Assessing the Marketing Strategy of Payboy Magazine

Contents Introduction4 Literature review5 The product life cycle5 Introduction stage5 Growth stage6 Maturity stage6 Decline stage7 MARKET SEGMENTATION8 Attractiveness of a market segment9 Target market strategies9 BRAND10 Building and managing brand equity12 Globalisation13 There are three main international marketing orientations13 Ethics in marketing14 Gender role and marketing14 Generic marketing strategy15 Findings16 The playboy product life cycle16 Market segmentation17 Brand17 Globalization17 Ethics18 Marketing strategy18 Discussion20 Conclusions21 Recommendations21 References22 Introduction A marketing strategy calls for the organization to pull its limited resources to attract the desired market segment and gain some competitive advantage. The positioning of a product is the reason the target segment of the market uses or buys a product based on the attributes of the product which ensure that the product attracts the desired market segment by meeting the product expectations (Wind, 1990). These two strategies are used to attract consumers of all product types. The magazine industry mainly applies these strategies to attract buyers towards their product. They offer their readers target content by being first segmented into the various types of magazines which include: men, women, news magazines and readers digest. Readers digest offer its readers a wide array of topics of interests without focussing on a specific readership, gender or group of interests. News magazines offer feature news articles usually on topics that have already been discussed in other news media but in a more in-depth sense. Women’s magazines offer articles of interest to women and men’s magazines offer articles of interest to men. Magazines are further segmented under each section to feature topics of interest from decor to cars. One of the more successful men’s magazines Playboy will be discussed in this paper, focussing on, what strategy they applied to achieve their global success. The magazine has been in existence for over, 50years and has stood the test of time. This paper will seek to determine what marketing strategies they applied to achieve their global success. Literature review The product life cycle The product life cycle can be divided into several stages characterised by the revenue generated by the product. A PLC depicts the stages that the product goes through during its life time. The PLC is made up of the following stages: Introduction stage When the product is introduced, sales will be low until customers become aware of the product and its benefits. Advertising costs are typically high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated wit the initial distribution of the product. These higher costs coupled wit low sales volume usually make the introduction stage a period of negative profits. During the introduction stage, the goal is to establish a market and build primary demand for the product class. The introductory stage comprises of the following marketing mix components: Price – the price will be generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly. In some instances, a penetration pricing strategy is used and introductory prices are set low to gain market share quickly. Distribution –the distribution is selective and scattered as the firm commences implementation of the distribution plan. Promotion – it is aimed at building brand awareness. Samples or trials may be directed at early adopters. Growth stage This is a stage of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. The marketing team may increase its distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and or increased promotional costs in order to convince customers that the firm’s product is better than that of the competitor. During the growth stage the goal is to gain consumer preference and increase sales. The marketing mix may be modified as below: Product – new product features and packaging options, improvement of product quality Price – the price may be maintained at a high level if demand is high or reduced to capture additional customers. Distribution – at this point, the distribution becomes more intensive. Trade discounts are minimal if resellers sow a strong interest in the product. Promotion – advertising is increased to build brand preference. Maturity stage This is the most profitable stage. While sales continue to increase into this stage, they do so at a slower pace. The brand awareness is strong and so the advertising expenditures will be reduced. Te firm places effort into encouraging competitors’ customers to switch, increasing usage per customer, and converting non users into customers. Sales promotion may be offered to encourage retailers to give the product more shelf space over competing products. During the maturity stage, the goal is to maintain market share and extend the product life cycle. The marketing mix decision may include: Product – modifications are made and features are added in order to differentiate the product from competing products