This report is about a product (Carrot-Lite ice cream) that is to be introduced to the market and it analyses a marketing plan for the new product which is launching under the brand Cargills Magic. This includes SWOT and PEST analysis, Marketing research,

SWOT ANALYSIS

(Figure 1)

Strengths

1. Carrot-Lite is introducing to Sri Lankan market by the brand Cargills Magic a core product of Cargills PLC which is a famous FMCG manufacturer who had grabbed consumers in Sri Lanka since 1844.
2. This is the first time a vegetable ice cream is being introduced to the Sri Lankan market, so people who are extremely buying only the nutritious food items will get attracted to this Carrot-Lite.
3. This is not like other flavoured ice cream; it is included with all the proteins which a real carrot has and artificial carrot flavour.
4. As Cargills is a leading business organization in Sri Lanka for a long time it has sufficient financial and other resources to perform the marketing and promotional activities of the product effectively.

Weaknesses

1. As vegetable ice cream is new to Sri Lanka, Cargills may have to put more effort to create a value in customers mind. This may add more financial costs regarding promotional and marketing activities.
2. Demand for vegetable ice cream in the market is unremarkable so it may be a considerable issue after the product being launched to the target market. 

Opportunities

1. Cargills can focus on the young crowd as well as the elder crowd. Because young crowd is mostly figure conscious and they prefer consuming nutritious food like carrot. The elder crowd is looking for nutritious food as they prefer consuming food items which contain low sugar and low fat.
2. The strong brand recognition of Cargills can be used when introducing Carrot-Lite to Sri Lanka and this helps to evade all the risks that can be occurred while introducing the product to the market.
3. As Cargills has its own retail outlets (Cargills Food City) Carrot-Lite can be initially available in those so as to reach the regular customers of “Food City”

Threats

1. There are some people who ignore consuming ice cream as it is not good for cough and some other illnesses. Also there will be people who ignore using Carrot-Lite though it is a nutritious ice cream.
2. Cargills will get severe competition from other competitors such as Elephant House, Highland and Kothmale and this will affect the marketing process with a challenging risk.

PEST ANALYSIS

(Figure 2)

Political Environment

• Political structure - Sri Lankan political structure is very unstable. This will be a threat for the product.
• The war situation - The country’s war has end, so it will be an opportunity for the product because Cargills magic will be able to introduce Carrot – Lite to every part of Sri Lanka.
• Laws – Cargills have to work according to the laws within the country that is relevant to our product.
• Standards – The product should have ISO, HACCP, SLS standards because consumers concerned about the standards of the product.

Economic Environment

• Low domestic income rate- This will result a fall in expected sales. This restricts the buying power of consumers and this will result a fall in expected sales in Cargills magic – Carrot-Lite.
• High cost of living - Purchasing power of people will b restricted because of high cost of living.
• Price levels – Price levels in Sri Lanka have gone up due to inflation.

• Taxation policy - Taxes affect the prices of raw material, and the final price of the product. Mainly Value Added Tax (VAT) is affected to the final price of the product. Vat rate is 12% in Sri Lanka.

Social Environment

• High concern about health and figure - Present generation is health and figure conscious. Carrot-Lite will be popular in the market because it is a nutritious ice cream with lesser calories.
• Age distribution – People of all ages consume ice cream without any hesitation, so that the demand for carrot ice cream will be high. Cargills is concerned in the elderly (above 40) and younger group (age 20-30). Elder population is increasing drastically. (Refer appendix 2)

Technological Environment

• Cargills magic – Carrot-Lite will be manufactured under high quality. This will enable the company to be competitive in pricing.
• High tech machineries- Per hour production grow higher by using high tech machineries.

Marketing Research

Marketing research is the systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing a company. To provide the detailed information necessary in order to launch the new product Carrot-Lite ice cream managers need marketing research (Source: Kotler & Armstrong,2006,p.105)

Marketing Research process

(Figure 3)

STEP 1: Define the problem & research objectives

 A descriptive research was carried out in order to identify:

1. Potential demand and the success of the product
2. The demographics and attitudes of the consumer
3. The buying behavior of the consumer
4. The target market
5. Ways to avoid new product failures
6. The satisfaction that can be generated to the customer
7. Most suitable pricing policy and strategy.
8. Most suitable promotional methods and strategies
9. Most suitable distribution methods and strategies

STEP 2: Develop the research plan

After defining research objectives the company should develop an efficient method to gather the needed information.

