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MARKETING STRATEGY CASE STUDY April 23, 2012 Patrick Sollars Lydia Ellison Patti McCormick Alex Calkins

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PROBLEM STATEMENT TruEarth has developed a frozen pizza product, but the brand manager and other executives are struggling with the decision to launch the product or not. Poor forecasting in the past has lead TruEarth to misstep with previous product launches; judging the correct volume will be critical. The team is aware that their rival, Rigazzi, has also tested a pizza concept and is not far from a product launch.

EXECUTIVE SUMMARY The ready-­‐made or semi-­‐made meals market is mature, now reaching the late majority segment of the product life cycle. A segment of the ready made foods market is shifting away from mass produced, highly processed foods toward greater quality and authenticity. TruEarth has managed to differentiate itself and its products by targeting this niche, a segment of ready-­‐made foods that is still experiencing sustainable growth. TruEarth is on the offensive with their business strategies and it shows with their innovativeness in creating ready-­‐made fresh pasta dishes and pizza. TruEarth is a whole grain leader in the ready-­‐made industry.

Consumers generally consider pizza as a family treat, which they can conveniently access and easily prepare. The new pizza concept product has high market potential among our top two consumer segments, “family pizza pleasers” and “pizza lovers.” Combined they create nearly half (47%) of the revenue targeted in this market. “family pizza pleasers” will be the main target segment for the product launch. TruEarth Pizza differentiates itself from others with kit style presentation. This is a unique adaptation on a product in which the market is saturated. We believe TruEarth is in a good position to go ahead with the product launch, conditionally. Their top rival, Rigazzi is likely to release a close substitute product soon. For any chance of success TruEarth needs to have a product in this market as soon as possible. Move forward with product launches in high profitability “test-­‐markets,” Chicagoland, Milwaukee, Twin Cities, etc.

SITUATION ANALYSIS COMPANY TruEarth is a manufacturer of gourmet pastas, sauces, and meals. They produce their products from high quality ingredients like durum wheat from North Dakota. The company sells and distributes their products to retailers. Several mainstream supermarket chains (Meijer, Kroger, Trader Joe’s) have stocked as well as a number of gourmet grocers in the Midwestern United States have stocked TruEarth products. TruEarth’s products appeal to a narrow niche market. They are positioned as a healthy gourmet choice relative to other ready-­‐made meal choices. Their products reflect this positioning with low or no preservatives, whole-­‐wheat pasta, and a premium price Page 2

point. This niche differentiation strategy represents TruEarth’s primary sustainable competitive advantage. In order to compete in the food manufacturing industry companies must establish an efficient distribution network to keep their product on the shelves at all times. Demand forecasting is critical, and it is something that TruEarth has struggled with in the past. They now work with Nielson BASES to help estimate potential sales.

TRUEARTH MISSION STATEMENT “Everyone has the right to healthy food. We love being able to give people all-­‐natural, minimally processed foods that are free of highly refined sugars, artificial additives, and preservatives. Because when we eat well, we feel well.”

SWOT ANALYSIS STRENGTHS Successful launch of Cucina Fresca allowed company to establish market share and distribution network Strong position within niche market

WEAKNESSES Market Potential forecasting Small relative market share within ready made meals

OPPORTUNITIES New product offers a different approach to ready-­‐made pizza

THREATS Big player competition from Nestle and Kraft MI based Riggazi, is equally matched within niche Frozen pizza market is saturated and market growth is slow

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INDUSTRY ANALYSIS TruEarth sources their high quality durum wheat from North Dakota. The company sells and distributes their products to retailers. Several mainstream supermarket chains (Meijer, Kroger, Trader Joe’s) have stocked as well as a number of gourmet grocers in the Midwestern United States have stocked TruEarth products. TruEarth developed strength in their distribution network by being a first mover in ready-­‐made pasta market. It also resulted in a stronger market share, which is still growing. Demand for healthy gourmet products is rising. Shifting consumer focus away from mass-­‐produced, highly processed foods. This can be credited to customer awareness of the health effects of over processed foods as well as key influencers, like Dr. Atkins. In general Americans are trending towards fresher, healthier food choices provided that it is accessible and affordable.

