Table of Contents
The Executive Summary............................................................................................. 2
Introduction.................................................................................................................. 2
Marketing Process (LO 1.1)...................................................................................... 2
Marketing Orientation (LO
1.2).................................................................................. 3
Situational Analysis (LO 2.1)....................................................................................... 3
PEST Analysis........................................................................................................... 3
Porter’s Five Forces Analysis................................................................................... 5
Internal Analysis....................................................................................................... 6
Capabilities................................................................................................................ 6
SWOT Analysis......................................................................................................... 7
Segmentation (LO 2.2)................................................................................................. 8
Targeting (LO 2.3)....................................................................................................... 8
Buyer behavior (2.4).................................................................................................... 9
Positioning Options (LO 2.5)....................................................................................... 9
Marketing Plan (LO 4.1)............................................................................................. 9
Product (LO 3.1).................................................................................................... 10
Price (LO 3.3).......................................................................................................... 10
Place (LO 3.2).......................................................................................................... 10
Promotions (LO 3.4)................................................................................................ 10
Extended Marketing Mix (LO
3.5)........................................................................... 11
Conclusion and
Recommendations........................................................................... 11
References................................................................................................................... 12
The Executive Summary
Divine Chocolates has been
operating in the market for so long and currently seek opportunities to grow
through new product development. In this context, the environment analysis
identified the need for instant energy snack in the market and the marketing strategy
was developed to market the product defining the segmentation, targeting and
the positioning strategy. Once the marketing strategy was established, the next
element focused on developing the marketing mix for the product and under this
segment, product, price, promotions and place were discussed extensively.
Extended marketing mix was also presented to add further value to the marketing
mix of the company and finally it was concluded that the company should go
ahead with the product launch as planned as it has the potential to contribute
towards achieving marketing objectives.
Introduction
It is essential to develop a
proper marketing strategy to develop the competitive advantage in the market
while being successful in terms of profitability as well as sustainability. The
company wishes to introduce a new product to the market, which is an energy bar
that would provide instant nutrition for the busy consumers. The main aim of
this report is to perform a situational analysis for the company and come up
with the marketing strategy based on the findings of the situational analysis.
Marketing Process (LO 1.1)
Marketing activities for the
new product is conducted based on the marketing process that was developed by Klopper
et al (2006). Therefore, it seems to be highly formalized and methodical in
nature. The first step of the marketing process is to understand the business
environment of the company through a situation analysis where as the second
step focuses on developing the marketing strategy for the company through
deciding on segmentation, targeting and positioning. The next step of the
marketing process involves developing the marketing mix for the company using
the 4Ps as well as elements of the extended marketing mix. Once the marketing
mix is developed, the step of the marketing process focuses on the monitoring
and controlling of the marketing strategy upon implementation.
Marketing Orientation (LO 1.2)
There are various
orientations for production and sales depending on the era and the motives of
the process. Marketing orientation is one such orientations where is defined as
identifying, anticipating and satisfying needs and wants of the customer with a
motive for a profit in a socially acceptable manner. (Kotler and Armstrong,
2008) The element of socially acceptable manner is introduced through the
concept of societal marketing, which was introduced as an evolvement of the
original concept of marketing. The benefits of the marketing orientation to the
Divine Chocolates include its aim to satisfy need/wants of the customer, which
ultimately add value to the customer. It thinks of the process from the
perspective of the customer rather than forcing the customer buy the product
that was prepared based on the values and beliefs of the company. Marketing orientation also focuses on making
a profit for the company, which is essential for the financial stability for
the company, which would also ensure that the company would sustain for a
period of time through satisfying financial needs of the owners of the Divine
Chocolate. Therefore, the marketing orientation is considered to be appropriate
in the current business environment, which is highly competitive as well as
sustainability is an issue. Hence, the marketing orientation is adapted in
developing the marketing strategy for this company.
