4.3 Positioning
Al and Jack (1969) proposed positioning concept, which refers that a company finds out the product position in the market according to the competitors’ product position and the features that customers care most. Through the positioning, the company can provide a new brand image to the customers. In other words, product and customer positioning is the key point for a company to be competitive in the market.
As for the product positioning of O Product, according to the report of Cos (2007), in the open‐shelf store, the top four skincare products with both moisture and whitening function are OLAY Definity Luminesse Whitening Cream, L’OREAL PARIS Gentle Moisturizing Day Cream, Dr. Wu Intensive Hydrating Serum and For Beloved One Hyaluronic Acid Molecules
Moisturizing Serum. The price for above‐mentioned products are NT$499, NT$499, NT$1,600, and NT$880 respectively. Compare O Product with the top four skincare products in the open‐shelf store, the price of O Product is close to average customer spending, 355 NTD.
When it comes to the material and producing technology, O Product is made from natural ingredients via high‐oxygen technology. As for the customer positioning, women age from 20 to 30 is the biggest consuming group in skincare industry, and the function they care most is whitening and moisturizing. Otherwise, 13% of them are online shoppers. Based on the
statement mentioned above, the product positioning of O Product is a low price, natural, high‐tech, moisturizing and whitening product. The customer position of O Product is female online shopper who concern whitening and moisturizing function when they buy skincare products.
5. Marketing Strategies
According to the report from Wretch (2009), the most objective criterion of evaluating online marketing plan is return on investment (ROI), and it is one of the criteria to evaluate the marketing plan. Previous studies showed that, on average, 375 visitors of online
commercial will purchase the product per month. Based on Robert’s (1993) four C’s concept, the marketing strategy analysis is shown as below.
5.1 Consumer
The main functions of O Product are moisture and whitening. The main material of O Product is oxygen, which makes the skin moisturizing and compact. O Product is produced through high oxygen technology, and all the ingredients are natural. There is no artificial material added, for example, aromatizer, preservative, and alcohol.
Based on the report from Pollster (2009), in the skincare market, 36.8% Taiwanese women concern about whitening function, and 36.77% Taiwanese women care about
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moisturizing feature. The skincare products that Taiwanese women age from 20 to 30
purchase most are moisturizing and whitening products, which account for 44.6% and 30.5%
respectively. The most preferential virtual channel where Taiwanese women purchase skincare product is online shop, which accounts for 13% among the Taiwanese skincare channel. The most online markets that Taiwanese women age from 20 to 30 prefers are Yahoo! and PChome. The average expense that Taiwanese women spend on skincare product is NT$355 per skincare item.
According to McCarthy’s (1963) target market theory, target market is chosen based on market situation, consumer behavior, and the source of company. Therefore, the target market will be determined based on McCarthy’s (1963) targeting theory. For example, the main functions of O Product are moisturizing and whitening and the price is NT$360.
According to study from Pollster (2009), the skincare product function that women age from 20 to 30 care most are moisturizing and whitening, and they spend NT$355 on single skincare product. Based on the above‐mentioned comparison, the function and price of O Product fit the need of target customer, the women age from 20 to 30.
5.2 Cost
According to Robert’s (1993) 4C’s concept, the total cost of a company including
producing cost, marketing cost, and customers’ opportunity cost. Customers’ opportunity cost
determines the value of the product. Furthermore, cost includes the customer’s cost to change or implement the new product or service and the customer’s cost for not selecting a competitor’s product or service. In terms of producing cost of O Product, the fixed marketing cost of O Product is NT$59,200. The variable marketing cost of O Product is NT$362,400 annually. According to instruction of CEO, he hopes to sell four consignments of 1,000 for each per year. The manufacturing cost is NT$480,000. The total cost for 4,000 products is
NT$901,600, which means the cost for each product is NT$225. Based on the CEO’s instruction, he hopes O Product can generate 30% revenue of the company. The anticipated annual
revenue of the company is NT$1,800,000 for year 2010, and O Product ought to generate profit of NT$540,000. The profit of each product is NT$135. According to the financial
calculation mentioned above, the selling price of O Product is NT$360. According to the report of Chang (2008), the average expense that the target customer spend is NT$355 per item, and the price of O Product is NT$360. Based on Chang (2008), it is concluded the price of O
Product meets customers’ spending.
In order to increase consumers’ opportunity cost of switching to another brand, some functions of the company website and customer services need to be improved. First, the customer responding system needs to be constructed. After setting the responding system, customers can deliver prompt response not only via phone call but also via MSN messenger to
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our website. Second, a forum for consumer evaluation will be added on the company website, and the information will be updated frequently. Third, the column of cosmetic and skincare knowledge will be updated more frequently. Fourth, there will be at least one famous blogger invited post expression of O Product on the specific column of company website. Fifth, the hyperlink of social network and blog will be added on the company website to increase exposure of O Product. For example, there will be icon on the company website. After clicking the icon, the user can link to famous social network such as Facebook. Based on the
above‐mentioned modification of corporation website, the customer value of O Product is expected to increase.
