Table 1.1: Summary of Table Large sheet of paper
DEMOGRAPHIC SEGMENTATION:
Table 1.2 Segmentation by Age
Table 1.3: Segmentation by Gender
Table 1.5: Segmentation by behaviour for HC Drinkers
1b) TABLE 1.6: Marketing Mix Advice
1.0: INTRODUCTION
A new marketing plan based on reduced data from conducted interviews in as seen above, extracts and reports from the market research and consultancy reports and information from the various directors will be drawn up to embrace new opportunities in the hot drink industry.
2.0: BUSINESS MISSION
“To maintain the highest levels of quality in our hot chocolate drink, offering premium products that provide the best value for money. The success of our business is influenced by our dedication to continually improve the quality and creativity in every aspect of our operations.”
3.0: MARKETING AUDIT
RLL is currently a major player in the tea sector in Hot drinks Industry and has achieved it through high marketing orientation, high quality brand etc. Our marketing audit has been segmented into two parts, an Internal and External Marketing audit;
3.0.1: INTERNAL MARKETING AUDIT
TABLE 1.7: THE 4M’s Model
3.0.2: EXTERNAL AUDIT
This will comprise of the microenvironment of which we look at our competitors and our customers, and then the macro environment.
Microenvironment Audit (5 Forces Model)
Figure 1: Porter’s 5 Forces Model (Jobber, 2007)
Rivalry within industry: Nestle and KJS are RLL’s largest competitors with others such as Paulig, SKB, Premier etc that have a larger part of the food beverage market share than the bigger companies moving hand in hand with them as analysed by our stockbrokers, in terms of financial trends.
Entry Barriers: Entry barriers clearly exist for hot beverage companies, as big competitors can switch into the food beverage market because they have the resources to do so. With the production of standardised products amongst few companies, they tend to enjoy economies of scale, posing also a problem for new entrants with low capital due to high operational costs and a likely hood of retaliation from big companies
Supplier power: No information was given on the suppliers of RLL in the case study.
Buyer power: There is a balance between buyer and producers. With few large producers and few alternatives, large retailers are able to purchase huge quantities at bulk discounts. On the other hand, big brands command shelf space; therefore retailers are willing to sacrifice profits, partnering with large firms to produce own labels.
Substitutes: Although the there is a weakening demand for tea and coffee, there appears to be major contenders to compete with their high potential sales. Consumers can be lured to purchase them if Silk does not meet their demand requirements since it is a low involvement situation.
CUSTOMER AUDIT
-
Who is important: Our customers are within the age range of 25-34 and 45-54, and fall within the AB and C1C2 social class with household income of £15,000-£24,999.Based on the interview the females, F21& F66 seem to take up all the roles and therefore their buying decisions are individualistic. In the case of M48, the wife is the main influencer and buyer and the middle aged man could be the initiator and decider and the couple are the users of the product.
-
How do they Buy: Seeing that ‘silk’ is a low involvement commodity and decisions to buy can easily be influenced by emotions, the consumers are more influenced by self indulgence and relaxation. M48 is more interested in what is on offer but all the segments are interested in the flavour, taste, quality and texture.
-
What is their Choice criteria: Customers’ usage of food beverages depend on benefits of performance, comfort, taste, looks, convenience, image and quality. M48 state his value for money.
-
When do they Buy: As earlier stated, silk is a tangible staple product and is consumed regularly and can therefore be repurchased. The purchases are mostly made on a weekly basis or when doing grocery shopping
-
Where do they buy: They make most of their purchases at supermarkets, corner shops, retail shops, corner and health shops, cooperatives etc. as observed in the table above.
COMPETITORS AUDIT
RLL’s major competitors in the hot beverage sector include Nestle, KJS and Premier with Wander, Paulig, SKB, as smaller contenders.
MACROENVIRONMENT AUDIT
Political/Legal: The choice of raw material supply could possibly be affected by restrictions made by the EU on the cultivation of genetically modified organisms. Also, with the regulation of food packaging using plastic materials, coupled with the enforcement of the labelling code by DEFRA, there are likely implications on the packaging and labelling of our products.
Economic: Sales by the food beverage market showed profitable growth from 2007- 2009 by competitors (Premier, Wander...) despite the slow growth of the economy. Forecasted future sales show an increase and should hopefully remain so even with the VAT increase and spending cuts to tackle the budget deficit problem which is likely to affect consumer spending on products.
