The company has been operating smoothly for the past 25 years selling its cookies in four main flavors which are ginger snap, vanilla flax, honey and cinnamon, and the chocolate chip flavor. Kevin has also ensured that his company keeps to the health standards and quality control guidelines issued by the food health institutions. The success that the company was enjoying, moving up the shelves in the various retail stores started to go down recently and the products started to be placed on lower shelves. The sales of the company’s cookie products were observed to be going down and as a result action was needed to get the revenues back up again.Cost of Developing New Cookies
One of the options that Kevin is considering taking is developing new flavors of cookies to add to the company product line to get the sales back up again. Customers in the market are observed to change their interests and preferences in products after a while for reasons such as trying out new products, for economic reasons or when they no longer need it. The market also gets new entrants constantly who may provide better products, prices, or implement the correct strategies that pull customers towards their products. As a result, companies who fail to employ strategies to maintain their market positions and customer base may face a period of stagnation in sales and a subsequent decline in revenue.
One of the ways companies can avoid the stagnation of sales and decrease in revenue is to introduce a new line of products which will allow them to maintain their customers or possibly gain new ones and also keep their revenues high. Kevin is looking to introduce a pumpkin and coconut flavor line of cookies and a line of shortbread cookies and oatcakes. Kevin is also considering introducing a line of products that will be specifically targeted to kids with colorful packaging or dying the cookies in yellow, red and blue colors and making using of sprinkles to attract the attention of children.
Kevin has assigned a marketing he hired to conduct a marketing test of the products to determine their market potential. Kevin and his company are however in a tight financial situation where he has little money to make the correct decisions on what to do to improve the sales of the business products. Introducing new products in a company usually requires the business to invest money in issues such as researching the market potential of the new products, determining the target market and in creating ways to get the product distributed to the market. New products also demand additional cost in advertising and promotions to make the customers aware of the new products and the benefits they get from it and also additional production costs for new equipment, labor or raw materials.
Kevin should therefore as a first step to ensuring that developing new products is the best option he has to improve his company’s position before taking the financial risk of developing the new product. From the marketing test conducted by the marketing team at the university, the new coconut and pumpkin flavored cookies showed positive reception by the small groups of students who tasted them. The test shows that the new products have a market potential and could be received well by customers and increase the sales of the company saving it from the current situation. The company can, therefore, afford to and should develop the new cookie product line.
Investment Reaps Benefits
Kookie Kutter Bakery has mostly failed in creating active marketing strategies to push their products to be sold. The company has been denied to have a point of sale displays in most of the store they were selling their products and have not been creative in finding other alternative ways to promote the cookies. In the few stores that Kookie Kutter is allowed to set up the point of sale displays, cardboards have been used which are highly susceptible to damage in adverse weather conditions requiring frequent replacements. The bakery does most of its marketing through the packaging used in the cookie products and an occasional in-store sampling both of which do have a high potential or reach as many customers.
One of the retail stores in Sackville, the bakery’s home has a stand that promotes the cookies but the information displayed on the board is barely visible to customers in the store. Kookie Kutter Bakery should consider investing more towards their marketing efforts which will help reinforce their products in the market and increase their sales. Marketing will help the bakery improve their brand awareness and recognition by the potential customers increasing the chances of them buying the products. Marketing will also bring more benefits such as increased sales, increased brand visibility, improve brand authority and credibility and create loyalty and a lasting relationship with the customers. Developing new cookies and investing more towards the marketing would, therefore, bring significant benefits to Kookie Kutter bakery.
Recommendations Around Growing Business
Cerreti would be advised to make more efforts towards marketing the cookie products as often as possible to help the bakery maintain a favorable position with the customers. On top of marketing, Kevin should consider making a continuous evaluation of the market after a set period of time. Market evaluation will help identify changes in the main factor that drive the market and make adjustments to deal with them. The bakery should also try diversifying the product range to include new items that will help them enjoy revenue from other sources and not cookies alone. Kevin should also work towards building the bakery’s brand and make the customers more aware of the quality and healthy cookies they provide to the market. The firm can also build on the nutritious value of their products and their vegan-friendliness which will attract health-conscious customers to them and develop long-lasting relationships with them.
Data percolation refers to the process of collecting data and analyzing to an ideal level which can then be used to obtain quality results. The marketing team in the case study applied data percolation in the results they obtained from the two experiments at the local university. The two experiments involved testing the effects of a local label on a product to the flavor perception of the customers and ranking some of the bakery’s products in order of preference. The first experiments showed that 78% of the 23 students who tasted the cookies preferred to have the cookie with a local label on it despite having the same cookie presented to them. The second experiment showed that the most preferred cookie was the gingersnap and the least liked was the pumpkin cookie. The team applied the process of data percolation on the raw results collected to come up with a usable conclusion from the data.
The final conclusion made by the team on the first experiment was that the local label on the cookie may not have tricked the participants since five of the students believed it was the same cookie and others speculated that it was the same. The team further realized that there may have been taste interference between the coconut, ginger snap and pumpkin cookies affecting the credibility of the results. The team came to a conclusion that the students may have held a positive bias for the products with a local label and that the pumpkin cookie test run was not a success.
Changes to Experiment Suggestions
Since the results from the first two experiments were not conclusive enough to make decisions from, Kevin should consider sending the marketing team again to re-conduct the test. One change that should be implemented in the second test to improve the quality of the experiments is setting up the tests in more than one area. Setting up the experiments in more than one area will help the team obtain results from wider population demographics which will paint a clearer picture of the market. The multiple test spots will also provide more data which is better in reaching a conclusion. The team should also create a way to ensure that taste interference as the participants try the different cookies do not affect the final results. This can be achieved by taking time between trying one cookie and the next. The participants can also be asked to taste and rank the cookies before being told what flavor they were taking to avoid the possibility of biased results.
The case study enlightens us about the constantly changing market factors that in turn mean that businesses have to keep adjusting and innovating to fit into the new conditions. Failure to change with the changing market dynamics will run a firm out of business when no more enough sales are made. Some of the strategies that businesses can use to keep up with the changing markets in to develop new products and invest in strengthening their brand and marketing the products to reach more customers. Business should also conduct adequate research before making decisions such as creating new products to get an idea of how the products will be received by the customers.