Some marketing problems require extensive study because they seem likely to uncover the possibility of producing profitable marketing opportunities or, conversely, sizeable losses. Some will require immediate attention while others may be less urgent.
A firm produces a wide range of food products for the consumer market. It believes that its jellies are of a superior quality and taste, but sales are below what the firm might have expected. The fault may lie with the price or the packaging, but the firm does not really have any precise ideas. It is even wondering whether it should drop out of the jellies market entirely. If this last action is seriously contemplated, the firm needs to know how this would affect its other product lines and, in particular, what effect this would have on distributors' readiness to stock the firm's other products.
A systematic approach to problem definition can help to direct marketing research staff in their efforts to obtain relevant information. It is also informative to all those people in the organisation who will be affected by the findings and recommendations.
MANY PARTIES MAY BE INVOLVED IN HELPING TO DEFINE A MARKETING PROBLEM AND IT HAS TO BE APPROACHED IN A SYSTEMATIC MANNER
A firm manufactures high-quality crystal glassware and wants to expand and become more profitable. It is considering manufacturing and distributing a line of lower-quality, lower-price products. It is unsure, however, whether it has the manufacturing and marketing experience to make such a venture successful.
In defining such a problem we have to adopt a systematic approach. The first step is to find out what the firm needs to know. Certainly, the firm needs a complete knowledge of the market. What competitive lines are being sold? Are competitors' lines profitable? Is there room for another line? How strong are brand names? How strong would the firm's brand name be in this lower-price line? Should the firm even use its brand name for this product? Can current distribution channels handle the new line? How strong are lines coming in from other countries?
The definition of the marketing problem must cover these questions together with additional questions posed by other involved parties.
Problem definition must take into account the situation of the company and its ability to take sound action. Poorly thought-out marketing decisions can cause major problems, sometimes with disastrous consequences. Many things can go wrong and many opportunities can be missed. The marketers in the firm need to anticipate and prevent as many of these as possible and in each case the first action should be a precise definition of the problem.
SWISS WATCH INDUSTRY - MISSING AN OPPORTUNITY THROUGH INCORRECT PERCEPTION OF THE PROBLEM
The Swiss watch industry chose to ignore the application of a new technology even though it had created the technology in the first place. Although the Swiss watch industry invented the quartz movement it did not initially make use of the invention because it felt that this invention would have strong negative effects on its existing product markets.1 The Swiss argued that anyone else could make the quartz movement, whereas only the Swiss themselves had the skills to make the clockwork components required for automatic and mechanical movements.
With the benefit of hindsight we can appreciate that the Swiss were right in their thinking but wrong in their strategy. Watchmakers in Japan and Hong Kong
^46^ Chapter 2 • Planning the research project immediately adopted the quartz movement and, in one year, the sales of Swiss watches dropped by some 25%.
Swiss watch manufacturers became entrapped because the executives in the firms did not really understand the nature of the market. They did not appreciate or understand customer wants and needs. The Swiss Swatch company rescued the Swiss watch industry by providing a bulk outlet for quartz movements so that prices could be brought down. The firm also recognised that telling the time was no longer the most important thing in a watch. The Swatch was not selling 'an indicator of the time' as much as fun and costume jewellery.
From the very beginning of awareness and consideration of a marketing problem, research should be an integral part of the problem-solving approach.
EXAMPLE OF A MARKETING DECISION - A NEW PRODUCT FOR A MANUFACTURER
Marketing research can find information that helps to answer the following questions:
• Does an obvious need for the product exist?
• Has the company sufficient financial resources to design, manufacture and push the product through the early sales growth years?
• What will be the best design to adopt?
• What will be the best price level(s) for the market or market segments?
• How should the firm choose between volume, price and profit?
• What will be the probable market life for the product?
• What level of quality will be required?
• Who are the competitors, who is about to enter the market and how strong are actual and potential competitors?
• What will be required in the way of promotion? What will it cost?
• How will this new product affect current lines?
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