1.7 version 2

      1. Try to estimate the Market potential and the sales potential for your product in the Netherlands in the year 2015 using the break down approach or the build-up approach.

The total market potential for the Netherlands would be the total number of households which is roughly 8 million (7.7 million per January 1^st 2015) (clo, 2016). I’m taking this number because Doritos is something that is purchased, usually, per household. There are exceptions, of course. But there are always exceptions. I thought about ways to slim down the number, but Doritos is cheap and readily available to anyone who should wish it. There are of course people who prefer other crisps such as Lays or Pringles, but it is impossible to give an accurate figure on this, since there has been no research into this.

From what I could find on Euromonitor, it tells me that the total market share of Doritos is 1.7% of the total of all savoury snacks. (Euromonitor, 2016) (Euromonitor, 2016) so, to find the sales potential I took that 1.7% out of the 8 million market potential, which is 8.000.000/100*1.7=136.000

So, the sales potential is roughly 136 thousand.

2. Give three valid arguments why the company should write a marketing plan for the Dutch market for your product. Can you think of any arguments not to write a marketing plan?

First of all, you need to know what you’re aiming to accomplish. If you do not know what you’re trying reach, you have nothing to aim for, and you won’t be able to do anything, since you will not know what you would need to do. Simply said; you need a goal, if you don’t have this, you will fail.

You need to know how to reach your clients, what they’re interested in and any and all cultural factors that might help you or get in your way. All of this can be discovered by making a marketing plan, it will help you understand the people of the country your trying to sell to, and by knowing these people you can play into their wishes, which will allow you to sell your product.

A marketing plan also includes a SWOT analysis, which is very important to have, because it can help you understand what to do and what to be weary of. It will show you the things you need to look out for and the things you can use to increase your revenue.

A reason not to write one might be that it costs a lot of time and manpower, and here time is quite literally money. Of course, on the long run it would be money well invested, but for a company that is already trying to enter a new market, this would add even more costs, and take away employees that could be used elsewhere.

3. If you were asked to develop a sales forecast for your product for the years 2016, 2017 and 2018, which forecasting technique would you use? Give two advantages and two disadvantages of the chosen forecasting technique.

I would use a time series analysis.

Doritos is a company that has existed for a long time, and therefore this becomes a viable option. Companies that have not been around for as long will not have this option because this type of forecasting requires a history to analyse.

Since the accuracy and therefore validity of the time series analysis hinge on whether or not the past sales pattern will continue, it is better for this to be used by a company with a long history, since there is more for them to see, which gives you a larger chance of it actually being accurate. it is also suitable for Doritos because this analysis is only suitable for products which have a stable demand, which Doritos has.

An advantage is that through the trend analysis you can see whether or not your sales figures are rising, falling or not changing much altogether.

Another advantage is that it can show you if holidays or the season of the year have an influence on your products sales.

To summarize, the great thing about this analysis is all the different analyses you have to use to get the final conclusion. They all add up for many different viewpoints which give you a lot of great and useful information.

A disadvantage to this particular analysis is that it is very time consuming. A trend analysis needs many years to determine whether your sales are rising, falling or staying the same. And the cycle analysis as well takes up some years of time.

Because of the time it takes, it is also very costly. To make these analyses you need to use some of your employees for this specific thing for a very long time, which will cost great amounts of money, and it isn’t even guaranteed to be very accurate.

1.6 version 2

1.    Does your product have an international brand?

Yes, Doritos is an international brand. And the level of international involvement is global. Doritos is being sold in at least 37 countries as per 2013, when they started their first global campaign (Schulz, 2016). in the appendix, you can see exactly how much market share they have in some countries, and the country with the highest market share is Hong Kong, China (euromonitor, 2016). They are the third in the market in Hong Kong, to be specific, which you can see in the 2^nd appendix (euromonitor, 2016).

I am sorry, but I could not find the market entry strategy that Doritos employs, neither that of their parent company PepsiCo.

There are definite indications that Doritos applies different positioning to different countries. The easiest to look at would be how the change the name of some of their products in different countries. Take the flavour “Cool Ranch” for instance. It is called ‘Cool Ranch’ in the U.S. but it is called “Cool American” here in the Netherlands. There are also all kinds of different flavours available in some countries that are not available in others. A good example of this would-be Doritos Taco; which is only available in Japan (Taquitos, 2016).

2.    Do you see evidence of impact of the recent international turmoil (e.g. Ukraine Crisis/ trade with Russia, ISIS in the Middle East, War in Israel/Gaza, Ebola virus in Africa, Argentina bankruptcy, “Brexit”) on your company and/or your product?

