Marketing Principles

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Marketing is a daily reality noticeable in every product or service used by people worldwide. The paper proposed attempts to highlight the principles of marketing in a particular case, Kellogg, a reputable company in food industry that applied concepts as segmentation, in order to effectively promote its products. The research demarche is a deductive one, debuting with general concepts as marketing process, focusing on the launch of a new product in the case of Kellogg.

LO1

AC 1.1

Generally, marketing is a complex process defined as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large" (www.ama.org). Based on the definition of marketing adopted by the American Marketing Association in 2013, marketing surpasses the level of production activity, as it might be initially perceived, including the organization itself, as well as its customers, clients, partners or other persons interested in its development. Marketing does not refer to manufacturing, delivering and promoting products or services, but also to create value for the organization and its stakeholders or society itself, as a major stakeholder interested in the activity of the organization. A similar perspective is suggested by Philip Kotler and Gary Armstrong (2011) considering that currently marketing cannot be associated with the image of "telling and selling", but with the attempt of "satisfying customer needs" (Kotler and Armstrong, 2011, 29). In practice, an organization is able to develop reliable products to create superior customer value, if it analyzes the consumer needs and focuses on the satisfaction of those needs. Basically, the products created are associated with particular prices, are distributed in a certain way and are specifically promoted, to reach the customers and satisfy their needs (Kotler and Armstrong, 2011, 29). In order to reach its objectives, an organization can adopt a cycle of five-step marketing strategy, debuting with the understanding of the marketplace and the customer needs, followed by the creation of a customer-driven marketing strategy, further creating an integrated marketing program able to deliver superior value and finally, build profitable relationships with customers, which will create "customer delight". As the four steps are completed, the final step is practically a positive effect for the organization, "capturing value from customers in return" (Kotler and Armstrong, 2011, 29), more precisely as the organization created for customers, they are likey to return value to the organization in the form of sales, profits, as well as long-term equity (Kotler and Armstrong, 2011, 29).

