My name is blank. I am currently studying business at Waterford Collage . As part of my Marketing Practice Module I am required to select a product and analyse the Marketing Mix in relation to the product. The product I have selected is Pringles. I chose to do my project on Pringles as they have a very interesting packaging design and they are one of the leading providers of potatoes crisps. Firstly I will present an overview of Pringles then I will examine the Marketing Mix used by Pringles.
There are four elements of the Marketing Mix, these are, Product, Price, Promotion and Place. In the product section I will define the Product Life Cycle and determine where Pringles are positioned on the Life Cycle. I will then examine Pringles brand name and the packaging that they use. In the section on price, I will discuss the importance of price and suggest what pricing method I think Pringles adopt. For the promotional section of the Marketing Mix I will examine how Pringles promote and create awareness of their product. Lastly for the section on Place I will investigate the distribution channels used by Pringles.
Primary research was not necessary as part of this project, however I did visit Tesco’s to purchase a tube of Pringles to observe the packaging and to determine the price. Secondary research was conducted by searching the internet and by reading books. Overview of Pringles Pringles are a brand of potato and rice flavoured chip. In the 1960’s Alexander Liepa invented a potato chip that was made from potato flakes, Alexander Liepa “received a patent (3396036) on August 6, 1968” (Micheal White,2008), this was his original patent, later “He later patented additional improvements to the formula (3998975)” (White,2008).
Leipa took his patent to Procter and Gamble in 1968. The potato chip he invented was originally named ‘Pringles Newfangled Potato Chips’, later the name was shortened to Pringles (www. bighistory. net ). Pringles were first sold in Ohio, there were sold in other states after 1977 (www. whenguide. com). The snack only became popular in the 1980’s after the flavour was tweaked. Pringles steadily became more popular and by the late 1990’s the brand was generating almost $1 billion annually (Martin, 2011).
In 2012 the Cincinnati based company Procter and Gamble sold Pringles to Kellogg’s for $2. billion (Martin, 2011). Pringles now sell in over 100 countries (www. gardenguide. com). There standard flavours include: Original, Cheeses and Onion, Cheese, Hot and Spicy, BBQ, Prawn Cocktail and the extreme flavours.
A product is anything that is offered to the market that might satisfy a need or a want. Products usually have a limited lifespan, this will be discussed in greater detail through the Product Life Cycle. There are different four different types of products convenience products, shopping products, speciality products and unsought products.
A convenience product is generally consumed and purchased regularly. Convenience products appeal to large section of the market segment. A convenience product is usually purchased without much consideration by the consumer as these goods are bought regularly and they tend to be relatively cheap. Examples of convenience products include snacks, drinks etc.
Consumers will usually tend to spend a lot of time thinking about the purchase and will look around in different stores. Some people will also compare the price of the product to online prices to find the cheapest. Examples of shopping products include clothes, electronics etc. Speciality products Specialty products are products which tend to have unique characteristics. Consumers are much more selective when purchasing these products, in most cases consumers plan the purchase for quite some time beforehand and will not be willing to accept a substitute.
Speciality products include concert tickets, automobiles etc. Unsought products Unsought products are usually unplanned purchases. These products are usually purchased when a consumer is exposed to promotional activity, such as special offers. Consumers will normally make these purchases under pressure. An example of a unsought product would be life assurance if a sales persons pressured the consumer.
As mentioned in the product definition, very few products last forever. A product usually goes through the four stages of a Product life cycle, these are; introduction, growth, maturity and decline The vertical line of the product life cycle represents sales figures generated by a product, while the horizontal line represents the length of the time which the product has been in the market place. Introduction In this stage the product is launched into the market. This is usually the most expensive phase as the company needs to build a brand awareness. As smaller quantities of a product is manufactured each unit is more expensive than it would be if a larger amount of the same product was manufactured. A lot of expenditure is designated to promotion and distribution at this stage.
In the growth phase the product becomes more well-known and sales increase rapidly. The product usually generates a positive cash flow at this stage. Money might need to be invested at this stage to increase production to meet consumer demand. Quality needs to be maintained at this stage. At this stage the product is generating strong profits. This should cover the expenditure at the introduction stage. Sales usually start to level off at this stage, Companies often use special offers at this stage to increase sales and maintain customer interest in the product. Rival ‘copycat’ products usually appear at the maturity stage.
The last stage of the product life cycle is decline. Sales and profitability will drop here. The marketing manager will have to decide to ether let the product die or to rescue the product by redesigning the marketing mix or by changing the brand image. I think Pringles are currently at the maturity state of the product life cycle as they are still generating profits. They are introducing new flavours and are offering special offers to increase sales and maintain consumer interest.
Rival products have also started to appear on the market such as Tubz. Branding Branding is to create an identity for a product so it can be easily distinguished from its competitors. Branding is useful for buyers and sellers when a product is branded buyers can know the quality of the product before they purchase it this reduces the risk in buying the product for the consumer. Luxury goods can increase the psychologically satisfaction from the purchase from perceived status. Branding can also shorten the decision making process for consumers as they may have brand loyalty to certain to certain products.
