Complaints are another source of internal secondary data that can be used to improve the restaurant. Moto could look at all the complaints received and see if there is a common pattern with the area complained about. It may be that Moto have had quiet a few complaints about the standard of the restaurant floor. This would mean that management would have to look at this problem and see how they can improve it. Also Moto can look at their budgets and costing figures to see if they have spent more than they have budgeted for. If Moto find that they have over spent on wages for the year then they can use these figures to try and amend this next year.
External Secondary Data
These can include Websites of their competitors, Mintel, Public Records and National/International Governments. All these help the company in someway so that the productivity increases whilst being cost effective to increase sales.
The Websites of their competitors can act as a benchmark to perhaps what they want to achieve. If Motos competitors have a website that is easy to use and has all the relevant information then Moto would want to take note from this. Also the website could have important information that is useful to them such as share prices, possible mergers and gross profit figures. All this information can be used to keep an eye on their competitors as something they do may threaten the company.
Mintel is a great source of secondary information as it tells Moto about the market that they are situated in. It will tell them information about their competitors and the trends of the consumer. This is very useful when Moto is to plan for the future. Public Records also have information about the consumer such as population sizes and average amount of people in a household. This would be useful for companies such as Sky who sell television to households. By looking at public records they will see that the amount of people found in a house is decreasing. This means more households with single people in them who will watch the television. For Sky this is very important information as it means that they can plan for the future.
National/International Governments set the laws that the companies have to follow so this is important information those companies such as Moto need. An example of this would be the equal opportunities laws that the EU enforced form their Social Charter. This means that companies have to give everyone within the company the right to such opportunities as training.
17.2.3 Reliability of Marketing Research Sources and Findings
The problem with any type of market research is that everyone is different and it would be hard ask everyone in the UK what he or she think or want. This means that companies have to take a sample of the population and rely on this sample as a reflection of the thoughts of the whole country.
Companies have to take samples of the population from all around the country so that they can look at what the whole population want. By doing this they will see factors such as economies of scale where some parts of the country are more wealthily than others. Walkers have to take this into account and this was seen in the sales of their “Sensations” range. They found that a lot more packets where sold in the south than the north. Other factors are different social perceptions that are present around the country. In the north a lot more people are over weight but more people visit the gym in the southern region of the UK.
Also companies have to think about the sources of their market research especially in the case of secondary research. Some of the data could be out of date or imprecise. If Walkers or any company use this type of data then it will mean that their marker research will be a complete waste of time and money.
Walkers have to take these factors into account when they are performing market research their findings may find an untrue picture of the situation. This would be made up of unsatisfactory secondary and primary information that only results in the outcome being a waste of time.
17.2.4 Research Plan
Systematic Marketing Approach
These consists of five steps and they include,
1. Define the research problem and objectives
This is where the problem is found and from this the company will know its objectives. Walkers have a problem with their healthy food so it will be identified here and then the company’s objectives are made. These objectives are to improve the quality of its healthy food range. Walkers shouldn’t define the problem of their hot food too narrowly or they may miss vital clues. In other words if Walkers only focus on improving the Original crisps in their range then they miss that all the other ranges like Doritos need improving as well. Also if Walkers define the problem too broadly then the people trying to solve the problem will be wasting time and resources.
2. Design the research Plan
This part of the plan has five stages and is complex. The first stage is to determine the data sources.
Primary Data
The primary data would be that created by the managers and the product development staff. It would be data about the customers wants found from complaint forms or questionnaires. It is data collected for the first time with the specific purpose of the particular marketing research study being conducted. So for the study that Walkers are completing it may be research looking at what types of healthy crisps the customer wants. They may find that the customer wants more healthy options in all of the varieties and not just the original range.
Secondary Data
This is information found from internal and external sources that will help with the research plan. The internal data could be sales figures or existing data that has already been collected by the company. Walkers have changed their crisps a few times and the last time they did they had to perform market research. They did so to see what the customer wanted then so this information may give the research and development department some idea.
Other secondary data could be external and this could come from such sources as the Mintel Reports. These will give the company the current status of the market and give information on their competitors. The report may show that in the last year many of their competitors such as Golden Wonder have spent a lot of money developing new products. This would mean that it is essential that Walkers do the same as otherwise their competitors could gain advantage, which would be measured by market share.
Also another type external data Walkers could use would be local and national press to keep an eye on the current economic state locally and nationally. They need to do this, as this will give the company a good indication of how the country is spending. This will have an affect on the type of product they produce especially the price. As if people are spending then they would want to keep the price relatively high on release.
Selection of Research Technique
This is how the company will collect the data and it could be by Observation, Experimentation or a survey. At Walkers as they are dealing with food then one type of data collection they could use is experimental. They could do this by testing the new types of Crisps on the general public and then getting them to fill out a questionnaire. From these results they can work out statistical data to see if their new products would be appealing to the general public.
Selection of research instruments
For the research Walkers may need to use laboratories to help with testing the food. In these laboratories Walkers may feel it appropriate to record the tasting session for future programmes and to show top management. They would do this by using CCTV and observing the candidates whilst they perform the taste test.
