The UK yoghurt market (marketing plan) - Essay Example

?Running head: MARKETING PLAN Marketing Plan Insert Insert Grade Insert July 16, Outline Introduction Mission and business objectives Internal and external situation Research on market and customers Segmentation, target, and positioning Marketing objectives Marketing programs plan Measurement of progress and performance Implementation and evaluation Conclusion References Marketing Essential 1. Introduction Yoghurt is a milk product obtained through bacterial fermentation to convert the lactose content of milk into lactic acid. The decomposition improves that taste of the milk products for the individuals who would find fresh milk not palatable. The product has been in existence since the ancient times where the traditional forms of the product was got from natural fermentation of milk. The modern product is obtained through catalyzed bacterial actions on whole milk. The bacterial actions enable the product to last longer than fresh milk. Yoghurt was not used as part of the main diet in the ancient time, but could be consumed in relatively smaller quantities for its medicinal value. Similar rates of consumption are witnessed in the modern society. The product is used to supplement the main diet. Various developments have been registered in the production and marketing of this product in different markets across the globe. Different production companies have developed different brands of the product leading to an increased competition in the market. Besides, other related milk products give stiff competition to yoghurt in the market. The company that is to succeed in the market has to be sensitive and able to respond to the changing market trends. It has to develop a product brand that meets the changing needs of the clients. The organization should develop a marketing strategy that ensures proper brand positioning in the market. There has been a significant growth in the UK yoghurt market in the recent years with 21% increase in the period 2006- 2011 (UK-June 2011 Report, 2011). One of the players in the UK yoghurt is Yeo Valley Organic. This is a farming and dairy company situated in the Yeo Valley of Somerset, England. The company deals in a variety of dairy products and other desserts. Initially starting with the natural yoghurt, the company has expanded its operations to produce more brands of the products to meet the customer needs in relation to tastes or costs of the products. Other companies offer similar products in the market leading to increased competition in the UK yoghurt market. The organization is then faced with the challenge to develop products that rank above those produced by the competitors in customer satisfaction. A good market plan will help the company to position its brand above the competing brands. This calls for an analysis of all the market forces in the UK yoghurt market and identifying procedures of overcoming the forces. Due to the changing customer needs, the organization has introduced a new product that is of better medicinal value. Apart from the normal ingredients, this new product has a component that makes it suitable for relieving mid pain. The company is in the process of marketing this new product. This paper illustrates a market plan that is to be adopted by Yeo Valley Organic to help achieve its marketing objectives. It is a one-year program to market the new yoghurt products by the company. 2. Mission and Business objectives The management at Yeo Valley Organic has noted that the quality of the products can be improved through proper care given to the dairy animals. This requires proper environmental conservation initiatives. Thus, the organization is committed to providing quality products to customers while reducing the adverse effects of their operations on the environment to ensure sustainable production. The organization has set a number of objectives that are concerned with management of environment. It is concerned with ensuring sustainable production in order to survive in the future market. To reduce the production cost and improve product quality, the company has purposed to apply the natural methods and ingredients in developing the dairy products as opposed to the artificial methods. It is also set to increase its use of recycled and recyclable materials in the packaging of its products. The organization has also set to reduce its energy consumption and its carbon footprint. 3. Situational analysis a) The micro environment There are factors external to the company and affect the operations at Yeo Valley Organic negatively and positively. Consumers and the suppliers The yoghurt market in the UK has grown considerably with an increasing demand for yoghurt and related products. There is an increasing concern by the consumers on the nutritional values of the products in the market. Much attention is focused on the health effects of the milk product, considering factors like the fat contents. The buyers also have different tastes and preferences for the products thus prompting for the different product flavors. The company is then forced to have product differentiation as a strategy. On the other hand, the company has a reliable supply of organic milk that it uses to produce the dairy products. The Organic Milk Suppliers Cooperative is a dairy-farmers cooperative whose members are committed to producing high quality milk (Yeo Valley Organic, 2011a.). Similar to the objectives of the company, the farmers are concerned with the type of care given to the animals through proper environmental management. The production of high quality products by the farmers and subsequently by the company leads to increased market. This in turn improves the