tat may have been introduced, Price – there are possible price reductions in response to competition while avoiding a price war. Distribution – new distribution channels and incentives to re-sellers n order to avoid losing self space. Promotion – emphasis on differentiation and building of brand loyalty. Incentives may be introduced at this stage to get competitors’ customers to switch. Decline stage At this stage, sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer taste change, if the product as developed brand loyalty, the profitability may be maintained longer. Init costs may increase with the declining production volumes and eventually no more profit can be made. During the decline stage, the firm has three options: †¢ Maintain the product with hope that competitors will exit. Reduce costs and find new uses for the product. †¢ Harvest it, reducing market support and coasting along until no more profit can be made. Discontinue the product when no more profit can be made or there is a successor product. The marketing mix may be modified as follows: Product – the number of products in the product line may be reduced. Rejuvenate surviving products to make them look new again. Price – prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for continued pr oducts serving a nice market. Distribution – it will become more selective. Channels that are no longer profitable are passed out. Promotion – expenditures are lower and aimed at reinforcing the brand image for continued products. MARKET SEGMENTATION Here, the suppliers will want to concentrate in a particular market. There are two important factors to consider when selecting a target market segment. These are the attractiveness of the segment and the fit between the segment and the firm’s objectives, resources and capabilities. † This is the process in which a company attempts to identify the categories of consumers whose needs and wants it can satisfy. In order to segment the market Companies first assess their capabilities and resources then they determine the competitive situation in the marketing environment. Finally they match their capabilities with the needs of the market segment. There is no single way of segmenting the market because their criteria used to segment the market depend on the individual organisations. The segmentation process involves several steps: †¢ You define the market usually based on the consumers needs †¢ Identify the best market segmentation criteria †¢ Apply the segmentation criteria and divide the market †¢ Analyse and understand the profile of the priority consumer segment (Ranchhod & Gurau, 2007) Attractiveness of a market segment The following aspects can be considered when evaluating the attractiveness of a market segment: †¢ Growth rate in the segment †¢ Size of the segment †¢ Competition in the segment †¢ Attainable market share given promotional budget and competitors’ expenditures †¢ Required market share to break even Market research and analysis is essential to obtain this information. Te impact of micro and macro environmental variables on the market segment should be considered. Target market strategies Market specialisation – here the firm specialises in a particular market segment and offers that segment an array of different products Full market coverage – the firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment. Product specialisation – Here the firm specialises in a particular product and tailors it to different market segments Selective specialisation – Here the different marketing mixes are offered to different segments. The product itself may or may not be different. The promotional messages or distribution channels may vary. Single segment strategy – Here one market segment is served with one marketing mix. A single segment approach often is the strategy of choice for smaller companies wit limited resources. BRAND A brand is a name or symbol used to identify the source of a product. (NetMBA,marketing>brand equity). Very successful brands have been known to become the generic name of a product. The design and implementation of an effective brand strategy can be considered in relation to the brand, product or the service offered. There are several brand strategies that can be applied, these include: †¢ Brand development strategy – used when the brand already exist †¢ Rebranding – when an existing brand is rebranded in line with the change in the market segmentation or competitive positioning strategy. †¢ Brand introduction – used when a new brand is introduced †¢ Brand extension (umbrella branding) – used when a new product that is unrelated to an existing product is introduced. (Ranchhod & Gurau, 2007) The brand can add significant value when it is well recognised and as positive associations in the mind of the consumer. This concept is referred to as â€Å"Brand equity. † There are three perspectives from which to view brand equity: 1. Consumer- based: A strong brand increases the consumer’s attitude strength toward the product associated with the brand. Attitude strength is built by experience with a product. This importance of actual experience by the customer implies that trial samples are more effective than advertising in the early stages of building a strong brand. The consumer’s awareness and associations lead to perceived quality, inferred attributes, and eventually, brand loyalty. 