AC 1.2

In the case of Kellogg, it is noticeable to tendency to adopt the five-step marketing model mentioned, in order to create superior customer value. Kellogg has a long tradition in food industry, yet the organization is focused on the changing social reality of today, aiming to satisfy the needs of customers through improved products and offering particular rewards, in order to preserve their loyalty. The first step adopted by Kellogg is contemporary context is to understand the marketplace and the customer needs. Comparing with previous periods, current customers are particularly interested in a healthy, yet satiable food. In order to satisfy their needs, Kellogg creates organic recipes available for the classical breakfast products of Kellogg, as well as for the new products as Double-Coated Chicken, which tends to approach Kellogg to the area of fast-food, a complementary area of activity for the organization. Generally, the products dedicated to children as Kellogg assumed the mission of offering healthy food for the little ones, in order to attract the interest of parents, are included in a reward program. Parents are stimulated to buy healthy food as organic musli for breakfast and are rewarded with different promotions, in order to offer a surprise to their children as discounts to a visit to an amusement park as included in the Kellogg's Family Travel Rewards program (http://www.kelloggs.com/en_US/travel-rewards-promotion.html). Secondly, Kellogg designed a customer-driven marketing strategy based on creating value through production concept, product concept, selling concept, marketing concept and societal concept. In the case of Kellogg, the products are created from organic ingredients in modern factories, with minimal impact on the environment, further being packages in secure conditions, so that the customers benefit of a quality experience. The products designed by Kellogg stands for quality and healthiness, as they stimulate a correct nutrition for both parents and children. Kellogg products are included in a selling process expanded worldwide, the organization being interested to enter new markets and stimulate a healthy lifestyle at affordable costs. The marketing process adopted by Kellogg is based on sense and respond to customers' needs, the organization's products are directed to customers, instead of searching potential customers for existing products, as consequence the traditional ready-to-eat cereals were enhanced with fibers, as suggested by stakeholders, in order to respond to customers' attention to healthier nutrition habits. The societal marketing concept adopted by Kellogg refers to the intentions of the organization to offer long-term value to customers, as well as the society's positive development, as consequence Kellogg constantly improves its products in order to offer healthier nutrition solutions, additionally the organization participates to multiple environmental programs related to an ecological agriculture or securer package for food, in order to preserve their original features (http://www.kelloggs.com/en_US/environmental-initatives.html). Thirdly, Kellogg constructs an integrated marketing program focusing on the creation of superior value, the quality of product, a good price, place, and promotion. As already mentioned, Kellogg products are organic, created to support a healthier lifestyle, comparing with competitors' products. The positive value promised by Kellogg products might pass unnoticed, if the factor price would support the company's mission. Generally, Kellogg products are affordable by middle-class customers or customers with lower incomes, comparing with similar products, for example cornflakes for breakfast from a competitor are estimated at £1.45, while Kellogg version of the cornflakes cost £2.55 (http://www.mysupermarket.co.uk/tesco-price-comparison/Breakfast_Cereals/Kelloggs_Corn_Flakes_750g.html). The difference between the prices of the product can be cancelled in the mind of the customer, willing to offer healthy food from a reputable company as Kellogg. The organization's products are sold through an expanded network of restaurants, Kellogg being intensively interested in started partnerships with companies in the area of food (http://www.kelloggcompany.com/en_US/supplier-relations.html). Recently, certain products can be directly ordered from the official site of the organization (http://www.kelloggs.com/en_US/where-to-buy.html). The main promotional technique adopted by Kellogg is represented by the official site, as well as social networking or blogs officially associated with the company. Visiting or following these communication tools, potential or existing customers are informed about Kellogg's products, promotions, as well as social responsibility. A second promotional technique is advertising, Kellogg products being associated with a successful story of becoming or remaining healthy through their consumption as in the advertising to the Extra Muesli, a breakfast product, promoted through the message "Nutrition never tasted this good" (http://soulsteer.com/wp-content/uploads/2013/05/Kelloggs-The-best-to-you-each-morning.jpg). A third promotional technique is the constant attention to efficient trades, as Kellogg enters new markets or is willing to reinforce its position on an existing market, the products offered are constantly improved, as in the case of the introduction of fibers in breakfast products based on studies highlighting the alarming level of fibers in children nutrition or the innovative packaging, to preserve the freshness of the products (http://www.kelloggs.com/en_US/our-history.html). Fourthly, as an organization developed a proper customer-driven marketing strategy and marketing program, the effect would be the creation of profitable customer relationships. Kellog builds profitable relationships with customers based on superior customer value and satisfaction. The product promoted has to be different from other similar products, in order to create a benefice for the customer and further, the product should create a constant performance for the customer, in order to create satisfaction. Taking the example of a popular breakfast product among children as chocolate biscuits, Kellogg's version, Nutri-Grain Chocolate Chip Crunch Breakfast Biscuit (http://www.kelloggs.com/en_US/kellogg-s-nutri-grain-breakfast-biscuits-chocolate-chip-product.html) is enhanced with vitamins as vitamin B6 and it includes less salt, comparing with a similar product promoted by Belvita (http://www.tesco.com/groceries/product/details/?id=280679309). The product promoted by Kellogg can be considered by parents healthier than other products and as it is associated with different toys or rewards for children, it can create a superior value customer on the long-term. Totally, the marketing orientation adopted by Kellogg created positive effects for the organization, as the products promoted are perceived healthier than similar products on existing markets or on new markets, being constantly purchased in order to maintain a correct lifestyle for both parents and children, as consequence the organization reaches its goal of capturing value from customers in return, its current evolution being a profitable one, with increased incomes starting with 2012 (http://www.forbes.com/sites/jenniferrooney/2012/05/10/kelloggs-embarks-on-major-brand-overhaul/). On the contrary, the marketing orientation of Kellogg is also subject to additional costs, comparing with other organizations, as the company is committed to use only organic ingredients to create healthier food, which increases the costs of production, as well as of delivering, since organic foods needs to be attentively packaged and deliver to customers.

LO2

AC 2.1

Marketing can be described as a dynamic process responding to "environmental change" (Groucutt, Leadley and Forsyth, 2004, 27), similarly to human body. The environment where an organization develops can be affected by both external factors such as politics, as well as internal factors as the activity of suppliers. In order to effectively monitor the changes in the marketing environment, an organization can apply an environmental scanning and analysis strategy. Initially, the organization gathers information about the factors in the marketing environment through environmental scanning, while through scanning the organization concretely analyses the factors. There are multiple scanning possibilities such as observing marketing events, as well as general-interest publications, marketing researches or documents available on the internet. Once all required data are gathered, the organization starts an environmental analysis, interpreting the information acquired, in order to apply the most efficient marketing decisions (Pride and Ferrell, 2008, 64). Focusing on the dynamism of marketing environment, micro environmental factors as the organization itself, suppliers, marketing intermediaries, customer markets, competitors and publics are considered more "controllable" (Groucutt, Leadley and Forsyth, 2004, 28), as the company directly interferes in their evolution, for example if a supplier is not reliable anymore in terms of delivery on time, it is replaced with another supplier able to respect the organization's deadlines. By contrary, the macro environmental factors are considered "volatile" (Groucutt, Leadley and Forsyth, 2004, 34), as the organization's influence on their evolution is minimal or even absent, as in the case of politics, economics, social and cultural factors, technology, ecology or legal framework. The Kellogg product that will be analyzed is a new one, possibly named Kellogg Nutri-Apple Pie, based on apple and vanilla as main ingredients. In terms of micro environmental factors, Kellogg has to find or to reinforce its partnership with reliable suppliers and marketing intermediaries, to support the production chain and the distribution for this new product. Additionally, Kellogg has to create a different message to potential customers, as other competitors offer apple pies, as an unique healthy product based on the organic line already implemented by the organization. In the case of macro environmental factors, Kellogg has to pay attention to social and cultural background, if it intends to introduce the product to a different market than the European and North American ones, where apple pie is a very common product. Another external factor that should be analyzed is the ecological issue, as the new product demands organic ingredient, the company could support through social responsibility programs the ecological production of apples or wheat.

