Foundations of Marketing – 4000 words


/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[2]?ChocolateCoffee (work and home)TeaTea & chocolate (mornings and evenings)TeaTea & Chocolate
2 – Why do you drink HB?Self indulgenceStimulantTaste, habitualTea – refreshing, Chocolate – relaxingHabit – changing type to herbalHabitual, Milky flavour – before bed, indulgence.
3 – Where do you stop for your HB?Supermarket/weeklySecondary buyer- Jill, coffee shopSecondary buyer – Gillian at the Co-opCorner shopLocal Health Food StoreSupermarket, secondary buyer – Wife,  Ros
4 – What influences your choice of HB?Thick, rich flavour,  smooth texture, unsweetened, diet versionsCoffee aromaStrong taste, brand loyal (red-label) and GillianBrand – twinning’s and Cadbury; add-milk type of chocolateTaste, non-caffeine varietyPrice – anything on offer, try anything new
5 – Would you consider buying a HB called “silk”?yesnonoNo- tea, yes – chocolateYes – chocolate, No – teaYes


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 drinkersNon – H-C drinkers
 1 – Why do you drink such beverages?Self indulgence, relaxant, Milky flavourStimulant, taste, habitual
2 – Where do you stop for your beverages?Supermarket, corner shop, secondary buyersecondary buyer, coffee shop, health shop, co-op
3 – What influences your choice of beverages?Flavour, texture, diet version, price, tasteAroma, Strong taste, brand,
4 – Would you consider buying a hot beverage called “silk”?yesno



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 buyersupermarket, secondary buyer,
3 – What influences your choice of beverages?Flavour, texture, diet version, price, tasteTaste, price brand,
4 – Would you consider buying a hot beverage called “silk”?yesyes


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 indulgenceMilky flavourRelaxing
3 – Where do you stop for your beverages?SupermarketSupermarket, secondary buyerCorner shop
4 – What influences your choice of beverages?Flavour, texture, diet versionPrice, promotionsBrand
5 – Would you consider buying a hot beverage called “silk”?yesyesyes


Table 5: Behavioural segmentation

Hot Chocolate drinkers/non-drinkersInterviewee






Benefits soughtSelf indulgence, smooth texture, rich flavour, diet versionRelaxing, convenience, quality, brand, milky flavourMilky flavour, price promotions
Purchase occasionSelf buy, weekly at the supermarketSelf buy, corner shop


Secondary buy – Ros, wife, supermarket
Purchase behaviourNo information givenSolus buyerInnovator – buy anything new
UsageLight drinkerHeavy drinkerLight drinker







Middle-aged (45-54)  Old


Benefits soughtPurchase Occasion/BehaviourUsage














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 varietyA smooth texture, rich in flavour, diet versions of HC that did not differ in taste with the other versions of HCA milky flavourIs driven by brands and liked an add-milk version of HCrich in flavour, relaxing, smooth texture, diet versions, indulgenceSolus buyers and innovatorsThe segment F1 and M6 are light  users and F4 are heavy users
PriceNo information was givenThis segment would be more favoured to price discountsNo information was givenPrice discounts will favour this segment  No information was givenPrice discounts will favour this segmentNo information was givenNo information was given
PlaceHalf 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 supermarketsMade purchase along with weekly groceries at supermarketsPurchases are made at supermarkets along with other drinksThis segment makes purchases at corner shops for convenienceThe main benefit sought is for convenienceself and secondary  buys
Promotion No information was givenSales promotion No information was givenSales promotion  No information was given Promotions No information was given No information provided





Table 7

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.

•        Reliability

•        Performance

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

•        Ethics

•        Emotions

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.






Table 8: The 4 M’s Model

     MenRLL 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.
     MoneyThe 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.
     MachineThe 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’sProduct – 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.



  1. b) COMPETITOR AUDIT: Porter’s 5 Forces model



Figure 1: Porter’s 5 Forces Model (Jobber, 2007)

  1. 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.
  2. 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.

  1. 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.
  2. 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.



  1. c) MACRO AUDIT: Political Ecological Socio-economic Technology (PEST)

Table 9: Political factors

     Tax policyIn 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 regulationsOne 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 growthThe 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 rateDue 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.


     Exchange rate
     Unemployment and recessionHRM 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 distributionThe 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 & developmentRLL 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

Business Mission

“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?


Refer to section 2b


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.


Table 13




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 rateGrowth 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.





Table 15: SWOT Analysis for RLL


  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. Heavily reliant on the retailers
  2. Weakest link in the competitor analysis is in the area of New Product Development

  1. Untapped emerging  market
  2. Increasing sales growth in the food beverage industry
  3. Weakening demand for substitutes

4.     Undeveloped products and brands.

  1. Low level of competition in this sector
  2. Lower interest rates

  1. Strong competitors e.g. Nestle, KJS
  2. The current economic recession
  3. The health consciousness






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

Converted Weaknesses

1.     Distributor chain expansion to gain wider coverage

2.     The urgent need to improve the operations unit by better supervision and control


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.

  1. The operations unit is the least efficient amongst its peers.



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

Converted Threats

7.     Strong competitors/ highly marketing oriented

8.     Current economic recession/strong relationship with retailers

9.     Health consciousness/ high quality brand of products


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 Markets

New Markets
Existing ProductsMarket 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.

Market development


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 ProductsProduct 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

ProductThe 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 –
Product variety


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.
QualityThe 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.
DesignThe design and packaging is essential to lure our target market especially the young females.
FeaturesThe healthy aspect of Silk is an augmented feature that can stimulate consumers to buy and give leverage over competitors.
Brand nameThe brand name “silk” appealed to all the hot chocolate drinkers and will be a good a good brand name for our chocolate beverage
PriceRLL’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.
PlaceChannels – 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.
PromotionSales 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

Cost control

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

Competitive Advantage:


Marketing Mix

Organization and Implementation






















  11. Kotler, P., Marketing Management; 9th International Edition; Prentice Hall International, Inc., Upper Saddle River, New Jersey 07458
  12. 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

Factor NestleKJSRLLPrem BrandsSKBWanderSupermarketsPaulig
Retail links44433304


Table ii: Internal audit: showing the finance position of companies in the Hot Beverage Industry

[1] 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[1]

[2] HB – hot beverages

[3] F1 – young female

[4] F4 – old female

[5] M6 – middle aged male