Kunal Gudhka Student Id-5184154
MARKETING PLAN FOR ORGANIC VALLEY Organic Chocolate in UK
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Executive Summary Organic Valley is preparing to enter mature market of UK with its new high quality organic Chocolate. We can easily compete with non-organic chocolate producers as our product is purely organic and healthier than them. With other organic chocolate manufacturers, we will be competitive in price. We will be introducing chocolates in the Countlines segment of chocolates. We will be positioning our company in price between non-organic chocolate manufacturers and organic chocolate manufacturers. We are targeting specific segments in the consumer markets like Tweens (11-14 years), years), Students and „Over 55‟s‟. We will introduce „50g bar‟ and „After dinner mint‟ chocolates for Over 55‟s and „25g minibars‟ for Tweens and Students. The primary financial objective is to achieve first year UK market share of 0.5% in chocolate confectionary market. The primary marketing objective is t o make Organic Valley as a sophisticated organic chocolate brand.
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Table of Contents 1.0 Situational Analysis
PAGE No 03
1.1 Company Overview
03
1.2 PESTEL Analysis
04
1.3 Porters Five Force Analysis
06
1.4 SWOT Analysis
08
2.0 Objectives
09
3.0 Market Segmentation, Targeting and Positioning
10
3.1 Market Segmentation
10
3.2 Target Market
12
3.3 Positioning
13
4.0 Marketing Strategies
15
4.1 Product Description and Branding
15
4.2 Pricing Strategy
16
4.3 Distribution Strategy
17
4.4 Marketing Communications
18
5.0 Implementation and Controls
19
References
20
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1.0 Situational Analysis 1.1 Company Overview Organic Valley is a US based organic agricultural Cooperative Company formed in 1988. Initially it was known as Coulee Region Organic Produce Pool (CROPP). Later Organic Valley brand name was formed and CROPP was for Cooperative Regions of Organic Producer Pools. Organic Valley is headquartered in La Farge, Wisconsin, United States. It served its various organic products in US, Japan and Canada. It is one of US‟s largest producers and distributors of organic produce, dairy, soy and eggs. Beef, Pork, Turkey and Chicken products are marketed under Organic Prairie brand (Annual Report 2012). Organic Valley is purely owned and run by farmers. Each and every farms of CROPP is certified Organic by the National Organic Program. Organic Valley‟s aim is to create and operate a marketing cooperative that promotes regional farm diversity and economic stability by use of organic agricultural methods and sale of certified organic products (Annual Report 2012). Organic Valley is not present in Europe and UK till now. The Chocolate confectionary market in UK is the largest among the European Union (30 percent of the EU market) with British citizens consuming more chocolate than any other EU nation (Barnett, 2006). So now they are planning to enter UK market with a new organic Chocolate products. Also Chocolate confectionery is expected to increase by 13% in the forecast period 2012-2017 (Euromonitor International 2012). Organic Valley is already producing organic milk, so now they have to only grow organic cocoa which is important ingredient for manufacturing organic chocolate. This marketing plan shows how company extend its market to consumers of the UK.
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1.2 PESTEL Analysis The Macro environmental factors which affects the Organic Valley‟s organic Chocolate in UK is determined by PESTEL analysis as follows Political/Legal
Agricultural Regulations on
Economic
organic farming
Laws on Taxation
Market Regulations
Type of Government –
Future Legislation or laws
Export-Import laws of UK
Consumer‟s purchasing
chocolate
do not promote a healthy
income of consumers
lifestyle
Currency Fluctuation
Environmental
Cacao can grow 15-20 degrees below and above
decisions
the equator
Online presence of
Cacao is seasonal crop
company
Climate or weather change
Mobile applications
Technology licensing and Patents
Perception that Chocolate
GDP and Disposable
people‟s purchasing
Brand name or company
image
Technological Social Media‟s influence on
Shift in consumer preference for organic
for food industry
and trends
power
autocratic or democratic
UK‟s Economy situation
Social/Cultural
can affect its production
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The key drivers affecting the industry are 1) Global Recession 2) Less disposable income 3) Climate and Weather change
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1.3 Porter’s Five Forces Analysis
FIGURE 1: Porter’s Five Forces Analysis
Source: Adopted by Gudhka K. (2013) from http://www.tutor2u.net/business/strategy/porter-fiveforcesmodel.jpg
Force
Information
Result
Threat of Substitute
One can easily switch to conventional non-
High
Products
organic products such as non-organic chocolates.
Bargaining Power of
Have our own farm lands and organic
Suppliers
valley is one of largest organic producer and acquirer.
Medium
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Bargaining Power of
Fixed Retail price for most of the products
Low
Entry barriers are high as organic farming
Medium
Buyers (Customers) Threat of New Entrants
is difficult and is less practised. Intensity of Rivalry
High competition from other organic
within the industry
producers having a good brand value. Competition from conventional non-organic chocolate manufacturers like Cadbury, Nestle, Mars etc.
