Wednesday, April 21, 2010

Dissertation on Marketing

Dissertation on Marketing

Ross Product division traces its beginnings to 1903, when Harry C. Moores and Stanely M. Ross founded the Moores and Ross Milk Company in Columbus, Ohio. Establishing what would become a company tradition of customer services, the entrepreneurs wanted to do more than process milk. In seeking unique ways to fulfill customer needs and distinguish themselves from the competition, they began using the first stand-and drive milk truck and the first glass bottle for home delivery. Over the next 20 years, their business prospered. In 1924, the partners took the daring step of producing and marketing a then-new concept - milk based infant formula. As the product grew in popularity, Moore and Ross sold its dairy, ice cream and milk processing operation to another prominent Columbus firm, the Borden Company, and focused solely on producing the infant formula.

In 1928, the company was renamed M&R Dietetics Laboratories. Free to concentrate fully on the merging field of pediatric nutrition, M&R Dietetic Laboratories became known for one of the most respected and successful infant formulas - Similac. Similac was first available in powder form. After extensive research, similac concentrated liquid was introduced in 1951, as the first infant formula available in a form other than powder. Concentrated liquid was easier to prepare than powder and soon became the most popular product in the U.S. infant-formula market.

In 1959, the company introduced Similac with Iron to help prevent iron deficiency in infants. Today, iron-fortified infant formula is considered to be preferred source of nutrition during the first year of life if breastfeeding is not chosen. In 1963, the company launched an innovative system, the first pre-bottled, pre-sterilized formulas for feeding infants in hospital.


In 1964, the company was renamed Ross Laboratories after merging with one of the world's largest healthcare corporation, North Chicago-based Abbott Laboratories. Today, as one of Abbott's six operating units, the Ross Product Division - with division headquarters and a manufacturing facility in Columbus Ohio, and other U.S. manufacturing facilities in Arizona, Michigan and Virginia - is a leading worldwide producer of scientifically formulated nutrition to meet normal and special dietary needs from infancy through adulthood. Ross's philosophy strongly believe in the idea that good nutrition can improve and even saves lives while helping to reduce overall medical costs. The attached marketing study was initiated at the request of Ross's top management to evaluate the companyТs marketing practices and strategies to support the company's philosophy - to improve the quality of life through good nutrition.

Philosophy of Marketing Management
Today marketing can be defined as the "process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organization, and events to create and maintain relationships that satisfy individual and organizational objectives." In order to compete, companies must continually search for the most efficient manufacturing sites and most lucrative markets for products. The global economy is continuing to expand as standards of living rises, especially in Europe and Asia, customers demand for the latest goods and services increases.

There are five alternative concepts under which organizations conduct their marketing activities: the production, product, and selling, marketing and societal marketing concept. Ross uses the marketing management philosophy known as marketing concept.

Marketing concept states that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desire satisfactions more effectively and efficiently than competition do. One best way Ross practices the marketing concept is through their web site, which is designed to help acquaint a consumer with Ensure. The site also gives the toll free number for customer service and offers programs such as nutrition recipes (made with Ensure), Ensure home delivery system and Ensure health connection - unique e-mail health news letter informing about latest health prevention tips and new products development.

Strategic Business Units/Mission Statement
Management's first step is to identify the key businesses making up the company. These are called the strategic business units. A strategic business (SBU) is a unit of the company that has a separate mission and objective and that can be planned independently from other company business. An SBU can be a company division, a product line within a company or sometimes a single product or brand.

Ross offers a number of pediatric and adult nutritional products, pharmaceuticals, entral feeding devices and other products. One can get more information of any of these products by clinking on the links on their web page.


Mission statement/vision statement are very important for any organization because they provide direction and purpose for existing and most importantly these statements help guide people throughout the organization to work toward common goals, even though they may work independently from one another.

The Boston Consulting Group Approach
Using the Boston Consulting Group (BCG) approach, a company classifies all of its SBUs according to the growth-share matrix. On the vertical axis, market growth rate, provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. By dividing the growth-share matrix in the market, four types of SBUs can be distinguished - stars, cash cows, questions and dogs.

Ensure supplements are located in the cash cow division. Cash cows are low-growth, high-share business or products. These established and successful SBUs need less investing to hold their market share. Thus they produce a lot of cash that the company uses to pay its bills and support other SBUs that need investment.