I could not find any evidence that these crises or turmoil had an effect on Doritos. Of course, something like the Brexit would lead to a loss in revenue because of the massive drop in the stocks, which caused the pound to fall massively. With the lessening of the value of the pound also comes the fact that you receive a smaller amount of value for the same product, which means that at this point Doritos in the U.K. would see a decline in profit. The U.K. however is but one country where Doritos is sold, so whilst it is disturbing that they probably lost some possible income there I wouldn’t count it as truly having an “impact”.

3.    Which international legal forces (government policies, tax regulation) have an impact on the marketing position of your product. Try to find at least three national or international relevant laws.

Import taxes must be paid over any goods that are shipped across borders, which makes it more difficult and costly to ship your goods to other countries, this is a distinct disadvantage of being a global company, and is something that definitely affects Doritos. There are exemptions to the rule, such as within the EU borders, but since Doritos is an American company they will have to pay the costs whenever they enter the EU.

On the positive side, Hong Kong, which, as we’ve seen has the highest market share for Doritos, one of the lowest tax rates and simplest tax structures in the world. to top it off imports into the region are tax exempt (with some exceptions.) this, then, has a positive impact on the marketing position of Doritos. (customs.gov.uk, 2016)

Here in the Netherlands the taxes you have to pay on luxury goods is 21%, which is what I expected needed to be paid for Doritos. However, you only need to pay 6% over the price which is a good thing because it allows them to sell the product cheaper, or at a higher price, but retain more of their earnings. Either way it has a positive effect. (belastingdienst, 2016)

Bibliography

belastingdienst. (2016, December 22). Voedingsmiddelen. Retrieved from http://www.belastingdienst.nl: http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/btw/tarieven_en_vrijstellingen/goederen_6_btw/voedingsmiddelen/voedingsmiddelen

customs.gov.uk. (2016, December 22). Import and Export Clearance. Retrieved from http://www.customs.gov.hk: http://www.customs.gov.hk/en/faqs/cargo_clearance/clearance/index.html

euromonitor. (2016, December 22). Brand Shares (Umbrella – Historical Owner) | Historical | Retail Value RSP | % breakdown. Retrieved from http://www.portal.euromonitor.com: http://www.portal.euromonitor.com.saxion.idm.oclc.org/portal/statistics/tab

euromonitor. (2016, December 22). Brand Shares (Umbrella – Latest Owner) | Historical | Retail Value RSP | % breakdown. Retrieved from http://www.portal.euromonitor.com: http://www.portal.euromonitor.com.saxion.idm.oclc.org/portal/statistics/tab

Schulz, E. (2016, December 22). Doritos launches first global campaign. Retrieved from adage.com: http://adage.com/article/news/doritos-launches-global-campaign/240173/

Taquitos. (2016, December 22). Doritos Taco (Japan). Retrieved from http://www.taquitos.net: http://www.taquitos.net/chips/Doritos-Taco-Japan-Frito-Lay

2.6

1. Which services (related to your product) are offered by the manufacturer of your product? Describe the extended marketing mix for these services.

I’m afraid that I could not find, or come up with any services that Doritos offers; at least not aside from customer service. Doritos is a simple food product, not something that requires technical advice, custom design or any such service. On-time delivery is of course a service they do give to their supermarkets, but I assume that isn’t what is meant by that particular service as is mentioned in the PowerPoint.

As such, I cannot describe the extended marketing mix; because there are no services for me to explain about.

2. Which new services do you see could be interesting to have for your product?

I cannot imagine any services that might be helpful or interesting for Doritos to use. It is simply not necessary for a product such as this.

However, for the sake of writing something down, let’s say that customizability would be a good service and let’s take it from there. And with customizability, I mean the option to change the crisp. Be it flavour, shape or the materials it is produced from (potato or tortilla.)

3. Explain the intangibility, variability, inseparability and perishability of these services and explain which consequences these service characteristics have for the marketing of your product

Intangibility:

Customizing is something that always happens pre-purchase, and it is therefore completely intangible.

Variability:

Since customization is something that completely alters the product, or, at least, it can completely alter it, this is something that can change altogether when you do it at different vendors. One vendor might not have the same options for customization available as another, nor might those options be as good.

Inseparability

Customization is definitely inseparable from the provider. The consumers input is also required for it to actually work. The consumer must, after all, decide what should be changed to the product, and this alteration is something only the provider can… provide.

Perishability

Customization is something that cannot be stored since it is an active process, just like, for instance, getting your hair cut is an active service, it is something that is done, and then cannot be undone.