5.3 Convenience
Based on Robert’s (1993) 4C’s theory, convenience takes into account the ease of purchasing the product, finding the product, finding information about the product. In order to increase customers’ convenience to access and obtain the product, the marketing channel is the Internet. According to the studies from InsightXplorer (2010), the Internet is the main virtual channel for the target customer, women age from 20 to 30, to buy skincare products.
Furthermore, the merits of online shopping are convenience, low price, freedom, and diverse paying methods. The customer can log in the online shops on Yahoo! and PChome or the corporate website to order products. As for the after‐sale service, the customer can respond
via phone call or online service to obtain their needs. As for more information about O
Product or skincare knowledge, the customer can log on the corporate website to perceive the updated information. The company website offers hyperlinks of social network, such as
Facebook and blog, such as Twitter and Wretch. The customer could have the connection between O Product and customers’ personal network. For instance, there will be some icons installed on the company website. Once the user or member wants to link to famous social network such as Facebook, she can click the icons and link to the social network right away.
According to the above‐mentioned services, customers can easily reach O Product, and customers’ cost of time will decrease a lot.
According to the survey of 5,888 female online shoppers from Pollster (2009), the
preferential channel of obtaining the products is convenient store, which accounts for 48.59%
of female online shoppers. According to the research from Shu (2007), the merits of convenient store logistics are flexibility, safety and convenience. Based on the studies of Pollster (2009) and Shu (2007), the online shoppers can obtain their products based on their available time. Besides, it is safe to get and pay the products at the convenient store. Based on the studies mentioned above, convenient store is the main channel to deliver products to customers.
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5.4 Communication
Based on Robert’s (1993) 4C’s concept, communication includes advertising, public relations, personal selling, viral marketing, and any form of communication between the company and customers. On the other hand, communication between the company and customer is the main point of brand awareness. According to the thesis form Liu (2005), brand awareness is a marketing concept that measures consumers’ knowledge of a brand’s existence.
In other words, brand awareness is the degree of consumers who know about the brand. In order to increase the brand awareness of O Product, some actions need to be done. First, according to the survey of 5,888 female online shoppers from AC Nielson (2010), Yahoo! , PChome and PayEasy are the top three website for female online shoppers to visit. Based on the report, I Company needs to cooperate with famous portal websites such as Yahoo! and PayEasy. Having the hyperlink on the famous beauty website will increase the exposure of O Product. Second, according to the viral marketing concept and the report from Forrester Research (2009), social network, and blog are productive ways to increase the click through rate of ads, so O Product will use the channel to increase brand image. For example, we can set an O Product fans group on Facebook. We can use it as a communicating platform with potential customer on Facebook. Besides, the news and information will be posted on the company website and Facebook simultaneously. Otherwise, the uses and fans of O Product group on Facebook are expected to know more about O Product. Third, mailing the trial
sample to the member of O Product is another activity to create more brand awareness. After using the trail sample, the users can express their feelings on the company website so that the company can collect the feedback from end users. Fourth, according to the report of www.ce (2007), the most attractive promotion for online shopper is discount. 70% online shoppers regard discount is the best promotion method. Therefore, the promotion plan will use discount and coupon. According to the report from AC Nielson, the click through rate of text message is higher than Internet ads and email. Based on this reason, the coupon will be delivered via text message, and the e‐coupon will be sent during special holiday, such as Mother’s Day and X’mas. The member of O Product will receive special gift of coupon on their birthday day. Fifth, there will be some competitions or games on the company website. If the member wins the game or competitions, the winner would obtain the prize from O Product.
For example, the customers can contribute their feedback or suggestion about the product, and some of the suggestions will be picked as the winners. The winners will obtain special gifts.
Sixth, if the member of O Product recommends two potential customers to purchase the products, she will be promoted as an advanced member, who can have 10% off discount than other members can (5% off). Seventh, the customers will be asked to fill out questionnaire, which are made based on target customers’ preference. In the questionnaire, the customers can vote for the preferential features about the product such as packing, function, and design.
Based on the above‐mentioned promotions and communication with potential customers, the
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company can understand the customers’ needs and have more interactions and
communications with them. Besides, the brand awareness and sales volume of O Product will increase.
Figure 2‐9, Gantt Chart of Promotion Activities
Soure: Made by author
6. Financials and Budget
This section will offer a financial review of O Product as it relates to marketing activities.
