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When New Products And Customer Loyalty Collide Case Solution
The first strategy model available, in this case, is the Ansoff matrix for gaining market share dominated by other companies in the industry. The main aim of the strategy change was to increase the market share and expand the competitive advantage to the walking shoes. The model is presented in the form of a matrix in which the company has implemented a strategy of new product development in new markets. The reason is that the target audience for the new walking shoes is not athletes and serious runners. The new market is those who walk in comfortable shoes. The new products are the varieties that are being introduced in the market. This matrix has two approaches, one is increasing loyalty among existing customers, and the second is increase sales among other customers. However, these two approaches require different marketing methods and do not cover the context of brand management that is the case similar to the situation presented in the case study (Pringle & Field, 2008).
Following questions are answered in this case study solution
What are the strategic errors committed?
What are top four marketing objectives for Pacer?
What are two strategy models applicable for this case?
Case Analysis for When New Products And Customer Loyalty Collide
1. What are the strategic errors committed?
The case gives an impression that the follower strategy for Pacer was not working out. It had diluted the brand image and confused the customers that had opted for Pacer because of its runner shoes. However, the company did not do wrong in following the path of the larger competitors. The reason is that the company had to diversify and include other products in its portfolio to improve the position of the company in the market that had become so competitive. However, the error, in this case, was the implementation of these strategies. Firstly, the company should have started with market research in order to gain an insight of the market needs and the customer requirements and wants. This is because the company was making major strategic changes in its offerings, and it should have been backed by consumer research to offer products that cater to the needs of the customers. Also, since the company has a customer base of serious runners and athletes, the improvement in the existing product could be a strategy for improvement of the market position of the company. The regular customers of the company were not approached, and the change in strategy caused them to perceive the company and the brand not being sure of its position in the mindset of the existing audience.
Also, one other error was the expansion to several categories from a small number of five categories meant that the company required changes that were not made. A small company compared to the large competitors in the shoe category, such as Pacer, cannot handle a large amount of variants in its product portfolio. The reason is that the greater the variants, the greater the inventory costs. Additionally, these variants were not produced based on strong marketing research that was a gamble for the company, and could result in all investments going to waste. Also, the large number of variants were confusing the existing customers as well as other buyers in the market. The high level of variants might cause a dilution of the brand, and the essence of the company that has previously targeted serious runners and athletes.
The company was planning to launch the new shoes under the same brand name with which customers had previously associated running with. This strategy error might have decreased the credibility and the perception about the already existent high-quality shoes.
2. What are top four marketing objectives for Pacer?
The first marketing objective for Pacer is to retain its loyal customer base. Pacer has been known for its shoes for serious runners and athletes. The company should have an objective of overcoming the customer complaints and include their feedback in the formation of a new product or the same product with an improved version. The feedback from the current customers will help the designing team in assessing the requirements of the target audience and cater to their concerns regarding the product.
Secondly, customer demand should be assessed. The assessment of the customer demand will allow the company to develop its products in accordance with the customers’ needs and wants. The consumer behavior is changing with the changing times and trends. This change in trend should be included in the product that has not been changed significantly in the past several years. The company had been producing inly five designs for the past several years, and no significant change had been incorporated in the product. The objective was to assess the change in demands to make the company cope up with the changes. Also, this assessment could help the company develop new products according to the changing needs of the customers.
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