Grocery Bags Developed by Recycled Paper Materials - Coursework Example

Grocery bags developed by recycled paper materials BY YOU YOUR SCHOOL INFO HERE HERE Product There are a variety of different products that canbe developed using recycled paper, including cardboard products for use in a variety of different electronics technologies, printer paper for use in household computing as well as various commercial and household paper towels. However, there has been noticeable growth in the existence of domestic and foreign grocery superstores with ample market size to ensure distribution of grocery bags made largely of recycled paper products. The recycling facility will use recycled paper, gained through agreements with local agencies to gather these post-consumer paper products, to create recycled grocery bags for international and domestic distribution. There has been growing global concern about waste products and the ability to find adequate room for their disposal, such as the growing use of plastic shopping bags, that makes recycled grocery bags an excellent product idea and marketing strategy to gain higher profitability. In some areas, regulatory agencies have attempted to highlight the need for reduction in plastic shopping bags to avoid over-filling of landfills or their simple disposal by consumers into the public environment. In Manitoba, Canada, the governments have actually managed to ban, completely, the use of plastic shopping bags in 2007. This was accomplished only after imposing a small, three cent tax for their use (Katz, 2009). In this same region, the Liquor Control Board of Canada has banned plastic grocery bag use in stores, allowing customers to only receive their merchandise in paper bag format (Katz). In Ireland, China and the United States, have been attempting to ban plastic grocery bag use, with some members of the United Nations asking for an outlawing of their use globally (Ball, 2009). The need to reduce plastic grocery bag use has grown so large, and become such a global concern, the various international recycling programmes have been developed to attempt to reduce this ongoing disposal problem (Ball). It is because of these factors that a demand has been created for paper grocery bag use to avoid excess costs associated with disposal and/or recycle. At the same time, at the consumer level, a growing recognition of the need for individual consumers to help in this process has grown. There is a greener mentality among many different consumer segments as they recognise their role in reducing this growing problem with plastics disposal. “Many companies are entering (markets) with new, innovative green products and services, thus opening the door for consumers to find their own shade of green” (lohas.com, 2008, p.1). Because consumers internationally are becoming aware of the problem, and are becoming involved in various waste reduction efforts, there is virtually unlimited market potential globally to ensure the new recycled paper products are accepted. With growing regulatory pressures on grocery store owners to reduce their use or to add taxation surcharges to the already high grocery bills, market availability can be secured to help reduce these pressures whilst satisfying the consumer trend in eco-friendly purchasing. Pricing Pricing for the new paper products must be competitive and not overwhelm the grocers supply chain costs and also not turn consumers against their use because of the costs added to their grocery bills. When deciding on how to price these grocery bags, all operating costs must be recaptured and the behaviour of the business buyer taken into consideration to avoid rejection of these new paper grocery bags. In New York, as one example, it costs them only $300 per ton of post-consumer paper waste to be used in new product development (ecoistabode.com, 2008). These are not high costs associated with collection and therefore do not pose much risk when deciding on a pricing policy. Consumers internationally, as already identified, have become accustomed to certain surcharges or regulations related to paper bag consumption, therefore adding a marginal price to each bag should not be a concern with the business customers. At the estimated cost of $300 for collection, including operating costs of extraction, chemical bleaching and all other processes, pricing should have a small mark-up of only 20 percent to avoid buyer rejection. In the United Kingdom, there are currently 92,796 grocery stores that experienced consumer growth rates of 4.8 percent in 2008 (igd.com, 2010). Western Europe is a large market environment that has been attempting to ban plastic grocery bag use, therefore these buyers are familiar with paper bag purchases and will likely seek out suppliers than can deliver quality products at a competitive price. In Western Europe, demand for recycled paper products grew 11 percent in 2007 (Jones, 2008). Taking into consideration the likely operating costs of the recycling plan operational process, consumer behaviour related to green product consumption and the retailers’ familiarity with paper bag purchases, the following price structure was determined: 5,000 bag packages: £600 10,000 bag packages: £1100 There is an element of psychology associated with the volume discount, as it shows