Situational Analysis (LO 2.1)
The situational analysis
identifies the strategic position of the company in the business environment
upon evaluating the internal and the external business environment that would
impact the marketing strategy of the company. Various tools are used to
evaluate the internal and the external business environment where the findings
of the analysis are summarized through a SWOT analysis, which would be used in
decision making of the marketing strategy.
The Situational analysis starts with the macro environment analysis
carried out through the PEST framework. (Kotler and Armstrong, 2008)
PEST Analysis
Political Factors – Food
packaging regulations –
The government has introduced
food packaging regulation in order protect the consumer right in terms of
obtaining healthy food. Food product manufacturers and marketers should meet
stated standards such as air tied packaging, displaying manufactured date,
ingredients, expiry dates and the license number. Hence, the marketing strategy
should be devised based on the tight legal framework that regulates the food
manufacturing industry.
Economic Factors
Boom in Consumer Spending – The
consumer income in the UK has increased by 0.7% on a monthly basis in the early
half of the year, which indicates that the purchasing power of the consumer has
increased overtime. (Guardian News and Media Limited, 2013) This gives a
significant opportunity for the company to market the product at a higher
price.
Social Factors
Lack of Nutrition – Most of
the consumers in UK have got used the habit of consuming fast food and there is
a significant lack of nutrition among the population in the domestic market. (HSIS,
n.d) The survey findings also reveal that most of the kids as well as the
working population in UK undergo certain stages of malnutrition/lack of
nutrition, which creates an opportunity for the company to market an energy
bar. (HSIS, n.d)
Lack of Free Time – With the
increased work load at offices/work places, the consumers do not have time to
sacrifice on preparation of nutritious food and therefore, many customers have
got used to the habit of consuming fast food which is not healthy for them.
Therefore, the company has the opportunity to introduce an instant snack that
provides nutrition to the customers while saving time
Technology Factors
Boom in social media – Social
media has become an emerging trend among the customers where many customers
engage in social media such as Facebook and Twitter on a daily basis. (European
Travel Commission, 2013) This provides an opportunity for the company to use it
as a marketing channel to reach out to its target market on a regular basis
with a low cost.
Porter’s Five Forces Analysis
Michael Porter’s Five Forces
analysis identifies the industry factors that impact the marketing strategy of
the company. (Kotler and Armstrong, 2008)
Bargaining Power of Customers
– There are large number of customers in the market and the customer is not
depended on one/limited number of customers. Therefore, the bargaining power of
the customers is identified to be low. However, there are various other
alternative products that are available in the market and the customer can
switch to such product with no switching cost, which increases the bargaining
power of customers. Hence, the bargaining power of customers is concluded to be
moderate.
Bargaining Power of Suppliers
–There are large number of suppliers who can supply raw materials to the
company. The company also purchases in bulk, which allows the company to
negotiate for bulk rates. Therefore, the bargaining power of suppliers is
identified to be low.
Threat of Substitutes – There
are large number of substitute products in the market, which provide instant
nutrition to the customers. These products include nutritious drinks, energy
drinks, cereals and many other nutritious foods. The customer has the option to
switch to substitutes with no switching cost. Hence, the threat of substitutes
is identified to be low.
Threat of new entrants –
Since the nutritious food category is an emerging market trend and due to the
industry’s potential, there are many new entrants who are willing to enter the
industry with new products. There are no major entry barrier to the industry
except for obtaining license and developing recipes for products. Therefore, it
gives the chance for newcomers to enter the industry easily creating threat for
the company.
Rivalry among existing
players – There are large number of players in the market who compete to
sustain as well as increase their market share. Since the threat of new
entrants and substitutes is high, the existing companies need to compete hard
in order to survive in the market as those two forces try to eliminate the
companies from the market. Therefore, the rivalry among existing players is
also identified to be high, which is seen as another threat to the company.
Internal Analysis
The factors that are internal
to the Divine Chocolate can be analyzed as follows:
Visionary Leadership – Divine
Chocolate has a visionary leadership that is provided by the founder and the
CEO who is actively involved in the day to day management of the business. The CEO is has forward-looking
decision-making pattern where his leadership skills are considered to be
strength to the company.