AC 2.2

In order to successfully implement a new product or an existing one, an organization has to implement three major steps:

Market segmentation, the organization identifies and profiles distinct groups of buyers for the products promoted

Marketing targeting, the organization selects one or more market segments to enter

Market positioning, the organization establishes and communicates the products' distinctive features (Kotler, 2002, 142).

Kellogg Nutri-Apple Pie is subject to a complex consumer segmentation, as follows:

Behavioural factors

► Benefits sought: the buyers of Kellogg product desire to consume a healthy, tasty apple pie

► Purchase occasion: the product can be bought as a daily snack or as a special product to remember the taste of childhood

► Purchase behavior: the product can be bought by parents to be offered to their children as a healthy snack, as well as adults can buy it for themselves as a healthy product

► Usage: the product can be bought daily, at any hour, as it is affordable and delicious

►Perceptions and beliefs: the product is a "taste" of childhood, attempting to create a special moment for adults, as well as for children

Psychographic factors

► Lifestyle: the product is consumed by people interested in a healthier condition for themselves and if it is the case, their children. Additionally to the healthier lifestyle they aim, the product can be consumed quickly, being a flexible snack in daily context, such as at work

►Personality: the product is created for adults willing to consume a healthy, yet childhood-memory snack, as well as for their children, to provide a healthier nutrition

Profile

►Demographic:

Age and gender: the product is created for all adults and children, it can be consumed from children aged 2 to adults of any age, as they are willing to rediscover the taste of a childhood apple pie

– Household features: the product can be bought by any type of customers, women or men, either they are married or not, belonging to an official religious group or not, having graduated or not an education form

►Socio-economic:

Income: the product can be bought by any type of customer with revenues surpassing the average or not, being affordable

►Geographic:

Country: the product can be bought in any country where apple pies are appreciated, as well as on new markets where Kellogg attempts to enter with new products

Climate: the product can be consumed in any season

Needs: the products satisfies the common need in every cultural or geographic area to consume healthy and tasty food

AC 2.3

Kellogg Nutri-Apple Pie's targeting will be based on two complementary strategies: focused targeting on traditional markets as Europe and North American, and customized targeting for new markets as Asia. On traditional markets, Kellogg can use market niche, a single segment (adults, with the special case of parents), in order to concentrate on understanding their needs. Before launching the product, Kellog will organize focus groups, will apply surveys in order to discover how a healthy apple pie would be received by existing customers or potential customers. Although, Kellogg is a traditional brand in food industry, the release of a new product that has competitors as the apple pie promoted by McDonald's has to be supported by a niche targeting, in order to implement the best marketing decision. In the case of new markets, Kellogg will apply customized targeting based on the satisfaction of local requirements. As the apple pie might be considered a product that does not culturally belong to the area, the organization will develop micro marketing measures as an affordable cost, discounted to the average cost of the product worldwide, additionally to the global marketing message about the product as a healthy one.

AC 2.4

Snacks are generally purchased on impulse, creating a low involvement, yet Kellogg Nutri- Apple Pie through its features of healthy and tasty snack can create a high involvement customer behavior, as adults perceives it as a necessary daily product or parents include it in the daily nutrition of children. In the case of Kellogg's apple pie, cultural, social, personal and psychological factors can influence substantially influence the buyer behavior and as consequence, affect marketing activities.