2. Brand extensions: A successful brand can be used as a platform to launch related products. Te benefits of brand extensions are the leveraging of existing brand awareness thus reducing advertising expenditures, and a lower risk from the perspective of the customer. Appropriate brand extensions can enhance the core brand. Te value of the brand extension is however more difficult to quantify than are direct financial measures of brand equity. 3. Financial: One way to measure brand equity is to determine the price premium that a brands commands over a generic product. Strong brand equity provides the following benefits: . It is an asset that can be sold or leased 2. It Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing. 3. It facilitates a more predictable income stream Building and managing brand equity In his 1989 paper, Managing brand Equity, Peter H. Farguhar outlines # the following three stages tat are required in order to build a strong brand: 1 . Introduction – in this stage, introduce a quality product with the strategy of using the brand as a platform from which to launch future products. A positive evaluation by the consumer is important. 2. Elaboration – make the brand easy to remember and develop repeat usage. There should be accessible brand attitude, that is, the consumer should easily remember his or her positive evaluation of the brand. 3. Fortification – the brand should carry a consistent image over time to reinforce its place in the consumer’s mind and develop a special relationship with the consumer. Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer. Globalisation Marketing efforts can cross borders in a process known as internationalisation and globalisation. Internationalisation is when a firm starts to sell the products across the borders. Globalisation is a result of internalisation and it is shown by an increase in volumes and value of goods as well as the emergence of transnational segments of consumers with similar demand. (Ranchhod & Gurau, 2007). The main factors influencing international marketing operations are: †¢ Good knowledge of the evolution of the international business environment †¢ The existing assets of the firm †¢ The capacity of managers †¢ To rapidly adapt the firm’s strategy to the continuous changes in international markets. (Ranchhod & Gurau, 2007) There are three main international marketing orientations †¢ Domestic Market orientation – this is when you sell your service or products in a foreign markets that is very similar to the domestic market. †¢ The multi-national orientation – this is when a product or services adapts to the demands of each foreign market. †¢ Global orientation – it identifies the transnational segment of consumers in different foreign countries having similar needs and wants. (Ranchhod & Gurau, 2007) The main challenge with globalisation is whether to adopt standardisation or adaptation theories in the marketing strategy. It has been argued that standardisation should be adopted because international markets have increasingly convergent needs and wants. However, standardisation does not allow for the local cultures to shape the preferences and in such cases the adaptation theory will work best. (Ranchhod & Gurau, 2007) Ethics in marketing The ethical stance of an organisation can either promote or hinder the marketing strategy of an organisation. Ethical issues ranging from pay, pricing of goods to environmental issues affect the image of an organisation and can have a critical impact on an organisation’s brand. In order to combat the negative publicity, organisations can form ethical alliances with non-profit organisation taking the form of donations, cause-related marketing, event sponsorship, employee exchange and the provision of services. Such cause-related marketing strategies can be used to distinguish an organisation in the market place. (Ranchhod & Gurau, 2007) Gender role and marketing In advertising, it has been found that the marketing to women and men especially in publication differ in terms of the type of products they advertise. Men products tend to promote lifestyle enhancing and professional appearance while women’s advertisements tend to promote self reflection and personal appearance (Graham and Gollop, 2003). Many brands in the market are said to posses gender bias. The bias helps leverage their ability to attract their male or female target group. This same trait works as a hindrance where the brand is trying to cross the gender divide (Jung and Lee, 2006). Findings show that depending on the race and gender of the magazine, the roles of the women and men changed. In women’s magazines, women appeared in subordinate roles most of the time and were considered more exposed then men although research has shown that these roles appear to be changing. Interestingly, depending on the magazine gender bias, men’s magazines had dominated in images of men and women’s magazines dominated in images of women (Graham and Gollop, 2003). In most the magazines, women appeared as sexual objects. Generic marketing strategy Porters has two main fundamental decisions that organisation need to adopt in order to gain competitive advantage. He proposed that organisations could compete on price and differentiation. The two strategies define the following four generic competitive strategies . 