Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Developing Innovative
Marketing Plans
Text © The McGraw−Hill
Companies, 2002611When marketing managers fully understand their target markets, they may be
able to develop marketing mixes that are superior to competitors’ mixes. Such
understanding may provide breakthrough opportunities. Taking advantage of these
opportunities can lead to large sales and profitable growth. This is why we stress the
importance of looking for breakthrough opportunities rather than just trying to
imitate competitors’ offerings.
Loctite Corporation, a producer of industrial supplies, used careful strategy
planning to launch Quick Metal—a puttylike adhesive for repairing worn
machine parts. Loctite chemists had developed similar products in the past. But
managers paid little attention to developing a complete marketing strategy—and
sales had been poor.
Before creating Quick Metal, Loctite identified some attractive target customers.
Research showed that production people were eager to try any product that helped
get broken machines back into production. Quick Metal was developed to meet the
needs of this target market. Ads appealed to such needs with copy promising that
Quick Metal “keeps machinery running until the new parts arrive.” Channel mem-
bers also received attention. During the introduction stage, sales reps made frequent
phone calls and sales visits to the nearly 700 wholesalers who handle Loctite prod-
ucts. Loctite awarded cash prizes to those selling the most Quick Metal.
A tube of Quick Metal was priced at $17.75—about twice the price (and profit
margin) of competing products. But Loctite’s customers weren’t concerned about
price. They responded to a quality product that could keep their production lines
operating.
Based on past experience, some industry experts estimated that a typical product
for this market might reach sales of $300,000 a year. But Loctite didn’t rely on a
typical strategy. Instead the company offered a carefully targeted marketing mix to
meet the needs of a specifictarget market. It sold 100,000 tubes the first week—and
within seven months sales exceeded $2.2 million. Loctite’s careful planning paid off
in an immediate market success and high profits.^3Superior mixes may
be breakthrough
opportunities611 Chapter 20
Local Drugstore Delivers a Lifeline to Remote CustomersStadtlanders Pharmacy was founded in 1930. Until
the early 1990s, it was a typical old-fashioned drug-
store with a soda fountain. But competition got tough.
The growth of giant retail drug chains, like Walgreens
and CVS, was eating into profits. Adding nondrug
products didn’t help much because of competition
from mass-merchandisers like Wal-Mart and Kmart.
So Stadtlanders developed a new strategy. By focus-
ing on the needs of a specific target market and
doing what was nottypical for a drugstore, Stadt-
landers became a huge success. Within a decade it
became a $400 million mail-order drug company dis-
tributing 4,000 different drugs. By the time the big
drug chains realized what it had done, it was tough
for them to compete. In fact, the top management at
CVS recently decided it would be cheaper to buy
Stadtlanders and turn it into a division of CVS rather
than to try to do the same thing from scratch.
Stadtlanders started down the path to a new strat-
egy in a not-so-unusual way—providing a little extra
customer service. A kidney-transplant patient needed
some hard-to-get medicine used to prevent organrejection. Stadtlanders found a source of the
expensive new drug and then extended credit to the
customer while she waited for her insurance company
to pay. As word spread, other customers and insurers
contacted the firm for help. Seeing the opportunity,
Stadtlanders created a new strategy to serve this tar-
get market. Many of its patients suffer from long-term
problems, including AIDS and diabetes, that are
extremely expensive to treat.
Stadtlanders was one of the early firms to use
mail-order to reach a larger market and squeeze
costs out of the traditional health care channels. It
added conveniences like toll-free lines with pharma-
cists available 24/7 to answer questions, and its
computerized medication profiles on each home-
delivery customer helped in providing guidance. It
also added special services, like consulting on com-
plicated insurance reimbursements. By the time
Stadtlanders was purchased by CVS, it was shipping
medicine and nutrition information to more than
70,000 patients a year and filling more than a million
prescriptions.^2