1) Due to inexpensive labor in Russia, the automated packaging process will increase the cost of product.

2) Since it is a mean of marketing, we should identify where it is reasonable to use it. It will require efforts of the economists and accountants of the corporation. I have to collect the necessary marketing information to make them able to answer the question: . “will offering an automatically packed product create enough incremental preference and profit to justify its cost against the other possible investments that could be made?”. This information must also be helpful for the further analysis and design of necessary marketing mixes.

3) The necessary information is information about the situation in the market, about people's attitude towards automatically and manually packed pastas.

To do this I need to:

(I) Formulate the research objectives sharply.

(II) Analyze the history of the market of pastas of Saint Petersburg and its present state.

(III) Segment the market of pastas and develop profiles of resulting segments.

(IV) Evaluate the attractiveness of each segment.

(V) Evaluate preferences of the buyers and their attitude towards such factors as price, quality of the core product, quality of packaging, etc.

(VI) Having known the preferences and attitude towards packaging, quality and price, identify conditions upon which an automatically packed product will not fail.

(VII) Identify the necessary positioning concept for automatically packed pastas that will be offered to different segments.

1) Evaluate attractiveness of each segment.

a) What kind of people would be the most likely to purchase pastas in high quality packaging?

b) Which segment do the most heavy users belong to?

2) Define the preferred form of pastas (corns, shells, etc.).

3) Define the most important factors which influence the consumer's subjective probability Subjective probability- a term from microeconomics which denotes the probability which is subjectively estimated by a person while making a choice decision. concerning the quality of the product.

a) Does the consumer usually estimate the quality by appearance of the product?

b) Is there a stereotype that a quality product can be packed only in a high quality package?

c) Is there a stereotype that imported pastas are better than the domestic ones? How strong is it?

4) Define the importance of quality packaging for the buyer.

a) Does the quality of packaging correlate with the quality of the product in consumer's mind?

b) What must be the quality of the product which is automatically packed?

c) How much will a buyer desire to pay for packaging?

d) What are the main factors which make packaging important (estimated quality of the product, precise weight, other)?

5) Define the desired characteristics of the package.

a) Which size of the package will be the most popular? Shall we offer packages of different size?

b) What should be the packaging be made of and what shape should it have(plastic or polyethylene packet, cardboard box)?

6) Define the loyalty status of the consumers.

7) Define the “patriot” status of the consumers.

a) Do they feel unsatisfied that most of the high quality pastas are imported?

b) Does the fact that Russia substitutes natural gas and oil for “colonial” goods?

As can be seen from the goals and objectives, the research combines the features of both exploratory and casual research.

1) has lack of information about the market in general;

2) needs some specific information ;

3) does not want to spend money on purchasing the available secondary or primary data;

4) thinks that the secondary data available can be outdated due to the last crisis; primary data must be collected.

The most reasonable research approach in this situation is a survey research. It will allow to gather more information in less time, and some information needed can be acquired only directly from the purchaser's answer. As a consequence, a questionnaire should be used as a research instrument.

I have two basic sources of information:

The buyers of pastas.

The salesmen who sell pastas .

Of course it is much easier to talk to salesmen than to the buyers, since the seller knows his market and he can give you a complete idea about what the situation in the market is like. But for this ease we have to pay:

This information can be not so accurate because the salesman though can give you information about how much of this or that good had been sold, probably will have difficulties with determining such things as percentage of buyers of different age, sex, etc. Here a problem of selective remembering may arise.

There are questions which can be answered only by the buyer himself and about which the salesman can have no idea at all. It regards to, for example, such things as the expected reaction for a price change, attitude towards packaging and the “reasonable” price of it in the consumer's eyes.

As may be seen, this source of information could not satisfy our needs, but I decided not to neglect it for that reason but leave for the purposes of control. It is reasonable to expect that the results from the both sources must correlate.

The consumer survey was made by me and two other employees of the LBS Corporation between the 5th and the 10th of November at outdoors markets of Primorsky district of Saint-Peteersbug. About seventy customers were asked. The results of the survey are shown and discussed below in the appropriate section.

In addition to this, high quality pastas can be made only of high quality durum wheat flour. And of course, there was a deficit of this kind of wheat in the USSR.

The consequence of all these plus bad management was the poor quality of the pastas manufactured in the USSR.

When later the market was open for foreign manufacturers of pastas the native ones were pushed out of the market since they were non-competitive.

For several years the market of pastas was saturated with imported products. Only in the last few years the situation began to improve for native manufacturers. This was because the difference in prices between them and the foreign manufacturers they could achieve became more significant and the quality of Russian pastas improved. The industry began to develop.

