Marketing Plan for RLLs New Hot Chocolate Product - Essay Example

? Marketing Plan for River Link Limited Addressed To/ Marketing Plan for RLL’s New Hot Chocolate Product I. Introduction RLL is one of the leading companies in the UK that makes hot beverage products such as tea and coffee. The company is planning to launch a new hot chocolate product in the market. This marketing plan illustrates RLL’s market segments and marketing strategies the company uses to get customers. The plan outlines the strategies that RLL will use in marketing its marketing so as to achieve its sales objectives. The report has looked at the consumer needs in the UK market and how this needs have been met by other competitors. The report then looks at how RLL can fit into the hot chocolate market using various promotional strategies as well as its existing resources. II. Customer Audit From the interview findings, all the respondents do like hot beverages and many of them take hot chocolate. Both male and female respondents across a wide range of age brackets like taking chocolate. Those who take chocolate drinks take them for indulgence reasons and other for relaxation. Most people get their chocolate drinks from supermarkets and local shops. When buying their chocolate drinks, most people are influenced by the thickness, a rich flavor and smoothness. Others get whatever is new in the market. The respondents who take chocolate said they would buy a hot beverage called Silk. III. Internal Audit A. Operating Results Tea and coffee dominate the UK hot drinks industry, which account for more than 90% of the industry’s total sales. The remainder of the sales (10%) is accounted for by other food beverages such as hot chocolate. The hot beverage industry is worth more than ?1.5 billion. The tea industry is worth ?655 million, coffee industry is worth ?739 million while the other food beverages are worth ?125 million. The Forecasted future sales in the UK hot drinks industry is ?1.7 billion by 2016. 58.5% of UK hot drinks customer use food beverages. This is in contrast to 90.5% and 90% for those who use tea bags and instant coffee respectively. However, food beverages seem to be more popular than ground coffee which is consumed by only 34.5% of the population. Most of the users of food beverages are in the social classes AB, C1 and C2. 67% of those consumers with a household income of ?20,000-?24,999 use food beverages. Other high consumers of food beverages are those with household incomes of ?25,000 – ?34,999 (62%), ?15,000 – 19,000 and ?35,000 (64% each). The sales of instant chocolate and add milk chocolate increased from the year 2005 to 2007. B. Strategic Issues Analysis 1. Marketing objectives Launch a new hot chocolate product Generate over ?200,000 in the new product’s sales by the end of the first year. Increase the new product’s sales by 40% by the end of year 2. 2. Market segmentation All hot drinks customers from all age brackets prefer high premium products, which are full of flavor and exotic. They like expensive but restrained image. Their preferred brand does not have to be branded. Young C1C2 customers like convenient products that come at a moderate price. They also like branded products with standard products being the most accepted. For this age group, the kind of purchase they make conveys their status. Older C1C2s do not mind the price of the product as long as its quality is right. For them, taste is the most important factor when purchasing hot drinks products. They do not care much about the products image or exotic products. They normally view own label as poor quality. For the younger DEs the product’s price is very important. They tend to buy smaller packages of branded products whose quality must be good. They are also concerned about the image and they are likely to change products quite often. Older DEs mostly buy the cheapest products and they stick to those products that they know, that is, the traditional products. They also value own labels. 3. Competitive Advantage The company has hi-tech production facilities that could enable it to incorporate manufacturing units for coffee, tea and other food beverages. RLL’s resource areas are also very strong. Its marketing, sales, production, new product development and people resources are very rich. The company also has an established program of continuous improvement of all its business, more so its brands. These factors give the company a competitive advantage in the industry. 4. Core Competencies Among RLL’s core competencies lie in the production of top quality tea and coffee. The company is also highly marketing oriented, which has enabled it to have a wide range of high awareness national brands. The company has also maintained a strong relationship with the countries major food retailers. 5. Positioning RLL is part of a major multinational food company and has a strong financial position. This means that the company has the ability to make significant investment. 