Selection of sampling plan
Walkers would use a type of probability sampling that is the cluster sampling technique. They would use this technique, as Walkers want to interview people who are health conscious and will therefore eat their healthy crisps. This means that to save costs and time they will put together a group of candidates who are health conscious and then randomly pick out of these. This group will perhaps be found by putting adverts in health magazines.
Selection of contact method
This would be face-to-face, postal, telephone or e-mail. At Walkers I believe that they would use the Internet, as this is the most up-to-date method. I have already gave the disadvantages and advantages of all the methods earlier on in the essay and it shows that the Internet is the way forward for conducting surveys. As along with the Telephone and Mail it is the most cost effective and like face-to-face you can show visual aids. Consequently I believe that Walkers would use this method.
3. Collect the data
At this stage the data is collected and it would be up to Walkers if they use an Internal or External source to collect the data. If they use an internal source then they will implement their research plan. If Walkers use an external source then they would have to send a proper brief that will show the information that they desire. Also Walkers should make sure that the research agency knows of all the previous research that Walkers have already completed.
4. Analyse and interpret the data
This is where the research and development department at Walkers review the data gathered. They also need to evaluate its meanings to the problems and objectives of the research. This stage usually means taking the information from a variety of sources and using it as a model to how the market works. This means looking at the competitors and see how they operate by seeing what they are investing in. The data should show that all the competitors have a budget for product development and it is how they use innovation to improve current and new products.
5. Present the research findings
This means giving the information to the managers to help with their decision-making. This may mean setting up an MIS system that is decentralised so that managers have easy access to information. This may mean setting up a Local Area Network so the managers have access to the information that has been found by the research department.
17.3.1 Market Size and Growth Trends
The Crisps and Snack Market
Market Trends
In 2000 crisps have shown a healthy performance, boosted by the growth of the hand cooked sector and strong promotion from Walkers. The Snacks sector has slowed down, perhaps as a result of stronger competition from other snack foods and the slow down of Pringle sales. In 2000 the snacks market grew by 1%, while the crisp market rose by 4% and a big factor again is the promotions used by Walkers.
The industry is increasingly seeing the crisps and snack market as one but many companies see it fit to segment the market into the different Product Market Units. For Walkers this would be Children’s, Healthier, and Everyday products. Also the results shown in the tables may be a little mixed-up due to the consumer not knowing if a product is in the crisps or snack market.
Growth rates
As you can see from the table above the volume of sales has shown stronger growth in 2000 than sales, as competition and promotional activity led to price deflation of around 3% overall. Figures show that volumes grew by 12% between 1996 and 2000.
Sales for the whole of the Snacks and Crisps Market
Above is a table showing the sales of UK crisps and snacks and this shows how Walkers clearly dominate the market. In 2000 the Crisp market grew by 4% and it is clear from the table above that Walkers had a big part to play in this. As you can see Walkers have half of the whole market share showing a 10.9% increase in sales from 1998. It shows how sales of Own Brand products are dropping. Below we can see the Crisps and Snacks market broken down so one table shows just crisp sales and the other just snacks.
Crisps
When we break the market up you can see that Walkers clearly are the market leaders with 65.4% of the market. It shows a change from 1998 of 10.4 percent and this is due to Walkers advertising and promotions activity. Again it shows how the own brand label crisps have took a massive drop in sales showing a decrease in sales of 19.1%. This is perhaps because these types of products rely on the customer to want to buy these, as they are cheap and for no other reason. Due to Walkers and all the other brands having some kind of advertising campaign then it makes them more desirable than the own brands.
Golden Wonder has also shown a sharp drop in sales of 10.4% to Walkers and the rest of the market. This is due to Golden Wonder being heavily dependent on its mainstream brand. Golden Wonder is the leading supplier of own-label by some distance, so its share as a manufacturer is rather higher than its company-branded share. KP has also shown a healthy increase of the market share of 23.5% and therefore is now seen to be one of the main competitors to Walkers.
Snacks
In the Snacks market again Walkers are the leader but it faces more effective competition than in the crisp market. The growth of Pringles has meant that Proctor and Gambles share of the market has risen significantly, at the expense of longer-established brands, but it is now losing share and this is the reason for their poor performance in the table above.
In the Snacks table we see that own brands are showing a steady increase of 3.9% and therefore have a market share of 8%. This is completely different to the crisps market where they have performed so poorly. The leading brand in this market is Pringles, Hula Hoops and then Walkers in third place with Quavers. This has to be worrying for Walkers who do have a big share of the market but only have the third best product.
17.3.2 Competitive Analysis
In the crisp market there are three main companies who dominate as shown in the table below.
As seen from the table Walkers is the main threat to anyone entering the crisps market. Therefore I believe it to be appropriate to focus on Walkers as the main threat so I shall concentrate on showing their Strengths and Weaknesses.
Strengths
Product
As you have seen from the Internal and External parts of the Audit Walkers have shown strengths in the sales of the products that they manufacture. Having a share of two thirds of the crisp market outlines this. It is also shown in the Snack market where results show Walkers have half of the market share. In the individual products Walkers have shown excellent results in the Healthy range with Walkers Lites having 40% of sector sales. All the products have shown to be performing well and are therefore satisfying customer needs.
