Principles Of Marketing Management Chocolate in the UK - Essay Example

? Introduction Chocolate is a highly demanded product in the UK. With an ever expanding market and increasing competition, it is tough for market players to sustain their position and continue to remain profitable. Thorntons is one company that has sustained considerable success throughout years and boasts of producing the most highly demanded chocolate products in the UK. This report seeks to provide strategies and plans that can help further strengthen the company’s positioning and increase profits. The main products of the company are gift packs and customized chocolate packages delivered upon request or custom prepared at their retail outlets(Thorntons, 2011). The company’s website is a strong source of sales and allows customers to pick and chose chocolates. Thorntors also promotes its new products readily(Thorntons, 2010). Unique season based product packages such as wedding favours are also highly demanded. The company provides chocolates of various ranges including Belgian, Winter, Viennese,etc. Chocolates of various types such as milk chocolate, dark chocolate, mint chocolate, etc., are also available for customers (Thorntons, 2011) This research paper seeks to analyze the current market standing of the company via a comprehensive swot analysis. The findings of this analysis shall be used to frame the marketing and positioning strategies of the company. Thorntors chocolate has been in the UK market for over 100 years and possesses a turnover of 210 million pounds in the year 2008. Along with general retail outlets, Thorntons also sells its products through the internet, mail order and by using other commercial services. Analyzing Thontorns in depth:- Thorntors poses a challenging test to any marketer. The company boasts of its legacy, however, it faces increasing competition from newer entrants that threaten to torment its reign as a top chocolate company. A swot analysis of the company shall help understand aspects that it can rely on and things it needs to work on to cement its position as the top chocolate company. Strengths 1) Strong market position due to their history and quality. 2) Innovative Products. 3) Strong network and reach towards potential customers. 4) Strong and loyal clientele. 5) Enormous knowledge of market dynamics due to experience. 6) Premium brand positioning. Weaknesses 1)Retail Outlets’ failure to meet targets. 2)No customized products at retail stores. 3)History of problems with hand finished chocolates. 4)Weak performance by OWN Stores channel. Opportunities 1)Export market potential. 2)Product Innovation to counter economic downturn. 3)Discovery of new ranges such as biscuit desserts can help enhance brand equity. Threats 1)Fluctuating raw material and dairy prices. 2)Rising inflation and affordability issues. 3)Economic downturn and customer’s changing preferences. 4)Failure to address retail sales issue before competitors can gain advantage. Target Market and Seeking new opportunities:- Thorntons is a premium brand of chocolate that has established considerable brand equity over the 99 years of its existence. While the company welcomes and appreciates every walk in customer, there are specific people it targets with each of its innovative products. Kingston Upon Hull is the market that Thorntons seeks to capure this Christmas. The city is located in the East Riding of Yorkshire and has a population of around a quarter of a million people. Hull is home to around 97% local residents while a small minority group of within 1000 people reside in the entire city. The city boasts a high percentage of people who use personal transport over public transport and the economic conditions of the people are relatively good. There is however, a 6.2% unemployment rate which acts as a threat to potential market. Hull is also home to several types of restaurants, including Chinese, English, French, Italian etc (Hull and East Reading, 2011).The city acts as a busy port and economy is built around trading and seafaring. Considering the company’s premium positioning, it will be fair to say that this market will tend to demand products for Thorntons for Christmas season. The vicinity is mostly Christian and the festive season will entail great demand from the local customers (Hull City Council, 2011). The city acts as a wonderful opportunity if the company acts well enough and capitalizes on the infrastructural facilities in place. Hull is the biggest focus for retail shoppers as it is located at the biggest settlement in east riding of Yorkshire. The city has three main shopping centres namely, St.Stephen’s, Princess Quay and prospect centre. The company can target both male and female residents of the city for the festive season. The family centric culture of the city acts in the company’s favour as demand for gifts during the festive season can only increase. Chocolate is considered an element of joy which automatically ties it up with the festive season Only 17,000 out of the 250,000 are aged over 70 which means that the market diluted due to threat of diabetes, calories control problems, etc is very low. Furthermore, an increasing youth percentage and trend towards online product demand further augments the chances of online sales. the retail centre of hull is an obvious choice of sales during the festive season and the company shall work to capitalize on that front. The element of warmth:- Hull is an area that is cool throughout the year and the cold weather culminates during the Christmas season. Chocolate is known to be a product that