Based on the cultural background of the consumer, the apple pie promoted by Kellogg can be perceived as a traditional product consumed by other people in his/her social class, as consequence the image of popular product might persuade the consumer to buy the product and can be used by the organization in effective promotional strategies. On the other hand, when the product is introduced on a new market, the potential customers might perceive it as an external aggression to their local culture, as consequence it can be avoided, leading to negative effects for the organization, forced to find a communication channel to reach those buyers. In order to be positively received, the organization can associate the new product on a different cultural area with existing values as the need to consume something sweet to tea ritual as in China.

Apple pie is a common product, mostly consumed by family, friends or acquaintances. Consumers try it, because it was recommended by close persons, as consequence if a member of the family or friends circle is dissatisfied, the consumer is likely to avoid the product based on this experience.

The apple pie promoted by Kellogg can be associated with any age, occupation, economic situation, lifestyle or personality, being a product to satisfy the need for a healthier status and special moment of tasting food. Among those factors, age is likely to affect marketing activities, as parents or grandparents are interests in providing healthy food to children, as well as lifestyle for adults as a healthy condition can determine them to buy Kellogg's product

In terms of psychological influence, Kellogg's apple pie is likely to be associated with the motivation of remaining or becoming healthier. People interested in achieving this goal are likely to buy the product, as well as to avoid it, if it is suggested by competitors or by media as deceptive product

AC 2.5

Through its features, Kellogg Nutri-Apple Pie will be positioned in the minds of potential consumers as a completely healthy, tasty and affordable snack. Kellogg is different to similar products, since it includes organic ingredients and recreates a special moment, of tasting a hot apple pie as a child. Kellogg Nutri-Apple Pie if for both parents and children, as well for everyone willing to taste a good snack.

LO3

AC 3.1

Not only customers are segmented, in order to be effectively reached, but also products are subject to a differentiation process in order to create and sustain the competitive advantage of the organization. (Nilsson, Rapp, 2005, 75). Generally, the competitive advantage of an organization is the ability of creating or maintaining its prominence on the market segment through the products promoted. Concretely, the release of a new product is risky, the organization should focus on:

– the core customer value, the effective purchase of consumers in a market

– the actual features of the product, including the brand, design, packaging and quality

– additional features as delivery, warranty, service, if it is the case

In the absence of a reliable analysis before the implementation of a new product, the company's product is likely to fail, based on overestimation or underestimation of market size, design or brand problems or wrong price strategy. For an effective released and development of a new product, an organization should consider the following factors:

Idea generation. In the case of Kellogg's apple pie, the idea can be issued by internal factors as the employees or external factors as loyal customers, willing to introduce an old snack in their nutrition, but based on a new format similar to Kellogg other products

Idea screening. The potential apple pie is analyzed by a committee, focusing on the potential attractiveness of the product to current customers, as well as new customers, the price of the product, the production itself, as well as the distribution

Concept development and testing

Product idea: The new product is manufactured with organic ingredients, similar to Kellogg line, including apples and vanilla as new ingredients.

Product concept: the apple is mentioned to existing customers and potential customers as a completely healthy and tasty snack, based on the childhood flavors of apple and vanilla

Concept testing. Groups of existing customers, as well as potential ones selected from social networking or forums, are invited to taste the new product and express their opinion on the recipe and the current packaging.

Marketing strategy development. If the results of the testing are positive, Kellogg prepares to release the new product

Business analysis. Analyzing the potential sales of the new product, Kellogg establishes the costs and profit projection for the next cycle of production. If the product's performance is unsatisfactory, it will be withdrawn from Kellogg's line

Product development. The idea of product takes the shape of a concrete product, an apple pie and its packaging as prototype. The initial prototype will be tested in selected restaurants as free bonus from Kellogg before the official release, in order to evaluate once again the customers' perception

Test marketing. Additionally to few restaurants, traditional partners of Kellogg, the product will be sent as sample to other potential customers as organizations and individual, free of charge. They will be asked to offer their feedback related to the product, so that the organization can modify it before the effective release

Commercialization. The new product of Kellogg will start to be commercialized in favorable moment, mostly in the autumn when freshly picked apples are a common ingredient to other recipes. The product will be introduced to all restaurants selling Kellog products, following to be included on the online purchase system of the company

