Marketing Plan for Atlantic Quench - Report Example

Marketing plan for Atlantic Quench Atlantic Quench Cranberries (AQC) is small yet well established beverage company in the United s andthe company is making strong effort to establish its position in the United Kingdom. The flavour of beverages of the company is considerably influenced by firm’s core fruit, Cranberry. This report is a marketing outline of the company for projecting future profitability of the firm. For developing a strong marketing plan, micro and macro environment of the venture has been assessed critically using prominent marketing theories. Broadly, the objectives of the company for the coming year are to increase market share and gain consumer loyalty. Quantitatively, the goal is to increase sales by at least 20%. Table of Contents Chapter 1 Introduction 5 Chapter 2 Current marketing situation 6 2.1. Internal analysis 6 2.1.1.Market description 6 2.1.2.Product review 6 2.1.3.Competitive review 7 2.1.4.Distribution review 7 2.2. Macro Environment Analysis (Porter’s Five Forces analysis) 8 2.2.1.Bargaining power of buyers: Moderate 8 2.2.2.Bargaining power of suppliers: Moderate 8 2.2.3.Threat of new entry: Moderate 9 2.2.4.Threat of substitute: Mild 9 2.2.5.Degree of rivalry: Fair 9 Chapter 3 SWOT analysis 10 3.1.Strengths 10 3.2.Weaknesses 10 3.3.Opportunities 10 3.4.Threats 11 Chapter 4 Objectives and Issues 12 4.1.Objectives 12 4.2.Issues 12 Chapter 5 Marketing strategy 13 5.1.Positioning 13 5.2.Product strategy 13 5.3.Pricing strategy 14 5.4.Distribution strategy 14 5.5.Marketing communication strategy 15 5.6.Marketing research 15 Chapter 6 Marketing implementation 16 Chapter 7 Budget ($) 17 Chapter 8 Control 18 Reference list 19 Bibliography 21 Chapter 1 Introduction The global non-alcoholic beverage industry comprises retailing of bottled water, carbonated drinks, syrups and concentrates, juices, functional drinks, Ready-To-Drink tea and coffee and other beverages. According to Marketline (2013), the global soft drink industry is growing at a moderate yet steady pace and had revenue as high as $ 624363.5 million in 2013. Among various segments in the industry, the carbonated drink and bottled water was determined to be the most lucrative one in terms of revenue and market share. However, the growing awareness regarding lifestyle diseases such as obesity has resulted in increased demand for fruit juice with limited or no sugar content. Moving ahead with juices and juice-based drinks, the paper focuses on US-based agricultural co-operative, Atlantic Quench Cranberries Inc. (AQC). AQC is a leading producer and marketer of canned and bottled juice drinks and juices along with other products such as cranberry sauces, fresh cranberries, dried cranberries and new conserve. AQC has received positive support in terms of its products in the UK but is facing aggressive competition from large beverage companies and supermarket brands. This report presents marketing plan for AQC for the coming year along with a complete study of its product market using various marketing theories and techniques so that the company is able to adopt suitable expansion strategy in the increasingly competitive industry. Chapter 2 Current marketing situation 2.1. Internal analysis 1. 2. 2.1. 2.1.1. Market description Atlantic Quench has a strong market in the US and is recognised as bestselling brand in the country with respect to canned and bottled juices and juice-based drinks. The company is growing gradually in the UK industry as well. In this regards, market analysis reflects that the juice and juice based drink sector has witnessed an average growth of 10% between 2008 and 2013 and presently worth £4.8 billion (Wang, Bleich, and Gortmaker, 2008). Figure 1: UK juice and functional drink sector between 2009 and 2013 (Source: Hucker, 2014) The sector is primarily categorised as juices, juice drinks and functional drinks. Demand for juices and functional drinks have increased significantly in the UK market owning to health consciousness among various consumers. The market is witnessing major transformation in terms of opportunities and threats as a result of demographic changes. Consumer purchasing behaviour has been observed to be increasingly affected by inflation, economic slowdown, recession and health consciousness (Mintel, 2013Marketline, 2014). 2.1.2. Product review AQC has segmented its products primarily under two categories namely juice drinks and non-juice drinks. Additionally, the company sells dried cranberries under the brand name of Crantanas. With respect to products of AQC, it is noteworthy that the company has ensured that among various juices, cranberry continues to be the core product. The juice category of AQC comprises original cranberry juice, mixed juice drinks containing cranberry juice, pure juices and single servings. The non-juice category consists of cranberry sauces, cordials, fresh and dried cranberries and others. 2003 and 2004 witnessed launch of low calorie fruit drinks in flavours of mango, raspberry and blackcurrant with cranberry and white cranberry juice respectively. Pacing up with rising demand of chilled beverages, AQC launched Cranberry Select Premium Chilled Juice Drink in 1.75 litre packaging in 2004. A new drink based on cranberry and mandarin juice was added to the product range in 2005. The products have received positive response in the UK and consequently, the company sells more that 800 million litres every year to the UK market. The company earned revenue as high as $1.7 billion in 2007 and about 9% of the same came from heavy sale of Crantanas. 