GBMP502 Fundamentals of Marketing

19th March 2013

CASE STUDY:

BUY LESS: HOW SOME COMPANIES PROFIT BY ASKING YOU TO SPEND LESS

SUBMITTED TO: SUZANNE ROSS

SUBMITTED BY: ANKITA PANDEY, JIJO FRANCIS, LEJO JOHN, RATUL CHOWDHURY,
RINKESH PATEL, SIDDHARTH THAPA & NAVJOT SINGH

GBMP502 Fundamentals of Marketing

TABLE OF CONTENTS
1) INTRODUCTION 2

2) MARKET / SWOT ANALYSIS

3) TARGET MARKET

4) COMPETITIVE ANALYSIS AND SCA.

12

5) POSITIONING. 16

6) EXTRAPOLATION. 20

7) BIBLIOGRAPHY.

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1.)

INTRODUCTION:

The case study describes how some of the companies make profit by asking the customers to spend less. Most of the companies spend much of their money and effort on how to get more customers. Among these companies some have become successful where as the rest was not able to. This is because of the fact that they are concerned about making more profits than focusing on customer satisfaction and loyalty. Some companies have proven this to be wrong by making profits as well as earning customer loyalty along with it. In this case study we will be discussing such companies (Max burgers, Xerox, Gillette & Patagonia) and their marketing strategies which made them achieve their target. We will be discussing about the market / swot analysis, target market, competitive analysis, sca, positioning and extrapolation of this companies. MAX BURGERS Max burger is a fast food restaurant that was opened in north Sweden in 1968. This fast food corporation was founded by Curt Burgers. In 1990s, Max Burger became a nationwide fast food chain expanding from northern Sweden where it was the largest hamburger restaurant chain. By 2011, Max Burger owned 85 restaurants more than double of what they had in 2006. They had three thousand employees in year 2010. Maxs competed with two major fast food chains on the market, McDonalds and Burger King and performed very

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well. Max is a family owned corporation so it is great achievement for a family oriented business to be successful at such level. Average turnover per restaurant is 2 million Euros.

XEROX
Xerox Corporation is an American multinational document management corporation that manufactures and sells a series of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies.

GILLETTE
Gillette is one of the best brands for mens safety razors. From early 2005, Gillette started dominating the razor and blades industry with more than 70 percent of the global market share and the rest 20 percent was owned by Schick Company.

PATAGONIA
Patagonia grew out of a small company that made tools for climbers. Alpinism remains at the heart of a worldwide business that still makes clothes for climbing as well as for skiing, snowboarding, surfing, fly fishing, paddling and trail running. These are all silent sports. None requires a motor; none delivers the cheers of a crowd. In each sport, reward comes in the form of hard-won grace and moments of connection between us and nature.

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GBMP502 Fundamentals of Marketing Their values reflect those of a business started by a band of climbers and surfers, and the least style they promoted. The approach we take towards product design demonstrates a bias for simplicity and utility.

2.)

MARKET/SWOT ANALYSIS

MAX BURGERS: In market analysis we define many things like market size, market trend to market growth rate and key success factors. In fast food industry the market size is increasing day by day as more and more people are in need of fast and less time consuming food alternatives. Market trends are also good for fast food industry as the market trend is upward. Max burgers are in upward market trend as they are exploring new opportunities and eliminating the threats. There have been challenges for the fast food industry in recent year both internal and external. The industry as a whole has proven robust enough to withstand these challenges, though some players have done better than others. Max Burger is one of those players who have done well. Over the last decade there has been increased focus on the quality of food served in fast food restaurants. Typically highly processed and industrial in preparation, much of the food is high in fat and has been shown to increase body mass index (BMI) and cause weight gain. Popular books such as Fast Food Nation and documentaries like Super Size Me have increased public awareness of the negative health consequences of fast food. Fast food companies have responded by adopting healthier choices and have had some measure of success, but the shadow of bad press still hangs over the industry. Max Burger has introduced healthier food products to overcome this factor.

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GBMP502 Fundamentals of Marketing

XEROX: Strength Strong research and development abilities INTERNAL Strong brand icon Environmental focus Weakness High dependences on US and Europe Dynamic market No presence in home market

Opportunities Expansion in small and midsized market EXTERNAL Acquisition of ACS Reusable paper

Threats Market going digital Intense competition International business risk

GILLETTE: There are number of macro-environmental factors that are affecting the gillete

company such as: - Gillette's famous market share has been losing some ground. Since 2010, some reports state they have lost three share points, due to the economy.