farmers’ production and the cycle continues. Besides, the demand for the yoghurt products is also increasing the in UK market due to the ‘consumers’ focus on healthy eating, and the unusual image it has forged as a healthy but enjoyable snack’ (UK June 2011 Report, 2011). Competitors The yoghurt and dessert market is highly competitive in the UK. Companies like Muller, Danone, Tesco, and Nom provide stiff competition to Yeo Valley Organic in the market. The UK yoghurt market continues to grow and has a current value of about ?670 million (Williams Reeds Business Media SAS, 2011). By 1992, Muller was the largest producer of yoghurt in the UK (Dairy Co 2011, p.104). The companies have strived to maintain their market positions. It is characterized by pure competition with various players capable of getting into the market. Companies from outside the region are also attracted into the market. These include Horizon Organic, a dairy company based in the US, which has set out to use similar business strategies applied by Yeo Valley Organic (Williams Reeds Business Media SAS, 2011). To attract and retain customers, the competitors apply techniques like product differentiation and product promotion. For instance, Danone produces a mixture of spoonable yoghurt and yoghurt drinks to suit the needs of different consumers. Actimel and Activia are brands produced by Danone that have had good performance in the market (Dairy Co 2011, p.105). Yeo Valley has also introduced Greek style yoghurt, a spoonable brand to compete the others in the market. The companies embark on heavy product promotion through offers. b) The Macro environment (PEST analysis) The company’s macro environment also affects its operations. These external environmental factors include political, Economic, Socio-cultural, and Technological factors prevalent in the UK (Moutinho & Chien, 2007, p.1). Economic factors The country has a stable economy with a relatively stable growth rate. The UK is highly industrialized and has one of the leading economies in the world in terms of the GDP. The stable economy attracts other investors from across the globe. More investment in the region will continue to improve the economy of the region through improved living standards. This will increase the ability of consumers to buy different products. The eating habits of the natives will definitely increase. Socio-cultural factors The UK is one of the most populous states in Europe. The need for food products is highly and positively associated with the human population. The region also has a mixture of cultures due to the immigration patterns witnessed currently among different states. This has impacts on the eating habits of the people Political factors The country is politically stable with three levels of government that can affect the operations of businesses in the region. These are the local government, central government and the European government. The governments ensure that quality products and services are given to the public and that the businesses operate in line with the national or regional economic objectives. The governments have enacted different fiscal policies, monetary policies and direct control policies to regulate business operations. UK is one of the member states of EU and complies with the EU provisions on trade. There are regulatory measures within the EU system that have to be adopted by the member states. A company in the food and beverage industry has to comply with the provisions of the European Food Safety Authority. The EU has other regulations on trade like the reduction of tariff by regulation of tariffs among the EU member states and the US. There are other agencies concerned with the protection of the consumers to ensure that quality products are available in the market. Technological factors UK is one of the highly industrialized states in the world with high level of technology applications in industries. There is also a high level of expertise to apply the technology in the industries and other business operations. Conclusion of the PEST analysis The above macro environment factors provide opportunities and challenges to the company. The stable economy and favorable political factors have attracted many investors into the market leading to high level of competition. The competitors adopt strategies like lowering products and providing product offers leading to decrease in the returns from the business (UK June 2011 Report, 2011). However, the incoming of investors from outside the country will continue to improve on the economy. Therefore, there is a promising market for the yoghurt products in the region. As such, the company will apply both advertisement and product promotion to win more customers. There will be discounts on products bought on cash or prompt cash over the next one-year period. The application of modern technology can enable the organization to achieve its objectives of reducing effects on the environment. For heating and other energy uses, the company will make us of the solar energy. This will help reduce the carbon footprint from energy consumption. c) Company analysis Yeo Valley Organic is committed to providing quality products to the clients. The organization believes that the clients should have access to great tasting organic food and is out to correct the wrong perception that organic foods are generic and expensive. The company gives products at prices that are conventional and affordable by different people. It has been dealing in a variety of dairy products like yoghurt, milk, cheese, ice creams and many others. Similarly, it has different varieties of yoghurt. These include Whole Milk natural yoghurt, Fat free yoghurt, Greek yoghurt, and Pots