1. Overall price leadership – it provides products and services at lowest prices 2. Differentiation – offering a product or service with differentiated features. 3. Differentiation focus – segment the market then offer each segment a differentiated product. 4. Price focus – firstly, segment the market and offer the segment a low price (Mitchell,2010) Findings The playboy product life cycle Introduction – Playboy was introduced in 1953 with a $1000. 0 budget. The first publication had a circulation of 53991 copies and Marylyn Manroe was on the cover prior to her fame at a price of $0. 5 per issue. When this idea was launched, the logo was a stag, and the magazine was supposed to be called ‘Stag Growth stage –the playboy ‘bunny ‘was introduced and subsequently became the prima ry unchanged logo for the magazine. Maturity stage-in the 1970’s the playboy magazine had grown in popularity and this marked the best sales period of its circulation. The magazine grew into the playboy corporation and has under the umbrella name in addition to the magazine: Night clubs †¢ Casinos †¢ cosmetics Decline- given the negative publicity linked to the content of the playboy magazine, in the late 1970’s immediately after achieving its peak, their sales declined as a result of the rise of competitors such as penthouse (Trivialibrary. com, 2010). There was a 2-year ban on all explicit content magazines in the united states in the†¦ based on the speculation that magazine of that content was a health hazard. Maturity stage -to date the magazine has a notable goodwill and has accumulated in value. In 2002, the first issue of the playboy magazine was auctioned off for $5000. 0 showing that the magazine has accumulated value as a collectable. Market se gmentation The playboy magazine cast a wide web and segmented its market using geographical and gender based segmentation. The magazine is typically targeted at men aged between 18 and 80 years of age. However, the contents satisfied both the male and female market (Forbish, 2004). Brand The playboy brand is symbolised by a black bunny bearing a bow tie. It has immense goodwill and has been exploited and incorporated into several products such as jewellery, T-shirts printed etc. The magazine P has stars to indicate the level of circulation for that particular issue Major brand extensions include: lingerie, jewellery, TV shows, Clubs and Casinos. Globalization The playboy magazine has been published in over 50 countries worldwide with local publication and has shown a certain degree of popularity internationally. It sells more the 3million copies in the united states and 4. 5million copies around the world (Forbish, 2004). In addition, playboy has a website which has allowed that to reach an international market. Ethics There have been many ethical issues surrounding the magazine spanning from, exploitation of women to the lack of morals based in the sexual content of the magazine. However, they stand out from the rest because they show some moderation on their contents; †¢ they are not as explicit in both their magazine and web content †¢ their sit only shows nudity to viewers after they have acknowledged the content Marketing strategy The main aim of the playboy magazine was to sell a ‘lifestyle’ and not just sex and nudity. The idea was for the young man to feel like he was a member of a playboy lifestyle club (Forbish, 2004; Thompson, 2008). They show this by incorporating issues of interest to men including humorous and celebrity related content (Forbish, 2004). Between 1959 and 1961, Playboy had a television show ‘Playboy penthouse’ which supplemented in television what it offered as a publication. This show was not an easy success story because television at the time was related to feminism and usually show cased feminine products and shows (Thompson, 2008). The show offered the viewer a visual idea of what the playboy lifestyle was about: beautiful women, celebrities and partying (Thompson, 2008). They have a web page that was opened in 1994. It is currently the most visited site and highly successful magazine online sites. Its cyber store has a 2700 item catalogue and is responsible for a major portion of the playboy profit. Another major feature is the live feature which allows surfers access to view live events online. The ideas of the web site was not to lose sight of the playboy persona by strongly linking its contents and the quality to that of the magazine aimed at getting its visitors to buy into the playboy brand as