The market for healthy foods has continued to grow over the past decade and is projected to keep on doing so in the future. The needs and wants of consumers to look good and to live longer by eating healthier is at a peak today in the United States. The industry of healthy foods is going to continue to grow and become an even bigger competitive market as it is right now. Competitive threats will become more increasing as the industry grows and TruEarth will have to plan ahead to stay above the new and up and coming companies in the same industry.

COMPETITOR ANALYSIS TruEarth faces strong competition from huge players Kraft and Nestle. They have the market share and the power to compete with a broad cost leader strategy. Michigan based, Rigazzi is a competitor of similar size and market share to TruEarth. They target the exact same market with quality gourmet pasta meals.

Rigazzi, a Michigan based company introduced their own line of whole grain fresh pasta in late 2007. Rigazzi marketed itself as using only traditional pasta-­‐making techniques and vintage Italian equipment. Rigazzi is the only competitor on a similar scale, meaning they sell all the same products as TruEarth. Some of the supermarkets are fine by carrying both of the products; however, some just prefer one or the other. If they do allow both, we are competing with very little shelf space. Buitoni refrigerated pastas and sauces reflect the growing emphasis on the nutritional value of whole grains, with some pastas made from 100% whole durum wheat flour, which contain 4-­‐8g of fiber per serving. Buitoni makes sure every meal is sure to deliver homemade taste your family will love. The products Buitoni are made with only the

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finest ingredients, then refrigerated and dated for freshness. Buitoni products are available throughout Europe and the United States. Kraft Pizza Company is the leader in the U.S. frozen pizza category. DiGiorno is Kraft's largest pizza brand, but also includes California Pizza Kitchen, Tombstone, and Jack’s. Kraft Foods just introduced DiGiorno Flatbread Melts, which are premium, single-­‐ serve meals that cook up in the microwave in less than four minutes, and DiGiorno Crispy Flatbread pizza, featuring an extra-­‐thin crispy crust with Italian-­‐inspired toppings.

PORTER’S FIVE FORCES

1. Bargaining power of suppliers Strength: 4 a. Factor 1: No substitute input, TruEarth is very selective of its ingredients, have to have specific high quality ingredients therefore supplier power is higher in this scenario than it might normally be. b. Factor 2: Importance of quality suppliers goes hand in hand with the first factor. The raw material in this industry is the most important part and it demands a premium price.

2. Bargaining power of buyers Strength: 4 a. Factor 1: Huge buyer independence in both US and global ready-­‐made meal, however stores will need to stock brands preferred most by consumers. b. Factor 2: Retailers are unlikely to be swayed by brand loyalty, therefore this market experiences high price sensitivity and tenancy to switch.

3. Threat of substitute products or services Strength: 3 a. Factor 1: Low cost switching for buyers, pizza is not a significant purchase in any respect. If users do not like the product or are swayed by a lower cost option they are unlikely to return. b. Factor 2: Our product fills a unique niche that is currently not duplicated; the challenge is getting the right user to try the product for the first time.

4. Threat of new entrants Strength: 2 a. Factor 1: Large capital investment in manufacturing and developing a distribution network, difficulty accessing distribution channels creates huge barriers for new entrants.

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b. Factor 2: Ready meals market is mature and organic food is experiencing slower but steady growth. Sluggish increases in the market cap is unattractive to new entrants.

5. Rivalry among existing competitors Strength: 4 a. Factor 1: The top three companies control 43.3% of the market, retailers can switch easily and rivalry is intensified by similarity in products. b. Factor 2: Large capital investments in manufacturing and automation create higher exit barriers in this industry, which tend to intensify competition.

CONTEXT ECONOMIC The gourmet food market is somewhat economically cyclical. Loyal consumers are most likely not going to steer away from the product, however a robust economy could expand market potential among those aiming for a healthier diet. Our target has a relatively high household income because it is a dual income household.

SOCIO-­‐CULTURAL Analysts describe a trend in American preference towards fresh and natural foods vs. processed and prepackaged. For larger companies it is harder to shift their focus from low cost/mass produced to small supplier, gourmet food. In this respect TruEarth has the advantage, because they were already positioned based on this consumer preference. Active fitness and nutrition lifestyles are driving TruEarth’s success.

