|/Question(s)||Female, 21 years old||Female, 46 yrs old||Male, 66 yrs old||Female, 66yrs old||Female, 46 yrs old||Male,48 yrs old|
|1 – Do you drink HB?||Chocolate||Coffee (work and home)||Tea||Tea & chocolate (mornings and evenings)||Tea||Tea & Chocolate|
|2 – Why do you drink HB?||Self indulgence||Stimulant||Taste, habitual||Tea – refreshing, Chocolate – relaxing||Habit – changing type to herbal||Habitual, Milky flavour – before bed, indulgence.|
|3 – Where do you stop for your HB?||Supermarket/weekly||Secondary buyer- Jill, coffee shop||Secondary buyer – Gillian at the Co-op||Corner shop||Local Health Food Store||Supermarket, secondary buyer – Wife, Ros|
|4 – What influences your choice of HB?||Thick, rich flavour, smooth texture, unsweetened, diet versions||Coffee aroma||Strong taste, brand loyal (red-label) and Gillian||Brand – twinning’s and Cadbury; add-milk type of chocolate||Taste, non-caffeine variety||Price – anything on offer, try anything new|
|5 – Would you consider buying a HB called “silk”?||yes||no||no||No- tea, yes – chocolate||Yes – chocolate, No – tea||Yes|
Table 1: Spread-sheet showing the interviewees responses to the Silk marketing research
|Table 2: Drinkers and non-drinkers of hot chocolate beverages|
|H-C drinkers||Non – H-C drinkers|
|1 – Why do you drink such beverages?||Self indulgence, relaxant, Milky flavour||Stimulant, taste, habitual|
|2 – Where do you stop for your beverages?||Supermarket, corner shop, secondary buyer||secondary buyer, coffee shop, health shop, co-op|
|3 – What influences your choice of beverages?||Flavour, texture, diet version, price, taste||Aroma, Strong taste, brand,|
|4 – Would you consider buying a hot beverage called “silk”?||yes||no|
|Table 3: Demographics of H-C drinkers: Gender|
|1 – Why do you drink such beverages?||Self indulgence, relaxant,||Milky flavour, taste|
|2 – Where do you stop for your beverages?||Supermarket, corner shop, secondary buyer||supermarket, secondary buyer,|
|3 – What influences your choice of beverages?||Flavour, texture, diet version, price, taste||Taste, price brand,|
|4 – Would you consider buying a hot beverage called “silk”?||yes||yes|
|Table 4: Demographics of HC drinkers – Age distribution|
|Young (15-24)||Middle-aged (45-54)||Old (65+)|
|2 – Why do you drink such beverages?||Self indulgence||Milky flavour||Relaxing|
|3 – Where do you stop for your beverages?||Supermarket||Supermarket, secondary buyer||Corner shop|
|4 – What influences your choice of beverages?||Flavour, texture, diet version||Price, promotions||Brand|
|5 – Would you consider buying a hot beverage called “silk”?||yes||yes||yes|
Table 5: Behavioural segmentation
|Hot Chocolate drinkers/non-drinkers||Interviewee|
|Benefits sought||Self indulgence, smooth texture, rich flavour, diet version||Relaxing, convenience, quality, brand, milky flavour||Milky flavour, price promotions|
|Purchase occasion||Self buy, weekly at the supermarket||Self buy, corner shop|
|Secondary buy – Ros, wife, supermarket|
|Purchase behaviour||No information given||Solus buyer||Innovator – buy anything new|
|Usage||Light drinker||Heavy drinker||Light drinker|
Table 6: MARKETING MIX
|Middle-aged (45-54)|| Old|
|Benefits sought||Purchase Occasion/Behaviour||Usage|
|This segment F1 and F4 sought features like smooth texture, rich flavour, milky and diet variety of HC that did not differ in taste and quality with the non-dietary HC. And sought HC to help relax. Silk is a good brand name and is acceptable by all female segments.||The male segment are seek for a drink that makes them relax and also sought a milky flavour variety||A smooth texture, rich in flavour, diet versions of HC that did not differ in taste with the other versions of HC||A milky flavour||Is driven by brands and liked an add-milk version of HC||rich in flavour, relaxing, smooth texture, diet versions, indulgence||Solus buyers and innovators||The segment F1 and M6 are light users and F4 are heavy users|
|Price||No information was given||This segment would be more favoured to price discounts||No information was given||Price discounts will favour this segment||No information was given||Price discounts will favour this segment||No information was given||No information was given|