Marketing Environment
As we enter the new millennium, both consumers and market wonders what the future will bring. The business environment continues to change at a rapid pace. A company's marketing environment consists of the actors and forces outside marketing that affect marketing management ability to develop and maintain a successful relationship with its target customers. The marketing environment offers both opportunities and threats. Successful companies know the vital importance of constantly watching and adapting to the changing environment.

Microenvironment consist of forces close to the company that affect its ability to serve its customers - the companies suppliers, marketing channel firms, customers markets, competition and publics.

Below is a list of some of key players that make up Ross's microenvironment:

Macro environment
The macro environment consists of the larger societal forces that affect the microenvironment - demographics, economic, natural, technological, political and cultural forces. Some examples of the forces that Ross faces in the macroenvironment are:

Marketing Information System
In order to produce superior value and satisfaction for customers, companies need information at almost very turn. Good products and marketing program begin with a thorough understanding of consumer needs and wants. Companies also need an abundance of information on competitors, resellers, and other actors and forces in the market place.
Marketers are viewing information not just as an input for making better decisions but also as an important strategic asset and marketing tool. Note that today's marketing company information may prove to be its chief competitive advantage.

A marketing info system (MIS) consist of people, equipment, and procedure to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. Furthermore in today's business environment many businesses are striving to increase the use of electronic commerce (EC) to streamline business processes and improve efficiencies. Today electronic commerce plays an important role in business strategies, enabling computers to exchange data electronically which is much cheaper, faster and more accurate than the paper based system.

Ross uses EASYEC, a valuable software tool which provides a quick, efficient, paperless interface for processing purchase orders, receiving invoices, making payments and conducting other business tasks (Financials statements, etc.) electronically.

Maslow's Hierarchy of Needs
A.H. Maslow developed a theory that characterized needs and arranged them in a hierarchy to reflect their importance. Maslow identified five labels of needs, beginning with physiological needs and progressing to the need for self-actualization. A person must at least partially satisfy lower-level needs, according to his theory, before higher needs can affect behavior.

Maslow's Hierarchy of Needs
Ensure supplements can primarily fall into physiological need category due to the fact that ensure can satisfy a basic physiological; need - hunger. But it can also be classified under safety needs protection/prevention from malnutrition. Furthermore drinking Ensure can also boost self-esteem, one can easily perceive that drinking Ensure is a complete balanced nutrition to help stay healthy, active and energetic.

Types of Buying Decision Behavior:
Involvement in Purchase
High Low

Ensure supplements can be classified into complex buying behavior and variety seeking behavior. Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant difference among brands. Consumers may be highly involved when the product is expensive, risky, purchased infrequently and highly self-expressive. Typically, the consumer has much to learn about the product. Thus, the buyer will pass through a learning process, first developing beliefs about Ensure, then attitude and then making a thoughtful purchase choice. Consumer will buy Ensure supplements when they are convinced that they need this added nutrition to boost their nutritional status and self-image.

When the consumer is fully trained and convinced then they will seek variety. They might want to explore new flavors and different formulation (e.g. Ensure Plus HN). Ross marketers make sure that they provide the retail shelves with a wide range of flavors to satisfy the consumer taste craving. Regular advertisement is also done to keep consumer's demand high.

Adoption Process
The mental process that an individual passes through, from first learning of a product to using a product on a regular basis, is known as the adoption process. Ensure has been around for years, so many consumers in the target market have already moved through the stages of awareness, interest, Evaluation, Trial, and ended up at adoption level, which is where Ross wants them.

Market Coverage
Firms that promote numerous products with different marketing mixes designed to satisfy smaller segments are said to practice differentiated marketing. By providing increased satisfaction for each of many target markets, a company can produce more sales by following a differentiated marketing strategy than undifferentiated marketing would generate. Ross uses a differentiated marketing, meaning that Ross does not just make one type of Ensure but offers different types of Ensure, "we make a whole family of Ensure products to meet your individual nutritional needs." ( For an example individuals who do not consume enough fiber in their diet can take Ensure with Fiber, and individuals with increased protein needs can drink Ensure Plus, etc. They also have a wide variety range of flavors to choose from, vanilla, strawberry, chocolate, cherry, etc. While this coverage strategy bring in more sales than making just vanilla Ensure. The advertising, product and marketing cost are usually high but must be kept under good control.