Low financial resources –Divine
Chocolate is a small-scale business at the moment, the financial stability of
the company is identified to be low. Therefore, the company does not own many financial
resources to be invested/spent on marketing activities limiting the marketing
budget, which create a weakness.
Lack of employee empowerment –
Since the company is small, the organization still operates with a top down
approach for the management where the lower level employees are not given
enough empower. This is seen as a weakness as the creativity in the marketing
depends on encouraging ideas from all levels within the company.
Capabilities
Capabilities of Divine
Chocolates can be explained as follows:
Highly Creative Marketing
Team – The company currently has a highly create set of marketing professionals
who could be highly innovative in designing marketing strategies. This could
differentiate the company from the rest in the market and therefore, it is seen
as a strength to the organization.
In house product development –
The Company also holds an in house team who are expert in developing new
products as they have past experience and required knowledge for new product
development in food industry. This prevents the company from having to
outsource product development and it is identified to be strength of the
company.
SWOT Analysis
Based on the internal and the
external environment analysis conducted above, the SWOT analysis for the company
can be developed as follows:
Strengths
·
Visionary
Leadership
·
Highly
Creative Marketing team
·
In house
product development ream
Weaknesses
·
Lack of
employee empowerment
·
Lack of
financial resources limiting the marketing budget
Opportunities
·
Increased
consumer income
·
Lack of nutrition among the population of UK
·
Increased
workload that limits the time available to prepare nutritious food
·
Increased usage of social media
·
Low
bargaining power of suppliers
Threats
·
Highly
regulated food industry to protect consumer rights
·
High
threat of substitutes and new entrants
·
High
bargaining power of customer
Extensive rivalry among
existing players in the market
Segmentation (LO 2.2)
As the situational analysis
is conducted, the next step of the marketing process is to develop the
marketing strategy, which emphasizes on segmentation, targeting and
positioning. The segmentation is the process by which customers with similar
characteristics are grouped using segmentation variables. (Kotler and
Armstrong, 2008) The segmentation variables used for this product are age,
income level, requirement for nutrition and the level of workload in their
day-to-day routine. Income factor justifies the customer ability to pay for
product and age factor indicates the appetite of customers towards the instant
food. Based on these factors, following
two segments can be identified as viable segments.
Feature
|
Segment
One
|
Segment
Two
|
Age
|
13- 18 (teenagers)
|
22 – 30 (young adults)
|
Requirement for Nutrition
|
Yes
|
Yes
|
Level of workload
|
High
|
High
|
Income Level
|
Middle income earners
|
Middle income earners
|
Targeting (LO 2.3)
Once the segments are
established, the next step in the marketing process is to identify the
targeting strategy for the company. In this case, the targeting strategy is
identified as undifferentiated marketing/mass marketing, where the product will
be offered to all the segments using the same approach. (Kotler and Armstrong,
2008) This is because, there are are no differences in customer segments in
terms of customer needs and therefore, the same approach is used to target all
the segments at once. The main aim of using this approach is to sell in bulk
and thereby generate economies of scales to achieve cost advantage. Further,
this method also avoids confusions in customer’s mind, which is also essential
in creating clear positioning.
Buyer behavior (2.4)
Since this is a
consumer-oriented product, the consumer buying process would apply indicating
that the consumer behavior concepts would be applied in the same. Since this is
a food related product (consumer good), purchases can be very spontaneous as
the customers could get the urge to purchase/consume as and when they see the
product in display. Further, due to the fast moving nature and the high
frequency of purchase, the effort that would be put into pre purchase
evaluation would be less with less information gather and less time spent on
evaluating purchase options. However, the post purchase behavior would remain
the same where positive post purchase review could lead to loyal customers with
positive word of mouth and vice versa.
Positioning Options (LO 2.5)
Positioning involves
capturing a clear place in customer’s mind regarding the product and there are
various positioning options available for the company which are explained
below:
Pricing as a positioning tool
– The company can offer the product at the lowest price in the market which
would allow the company to be position as the lowest price provider in the
market.