provides warmth and hence there is a correlation between chocolate demand and cold weather (Thorpe E. & Morgan R., 2007). It is hence fair to estimate that the demand for chocolate is likely to rise due to that fact as well. Positioning of the brand:- Thorntons should continue to position itself as a premium brand for the local residents in hull during the festive season. Brand is a single idea and it is important that companies do not fluctuate much (Mercer, 1996).Any deviance from its original position may be taken as a negative statement by local residents who shall be looking for the best quality chocolates to gift their loved ones during the festive season. Furthermore, the various ranges of products offered by the company shall be made available to the hull audience, however the marketing focus shall be on the premium category of chocolates. The festive season is the season that can be capitalized on to increase sales of highest gross margin yielding products. Customization of products to suit specific needs is necessary when new opportunities arise (Kerin, Kerin, Wartley & Rudellius, 2010). The positioning of the brand can be customized according to customer preferences during this season, without compromising on the promise of quality and premium chocolates. Product differentiation is a key way to attract and retain customers (Smith, 1956). Product variations that are consistent with the brand and do not hamper brand equity can be useful in circumstances that demand special action; it is important, however, to maintain brand equity while customizing (Lamb, Hair, McDaniel, McDaniel, 2002) The following variations in product offerings can take place for the season of Christmas:- 1) Chocolates for gifts:- Gift packs shall contain chocolates of the highest quality and taste and shall be considered the cash cows of the brand during the season. The fact that people tend to compromise money for satisfaction of loved ones can be used to enable the sale of premium, high profit yielding chocolates (Martin M, 2004). The company provides a wide range of products via its gift boxes. Alphabet truffles, Thorntons photo boxes, create a chocolate box and models and plaques. Hampers consists of four brands chocolate hampers, celebration boxes, champagne hampers and sweet hampers; chocolate collections comprise of nine brands namely, continental, classics, centenary collection, chocolate blocks, summer collection, dessert gallery, premium collection, moments and melts. The company also provides fudge and box chocolates. 2) Chocolates for desserts:- The products made available for the purpose of desserts can be served differently than those used as gift packs. A careful judgement call on the customer’s ability to pay for quality shall be made when presenting chocolate offerings. It is important that the retail store representatives are flexible with such type of walk in customers as they can vary and may use the dessert themselves of serve them to the guests. It is also imperative that the retail store representative is aware of the type of quality of each product and whether the specific kind of chocolate can satisfy the need of the customer. 3) Chocolates for self consumption:- This category shall play a vital role in the performance of the company in Hull during Christmas. These customers are potential long term prospects who can become loyal to the brand if they like the product. It is extremely important to capitalize on this market as these people can continue to come back to the stores even after the festive season. The festive season is a means to introduce them to the brand and then work to ensure that they come back when the season is over. There shall be no restrictions on the category of product that is presented to the customers. A shrewd and learned representative of the company is extremely important for this task as he has the responsibility of ensuring that the customer knows what he wants and he delivers him that on the spot. Premium and innovative products can be the instigators of loyalty for this audience, especially if the customer has not consumed the product previously. Thornton can also use findings of new research to gauge old age customers towards its products. Defining the objective:- The objective of the campaign shall be to establish Thornton’s brand in the minds of the customers at Hull and ensure that these customers revert back to the brand once the festive season is over. It is essential that a high potential market like hull is captured by the company, which will help it achieve its long term objectives. Marketing Strategies:- Seasonal marketing initiatives are a challenge that many companies face in the modern era. It is important that these companies are able to meet demand while maintaining brand equity during this season (Pride & Ferrel, 2006). The festive season arrives with a plethora of products and innovations. Several companies of different products seek to capture the increase in demand created by the gift giving festive season. Chocolates are often considered as a convenient gift, however latest research suggests that it can have healthy affects on the metabolism and help cope with stress better (Nestle Research Centre, 2009). It is hence essential for Thornton to capitalize on this psychology and finding and establish itself. The positioning and retailing strategies have already been identified above. We shall now analyze how the company can use various mediums to market its brand and attract and retain customers. 