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- Some pricing pressure from competitors. STRENGTHS: -brand image and brand equity -innovative technology -celebrity endorsement -market leaders -strong brand name for gillete -Portfolio range

WEAKNESSES: -very high cost with propaganda -manual products only -male products only -environment issues -dangerous OPPORTUNITY: -importance of personal hygiene
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-fashion look -military use -consumer brand preference -changing societal attitudes -new production technology -sophistication -increased grooming

THREATS: -manufacturing prices increased -lower cost product -competitors of Gillette -long development cycle -relatively static market growth

Patagonia, Inc. is a Ventura, California-based clothing company, focusing mainly on outdoor

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clothing. It was founded by Yvon Chouinard in 1972. Patagonia offers many varieties of outdoor clothing. Many of their products are marketed towards skiers, campers, surfers, hikers, rock climbers etc. Patagonia has played a major role for environmental groups. Patagonia commits 1% of their total sales or 10% of their profit, whichever is more, to environmental groups. Since 1985, when the program was first started, Patagonia has donated $25 million to over 1,000 organizations. Patagonia co-founded the alliance 1% For the Planet. This is an alliance of businesses who, like Patagonia, commit at least 1% of their total sales to the environment. Patagonia often features their environmental campaigns in their catalogs and advertisements. Many of their recent campaigns include work with preventing oil drilling in the Alaska Wildlife Refuge, "Ocean as a Wilderness", and "Don't Dam Patagonia. Strengths High quality product Environment friendly business Manufacturing process Low employee turnover Reached active market segment

Weakness Few customer loyalty incentives Few high-performance finishes

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Less fashionable apparels compared to competitors High price

Opportunities Increase of online spending Increase of environmental activism Expand target market Expand business to new countries

Threats Competition with the companies like North Face, Columbia, REI Ageing target market Changing activities bodies Season

3.)

TARGET MARKET are 25 provinces in Sweden with 9,555, 983 people and GDP $40, 393

MAX BURGERS: There

per capita. Every region has its own structure. The strengths and weaknesses of the brand depend much on this structure. We would like to describe Halland. The territory is 156, 35 square kilometers. The population is 303, 895 persons. Density is 160 per square meter.

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GBMP502 Fundamentals of Marketing

Generally the target market of the Company consists of the male and female. The age range varies between 12 and 65. The customers value nutritious food, which represents homemade meal traditions, as well as interrelates with cultural aspects. People consuming the product are primarily families with kids or single individuals. Their income is from $3, 000 to $15, 000 per month. They are both graduates from high schools or higher educational establishments. Elofsson (2010) states the province municipality employs 7,500 people in 70 different professions. People, who enjoy comfort, tasty food, and stability in life, daily routine fall under category of the Companys target market. Some people staying in the food location expect higher service, more comfort and better facilities. Max Burger provides with the space for the guests who value privacy and do not want to share the floor with others. The safety and sanitary conditions are also taking place. The personnel are friendly and ready to serve. The Company has openly stated the information concerning the amount of excessive emissions, which is released while preparing the hamburgers. The management asks the customers to consume less ham and offers them different ingredients
XEROX: Xerox main costumers are one who owns a business. This business varies from small scale, which may use a starting segment laser printer to corporations that has thousands of employees. The target market also includes production and commercial printing customers, graphic-arts and creative services companies, public sector operations, and industries like healthcare, education and financial services. The individuals can be from the both sex, with wide and varied age range. The customers can also be one employed in professional activity. The income range can be varied from $15,000 to $200,000.

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GBMP502 Fundamentals of Marketing Customer expects product quality and aesthetic design from a product produced on large scale. Fast delivery of the product is also important. Rather than the design factors price of the product is the one that of vital importance. Customers also rate for the afters sales services. With the increase in global warming, consumers are becoming more selective about the products and prefer more environment friendly products. By print less strategy, they were able to create an insight among the customers that, Xerox is environment friendly and aims at reducing the deforestation which is the main cause of globalization 1. 2. 3. 4. 5. Males and Females Ages between 25 to 28 Children younger than 12 Independent/single or married Personal income level $60,000 or higher Lifestyle Active, outdoors or nature lovers, sports participation Concern for environment, sustainability, conservation Fashion quality Need high quality apparel for varying weather conditions, less concerned with current trends

Patagonia targets a variety of markets including the active outdoorsman such as backpackers, climbers, kayakers, surfers, environmentally conscious and to the older and younger demographics.