|Place||Half of this segment shopped at supermarkets and the other corner shops. Extending distribution channels to other outlets like corner shops to gain a wider coverage of consumers and increase market share.||The house hold purchases are made supermarkets||Made purchase along with weekly groceries at supermarkets||Purchases are made at supermarkets along with other drinks||This segment makes purchases at corner shops for convenience||The main benefit sought is for convenience||self and secondary buys|
|Promotion||No information was given||Sales promotion||No information was given||Sales promotion||No information was given||Promotions||No information was given||No information provided|
Q2 – a) POTENTIAL CUSTOMER AUDIT:
|i) Who is important?||In purchasing Silk, the buying decision may be individualistic or could be based on collective decisions made by for example, the family and it can be described in 5 ways as the i) Initiator ii) Influencer iii) Decider iv) Buyer v) User.|
The F1& F4 group in Q1a seems to possess all the attributes and therefore their buying decisions are individualistic. In the case of the M6 group, the wife is the main influencer and buyer and the middle aged man could be the initiator and decider and the couple are the users of the product.
|ii) How do they buy?||This is known as the decision making process starting from Identifying the problem to information search evaluation then purchase and post-purchase evaluation which has been illustrated in the appendix. The consumers were more influenced by the flavour and self indulgence. Segment M6 is more interested in what was on offer but all the segments are interested in the flavour and texture since hot chocolate is a low involvement commodity and purchase can easily be influenced by emotions. Quality is essential.|
|iii) What is their choice criteria?||The consumers choice criteria can be classified into the 4 types: – Technical, economic, social and personal.|
Technical – Taste – e.g. F1 who loved HC for the smooth texture and rich flavour.
Social – Price – e.g. M6 who would buy when there are promotion and affordability
• Value for money
Economic – Status – e.g F4 who was brand-oriented
• Social belonging
Technical – Self image
|iv) When do they buy?||As it was stated earlier, Silk is a tangible staple product and is consumed regularly. The purchases are mostly made on a weekly basis or when the consumable has been consumed.|
|v) Where do they buy?||The consumers make their purchases at supermarkets, corner shops etc. as it can be observed in the table above We have a good relationships with major retailers and locating Silk will be easy and convenient for the consumer.|
- a) INTERNAL AUDIT
Table 8: The 4 M’s Model
|Men||RLL is known to possess a strong resources area notably in people. The human resources include the Managing Director, Sales Director, Group Finance Director, Production Director and Marketing Director.|
|Money||The Finance Director stated that RLL is financially strong. The company’s major revenue is generated from its tea variety and reflects in the sales of tea in the industry as a market leader with an average sales figure of 170M pounds. And has been confirmed by the director to be financially capable of producing the new product, Silk.|
|Machine||The production director affirmed the unit’s ability to incorporate an additional line for Silk and the cost amounts to approximately 1M pounds which will cover the cost of production, packaging and design.|
|Marketing – 4p’s||Product – RLL’s current main focus is on the Tea sector with product variety such as instant tea and flavoured tea that has a high quality brand.|
Price – In the hot drinks industry, we tend to be price leaders. Our products are of high quality and hence prices must fit the brand image.
Promotion – RLL spends heavily on marketing, trade promotion and selling and push and pull a narrow range of high quality products.
Place – The company has good relationship with retailers and are supermarkets are the sole distributors. There are only about a dozen of them but have many outlets to cover different regions in getting across to the consumers.