NATURAL ENVIRONMENT Corporate sustainability, “green,” and organic products are becoming, more and more, a factor in consumer purchasing behavior. Among our target, “Julias” across America are just the type of market that is concerned with this feature because they are affluent and environmentally conscious.

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TARGET CONSUMER

Our target consumer is the 35 year old, busy-­‐working mother, Julia. She is looking for a quick and easy meal without giving up the benefits of a whole grain, organic choice. She wants something that is not highly processed because she cares about the health of her family and what her husband and children are putting into their bodies.

TruEarth and its healthy pizza kits are targeting middle age family oriented females. This is TruEarths primary target market because middle age women who are busy are usually looking for a quick and nutritious way to feed their family and TruEarths pizza kits are just the right way accomplish this feat.

In the “Values, attitudes and lifestyles” analysis we feel our typical demographic falls under the “Achiever” category. Achievers are people who are motivated by the desire for achievement and are career oriented and have a deep commitment to their career and family. We feel this is an appropriate measure of who TruEarth is primarily targeting because a woman who is excelling in a Page 7

career oriented lifestyle and trying to raise a family is undoubtedly busy, and a nutritious and good tasting pizza that can feed the whole family is a very appropriate meal plan for the family. The definition of an achiever is “with many wants and needs, achievers are active in the consumer marketplace. Image is important to achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-­‐saving devices.” The key for TruEarth in that definition is at the end of that sentence, because of their busy lives, they are often interested in a variety of time-­‐saving devices. Now fresh healthy pizza is not quite a device, but it definitely can help save a busy person a lot of time by being able to throw the pizza in the oven and know their family will have a delicious meal without sacrificing the healthy meal that a growing family needs.

DESIGNING MARKET STRATEGY

A. CUSTOMER NEEDS ANALYSIS

TruEarth frozen pizza provides a convenient and healthy alternative to traditional frozen pizza. This product is family friendly; the “pizza kit” style gives the opportunity for kids to jump in making dinner. It tastes great and most of all it’s just fun for Julia’s family.

B. PROBLEM RECOGNITION

There isn’t necessarily a problem for Julia just a new choice. We can however create a desired state for her to reach by differentiating our product from others.

C. INFORMATION SEARCH

Our primary target purchaser is ultimately trying to create harmony within her household. Who does she consult? Her family. Targeting her influences presents an interesting promotion challenge, however it is the key to swaying Julia to put our pizza in the cart.

MARKET SEGMENTATION This is the overall frozen pizza market broken down into six categories: 1. Low-­‐Cost seekers a. Driven by price only b. Not our target 2. Pizza Lovers a. Consist of 18% of the market but spend 28% of the dollars b. Dual-­‐income, no kids, willing to experiment c. High market potential Page 8

3. Family pizza pleasers a. Consist of 16% of the market but spend 19% of the dollars b. Similar to Pizza lovers, however they are influenced by kids, spouse, others c. Will be our primary target market for the TruEarth pizza launch

4. Wholesome nutrition seekers a. Prefer restaurant or takeout pizza b. Possible market, however we would need to convince them that frozen pizza is good c. Much more promotion and awareness building necessary, not ideal 5. Cooking avoiders a. Taste is not a primary need b. Not interested in gourmet flavors, similar to Low-­‐Cost 6. Frozen pizza avoiders a. Not at all a fertile market

PRODUCT USAGE

The chart below shows demographics with a high probability to buy a frozen pizza in the next 6 months. Highlighted demographics show indexes equal to 120 or more.

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CUSTOMER POSITIONING STRATEGIES

The left-­‐hand chart shows positioning strategies of popular pizza brands as well as the targeted position of TruEarth’s Pizza kit. There is an obvious lineal organization to this graphic. It helps to visualize our position because we can aim for this spot by shifting customer perceptions of our brand.

The right-­‐hand chart shows possible family meal choices, they are organized by convenience and satisfaction for the family. In this graphic we can see that the “semi-­‐ made” category is attractive because it is both moderately convenient for the busy family and highly satisfactory.

