tasty, unconventional snacks. This approach

has helped maintain its growth. Today it employs over 200staff, including a team of discoverers, who research remoterparts of the world for the next taste bud tingling delight. Overthe years, humorous award-winning advertising campaignshave developed the brand's reputation as the leadinginnovator within the adult premium snacks market.

Product life-cycle

All products experience a life-cycle. This takes the form of astaged product launch, followed by a period of sustainedgrowth up to maturity, and then finally a decline in sales as


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product strength diminishes. The length of the life-cycle is notthe same for all products, but it is usually many years. Withcareful nurturing, a product's life-cycle can sometimes beextended.

Following its success in the 1980s, the Phileas Fogg brandshowed signs of slower growth in the 1990s. This was mainlybecause:

new competitors had entered the field, supported byheavy investment and clever marketing e.g. Doritos,Kettle Chips and Pringles

the original Phileas Fogg proposition based on the ideaof a Victorian gentleman travelling around the world withhis manservant Passepartout had become outdated andlacked relevance

the strong levels of creativity and innovation thatcharacterised the Phileas Fogg brand in the 1980s andearly 1990s had diminished in recent years.

It was clear that if Phileas Fogg was to re-discover its earlyvigour and success then a new approach to marketing and

innovation was required.


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Preparing to change

In the world of food manufacture, products are continuallybeing improved and altered to keep abreast with changing

times. The process of improvement involves first finding outwhat consumers want, and then seeking to introduce changesto existing products to meet their needs. Having done this,companies can re-launch a brand or individual product linesusing appropriate advertising and promotional techniques toconvey the change.In preparing for the re-launch of Phileas Fogg in June 2002,UB carried out vital preparatory work. The group:

1worked with a number of leading entrepreneurs todiscuss possible ways of rejuvenating the brand

2carried out detailed market research to discoverconsumers' views

3identified the core elements of the Phileas Fogg brandthat needed to be retained. These were:

commitment to innovation absolute integrity ongoing research worldwide to identify new snacking

experiences.


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Making the change

To create a momentum for the change process, work patternsat Phileas Fogg were altered; people responsible for newproduct development were put into cross-functional teams.New products were developed and fast tracked to re-launch inrecord time.Importantly, the organisation was prepared to take risks.Every single product was re-launched and the range wasdrastically cut to remove under-performing lines that were

draining resources.The aim was to radically change and modernise the PhileasFogg brand, a process which involved the decision to removethe brand icon, the Victorian Phileas Fogg character. Asignificant amount of finance - 1.5m - was put behind thebrand in the re-launch year. Great emphasis was placed onputting innovation back at the heart of the brand.

Because of its history, Phileas Fogg has always maintained astrong relationship with its employees. This relationship wasfurther strengthened during the re-launch process. All PhileasFogg employees were and continue to be kept informed ofnew developments and opportunities to ensure that new ideasare shared across the company.The Phileas Fogg Company invited and paid for a range ofemployees from different functions from both management


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and the factory floor to travel the world and bring back freshideas. Pictures of the staff who travelled in search of newideas are featured on the back of the new packs for all theworld to see. The venture generated a host of new productideas. Some of these have already been launched whilstothers will be brought to market in years to come.Whilst individual brand re-launches will often have specificevaluation criteria that need to be delivered, there are genericmeasures that most re-launches, including Phileas Fogg,have to achieve.These include:

increases in distribution, particularly among major retailchains improvements in both the brand's market share and consumer penetration increased levels of excitement and enthusiasm behind

the brand amongst both the sales team and retailers increased levels of media coverage and public interest in

the re-launched brand.

Conclusion

The Phileas Fogg Company has a culture that encouragesrisk taking and has always been well known for its groundbreaking, distinctively eccentric, award winning advertising. It


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has a reputation for frequent new product development andexciting packaging (e.g. a triangular tortilla pack).Because the company was born out of the hardship ofindustrial decline, employees have always been fiercely loyalto it. The challenge that faced UB following the acquisition ofPhileas Fogg in 1992 was how to build on these corestrengths with the added benefit of increased funding andresource without stifling the entrepreneurial spirit that built thebrand.The re-launch initiative has been a huge undertaking. Itsimpact can be seen across the complete Phileas Fogg

product range and can be felt amongst all its employees someof whom research and travel the world looking for new,exciting taste and snacking experiences.UB is committed to this exciting and enterprising approach.Re-inventing the Phileas Fogg brand demonstrates that allorganisations need to create positive consumer led change.