1. The customer has bought pastas:

Ё Automatically manually packed

Ё Sort: Corns Shells Spirals Spaghetti Vermicelli

Ё Quality: high midle low

Ё Domestic Imported

Ё Trade mark: (for automatically packed)
Nordic Big other_______ unknown

Ё Weight: 300g 500g 1000g

Ё Price: __________________

Ё Quantity: 1 2 3 more

2. The customer is making or has already made another purchases
YES NO

3. The customer's sex: M F

4. The customer's age: 10-18, 18-25, 25-35, 35-45, 45-55, 55-65, 65-

5. The customer's dress is:
poor average rich

_________________________________________________________

The questions to be asked (skip the question if the answer is obvious, just mark the right answer):

1. Have you bought pastas manually or automatically packed?
Manually Automatically

2. (skip the questions 2 and 3 if the pasta bought is manually packed) What is the trademark of the pasta you have just bought?

3. You prefer to purchase pasta

Ё of this trademark

Ё of this and some others trademarks (if yes, what are they)

Ё the trademark does not mean

4. What is the sort of the pasta you have bought?
Corns Shells Spirals Spaghetti Vermicelli

5. What is the size of the package?
300g 500g 1000g

6. What is the optimal size of the package?
300g 500g 1000g other ____________

7. What is the price of the package? __________________

8. What is the form of the pastas you have bought?
Shells corns spirals vermicelli
other_________________________

9. Why have you chosen exactly this pasta?
Price Quality Familiar trademark Other __________________

10. How often do you buy pastas?
____ times a week once a _____weeks once a _____ months

11. How many people will eat the pasta you have bough? _______

12. Did you use to buy more or less pastas before crisis? MORE LESS

13. You have planned to buy pastas in advance? YES NO

14. You have made your decision about which particular pasta ( brandname, sort) you will buy in advance? YES NO

15. Imported Of course, this may sound awkwardly, but I think we can use this category in Russian conditions due to specific traditions, stereotypes and differences in technology. pastas are better than the domestic ones. Yes No

16. How much would you pay to have a 500g package of imported pastas instead of Russian? ___________________

17. Automatically packed pastas are better than manually packed ones:
always
often, but sometimes manually packed pastas are not worth
manually packed pastas are as good as automatically packed

18. How much should a 500g package of good-looking automatically packed pasta of an unknown domestic brand cost to make you switch to it? _____________

19. What is the biggest disadvantage of manually packed pastas?
Poor quality Unknown manufacturer No guarantee on weight
Other ___________________________________________________

20. When you buy imported goods do you have a feeling that it is bad that we have to substitute natural gas for foods, cloths, etc.
Usually Sometimes Seldom Never

21. What are you?

22. Have the reforms performed in Russia been in your favor?

23. Do you prefer to buy clothes and footwear in the shop or in the market?

24. What are the members of your family?

25. What is your personal income?

26. What is the income per head in your family?

27. How old are you?

1. We revealed a negative correlation between income per head and consumption of pastas. The biggest partSince people were not always willing or able to answer some questions, the total of the percentages of respondents answered in different manner this or that question is often below 100%. of buyers were representatives of the lower class or the lower middles (31% and 33% respectively). 27% were higher middles, and 16% belonged to the high class. Since only pasta buyers were asked, the average consumption of pasta is lower than our research show, but nevertheless we can get an idea of structure of consumption of pastas. According to our calculations, the consumption of pastas per head is:

Ё Lower class- 0.6 kg/month

Ё Lower middles - 0.55 kg/month

Ё Higher middles - 0.32 kg/month

Ё High class - 0.13 kg/month

2. Only 12% of the respondents claimed they consume more than 1.3 kg of pastas a month per head. We can treat the lower class and the lower middles as the heavy half and the higher middles and the high class as the light half.

3. 36 % of respondents claimed they prefer corns to other pastas, 22%like spirals, 26% like shells, 7% prefer vermicelli, and 2% usually buy spaghetti.

4. 46% of buyers claimed the price to be the most important factor which influenced their purchase decision, for 37% of consumers the quality is the priority. 5% think they should buy only automatically packed pastas, and 3% claimed some specific features as taste (we should assume that good taste is a part of quality and that is why this group is small). There were also 4% of loyals who are driven by a familiar brand name while making their decision.

5. Usually people plan to purchase pastas in advance (87%). In spite of this, the decision about the particular sort and brand name (if there is any) is usually impulse (63%).

6. The crisis dramatically affected the market of pastas. We talked to the salesmen of pastas to shed light on this question. All of the salesmen we talked to said that before the crisis people preferred imported pastas to domestic ones. Now domestic pastas of low quality (37%) and middle quality (45%) are bought (according to our survey, not to salesmen). We expected changes to happen, but we did not expect them to be so huge, though LBS Corporation's manufacture of pastas very notably increased since before August, 17th.

7. The most desirable size of package is 1kg (57%), then goes a 500g package (38%).

8. People almost do not purchase domestic automatically packed pastas. Their price is almost equal to the price of imported pastas.

9. 72% of respondents said that they would prefer automatically packed pasta to manually packed one. 35% would do it because they are afraid of being given light weight, 19% do not like unawareness about the manufacturer, and 11% think the quality is poor.
In spite of this, people are not willing to pay much for packaging, though 82% of them agree that they would prefer automatically packed pasta to manually packed one. Only 9% were willing to pay more than 1 ruble for a 500g package, 24 % would pay from 0.6 to 1 ruble for a 500g package, 28% would pay about 0.5 ruble, and 10% would pay nothing at all (some even said they would prefer manually packed pastas because they can use the packaging).