Product Positioning
Having chosen a strategy for reaching their firm's target market, marketers must decide how best to position the product. The concept of positioning seeks to place a product in a certain "position" in the minds of prospective buyers. Marketers use a positioning strategy to distinguish their firms good or service from those of competitors and to create promotion that communicates the desired position. Following is an illustration of their product positioning in the market taken from their web site. "Ensure: complete, Balanced Nutrition, for a convenient way to add protein, vitamins, minerals and calories to your diet, try Ensure! Ensure provides complete, balanced nutrition to help stay healthy, active or energetic. Uses as a snack or with meals, an 8-fl-oz serving of regular Ensure is a source of good nutrition that's available in a variety of delicious flavors. We make a whole family of Ensure products to meet your individual nutritional needs, so talk with your doctor to decide which Ensure is right for you."

One can easily see that Ross uses a positive approach to advertise their products emphasizing in quality rather than making negative remarks about their competitors.

The Three Levels of Products
Product planner needs to think about products and service on three levels. The most basic level is the core product, which states the question what is the consumer really buying? In this case, the consumer is taking Ensure supplements. The next level is the actual product, actual Ensure supplement packaging. The last level augmented gives consumer addition services, benefits, etc. Ross has a 1-800 customer service line, money-back guarantee if not satisfied. In addition; they also have a web site to explore the family of supplements and can also determine consumer their nutritional status.

Product Classification
Ensure supplements can be classified as a non-durable good, since the supplements are used in a relatively short time, and are not considered a major purchase. It can also be a consumer product, since that they are intended for sale and consumption. Ensure family products are further broken down into goods known as shopping goods, meaning that Ensure supplements are usually less frequently purchased, the consumer may compare nutritional value with their individual nutritional needs for suitability. Ensure supplements are usually expensive when compared with other comparable supplements for an example, daily vitamin/mineral supplements, soymilk, instant breakfast mixes, and several generic equivalent brands.

Product Life Cycle
Products, like people pass through stages as they age. Humans progress from infancy to childhood to retirement to death. Successful products progress through four basic stages: introduction, growth, maturity and decline. It is important to point out that the product life cycle concept applies to products or product categories within an industry not to individual brands.

Ensure supplements are in the maturity stage because profits have leveled; heavy advertisement is done to differentiate Ensure from competitors brands such as Sustcal, Resource, etc. Brand competition also intensifies, Ross differentiate their Ensure supplements by focusing on its attributes, such as quality taste and service.

Price Elasticity
Elasticity measures the responsiveness of purchasers and suppliers to price change. Elasticity of demanded is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price. Ross has a price-demand relationship that is inelastic in nature for Ensure supplements. People really donТt need Ensure supplements; they can easily find other food substitute to get proper nutrition. Nonetheless, the demand for Ensure remains very inelastic because people spend so little time on them that they hardly notice a price change.

Market Type
Ross market leadership position is characterized by monopolistic competition. There are many buyers and sellers in the nutritional supplement market because the competitive price can vary as sellers differentiate their products.

Distribution Channel
Ross use intermediaries to bring their products to the market. They try to forge a distribution channel - a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Ross has a three-channeled levels involved in getting their products to the consumer: A manufacture ring plant, a wholesaler and a retailer. Ross sells to wholesaler, who maintains a close working relationship with retailers. Ross basically has their Ensure supplements in nearly every retailer business that carries food or convenience items. Therefore, they are practicing - intensive distribution. This is a good choice, since consumer will not travel to a certain retailer to just to buy Ensure.

Ross Channel type also can be categorized under Vertical Marketing System (VMS) - a distribution channel structure in which producers, wholesaler and retailer act as an unfired system. One channel member owns the others and has a contract with them, or has so much power that they all cooperate. Since Ross is the market leader in the nutritional supplement industry, they command a high level of cooperation from the wholesaler and retailers without contracts or ownership from those channels. Ross also controls promotions, shelf space and other retailing functions that smaller manufacturer would never control.

Retail Outlets
Different products require different amounts of service and customer service preferences vary. Retailers may offer one of these levels of service, self-service, limited service and full-service. Self-service retailer serves customers who are willing to perform their own "locate-compare-select" process to save money. Note: self-service is the bases of all discount operations and is typically used by sellers of convenience goods and nationally branded fast moving shopping goods. Ross basically uses self-service to sell Ensure.

Promotion Mix
Ross's marketing communication strategy, or promotion max can be comprised of advertising, personal selling, sales promotion, public relations or any combination there of. Ross gives high percentage (approximately 50%) to broadcast and print advertising. The heavily advertise in medical journals and health related magazines by giving scientific rationale for taking Ensure supplements.