Walkers also have gained a good brand name, which can be only good news for the company. As this means that when a customer looks at a pack of crisps on a shelf in a outlet that sells crisps they will relate walkers with quality. With a good brand name it has also meant that eating walkers crisps has become fashionable compared to eating a non brand name of crisps.
Another main strength for Walkers is the range of products that they sell, as it seems to cater for many social and age groups. By social groups I mean those who class themselves better off can eat Walkers Sensations while us mere mortals can take advantage of the rest of the Walkers range. They also cater for different age groups and by this I mean Monster Munch range for kids and Walkers Original for people who class themselves not kids.
Promotion
The strengths of Walkers promotion are shown in their performance in the market. They have a very good unique selling point and that is of course Gary Lineker. Walkers use other means of advertising such as radio, cinema, posters, and, of course, football sponsorship. Their sponsorship of a Football ground means that the awareness of Walkers Products is increased by the fact that the stadium is associated with their name. Walkers also advertise on the TV with Doritos sponsoring ITV Movie premieres.
Placement
Walkers have their products in every food outlet so the customer is never too far away from a pack of Walkers crisps. This is a massive strength as it means that Walkers products are easily available and therefore will increase the chance of the consumer buying their crisps. This is again outlined by the massive percentage of the market share that Walkers have meaning that if their products weren’t so easy to buy then the consumer would be looking for alternatives.
Price
Walkers use a competitive pricing strategy meaning that their prices are inline with competitors. They keep the prices the same as their branded competitors, which means that the quality end of the market is all priced at the same price. Walkers use this type of strategy so they can change price inline with the state of the economy and factors that control it.
Weaknesses
Product
Walkers have few weaknesses and in the area of the product it could be seen as weakness that they aren’t in all the different segments of the market. By this I mean they are in the Crisps and Snack part but could look into bringing out a more extensive rage of products.
Promotion
Again Walkers have few weaknesses in this area as their promotions as their marketing activity is so effective. The only weakness that I can see is that they only seem to use a few celebrities to promote their products. Perhaps Walkers could look into have a bigger range of Faces promoting your products.
Placement
One of the few weaknesses for Walkers is that overseas their products are sold but in a different name this being ‘Lays’. If Walkers are to prosper from markets abroad they should use their own name, as the consumer will relate to the product better.
Price
Walkers pricing strategy means that there price is inline with their competitors and not as a result of the costs to the business. This means that if one of the departments of the business has increased costs then they aren’t going to increase the price to cover these extra costs. This means that the money will have to be found elsewhere which would mean either reducing costs by decreasing the workforce or to take the money out of money made from profits.
Opportunities
Walkers can also look into branching out into the segments of the market that they aren’t involved in. By this I mean the Nuts, Baked and Corn segments. If they use their name as a symbol of quality then they should see success in these markets. They could also look into expanding the product ranges of the markets that they are already in. This would mean looking at focusing on different age groups within the market including the older generation.
Also Walkers can think about the opportunities found by the advances in Technology, which would mean that they could improve the product and the packaging that it comes in. In the audit I have looked into the possible use of GM foods, which for Walkers may be an example of how technology can improve the product in the long term.
Walkers have already spent huge amounts on the promotion of their product products and they are already using many types of Media. From looking at their website it shows that they have the opportunity to make customer awareness even more profound. They could use this type of media with the help of Emails to promote their products.
Walkers have Pepsi as a huge stakeholder in the business and this means that the possible investment is huge. It means that Walkers can look at Global dominance in markets around the world. It has already shown impressive results in the UK so the company can take this success into markets around the world.
With Walkers having so much of the Market share the opportunities to expand their trading is massive. They have huge financial backing and a successful product. These two factors mean that the future of Walkers is looking very good.
Other possible competitors
Golden Wonder
Golden Wonder have a 5.1% share in the Crisp market and have products such as Nik Naks, Golden Wonder and Wheat Crunchies. Until 1995 Golden Wonder was part of Dalgety, but it then became independent by way of a management buy out, backed by Legal & General Ventures. In July 2000,l the company was the subject of a secondary buy out from Bridgepoint Capital.
This means that Golden Wonder now have the financial backing to win back some of the market share from the leader in the market Walkers. This is one of their main strengths along with a good brand name so anyone entering the market would see Golden Wonder as one of their main competitors.
Proctor and Gamble
Proctor and Gamble are the second largest crisp and snack manufacturer and are still some way behind Walkers in term of Sales. These are the company that makes Pringles that are very popular worldwide especially in America. One of the main developments is that Proctor and Gamble are merging with Coca-Cola, which in the long term could be bad news for anyone entering the market.
This means that Proctor and Gamble have much strength, which include a good brand name, financial backing and good product placement. With Proctor and Gamble being partially owned by Coca-Cola it means that as with Golden Wonder and Walkers they have great financial backing. Also because Proctor and Gamble sell their products worldwide then this is a competitive advantage over many of the opposition. If anyone was looking at entering the market then they would have to look at Proctor and Gamble are doing.
United Biscuits
United Biscuits who are perhaps one of the biggest competitors with half-year results showing £924 million in biscuits and £339 million in snacks. Their product range includes Hula Hoops, McCoy's, Mini Cheddars, Skips, Phileas Fogg and KP Nuts. They control 5.3% of the crisp market and these are the second biggest rivals to Walkers. This just underlines how much Walkers dominate the crisps market.
