Unit 6 assignment 2 (P5 & M3)

Resources

resources

employees - The way in which the resources available to Chin Chin Labs impact on their marketing strategy is because, they don’t have the correct amount of employees in order to buy products in buy in bulk. The reason for this is because, if they were to by in bulk, they would have much more stock (ice cream), and therefore, this would require more sales staff in order to sell it all. However, currently, they don’t consist of enough employees therefore a mass marketing strategy wouldn’t be possible for chin Chin Chin Labs. based on this infirmation, they have decded to persue a product development strategy. this is because they require less sales to obtain profit due to their higher prices. subsequently, they have less sales staff because the number of sales required is less (due to high, product development, prices).

funding - Additionally, Chin Chin Labs currently don’t have enough capital available to proceed with a diversification strategy. The reason for this is because, diversification require a large amount of funding for the research and development of a new product and a new market. additionally, it is the most risky strategy meaning that it can be financially detrimental to the business it it doesn’t work out. This is a key factor as to why they don’t have the resources available for them to pursue an diversification strategy. furthermore, this has influenced their decision to persue a product development strategy. the reson for this is because they are not operating in a new market therefore less initial research and development costs are required for them becoming familier with a new market.

Stage of the Lifecycle

stage of the lifecycle

The way in which the stage of the lifecycle that Chin Chin Labs products are in impacts on their marketing strategy is because, they have been around since 2010, meaning that they have had a sufficient amount of time to develop their product and make them recognised within the market. now that they have grown and matured, the next stage is to decline meaning that customer will begin to grow tired of their products. This is why they have decided to develop a product development strategy in order to produce an extension strategy. The way in which they do this is by developing a new product every so often in order to maintain in the maturity stage and retain their customers

Chin Chin labs have also decided to develop a differentiation focus strategy in order to ensure that their lifecycle is as long and successful as possible. The niche market allowed them to do this due to the gap in the market being identified by Chin Chin Labs, and expanded on.

Different Markets

Chin Chin Labs strictly operate in the business to consumer distribution channels. The reason for this is because they are only a small business and therefore don’t have the funds available to conduct overseas operations. Additionally, they are not a supplier therefore they don’t sell business to business. The way in which this relates to their marketing strategy is because, based on the fact that they are saving money by only operating in one market, this saves them money so that they can pursue a strategy that is more risky such as product development.

However, in terms of the diversification strategy form the porters generic strategy that they have chosen, by only operating in one distribution channel, it may not be the best option for Chin Chin Labs. the reason for this is because, if they were to operate overseas as opposed to just in London, it may provide them with contacts and relations with other businesses which will help them to improve their product or may even help them to purchase necessary materials, such as nitrogen gas, for cheaper. Furthermore, by operating overseas, it will provide Chin Chin Labs with another source of sales revenue which will help them to fund their diversification strategy. lastly, it will also improve the size and barnd recognition of the busienss due to their increased audience as well as knowledge of the business. overall, this will help to increase their customer base.

Social Trends

The way in which social trends have impacted on the marketing strategy of Chin Chin Labs is because, trending social media sights such as Facebook, Instagram, twitter and snapchat have taken a huge lead in the way that Chin Chin Labs reach out to their niche segment of the market. they have noticed that these are popular and sociable sights, used by their target market, therefore they have take advantage of this as a free and effective way of reaching out to customers. For example, they regularly and consistently post on these sights in order to promote their product.

The way in which social trends can relate to/impact on the Ansoff matrix strategy, product development, chosen by Chin Chin Labs, is because, as they have spent money on researching and developing a new product, as well as the running cost of raw materials, such as nitrogen gas, using social media has helped them to keep costs down in the marketing department as social media is free to use. This also applies for their diversification as it, as well as product development, is expensive to pursue.

Social Trends

Stakeholders

Stakeholders play a big part in determining and developing the marketing strategies that Chin Chin labs have decided to pursue. The reason for this is because Chin Chin Labs set out to impress and appeal to customers who are a vital stakeholder. Therefore, this means that they need to chose the best marketing strategy possible to gain the approval and custom of customer. In terms of product development and differentiation, Chin Chin Labs decided to develop a new, innovative and creative product within the ice cream market. the reason why they did this was because competitors, another stakeholder, in this market had not yet done this. Therefore, they spotted a gap for an innovative way of making/serving ice cream among their competitors and decided to pursue this idea in order to appeal to customers.

Stakeholders

Flexability of the Marketing Mix

When relating to porters generic strategies and the Ansoff matrix strategies that Chin Chin Labs use, the product section of the marketing mix is flexible. The reason for this is because these strategies allow them to develop any product of their choice.

However, the price section is not very flexible based on the fact that they have chosen product development from the Ansoff matrix and differentiation focus from porters generic strategies. Both these strategies involve developing new and innovative products which means that the research and development costs will be high. Based on this, it means that they have no choice than to set high prices if they want to make a profit. For this reason, the price section of the marketing mix can be considered not flexible. Furthermore, high development costs mean that they have less money to spend on other areas such as location (place) and promotion. This is a justification to why they are located in a significantly small shop/premises and do not apper on any TV ir radeo adverts as they are expensice and cannot be afforded doe to the expensice marketing strategies chosen by Chin Chin Labs.