6. Marketing Mix Effectiveness The approach of the company is to rely and spend heavily on advertising, trade promotion and selling. This approach is effective in pushing and pulling the company’s narrow range of high quality national products. RLL normally carries out research regularly to ensure that is well positioned in the market. The company has a strong relationship with distributors across the country who distribute RLL brands. When it comes to pricing, RLL tries to offer competitive prices for all its products. Promotional offers are preferred in RLL more than straightforward price cuts. IV. Competitor Audit The main competitors are a few big corporations such as Nescafe which have been in the business for quite a while. These companies have a strong hold on UK’s hot drinks market and they control almost 90% of the market. In the hot chocolate sector, the competitors are fewer, which means that there is an opportunity for new products to thrive in the market. List of Competitors: Nestle - Nescafe, Gold Blend, Alta Rica, Cap Colombie, Blend 37, Espresso Kraft Jacobs Suchard - Maxwell House, Kenco, Mellow Birds Paulig (Tetley) - Tetley Tea Bags, Orange Label, Red Label, Quick Brew Premier Brands - Typhoo, QT, Cadbury Drinking Chocolate, Cadbury Highlights Smith Kline Beecham - Horlicks Wander Foods - Ovaltine, Options Supermarket own labels - in all sales areas. V. Macro Audit: PESTLE Analysis Political The political climate in the country allows for new investments to thrive. There are no legal barriers that might affect the introduction of a new chocolate product in the market. The laws also encourage a competitive environment in the hot beverage industry, which gives an opportunity for new entrants to compete at the same level with established companies. Economic The financial capabilities of the target market are very high. They can afford to buy hot beverage products from the available options. Social Cultural The English and larger UK society has a hot beverage drinking tradition. Most people take some type of hot beverage at least once every day. Technological The hot beverage industry in UK has adopted the use of high tech facilities for production purposes. The use of technology, such as internet, is also present in communication and product promotion. Ecological More and more consumers of hot beverages in the UK are turning to healthy products. The major producers of hot beverage products are therefore producing drinks that are healthy. VI. Situational Analysis Audits and Assumptions A. Business Mission The mission of RLL is to provide the best quality hot drinks products to its target market. B. Marketing Audit From the interview findings, all the respondents do like hot beverages and many of them take hot chocolate. Both male and female respondents across a wide range of age brackets like taking chocolate. Tea and coffee dominate the UK hot drinks industry, which account for more than 90% of the industry’s total sales. The remainder of the sales (10%) is accounted for by other food beverages such as hot chocolate. 58.5% of UK hot drinks customer use food beverages. Most of the users of food beverages are in the social classes AB, C1 and C2. All hot drinks customers from all age brackets prefer high premium products, which are full of flavor and exotic. They like expensive but restrained image. Their preferred brand does not have to be branded. C. SWOT Analysis 1.Strengths Firm Financial base Strong marketing procedures Existing market Existing distributors Existing production facilities 2. Weaknesses Company has had no experience in the production and distribution of hot chocolate drinks 3. Opportunities Large and untapped market 4. Threats Entry of new competitors D. Marketing Strategy RLL’s marketing strategy is focused on wide pool of potential consumers: those from age 20 to late 60s. These are members of the age brackets which consist of the highest number of people who take hot beverages. The approach of the company marketing strategy is to rely heavily on advertising, trade promotion and selling. E. Marketing Mix Decisions The new hot chocolate drink will be priced at the normal pricing for most of the popular hot chocolate brands. The new product will be distributed all over the country and promotion will primarily be through advertisements, trade promotions and selling. VII. Marketing Outline Target Market Segmentation All hot drinks customers from all age brackets prefer high premium products, which are full of flavor and exotic. They like expensive but restrained image. Their preferred brand does not have to be branded. The market will be divided into two, depending on social class. The first group will be the AB to the C2 group, which is considered to be up market kind of consumers. The new chocolate product for the first group will be packaged with the company’s brand. Marketing of this product will aim at emphasizing on the quality of the product and pricing will be critical. The other group is the D and E social classes. The chocolate product packages for this group will not focus too much on branding. Although quality will be a major issue, the most important thing will be pricing. Appendices Respondent Do you drink hot beverages? Why? Where do you shop for the hot beverages? What influences you choice of hot beverage? Would you consider buying a hot beverage called “silk”? 1 - Female 21 years old Yes; hot chocolate Indulgence Supermarket Rich flavor, thickness and smooth texture, not too sweet Yes, if it was chocolate based and smooth 2 - Female 46 years old Yes; coffee Gives a lift/ it is a stimulant Work pool/coffee shop Good aroma No; it’s not a good coffee name, maybe a better name for choc. drink 3 – Male 66 years old Yes; tea Habit/Tastes good Someone else buys from Co-ops Co-ops red label – has got strong taste No; not a good name for tea 4 – female 66 years old Yes; tea and chocolate Tea is refreshing, chocolate is relaxing The corner shop Twinning’s morning tea variety and Cadbury’s drinking chocolate Yes for chocolate, no for tea – not a tea name 5 – Female 46 years old Yes; tea Habit Local health food shop Personal taste; non-caffeine No – not a tea name 6 – Male 48 years old Yes; tea and occasional chocolate Tea-habit Chocolate-indulgence Someone buys at the supermarket Whatever is on offer or anything new Yes if it is chocolate, no for tea-not a tea name Reference Marketing Case Study: Marketing CW Read More