Contents
Page No. 1. Terms of Reference……………………………………………………………………..01 2. Introduction to Unilever Bangladesh Limited (UBL)………………………………01 3. Evaluation of the findings from marketing audit of UBL and identification of key issues………………………………………01 3.1 Evaluation of External Environmental Factors……………………………………01 3.2 Evaluation of Internal Environmental Factors…………………………………….02 3.3 Key Issues: External and Internal Environmental Factors………………………02 4. Marketing Objectives……………………………………………………………………03 4.1 Generating Alternative Strategic Options…………………………………………03 5.
Recommendations of segmentation, targeting and positioning……………….04 5.1 Market Segmentation………………………………………………………………..04 5.2 Target Market Segmentation for ‘Knorr Soup’……………………………………05 5.3 Targeting Strategy……………………………………………………………………05 5.4 Positioning Strategy………………………………………………………………….06
6. Suggested marketing mix for Knorr Soup…………………………………………..07 7. Recommendations of marketing budget…………………………………………….09 8. Suggested method for Evaluating and Controlling the Marketing Plan & Budget……………………………………………………………...10 8.1 Benchmarking………………………………………………………………………...10 9. Conclusion…………………………………………………………………………………11 Bibliography……………………………………………………………………………………12
Marketing planning of ‘Knorr Soup’
Figure
Page No. Figure 1 : Ansoff’s growth vector matrix (source: Ansoff, 1957)…………………………………………..03 Figure 2 : The major bases for segmenting consumer markets…………………………………………..05 Figure 3 : Multivariate Segmentation for Knorr Soup……………………………………………………….05 Figure 4: Perceptual map adapted from Drummond and Ensor (2001)…………………………………..06 Figure 5 : Knorr soup distribution channel…………………………………………………………………….08 Figure 6: Implementation Schedule of promotional activities (GANN CHART)…………………………09 Figure 7: Marketing Budget for the First year…………………………………………………………………10
Marketing planning of ‘Knorr Soup’
1. Terms of Reference This task is based upon creating a medium term marketing planning (3 years) of knorr Soup just 9 months ago launched by Unilever Bangladesh Limited(UBL). In doing this, the marketing environment including both external and internal environment has been evaluated. Afterwards considering the marketing objectives a marketing mix has been suggested based upon the target market segmentation and positioning. And by analyzing all the above factors, a marketing budget has been established to create awareness among the target market. Eventually, the benchmarking method has been suggested for controlling the marketing plan and budget. 2. Introduction to Unilever Bangladesh Limited (UBL) An organizational overview of Unilever Bangladesh Limited is shown in Appendix 1. 3. Evaluation of the findings from marketing audit of UBL and identification of key issues: To enhance company performance with sustainable competitive advantage, It is very important for UBL to conduct an insightful diagnosis of the external and internal environment which will help to adopt a strategy that is brilliantly fit with the company's situation. 3.1 Evaluation of External Environmental Factors Macro Environmental Factors
Although unstable political situation prevails, as a developing country Bangladesh Govt. always encourages investments by making favorable business environment to reduce unemployment problem.
To control inflation is very important to make the GDP growth fruitful. In such a situation, to ensure a sustainable profit drive, UBL has to adopt the strategy for some products to packaged into small size for low income group, for affordability.
Busy urban life need such products that can make their life easier. So, it is a great opportunity for UBL to emphasize on an exclusive culture and embracing difference, which will result in high demand of its products in the developing and emerging market.
UBL should always try to give importance on R&D, current technologies and launching of modified products so it can please its stakeholders.
The Government is strengthening the consumer protection law and UBL must cope with the law to serve consumer interest.