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VALUE ASSOCIATION MAP

When creating the value association map for TruEarth we came up with three determining factors; value, attributes and benefits. We felt that each of these factors have strong ties between each other and can be closely connected to each other in multiple ways. TruEarth is producing healthy pizzas, which are targeted towards middle class families, therefore when choosing items that correlate with each other it is important to choose items that are family related and can be connected with families.

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CUSTOMER RELATIONSHIP MANAGEMENT (CRM) The driving force underlying these relationships is that the marketer may enhance its ability to satisfy customers and cope with a rapidly changing business environment through collaboration of his suppliers, distributors, and customers. TruEarth uses focus groups to help evaluate their products from a real customer’s point of view. TruEarth could actively engage with customer through social media sites such as Facebook and twitter. TruEarth could use their package to keep the customer involved by offering points or rewards for going to the website or “liking” TruEarth on Facebook. TruEarth has impeccable timing when answering to customer issues, via phone, email, and mail.

TRENDSPOTTING
Technology
Trends -­‐ The major pizza players are offering online ordering and some are now offering text ordering from mobile phones, PDAs and other web enabled mobile devices. Major pizza chains are using social networking sites like Facebook as platforms to build a loyal customer base and to facilitate ordering directly from the sites. With an increased focus on green initiatives in the restaurant industry as a whole, pizza operators are introducing energy efficient equipment such as high-­‐speed ovens.

Healthier Options -­‐ There is increasing demand among consumers for healthy meals and healthy kid’s meals. Consumers are also more interested in where their food comes from and how it is produced, with a growing demand for locally produced and organic ingredients. Pizzeria operators are responding by producing dough with healthier fats, offering whole wheat pizza crusts, healthier vegetable based toppings and salads. Value -­‐ As consumers increasingly look for value, pizzeria operators are expected to respond with lower prices and promotions. Falling commodity prices will enable more aggressive pricing. Consumers have less to spend, but they still want to dine out for convenience and enjoyment. By responding with value pricing, specials and combo-­‐deals, pizza franchises will meet this ongoing consumer need.

MARKETING MIX A. PRODUCT Current Situation TruEarth Frozen Pizza differentiates itself from others with kit style presentation.

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Proposal A Go forward with proposed method. In a mall intercept survey consumers rated the pizza concept 7.7 for “easy to prepare.” Consumers do not differ in the convenience factor from TruEarth’s concept vs. typical frozen pizza. Proposal B Package toppings with the pizza crust and allow users to assemble the pizza at home. With this method consumers still get the experience of “make-­‐it-­‐yourself,” while the product does not differ itself so much from other choices that consumers won’t switch to it.

B.

DISTRIBUTION

Current Situation Brand is already established in several mainstream supermarket chains and gourmet grocers across the Midwest. Proposal A The pizza concept will take up more space on the refrigerator shelf because it needs ingredients placed next to it. This is something that the majority of retailers will not readily adopt; from their perspective it’s all about maximizing profit per square foot. Solution: Implement an all-­‐in-­‐one pizza kit with optional ingredients. Proposal B Launch product in more affluent suburban areas to maximize reach to target consumer. Midwestern states, especially in the Great Lakes region, are a very penetrable market.

C.

PRICE

Current Situation Product demands premium price (about $12.38 for pizza kit + 1.25 toppings), which rivals some delivery brand price points. Consumers rated this price point as unfavorable to concept. Proposal A Introduce as proposed, Pizza kit @ $8 + Individual topping packs @ $3.50/each. Proposal B Sell entire pizza starter $10 (crust, sauce, cheese, + one topping) with option to add more toppings as desired.

D.

PROMOTION

Current Situation New product has little to no awareness, however target consumers are familiar with the TruEarth name. Awareness for Pizza product will be much higher for current Cucina

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Fresca users. The promotional mix calls for $8 million in advertising and an additional $2 million in coupons. Proposal A Bundle coupons for pizza with Cucina Fresca pastas. TruEarth’s target markets for these products are near identical this is the quickest way to pick out a customer and influence her to try our new pizza. Proposal B Create TV ad campaign targeted towards Dad and kids to influence Moms purchase. On the MRI+ report for frozen pizza purchased in the last 6 months stations with high indexes include: Fuel TV, Fox Sports, Spike TV, as well as TeenNick, MTV, and Disney.