10. People would not like to buy pastas in cardboard or other non-glassy packaging. Actually all of the respondents said they need to look at the product to estimate its quality.

11. Though people agree that imported pastas tend to be better than the domestic ones, most of them (67%) would not like to pay more than 25% more for imported pastas.

12. People do not worry a lot about the brand name. There are no hard-core loyals. There are a few split loyals (11%). They are among the people who still prefer imported pastas. The most popular brands are: Nordic (27% of imported pastas purchased were of this brand), Big (21 %). Non of the respondents was a loyal of any domestic trademarks.

13. Actually all people said that it is bad that Russia substitutes natural resources for industrial goods, but only 4% said they often think about it when they make their purchase decision, 7% said they sometimes do, 5% seldom think of this.

14. Since it was difficult for the respondents to answer weather they used to consume more or less pastas before the crisis (more than 50% could not answer at all or hesitated), we used the salesmen as our reserve source of information. According to them, the overall consumption of pastas decreased by approximately 15%, and consumption of imported pastas has just slummed- by more than 50%.

2. The lower middles and the lower class are the most attractive segments from the point of value. The lowers will more likely need low and middle quality pastas. Taking into account the role of price in purchase decision, we should assume that this segment will hardly react the traditional marketing measures. The other segments high class will probably require more elaborated marketing mixes, since quality plays the most important role there. Quality is estimated subjectively, and we can affect subjective probability using the means of marketing.
The lower middles and higher middles will probably prefer middle quality pastas. the biggest difference between them is in the price they are ready to pay for quality. A company can acquire competitive advantages using automated process of packaging. The main difficulty it is likely to face here - the increase in price must be low enough. It also should be careful and remember about positioning: even if it is able to automatically pack at a low cost and provide the necessary low price, its products than will be positioned as middle quality ones due to the low price. It may harm its reputation and its marketing in the higher middles and high class segments.
The high class segment is relatively small and less attractive because its representatives are less likely to buy pastas in general and when they buy, they are more likely to buy imported pastas.
Actually we can join the higher and the lower middles in one market segment since there are no differences in their preferences which are of principle. Both of them will require pastas positioned as middle ones. Though quality is the most important factor for the representatives of those segments, the price is also of the great importance, and the main difference between the representatives of these segments is the price they are ready to pay for quality (or for the quality packaging).

3. The crisis seriously affected the market of pastas. The domestic manufacturers now have a lucky chance to grab the market share that earlier belonged to foreign manufacturers. They can gain brand recognition and loyalty.

4. The main task, in my opinion, for a pasta manufacturing company in Russia now is gaining brand recognition and good attitude of consumers (of course, if it thinks of its long-term perspectives). People have to give up consumption of imported pastas. This gives a great opportunity to get people used to consume domestic pastas. Since quality of many domestic pastas is actually as high as of the imported ones, the stereotype which has formed in the time of the USSR and which has been providing a negative attitude towards domestic goods will slack.

I The company can provide low increase in costs resulting from the automation. In this case the corresponding increase in price will be also low. This will make orientation towards the heavy half (lowers and lower middles, and partly even the higher middles) possible. We can estimate that it will not be possible to provide high quality of packaging in this case.
The company will position its product somewhere between automatically packed (or high quality) and manually packed (or middle quality) pastas. This may cause a positive reaction of up to 72 % of buyers depending on the price increase.

II The other alternative is to use packaging of higher quality at higher costs. The limit here is about a one ruble rice increase per 500g package. It is also possible to make 1000g packages, this will decrease cost of packaging. The most important thing resulting from the research we should remember about is: class pricing will hardly do. We have not made a special research, but we have the reasons to think that most of domestic manufacturers of automatically packed pastas position their products too high and face significant problems. . Providing a high quality packaging and a comparatively low price (if it is possible) will position the product as an inexpensive and quality one. This should cause a positive reaction of about 20%, we may estimate (of course, this figure will depend upon marketing efforts made). This decision will mean orientation towards the higher middles and the higher class.
Though this option will probably be less attractive than the first one, it is more attractive in prospect, since it will increase competitiveness of the company, improve its reputation and help gain loyalty.

III The best alternative, in my opinion, is to combine the features of the first two. It is possible if the company can vary costs of packaging. This actually will mean full covering of the market.

We see, that alternative decisions depend on the costs of packaging, so the market coverage does. We have a strict limit here- we cannot afford using packaging which will cause a price increase more than 1 ruble per 500g package. This means we will have to think of production first, and only after that continue thinking about marketing (do not mix it with actually manufacturing first and than thinking about marketing). It is a specific feature of our country- everything is made vice versa.

The decision of the management of the Corporation based on this research and on the economists' opinion was to seek means to decrease costs of packaging and make the third option possible to be performed. One of the possible decisions is sharing a packaging line with another foods (not pastas) manufacturing company. When the company has several alternative possible solutions of this problem, elaborated marketing mixes will be developed for the segments that will be selected as the target ones.