Branding is extremely useful for sellers as it can help them to position their product as it can help them to position their product in the mind of the consumer. Product price can be increased when a brand is perceived to be prestigious this will in turn increase profitability. If a product can generate brand loyalty then it can create long term customers. A strong brand name also makes it easier for sellers to launch new products. Own label brands are “products sold by retailers under their own brand name” (Connolly 2008 pg. 243).
These own label brands are usually sold at a lower price. Tesco’s own label brand and Tesco finest. Own label brands allow retailers to impose their own quality control standards. These own label brands are also more affordable for consumers A brand can be defined as: A name, symbol, term, design or a combination these, utilised to portray a unique memorable image. Pringles brand logo is a cartoon character with a large bushy moustache. The Pringles branding slogan is “Once you pop you can’t stop”. Packaging The packaging of a product should “physically protect the product from handling damage, contamination or tampering.
The foil can is made by rolling lengths of cardboard into a cylindrical tube. The aluminium foil on the inside of the tube helps to keep the Pringles chips fresh for a longer time and also keeps the tube vacuum sealed. The Pringles can is very convenient for its consumers as it is resalable and this helps keep the chips which would have gone stale very quickly fresh for a long amount of time. The Pringles can is also fully recyclable. The packaging of Pringles promotes the product excellently as it is easy for the consumer to recognise the product at a glance due to its tube design.
As Pringles are sold in many different countries a lot of information must be displayed in different languages, the tube I purchased displayed ingredients, Nutrition info and country where they have been manufactured in 12 different languages. They also provided in 16 different helpline numbers. Pringles packaging was designed by Fredric J Baur, “A patent for the can was granted in 1970” (P&G archivist Ed Rider. ), Fredric Baur died May 4, 2008, at the age of 89. “Relatives revealed they honored Fredric Baur’s bizarre last wish and buried part of his cremated remains in a Pringles can. ” (Bill Hutchinson,2008)
Importance of Price Price involves putting a value on a product or a service. Price is important as the buyer needs to know what they will have to pay for a product and the seller needs to set a price that will cover costs and earn the business a profit. The price will effort the image of the product consumers will usually perceive higher priced goods to be of better quality, however they will tend not to buy it as often. The recession has made price even more important as consumer have less money. There are four main factors to be considered when setting a price, these are; cost, competition, consumer demand and government controls.
A business needs to set the price above the cost price as to make a profit, however some products will be sold at cost or below cost price during the introduction stage. The Competitors price is important, if the goods are similar then a consumer probably choose the cheapest product. If the consumer demand is high then the price can be high. Lastly government controls may influence price through taxes and charges. Pricing Methods There are various forms of pricing methods. “Pricing strategies are concerned with setting a price that will help the firm to achieve its long-term marketing objectives” (Connolly 2008 pg. 44).
In this project I will be discussing competition based pricing, psychological pricing, Discriminatory pricing, cost plus pricing and value based pricing. Competition based pricing is to price a product in accordance to the price set by competitors. This method is used with similar products. An example of competition based pricing is petrol, Discriminatory pricing Discriminatory pricing is to charge different customers different prices for the same product, this method of pricing is very common in services This is usually done by offering discounts to certain market segments.
An example would be student discounts in cinemas. The business benefits by appealing to various market segments. Psychological pricing Psychological pricing is often referred to as “old even” as consumers usually round down a price to the nearest whole number, this makes a product appear to be cheaper (e. g. €1. 99 instead of €2). Companies also know that by setting a high price that their brand will be perceived to be more luxurious and exclusive the price can then be lowered to a sale price, this method of pricing can been seen when there is an on-going offer.
Cost plus pricing is adding a standard profit percentage to the direct cost of production, (e. g. If the cost of production is €1 and a company wants to make a 20% profit they will charge €1. 20 ). This method is often used in the retail sector. The main advantages of this is it is easy to use, but it does not take into account competitors prices. Value based pricing Value based pricing is based on consumer demand and the perceived value of the product. When the demand is high the price is usually set higher. This method takes into account the fact that different prices are charged for the product depending on where they are purchased
I believe that Pringles use a combination of cost plus pricing and value based pricing. A standard rate of profit is set for sales of Pringles in supermarkets and general shops, however Pringles also adopt a value pricing as they more expensive in some places. Pringles are usually sold on trains, aeroplanes and ferries and due to the tube design it makes them very easy to store and transport they also have a long self-life so this makes them the ideal snack to be sold. A small tube of Pringles can be purchased at the supermarket for approximately €1. 50 at Tesco’s but when purchasing the same tube on an aeroplane they cost €3.