OPTION SUMMARY Our three alternatives include keeping with the status quo, launch the pizza product, and lastly R&D alternative food product. The lowest cost option would be keeping with the status quo, it would also be the lowest financial risk and great ease of implementation for TruEarth. Launching the pizza product would offer moderate risk and greater difficulty of implementation and a cost much higher than keeping with the status quo. Launching an alternative food product would be a higher financial risk than that of launching the pizza product because the pizza market is a thriving industry. It is also the slowest option. The new product market could be either an over saturated one, or an untouched one.

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EVALUATION OF CRITERIA STATUS QUO Growth/Profit Potential Ease of implementation Low Initial Cost Low Financial Risk Speed of implementation

SCORE 30 100 95 85 100

WEIGHT 35% 10% 20% 20% 15% 100%

WEIGHTED SCORE

10.5 10 19 17 15 71.5

PIZZA KIT LAUNCH Growth/Profit Potential Ease of implementation Low Initial Cost Low Financial Risk Speed of implementation

SCORE 85 70 70 65 85

WEIGHT 35% 10% 20% 20% 15% 100%

WEIGHTED SCORE

29.75 7 14 13 12.75 76.5

R&D ALTERNATIVE Growth/Profit Potential Ease of implementation Low Initial Cost Low Financial Risk Speed of implementation

SCORE 80 30 40 55 20

WEIGHT 35% 10% 20% 20% 15% 100%

WEIGHTED SCORE

28 3 8 11 3 53

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IMPLEMENTATION & CONTROL The implementation plan for the pizza kit will be to launch in sub-­‐urban, mid-­‐ western towns surrounding Chicago, Milwaukee, and Twin Cities, etc. MRI data showed that the mid-­‐west census region has a high probability to buy pizza in the next 6 months. Distribution channels will be the same as the Cucina Fresca pastas.

FEASIBILITY The ease of implementation for the pizza kit we weighted at 10% and scored at 70. We weighted it higher because the implementation of the pizza kit would be easier than the implementation of a different product, but it’s more difficult to implement than sticking with the status quo. The speed of implementation for the pizza kit was weighted at 15%, slightly higher than the ease of implementation because the faster we can implement the pizza kit the sooner we can start making a profit. We scored it at 85 because launching the pizza kit will be faster than launching a different product and it will be slower than sticking with the status quo.

MEASUREMENT The success of the pizza kit launch will be measured by sales and revenues, with a goal to sell $600 thousand in the first 6 months of sales. We will then and compare our sales to that of Rigazzi’s sales. We will also measure our market share in comparison to Rigazzi. The goal is to expand from the initial test markets if revenues and market share exceed expectations.

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CITATIONS & REFERENCES

Datamonitor, (2010) Porter’s five forces from US ReadyMeals report

MRI+, (Fall 2010) Frozen Pizza used in the last six months.

Chris, D. (2011, November 19). [Audio Tape Recording]. Ama regional conference speaker. , Whitewater, WI.

Nestle-­‐ http://www.nestle.com/Brands/Pages/BrandsDetail.aspx?brandguid=A3BE777C-­‐ E1A3-­‐4E99-­‐8FE9-­‐73A42FD7A6AA&BrandName=Buitoni

Kraft Foods-­‐ http://www.kraftfoodscompany.com/mediacenter/country-­‐press-­‐ releases/us/2009/us_pr_06252009.aspx

Strategic Business Insights. (n.d.) VALS achievers Retrieved from http://www.strategicbusinessinsights.com/vals/ustypes/achievers.shtml.

Anzalone, A. (2009, January 08). Kashi® introduces crispy thin crust frozen pizzas with seven whole grains. Retrieved from http://www.kashi.com/media_relations

CRMforecast.com. (n.d.). CRM business strategy. Retrieved from http://www.crmforecast.com/strategy.htm.

Williamson, M., & (n.d.). Minot milling. Retrieved from http://www.minotmilling.com/durum/durum.html

Market segmentation -­‐ meaning, basis and types of segmentation.. (2008-­‐2012.). Retrieved from http://www.managementstudyguide.com/market-­‐segmentation.htm.