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GBMP502 Fundamentals of Marketing Patagonia offers a variety of high performance gear such as jackets, tents, packs, sleeping bags, climbing gear, river shells, wet suits, ski wear, etc. These products obviously target the active outdoorsman because these are high performance necessities when venturing through the wild back country. Function always dictates the form and the perfect form is the result of a perfectly solved functional need which targets the outdoorsman, who is primarily focused on his latest venture, not fashion. Patagonia targets the environmentally conscious consumers because they use recyclable fibers and organic cotton. Patagonia also spreads awareness of the need to preserve the environment to people all over the world. The values of the company target those who care about environment and therefore bring in a large portion of sales. The younger and older demographics are targeted because of the function and high performance level provided by all Patagonia products. People of all ages want to buy products that will last and Patagonia provides this to the fullest.

4.)

COMPETITIVE ANALYSIS AND SCA

The major competition to Max Burger is from McDonalds and Burger King. Max Burger is more profitable than McDonalds and Burger King in the Sweden market. There are many attributes of Max Burger which has leaded it to the first position in the market. They have tried various innovative and new ideas to outcome there competition. For example: Asking its customers to eat less beef.

Few years back Max Burger decided to look at their menu and realized that their prime menu itemhamburgers- generated 70% of their carbon footprint. So they decided to offer fewer beef items on their menu and recommended more chicken and wish. This reduced fat, sugar and salt in the products which lead to profits. Max Burger followed this brave strategy for some time and they enjoy 11-15% profit 12 | P a g e

GBMP502 Fundamentals of Marketing margins versus 2-5% for their competitors. This is a unique attribute and factor which has distinguished Max Burgers from others. Max Burger became the first hamburger restaurant to outcompete McDonalds restaurants. Quality and Customers Loyalty: For nine consecutive years, Max had the most satisfied

customers among the fast food chains in Sweden beating McDonalds and Burger King by large margins. In a poll conducted it was found that Max Hamburgers have 40% customers satisfaction compared to 17% of McDonalds and 20% of Burger King. This is one of the major attributes of this family oriented company, the emphasis on customer satisfaction which helps in creating customer loyalty. This is why they are fastest growing chain of restaurants in Sweden, expanding 20% per year and they have enjoyed an increase in customer loyalty of over 27%. It's a growth strategy born of asking people to buy less. To maintain SCA focus Max Burger that takes into account the strengths and weaknesses of its competitors. They deliver a service competitors cant match, such as less beef more healthy foods, higher quality and higher customer satisfaction. The major competitors of Xerox Corporation are HP and Canon. , Xerox has a favorable brand name image. The company was one of the pioneers in the document processing business, and the name stands for quality, state-of-the-art technology, and good service. Many Japanese brands may not have such a favorable image. This image was enhanced by the introduction of the "Total satisfaction guarantee" where instead of monetary refunds, the products are replaced. Secondly, Xerox Corporation has an excellent quality management team. This fact has enabled the corporation to increase its market share. The Gillette Company is interested in maintaining its market share by introducing new products on the market and by upgrading existing products. This way, the company considers that customers will be

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GBMP502 Fundamentals of Marketing attracted by the companys interest in developing high quality products that address the needs of customers. In addition to this, Gillette is trying to attract customers and to develop a loyal customer base by creating products that seem to address the needs of specific categories of customers that cannot be considered mass customers. By developing such products, Gillette expects its customers to feel appreciated by the company and repeat their purchase. Gillette also focuses on developing a marketing strategy that allows the flexibility required by the changing needs of consumers. Besides this, to retain their market share, Gillette has come up with the new marketing strategy which is Buy less. Gillette made a statement they have never made before: They promoted a five-week blade lifespan.