Again this is one of the main players in the crisp market that any new entrant to the market has to look at. United Biscuits main strengths are their brand name and financial backing.
Own Brand
The supermarkets are one of the main threats to any company trying to enter the crisp market, as they are the main place where people buy crisps. Without supermarkets many firms would find it hard to distribute their crisps especially now they are taking over corner shops as well.
Supermarkets also have great financial backing and loyalty from their customers to add to their strengths. As the government is a promoter of the free market then the threat of supermarkets not selling brand crisps is unrealistic. With the power the supermarkets have though they could sell their crisps at a much cheaper price and this will promote competitive pricing throughout the market. As the supermarkets sell more than just crisps then they can afford to lose some revenue from crisp sales. The crisp companies are unable to do this as they specialise in one thing and this is another reason why supermarkets are a main threat.
17.3.3 Evaluate opportunities and threats for a product entering the market
The Organisation
The opportunities and threats of a company entering the crisp market within the organisation can be broken down into Price, Product, Placement and Promotion.
Product
Innovation has to be the key when it comes to designing a new product to enter the crisp market. As there are big well financially backed organisations in the market then the new product has to be different. The opportunities if it is are massive as the company could bring out a range like Walkers have done with their Doritos Crisps. The idea I have for a new type of crisp that I believe that no other company is crisps designed for old people. These crisps could be in different shapes and be flavors of traditional English food. This idea has great opportunities due to the ever-growing older population. The biggest threat to this idea is the competitors who are sure to react to the new product with ideas of their own.
Price
The price of a new packet of crisps that will be released into the crisp market would have to be competitively priced. I believe competitive pricing is the best option as it means that the price will be inline with what the competitors are charging. This is an advantage because if our competitors decide to lower their prices then the new products price needs to be inline with this. Otherwise the company with the new product will find that sales will drop due to the customer buying the better-priced crisp. It would have to be so as I believe that there are many competitors that already use this type of pricing strategy. Dependent on the type of crisp it is (own brand or luxury) will be a factor for the price that is set. The threat the company has when releasing the new crisp is that they price their selves outside the market. As the product is aimed at older people then the price should be kept low due to older people being stereotypically not big spenders as their generation was taught to save.
Promotion
Promoting the new crisp will take a massive investment as Walkers have found but it can reap great rewards. Walkers sales figures have rose sharply after an intense promotion campaign. The new product would have to be promoted using different types of media such as the T.V., Radio, Magazines and the Internet. Due to a company having to have good financial backing then using this type of media shouldn’t be a problem. The threat in this area is over investment by trying to use too many types of media to promote the new product. By using these promotional tools to their optimum productivity then the new product has the opportunity to be the leading product in the market. As the crisp that I would realize is directed to old people then opportunities in promotions could arise. This could include advertising in Post Offices and Old Peoples homes, which would bring with it good publicity due to both being in financial crisis. The company could also think about promoting the crisps at events such as bowls tournaments that currently have little competition for advertising space. Also the company could think about either tokens or competitions on the crisp packets that are directed to older people. This could be a free saga holiday or book tokens.
Placement
The opportunities in the placement in the new product are massive if the company releasing it distributes it on a worldwide scale. Not even Walkers the market leader has a global domination of the crisp market only the domestic one. The threats with the placement of the new product will come with the power that the competitors have over the retailers. Walkers are a big company that can demand where their product is placed in a supermarket. As the new product will be an experimental product then the supermarket might not agree with promotions of the new product dominating the crisps ilea. The opportunities for the product are that the company could work alongside such places as Libraries and Old Peoples Homes. The company could supply the crisps to Old Peoples Homes with perhaps a partnership being made between the Homes and the crisp manufactories.
Micro Environment
Suppliers
The threat to the new product by the suppliers would be the price of supplying such raw materials as potatoes. Due to the ever-decreasing farming industry in the UK the new company may have to think about getting their raw materials from abroad. This could be an opportunity as it means that the company will be getting cheaper produce from abroad. This could be a great saving for the company or it might lead to competitors buying up the raw materials from the suppliers. As companies such as Walkers have loyal suppliers then they might buy the stock so the new company has to pay dearer prices elsewhere. If the supply of raw materials then this could lead to reduced output, which means a drop in sales.
Distributors
The distributors for the new product will be the supermarkets mainly and they have great power over if they sell the new product. The supermarkets will get some of the money made from the sale of the crisps. They may increase their percentage if they see the product being a risk to the creditability of their store. The opportunities in the distribution of the crisps are as mentioned earlier to distribute them to places where older people go. As the new crisp will be focused on selling to older people then the places they go might not already be used to sell crisps. Example of this would be libraries and tearooms. The threat to the company with using this strategy would be if they received bad publicity due to people considering this practice as being unethical.
Customers
The new product will be aimed at older people but younger people may be tempted to buy the product. The opportunities to the company are that old people have increasing amounts of disposable income. This means that the company can consider making the crisps a luxury item with the temptation of free saga holidays used as the bait. The threat from the customers is as they are old people they may be cautious about buying new types of crisps. This is why the company has to implement a good promotional campaign to settle any doubts. The other possible threat would be the customers being loyal to the competitors but this would be unlikely due to crisps being a non-luxury item that is repeatedly bought.