among others. The products have varied nutritional and energy contents. They have varied proportions of carbohydrates, proteins, and fats in these different brands. They also have a high content of calcium at varying proportions. The difference in the products is in their proportions that reflects on the taste and flavors. The products also come in different packs. The company has struggled to improve on its market position despite the high level of competition in the market. The company has had a sales growth of about 30% in the last couple of years to become the fourth in the grocery market (Williams Reeds Business Media SAS, 2011). To increase its market position, the company has introduced a new yoghurt product that it believes will get a handsome share in the market. The organization has shown an outstanding commitment to sustainable development. It has a good team that is devoted to managing the environment. The company uses recycled materials in packaging of its products to reduce environmental effects and costs of production (Yeo Valley Organic, 2011b.). The company also has its efficient means of transport to various dairy suppliers. It uses lorries with double-decker trailers in shipping the products from the suppliers (Yeo Valley Organic, 2011b.). The reduced trips by the lorries are not only cost effective but also friendly to the environment. Over the last years, the company has been offering products at different quantities. There were packs of 500g, 450g, 300g, and 150g. The company has changed to new packaging for its products and continued introduction of new products (Williams Reeds Business Media SAS 2011). The new product will also be available in packs of different sizes to suit the requirements by different people. The company intends to reach the customers through intensive advertisement of the new product. 4. Research and analysis of market and customers The organic sector is the most rapidly growing sector in the yoghurt market. The customers are attracted to organic products that have no additives, are natural, have better tastes, and are clean. The consumers show increasing concern on the nutritional value of the products and the effects that the products have on their health. Yoghurt is a product that is consumed by individuals of almost all ages. The consumption is also relatively the same in both the genders. However, it is not considered as an essential component of the daily diet. Its consumption is discretionary and it will depend largely on the lifestyle and the living standards of the consumers. The company has developed the most loyal brand in the organic market and it is certain that the brand will continue to be popular among the clients. It is committed to producing natural fat-free products and using packaging systems to meet the demands of the clients. 5. Segmentation, targetation, and positioning Several variables of segmentation are available. However, some of the variables are not applicable in the yoghurt market. One of the variables of segmentation in the yoghurt market is age. Even though the individuals of all ages may be consumers of the product, the taste that appeals to the children may not be similar to that of the adults (O’Shaughnessy, 1995, p.201). The children would not be attracted to sharp or bitter tastes that may be liked by the adults. The consumption rate will also differ suggesting for different packaging for the adults and children. Besides, reaches have shown that the success of the appeal in the advertisement will be affected by the difference in age among the adults (O’Shaughnessy, 1995, p.201). Another variable is the social class. Individuals of different social classes have access to different information media. This will determine the media used by the organization in advertisements of its products to reach the potential clients. It will also affect the consumers’ understanding of the value of the products. The financial status of different individuals also varies. This will affect their ability to purchase the products. Since they are not essential parts of the meals, consumers are concerned with medicinal values of the product. There is an increasing attraction to natural products with low fat content. Brands that appeal to the consumers to be made through the natural processes will be well positioned in the market. This explains the company’s commitment to minimize artificial inputs in its production processes. The different tastes of the clients across the ages and the different financial abilities will lead to product and value differentiation. This is summarized in the following SWOT strategic implication Matrix The SWOT strategic implication Matrix for the market plan Internal External Strengths Weaknesses Opportunities The company has to emphasize on the value of their products through natural methods of production. It should then appeal to the consumers through advertisements that the products are healthy. Improve on the use of technology to inform the consumers of the products. The company has to be conversant with factors like the social class or education level of the consumers. Threats The company has to use product and price differentiation to capture a wider market. There is need to keep records of the latest developments by the competitors to enable the company to strategize in time. There is likelihood that more cultures will e available in the yoghurt market with different tastes that affects the demand. The company has to be sensitive respond to the changing cultural needs of the clients. 6. The marketing objectives The company has annual sales of ?73 million (Zenith International, 2008). The marketing strategy for the new product is intended to increase the total annual sales of the company to ? 