the retail buyer that they are partners in improving their position with regulatory agencies without causing cost problems to their supply chain budget. In essence, this represents a cost of approximately 11 cents per bag. Product distribution Much to the advantage of the company, growth in hypermarkets and supermarkets is considerable in most developed parts of the world. At the same time, with growing pressure from major organisations such as the United Nations and local country governments, these new recycled paper bags have virtually unlimited market potential. They represent consumer segments from all walks of life, including the eco-friendly buyer, as they all have a similar need for grocery store products and the need by which to package them for delivery to their household pantries. As mentioned, in the UK alone there are nearly 100,000 of these markets, not taking into consideration the smaller community markets, that can serve a substantial profit margin when they are distributed. Measureable growth rates of nearly five percent also make this an excellent growth strategy for global distribution using existing global supply chain networks. Promotion Part of the marketing strategy for these bags will be to focus on creating agreements with buyers to add a deposit system to the bags, allowing customers to pay a small fee (estimated at just three cents per bag) that can be recaptured if they return the bags for recycling. Using green marketing principles, consumers can essentially do their part in helping the environment whilst not experiencing high grocery store surcharges. Costs are bore in this case only if the waste is discarded (Lavee, Regev and Zemel, 2005). Communication of this deposit strategy will rely on grocer expertise in in-store marketing, along with distribution of leaflet materials produced by the manufacturer that reinforce the importance of eco-friendly purchasing and why these deposit strategies are beneficial to government and urban maintenance. These low-cost leaflets will give the manufacturer a better recognised brand name and also serve corporate social responsibility needs at the same time. Information such as how recycled paper products reduce greenhouse emissions by 37 percent and use 44 percent less energy (northstar.sierraclub.org, 2010) will be stressed in these promotional materials. Because the market need, globally, is virtually without limit and experiencing high growth, there is no need to target specific buyers with complicated ad strategies. Instead, sales representatives for face-to-face contract development will be the key resource in making these buyers select these products over competing brands. To isolate specific grocers, who are the customers for these products, when there is such high opportunity to meet the needs of diverse markets, would be a costly effort that is outside of the marketing capability of the recycling plant. Instead of using qualitative market research surveys to find specific grocer buying behaviours, a labour intensive effort, simply realising they all have a need for these products opens wide market opportunity. The regulatory pressures along with consumer-based pressures for eco-friendly purchasing creates the necessary international and domestic demand for paper products. Foreign markets that cannot have actual sales representatives will require having an online presence, a dedicated website about the product and its manufacture, as well as the production of a small-scale sales catalogue that can be distributed via online channels or through actual mail delivery. The goal is to make the business’ brand name recognised and make ordering volume packages convenient for international clients. These can be produced with graphic arts companies and other publication organisations at a relatively low cost or produced by in-house marketing talent for online presentation. These catalogues will be free and delivered on using a global mailing list for reference to different well-known global grocers. References Ball, J. (2009), Lessen plastic’s stigma, even as cities and states consider imposing bans or taxes, Wall Street Journal, June 12, p.A11. Ecoistabode.com. (2008), Paper recycling, Travis recycling plant. www.ecoistabode.com/new-york-paper-​plant08.aspx (viewed August 10, 2010). Igd.com. (2010), UK Grocery Retailing, IGD – The Food and Grocery Experts. http://www.igd.com/index.asp?id=1&fid=1&sid=7&tid=26&cid=94 (viewed August 11, 2010). Jones, A. (2008), UK market for recycled paper surpasses long-time market leader Germany. http://www.infotrends.com/public/Content/Press/2008/11.25.2.2008.html (viewed August 10, 2010). Katz, D. (2009), The grocery bag dilemma, Fraser Forum, July, pp.5-8. Lavee, D., Regev, U. and Zemel, A. (2005), Optimal intervention in uncertain waste recycling markets. Ben-Gurion University of Israel. http://www2.soc.hawaii.edu/css/dept/econ/research/seminars/05-06/09_23_05.pdf Lohas.com. (2008), The LOHAS marketplace: $209 billion strong (and growing). http://www.lohas.com/journal/maketsize2005.html (viewed August 10, 2010). Northstar.sierraclub.org. (2010), Environmentally friendly paper, Sierra Club Minnesota North Star Chapter, p.2. ttp://www.northstar.sierraclub.org/campaigns/air/schoolbus/studentZone/paper/index.html (viewed August 11, 2010). Read More