Companies begin to differentiate themselves, at the most basic level, by deciding which of these sub-industries they are going to enter. Once that happens advertising becomes a big way companies can differentiate themselves and also make a name for themselves. Mascots are very prominent in the Food and Tobacco industry. Whether it be a snack food such as Cheetos with the Cheeto Cheetah, a beverage company such as Coca-Cola with the Coke polar bears, or even a tobacco company such as Camel with Camel Joe, popular food and tobacco companies often try to put faces to their products. Pepsi Co. is known for having pop culture celebrities featured in their advertisements to increase appeal. Once a reputation is acquired, especially markets for things like soda, fast food, and packaged foods, brand loyalty is very prominent in the industry. The famous Coke-Pepsi competition or McDonals-Burger King are excellent examples of this. Most smokers also display brand loyalty.
Companies in the industry also divide themselves using quality and price. If a food is expensive, it differentiates itself by promoting its quality whereas companies who can't claim they have best quality advertise their products as being affordable. In one of my recent blog posts I mentioned Domino's new marketing strategy to appeal to a larger audience. Dominos unveiled a new product line, along with their original pizza product line, of a new artisan recipe being sold for a higher price. Now Dominos is marketing their regular recipe as affordable and the new artisan line as higher quality pizza.
Companies also differentiate themselves with their values. Whether it be sponsoring a charity or changing a container to a more environmentally responsible model, companies show their morals and hold themselves as environmentally responsible to gain public support and increase their image.
A market for health food has also seen a sudden rise in popularity. Two factors attribute to this: the obesity scare in America and parent's efforts to keep their children and families active while the general population begins making changes in life styles; and the rise in globalization in the industry and the new concern for knowing where your food is coming from. Stores now focused on selling health food products, such as Whole Foods, are seeing increased sales as consumer habits in the United States change.
http://online.wsj.com/article/SB10001424052970204346104576638873048420558.html
Brady, this is well written. I want to know which major companies are doing well in their market segmentation. For those who caters to a niche market, what are the companies that are doing extremely successful there. For those who are mass marketing, which companies are having an advantage?
ReplyDeleteBrand loyalty is a major factor in our industry, I'll continue to emphasize that. Large and established companies like Coca-Cola and Pepsi Co. will continue to lead the beverage company, while the restaurant industry will be dominated by fast food giants due to the fact that they are chains, whereas more upper class restaurants cannot take away from their prestige by spreading themselves all over the place. That said, high end restaurants also don't gain enough money to spread everywhere as only the upper class can afford them regularly--but many of them are privately owned giving the owners the option to open other restaurants under different names, so once they become prestigious they can prove profitable enough FOR a small, private business. Fast food tends to be more profitable for these reasons. In the health market I continue to be impressed by whole foods, take a look at their growth over the past couple of years and it remains impressively constant despite rough economic times and trends towards inferior goods. I can post a link if you'd rather not look it up. Bulk and processed foods are also run by giants such as Nestle and General Mills simply because they have too large a financial base to have their prices undercut.
ReplyDeleteCigarettes are interesting, obviously the leaders are the leaders, it's incredibly difficult at this point to enter the tobacco industry. Those who made enough money to advertise got their consumer base hooked, continued to see growth and then out advertised smaller companies by which sufficiently gaining a new generation of customers. Altria, Reynolds American, British American Tobacco, Phillip Morris International, etc. are the companies who continue to see success due to the fact that addiction and brand loyalty made the market impossible to enter.