External Threats
Pest Analysis
I also feel it necessary to look at the threats to the market from external sources so this is why I have included a PEST analysis for the possible new product.
Pest analysis
Political
Sell by dates
Sell by dates are found on all packaging including Crisps and there are many sceptic who believe that this system is only for the manufactures own ease. This is shown by a quote from Professor Richard Lacey who is a retired Professor of Micro Biology and used to work for the government he quotes,
"The sell-by date is established by the food industry, mainly for its own convenience," he says. "There's no scientific basis for it."
Food writer and author Joanna Blythman echoes Lacey's warnings.
"It's all part of de-skilling us as shoppers."
By this he means that in supermarkets today a lot of the food found is packed and therefore unable for the consumer to see if it is fresh or not. This means that they have to rely on the sell by date of a product and not their own judgments.
If their argument is true and further research has to be performed in this area then it could mean increased costs for Crisp Manufactories. As if there was firm evidence that companies don’t actually do any research then the Government will step in to set new guidelines that all manufactures have to comply to. It will probably mean that companies will have to pass certain tests to be able to sell their products and if these aren’t meet then Crisp Manufactures will have to stop trading. If these laws were in place then it would mean huge new costs for their research and development department. To cover these new costs Crisp Manufactures would either have to increase revenue by increasing the price they sell to the retailers at or cut cost in other areas.
Salt warnings on packets
Crisps have high levels of salt in them and this isn’t advertised on the packets of their crisps. Campaigners say that this should be shown on the packets as is found in the Cigarette market with their warning of how smoking can damage your health. Research by Dr Anthony Rodgers and Dr Bruce Neal has found that salt levels are high in processed food and this can be a health risk. They say that,
“The strong association that has been found between a high salt intake and increased blood pressure really demands that methods are sought to encourage such small changes”
Their quote shows that high levels of salt in a persons diet can mean an increase in the likelihood of someone suffering from high blood pressure. High blood pressure is a condition that can be fatal showing that the government introduce new laws that would mean that packaging would have to show levels of slat.
If this was to happen then Crisp Manufactures have perhaps two options the first being that they leave the levels of salt in their crisps as they are and put a warning on the packet. This could mean a drop in sales due to society being more health conscious. By doing it this way it means that the salt industry wouldn’t lose any business and therefore leave the prices of salt as they are. Meaning that no extra costs would affect Walkers only the cost of reduced sales.
The second way would be to lower the level of salt in the crisps and this would be again displayed on the side of the packet. By doing this you wouldn’t lose any customers through the levels of salt but perhaps by the change in flavour. As Crisp Manufactures use salt in their crisps to enhance the flavour then reducing the salt levels would reduce the flavour. To stop this from happening would mean investment into the research and development department, which would consequently mean extra costs. Also you have to remember that the salt suppliers are losing business from the company if you use this method and therefore they will have to increase their prices to cover costs. These are all extra costs that the business will have to look at before think about the way forward. You have to remember that in the long term you have to remember that you will keep your customers and therefore continue to be the leader of the market.
Organic Food
The Food Standards Agency is looking into the difference in the quality of the Organic and Conventionally produced food. Sir John Krebs who is the chairman and believes that the difference in the amount of pesticides used in the two types of food is worrying heads this research. Crisp Manufactures main raw material is the potato and if new laws are brought in saying that all food has to be organic then this will increase costs at Crisp Manufactures considerably. It would mean that they will have to change their suppliers to perhaps those found abroad and this will take money away from Britain’s Economy. Also you have to remember that these new costs would mean an increase in the price paid for the product to the consumer and therefore crisps may become a luxury item that perhaps people don’t really need.
Trade Unions
These could also be a big threat to Walkers especially in the area of distribution as is shown in France where the Truck Drivers have set up road blockades nationwide. So this means that distribution of products is almost impossible. If Crisp Manufactures can’t receive deliveries from their suppliers and distribute their product to retailers then it means for the time being Crisp Manufactures will have to stop trading.
Another type of Trade Union would be that of the Farmers Union who Crisp Manufactures rely on being corporative with as the Potato is the main raw material for walkers. If the Farmers Union went on strike due to the prices paid for their products then this would be of huge concern to Crisp Manufactures. As again it would mean that they aren’t receiving the raw materials needed to make the product and this would again mean that Crisp Manufactures would perhaps have to stop manufacturing in this company and move elsewhere.
For this period Crisp Manufactures will be making a loss and there is little they can do about it until the strike has finished. In the most serious of cases it could lead to job losses meaning that the economy could have a period of recession. This would happen as with more people out of work it means that people aren’t spending, which means less money being moved around the economy.
Taxation
The final political issue is Taxation and this can have huge affects on the costs at Crisp Manufactures if a certain tax was to increase an example is petrol that is around 75p for a litre. If the price were to increase to 80p through stealth taxing by the government then it would mean that Crisp Manufactures distribution costs would dramatically increase. Crisp Manufactures fleet of trucks use around 9.5 million litres of oil each year. This means an increase of 9.5 million times £0.05, which is £475,000 in extra costs. Meaning that Crisp Manufactures would have to find alternative ways of fuel or again cut costs in other areas. An alternative fuel could be gas, which initially would cost the company converting their vehicles but would show financial gain in the future.