Socio/cultural: Customers are more knowledgeable and aware of varieties and brands nowadays, some of who are aware of healthy eating. Customers show 90% of awareness and 80% of purchase intentions for food beverages based on their preference, sales by the food beverage sector show increase in instant chocolate and malted drinks. While there are income rises, household size gradually decreases; more women have jobs and luxury and convenience product consumption is rising (Jobber, 2010).
Technological: The continuing computerisation of organisational activities, e.g. a direct link between retailers and suppliers to replenish inventory levels, innovations in various fields like biotechnology and food additives require an understanding of the market carried out by the R&D and marketing team.
4.0: SITUATION ANALYSIS
Table 1.7: SWOT Analysis for RLL
Table 1.8: showing the conversion of weaknesses to strengths and matching the objectives
5.0: MARKETING STRATEGY
Product
Existing New
FIGURE 3: Ansoff Matrix
Based on the situation analysis mapped out above, we are able to match our strengths with opportunities. Using the Ansoff Matrix model of new product and existing market, RLL’s should focus on the area of product development which should be in line with introducing the new product, ‘silk’.
- They can utilize resources to establish our new product, silk, to standard quality and taste in the area of undeveloped product with the advantage of their high quality brands.
- They have a strong financial position to increase marketing and advertising spend and hence competition in the food beverage sector.
- RLL is highly market oriented and new avenues should be explored by their R&D team that are rarely explored by competitors
- They have a very good relationship with the retailers and should establish stronger partnerships with retailers with the purpose of increasing sales of the new product with its variants.
6.0: MARKETING OBJECTIVES
- To launch the new hot chocolate drink, silk, into the existing target market, with a product share of 40% amongst age 15-24 and 60% amongst age 65+, creating the instant, bedtime and light versions to standard quality, accomplishing tasks by Jan 2014.
- To increase awareness and sales of our new product through increased marketing spend, working with retailers to push hard our trails from 2%- 5% of our target market within a period of two years.
7.0: MARKETING IMPLEMENTATION
PRODUCT
We will be working chiefly on introducing the new product brands. We understand the core features expected of our target market which includes tastes and texture of the products; coupled with emotional benefits they derive (relaxant, a form of indulgence). Our decision to build our brands to augmented features in order to meet and exceed our customers’ expectations will include creating varieties such as instant, add-milk, diet/ light, bedtime versions. Labelling and packaging of our products should inform our customers and appeal to them as well, based on their various perceptions. Interestingly, a new idea of green labelling could be introduced.
Price: For our pricing strategy for the new product, we consider premier’s pricing strategies, noting them as price followers. RLL are price leaders in leading brands and our target market show considerable flow of income (£15,000-£ 24,999). In order to keep the image and standard of our brands, considering, also, our approach to spending more on advertising, a rapid skimming pricing strategy will be adopted, to create high levels of awareness and returns on investment.
PROMOTION
Decisions on promoting our products are influenced by target market, which comprises men, and mostly of women coupled with their attitude on trial of our brands. Since this is a low involvement situation, passive reception of information will be involved which will include sales promotions (premiums and gifts, coupons, packaging inserts); exhibits and trade shows, personal selling (sales samples), direct marketing (catalogs, telemarketing, company magazines, e-marketing). Our budget to invest on advertising has been approved by our financial directors.
Place: We plan to reach our customers, communicating with them as directly as possible, considering, also, the costs of distribution. Our decision to operate with Supplier-Retailer-Consumer channel will be most preferable for now. Other modes of distribution will be through direct internet sales. Arrangement concerning processing customer orders, warehouse arrangements, inventory levels, transportation modes will all be checked.
8.0: CONTROL
9.0: CONCLUSION
So far, the new marketing plan, prepared based on the information and reports provided by our directors and their team, has been prepared showing suitable strategies to build and launch our new product into the market. With available resources and a strong financial position, this new idea proves to be a possibility for River Links Ltd.
REFERENCES
-
Coutler M. (2002), Strategic Management in Action, 2nd Edition, New Jersey: Prentice-hall.
-
Jobber D. (2010), Principles and Practice of Marketing, 6th Edition, New York: McGraw hill.
-
[Assessed on 27/12/10].