This customization of the product would change everything for Doritos. With a change like this Doritos could no longer be sold in supermarkets since they do not have the capability to customize the product themselves, it is something that would have to be done at the factory. So, then Doritos would become a specialty good which you could only get at special stores that Doritos would need to open, or you would have to order it from Doritos (online or otherwise), in the way that you want the crisps, and have it delivered to your doorstep.

5. Let’s say that you export your product in a country you never exported to before. What promotional strategies could you follow in relation to the product issues and promotion? (see fig.21.6 p 632) Describe a possible strategy for your product.

The best strategy would be to advertise the change in Doritos’ product to start. They will have undoubtedly heard of Doritos, and will be expecting a bag of crisps. So, to start you must get commercials out there to make it clear what Doritos now is, and what it has to offer.

2.5

1. How is the product presented in the supermarkets/shop? Describe the shop’s atmospheres, using the following elements: general atmosphere, music, colour, shop design, personnel’s clothing. Where in the shop is your product located (in the front; in the back, near the cash register)? Explain why this specific location has been chosen. If your product cannot be found in a supermarkets/shops, describe the “best” spatial environment of the place where you see your product being sold.

I visited the supermarkets Jumbo and the Albert Heijn. Both of these supermarkets are similar in atmosphere, in that they are made to only spend not too much time in. they are well lit and very spatial. The music they play over the radio is hard to notice in that it isn’t too loud, and is also what would be known as pop music, mixed with some occasional commercials from the store itself. I asked one of the employees and they said it is just a playlist, which changes every once in a while. The colour of a store is hard to determine since it is mainly the products you’re looking at, though in the Albert Heijn the predominant colour seems to be blue and in the Jumbo it seems to be yellow. The clothing of both stores is similar, aside from the logo and colours shown on it.

2. Take some photographs of the shelves up to 1,5 meter to the left and right of your product. Where are the best known brands located? Which value brands are offered? Which own-label offerings are present? If not relevant for your product, give a description of how you would locate other brands of the same product and/or other similar products of the same brand.

The Albert Heijn in ******* has Doritos on a lower level than the one in *****, and also lower than the Jumbo, which leads me to believe that the Albert Heijn in ****** that I visited was a franchise store. The best-known brands are, after all, located at around eye-level, with exceptions for products that are exceptionally large or heavy; however, Doritos is neither heavy nor overly large so it should always be at eye level. The Albert Heijn has its own brand of tortilla crisps lower down near the floor (at least the one in ***** does, the one in ****** (probably franchise) doesn’t.

3. Count the number of facings of your product and compare this to the number of facings of competing brands. Measure the space on the shelves and calculate the “share of space” of your brand. If not relevant for your product make an estimation of these aspects.

The top brands that compete with Doritos are Lays and Pringles. There are then some smaller brands, as well as some own labels that are also on the shelves. It is very clear that Doritos, Lays and Pringles are all awarded the same amount of space, and the other brands much less. The exception to this is again the Albert Heijn (franchise) in ******. They have put their own labels higher on the shelves and the other ‘’lesser’’ brands have also been awarded the same, if not more, space on the shelves.

4. Describe the relation between transportation, packaging and communication in relation to your product.

Doritos is transported in boxes where they’re packed loosely together. Since it is a bag it cannot be made to fit the box perfectly, and so there is always some excess space left unused. I took a look at how many bags of Doritos you could get per box, but there were different answers. On Amazon I found that you could order a box with 64 bags inside of it but also one with 50 bags. I am, alas, unsure what the common size is that supermarkets purchase.

2.4

1. Draw an overview of the distribution channels for your product. Describe the channels in terms of complexity and distance.

From what I could find out about Frito-Lay, and thus, by extension, Doritos’ distribution channels; it seems they have three: Direct store delivery, customer warehouse and third-party distributor networks. The first one is short indirect, the second and third one are long indirect.            (marketrealist, 2016)           (PepsiCo, 2016)

Under the first system, they deliver products directly to retail stores, which means they do all of the distributing work themselves. The second system delivers the product from the manufacturing plants and warehouses to customer warehouses and retail stores. The last of the three systems distributes the products to restaurants, businesses, schools and stadiums, which they do through third-party food service, vending distributors and operators.

2. Describe which distribution functions are fulfilled through the different channel members.

In the first system, they do everything themselves, so all of the functions are filled by Doritos themselves except for the last part of the journey, which is left up to the retail stores. Doritos produces the product, transports it to the stores and after that it is up to the stores to sell the product.

