Ugrás a tartalomhoz

Local resources and product path management

Ruszkai Csaba

Eszterházy Károly College Faculty of Natural Sciences

General criteria for the quest of the product

General criteria for the quest of the product

  1. Reputation: The costumer becomes aware of the existence of a product.

  2. Interest: The consumer collects information from more sources.

  3. Valuation: The consumer decides whether to tries out or not.

  4. Trying – out: The consumer tries out the product and evaluates by the right of this.

  5. Acceptance: Consumer decides to use the product regularly or chooses the old one.

Many factors affect the innovations procedures among these open-mindedness to innovation is principal, which could be divergent. Neither the impression of personal potency nor the rate of adoption are constant. The further factors are the innovative categories kind of Rogers, which are attached to the type of innovation. One of these is the relative benefit, I mean in what extent the concrete consume is better than the preceding. This benefit could be economic, functional, environment- protectoral or social. Researches proved that the relative benefit directly proportional to the speed of adoption. Further term of adopting innovation is compatibility which shows in what extent the produce is applicable onsite and a changing in mentality is not to be induced or a technical innovation is not to be executed on the side of the user. Complexity is the extent of how the profit of the use of the innovation is plain and articulate. In many cases the recognition of the profits are not entirely evident, insomuch as the benefit that derives from the concentration of a new active ingredient of a detergent.

Try-out opportunity,(testing) by which consumers could get acquainted with the innovation before its spread and could compare innovation advantages with their own experience.

Perceptibility shows that in what extent the result of improvements are apparent and evident.

In rural areas which are build upon own resources these economics definitions are valid as well as in the course of a big mammoth company that dispose big technological know-how and publicity with the difference that the product often only connotes perspective for a tight target group, for example building material, set of furniture, provision developed from regionary raw material.

Figure of product-life by Rogers

Everett Rogers rates the consumer to the following groups from the aspect of adaption.

  1. (Innovators) 2,5%

  2. (Early Adopters) 13,5%

  3. (Early Majority) 34%

  4. (Late Majority) 34%

  5. (Laggards) 16%

Figure 36. Product adaptation Figure kind of Rogers (source: own editing)

Innovators enthuse over new technologies, collect new information actively, and are characterized to have high risk-taking skill. They dispose expansive relationship framework, what is sustained by prevalent communication, and geographical distance is not an object for them.

They have highlighted role in the diffusive procurement, since innovation spreads quickly through the intervention of their relations. They willingly participate in produce testing.

Rural areas could participate in finding innovator with the help of the same devices like the multinational companies with the difference that their marketplace could be found in their direct geographical environment (initially).

Early adopters are highly respected members of the society, who consciously search for innovations in order to acquire advantage among their fellow-being.

Their opinion provide relevant information source for other groups of the society.

They support to reduce others hesitancy and less sensitive to price.

The members of the early majority think along practicably, adapt newness quicker than the average. Their decisions are chiefly affected by rationality and utilitarianism.

They buy the product just alone when they make sure of its utility.

They are recipient to mass communication. They have relevant role in the diffusive process, inasmuch as they are transition between early and late adopters. They are the source of information for laggings.

The late majority is the majority who has restricted accessibility to mass- communication tools.

They are informed about novelties from personal communication. Its members are often sceptical and conservative individuals. They possess low for risk-taking skills, they prefer well-tried technology to new technology and they are sensitive toward the price. In their case turnout to new product often results from outward pressure.

The laggards have traditional values which are considered to be important, they are conservatives. Adhering to the usual products, technologies. Less integrated in the social system. They switch to the new product if the old is no longer possible. Even the rural micro and small businesses can’t afford to be part of the critical mass who are left behind relatives, late majority. with proper marketing (guerrilla marketing campaigns), the regional presence (exhibition, event support) the latter segment ratio can be significantly reduced.

The marketing strategy of the product market entry

The introduction of the new product in classical stance creates many problems, it is the task of the management to solve this problem for the company in order to survive. The interest of the new product determines the market success, and the performance of the proposed sale, which shows the evolution of the market share. Return analysis shows the corporate investment objectives considering risk, and profitability aspects. The market entry process is costly, and characterized by slow business rise. Therefore, the profit is negative or very low during this period. The promotional costs are highest at this time. The reasons for this are: the participants should be informed of the new product, encourage the purchase of the product and ensure even distribution of the stores. The company should focus on the potential buyers, who generally have high incomes, since then its price is high because of the development and promotion costs. In terms of rural areas this process is at least as complex , with the difference that the starting point of the geographical space itself. So the message its self by all means has to build on the reputation and special characteristics of the region, also known as all regional or local product / service uniqueness of the place "spirit" of the. A significant number of German and American authors did researches on such as region of production and issue of consumer attitudes. The tests clearly demonstrated that the geographical origin of different quality indicators provided by the product for consumers (eg, reliability, durability, taste, etc) - cognitive perception or behavior. So the logical connection between the geographical space and the product properties come from the knowledge of the origin and the designations of origin (eg geographical protected products, certificate of origin, geographic logos), and other determinants of a combination of (goods suspended familiar opinion). The affective behavior completely turning off the cognitive approach, it build on basically generalities and stereotypes instead of accurate information about the current product. For example, the image of the area and not a specific product based on the positive or negative impression. The normative behaviour an attitude which is created by the geographical area in question of accepted social norms, or individual attitude such as national consciousness, the refusal of foreign products. These consumer attitudes are generally not separated, but rather appear entwined with each other. They have crucial importance of the local market access, their regional presence is determinative for the introduction of products into the market. (ALVENSLEBEN, 2009)

Steps of market entering:

  1. Target market selection (in our case it is given: regional market)

  2. Market segmentation (defining of target groups)

  3. Positioning (defining of target groups)

  4. Pricing (this is where local products are bleeding out)

  5. Marketing communication (brand building or strengthening is the key)

1. Target market selection, market segmentation

The appropriate market definition and selection is an important task for the group of rural enterprises.