AC 3.2

Customer convenience can be considered the effective distribution of the product to the customer, able to create satisfaction (Jyoti, 2010, 20). The companies worldwide are interested by fast, secure distribution, at affordable costs. Commonly, the distribution system of an organization is based on successive phases as inventory control, transportation, order processing, warehousing, material handling and customer service, in order to provide a quality experience to customers, but as well as to maintain an efficient organizational network. Traditionally, the distribution channel included several agents as wholesaler, retailer, before the product arrived to the consumers, which was likely to create the context of late delivery or conflicts between the agents. Currently, a more direct distribution channel is preferred, from manufacturer to wholesaler that effectively distributes the products to consumers, reducing costs for the manufacturer, as well as increasing its control on the distribution process. In the case of Kellogg, the organization renounced to intermediaries, since 1950s, when it created its own transport system, as consequence Kellogg directly distributes its products to traditional retailers as Tesco or ASDA. Additionally to the security of distribution and the reduction of costs, the organization guarantees to its customers that the products will arrive fast and in proper conditions to the shelves of the retailers (https://www.tradegecko.com/blog/supply-chain-management-factory-supermarket-shelves-kelloggs).

AC 3.3

The price is considered the amount of money paid for a product or service, being the revenue associated with the organization, while the other elements of marketing process as distribution, previously analyzed, are costs (Kotler and Armstrong, 2010, 330). Price is a sensitive category for the potential customer, as well as a relevant criterion for the company's performance, setting the price being a permanent negotiation between internal and external factors. Generally, before establishing a price, an organization analyzes the following factors:

► customer perception of value. In the case of Kellogg products, although they are more expensive than rival products, they create a particular value of healthy status for customers themselves or for their children

►internal and external considerations as marketing strategy, nature of the market and demand, competitors' strategies. As the company intends to expand to new markets or launch new products, more incomes are needed to complete these goals. Internally, the organization has to maintain an affordable pricing of its products, comparing with rival products, in order to maintain the existing customers and attract the new ones.

► Product costs. Kellogg's products are based on organic ingredients, which are most expensive, as well the prices set should support the producing and distribution activity.

AC 3.4

By promoting a product, the company presents to customers a product. Currently, companies use a promotion mix, including advertising, sales promotion, sponsorship, direct marketing or Internet marketing, in order to create a positive image of the product and attract potential customers (Strydom, 2005, 140). In order to achieve marketing goals, the promotion mix should rely on two complementary leves: mass methods including advertising, sales promotion or public relations, as well as direct methods based on personal selling, direct marketing and internet marketing. The main functions of promotion mix are to:

– differentiate the product promoted

– remind and reassure the customers about its positive features

– inform customers

– persuade customers

In the case of Kellogg new product, the promotional activities will include:

Advertising mostly in new media (social networks, forums, most read newspapers, most listened radios), as the main segment of the customers is represented by young consumers, some of them parents, constantly connected to internet. Advertising in print press, radio and television will not be omitted, in order to reach other age categories, but its rate is reduced

Sales promotions in traditional partners of Kellogg as restaurants and retailers, so potential customers can test the product as a sample, before purchasing it

Direct marketing under the format of e-marketing, the customers being able to purchase the product from the official site

AC 3.5

On the level of additional elements of the extended marketing mix, improvements can be made on Layout and Process, as Kellogg has already developed a profitable strategy in recruiting and maintaining satisfaction among employees. In the case of the Layout of the new product, Kellogg can create an amusing packaging that can be perceived as familiar by both adults and children, for instance a flexible, colorful box where the apple pie would remain fresh for long time. As analyzing the factor Process, the organization could expand its strategy of communicating through new media as gathering feedback or complaints on the official site or social networks.

All in all, Kellogg as a long-term organization in food industry managed to preserve its position on the market through efficient marketing strategies as controllable distribution channel or the use of organic ingredients to deliver the best quality, comparing with similar products. The new product promoted by Kellogg is part of a line marked by the promise of a healthy and tasty experience, dedicated to children and adults of any age, income or social status. The apple pie created by Kellogg will provide an unique, affordable experience, based on organic ingredients and a challenging packaging, able to create a reliable positioning in the customers' preferences.

Bibliography:

Groucutt, Jonathan; Leadley, Peter; Forsyth, Patrick (2004), Marketing. Essential principles, new realities, Kogan Page Limited, London.

Kotler, Philip (2002), Marketing Managemenet, Prentice Hall, New York.

Kotler, Philip; Armstrong, Gary (2010), Principles of Marketing, 13th edition, Pearson Education, London & New Jersey.

Jyoti, Amar (2010), Marketing Management, Gennext Publication, New Delhi.

Nilsson, Fredrik; Rapp, Birger (2005), Understanding Competitive Advantage. The Importance of Strategic Congruence and Integrated Control, Springer, New York.

Pride, William; Ferrel, O. C. (2008), Marketing, Cengage Learning, New York.

Strydom, Johan (2005), Introduction to Marketing, Juta and Co, Cape Town.

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