Market leadership inthe 3G marketA Hutchison 3G case study


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Page 1: Introduction

3G stands for third-generation mobile communication and can

be viewed as wireless broadband for mobile phones. It is a

radio communications technology offering:

3G is a contemporary development, with phones first being

developed on a major scale in Japan in 2001. Today, more

than half of Japanese mobile phone users use 3G. It spread

to Europe in 2003 and its use is growing rapidly here and

worldwide. The market leader in 3G in this country is 3. 3 has

the highest customer base in its market sector. As a mobile

network provider, 3 recognised that 3G was the way forward

for market development. It seeks to provide the best network

available for mobile phone users.


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The Product Life Cycle

Products go through a life cycle: When a new product is introduced to the market,

consumers may have little awareness. Therefore, it isimportant to use promotional activity to give advice aboutthe product's benefits.

The next stage is growth. During this period more peoplefind out about the product and purchase it.

Finally is a stage of maturity when there is littleexpansion and a product may go into decline.

The typical life cycle of a product can be illustrated as above.

The sales performance rises steadily from zero (when theproduct is introduced to the market).The mobile phone market fits this pattern.


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Relationship between the life cycle and sales

Initially the product will grow and flourish. However, as newcompetitors come into the market and as excitement about

the product reduces, a new stage in the life cycle stage isreached, called maturity. If the product is not handled carefullyat this stage we may see the saturation of the market andinterest in the product or services begins to decline. At eachstage there is a close relationship between sales and profitsso that as organisations or brands go into decline, theirprofitability decreases. To prolong the life cycle of a brand orproduct, an organisation needs to use skilful marketing

techniques to inject new life into the product.

Maintaining a product's life

A product's life cycle may last for a few months or for morethan a century. It all depends on how good the product isoriginally, how easy it is for competitors to emerge, and howgood a firm is at keeping its own product relevant and

attractive to consumers. Hutchison Whampoa, the companythat owns 3, has led the growth of the global 3G market. It hasinvested heavily in new technology and provides the mostcomprehensive network for 3G communications.


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What is marketing strategy?

Marketing strategy describes how a business meets therequirements of its market.The marketing strategy must enable a business to deliver itsobjectives. Markets are made up of customers with wants andneeds. Market planners must provide products and servicesthat are better than those which competitors offer. Theorganisation with the most effective marketing strategy shouldbecome the market leader.

Creating a marketing strategy

To create a marketing strategy you must first find out aboutyour environment through market research. Investigation intothe 3G market in Japan first indicated that the 'killerapplication' would be video messaging. This has not proved tobe the case. For example, Japanese consumers have beenfar more interested in music downloads. Market research by 3showed that consumers are interested in the extensive rangeof 3G phone applications.


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Marketing strategy covers all elements of the procedure thatan organisation uses to satisfy the market, such as research,promotion and advertising. The marketing strategy mustenable a business to deliver its objectives. HutchisonWhampoa's objective is to be the market leader in providing

3G wireless communications. All aspects of 3's market planare tailored to achieving this. For example, the company'sadvertising helps customers appreciate the benefits of 3Gservices and content.

Product and market orientation

Product orientation

Production and marketing go hand in hand in successfulbusinesses. You can only convince customers that you canmeet their needs if you have the products to do so.3G technology has significantly more bandwidth than 2Gtechnology. More bandwidth means more space fortransmitting large amounts of data e.g. videos rather than text.

A 3G phone offers up to 384 kilobytes per second when adevice is stationary or moving at pedestrian speed. During2007, 3 will launch a high speed service which will have atarget speed of 1.8 Mbytes per second.There are three main sections of 3's UK business:


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First mover advantage

3 was the first company in Europe to appreciate theopportunities offered by 3G. It invested seriously in thismarket, hoping to acquire 'first mover advantage' by being thefirst one to develop a specific market. The first moverbecomes associated by customers with that expansion. It isthen able to be at the leading edge of new developments soits rivals are continually trying to catch up. 3 is always seekingto improve its products and services to maintain its marketleading position. In 2006 these included:

signing an exclusive deal to stream ITV1 ITV's flagshipchannel to its 3.75 million customers in the UK (customernumbers in August 2006)

signing deals with leading handset producers such asNokia, Motorola and Sony Ericsson to provide handsets

to complement the network. A recent example of this isthe link with Sony Ericsson's K610i and K800i Cyber-shotphones

screening the 2006 World Cup directly on customermobile phones. This created an all-time high in mobiletelevision usage


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launch of the X Series from 3, which is supported by acommercial link with key Internet service and softwareproviders such as Microsoft, Yahoo, Google, eBay,Skype, Slingbox and Orb. These links will take wirelessbroadband to the next level, allowing consumers toexperience the full Internet experience whilst on themove.