1 Marketing planning of ‘Knorr Soup’
Working with the government in regard to climate change, CO2 emission waste management and arrangement of various training program to ensure compliance with the company standard for occupational health and safety will enhance the brand image. Evaluation of Micro Environmental Factors The micro environmental factors of UBL reveals that as UBL has access to many suppliers for acquiring raw materials with a strong inventory management system, the bargaining power of supplier is low. And there are various alternative choice customers can enjoy to satisfy their needs and desire, so the bargaining power of buyer is high. Only few financially capable companies exists to invest required capital, so the threat of new entrants is moderate. In addition, the price of the substitute product is relatively higher than the UBL one ,so there is a low threat of substitute. In the soup industry UBL is competing with only ‘Nestle’. The present scenario reveals that almost 83% market is covered by Nestle. So, to increase the market share will be a challenge for UBL. 3.2 Evaluation of Internal Environmental Factors Internal environment could be evaluated in the context of product life cycle model & BCG matrix which have been discussed in the task-1: Earlier it has been revealed that the product (Knorr) is at the introduction stage. So, for helping the product to progress further it is necessary to create awareness & trial, to extend distribution channel and if it can be done than low sales will be turned into high and negative profit will be turned into positive because of economies of scale. In the Task-1, it has been revealed that ‘Knorr Soup’ is operating in the high-growth market (18.11%) with a low relative market share(17%). In such a situation 'Knorr must try to increase the market share in order to strengthen its position. In doing this, UBL should concentrate on long-term returns rather short-term earnings and profits. 3.3 Key Issues: The followings are the key issues of external & internal environment External Environment
Political instability could affect investment.
Real GDP growth rate is 6.7% which will influence to consume.
41.7 million people living in urban areas who have more consumption power.
Enriched R&D has the ability to introduce new products which can attract customers. 2 Marketing planning of ‘Knorr Soup’
Change in international and local policy could affect productivity.
Industry Analysis
Low bargaining power of supplier will ease the raw material collection.
Bargaining power of buyer demands more customized product.
Moderate threat of entrants can bring more option for customer.
Higher cost of substitute product enhances opportunity.
Key issues of Internal Marketing Environment
Annual market growth is high Product at introduction stage demands awareness creation.
Should concentrate on long term results.
Need more market share to gain profit.
4. Marketing Objectives
To achieve 7o% customer awareness in the target market within first 6 months.
To establish distribution channel in 42 district town within first 12 months.
To accomplish annual growth rate of at least 12% by the end of second year.
To achieve 45% market share by the end of three years
4.1 Generating Alternative Strategic Options Ansoff (1975) developed product/market matrix which presents a useful relationship between products and markets. The matrix reflects on four arrangements of product and market. Each mixture proposes a growth strategy. So, for achieving the objectives, which strategic option should be proposed to deliver a product to the market must be ensured. Current
Market Penetration, Market Share, Market Growth, Customer Churn
Product Development
Market Extension/ Market Development
Diversification
Market
Current
New
New
Product
Figure 1 : Ansoff’s growth vector matrix (source: Ansoff, 1988)
3 Marketing planning of ‘Knorr Soup’
From the marketing objective, it can be seen that in its medium term planning ‘Knorr’ tends to dominate the market by creating awareness and extending distribution channel. Moreover, in the task-1, in BCG Matrix it has been shown that annual market growth of Knorr is very high. So, all this things recommends Knorr to adopt market penetration strategy. 5. Recommendations of segmentation, targeting and positioning The phases of STP progression can be identified as follows: 1.Identify the organization’s current position, capabilities, objectives and constraints 2.Identify the segmentation variables and segment the markets 3. Develop profile of each segment 4. Evaluate the potential and attractiveness of each segment 5..Select the target segment(s) 6. Identify the positioning concept within each target segment 7 Select and develop the appropriate positioning concepts 8. Develop the marketing mix strategy Source: Gilligan and Wilson (2003, p398 )
5.1 Market Segmentation Dibb et al. (2001) defines segmentation as: ‘The process of grouping customers in markets with some heterogeneity into smaller, more similar or homogeneous segments’ Kotler et al. (1998, p.28) defines segmentation as: ‘The act of dividing the market into specific group of consumers who share common needs and who might require separate products and/or marketing mixes’ There are a number of reasons organizations undertake segmentation (Doyle, 1994):
‘To Meet consumer needs more precisely
To increase profits
To segment leadership
To retain customers
To focus marketing communications’
