Term Paper on "Jiffy Lube"

Term Paper 12 pages (4551 words) Sources: 1+

[EXCERPT] . . . .

Selling Detergents a. Executive Summary

The product selected for study is the mundane detergent. Study of detergent markets give the person a complete idea into the market development and growth as this has been one of the first products to reach a developed stage and new ideas have to be used for growth of brands. The market shares of brands keep changing, though the comparative market shares of different companies manufacturing detergents remain relatively stable, as some undeclared pricing agreements exist between manufacturers. The reason for agreements is the very high expenditures on marketing and advertising by major manufacturing companies to protect their own market shares and also to stop new entrants into the market. The situation of the total market is also difficult right now, and for that any new entrant has to take a number of factors into consideration. Thus the entire marketing strategy has to be decided on extraneous considerations.

b. Individual Pricing Component

The product to be studied is washing detergents. The product is used in every household or even by individuals living separately, for cleaning of clothes. Since every individual's clothes get dirty, they have to be cleaned till the clothes remain usable. The demand is thus stable. The product is used in every section of the society; there are many price ranges in which the product is available, with different qualities and possible utilization in different manners. The usage of detergents for this purpose has come after the manufacture and use of soaps for the same purpose was stopped due to the technical advantages of detergents and the price advantages for manufacture. There are a large number of brands targeted at different groups: some buy for the prestige of using a brand; some housewives buy a brand for free offer of associated products; some buy it for suitability to the method they have for washing clothes in terms of machines, flow of water, etc.

The product is available in powders, bars or cakes, liquids, concentrates, etc. The consumer demand is at different price levels according to the facility the household has for washing clothes, the money that can be afforded by the household for the purpose and the image that they want to project to others in the social group. The product is generally available in all types of stores, though select brands may not be available in all places. The usage of a particular brand is decided by the household, and there is no reason to assume any brand loyalties. The likelihood of using a brand gets increased with the associated images that the brand is promoted with, and the association may be through pictures in the advertisements along with the product. The consumer demand for the product in the total market is growing at a slow rate, and the growth is only due to change of population habits. The brand shares keep changing and the change depends on the offer that is more attractive to the housewife, who is generally both the customer and deciding authority for purchase.

c. Cost Component

The methods of manufacturing detergents are well established, and not all marketing organizations manufacture the detergents they sell - it is possible to get some other organizations to manufacture the detergent that is being sold by a marketing organization. The only development has been through the use of enzymes which help in the reduction of wash temperatures and removal of phosphates from detergents as required presently by global environment concerns. Through the removal of phosphates and reduction of temperatures would have led to reduction in cleaning ability which is avoided by using enzymes. The lowering of wash temperatures also reduces the requirement of energy for a load of wash, as the reduction in temperatures is from about 90 degrees Centigrade to about 40 to 60 degrees Centigrade. For the environment a lower load of phosphates into rivers and lakes also reduces the decline that these systems are facing. For fabrics the wash conditions are gentler and that stops the colors from rapidly fading out. Different types of materials can also be introduced in the fabric as the wash temperatures have been reduced. (Enzymes: A Primer on Use and Benefits Today and Tomorrow)

Regarding the question of costs, it was seen during a study in England that the competition between Proctor & Gamble and Unilever was very high in England. The competition between the two was mainly on advertising, and this was leading to very high advertising expenditures for them. This resulted in very high prices, and these prices also stopped new manufacturers or marketing organizations from selling their products in Great Britain as they would also face similar costs when they tried to enter the market. The costs are related to promotional schemes that provide gifts and provide an incentive for brand purchase. Customers also liked gifts and prizes, and while the marketing organization incurred costs, the items also provided value to customers. It was seen that many brands were similar in composition, but the brands appealed to different sections of the market in terms of geographic area, social levels, or even personal preference. (Conclusions and Recommendations) This was the justification for maintaining them, though this process increased costs.

d. Market Structures Component

For any marketing plan to be designed there are at least four elements that have to be considered - price, promotion, product and distribution. In some places these elements are called the four Ps. (Marketing Mix) the definition of marketing mix is the combination of these four elements in a manner so that the organizational objectives can be met. For each product that is manufactured by a company, there will be a different marketing mix for the product to achieve its targeted sale and profits. For preparation of the mix, the marketing person preparing the mix has to keep thinking of the target market for the product.

The importance of mix has to be understood in that all elements of the mix blend together so that the product performs well in the market. If we think of selling an ordinary medium quality detergent in a high price cosmetic store, then the distribution will not match the product image, and the result will be very poor sale. At the same time, distribution is not an exercise under the direct control of the marketing planner, and thus he may be held responsible for some actions that cannot be strictly controlled by him. This makes it important that these plans are finalized at the initial stage of planning for the product as that will compel all concerned to follow a set of policies that have been set up. (Marketing Mix) in the present day situation, the number of elements to be considered in marketing mix has been increased and some would like to consider another element called 'people' in the mix. This is to take into account the element of human behavior and traits in different aspects of marketing. For some businesses, the role of the collaborator is very important and that can be taken into account by including another element called 'partners'.

The product is of a type that is very common and has been used for a long time. The general practice is to manufacture the product, then send it down to a wholesaler, and finally to retailers. It is the job of the retail store to sell the product to the client. The pricing thus has to provide for the margins of all participants in sending the product to the market. It was seen in United Kingdom that the wholesaler and the retailer were given a margin of 16% while the manufacturer apparently had a margin of only seven and a half percent. Compared to this, the total selling costs were 23% and the cost for manufacturing of the product was 46%. Thus, it is clear that the traditional method of selling the product is not likely to provide a high return to the marketing organization in spite of the risks that it takes. The situation today is different and there are a number of factors that can influence the marketing channels. (the Environment of Marketing Channels)

While the effect on economy during 2001 was recessionary, the consumer purchase patterns which usually slow down did not, and the business investment fell instead due to the action taken by Federal Reserve. In terms of purchases of detergents in the supermarkets, the changes noted were to buying items which were needed, buying lower quality brands and buying unplanned items only if they were on special sale. This made the retailers cautious about their stocking and they tried to get more of promotional support while reducing their inventory levels to the lowest level. (the Environment of Marketing Channels) in the meantime, the supermarkets had their own expenses with guards to protect people, records, merchandise, money, and equipment. These guards often work with undercover store detectives so that theft by customers or store employees can be prevented. They also help in the… READ MORE

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