1) Welcoming the season with sweetness:- Branding the product with respect to the festive season is important. Branding plays a major role in shaping expectations and perceptions about products (Randall, 2000). The company can capitalize on the fact that its products are sweet and the festive season’s merry and joyous nature. People tend to associates sweetness with joy, hence the company can conveniently align itself with the festive season. Tag lines like ‘Sweetness and the festive season’ can be placed with marketing material that is used across different mediums. It is important to understand that the brand must not stick to itself in isolation. An association with something people look forward to, such as the Christmas season, is important; especially for those people who shall use the product for the first time. 2) Identifying the mediums:- Technology provides several methods that can be used to communicate the message to the audience, e-commerce, online advertising campaigns, etc are feasible options (Noronha, 1998). It is important that the company does not decide to rush on to high costs ATL mediums immediately. It is well known that the retail hub of Hull is a place of high activity and increasing customer concentration. The company can place advertisement billboards, hoardings at these spots. It can also conduct cost effective below the line campaigns in the three famous shopping centres of hull. It is important that the company engages its audience and create a joyous atmosphere with its activities. Introduction to the products of the company can be done simultaneously. Furthermore, cost effective techniques such as bus advertisements and mascots can also be used. 3) Product Innovations:- Customized gift packs are of great demand during the season and the company can capitalize on this fact by providing packages that cater to the demand of all types of customers. The festive season demands creativity and it is important the unique packages are made available to all types of customers during the festive season at Hull. 4) Discounts and Deals:- Discounts must be shrewdly crafted such that the company does not lose its focus and continues to remain profitable(Kotler, 2009). Cost base analysis is necessary in determining the percentage of discounts to be given; also, a carefull assessment of the kind of customers and the seasonal variations must be made before making any decision (Coughlan, 2007). Thornton can claim to spread sweetness and happiness by providing special Christmas discounts and packages that are less costly than individual items. These ‘products’ shall be marketed via the ATL by using local bill boards, hoardings, marketing via local TV and radio stations and local celebrity endorsements. It is important that in lieu of capturing hull, the company does not spend too much on the marketing strategy. 5) Local Celebrities:- Local celebrities such as the Hull City football players and local radio/ TV hosts can be signed as endorsees of the brand. Although the strong brand equity of Thornton enables it to appeal to customers throughout the UK, an added local connection can only augment the strong association with the brand. 6) Online Marketing Strategy:- Web advertising is the latest medium of demand which reaches a wide range of audience and can be customized to target specific people (Janoschka, 2004). Hull is home to a vibrant and active internet audience which enables the company to attract customers via that medium too. While local marketing tactics will play a role, it is important that customers are aware of what the company is doing across the country to spread happiness and love. Mediums such as facebook to allow for continuous interaction shall be used. The website must be updated regularly with messages of the festive season and how the company is helping promote happiness through its unique and unchallenged products. 7) Pricing:- Pricing on purpose and with clear objectives in mind can work in positive ways for any organization (Baker, 2006) .The festive season is accompanied by discounts and cost effective offerings. Same shall be the case with Thornton, however hard work must be put into designing the gift packs/deals that are made available for sale. Innovative and unique products shall be combined with classics to balance the cost of the gift packs. Customized gift packs shall be encouraged as they can provide leeway to the company in pricing with respect to kind of chocolate chosen. 8) Electronic Advertising:- Electronic advertising is moving very quickly and reaches the business and home settings. This medium is of great value and sends the message across efficiently (Evans, 2009). The company shall rely on its nationwide policy of advertisements as far as standard products and packages are concerned. A unique targeted campaign addressing customers in areas that are fond of chocolates can be undertaken as well. In such a case, Thornton can turn to local TV stations and market its brand alongside local celebrities. These celebrities shall provide a personal touch to the message and help communicate with the audience better. However, it is important that premature and excessive spending to electronic advertising is avoided as the city of Hull can be targeted via BTL and personalized strategies as well; the benefits must outweigh the costs. Budget, Implementation and Control:- Marketing plans and strategies are much easier outlined than implemented. The long hours of planning can go in vain if strict cost benefit analysis is not done and clear objectives and evaluation criterion are not set forth (Luther, 2011). It is hence essential that Thornton identifies key performance indicators