So, it could be said that segmentation is about categorizing explicit groups of customers to which an organization could realize demand with its’ products or services. As the chosen product is a FMCG product, so it is necessary to use segmentation variables for the consumer market. 4 Marketing planning of ‘Knorr Soup’
Geographic and geo demographic Geographic: region, climate, population density. Geo demographic: ACORN, MOSAIC, PiNPOINT, SUPERPROFILES, DEFINE, PiN, FiNPiN Demographic Age, sex, education, occupation, religion, race, nationality, family size, family life cycle, ethnicity Behavioral Attitudes, knowledge, benefits, user status, usage rate, loyalty status, readiness to buy, occasions Psychographic Personality,
lifestyle, VALS, AIO, 4Cs, Monitor
Figure 2 : The major bases for segmenting consumer markets [Source: Wilson and Gilligan (2003, p 412)]
5.2 Market Segmentation Strategy for ‘Knorr Soup’ After careful study of the market UBL will adopt the Multivariate segmentation strategy for Knorr Soup in the following way: Demographic Segmentation Variable
Consumer
Age
10+
Ethnicity
Urban Society
House Hold Size
4+
House Hold Income
10000
Behavioral Segmentation
Benefits Sought
Can be prepared promptly and easily.
Average usage rate
4 packs a week
Figure 3 : Multivariate Segmentation for Knorr
5.3 Targeting Strategy After identifying the market segmentation it is essential to adopt a targeting strategy which will help UBL to go after the segment for its marketing efforts. Dibb et al. (2001, p.49) identify the different targeting approaches as: ‘The decision about which market segment(s) a business decides to priorities for its sales and marketing efforts.’ One of 5 Marketing planning of ‘Knorr Soup’
the different approaches is undifferentiated or mass marketing strategy where the organization considers the total market as being homogenous and apply just one marketing mix for the total market. For Knorr Soup, UBL will go for this strategy because it will ensure mass awareness to total urban society with lower operational cost (marketing, manufacturing e.g.). 5.4 Positioning Strategy Kotler and Keller (2006) defines positioning as: ‘The act of designing the company’s offer and image so that they occupy a meaningful and distinctive position in the target customer’s mind.’ Having finished the target market selection it is important for UBL to make a strong position in the target market’s mind. Knorr Soup has entered the market with four flavors which are almost similar to its competitor in terms of ingredients and customers can easily identify this. Now, on what positioning prompts UBL should concentrate on. As Knorr has entered the market after three years of its competitor (Maggie Soup) and has grab 17% market share after nine months of launching the product. So, Knorr Soup should concentrate on competitive positioning.
The following perceptual map has been adapted from Drummond and Ensor (2001, p.186) ,and shows where Knorr Soup now see itself relative to its main competitor Maggie Soup:
High
Quality
Price
Premier Sector
Mid Range Maggie Knorr
Basic
Low Quality
High Quality
Figure 4: Perceptual map adapted from Drummond and Ensor (2001)
6 Marketing planning of ‘Knorr Soup’
The above perceptual map reveals that in terms of quality the perception of consumers about Knorr is less than its competitor. So, consumers are ready to pay higher price for Maggie Soup. UBL thinks that people perceive Maggie in this way because it has entered in the market before Knorr and has enjoyed monopoly business. 6. Suggested marketing mix for Knorr Soup Wilson and Gilligan (2003 , p. 578) has the following to say about marketing mix: “The way in which a differential advantage might be achieved – and sustained – is through the manipulation of the elements of the marketing mix. This mix has traditionally been seen to consist of the ‘four Ps’ of marketing: product, price, promotion and place.” So, it could be said that marketing mix is the following set of marketing tools like;
Product
Price
Place
Promotion
that a firm can manage to follow its marketing objectives in the target market. With the purpose of creating the proper arrangement of these elements to satisfy the needs of the customer of Knorr Soup, UBL should combine the above elements in the following way: Product : Keeping in mind the diverse flavors of its competitor (Maggie Soup), Knorr Soup has entered the soup industry as an actual product. The four flavors of Knorr are chicken ginger, chicken mushroom, classic tomato & corn chicken which are almost similar to its competitor. In case of packaging all nutritional facts have been revealed for consumers. As Knorr has entered the soup industry as an actual product, so for attaining the marketing objectives UBL should modify the existing features by removing those which no longer meet up the needs of a large enough number of consumers and do not generate sufficient profits. Price: In case of price setting ‘Knorr’ has adopted market penetration pricing strategy because the competitor has already grabbed 83% market share so ‘knorr’ needs to attract the large number of buyers in order to enlarge its market share. In doing this, the price of Knorr will be lower from its competitor. Earlier in the characteristics of market segmentation it has been showed that average usage rate is 4 packs per week, So, UBL should adopt the product-mix pricing strategy like product bundle pricing including 4 packs together which will cost 100tk and which is 20tk. lower than its competitor.