2.1.3. Competitive review In the UK beverage market, juices and juice based drinks are not the only kind of beverage available to consumers. The carbonated drinks also have significant share therein. Consequently, AQC is consistently being challenged by companies such as Coca-Cola, PepsiCo and private labels of various supermarkets. The primary competitors of AQC in the UK are brands such as Minute Maid, Glaceau and Oasis by Coca-Cola and Naked, Copella and Tropicana by PepsiCo (PepsiCo, 2014; Coca-Cola, 2014). Significant amount of UK beverage market is dominated by PepsiCo and Coca-Cola as they have adopted product diversification for reaching mass consumers (Mintel, 2013). 2.1.4. Distribution review The distribution process in the beverage industry goes through various stages as discussed in figure 2. The model comprises bottlers, distributor, merchandiser/retailer and consumers in the chain. AQC has received positive response in the UK as its products are being distributed to final consumers by its licensed partner, Gerber. The company sold more than 800 million litres in the country every year and presently have been successful in negotiating distribution contracts with three of the largest supermarkets in the country. Figure 2: Soft drink operating model (Source: Fry, et al., 2012) 1. 2.2. Macro Environment Analysis (Porter’s Five Forces analysis) 1. 2. 2.1. 2.2. 2.2.1. Bargaining power of buyers: Moderate The distribution channels play an essential role in strengthening buyers’ power in beverage industry. Studies suggest that the most common sources of distribution in this industry are hypermarkets and supermarket and accounts for around 55% of the market volume (Marketline, 2014). From the perspective of market players, retailers are considered as the primary buyer of beverages. Based on this fact it was determined that the market for juices and non-juice drinks is highly concentrated in the Europe. Furthermore, supermarket chains such as Tesco play a dominating role thereof. Branding plays an important role in the beverage industry, to which major marketer has responded very well resulting to buyer’s power reduction (Marketline, 2014; Porter, 2008). 2.2.2. Bargaining power of suppliers: Moderate The raw materials in beverage industry comprise syrups and concentrates, artificial sweeteners, preservatives, fruits, water and other ingredients. Price of most of these commodities is affected by market fluctuations. Furthermore, besides a few ingredients, most of the raw materials are available to companies by means of local suppliers which significantly reduce bargaining power of suppliers through the price they charge. However, eco-friendly packaging manufacturers can have relatively high bargaining power as demand for recyclable packaging is increasing rapid while number of producers is still limited. Consequently, suppliers’ power can be considered moderate (Marketline, 2014). 2.2.3. Threat of new entry: Moderate The global beverage industry is chiefly dominated by large scale producers such as Coca-Cola, PepsiCo and Tingyi. The dominating firms together account for 39% of global sale. Market trend suggest that the competitiveness in the environment is affected by economies of scale, brand power and product diversification. Almost all the companies in the industry have multiple brands selling distinguished products as per consumer needs. Additionally, private labels also occupy significant market share. Since the industry does not have entry or exit barriers but require heavy investment therefore moderate threat from entrants can be established (IBIS World, 2014). 2.2.4. Threat of substitute: Mild Primary substitutes recognized in the beverage industry consist of bottled water, fruit based drinks, RTD tea and coffee, flavoured and unflavoured soda, enhanced water, carbonates and juices. Every competitor in the industry have diversified the product ranges to incorporate all substitutes, hence it can be suggested that external threat of substitute is mild or very limited (Marketline, 2014; Porter, 2008). 2.2.5. Degree of rivalry: Fair The degree of rivalry was determined to be fair in the beverage industry because most of the company sell similar products and have common product structure. From the pricing perspective as well, there is little competition and as a result, switching cost to consumers is very low. Companies in the industry are primarily focussed on product differentiation in terms of flavour, price and content (Marketline, 2014). Chapter 3 SWOT analysis 1. 2. 3. 3.1. Strengths AQC is considered as market leader in terms of production and marketing of bottled and canned juices and juice based drinks in the US. Co-operative approach to business resulting to growth in the arenas of experience and knowledge due to multiple generations of owners. AQC has developed monopolistic position in the niche market for cranberry products. AQC has been successful in establishing a strong business relation and strategic alliance with renowned suppliers, distributors and supermarkets for strengthening its competitive position. AQC’s business strength lies significantly in its management structure. Collaborative decision making is encouraged within the firm. Additionally, the firm minimised its marketing and advertising cost when climate volatility affected price of its raw materials. 3.2. Weaknesses ACQ is a relatively small company when compared with its competitors such as PepsiCo and Coca-Cola in terms of revenue and resources. Atlantic Quench has been relatively slow in recognising changing market trend in terms of consumer preference. The company is myopic regarding Cranberry based drinks and meanwhile, neglected the changing consumer demand of other super fruits such as acai berry, pomegranate, acerola and gogi. Another weakness of ACQ that was recognised is limited product diversification. 