well as other merchandise that they sell online (Forbish, 2004). When introducing the magazine, the pictures that were published in the magazine were of an upcoming icon Maryline Manroe which was to be used in a calendar. Playboy has been known for using celebrities such as Pamela Anderson in its covers. They also used award winning non sexual content interviews with famous figures to sell the magazine including Malxom X, Martin Luther King Jr. (Forbish, 2004). Discussion The playboy magazine is an ideal example of a magazine that stood the test of time. Starting in the 1950’s the magazine managed to capitalize on a basic need in Maslow’s hierarchy of needs ‘Sex’. Considering the more conserving time era in which the magazine was launched, the minimal budget and the small circulation, the magazine has proven to be a success story. To date, the playboy brand is considered a symbol of status, fashion and personality (Chen and Wang, 2007) In terms of strategy, using semi naked women on the cover, to attract their ideal market segment was a good key strategy to attract readership; having the semi naked women being up and coming celebrities like Pamela Andersen was a genius idea this being key in attracting their target market; men aged between 18-80. This strategy was the key to the success if the magazine (Thompson, 2008). In terms of positioning, the playboy magazine has expressed intensely that they are not a ‘pornographic’ magazine and attest the idea that their content is purely sexual in nature (Schilowitz, 2004). They argue that their content is of interest to men and thus their articles will be male interest related; with men interests being women amongst other things. They show this by having in depth interviews with interesting key people in society including Malcom X. They push the idea that Playboy is in-fact a lifestyle of fun with a sexual connotation, which is why the extensions of the brand include casinos and clubs. In terms of ethics, the try to show that they are not pushing the men into reckless sex, they do not exploit women and they do have a certain level of conservative standard which they show by not fully exposing their women; and putting restrictions on their websites to inform their patrons about potential nudity in their sites. Conclusions In conclusion, the playboy brand is a successful entity, the name and logo has an international standing. Having graced that stands from the 1950’s to present day and stood the test of criticism, linking to the ‘pornographic market, defending its image as a lifestyle as opposed to a product the brand has been successful. In terms of segmentation, the ‘Playboy’ magazine had had a high success rate in reaching its target market while unintentionally attracting another segment in the market; women readers. It has successfully offered its readers more than just ‘sex’, it has offered its readers the ideal idea of what it means to be a man (Cox, 1961). Playboy has had a fair share of negative press about the ethics of the publication linked to the images of the women but this has had a little effect on the goodwill of their brand. In summation, the playboy brand has been marketed successfully and the application of the strategy has been well carried out. This has been done through effective segmentation, application of online marketing and globalization, application of ethics, effective use of goodwill on the brand as well as brand extensions. Recommendations The following recommendations could be applied: Given the current global HIV/AIDS pandemic, it would be in the interest to include in their articles talks about how best to avoid, prevent and stop the transmission of HIV/AIDS. Their articles should promote awareness and prevent stigmatization. References Chen Y and Wang X. (2007). Research on the legal protection of intellectual property right in clothing brand. Asian social science. Vol. 3 (2) pp 77-80 Cox H. (1961) Playboy’s Doctrine of Man. Christianity and Crises. Forbish T. 2004) Sexual Profiteering and Rhetorical Assuagement: Examining Ethos and Identity at Playboy. com. JCMC. Vol. 9 (3) Jung K. and Lee W. Cross-Gender Brand Extensions: Effects of Gender of the brand, Gender of consumer, and Product Type on Evaluation of Cross-Gender Extensions. Advances of Consumer Research. Vol. 33. pp 67-74. Graham R. and Gollop C. J. (2003) Gender Role Reinforcement in Popular Magazine Advertising. Dissertation from the University of North Carolina. United States. Schilowitz E. (2004) Dont Dare Associate Playboy With Porn: Playboy Enterprises, Inc. . Netscape. Communications Corporation. B. U. J. Sci and Teck L. Vol. 10 (2) Thompson E. (2008) The Parodic Sensibility and the Sophisticated Gaze : Masculinity and Taste in the Playboy Penthouse. Televisions and News Media. Vol. 9 (4) pp 284-304. Wind Y. J (1990) Positioning analysis and strategy. Interface of marketing strategy. Jai Press ———————– Assessing the marketing strategy of Playboy magazine Strategic Marketing MKT 762 Dr. Ayanda Group IV Modise Nengu 9903378 Oumi El-Kindiy 200302031 Dineo Mooketsi 9703200