6.1 Production Cost
The cost of O Product itself consists of three parts: Aluminum bottle, oxygen water, and packing box. The cost of each part is shown as the following Figure; it shows that the cost of aluminum bottle is NT$ 90; the price of oxygen water is NT$20 NT$120 per piece.
Production Cost of O Product Unit:
NTD
Aluminum Bottle 80
Oxygen Water 10
Packing Box 10
Total Cost 100/piece Table 6‐1, Production Cost of O Product
Source: Made by the author 6.2 Marketing Expenses
The marketing expenses will be used as a tool to keep the company on target and provide indicators if corrections need to be made. The total marketing expense is shown as following:
Fixed Marketing Expenses Unit: NTD
Yahoo!
Advertising 1,200
Online Shop Fee 15,000
Online Shop Rent 3,000
PChome
Advertising 3,000
Online Shop Fee 36,000
Online Shop Rent 1,000
Total Expenses 59,200
Table 6‐2,Fixed marketing Expenses Source: Made by the author
Variable Monthly Marketing
Expenses Unit: NTD
Yahoo!
Advertising 1,200
Online Shop Rent 3,000
PChome
Advertising 3,000
Online Shop Rent 1,000
8,200
Trail Sample 5,000
Spokesperson 5,000
Personnel Cost 22,000
Total Expenses 40,200
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Table 6‐3, Variable Marketing Expenses Source: Made by the author
From the above‐mentioned expense lists, it is clear to show the cost structure of O Product. The minimum manufacturing quantity is 1,000 bottles, and the cost of each bottle is 100NTD. The total manufacturing cost for one bulk is 100,000NTD. Based on the CEO’s instruction, four bulks of products (4,000 bottles) have to be sold out, and the total
production cost is 400,000 NTD. The fixed marketing cost of O Product is 59,200 NTD, and the variable marketing cost is 40,200NTD per month. The annual variable cost is 482,400NTD.
Based on the above‐mentioned statement, total annual cost of O Product is 941,600 NTD.
6.3 Sales Forecast
According to the report from Ministry of the Interior (2010), the population of women age 20 to 30 is 1,671,031. Based on the previous studies from Pollster (2009), 74% of
Taiwanese women have the habit to purchase whitening and moisturizing products, and 68%
of them care about whitening and moisturizing functions. There are 13% of this group are online shoppers. In other words, the target customer of O Product is 109,312 people (1,671,031 people X 74% X 68% X 13%). According to the report from Chang (2008), the average annual price for women buying skincare is NT$2,130, which means the total demand of the target customer is 232,834,560 NTD (109,312 people X 2,130 NTD) per year. According
to the expectation of O Product’s CEO, there will be four bulks of products sold out in the first year and he plans to have 30% of the company revenue of the following year has to be
generated by O Product. The anticipated revenue of the following year is 1,800,000 NTD, and O Product is expected to generate at least 540,000 NTD within 12 months.
According to the annual sales forecast, at the first two months, we anticipate O Product will not generate any positive output for I Company. At the fifth month, the first bulk of product will be sold out. The hot periods of skincare industry are X’mas and Mother’s Day.
From the sales forecast, it is anticipated that the sales volume increases in December and May.
According to the report from MIC (2009), the average online sales of skincare product is 375 items per month. The monthly sales number of O Product is forecasted based on the
above‐mentioned report. Based on the annual sales forecast list, the anticipated sales volume is 1,474,200 NTD (4,095 bottle X 360 NTD), which occupy 0.6% market share. Otherwise, the anticipated revenue of O Product is 532,600 NTD, which occupies about 30% of total revenue of I Company. In other words, it is anticipated that market share and revenue rate reach CEO’s expectation.
Annual Sales Forecast Unit: NTD July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Sales (35,200) (35,200)108,000 126,000 126,000 162,000 135,000 144,000 144,000 162,000 180,000 162,000
Table 6‐4, Sales Forecast
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Source: Made by the author
7. Evaluation and Control
The purpose of this marketing plan is to extend the brand image of O Product and increase better sales revenue for I Company Company. Return on investment (ROI), annual sales
volume and accumulating click will be monitored to evaluate performance. As for the ROI, the anticipated revenue is 552,600 NTD and the total annual cost is 921,600 NTD, which means the ROI is expected to be 0.6. In terms of annual sales volume, after completing the marketing plan, the annual sales volume is anticipated to be 1,474,200 NTD, which is much better than before (10,800 NTD). When it comes to accumulating click of company website, after
implementing the promotion strategies such as trial sample delivering, membership application, viral marketing and so on, the number of accumulating click and visitor is
expected to increase and get better than before (2,670 clicks for three months). Based on the three criteria mentioned above, the marketing plan is expected to not only generate as much revenue as possible, but also expand brand image and brand awareness of O Product to potential customers.
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