90 million in the next on year. It is also aimed at increasing the awareness of the new product that has been launched by the company among the customers. The company will allocate ?3.5 million for advertisement of the products through different media. 7. The marketing program July 1, 2011- June 30, 2012 Product Due to the stiff competition in the yoghurt market, the company has recently developed a new product with different packaging and of better medicinal value. The new product, Healthy Yeo yoghurt, has been developed following an increasing demand for gluten-free dairy products. The product has been treated with traces of quinine to improve medical conditions like analgesia. It has been treated with gelatin to improve the protein content and further reduce fat content. Most importantly, the new product has also been treated coffee syrup. It is thus suitable to manage physical or mental depression due to its caffeine content. Due to the additional additives, the product has high protein and carbohydrate contents of 6g and 20g in 100g of the product respectively. The fat content has been reduced to 2.0g in 100g of the product. The calcium content as well as the energy content of the product is also higher than all the other products that have been in existence. Due the difference in the quantity that may be required by consumers, the product comes in packs of 125g, 400g, and 750g. Price- For the period of July 1, 2011 to June 30, 2012, the average retail price for 125g packs will be ?0.4, 400g pots will be ?1.3 whereas that of 750g will be ?1.9. Cash discount of 8% will be offered on the products bought during the first quarter of this period 5% discount in the remaining period. There shall a 5% quantity discounts on purchase of 10000g and more of the products. The prices may be subjected to changes in response emergencies in the production process. Place/distribution- The supply chain is not very complex. The company uses its means of transport to reach different retail stores located throughout the country. The company will also sell directly to consumers like hotels and institutions by order. An inventory of products valued at ?5 million will be maintained throughout the period. The company also has an online shop. Customers are able order for products online and these will be shipped to the said destinations. Promotion- This is necessary to generate positive customer response. The company has set aside ?3.5 million for advertisement. Moreover, 40% of the amount will be allocated to advertisement in television, 30% will be allocated to print media whereas radio and internet will receive 15% each. The company shall not provide product offers as sales promotion initiative during this period. 8. Measuring progress and performance Data pertaining to the weekly sales will be collected from five different retail stores for a period of eight weeks. The trend of sales observed in these randomly selected retail stores will indicate if the strategy is capable of achieving the objectives. A significant deviation from the expected sales outcome will call for intervention like lowering or raising the prices accordingly. 9. Evaluation of the plan With the availability of the funds for the product promotion strategy, it is possible to implement this market plan. The plan is likely to succeed since more emphasis has been put on the product brands and packaging system that is in high demand in the market. 10. Conclusion The development of an effective market plan consists in understanding the forces that are prevalent in the market. An organization has to identify its strengths and weaknesses, in addition to those of the competitors. It then capitalizes on its strengths and the competitors’ weaknesses to utilize the given opportunity. The success of the plan developed on a given period will depend on the evaluation of the performance during the period. Necessary adjustments are to be made if the sales are not heading towards the intended direction. Reference List Dairy Co. 2011. Company strategy and performance report, DIN, Muller UK Category Report 2010. (Online). Available from http://docs.google.com/viewer?a=v&q=cache:R3rnE6UK4YEJ:dairyco.net/non_umbraco/download.aspx%3Fmedia%3D9767+competition+in+The+UK+yoghurt+market&hl=en&gl=ke&pid=bl&srcid=ADGEESimVNCcxk_hO-72e8yvBjym6BET-7GE107Y_gbRdjLLmqxXmKtOWpsQzz3JeDTnKR7Jq0S_vrDof_HyvD7YaVdbe3BsIh9BGD90RtEVdGDvGXaSg4NPkDIGtEObOF0JW9PFdoyA&sig=AHIEtbT9R_JwcS4mKq1WvXLSxkCRHYyQMQ [Accessed July 19, 2011] O’Shaughnessy, J., 1995. Competitive marketing: a strategic approach 3rd ed. London: Routledge. Moutinho, L and Chien, C., 2007. Problems in marketing applying key concepts and techniques. Second ed. London: SAGE. Williams Reeds Business Media SAS. 2011. New look for Yeo Valley Organic. (Online). Available from http://www.foodanddrinkeurope.com/Products-Marketing/New-look-for-Yeo-Valley-Organic [Accessed July 19, 2011]. Yeo Valley Organic. 2011a. About us/Supporting sustainable British farming. (Online). Available from http://www.yeovalleyorganic.co.uk/#/about-us/supporting-sustainable-british-farming [Accessed July 19, 2011]. Yeo Valley Organic. 2011b. About us/working hard for the environment. (Online). Available from http://www.yeovalleyorganic.co.uk/#/about-us/working-hard-for-the-environment [Accessed July 19, 2011]. Yogurt and Desserts – UK. 2011. (Online). Available from http://oxygen.mintel.com/sinatra/oxygen/display/id=545330/display/id=582872 [Accessed July 19, 2011]. Zenith International. 2008. UK Food and Drink Entrepreneur Forum, London. (Online). Available from http://www.zenithinternational.com/events/event_details.asp?id=62 [Accessed July 19, 2011]. Read More