In the face of slow growth and a flattening market share, Becel’s brand manager, Ross Hugessen, is re-evaluating their market-penetration strategy. He has to face several important questions…is this a growth market? What is the competitor reaction going to be? Also, what is the capacity of their current target market to increase usage or consumption rates and the availability of new buyers?
Current Situation
Becel's main competitor in the spreads market is butter with just over 50% of the market in Canada. In both 1998 and 1999, Butter distributors spent at least $2 million more on advertising than Becel, but e
ven with all the new corporations emerging Becel still had the highest consumer loyalty of any brand at 32% of the margarine market.
Research has shown that a substantial portion of the volume of margarine purchases is by people with large families, particularly ones with four or five members, who tend to have a lower than average income. At the same time butter consumers tend to be families without children.
Becel shows that from 1998 to 1999, they decreased their advertising spending by $1,400,000 but kept the promotional budget the same. From 1998 to 1999, advertising awareness decreased 6%, brand trial decreased for the first time by 2% and dollar market share percentage increased only 0.3% which was considerably less that the 2.2% average increase seen over the last 5 or 6 years (See Exhibit A).
Options:
- Change Marketing Mix.
- Change Product (Diversify). Becel will be able to cater to a wide range of consumers by widening their product mix. New products could increase sales and some customers may purchase more than one.
- Price Cut (More for Less).
- Change Promotion or Advertising.
- Repositioning Strategy (Based on Different Buying Points).
Recommendation:
Becel needs to adjust its marketing mix to increase its brand awareness. It should embrace their current positioning as its current target market is growing (socioeconomic trend that our population is getting older and dealing with more health issues.) More people will buy on health points than ever before. Becel is bought based on health and this market is approximately 17% of the margarine buyers alone and combined with taste is almost 30% of the margarine market.
They should continue promotion of their referral relationships by continuing to build a strong relationship with healthcare professionals. They need to secure their position as market leader in the healthy margarine with promotions such as sponsorship of relevant events like the Senior Games.
They need to increase their advertising again to at least 6% of gross sales (5.75% in ’98) up from only 3.1% in ’99. They should continue to focus on an emotional upbeat appeal, rather than fear based, that will reach seniors concerned about their health. The price should stay premium, as it is still affordable by lower income seniors, and only a penny higher than the average retail price of health margarines.
Exhibit A – Effect of Advertising