Economic
Overseas
There are many factors that will change how the economy is performing and the main one of these is what is happening overseas especially America. Due to America’s economy being in a period of recession then this will affect how are own economy performs. It affects our economy as Britain imports and exports many products from different countries and if these countries are in a period of recession then it will increase the price of doing this. Crisp Manufactures import many of its raw materials from around the world including potatoes from Europe. If the price of importing potatoes increases then they will either have to think about looking at suppliers in Britain or pay the extra costs. These extra costs will mean that Crisp Manufactures will have to find revenue for these extra costs elsewhere. This could mean cutting costs and the biggest cost to the business is their employees. So they could either decrease the amount of people who work for them or do what many companies are doing and moving production overseas.
Unemployment
If we look at Unemployment in more detail, as this is an important Economic factor, as can a person who isn’t working afford to buy Crisps?
Well the answer to that would be no with relation to the more expensive range being Walkers Sensations. People will decide to buy the cheaper option, which would mean an increase in sales of “Own Brand” Crisps. This would mean that supermarkets would cut orders of certain Crisps if sales figures were down to cut costs. Therefore Crisp Manufactures will have to either cut the prices of their existing brands or realise a new cheaper brand. The problem with realising a cheaper brand is that people might associate your product as being cheap, which means that the consumer will switch brands when unemployment is low. This means that Crisp Manufactures have to rely on brand loyalty and lower the price to retailers so then they can do the same to the consumer. When lowering the price they will have to do this inline with inflation, which is the increase in general price levels. The CPI (Consumer Price Index) measures price levels and it is these figures that Walkers need to look at to see what price they will set their products at.
As you can see Unemployment is a big factor that will change the strength of the economy. If Crisp Manufactures increase the unemployment problem in Britain then this will have a knock on effect on the whole of the economy.
Social
Multicultural Society
With Britain becoming a more multicultural society Crisp Manufactures have to think about what this means to the crisp industry. As someone from India who are used to eating traditional Indian food such as curries will perhaps find it hard to change to eating Salt and Vinegar Crisps. Walkers have already tried new brands like Doritos that are different from the conventional Crisp but have not perhaps explored the full potential of these possible new products. An example would be if they brought out a range influenced by China such as Chicken Chow Mein, Cantonese Chicken or Sweet and Sour Chicken flavour. They could design packaging with traditional Oriental lettering with pictures of famous Chinese landmarks simplified as background. Crisp Manufactures could even think about changing the whole style of the packaging by selling the crisps in boxes like those found in Chinese Takeaway stores. Furthermore Crisp Manufactures could think about changing the crisps shape to Chinese Writing like Heinz did with their spaghetti. It would mean that they are bringing out new products into an existing market that they already have strength in. It will minimise the threat of different products entering the snack product, which are influenced by different cultures that could reduce market share.
Changes in Social fashions
One of the main social factors that Crisp Manufactures have to think about is that as society gets lazier we become more concerned of our weight. Previous generations didn’t have to worry about diets as they were more active and companies such as slim fast didn’t exist. Nowadays more and more people are very conscious about what they eat and wont buy a product without looking at the nutritional information on the back of the packet. Walkers have expanded their range into this market by bringing out the “Walkers Lites” series. Also people who are avid lookers of the back of the packet will find that the Squares and French Fries range are also low in fat. Walkers have already started to think about making a range that is low in fat but they could expand this range much further. They could do this by simple adding more flavours or by redesigning the shape of the packaging or the actual crisp. If Crisp Manufactures don’t take into consideration the fact that people are becoming more health conscious then they will experience a loss in sales in the years to come.
One of the main reasons for people being more health conscious is that they are becoming better educated at eating. As I have already mentioned people didn’t used to think about what they were eating they just ate it. Nowadays with education from firms such as Weight Watchers, School, Health Magazines and T.V. to name a few, people are far more aware of what is unhealthy. The problem is that people are being told that it is not what you eat but how much you eat. Meaning that if people are taught this then the consumption of Crisps will decrease, which means a lose in sales. With a good marketing campaign you could promote the fact that eating Crisps is an experience that has to be savoured. Crisp Manufactures have to think about society becoming more aware of their health, the Environment and the misuse of human resources i.e. moving manufacture to third world countries to exploit low wages.
Technological
One of the main technological changes for Crisp Manufactures is Genetically Modified Food and in our example it would be the Potato. Society sees Genetically Modified food as something that is unnatural and therefore not good for us. Perhaps it is because society doesn’t understand what GM Foods are and this is the reason for them disagreeing with it. Below is some evidence of the reasons for and against GM Foods.
Against
- The Royal Society, an independent body of scientists, has suggested the GM foods could cause nutritional deficiencies as they may contain fewer nutrients. German researchers who tried to boost the protein content of potatoes actually lowered it.
- Studies have suggested GM foods could increase allergies. In 2000 traces of a toxin from genetically modified corn that could cause allergies were found in taco shells in the US. This again shows more evidence that will make the consumer wary of our product.
- GM foods could make bacteria more resilient to antibiotics. Studies at Harvard University, USA, show that genes can transfer from GM plants to bacteria in laboratory testing.