High
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1.4 SWOT Analysis STRENGTH
Healthier chocolates than conventional
WEAKNESS
non-organic chocolates
Highly nutritive
Very few organic chocolate manufacturer currently
Prices are higher than non-organic products.
Very difficult to change consumers mentality towards buying organic things
Everyone is not concerned about health and nutrition.
No use of synthetic and harmful chemicals like pesticides, DDT etc. OPPORTUNITIES
Increasing demand for organic things
Consumers becoming more health conscious
THREATS
Non-organic producers does not have to follow organic standards
Due to higher price than non-organic chocolates, more chances of product failure.
Increasing cost of raw materials
Use of antibiotics for increasing milk production
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2.0 Objectives Financial ObjectivesWe are setting aggressive but achievable target for 1st year and 2nd year of market entry.
1st year Objectives- We are aiming of 0.5% of UK chocolate confectionery market share
2nd year Objective- Launching of Organic Coffee in UK market Marketing Objectives-
To market world‟s best organic chocolates in UK
To develop Organic Valley as a sophisticated organic chocolate brand
To build a good marketing team that promotes organic chocolate very well in UK Societal Objectives-
To practice and promote organic farming.
To provide Quality and taste with Health safety.
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3.0 Market Segmentation, Targeting and Positioning 3.1 Market Segmentation Figure 2- UK chocolate market value
(Source: Business Insights; Chocolate Confectionery Industry Insights, 2008)
Organic Chocolate market is popular among those consumer which focus on health and environmentally safer ingredients. The current market can be broken down into the following segments: Boxed- Chocolate assorted consisting of a selection of high-added-value individual units (Booth, 1990) Countlines- Chocolate-covered bars with an individual centre which can be eaten with one hand, so called named because these items are sold by number rather than weight. Moulded Bars- Regular bars of chocolate with or without inclusions i.e. nuts or filled centres i.e. soft caramels Seasonal Chocolate: Chocolate confectionary specially produced for Easter through „eggs‟ and Christmas in „gift boxes‟ and „miniatures‟
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Straightlines- Small items which are identical and eaten as casual snacks on the move i.e. Cadbury‟s chocolate buttons. Above figure suggests that Countlines segment is most revenue generating segment generating 2244.44 € million yearly. Thus it is a potential area for Organic Valley to intr oduce into for Organic chocolate. People prefers „on-the-go‟ lifestyles so Countlines which can go easily into handbags, suit pockets etc. are convenient snacks (UK Essays 2003).
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3.2 Target Market Children below 10 years are not part of our target segment because it requires awareness to choose healthy and organic food items. Organic Valley‟s target segment will be constituting of Tweens (11 to 14 years), Students and over 55 years („Over 55‟s‟) age people. Over 55‟s are consumers with higher disposable income so they can spend money on buying organic chocolates as they become more health conscious. Students and Tweens are biggest consumers of Chocolates so by making them aware about health and organic chocolates, they can become our biggest target audience. Also most Tweens use their pocket money on chocolates so by introducing 25g bar at same price as of Mars 45g, they can be easily targeted (Youth TGI, 2009)
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3.3 Positioning According to Kotler and Keller “Positioning is the act of designing a company‟s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the rand in the minds of consumers to maximize the potential benefit to the firm.” (Kotler 2012). Positioning is consumers thinking of our product against competing products and can determined by plotting graph of Health vs price and taste vs price diagrams Health
+
O G C N
-
+ Price
C- Cadbury N- Nestle G- Green and Blacks O-Organic Valley
As seen from graph, our product will lie between Cadbury and Green & Black‟s Chocolates in pricing and healthier than Green & Black‟s who also produces organic Chocolates.
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+ Taste
O
G
N C
-
+ Price
C- Cadbury N- Nestle G- Green and Blacks O-Organic Valley
Taste is purely individual‟s perception and is different for different people. We want to be placed as shown above in taste vs price graph.
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4.0 Marketing Strategies 4.1 Product Description and Branding 1) Over 55‟s – We will introduce 2 types of chocolates for this segment. First will be 50g weight, average size premium chocolate bar containing individual centres of nut or coconut. Also it will contain anti-oxidant properties in form of flavonoids, Cocoa and reduced milk. It will be purely organic with all certificates and standards. Lines will be “premium milk with added cocoa”. The differentiating factor with this brand is the fact that it is organic milk chocolate with added cocoa, for ‘a premium creamy milk chocolat y taste with all the anti-oxidants of dark chocolate’ . Second will be „After dinner mint‟ chocolate balls. This will be sold in a packet of 4*25g chocolate balls containing mint and nut along with cocoa. It will be also organic. 2) Tweens and Students – 25g weight mini bar formulated with milk chocolate and will contain individual centres of caramel, toffee or nuts. It will be also purely organic with certificates and standards. Lines can be solid milky and nutty chocolate.