- b) COMPETITOR AUDIT: Porter’s 5 Forces model
Figure 1: Porter’s 5 Forces Model (Jobber, 2007)
- i) Rivalry within industry: There is a high level of rivalry within the industry from Nestle, KJS and other smaller companies like Wander, S.K.B. and Premier Brands that have a larger part of the food beverage market share than the bigger companies.
- ii) Entry Barriers: Entry barriers clearly exist for hot beverage companies, as big competitors can switch into the food beverage market because they have the resources to do so. But for the new entrants into the industry, competition is very high and a lot of resources will be required to set-up costs, in advertising to create a name in the industry and a likely hood of retailiation from big companies
iii) Supplier power: No information was given on the suppliers of RLL in the case study.
- iv) Buyer power: Our major buyers are Asda, Sainsbury, Morrison’s etc who are not up to a dozen even though they may seem to have a high buyer power, the power of our brand makes it a-must for these retailers to have our products on their shelves and also due to the limited number of food beverages producers, we would have more advantage over them.
- v) Substitutes: Even though the there is a weakening demand for tea and coffee, there are major contenders in respect to their high potential sales. And consumers can be lured to purchase them if Silk does not meet their demand requirements. And its producers are potential entrants.
- c) MACRO AUDIT: Political Ecological Socio-economic Technology (PEST)
Table 9: Political factors
|Tax policy||In the pre-budget review, it was proposed that taxes will be cut and will allow consumers have more income to spend. The review showed that multinationals will not have to pay taxes on dividends from foreign investment; this is a good incentive for RLL when the need to expand or invest arises.|
|Environmental regulations||One of the major environmental issues is the carbon emission and ways to reduce it. And consumers agreed that buying decisions are based on the green factor. In the UK, the prices for organic foods have surged. It also has a positive impact on companies as the less energy consumed the less money to be paid. New pest management legislation in Europe could result in crop production shifting to other countries and prices for commodities shooting up. This may affect the cost of production of beverages in RLL.|
Table 10: Economic Forces
|Economic growth||The economy’s growth has slowed down during this year and GDP is likely to decrease from 2.5% to 1% and decrease further by next year. This may affect our production and consumers from buying. Urgent measures are being taken by the government to reduce this negative impact.|
|Interest rate||Due to the “credit binge” the Bank of England has cut down interest rate to 2% to encourage lending which will then lead to spending. Although Banks have been quite reluctant to pass down this cut, pressures have been put on them to do so and HSBC has made available 1b pounds credit available. This in turn will encourage consumers to buy and will enhance RLL’s new product launch.|
|Unemployment and recession||HRM guide reported that unemployment rate rose to 5.8% (1.8M) as at the 3rd quarter of this year as a result of the recession. And as a means of getting out of the recession, the government is creating incentives for the citizens to spend out of recession. And will enable consumers to still buy our products.|
Table 11: Socio-economic forces:
|Health consciousness||There is an increase in the health awareness of the society as a lot of people seem to currently fight obesity and to stay healthy and fit. It is also a fashion fad to be slim e.g. F1 in the table would indulge in drinking more Hot chocolate if there were diet versions of HC. RLL can leverage on this opportunity and create a healthier HC that will appeal to the market.|
|Population growth rate and age distribution||The current population growth rate is 0.275% (2007 Est.) with a current population of 60M. The age distribution is concentrated towards the age band of 25- 54. And our target market 15-24 – 12%, 45- 54 – 13% and 65+ – 4.4% totalling about 29.4% of UK population. Focusing on these target markets will help grow out market share.|
Table 12: Technological forces
|Research & development||RLL should needs to keep researching on new technologies and products and any new innovation discovered can lead to having a competitive edge over rivals and vice versa|
3 Using a Marketing Planning Structure recommend a suitable strategy for RLL
“RLL is a multinational food company aimed at continually providing improved premium products to its esteemed customers globally.”
RLL is currently a major player in the tea sector in Hot drinks Industry and has achieved it through high marketing orientation, high quality brand etc. Marketiing Audit is segmented into two parts an Internal and External Marketing audit leading proWhere are we now? How did we get here? Where are we heading?