They are also heavily involved with scientific community. Therefore they promote ensure supplements via public relation (approximately 30-40%). For an example, Ross center gives professional continuing education by offering on-site and self-study continuing education (CE programs). To make CE hours more convenient for health care professional, one can easy go online and access "continuing education" link.

Ross uses an objective and task method to determine the amount of promotional spending for each of its product lines. This is the method most commonly used to set the total promotion budget. Objective and task stresses the definition of specific promotional objectives, the task required to meet those objectives and the costs of performing these tasks.

Competitor Marketing Strategy
To plan effective competitive marketing strategies, the company needs to find out all it can about its competitors. It must constantly compare its products, prices, channel and promotion with those of close competitors. In this way the company can find areas of potential competitive advantage and disadvantage. Ross is a member within a strategic group in the nutritional supplement industry. Competitor such as Mead-Johnson, Clintec, and Sherwood-Medical are all trying to position themselves as superior nutritional supplement companies. Ross must learn its competitor's customer service, pricing, nutritional formulation and advertising strategies to try to find their weaknesses and strength. At this point Ross does not have a system to identify and take advantage of these strengths and weakness of its competitors. However they do have one of the most efficient Quality Assurance System in place to be more superior to their competitors. Following is example from their Web Site:

"At Ross product Division of Abbott Laboratories, We use state-of-the-art technologies and quality system to create nutritional products and services that meet the nutritional needs of our customers. Quality - to meet or exceed customer needs-is a key goal throughout the product development process of our nutritional formulas. Its is our pledge to our customers that the products they purchase will consistently meet or exceeds their expectations.

Ross has always adopted a proactive approach toward quality and the development of nutritional formulas. Quality is not feature simply added on during the course of development of a product. Instead, quality is the result of a series of sophisticated activities that have been built into the product development process, which include product planning, product manufacturing and product improvement"

One can see Ross's empasize on quality; this can be viewed as their competitive marketing strategies.

Attack Strategies
Ross's can be viewed as "well-behaved" competitor in the world of nutrition supplements. "Well-behaved" competitors play by the rules of the industry and shape an industry that consists of only "well-behaved" competitors. Ross believes in quality and innovation in nutrition and health for adults, this can be viewed as "well-behaved" attack strategy. Following can be viewed as their attack strategy, taken from their web site:

"Antioxidants may help reduce the level of free radicals in our body that scientists believe may involved in the development of heart disease, arthritis, cataracts and other disorders. Some medical nutritional products have been reformulated to include added levels of antioxidants. Prebiotic are nondigestable food ingredients that selectively promote growth and/or activity of good bacteria already present in the colon. Fructooligosaccharides (FOS) are an example of prebiotics that are now being added to foods to help maintain digestive tract health. FOS has been shown to promote the growth of beneficial bacteria in the digestive tract. FOS does not support the in vitro growth of certain pathogenic bacteria. Ensure Fiber with FOS are Ross Medical nutritional product that contain FOS"

Competitive Position and Strengths
Ross concentrates on the word QUALITY to differentiate their Ensure product line and marketing program to distinguish itself as the market leader in the nutritional industry. Following is an example of one of their strengths for product manufacturing/Quality testing taken from their Quality Assurance web site:

"To assure the quality of nutritional formulas - such as Ensure - careful monitoring of product quality characteristic and key manufacturing process occurs at various stages of production. For example, before manufacturing each batch of nutritional formula, the quality of the raw materials is confirmed by laboratory testing. After manufacturing of each batch is complete, the formula is thoroughly tested to assure that quality parameters, such as nutrient levels are within stringent specifications."

"Our employees are a key part of the production of our nutritional formulas. Quality through people is our motto. To manufacture each product. Ross employees accept personal responsibilities for quality and take personal pride in the meticulous execution of manufacturing procedure and manufacturing monitoring plans to produce nutritional products".

Some of the main marketing topics covered in this dissertation included: Marketing management philosophies, strategic business units, business portfolio analysis, marketing environment, marketing information systems, consumer behavior, buying discoing behavior, market coverage strategies, product positioning, product life cycles, distribution channeled, promotion mixes, competitor analysis and competitive position strategies. By carefully analyzing each concepts listed above I gained wealth of knowledge and understanding and a renewed respect in the field of marketing.

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