3.3. Opportunities Besides the juices, all beverages of AQC are also fruit based; therefore, the company has opportunity of selling its products more to health conscious consumers belonging to different age groups. Market studies reveal that consumers are increasingly inclining towards functional drinks, sugar less healthy beverages and 100% fruit juices (Mintel, 2013). Increase in health consciousness has very conveniently increased the consumer base of the company. The company can presently target parents, stalls in schools and colleges and other individuals with its low calorie fruit drinks. Atlantic quench has the perfect opportunity for selling fruit drinks based on other fruits beside cranberry. Additionally, the company can also target emerging markets where the demand exists but limited companies serve the consumers. 3.4. Threats The primary threat that was recognised for Atlantic Quench is strong competitive market in the UK due to presence large companies such as PepsiCo and Coca-Cola. AQC’s products are preferred by consumers but most of them are more inclined towards well-known brands by renowned firms in the industry. Lack of product diversification can be considered as a future threat for the company. Chapter 4 Objectives and Issues 1. 2. 3. 4. 4.1. Objectives Objective 1 Increasing market share Objective 2 Enriching and diversifying consumer base The chief objective of Atlantic Quench is to grow its market share and develop a more diverse consumer base in the UK by developing competitive advantage and strengthening market position. Based on research of Marketline (2014) one of the prevailing challenges is the expected declining demand in the UK and Germany. Therefore, primary objective of AQC is strengthening of its market share even as demand declines. One favourable factor in this regard is the growing consumer preference towards non-carbonated sugar free drinks. Hence, another important objective of AQC is winning consumer loyalty so that it is able to acquire consumers of carbonated drink sector as well. 4.2. Issues One of the major issues that are surfacing in the industry is growing demand for healthy food and beverages. Consumers are expressing coldness towards artificially sweetened carbonated and non-carbonated drinks. They are primarily seeking healthier choice with little or no added sugar. Fruit juices, sugar free flavoured water and plain bottled water are gaining importance among consumers. The main challenge for AQC is to minimise sugar content in its juices, juice based drinks, syrups, concentrates and other products. A survey conducted in the UK revealed that consumers are concerned about high quantity of unhealthy additives in beverages and that diluted fruit drinks deliver little or no nutritional value to the drinkers. With respect to AQC, different types of cranberry juices can face limited market opportunity as it is high on carbohydrate and calorie (Mintel, 2013). Chapter 5 Marketing strategy 1. 2. 3. 4. 5. 5.1. Positioning Various marketers and marketing theorist emphasised that STP (Segmentation, targeting and positioning) is invariably essential and integral part of any marketing plan (Luther, 2013). The reason is that STP helps in delivering right product to right consumer with right message associated therein (Dahlstrom, 2010; Moutinho, 2000). If a product is positioned appropriately in the mind of the target consumer then the sale is foreseeable. Fruit juices need to be positioned in the mind of the UK consumers as a healthier and convenient option over whole fruits and carbonated beverages (Armstrong and Cunningham, 2012). In this regard, AQC needs to undertake marketing campaign that emphasises on nutritional value of its product and position them as better choices in terms of vitamin and mineral supplements. Additionally, for fruit juices the company need not to look for specific target market or does not require segmenting either. The reason is that fruit juices are healthy from every individual ranging from infants to older population (exception can be due to specific ailment) and health is important for individuals belonging to any segment (Marketline, 2014). 5.2. Product strategy Product strategy can be regarded as an important aspect of marketing plan as it helps in determining the future of the product. Product strategy comprises determination of target audience, price of the product, its unique selling proposition and marketing strategy. Product strategy differs from one product to another. It was determined that the most appropriate method of discussing product strategy of AQC in its target market is the Ansoff Matrix. Igor Ansoff, through the matrix portrayed four different growth strategies in two kinds of markets. He highlighted that existing products should be sold in existing market by means of market penetration but in new market, consumer base should be developed. For new products, he explained that existing markets can be penetrated through product development while in new market; diversification strategy is very useful (Watts, Cope and Hulme, 1998). Figure 3: Ansoff Matrix (Source: Watts, Cope and Hulme, 1998) Beside fruit juices, consumers are showing considerable level of interest in green juices, that is, juices made from leafy and other green vegetables. Since, the beverage industry of UK is already in existence in terms of juices and other soft drinks, ACQ need to adopt product development strategy for increasing its market share. The company should not only produce fruit juices but can also produce and market fresh vegetable juices which are equally healthy. 