INTERNAL MARKETING AUDIT
Refer to section 2b
EXTERNAL MARKETING AUDIT
This comprises of the macroenvironment and microenvironment.
MACROENVIRONMENT: This entails broad environmental issues that may affect the performance of business. It includes the following Political, Economic, Socio-economic, Technological factors. Refer to section 2d for the full details.
|As at 2007, RLL occupies 28% of the hot drinks market share, dominantly so in the tea industry with a market size of 26%. The food beverage industry is currently 8-10% of the hot drinks industry with a steady growth.|
|Growth rate||Growth rate: there has a steady increase in the food beverage industry as observed in the case study where sales has grown at an average of 5% yearly from 96M in 2001 to 125M in comparison to the tea and coffee industry which can be observed to experience rise and falls in the sales figures.|
|Market trends:||Report documenting recent social trends|
Refer to section 1b and 2a
Figure 3: Showing competitor’s profile
Table 14: Showing the strengths and weaknesses through their distributors
We have very good relationships with our distributors and the power of the RLL brand makes retailers to put our products on the self.
We are heavily reliant on the distributors
No information was given.
SITUATIONAL ANALYSIS – SWOT Analysis
Table 15: SWOT Analysis for RLL
4. Undeveloped products and brands.
1. Well established brand name
2. High quality brand of products
3. Price leaders
4. Strong relationship with retailers
5. Financially strong
6. Highly marketing oriented
1. Distributor chain expansion to gain wider coverage
2. The urgent need to improve the operations unit by better supervision and control
|CONVERTING WEAKNESSES TO STRENGTHS|
1. Heavily reliant on the retailers – expanding the distributor chain to other retailers other than the big stores will not only reduce reliance but also expand the market share and customer reach e.g. the interviewee F4 who goes to the corner shop for convenience.
|MATCHING STRENGTHS TO OPPORTUNITIES|
1. Untapped emerging market/ high quality brand of products
2. Increasing sales growth in the food beverage industry/strong relationship with retailers
3. Weakening demand for substitutes/ highly marketing oriented
4. Undeveloped products and brands/ well established brand name
5. Low level of competition & advertising spend in this sector/Financially capable to establish itself in the industry
6. Lower interest rates / price leaders
7. Strong competitors/ highly marketing oriented
8. Current economic recession/strong relationship with retailers
9. Health consciousness/ high quality brand of products
|CONVERTING THREATS TO OPPORTUNITIES|
1. Strong competitors e.g. Nestle, KJS, Premier etc. Possess a competitive advantage over them to gain market share and for the smaller competitors like SKB and Wander attack heavily using our financial resources and advertising.
2. Current economic recession – Current economic recession – the government strategy of getting out of the recession is by spending and this is an advantage for RLL as consumers will tend to buy more and hence buy our products.
3. Health consciousness – Producing healthier versions of Hot beverages (Diet version) will lure more consumers to Silk especially the young females
Table 16: showing the conversion of weaknesses to strengths and matching the objectives
Specific – we are targeting females within the age range of 15—24 and 65+.
Measurable – the people who drink hot chocolate beverages
Achievable – grow our sales from 0% to 8% of the brand share
Realistic – 60% of the brand consumers should be within the age range of 15-24 and 40% within the age 65 years and above.
Time bound – 3-5 years
Objectives: “To launch our hot chocolate drink, Silk amongst the young and old females with a brand share of 60% within the ages 15-24 and 40% within 65+ and above and growing our brand share from 0% – 8% in 3 – 5 years.”
Strategic thrust – Strategic objectives
|Table 17: Ansoff Model|
|Existing Products||Market Penetration |
O3 – Utilising our high marketing orientation to refocus consumers to our brand of tea products hence strengthening demand Weakened demand for substitutes
O8 – The current economic recession resulting in a spend-spend way out of recession, our strong ties with retailers will be helpful in ensuring consumers have access to our tea range of products.