7 Marketing planning of ‘Knorr Soup’
Place: For making Knorr Soup available UBL will intensive distribution strategy which means the product will be available in the target region. Afterwards for distribution channel organization UBL should adopt a distribution channel structure in which producers, wholesalers and retailers act as an integrated system. In doing so, UBL should concentrate on establishing distribution channel in the district town by the following way: Unilever Bangladesh Limited (UBL)
Distributor
Whole sellers in the target market (district town)
the
Retailers
Direct Selling
Consumers
Figure 5 : Knorr soup distribution channel.
In case of choosing whole seller UBL prefer agents and brokers who will not take possession of the goods but will be paid a commission for aiding buying and selling. Moreover, UBL must ensure the prerequisite of products at the quality level preferred by the leading number of customers in that target market, while maintaining the costs of stock inventories, transportation and warehousing as low as possible. For making the channel more effective UBL should assign the tasks to all channel members so that the whole work could be done smoothly to attain overall channel goals in the following way;
To maintain a relationship between retailer & whole seller to ensure product placement in the targeted city for achieving a revenue target
To cluster various territories along with conflict management & trouble solution.
To make all the channel members responsible for the sales within the whole targeted area for Knorr Soup.
Promotion: Philip Kotler (2003, p.18) has the following to say about promotion: ‘Promotion is that part of communication that consists of company messages designed to stimulate awareness of, interest in, and purchase of its various products and services.’ For Knorr Soup UBL should emphasize on Integrated Communication Approach which means a management idea where all characteristics of marketing communication will effort in a combined way. Wilson and Gilligan (2003, p.589) has identified: ‘when a product is at introduction stage 8 Marketing planning of ‘Knorr Soup’
needs heavy spending to build awareness and encourage trial among early adopters and distributors’. So, For Knorr Soup UBL should conduct the following promotional activities: Advertising, Sales promotions, Merchandising, Personal Selling, Public Relation e.g.
So, UBL will implement the above promotional activities in the form of multiple tasks like the following way: Implementation Schedule Year-1
Year-2
Year-3
April, 2012- March, 2013
April,2013-March,
April,2014-March,
2014
2015
Three Years (3) Medium Term promotion Planning
Months
1
2
3
4
5
6
7
8
9
10
11
12
Task Description Product Development Television Advertisement News Paper Advertisement Magazine Advertisement Radio Advertisement Billboards Advertisement Point of Sale (POS) commission, free offer (Price off, sample) Personal Selling Campaigning Canteen/Cafeteria Branded Mobile Vans Product Modification Price Changes
Figure 6: Implementation Schedule of promotional activities (GANN CHART)
7. Recommendations of marketing budget To market a product, it is very imperative to estimate a realistic cost which will ensure the marketing objective to achieve 7o% customer awareness in the target market within first 12 months along with the permission of concerned authority. For this, UBL need to determine the budgeting method which will ensure a realistic budget for knorr soup.