Data Sources:

 To get more accurate information, it is best to have a combination of both primary and secondary data as data sources. As for the marketing research of Carrot Lite both primary and secondary data sources are used. 

(Figure 4)

Secondary data:

In order to get a basic understanding of our potential market and other relevant information we initially gathered secondary information. Such data was gathered through internal company records, government statistical data, bank reports, annual reports of FMCG companies, and web sites.

Primary Data:

Since secondary data is not enough to reach a decision, a primary research was carried out.  We gathered our primary data through

• Questionnaires

Distributed among the people who came to leading super markets such as Cargills Food City, Arpico and Sun-up.

• Observation

We observed consumer behavior in purchasing Ice cream and related goods at the retail stores and super markets.

• Interviews

Interviews were carried out among the retail shop owner’s super market managers about the customers’ purchases of ice cream and related goods.

Further this information was analyzed through qualitative and quantitative methods. As the sample group of people to present the questionnaires, hence our product is Carrot-Lite ice cream we selected customers who came to purchase ice cream and related goods and used random sampling method to choose the sample group of people from the population.  (Refer appendix 1 for the questionnaire)

STEP 3: Implementing the research plan- collecting and analyzing the data

After developing the research plan and obtaining necessary information, the next step is to implement the research plan. This involves evaluating the collected information and putting the plan into action. This is a very crucial stage of the process and a great amount of effort, consideration and high costs will be incurred. It should also be noted that the possibility of occurrence in errors in this stage is very high.

Step 4: Interpreting and reporting the findings

This is the final stage of the marketing research process. Researchers should present the collected findings using good statistical methods, in order to make good decisions faced by management.

Following is a summary of the survey.

• Only 2% of the sample population has tasted a vegetable ice cream
• 67% of the sample prefer to have vegetable ice cream
• 78% of the people like to have a carrot flavored ice cream and 7% of the people prefer beetroot flavored ice cream
• 56% of the population were females among the people who prefer vegetable ice cream
• Among the interviewees who prefer vegetable ice cream, are included to 25-65 age group.
• 85% of the interviewees prefer vegetable ice cream due to health concerns.
• 90% of the population prefers to have Cargills magic ice cream than other brands.
• Among the population middle income earners most preferred the carrot flavored ice cream

This analysis will be very useful in developing the market segmentation. According to our analysis a carrot flavoured ice cream was selected which will mainly focus on health conscious female population.

Market Segmentation

Dividing market in to distinct groups of buyers with different needs, characteristics or behavior who might require separate products, services or marketing mixes.

Market segmentation process consists of 3 main steps:

(Figure 5)

 Segmentation

Consumer market can be segmented based on 4 main segmentation bases

• Geographic : Region, City , Density and Climate
• Demographic: Age, Family size, life cycle, gender, Income, Occupation, Education and etc.
• Psychographic : Life style and personality
• Behavioral : Occasions, benefits, user status, usage rate, readiness and attitude

The market for Carrot-Lite is segmented based on demographic and psychographic segmentation bases.

Demographic

• Age: Carrot-Lite is targeting people who are more concerned about their health as well as their figure. Due that fact the targeted age group is Age:  20-30, 40 and above
• Gender: Targeted for both genders but mostly female.
• Income level:  Since this product is a convenience good, its demand does not affect by the income level.

Psychographic

• Social Class: Individuals in Lower class, middle class and upper class can consume the product.

Behavioral

• Benefits : Carrot-Lite is Sugar free and Nutritious ( consist of real carrot extracts)
• User status: Since this is a new product consumers are experiencing it for the first time.

Target Market

Targeting is the process of evaluating segment attractiveness and selecting segments to enter, which involves making business choices of which resources are to be focused.

The targeting strategy used by Cargill’s (Ceylon) PLC is differentiated marketing which they target for several market segments and designs separate offers for each.  Since Cargills PLC manufactures many products, they select different segments and marketing mixes for each product.  Carrot Lite will be served to a different selected market segment because it is easy to reach one market segment than covering the whole market.

Position

Carrot Lite is an ice cream which comes with a unique flavor and nutrients mostly for the consumers who concerned about their health as well as whom loves the delicious taste of it.