In the second system, Doritos delivers the products to customer warehouses which means after that it is up to said warehouses to get the product to the retail stores. So, with this system all of the logistical functions are for the warehouses. They must sort it, allocate it and of course transport the product to its final destination before it reaches the consumer; the retail stores.

And with the last system it is the third-party distributors which have to do the things that the customer warehouses took in the second system. There are many third-party’s which they use though, so small things may change depending on which kind of party it is.

Though I do feel like you cannot simply say which functions are fulfilled because, some commercial functions such as promotion will always be done by Doritos themselves, but other functions such as assorting can be done by the entrusted third-parties. And sadly, from what I could gather on the distribution that Frito-Lay uses, I couldn’t specifically figure out which third-party companies they actually use. So, I am unable to tell you exactly which of the third-party companies does what.

Nevertheless, I wish to give a general picture. The first system I won’t discuss, since Doritos do everything themselves. But for the second and third system I will endeavour to give a general picture. With both systems, most of the financial functions lie with Doritos, most of the logistic functions lie with the customer warehouses and third-parties and lastly most of the commercial functions lie with the retailers.

3. How can your product’s image be influenced by the retail concept in which it is sold? Clarify your answer!

Well, since retailing strategies are made to offer its products and services in ways to optimize the customer satisfaction, I shall assume it can both improve the customers image of your product, but if executed badly it may also hurt the image they have.

Allow me to clarify. If, for instance, a retailer makes a mistake when working on the customer orientation segment of the retailing concept, like he misjudges the needs of the customer, the entire plan would fall apart. the customer would, in this case, get something completed unwanted, which they might consider strange. This, then, would hurt the image of a certain product. If they do it properly, however, and give the customers what they want, said customers will be positively ecstatic, which is good for the product/company.

4. Which distribution strategy has been chosen for your product?

I feel like I’ve answered this already in the previous questions, so I suppose I’ve made a mistake somewhere. I suppose, then, that I will give an overview of what I have said previously.

Doritos uses three distribution strategies which are the following:

1.    Direct store delivery

2.    Customer warehouse

3.    Third-party distributors

(PepsiCo, 2016) (marketrealist, 2016)

The first one is short indirect, the second and third one are both long indirect. Doritos never uses the direct strategy because they don’t own any stores, and so cannot reach their consumer directly.

Bibliography

marketrealist. (2016, December 6). PepsiCo: A company overview. Retrieved from http://marketrealist.com: http://marketrealist.com/2014/12/pepsicos-three-channel-distribution-network/

PepsiCo. (2016, December 7). PepsiCo 2015 annual report. Retrieved from http://www.pepsico.com: http://www.pepsico.com/docs/album/annual-reports/pepsico-2015-annual-report_final_s57dqszgmy22ggn.pdf?sfvrsn=0

2.3

1. No brand positioning should ever be done without doing some research first. The reason is simple: it is likely that where and how you think your brand should be positioned is quite different from what consumers want, expect, and will accept. Create a short questionnaire with which you can measure the consumer perceptions of your product. You might use existing brand positioning questionnaires as inspiration.

-       I think the taste of Doritos is

o   Great

o   Good

o   Average

o   Bad

o   Terrible

-       I think the price for a bag of Doritos is

o   Great

o   Good

o   Average

o   Bad

o   Terrible

-       I think the overall quality of Doritos is

o   Great

o   Good

o   Average

o   Bad

o   Terrible

-       I think the amount of flavours Doritos has to offer is

o   Great

o   Good

o   Average

o   Bad

o   Terrible

-       I think the healthiness of Doritos is

o   Great

o   Good

o   Average

o   Bad

o   Terrible

2. Execute three face to face interviews with your friends and/or members of your family, based on the questionnaire you created. Create a positioning map for your product, based on these interviews.

In the table below you can see the answers that the three interviewees have given to my questionnaire. I have rated the answers from 1 being terrible to 5 being very good.

	Joram	Emre	Jan
Question 1	4	4	4
Question 2	5	4	4
Question 3	4	5	4
Question 4	5	3	5
Question 5	1	1	1

for this diagram, I took the averages of the all of the answers. If I may clarify for the first question the average was obviously 4, but for the second one the average was 5+4+4/3=4,3. So that 4,3 is what is added in this diagram.

All of the perceptual maps I could find were like this, so I tried my hardest to recreate one for Doritos. You can see it has both good quality and is also relatively cheap. The data was taken from the average of the table, just like in the previous one, though here I only used the averages from question 3 (quality) and question 2 (price).