in lieu of the marketing campaign it undertakes during the festive season. Any misjudgement or inefficiency can result in serious consequences for the company and hamper profitability. The strategy shall not only be followed by the marketing department, but everyone connected to the implementation of the strategy shall be on its toes and directly accountable for the success or failure of the campaign. Budget:- Budgeting plays a key role in gauging the success of any marketing plan. Excessive budgets to yield sales can be redundant, especially if costs outweigh benefits (Piercy, 1986). The following table identifies (by percentage points) the amount of investment that can be allowed for during the festive season. Category Percentage of Sales Revenue Total Marketing Campaign 5-10 % of the estimated sales revenue. Discounts 25 % of the marketing budget; given in the form of gifts, etc. ATL Mediums 20% of the campaigns and should include TVCs and bill boards. Celebrity Endorsements 20 % of the campaign and should be localized and customized according to target market of specific products. BTL Activity 35 % of the marketing budget: Shall be the core medium of marketing and implemented at areas of maximum concentration within Hull City. Implementation of the Plan:- Each and every member of the company shall be involved in implementing this plan in hull city. The work starts with the marketing department that must provide an accurate sales forecast for the season in context of its plan. The production department must ensure that the products demanded are produced with maximum assurance of quality and timeliness. The supply chain function shall work to facilitate the delivery of these products to various retail shops and other mediums across the city. The logistics department shall be on its toes to fulfil any online orders or deliveries of goods to be made. The finance department shall provide a clear estimate of the leverage of flexibility retailers and representatives can show when dealing with special orders. All of these functions shall interact to implement the marketing plan successfully and meet the objectives set forth by the company. Timeline of the plan:- The marketing plan shall initiate in June with the appearance of teasers. These teasers can be one line messages at existing stores or high concentration markets. It is important that these messages are connected to each other and give the customer an hint as to what is to follow. Teasers shall be replaced by a complete introduction to the campaign by early September. This phase is important as it is aimed to enhance awareness among customers significantly about the brand itself. The focus shall be the brand, rather than specific products. October and November shall be months when specific products are introduced step by step. This campaign will help drive current sales and also make the customer aware of the various tastes that are available. Mid November onwards, the entire marketing campaign shall be implemented and customized gifts, mascots, etc shall all be in place. These two months shall shape performance of the company and determine whether it successfully meets its objectives. References Hull City Council, 2011 “Population”, Retrieved August 12, 2011 from http://www.hullcc.gov.uk/portal/page?_pageid=221,147225&_dad=portal&_schema=PORTAL Kotler P., et. al.,2009 “Marketing Plan”, Marketing Management Martin M., 2004 “Consumer Responses to Discontinuance of Favorite Products: An Exploratory Study”, Advances in Consumer Research, vol. 31, p. 662-665, George Mason University William M.Pride, O.C Ferrel 2006, “Marketing: Concepts and Strategies”. Charles W. Lamb, Joseph H.Hair, Carl McDaniel, Carl D.McDaniel 2002, “Marketing” David Mercer, 1996, “Marketing” Roger Kerin, Roger A. Kerin, Steven W.Harley, William Redelius 2010, “Marketing: The Core” Nestle Research Centre 2009, “Dark Chocolate may improve Metabolic response to stress, Nestle Scientists Report”; Available at: http://www.research.nestle.com/NR/rdonlyres/C152FD66-EEF2-4D7D-BA80-340BA686A2BE/0/20091026MetaboliceffectsofdarkchocFINALUPDATED.pdf Smith W., 1956 “Product Differentiation and Market Segmentation as Alternative Marketing Strategies”, The Journal of Marketing, vol. 21 no. 1, p. 3-8, USA, American Marketing Association Thorntons, 2011 “Brands”, Retrieved August 12, 2011 from http://www.thorntons.co.uk/c/Wedding%20Services_Wedding%20Favours%20and%20Stationery_Oriental%20Blossom.html Thorntons Investor Centre (2011) “Company Reports” Retrieved August 12, 2011 from http://investors.thorntons.co.uk/reports David S.Evans, 2009 “The Online advertising industry: Economics, Evolution, Privacy” from the Journal of economic perspectives, University College London and University of Chicago Anja Janoschka, 2004 “Web advertising: new forms of communication on the internet” published by John Benjamins Publishing Company Shonan Noronha, 1998 “Careers in Communications” Published by McGraw-Hill Professional Coughlan Anne T, 2007 “Marketing Channels” Published by Pearson Education, India Hull and East Reading, 2011 “This is hull and east reading” available at http://www.thisishullandeastriding.co.uk/restaurants. William M. Luther, 2011 “The Marketing Plan: How to prepare and implement it” published by AMACOM Div American Mgmt Nigel Piercy, 1986 “Marketing Budgeting” published by Taylor and Francis Geoffrey Randall, 2000 “Branding: A practical guide to marketing strategy” Published by Kogan page publishers. Ronald J. Baker, 2006 “Pricing on purpose: creating and capturing value” Published by John Wiley and Sons Read More