O7 – The hot drinks industry in UK is highly competitive, moving into a new market outside the UK that is less competitive and coupled with our high marketing capabilities will enable us gain advantage over UK competitors and expand our market share.
|New Products||Product Development– |
O1 – RLL’s products are well established national brands with a new product, Silk; it will gain accelerated brand recognition in the food beverage industry where the products and brands are still undeveloped.
O2 – Increasing sales growth in the food industry is a means of opportunity to penetrate into the market and gain competitor advantage before other strong competitors move into the market. RLL’s strong relationship will prove resourceful as it will make available our products to consumers.
O5 – In contrast to the tea and coffee sector that are highly competitive. Low level of competition and advertising spend in this sector coupled with the company’s financial capability will enable RLL secure a position in the market through advertising and
O3 – As a result of the weakening demand for substitutes, RLL can take advantage of this opportunity using its high level of marketing orientation to draw consumers towards the new product, Silk.
O9 – Produce product variants: Have a diet version of Hot chocolate with a smooth and rich flavour i.e. retaining the same high quality.
O1 – Creating a malted drink and exploring other markets outside the UK with RLL’s known positioning as a high quality brand
– Trying out new products in a new market
– Introducing silk other parts of Europe, target the children
10. Untapped emerging market/ high quality brand of products
11. Increasing sales growth in the food beverage industry/strong relationship with retailers
12. Weakening demand for substitutes/ highly marketing oriented
13. Undeveloped products and brands/ well established brand name
Health consciousness/ high quality brand of products
Tactics – 4Ps
Table 18: The Marketing Mix: 4 P’s
|Product||The product “Silk” can be categorised into 3according to the target market: the core benefit – a hot drink to relax or to indulge in. The expected product –|
|The healthier version of Hot Chocolate beverage has been selected to fit the target market and subsequently other versions like the milky or malted can be introduced.|
|Quality||The quality is an expected part of the product should be a key factor of the product to promote a re-inforcement. Target market (the females) stressed on it.|
|Design||The design and packaging is essential to lure our target market especially the young females.|
|Features||The healthy aspect of Silk is an augmented feature that can stimulate consumers to buy and give leverage over competitors.|
|Brand name||The brand name “silk” appealed to all the hot chocolate drinkers and will be a good a good brand name for our chocolate beverage|
|Price||RLL’s high quality of products and lack of competition shown in the food industry as shown in the SWOT analysis. High price will most likely be an option but price discounts can be used initially to gain market share.|
|Place||Channels – A selection distribution strategy using our target market the distribution channels would be through the retailers as they have a large number of outlets. Coverage – The , assortment, locations, inventory and transport.|
|Promotion||Sales promotion, advertising, sales forces, public relations, direct marketing|
Product: It can be categorised into 3 major Hot Chocolate Beverage- is a tangible and convenience staple good as it is consumed quickly and purchased frequently. The appropriate strategy is to make Silk available in several locations, low mark-ups and advertise heavily to induce trial and build preference. Brand – attributes, benefits, values, culture, personality, user profile
Place: Advertising is key
Quality and size of the sales work force
Distribution network/decisions is essential.
Action – GANTT
Control – GANTT
Marketing Objectives – strategic thrusts and strategic objectives
Core Strategy – target market and competitor analysis. Note: 4Cs
Organization and Implementation
- Kotler, P., Marketing Management; 9th International Edition; Prentice Hall International, Inc., Upper Saddle River, New Jersey 07458
- Jobber, D. 2007. Principles of Marketing. 5th Ed.
Figure i: Marketing Mix
How do the buy?
Figure ii: The decision making process
Table i: Competitor Analysis
Table ii: Internal audit: showing the finance position of companies in the Hot Beverage Industry
 Keywords: F1: 21 year old female; F2: 46 year old female, M3: 66 year old male; F4: 66 year old female; F5: 46 year old female; M6: 48 year old male, HC
 HB – hot beverages
 F1 – young female
 F4 – old female
 M6 – middle aged male