XEROX Xerox Market share Medium Paper Input capacity High Energy Efficiency High Operating Noise Level High Medium Medium Low High Medium HP Canon

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GBMP502 Fundamentals of Marketing

Low Color Print Quality Good

Medium

High

Fair

Good

PATAGONIA Attributes ASPIRATION Patagonia Durable, functional clothing created out of respect for the PERSONA environment Hip, current, in-theknow Grounded, authentic REASON TO BELIEVE Self-reliant, socially responsible, granola-y Committed RELATIONSHIP environmental track record Uncle that never seems to slow down or grow old Everybodys favorite cousin A major player in the wilderness chic movement; jackets provoked muggings and counterfeiting One of first companies to use Gore-Tex Laid-back and lowkey climbing buddy Award winning designs in an industry that was considered done Intense and intimidating Hard core, committed The north face Performance wear for everyone Marmot Highest quality performance products Arcteryx Radical innovation for serious athletes

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GBMP502 Fundamentals of Marketing teacher

5)

POSITIONING

Max Burgers has positioned it very well in the market. It is able to make that mark on its target market. Max Burgers has created that quality and healthy fast food image in the customer mind. Max Burger already has surpassed its major competition and now it is expanding to different regions and countries. It has followed a two way strategy firstly it relies on its Swedish heritage and it also embraces a multicultural image at the same time. It serves both spicy and healthy products, the healthier alternative which ranges from 4% to 12.5% fat, its strategies like this which differentiate it from its competition. Xerox aims at helping people to find enhanced methods to do their work. They claims as the leader in document technologies, products and services that improves that helps the customer to do their work efficiently and easier. Xerox has chosen the point of difference position. They have a brand name that is exclusive and define the position. There are three technologies owned by the Xerox namely, the iGEN3 digital production press, the docu-color system, the phaser solid ink printers which differentiate them from the competitors. The world of copier is known by Xerox.

Gillette: For price sensitive customers products like P & G's Old Spice, Palmolive and Johnson are more satisfying than Gillette. Gillette is considered to have the best packaging among all the brands.

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GBMP502 Fundamentals of Marketing

High satisfaction in the availability in stores shows the robust distribution system that Gillette has put into place to cater to diversified markets. In the customer-value hierarchy, Customers evaluate Gillette to be significant along the product attributes and the point of purchase factors, giving it an image of high quality brand with attractive packaging and best availability. Old Spice and others are its closest competitors in attribute and price sensitivity respectively. Gillette lags behind all its competitors in price sensitivity which includes price and offers. In analyzing this case, it has been deducted that consumers are most satisfied with Gillette in all cases except when the purchasing decision is based on price along with additional features. PERCEPTUAL MAP

XEROX

Life Span

Long

Xerox
High Price

HP Low Price

Epson

Canon

Short

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Value Proposition for PATAGONIA

Quality: The pursuit of ever greater quality in everything we do. Integrity: Create and sustain relationship based on integrity and respect. Environmentalism: Serve as a catalyst for personal and corporate action. Innovation: Create unconventional solutions to help achieve the highest quality and minimize environmental impact. PATAGONIA

HIGH PRICE

MARMOT

THE NORTH FACE

HIGH QUALITY

LOW QUALITY

PETAGONIA

ARCTERYX

LOW PRICE

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GBMP502 Fundamentals of Marketing High cost

GILETTE

High quality

Low Quality

Low cost

MAC BURGERS

Costly

High Quality
Low quality

Cheap

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BRAND MANTRA
XEROX: Makes Business simpler through innovations PATAGONIA: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis. GILLETTE: The best a man can get; Buy less blades. MAC BURGERS: Healthiest burger starts with us.

6)

EXTRAPOLATION

The term Extrapolate means to make profits by using the buy less strategy. One of the companies which use this scheme is Coca-Cola. Type: Soft Drink Company: The Coca-Cola Company Brand Mantra: Share Happiness. Target Group: Coca-Colas target customers include people of all ages. However it is the favorite among the age group of 12 to 24. Coca-Cola is a carbonated beverage which is popular due to its brand quality and taste. It is used by people of age group. It is used with meal. It is popular among the youth.

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8) BIBLIOGRAPHY

Business Teacher. n.d. <http://www.businessteacher.org.uk/business-resources/swotanalysis-database/xerox-swot-analysis.php>.

Wikipedia. n.d. <http://en.wikipedia.org/wiki/Xerox>. Xerox. n.d. <http://kclacorte.wordpress.com/2010/02/16/xerox-corporation-marketresearch-and-analysis/>.

n.d.). Retrieved from http://patagoniacompany.wordpress.com (n.d.). Retrieved from http://trex.id.iit.edu (n.d.). Retrieved from http://www.greenleaf-publishing.com, (n.d.). Retrieved from http://www.radware.com www.scribd.com www.slideshare.com

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