5.3. Pricing strategy Presently, consumers are more interested in obtaining functional benefits from their beverages and often many of them are ready to pay a little extra for that. Therefore, AQC need to price its products in such a manner that they are available to consumer of different income groups. The company can adopt pricing strategy ranging between premium pricing and penetration pricing. This kind of pricing will enable consumers from different income backgrounds to purchase its products (Krishnan, Bass and Jain, 1999; Lee and Staelin, 1997). 5.4. Distribution strategy Distribution is one of four Ps of marketing mix that play essential role in marketing planning. Place in marketing mix denotes distribution channels and strategies for a firm. Distribution strategy determines choice of channels through which products or services are delivered to the final consumers. A firm can select from direct and indirect distribution channels depending on its purpose and process (Brodie, et al., 1997; Nevin, 1995). AQC has a strong distribution channel in the US and in 2007, the company entered in a strategic alliance with Coca-Cola where the company will sell single servings of cranberry based drinks under the company’s name. In the UK, the company has entered in licensing with the largest supplier of various private labels, namely, Gerber. Additionally, the company has successfully negotiated contracts with three of the prominent supermarkets for distribution of its products. However, the company need to adopt strong approach to distribution for increasing its market recognition in the UK as the competition thereof is relatively high. 5.5. Marketing communication strategy Marketing communication emphasises that an organisation should have sufficient channels through which product message can be delivered effectively to the final audience. Strategy in this regard comprises planning and selection of an appropriate channel or a mix of various channels. AQC need to adopt strategy that comprises both print and broadcast media for product promotion considering competition in the UK market. Advertisement in newspaper, magazine, radio and television can be adopted by the firm. Since consumers are becoming heavily health conscious, it is expected that informative advertisements will boost the sales. Advertisement in print media is cost effective and delivers more information while digital media is useful for reaching technology savvy consumers. Advertisement is television can be costly hence should be selected carefully. Another marketing strategy can be product promotion through discount pricing and free samples (Wood, 2008). 5.6. Marketing research Marketing research helps a firm in appropriate product positioning in its target market. AQC depends extensively on market trends that have been indicated by Mintel. The research area comprises lifestyle trends, impulse buying behaviour, nutritional standards in British schools, convenience snacking and non-retail sales. All these factors are considered imperative for market development as it reflects consumers’ taste and preference in the given location (Mintel, 2013). Chapter 6 Marketing implementation It was ascertained that the estimated marketing budget of AQC for 2014 will be $ 2,200,000. The company is expected to incur expenditure with respect to personnel management of $ 450,000. Other expenses consist of advertising expenditure and research and development budget. AQC will be investing significantly in research activities so that company is better equipped with consumer solutions. The online marketing expenditure will be $1, 40,000 as television advertising will be most expensive. Other online advertising include advertising through radio and internet. The offline marketing and research will cost together $80,000 and will include activities such as advertisement in billboard, newspaper and magazines, promotional measures and market survey respectively. The marketing department is responsible for developing budget and allocation of cost to various activities. The marketing plan is expected to yield outcome within a span of three to six months. Chapter 7 Budget ($) Table 1: Budget plan for 2014-2016 (Source: Author’s creation) The budget reflects that after deducting all potential expenditures from the revenue the company will be able to earn steady profit. Hence, the budget can be considered as effective. Chapter 8 Control AQC will be monitoring its budget in a firm manner as presently the company budget is reviewed on a regular basis (every quarter). The projected profit of AQC has been presented in the following graph. Figure 4: Profit projection (Source: Author’s creation) It can be estimated that the business of AQC will be profitable as it implements the budget plan (Hilton, 1994). Reference list Armstrong, G. and Cunningham, M. H., 2012. Principles of marketing. Australia: Pearson. Brodie, R. J., Coviello, N. E., Brookes, R. W. and Little, V., 1997. Towards a paradigm shift in marketing? An examination of current marketing practices. Journal of Marketing Management, 13(5), pp. 383-406. Coca-Cola, 2014. Brands. [online] Available at: [accessed 01 December 2014]. Dahlstrom, R., 2010. Green marketing management. Connecticut: Cengage Learning. Fry, C., Spector, C., Williamson, K.A. and Mujeeb, A., 2012. Breaking Down the Chain: A Guide to the soft drink Industry. 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