Market orientation

Hutchison Whampoa took a considerable gamblein investing in the 3G network market. At the time it was arelatively untried new technology, but there was considerablesupport for the development. Britain is a member state of the

European Union (EU), which was able to see the advantageof this innovative technology. In 2002 the EU Council wantedtelecom network providers to transfer 80% oftelecommunications to 3G.3 is always seeking to improve its products and services tomaintain its market leading position.Existing network providers and new competitors had to bid forlicences to operate using this system but the cost of these

was extremely high. Because of this, the successfulcompanies were left with only limited funds to invest in thenew technologies. However, 3 was determined to lead thefield and has invested considerably in this market. Today it isbeginning to harvest the benefits.


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Achieving market leadership

3 invested 4.4 billion to purchase one of the five licencesavailable from the Government. Since then, 3 has invested

heavily in developing its network which was launched on 3rdMarch 2003 and which today covers 90% of the UKpopulation.

The market is getting stronger all the time. The network iscontinually being extended and there are new and innovativecompanies producing the high-quality phones required toaccess the products and services delivered across thenetwork.When you phone someone using 3, 3G chops upyour call into a miniature packet of data, which is coded. This

is a highly efficient way of sending information. Using thissystem of chopping and coding, 3G can deliver large filessuch as pictures and videos at a much faster speed.

The results of 3's market research

3's market research shows that young people like 3Gbecause it enables them to send pictures, view videos and

listen to music downloads. It is also popular with businesscustomers and people who work in the media for example,film editors and journalists.The market research was able to illustrate that 3G providescustomers with many benefits including:


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1. Real-time communication for example, phone calls, e-mails (including large attachments) and faxes. Thismeans that people can be in constant touch.

2. High-speed Internet access you can browse the web anddownload data files and software using your handsetwherever you are.

3. Access to information for example, watching the WorldCup or accessing news bulletins.

4. Personal organisers including electronic diaries and lists.5. Global roaming you can access services anywhere in the

world (within 3's sister territories).

6. Video conferencing for business people or schoolslinking with partner schools in other parts of the world.

Asset-led marketing

An asset is something you have possession of. In this case,Hutchison Whampoa owns 3, which is the UK's market leader

in 3G. This provides customers with a much greater range ofcommunications benefits than non-3G offerings.

Asset-led marketing involves using your material goods in themost efficient way the market determines this. Wise marketers


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know that assets work best when they meet customer needs.Market research is therefore seen as imperative for 3. Forexample, it showed that ITV1 is a highly popular televisionchannel. Research also revealed that 3's customers wantedto watch ITV1 on their phones, so the company formed a linkwith ITV. The consequence is that 3's network works better tomeet customer requirements this is asset-led marketing.Asset-led marketing involves using your material goods in themost efficient way. 3 is continually seeking to improve itsnetwork and services. This involves improving:

the network

the content available through the network links with mobile phone producers links with global leaders in internet technology.

Conclusion

3G wireless technology provides an exciting newdevelopment in the way people communicate with each other.

It enables us to use a much more comprehensive range ofcommunication than previous forms. Because of the greaterbandwidth the new technology offers, there are tremendousbenefits to be gained by business and private users. Featuressuch as high-speed internet connections and the transmission


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of pictures and sound give users access to high-qualityinformation wherever they are.

Future development

A major strength of 3 is an emphasis on anticipating andmeeting customers' needs. The company recognises that itcan continue to be the market leader only if its product issuperior to that of its rivals. This will only be the case if 3understands what its customers want.In a fast-moving industry, it is important to find out whatclients prefer today, but 3 must also research their future

requirements. It must also frequently research newtechnologies in this way it will stay at the forefront of the fieldand retain market leadership. 3G is a developing technologyand the greatest benefits are likely to come in the next coupleof years. Because of its market leadership, 3 is ideally placedto continue to lead developments in 3G.

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