Reaction to Unforseen Changes

An example of an unforeseen change that may be faced by chin chin labs is a change in customer wants and needs. For example, if customers begin to dislike the nitrogen gas element of the ice cream, this may mean that chin chin labs may need to change their marketing strategy. The reason for this is because, if their current one has led to them facing a decline in sales, they can keep providing the same product. This would mean, in terms of their marketing strategies, that the would either need to change their strategy to a less risky and more flexible one to prevent this from happening again, if they would need to develop another innovative product.

in relation to their current strategies, this could be financially problematic die to the fact that they have already spent a large sum of money researching and developing their current fordust. theirefore, if custoemrs begin to dislike this product and they begin to face decline, it would be expensive to develope a new one as well as it being a waste of money spent on developing a product the custoemrs dont like anymore.

Contingency Planning

Contingency planning is the precautions taken by a business in case of an unforeseen circumstance. for example, if Chin Chin Labs are short on staff, they will have more employees in their books that they can bring in at short notice. Another example is if they run out of nitrogen gas, they keep spare canisters in preparation for this occurrence.

the way in which this relates to their marketing strategy is because, as they have decided to uptake product development and diversification, it mean that they sell a product that is a bit more expensive to make/manufacture, due to the nitrogen gas. Based on this, it means that they have to send more money on spare nitrogen gas as a contingency plan. This is more expansive than if they were to sell regular ice cream as they wouldn’t have to spend this money.

Contingency Planning

What is an Unforseen Change

what is an unforseen change?

an unforeseen change is an external factor that changes. This change is out of the control of a business and hand not been anticipated. It has the potential to have a positive and negative impact on a business and can come from a number of sources. For example, the economy, competitors, customer/the market..

What is an Unexpected Event

what is an unexpected event

an unexpected event is very similar to an unforeseen event based on the fact that they are both unanticipated and out of the businesses control.

Lease Runs Out on Their Shop

Lease Runs Out on Their Shop

If the lease runs out of the shop that chin chin labs operate in, it can lead to a number of different out comes which will impact on the marketing strategies of chin chin ;abs. for example, they may be offered an extension to their contract which is the same amount of rent and same rules as the previous contract. This would mean that their marketing strategies wouldn’t change.

Alternatively, they may be offered an extension of their contract that is cheaper than their old contract. This would mean that the business would have more cash available to them allowing them to lower their prices due to a decrease in expenses

Another result of their lease running out is that they are able to but out the shop from the current owner, thus becoming the owners of the store. Similar to the first outcome, this wouldn’t have a huge impact on their marketing strategies as they would be able to get a mortgage on the property which would allow them to pay off the rice of the shop at a steady and affordable rate. However, they may have to pay interest on the mortgage which would mean that they may have to raise their process in order to afford this.

Economic Changes (Recession)

Ecinomic Changes (Recession)

If an economic recession were to occur, there would be a decline in many different aspects of the economy. This would negative impact on the marketing strategy of Chin Chin Labs. one example of this would be that people wouldn’t have as much disposable income therefore they would be able to send as much money on unnecessary products, especially expensive ones such as Chin Chin Labs ice cream. In relation to their marketing strategy, it would almost definitely require them to lower their prices by a large amount in order to ensure that people would still be willing to buy their product

Another result of an economic recession, the national minimum wage would decrease. This would have two impacts on Chin Chin Labs. One impact would be that they would be able to pay their staff less money meaning they the business would have more cash to spend on other aspects of the business. However, as a result of this, the morale and motivation among the workforce would decrease. This would lead to a decline in workforce performance data such as, lower productivity, more wastage, higher labour turnover and higher absenteeism.

Alterations in Health & Safety Laws

If alterations and changes were to be made to health and safety laws, it has the potential to have a positive and a negative impact on Chin Chin Labs. the way in which it may have a negative impact on Chin Chin Labs is because, it may require them to make changes in who, how and where they make us of liquid nitrogen. For example, they may require a permit in order to handle it in the work area. This would require time and possibly even money to apply for. Additionally, they may be restricted to the amount in which they are allowed to have in their position therefore disallowing them from buying in bulk to get discounts. Additionally, staff may need to attend training courses to broaden their knowledge of how to safely use liquid nitrogen. This would also cost the business money as they would have to pay for the training as well as replacement staff for them whilst they are gone.

The way in which this can impact on their marketing strategy is because it may mean that they would have to increase their prices or increase their usage of social media to market their products in order to increase sales and revenue to make up for the increase cost of liquid nitrogen and the cost of staff training.

Alternatively, health and safety laws may become more relaxed. The way in which this would impact on their marketing strategy is that it may mean that they have to spend less money on keeping to health and safety regulations therefore meaning that they can decrease their prices as their costs would have been reduced. This decrease in costs would draw in customers and lead to more purchases.

New Competitors

The way in which new competitors can have a negative impact on Chin Chin Labs is because it will provide the customer with an alternative option to Chin Chin Labs if they wanted to buy a similar product. Additionally, the new competitors may charge lower than Chin Chin Labs therefore this will also be a factor as to why competitors may prefer the new business.

The way in which this impact on Chin Chin Labs marketing strategy is because, if the new competitors do charge lower prices, it may result in Chin Chin Labs being forced to lower their prices in order to retain their customers. This is not good for them as it will result in them receiving less sales revenue/profit from each sale. As a result of this, the unit contribution will also decrease. Another way in which this will negatively impact on chin Chin Labs marketing is because it will require them to invest more money on advertising and promotions. The reason for this is because they would need to convince their customer to continue to shop at Chin Chin Labs rather than switching brands. This will require time and money in order to develop a high quality and effective advertising campaign that will advise the customer against brand switching.