- A leading member of the British Medical Association’s public health committee called for the GM trails to be halted, claiming that there is not
“Enough reliable scientific evidence on their safety to be able to make valid decision as to whether there are potential health effects or not”.
- The final bit of evidence against GM foods is that the Head of the Governments GM Food safety committee has said that possible hazards could have been missed.
This evidence shows that perhaps GM Foods are lower in nutrients so why would this make our products more desirable. This evidence also shows a lot more research has to take place we know what GM foods are all about. A lot of the evidence above are speculations and haven’t got much real evidence behind them. If these accusations were to be true then it shows that GM foods are perhaps not the best way forward. With healthy living being fashionable at the moment then is this way to go right.
All this evidence outlines that GM foods are still very much in development and it is something that without further research using GM Foods could be devastating to the company’s reputation.
There is evidence for the defense of GM Foods and they are that firstly government tests have revealed that GM crops are more resilient to weeds and insects, cutting down pesticide use.
Also Lord Robert May, a former chief government scientific advisor, says that no adverse effects have been identified, but there had been benefits from reduced use of pesticides.
Finally scientists have discovered ways to increase the nutritional value of food. Indian scientists have developed the protato – so called because it contains a third more protein than a normal potato.
The evidence above shows that perhaps GM Foods are a substitute to using Pesticides, as these types of crops don’t need them. Using Pesticides on crops is expensive and harmful to the environment but I don’t believe GM Foods to be the solution. If we were to use GM Foods to increase the nutrient values in our products would it become more desirable to the health conscious consumer? I believe not as they would see it to be unnatural and therefore not good for them. As I have shown in the social part of the PEST analysis shows that people are very health conscious these days due to the information they are being shown around them from different types of media like magazines and the T.V. Therefore I believe that using GM foods in the short term would be a step back for Crisp Manufactures but in the long term they may be a step forward.
17.4.1 Measuring Customer Satisfaction
Measuring Customer Satisfaction – Definition
Below I will outline the fundamentals to ensure optimum customer satisfaction and to help explain this I shall use Walkers as an example.
Product/Service variables
For this part I shall use Walkers Lites as an example. The design of the Walkers Lite product has to be that it benefits the consumer. At Walkers they will do this by designing the product as a healthier crisp option then this is its unique selling point. The variables include taste, size, packaging and more importantly nutritional information. The benefit to the customer is the enjoyment of eating the crisps whilst being satisfied that the product is healthy for them.
Sales and promotion-related variables
Messages
These are the assumptions that the customers have before actually eating the crisps. Walkers do this by using famous people like Gary Lineker with the ‘No More Mr Nice Guy’ adverts to promote eating the crisps as an enjoyable experience. They do this by using different types of media such as the Television and Outdoor Advertising.
Walkers also use promotional activities that give a more ethical approach to eating crisps by relating the purchase of their crisps with a good cause. This was seen in the ‘Books for Schools’ campaign and more recently the one million pounds given to Comic Relief. By doing this it means that the customer will buy the crisps for more than just the reason that they like the taste of the crisp.
Promotion inline with current popular television is also used by Walkers and an example of this would be the ‘Pokemon Tazo’. This means that children and parents desire to buy Walkers Crisps increases because of what the product is related to. Walkers have also used Kelly Osbourne in their Doritos adverts to appeal to teenagers. So this gives the message to these teenagers that eating Doritos is fashionable.
Attitudes
This means the attitudes of everyone who works for them. The Walkers products are sold through newsagents and supermarkets so they have to rely on good promotional activity. By doing this customer realises that the product is not directly associated to the place of purchase and therefore aren’t put off by bad salespeople. The fact that Walkers crisps are readily available is another factor why Walkers believe that opening shops with only their products is not appropriate. If they did they could train staff to be inline with their objectives and this isn’t cost effective.
Walkers only concern in this area would be the staff in their call centres. These people deal with complaints, giving information and talking to other such people as investors. Walkers would hope that these people are polite and able to deal with people in an appropriate way so that in any situation the company looks helpful and understanding. This wouldn’t just be associated to these people but anyone that works for the company.
Intermediaries
The intermediaries for Walkers would be of course the retailers and these include the supermarket and corner shops. Walkers would send promotional material with their products and intermediaries would really come in to use when promoting a new product. This will include free samples for customers and supermarket staff and to do this they may have to be trained with information sent by Walkers.
After-sales variables
Support Services
These are the traditional after-sales services and for Walkers it would be the number the customer has to ring on the back of the packet. Walkers would have a team of help staff on the end of the phone able to deal with problems. These may include complaints about the quality of the product and in this situation Walkers would offer vouchers or their money back.
Feedback and Restitution
This is how Walkers handles with complaints and this could be from groups such as Green Peace or Friends of the Earth. Walkers could get complaints from these organisations if they started to use materials that where seen to be unethical. This could include using Genetically Modified Potatoes. Complaints from these sets of people would be very serious and bring bad publicity to the company. Therefore Walkers Management would take this situation very seriously and make it a priority to communicate with the people involved.
Another example of where Walkers could receive complaints would be development and the building of new factories. This would be less an important complaint as Walkers could argue their case easier. They also would have more support, as most people would see it a good thing due to the employment it will create. This means that this complaint would be less serious but would still need the management to talk to those opposed.