Characteristics of the selected market segment

1. The consumers who are in between age 20-30 and above 40 are mainly targeted.
2. Individuals with health issues such as diabetes, cholesterol and etc.
3. Females who are more concerned about their figure and fairness.
4. This product will be introduced to a price sensitive market with a competitive price.

Significant problems and opportunities of the market segments

Problems:

It is identified that the following criterias are not satisfied 100%. The problems that are recognized as unsolved are;

• There is no vegetable ice cream in the local market.
• Persons with health problems such as diabetes cannot have sugar added food.
• It has become a enormous problem for the persons who are more concerned about their figures, The fact that the Ice creams consist more calories ( basically 58g of vanilla ice cream consists 145 calories and chocolate ice creams 125 ).
• It is been difficult to find frozen food with real vegetable nutrients.

Opportunities:

• Carrot-Lite will be the only vegetable ice cream in the local market.
• Persons with health problems will consume Carrot Light as well as persons with normal health.
• The calories of Carrot-Lite will be lesser than the other ice creams in the market since it is sugar free.
• Carrot light includes real carrot extracts. The nutrients given by Carrot-Lite will be as same as the nutrients given by a real carrot.

MARKETING OBJECTIVES

The objectives will be positioned after analyzing the external and internal environment (SWOT & PEST) effectively. Objectives should be Specific, Measurable, Achievable, Relevant and Time bound. Accordingly the following would be the qualitative and quantitative objectives of Cargills Magic for its new flavored ice creams.

• Establish a broad distribution coverage island wide within the first three months after the product being launched to the market.
• Strengthen the brand image of the product among the target customers.
• Increase the awareness of the product within the identified target market within six months by 40%.
• Manufacture some other flavored vegetable ice cream such as potato, beetroot, tomato etc.
• Inform target audience about the nutrients of consuming the product and develop sales up to 100000 of 1 liter tubs in the first three months.
• Cover the initial costs spent on promotional and marketing activities and obtain profit margin of 10% within first three months.

Product

Product:                                                                                         Carrot-Lite Ice Cream

Product Concept:                                                                                         This is a nutritious, sugar fee ice cream that is healthy for everybody.

Product Classification:                                                                                Ice cream is a convenience product and it comes under consumer products.

Product Quality:                                                                                                Cargills quality dairies which manufactures Cargills magic is the first dairy products processing and manufacturing company to be with accredited with ISO 22000 (food safety), ISO 14001 (environmental management system) and ISO 9001 ( Quality management system). (Cargills Ceylon plc website.[online].

Product Features:                                                                                        Unique features of Carrot-Lite, 

• Vegetable proteins are included.
• Attractive packaging.

Brand Name: Cargills Magic

Packaging and Labeling:                                                                                This ice cream comes with an attractive packaging, in 1 litre and 2 litre tubs.

Product Levels:

• Core Product – The core expectation of the product is to satisfy the need of freezing hunger.
• Basic Product – Carrot Ice cream.
• Expected Product – This is the things that the consumer would be expecting from this product. Carrot ice cream is milky, hygienic product. The money spent on the product will be worth for the consumer.
• Augmented Product – This is a nutritious ice cream. This includes vegetable protein that is unique to the product.
• Potential Product – We expect to introduce other nutritious flavours to the market in the future. Eg- Potatoe, Beet root, Cabbage flavours.

Plan for product Life Cycle:

(Table 1)

Price

Factors Affecting Price

1. Internal Factors

• Company and Marketing Objectives affect the final price.
• Marketing Mix Strategy - Price decisions must be coordinated with product design, distribution and promotion decisions for a effective marketing programs.(lecture notes)
• Fixed Variable and Other costs affect the price of the product.

2. External Factors

• The nature of the market- Pure Competition
• The nature of the demand- Elastic demand
• Competitors costs, prices and offers
• Economic conditions, government and other external environmental factors.

(Lecture notes)

Pricing Process

Stage 1 – Pricing Objectives

Profit Maximization – As Cargills is a financially stable company it has the ability to cover the total production cost so the pricing objective is profit maximization.

Stage 2 – Determining customer demand

Elastic – Since there are so many competitors for this product, customers will tend to buy ice cream for a reasonable price.

Stage 3 – Estimating cost

The price of the product should be able to cover cost through making profits. Following chart shows the estimated cost.

(Table 2)

Stage 4 – Analyze competitors cost, prices and offers.

There are number of competitors for ice cream. So the company has to consider the prices of competitors. Therefore Cargills has to price the product after considering prices of the competitors.