The brand and logo will be displayed on our products and packaging as well as in all marketing campaigns.
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4.2 Pricing Strategy 50g premium chocolate for over 55‟s will be introduced at 90p and 42p for 25g mini bar for Tweens and Students. 100g „After dinner mint‟ chocolate balls packet will be sold at 95p as it only contains a nut, mint and cocoa. These prices reflects a strategy of attracting desirable channel partners and taking share from existing competitors. Green & Black‟s organic chocolate of 50g is of around £1.10 and other non-organic chocolate bars of 50g is for 60-70p. Therefore we have placed our price between both of our competitors.
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4.3 Distribution Strategy Over 55‟s For this segment, Distribution channels will be very wide. 50g bar chocolate will be available everywhere from small market to mass outlets. The current trends like internet and mobile applications will be used to maximise product launch. These distribution channels are very advantageous as they are very cost effective, can penetrate large market and easy maintenance once they are set up. Super stores which will scale our products will be Tesco, Morrison, ASDA, Waitrose and Sainsbury. „After dinner mint‟ will be available to selective three to five star hotels having good reputation. With this, we will able to create good brand impression to our target segment which will be visiting those hotels. Hotels will include Holidays Inn, Premier Inn, Feathers Hotel etc. Tweens and Students Distribution channel for this segment will be slightly different than above. It will be distributed through channels like supermarket and small shops as above. Use of internet for distribution will be must for this segment as current trend is toward online shopping. We will use amazon, ebay and other online stores for distributing our chocolates. We will also do tie ups with coffee shops such as Costa, Starbucks etc. and ice-cream outl ets as these are students favourite spots.
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4.4 Marketing Communications Strategy We have planned integrated marketing strategy for all three products which is hitting UK market in selective ways. Guerrilla marketing tactics is not applied as it a high quality product. We should use selective media and not shot gun approach as profit margins are lower and we are introducing a new product. In initial phase of campaign, we will introduce our product and its benefit to create b rand identity. We will tell consumers about the value which we will deliver. In second phase we will do promotion and advertisement of our brand. For promoting our brand we will only use integrated marketing communication strategy tools such as advertising, direct marketing and our own website. We will only advertise in print media such as best food journals and newsletter of UK. For e -media we will make 30 sec advertisement. We will air our ads on music channels for Tweens and Students and local channels for 55‟s. As our product is high quality, we will not use sales promotions as it might create negative impact. Direct marketing will include venues such as golf clubs, day centres, community centres for over 55‟s and gymnasiums, coffee shops etc. for students and t weens. E-marketing will be done by providing special offers and vouchers which can be redeemed by purchasing online from specified sites.
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5.0 Controls and Implementation Quality of chocolate will be monitored very closely using tight control measures as our product is highly qualitative. Quality Control department will be placed in manufacturing plant. Using different types of research we will find out features and benefits our target market segments value. Different Surveys, brand awareness feedbacks will help us monitor the effectiveness of our marketing strategies. Customers attitudes towards competing brands will be also be measured and analysed. Customer satisfaction will help us t o measure market reaction. All the surveys and feedbacks will be conducted on quarterly basis. All of this will help us to react quickly in correcting any problems that may occur. As a warning signals, monthly sales and monthly expenses will be used for deviation of plan or strategy (Kotler 2012).
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References 1) Booth, R (1990) „Snack food- An AVI book‟; Springer „Britons are Europe's biggest chocolate-lovers; Louise Barnett – 13/04/2006‟: Available at: http://www.independent.co.uk/news/uk/this-britain/britons-are-europes-biggestchocolatelovers-473928.html [Accessed: 17 Dec 2013] 2) Cropp Cooperative 2012 Annual Report. [Online] Available at: http://issuu.com/organicvalley/docs/13-55001_annreprt_2012_web?e=7846503/2805343 [Accessed: 17 Dec 2013]. 3) Undefined. Organic Valley - Why a co-op? [Online] Available at: http://www.organicvalley.coop/about-us/our-cooperative/our-co-op/ [Accessed: 17 Dec 2013]. 4) „Youth TGI (Target Group Index)‟ [Online] Available at http://kantarmedia-tgigb.com [Accessed 04/03/10] 5) UK Essays (2003). UK Chocolate Market Analysis Marketing Plan Marketing Essay . [online] Available at: http://www.ukessays.com/essays/marketing/uk-chocolate-market-analysismarketing-plan-marketing-essay.php [Accessed: 17 Dec 2013]. 6) Philip Kotler. (2012). Marketing Management. 14th ed. Harlow: Pearson Education Limited.