Quality as a positioning tool
– The company can produce the goods at high quality which would position the
product as a high quality product in the consumer’s mind and the quality can be
measured in terms of the taste, flavor and the freshness of the product.
Marketing Plan (LO 4.1)
As the marketing strategy
clearly defined the positioning, which is high quality low priced product, the
next step of the marketing process is to define the marketing mix using the 4Ps
and the extended marketing mix elements.
Product (LO 3.1)
The product would be
developed according the regulations developed the consumer affairs authority of
the country where the packaging and the labeling will be carried out according
to the regulations. The competitive advantage will be developed through the
product element where the product will be developed and produced at a very high
quality than competitors, which would increase the level of sales and thereby
increasing the profitability.
Price (LO 3.3)
In order to achieve the stated positioning,
the product will be sold at the lowest price possible and this will position
the product at the lowest priced brand in the market. When the prices are very
low, it would attract high number of volume and this would contribute towards
achieving the marketing objectives in terms of sales units as well as the
revenue targets. Therefore, this strategy seems to be viable for the company to
achieve objectives. However, since the prices are low, the cost element should
be managed effectively in order to generated targeted rate of profitability.
Place (LO 3.2)
The place indicates the way
in which the product is distributed the customer and the main aim of this is to
provide convenience to the customer, which would increase the frequency of
purchase. The products are sold through dealers, whole sellers and retailers
who are based around the country and this would create an extensive
distribution network allowing convenience for the customer.
Promotions (LO 3.4)
The promotions indicate the way in which the
message about the products is communicated to the customer. Since the social
media marketing is an emerging trend, which is cost effective, it is decided to
leverage on social media marketing to create awareness about the product. In
this process Facebook page and a Twitter profile will be created for the brand.
There will be various promotions such as competitions and one to one offers
will be offered for customers who are connected on social media in order to create
buzz about the new product.
Extended Marketing Mix (LO 3.5)
The extended marketing
element such as physical evidence will be created for the product using an
attractive logo and attractive packaging for the product, which would remain in
consumer’s mind even after consumption of the product. Further, the people element
will be managed through minimizing human contacts with customers where the
staff who gets involved with customers such as the product hotline assistants
will be given heavy training on customer relationship management. Processes
will be streamlined in order to eliminate non-value adding activities where the
focus will be given to the customer where they will be treated right at any
given time.
Conclusion and Recommendations
The report above identified
the situational factors that provided the market opportunity for the company to
market an instant energy bar to teenagers as well as young adults who have a
busy lifestyle. The elements of marketing strategy and the marketing mix were
proposed in the sections above. However, in order to further improve performance,
following recommendations are made. As the mobile phone usage is increasing,
the company should consider mobile marketing tactics such as SMS alerts the
promotions strategy. In order to stimulate demand in the initial stage, it is
recommended to carry out product testing campaigns at leading supermarkets such
as Tesco, which would create publicity and demand for the product.
References
European Travel Commission.
(2013). Social Networks and UGC . Available:
http://www.newmediatrendwatch.com/markets-by-country/18-uk/152-social-networks-and-ugc.
Last accessed 12th July 2013.
Guardian News and Media
Limited. (2013). US consumer spending makes biggest gain in five months as
incomes rise . Available: http://www.guardian.co.uk/business/2013/mar/29/us-consumer-spending-gain-income.
Last accessed 12th July 2013.
HSIS . (N.d). TOO MANY UK
CHILDREN STILL FACE POOR DIET AND NUTRITION, NEW HEALTH SUPPLEMENTS INFORMATION
STUDY FINDS. Available: http://www.hsis.org/press/childrensdiet.pdf. Last
accessed 12th July 2013.
Klopper et al (2006). Fresh
Perspectives: Marketing . Cape Town : Pearson Education South Africa
Kotler P Armstrong G (2008).
Principles of Marketing. 12th ed. New Delhi: Pearson Education Limited
