Strategic Marketing for The UK confectionery market - Term Paper Example

? Two products – chocolates and energy drinks are to be introduced in the UK market and the marketing strategy for these two products is presented below. Chocolates Background The UK confectionery market is poised for growth following change in the characteristics that can be associated with a highly competitive market. Currently Cadbury’s, Nestle and Mars dominate the market with Cadbury’s sales having exceeded expectations in the UK market and it stood at ?390m in 2007 (Financial Times, 2007). The overall confectionery market in UK is set to reach ?1.3bn by 2012 (Bainbridge, 2007). All the major competitors in UK have introduced fair-trade chocolates with Cadbury’s selling 40m Fairtrade Dairy Milk bars (Wood, 2009). Sainsbury has also converted all own-label roast and ground-coffee to fair-trade as The FairTrade Foundation (2010) considers it important to create opportunities for workers and producers that received setback. SWOT Strengths Confectionery sector is recession-proof Consumers engage in impulse buying because of targeted advertisements Chocolates considered an affordable, harmless indulgence (Adwan, 2003). Weakness Rising obesity Rising prices Consolidation in the market Opportunity Sugar-free confectionery fetches better margin for retailers This can be introduced for mainstream buyers and not just for the diabetics or the obese population. Preference for fair-trade products is high as main competitors switching to fair-trade confectionery (The Fairtrade Foundation 2010). Fair-trade public procurement has strong public support in UK. Threats High cocoa price exerts pressure on profit margins Sugar-free products more expensive than standard products but gaining popularity Three main competitors with rising market share Analysis The opportunities and threats suggest that market for sugar-free confectionery is growing because of rising obesity. The company should focus on fair-trade and people would be willing to pay a premium price for it. Accordingly the marketing strategy should be as follows. Marketing strategy Sales objectives – since the total confectionery market is expected to be ?1.3bn by 2012, this company expects to capture at least 5% of the total market share within the first year of its operations. Focus would be on sugar-free products with premium pricing since this is just being introduced in the market. In the first year of operation it may not be possible to achieve any profits but efforts would be made to ensure no loss too is incurred. Marketing Mix Product – Premium quality sugar-free chocolates catering to a discerning client base as this is the market-demand. Fair trade would be used for production. Price – The price would not be kept too low because low pricing creates an adverse image of the product. To enter the market the right perception is important. Premium pricing attract the target segment but pricing would be formulate taking into account prices of competitors. Promotion – consumers have become conscious of ethical and fair-trade and hence all promotions would carry messages of fair-trade. Introductory slabs can be clubbed with other products such as energy drinks. Advertisements should be made through television, popular dailies, and through magazines. Advertisements should highlight sugar-free element to attract the conscious consumers. Consumer interest should be sustained by changing the advertisements often. Advertisements should be appealing as consumers engage in impulse buying. Place - Distribution should be through all retail outlets, social clubs. It could be sold through kiosks at supermarkets. Online distribution strategy is also picking up and gift packs should be made available through online orders. Energy Drink Background Obesity is on the rise in UK with. Obesity has been linked to the quality of food and drinks consumed, in addition to the sedentary lifestyle which prevents people from visiting the gym or engaging in any sort of physical activity. Due to the quality of food consumed people lack the energy to exercise. People have become conscious to include daily exercises and workouts. At the same time the market for energy drinks is growing as a consequence of the busy lifestyle and health concerns (Reuters, 2005). Accordingly a sugar-free energy drink which can boost the consumer before an exercise session could find a huge market in UK. Currently Red Bull leads in the energy drink market. SWOT Strengths Growing market for energy drink/soy-based/yoghurt drinks, energy drinks preferred over soft drinks (Langlois, 2005). Health products enjoy premium pricing which means higher margins as consumers vie for a healthy lifestyle No sugar-free energy drink available in the market that would benefit the obese people and hence gap between demand and supply is high Weakness No awareness of this product even in the neighbouring regions and hence high advertising budgets required Opportunity Rising obesity concerns Sedentary lifestyle Lack of stamina to engage in exercise and workouts High immigrant population with diverse interests and high disposable income Threats Too many sports drinks/energy drinks in the market New products can enter the market with no or limited barriers to entry Analysis The analysis suggests that the market for sugar-free energy drink should be high as there is none available in the market. Obesity concerns coupled with sedentary lifestyle has made people conscious to workout but they lack the energy. This segment is what this company aims to tap into. Marketing strategy The high-income urban population, both sexes, aged between 16 and 50, would be the target segment initially. Segmentation would be done based on their aggressive attitude towards life’s goals because such people would have a determination to achieve their targets of maintaining their exercise regime and remaining healthy. In the first year efforts would be made to capture 10% of the market share as there is no competition in this sector of sugar-free energy drink. Marketing mix Product – the energy drink that boost energy without any sugars. Product differentiation can help capture the target market easily. Price – while the prices would have to be competitive, low pricing undermines the quality of the product. And since the focus is the urban high-income group, premium pricing is suggested. Promotion – this is the most important element in the marketing mix for any new product launch. Since there is confusion among consumers about energy drink and sports drink advertising has to ensure this is removed. Advertisements should communicate the importance of this drink before workouts. Importance of a healthy body and image should be conveyed. Outdoor media and magazines, sponsoring of prime time television programs, should be done with moderate frequency. Presentations can be given at gyms, at offices and at universities to attract the college students. They should be made to experience the change in the metabolic rate that the drink brings about. Display at stores and other places of sales should be prominent enough to attract attention. Package coloring should be appropriate – something like blue that conveys energy. Offer of a trial pack clubbed with some other product such as sugar-free foods should be taken up. The trial offer should tempt the consumer to purchase the product. For a few months every packet sold should offer discount coupon for the next purchase till a sizeable market is captured. Sponsorship of health-related programs could enhance public relations. Place – It should be sold through all retail outlets, supermarkets, convenience stores, gas stations, gyms and social clubs. Thus, rising obesity concerns in UK provides a good opportunity for both sugar-free confectionery and sugar-free energy drink. Market for both the product exists in UK but it has to be tapped and marketed with the right strategy. References Adwan, L. (2003). Private label confectionery looks to chocolate. EUROMONITOR ARCHIVE. Retrieved August 19, 2011, from http://www.euromonitor.com/Private_label_confectionery_looks_to_chocolate Bainbridge, J. (2007). Sweets riding out obesity storm. Marketing, 32-33. Retrieved August 19, 2011, from ABI/INFORM Global database. Financial Times. (2007). Watchdogs to consider food colouring research :[LONDON 1ST EDITION]. (2007, September 7). p.6. Retrieved August 19, 2011, from ABI/INFORM Global database Langlois, A 2005, 'Obesity –Reshaping the Global Food Industry', JP Morgan, Retrieved August 19, 2011, from http://www.unepfi.org/fileadmin/events/2005/roundtable/presentations/nyrt_langlois_2005.pdf Reuters 2005, 'Analyse the UK Health Drinks Market as Convenience and Health Concerns Drive the...', 25 June, Retrieved August 19, 2011, from http://www.reuters.com/article/pressRelease/idUS89342+25-Jun-2008+BW20080625 The FairTrade Foundation, 2010. The FAIRTRADE Mark. Retrieved August 19, 2011, from http://www.fairtrade.org.uk/what_is_fairtrade/fairtrade_certification_and_the_fairtrade_mark/the_fairtrade_mark.aspx Wood, Z. (2009). Cadbury boss Stitzer to play the heritage card. Retrieved August 19, 2011, from http://www.guardian.co.uk/business/2009/dec/01/cadbury-plans-ethical-takeover-defence Read More