Advertising can be used to inform potential customers about a product, to persuade them to but the product or to remind them of the product. TV, Radio, Cinema, mobiles and the use of the internet are known as electronic media. The main advantages of television advertisements are that the advertisement captures many viewers (Ireland are the most dedicated TV viewers in Europe). People are more relaxed while watching TV, this makes people more prone to taking in the message. Pringles have also appeared on the television series “Ally Mc Beal” along with many advertisements.
Some of the main disadvantages would be the cost of TV time is very expensive and many people tend to skip the advertisements. Internet is the cheapest form of electronic adverting, although many uses find them to be irritating, Radio is an effective form of advertising, as stations could have thousands of listeners. Approximately 90% of adults listen to the radio at some point in the day. Radio advertisements are cheaper than TV and the audience can’t skip the advertisements.
The disadvantage would be there are no visuals and it is still and it is still quite expensive e. g. he cheapest package for an advertisement on RTE is 8 spots for €3,650. Cinema advertising is very popular by 1998 Ireland had the highest rate of attendance in Europe. The main advantages are people are more relaxed in cinemas, they can’t skip advertisements and there is excellent sound and visual. The main disadvantages would be that these advertisements can still be very expensive. Press and magazine advertisements have become less effective in recent years as less people tend to buy newspapers and magazines however when people do buy magazines they tend to hold on to them for a long amount of time.
Some ways of getting good publicity can include; Hosting charity events, sponsorship of good causes and maintaining a good approach to corporate social responsibilities. Businesses can receive good publicity through press releases sponsorship has grown in popularity, in recent years. Business can sponsor events such as sporting events, people, movies or television programs. PR can be done within a company or this task can be outsourced to a specialist agency. Pringles don’t currently have a running PR promotion and they don’t mention events or causes that Pringles are currently sponsoring and don’t mention events have had in the past.
Personal selling means to contact existing and potential customers in person to generate sales. This is usually done by a sales representative. Telemarking is also a form of personal selling, this is when a company attempts to generate sales by telephoning customers. Pringles don’t use any form of personal selling Methods of Distribution Distribution refers to the activities to make a product available to the consumer. A channel of distribution is a chain of organisations which move the product from the manufacture to the consumer.
There are three main channels of distribution; Channel A, B and C. Channel A is the most common channel of distribution in business. It is a very practical for producers as they sell to thousands of consumers through retailers. A single producer would find it difficult to do business directly with retailers so they deal directly with a few wholesalers. T Through Channel A distribution is simplified as producers sell in large quantities to wholesalers. The wholesalers and retailers take on cost and responsibility for storage and transport. By using this channel producers can reach a mass market.
This method of distribution isn’t used as much as Wholesalers add a mark-up cost and large retailers are now using Channel B as it is cheaper. The channel moves goods from the producer to the retailer and skips the wholesaler. Large retailers buy in bulk e. g. Companies like Tesco. This allows the goods to be sold at a lower price and producers can still reach a mass market, distribution is simplified and costs are reduced. A disadvantage of this is retailers need a lot of storage as they have to buy in greater bulk. Through this channel goods are sold directly from the producer to their customers.
This channel suits perishable or specialised products such as: some agricultural products such as; some agricultural products like strawberry’s or tailor products such suits. The main advantage of using this channel would be that the producer is in close contact with the consumer and feedback is easily obtained. This method is also the cheapest for the consumer as there is no mark-up cost from middlemen. A disadvantage would be that less customers are reached. Pringles use two channels of distribution A and B. When Pringles are selling to small retailers like corner shops they would use channel A. They also have direct links with large supermarkets such as Tesco.
Conclusion
Pringles is a convenience product as it is a snack food. It is in the maturity stage of the Product Life Cycle as the sales have not started to decrease and the product is still popular. Pringles have an effective brand image and slogan, as customers automatically relate the image and the slogan to the product. Pringles packaging was very impressive as it protected the product, it was convenient, the packaging promoted the product well and contained all the necessary information e. g. nutritional information.
Pringles used a combination of cost plus and value based pricing for their pricing method. I found that Pringles promoted their product quite well. They used various forms of advertising and sales promotions, they did not use PR or personal selling. I believe Pringles could focus more on developing PR for their company. Pringles use two different channels of distribution: channel A and B. Channel A is used to sell to small retailer, while Channel B is used to sell to lager retailer like Tesco. I enjoyed doing this project on Pringles as they were an interesting company.
Bibliography
- Connolly, E. (2008) The Business World, Mentor Books: UK. Hutchinson, B. (2008). www. nydailynews. com P&G archivist Ed Rider (accessed on 2nd March 2012).
- Martin, A. (2011) “Once A Great Flop, Now Sold for Billion”, New York Times, April 5th 2011.
- White, M. (2008). http://patentlibrarian. blogspot. com (accessed 2nd March 2012).
- www. bighistory. net (accessed on 2nd March 2012).
- www. whenguide. com (accessed on 2nd March 2012).
- www. gardenguide. com (accessed on 3rd March 2012).
- www. a. s. a. i. ie (accused on 5th March 2012)