Segmentation can be defined as the process of the market demand of individual characteristics in their homogeneous segment groups which is facilitated by economical implementation of marketing campaigns.

The benefits of segmentation to companies:

  • satisfying customer needs,

  • the discovery of market gaps,

  • recognising of the segments’ customers,

  • expolration of price sensitivity in order to increase profit

  • reducing costs by effective marketing activities.

Important criteria for the selection of the target market is that the size of a segment should cover business operation and provide adequate economic growth, but it must not compromise effective marketing communication.

The selection of target markets has three ways, which are related to product design:

  • One segmented strategy: during product desing only one segment of the market is choosen. This strategy favors small business companies who do not have the necessary resources to operate on more markets or on amass market.

  • Multi-Segmented strategy: the company launches two or more products on the market simultaneously so that the company could be present on multiple segments of the market

  • Mass Market strategy: during the product design the target group is the average consumer. This is the perfect choice for enterprises, as they dispose the resources and the capacity to produce what is necessary to achieve this strategy.

2. Positioning

After market segmentation and the selection of the target market companies have to define the target market positions. After the well-performed positioning the company can smoothly execute marketing planning tasks.

Positioning on a particular market or segment is the determination of the relationship between a particular product or service and its competitors and the determination of the awareness in customers.

The established competitive position should meet the needs of the customers, which in a market dominated by multinationals seems very difficult. Companies use distinguished marketing communication tools in order to be discovered by the selected target groups. The distinguished characteristics, factors of the product have to be important, outstanding, and affordable in the customer's point of view

3. Pricing

Companies can do pricing in a many ways. In the case of micro and small companies, the price is determined by the owner. In the case of enterprises pricing is done by the management and the directors. Directors only set out the basic principles, pricing is done by the management. In the course of pricing the minimum price level is the direct cost while the maximum price the consumer is willing to pay for a given product. The final price will be specified between the minimum and the maximum level. Many customers consider the price as a quality characteristics and therefore consider low-priced products as low-quality products. We have to take all factors affecting pricing into account to determine the optimal price. However, this is not always feasible so often simplified pricing methods are used:

  • Cost-based pricing: The simplest form of pricing is when standard margins are put on the unit cost of the product. First they establish raw materials and labor value that is needed for production, then they add the average costs and the cost per product, and after they add a normal profit margin, the sales price is calculated.

    Product design-> costs-> price-> market position

  • Demand-based pricing: Pricing is depended on the market's price-adopting attitude. This method do not charge unit costs, prices are adjusted to the demand and also the prices of the company's target market. The price of a product is determined after prior assessment of demand, which can then be compared with the company's profitability expectations.

    market position ->price->cost

4. Marketing Communications

During the formulation of a company’s marketing communication multiple of factors must be taken into account. The target market has been defined during positioning. The company must select the purpose of communication, which can be informing, reminding or convincing. The success of communication depends on advertisement planning and creative implementing, so it must be designed carefully. Companies must also determine the financial expenditures for marketing communication. During budgeting the companies have to pay attention to excessive expenditures which can endanger the company's financial balance.

The budgets have to pay attention to the excessive expenditures of the company's financial balance sheet at risk.

Companies can choose from multiple communication methods:

Advertising - paied presentation and promotion of ideas, goods or services which are non-personally but come from identifiable sources.

Promotion - short-term incentives, which motivates the purchase of a product or service.

Activities and Events - Programs organized by the companies which are related to the brand, based on routine or special interactions.

Public relations (PR) - Various programs designed to maintain or improve the image of the company or its products.

Direct marketing - Direct communication with actual or potential consumers via promotional letter, telephone, fax, e-mail or via the Internet, whereupon the company is awaiting a reply.

Personal sales - Personal communication with one or more potential buyers whereby the seller presents the product, answers questions and takes orders.

Table 8.1. The most common means of communication (source: own editing: based on KOTLER, P. - LANE KELLER, K. (2006)

1. Advertising Printed and electronic advertising, Packing, Packed attachments, Movies, Brochures, Booklets, Posters, Leaflets, Yellow Pages, Advertisement reprints, Giant Posters, Shelf Boards, Point of sale advertising, Audiovisual materials, Symbols and logos, Video tapes.
2. Promotion Contests, Games, Sweepstakes, Lottery, Awards, Gifts, Samples, Tastings, Fairs, Business events, Exhibitions, Shows, Coupons, Rebates, Low interest loans, Entertainment, Discount Repurchase (old pruducts off), Loyalty Programs, Tying.
3. Activities and Events Sports, Entertainment, Festivals, Arts, Charity, Factory Tours, Corporate museums, Street events.
4. Public Relations (PR) Press Releases, Speeches, Seminars, Annual Reports, Charity donations, Publications, Links with the community, Lobby, Identity Media Tools, Corporate magazine.
5. Direct marketing Catalogs, Mail, Telemarketing, E-commerce, TV Shop, Faxes, Voice mail, E-mail address.
6. Personal sales Sales presentations, Sales Meeting, Incentive programs, Samples, Trade fairs and events.