9 Marketing planning of ‘Knorr Soup’
Among the several budgeting method Knorr should use the combination of objective & task and judgment method. In the marketing audit part (Task-1) it has been found that the soup industry growth is high and knorr is at the introduction stage. So, keeping the marketing objective in mind to gain 45% market share by the end of three years along with the analysis of social trend extracted from external environmental analysis the following marketing budget is recommended. Advertising
Cost in Taka
Television
20,00,000
Radio
60,000
News Paper
250,000
Magazine
50,000
Billboards
10,00,000
Merchandizing or Point of Sale (POS)
200,000
Out of home activation Canteen/Cafeteria branding (Chosen
120,000
University, College, School in the targeted area) Branded Mobile Vans
300,000
Sales Promotions Free Offer
150,000
Sample Distribution
120,000
Public Relation Campaigning
110,000
Sub Total
42,40,000
Figure 7: Marketing Budget for Knorr Soup
[Note: 1 pound=132.50 tk.]
8. Suggested method for Evaluating and Controlling the Marketing Plan & Budget With the aim of taking corrective action for better performance of knorr it is vital to adjust the marketing objective with the course of time along with evaluation of setting standard. In doing this, marketing department of UBL could consider profit analysis (return on investment), cost per unit analysis e.g. along with measuring the each component of marketing mix like market share, sales, profit margin, channel growth, stock levels, media coverage, awareness level e.g. which must be relevant with marketing objective and planning. And for all this things Knorr should adopt benchmarking method 8.1 Benchmarking: Drummond et al. (2008, p.286) defines benchmarking as: ‘A systematic and on-going process of measuring and comparing an organization’s business processes and 10 Marketing planning of ‘Knorr Soup’
achievements against acknowledged process leaders and/or key competitors, to facilitate improved performance.’ Hence, Knorr soup should scrutinize its competitor’s (Maggie) activities, strategy, operations which help them to increase their market share. For example; if Maggie adopt market penetration strategy or more invest on TV media or Billboard and it brings success to them then knorr soup should study on that. Moreover, Knorr could set up their performance standard like; by the end of one year Knorr will increase its market share by 15%. 9. Conclusion To form a marketing strategy, any proactive organization needs to evaluate its external and internal environment so that it can understand at what point it needs to improve, what strengths and opportunities it has. UBL should use the market penetration strategy outlined in Ansoff’s matrix in relation to other strategies, not in separation and it will help UBL to increase its market share. UBL needs to develop the marketing mix in a way so that it can cover the target market because for creating awareness and for getting response it is very important. As the product(knorr) is at the introduction stage and the industry growth is high, it is very important for UBL to make a substantial marketing budget considering the objective and task method along with judgment method which will help knorr to advance. Eventually, benchmarking method would be appropriate for UBL to compare itself with its competitor.
11 Marketing planning of ‘Knorr Soup’
Bibliography
Book
Drummond, G. et al (2008) Strategic marketing planning and control. 3rd edition. Oxford, Butterworth Heinemann. Drummond, G. and Ensor, J. (2001) Strategic marketing planning and control. 2nd edition. Oxford, Butterworth Heinemann. Kotler, P. et al (1998) Principles of marketing. Harlow, FT/ Prentice Hall. Dibb et al (2001) Marketing: concepts and strategies. 5th edition. Boston, Houghton Mifflin. Kotler, P and Keller, K.L. (2006) Marketing management.12th edition. Englewood Cliffs, NJ, Prentice Hall. Megicks, P. (ed), Donnelly, R. and Harrison G. (2009) CIM course book: the marketing planning process. Oxford, Butterworth Heinemann. Wilson, R.M.S. and Gilligan, C.(2003) Strategic marketing planning. Oxford, Butterworth Heinemann . Kotler, P (2003) Marketing insights from A to Z. New Jersey, John Wiley & Sons, Inc.
WEB Site
Official Web site of Bangladesh Bureau of statistics (www.bbs.gov.bd) Official Web site of Unilever Bangladesh (www.unilever.com.bd)
12 Marketing planning of ‘Knorr Soup’
