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Maytag's Marketing Strategy Plan

Essay by   •  February 21, 2011  •  Research Paper  •  3,599 Words (15 Pages)  •  4,674 Views

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Maytag's Marketing Strategy Plan

If asked what you know about Maytag's marketing program, the first thing to come to mind would probably be its "lonely repairman" ad campaigns. For 35 years, those ads have helped position Maytag as a reliable brand for major appliances. Gordon Jump, an actor who really was a former Maytag repairman, played the lonely repairman role in ads for 14 years. In 2004, another veteran character actor, Hardy Rawls, took on that job. Although Maytag's basic positioning has been consistent over many years, marketing managers at Maytag are constantly developing new marketing strategies. So let's take a closer look at what they did in one innovative strategy-planning process that resulted in profitable growth for Maytage by offering target customers superior value (www.maytag.com).

In 1907, Maytag introduced its first washing machine. Called the Pastime, the washer was made of water-resistant wood (boy, how times have changed). And by 1919 the company manufactured the first power washer. By 1924, one out of every five American washers purchase by consumers was a Maytag! And by 1967, the Maytag Lonely Repairman campaign was born. Ol' Lonely became both an advertising legend and an American icon in a way. Maytag was the first appliance manufacturer to be accepted as a partner and to factory label their appliances with the U.S. Department of Energy (DOE) and U.S. Environmental Protection Agency (EPA) ENERGY STAR logo.

The job of planning strategies to guide a whole company is called strategic (management) planning - the managerial process of developing and maintaining a match between an organization's resources and its market opportunities (Crego, page 116). This is a top-management job. It includes planning not only for marketing, but also for production, finance, human resources, and other areas. On the other hand, company plans should be market-oriented. And the marketing plan often sets the tone and direction for the whole company. So strategy planning and marketing strategy planning could mean the same thing. In practice, there is a logical process that marketing follows. The marketing planning process consists of analyzing marketing opportunities, selecting target markets, designing marketing strategies, developing marketing programs, and managing the marketing effort (Kotler, page 27).

Changes in the external environment called for a new strategy. The U.S. Department of Energy (DOE) was considering new regulations to requre that clothes washers use less water and energy. The U.S. uses three times as much water a day - 1,300 gallons per person - as the average European country. One reason is that front-loading clothes washers have long been standard in Europe. This is in part an economic issue. Front-loaders heat less water so less energy is used, and Europeans face steeper energy costs. There is also a cultural difference. North Americans are more convenience-oriented, but front-loaders make you stoop, they spill water on the floor, and you can't throw in a stray sock during the wash cycle (Maritz, 2006).

Marketing managers often commission formal marketing studies of specific problems and opportunities. Tools available include a market survey, product-preference test, sales forecast by region, and advertising evaluation. It is the job of the marketing researcher to produce insight into the customer's attitudes and buying behavior (Kotler, page 102). "Primary data can be collected in five main ways: through observation, focus groups, surveys, behavioral data, and experiments (Kotler, page 105)." Maytag's R&D people thought that they could use technology to improve the design of a front-loading washer to make it more convenient and to conserve water and energy as well. With inputs from marketers about broader needs in the clothes care product market they looked at needs beyond just cleaning. It appeared that a consumer-oriented design could improve basic benefits like easier loading and gentler care of fabrics.

Competitors were also on the move. Frigidaire came out with a front-load unit just in time to be the only one tested for a Consumer Reports article. It tested well on cleaning, but Maytag thought it fell short in improving other customer benefits. GE was further behind in working on a front-loaders. But these were strong competitors, so if Maytag didn't move quickly they wouldn't get a lead.

Maytag formed a cross-functional new product development team to quickly focus the effort. It screened various product ideas and strategies on criteria such as potential for superior customer value, initial costs, long-term growth, social responsibility, and profitability. Using nearly 40 pieces of consumer research, the team refined what the strategy might be and what it would cost. Marketers today have better marketing metrics for measuring the performance of marketing plans. They can use four tools to check on plan performance: sales analysis, market share analysis, marketing expense-to-sales analyss, and financial analysis. Sales analysis consists of measuring and evaluating actual sales in relation to goals. Market share can be measured in three ways. Overal market share is the company's sales expressed as a percentage of total market sales. Served market share is its sales expressed as a percentage of the total sales to its served market. Its served market is all the buyers who are able and willing to buy its product. And relative market share can be expressed as market share in relation to its largest competitor. Annual plan control requires making sure that the company is not overspending to achieve its sales goals. And the expense-to-sales ratios should be analyzed in an overall financial framework to determine how and where the company is making its money (Kotler, page 119). S.W.O.T. analysis showed that Maytag's advantages included a strong dealer network, the technical skills to develop the product, and the financial resources to do it. Major threats were mainly related to competitors' effort and consumers' prior attitudes about front-loading machines. Addressing those threats would take informing and real persuading (Perreault, page 82).

Market segmentation helped to narrow down to a target market. Various segments could be identified. For example, there was a homogeneous business market. It consisted of owners of coin-operated laundries who were mainly interested in operating costs and attracting customers. Consumer segments were more varied. Relevant needs focused on cleaning, removing stains, caring for fabrics, and saving water or energy. Some people just wanted less hassle on wash days and a care-free washer. Maytag decided not to target just the segment that conserved energy; that was not a qualifying dimension. Instead they

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