(Table 3)

Stage 5 – Selecting the pricing strategy

Cargills have chosen Skimming as the pricing strategy. This is to skim maximum revenues from the segments willing to pay high price. Through this the company can make fewer but more profitable sales.

Stage 6 – Selecting the final price

After the analysis is done company have decided the final price of a 1 L. Carrot-Lite tub.

Final price of 1 L Carrot – Lite tub – Rs. 155.00

Plan for product life cycle

(Table 4)

Place

Level of consumer marketing channel: Level 1

(Figure 6)

Sales points: Leading supermarkets Cargills food city, Laugh supermarket, Arpico and other small scale retail outlets.

Distribution Strategy

Selective distribution – Under this strategy the company will sell the product through a limited number of sales points. This strategy is chosen because this is a new product to the market. After the product becomes well known in the market the company can move from selective to intensive strategy.

Plan for product life cycle

(Table 5)

Promotion

Communication Mix

Cargills have chosen advertising and sales promotion to promote Carrot ice cream.

• Advertising – Cargills has adopted advertising since it is a very effective way to inform about the product to the customer. This would not be detailed information but this will be an attractive way to give reasons to buy the product. Its advertising medias would be TV, Radio, Internet, Print ads, Billboards, Packaging and Brochures.

• Sales promotions – Cargills have chosen sales promotions to encourage the purchase and sales of the product. The company will be giving customers who visit Cargills food city to have a taste of Carrot-Lite.

Marketing Communication Process

 (Figure 7)

• Identifying the target audience –

Target market is elder generation (age above 40) and younger generation (age between 20 –30)

• Determining the communication objectives –

Cargills magic is introducing Carrot-Lite ice cream to the market. Since this is a new product Cargills has to give information and educate the people about the product. Especially because this product is a newly introduced flavour to the market.

• Design communication message –                                                                The communication message will be “TASTE AND BE HEALTHY”                        
• Decide on media mix –

(Table 6)

• Establish marketing budget –

Cargills have chosen Objective and task method as our budgeting strategy. This is developing the promotion budget by defining objectives, determining tasks to achieve those, estimating costs and setting the budget.

(Lecture notes)

• Measure results –

The efficiency and effectiveness of the carried marketing activities have to be measured, that is whether they can remember the advertisements about the product.

Promotional Mix Strategy

• Pull strategy

(Figure 8)

Under promotional mix strategy pull strategy is used. In this strategy Cargills will use advertising and promotion effectively to encourage the customer to ask for the product from intermediaries (retail shops) accordingly inducing intermediaries to order it.

Plan for product life cycle

(Table 7)

CONCLUSION

It is identified through the marketing research that the demand for Carrot-Lite will be constructive in the target market which is recognized as the customers within the age group 20-30 and above 40.

Carrot-Lite is a nutritious ice cream with real carrot extracts and also it has mouth-watering flavor of Carrot. It is recognized through the marketing research that this product will be consumed mostly by the individuals who has health issues such as diabetes, blood pressure and etc.

By considering all the facts it is positive that the product would successfully establish in the market.

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Appendices

Appendix 1

Questionnaire

1. Have you ever tasted a vegetable ice cream?

                        Yes                No

2. Do you prefer vegetable ice cream?

           Yes                  No

3. If you prefer what flavor would you like to have?

Carrot      Beetroot        Tomato      Other

4. Why do you prefer a vegetable ice cream?

     Health       Figure     Taste

5. Which age group do you belong to?

5-17

18- 35

36-55

56 and above

6. Gender

Male                Female

7. Your monthly income

Below 25000

250000-50000

Above 50000

8. What’s your most preferred ice cream brand and why?

………………………………………………………………………………………………

Appendix 2

REFERENCES

• Cargills Ceylon PLC website, [online], Available , [Accessed 30 April 2009]

• Calorie count, [online], Available , [Accessed 21 May 2009]
• Groucutt, J., Leadley, P. & Forsyth, P. 2004, Marketing, published by Vinod Vasishtha for Kogan page India pvt. Ltd, New Delhi
• Kotler, P. & Keller, Principles of marketing, 2006, 11th edition, pearson education, New Jersey, USA.
• Lecture notes by Miss. Nilusha Gallage
• U.S. Census bureau, population pyramids for Sri Lanka, [online], available  [Accessed 20 May 2009]