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...chapter 1 Marketing’s Role in the Global Economy When You Finish This Chapter, You Should 1. Know what marketing is and why you should learn about it. 2. Understand the difference between micro-marketing and macro-marketing. 3. Know why and how macromarketing systems develop. 4. Understand why marketing is crucial to economic development and our global economy. 5. Know why marketing special— ists—including middlemen and — facilitators—develop. 6. Know the marketing functions and who performs them. 7. Understand the important new terms (shown in red). www.mhhe. When it’s time to roll out of bed in the morning, does your General Electric alarm wake you with a buzzer—or by playing your favorite radio station? Is the station playing rock, classical, or country music—or perhaps a Red Cross ad asking you to contribute blood? Will you slip into your Levi’s jeans, your shirt from L. L. Bean, and your Reeboks, or does the day call for your Brooks Brothers interviewing suit? Will breakfast be Lender’s Bagels with cream cheese or Kellogg’s Frosted Flakes—made with grain from America’s heartland—or some extra large eggs and Oscar Mayer bacon cooked in a Panasonic microwave oven imported from Japan? Will you drink decaffeinated Maxwell House coffee—grown in Colombia—or some Tang instant juice? Will you eat at home or is this a day to meet a friend at the Marriott-run cafeteria—where you’ll pay someone else to serve your breakfast? After breakfast, will you head off to school...

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...Abstract In the world of today with rude competition everywhere, customers’ expectations have become higher than ever. It is not the customers who come towards the products but it is the products which should make their way to the customers. And for this, only competitive businesses that are able to stimulate customers’ interests survive in the market. Therefore firms need to increase customers’ awareness about their products or services to be able to pull and encourage them to engage in purchase of their products. And as such, the promotional mix used by a company is really important for this task. The promotional mix in itself is very broad, consisting of various tools, like advertising, personal selling, direct marketing, public relation and sales promotion. To make the optimum use of these tools, marketers usually select them, depending on their budget and objectives, as well as the sector in which they operate (Kotler & Armstrong 1997). As such, research has been conducted on the use of promotional mix and research questions and objectives have been set. The methodology which will be used has been devised. We shall be doing a descriptive study through a survey questionnaire, in which there will be open as well as close ended questions and the questionnaire will be administered through personal interview that is direct, face-to-face. The sample size will be 100 persons and will all be customers of J Kalachand & Co Ltd. After the research, we will be...

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...Marketing is the process of communicating the value of a product or service to customers, for the purpose of selling that product or service. Marketing can be looked at as an organizational function and a set of processes for creating, delivering and communicating value to customers, and customer relationship management that also benefits the organization. Marketing is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer behavior and providing superior customer value. From a societal point of view, marketing is the link between a society’s material requirements and its economic patterns of response. Marketing satisfies these needs and wants through exchange processes and building long term relationships. Organizations may choose to operate a business under five competing concepts: the production concept, the product concept, the selling concept, the marketing concept, and the holistic marketing concept.[1] The four components of holistic marketing are relationship marketing, internal marketing, integrated marketing, and socially responsive marketing. The set of engagements necessary for successful marketing management includes capturing marketing insights, connecting with customers, building strong brands, shaping the market offerings, delivering and communicating value, creating long-term growth, and developing marketing strategies and plans.[2] Marketing may be defined in several ways, depending on...

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...oriented philosophy is so important. The phrase market-oriented is used in marketing conversations as an adjective describing a company with a marketing orientation. Market orientation more describes the company's approach to doing business. Market-oriented defines the company itself. If a company is market-oriented, its board and executive leadership believe that the best way to succeed is to prioritize the marketplace above products. This usually goes over well with customers, but the company also must have adequate research and development to provide what the market wants. Hence, a market-oriented organization is one whose actions are consistent with the marketing concept. Difference Between Marketing Orientation & Market Oriented by Neil Kokemuller, Demand Media http://smallbusiness.chron.com/difference-between-marketing-orientation-market-oriented-14387.html Marketing is a management process and management support for marketing concept is very important element in success. If a company wants to be successful then it is market oriented. Marketing involves identifying the customer requirements and estimate the customer requirements in future. It requires planning which is very important process of marketing. To satisfy the needs the business should provide benefits – offering right marketing at right time at right place. Generally market based companies adopt strategic level marketing that defines the mission and long term objectives of the company. Market oriented...

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