Culture-related variables
This is all about seeing if Walkers really focuses on what the customer wants or if the organisations needs come first. An example would be where the ‘Books for Schools’ campaign is concerned. The company has to ask itself if the President and CEO Martin Glenn had a meeting with a possible investor and the Head Teacher of a School then, which one would he choose? The publicity made from visiting the school could be very useful but is the investor’s money more important? Dependent on the culture of Walkers would answer these two questions i.e. if their culture is to put the customers needs first or the companies.
Measuring Customer Satisfaction – The Problems
The measurement of whether the customer is satisfied with their purchase can be exceedingly challenging for a number of reasons. Firstly there could be Weak Anecdotal Evidence and this is where Walkers only take note of good comments and scraps those that they don’t want to hear. So an example of this would be if Walkers realised a new product and asked for comments to be posted on their website. If the majority of messages where good then Walkers would promote the new product in the internal and external environment as a success.
Another reason could be single-incident disasters and these could be where a blame culture is developed within the organisation. This could happen if two departments are showing antagonism against each other. In Walkers this could be the Marketing and Product Development Departments. If Walkers have developed a good product but it was poorly marketed then this could result in bad sales figures. It would mean that one department would say it was a poor product and the other poor marketing. This means that the company isn’t working as one big team together but smaller teams against each other. This would go against the company’s objectives and cause grievances. It means that a true picture isn’t shown of the possible success of a product as other factors have intervened.
Also Walkers have to take in to consideration that perhaps they are only getting the opinions of those people who complain. The consumer will only ring the number on the back of the pact, if they have something to complain about. This doesn’t look at the thoughts of people who are satisfied with the product. How Walkers could do this is by having a comments page on their website that is uniquely designed for thoughts on that product.
People who are dealt with by the employees at the help centre may but unsatisfied with how their complaint was dealt with. From this the customer decides to shop elsewhere and this situation wouldn’t be recorded unless they ring again to complain. It is a common occurrence that this will happen as the product bought isn’t a luxury item.
Another example of where customer satisfaction may be inaccurate is if an important or powerful person complains about the crisps. An example would be if the Queen ate a bag of Walkers crisps and thought that they where unsatisfactory. If the Queen complained then this will cause a substantial amount of bad publicity due to the stature of the person who complains. This complaint may be inaccurate as this is one of millions of consumers but because it was the Queen then action would probably be taken.
Finally the customer service of the organisation may be out-of-date but management cant see this and therefore few comments are reordered. At Walkers they use a system that means the customer has to ring a number and they are put through to a call centre. Besides this there is only a small section on the website that is dedicated to complaints. Having to ring a call centre could be seen as being dated and there are already new types of technology that could be used. This includes text messaging so the customer could use their mobiles to send comments in about what they think about the product. The main problem with using a phone system is that people use mobile phones more and they can become expensive if the customer is on the phone too long. Another answer to this problem would be to expand the services offered of their website so it offers say a different page for each product. They could also think about using chat room technology on the Internet so Walkers can listen to complaints.
Measuring Customer Satisfaction – Segmentation
The points I have already raised are significant but are all treating the customers as alike with the same needs and desires from a product.
When talking about satisfaction we have to remember that all customers want different things from the products they buy. Using Walkers again as an example then they are an example of a company that knows that everyone’s different. They show this by the range of products they have and each one appeals to a different group of people. Using my Grandma as an example she likes traditional flavours like cheese and onion and ready salted. If I gave my Grandma a pack of Doritos then she would probably say that they are disgusting. My Grandma would complain to Walkers about the taste of Doritos whereas I wouldn’t. Companies have to take this factor into consideration when dealing with customer complaints.
Measuring Customer Satisfaction – After Sale Services
Any company by law has to offer the customer a period of time where they can bring the product back if they are unsatisfied. This would be known as a guarantee and a company can measure customer satisfaction by the amount of customers who comeback. They may come back because they got the wrong size but it is those who are unsatisfied with the product that companies need to measure. From these peoples decisions to comeback would the company process data from. They would want to make sure it doesn’t happen again and encourage the customer to swoop the product for something else.
Good after sales service will encourage the customer to come back to the shop and buy again. As they know that the shop is looking at what the customer wants and promoting loyalty. They see that encouraging repeat buying is easier than getting in new customers so this is why they try to do the best they can for the customer.
17.4.2 Techniques for assessing customer response
Survey Method
This method is often used by companies and consists of five steps and these are carry out an analysis of the organisations customers, decide whether to cover all customers or just a sample, pilot-test the questionnaire, decide whether to conduct the survey in person or by phone and finally analyse the results.
The advantages with this method are that it can distribute around many customers quickly so that the company can get a better picture of what people think. The drawbacks to this system are that if the survey isn’t well designed then it can become costly and unproductive.
The Complaints System
This system can be used to assess the customer’s response but unlike the questionnaire system it only focuses on the bad points of the service. The good point about this system is that it is firstly an external persons point of view. People within the organisation can only focus on making systems more efficient and not stopping to consider what the customer actually wants. At Walkers they have brought out a range of crisps called ‘Sensations’, which are designed to appeal to people with a large amount of disposable income. This range could have come about by people complaining about the cheaper ranges of Walkers crisps.
