Overview of the UK Sugar Market From the Case Study - Assignment Example

OVERVIEW OF THE UK SUGAR MARKET FROM THE CASE STUDY Introduction Consumer behavior analysis is generally based on the consumer buying behavior. It is always aimed at improving the overall business performance by understanding customer’s individual preferences as well as desires. As at today world of rapid growing competition where there are many brands selling similar products, con summers exposed to an abundant number of options and many diverse factors that their own buying behaviors. In such a case, this particular study presented here will help in formulating and structuring different strategies in order to maximize the organization profit. This case study makes an attempt to determine give an overview of the UK market, by identifying specific areas of market growth that might provide John Foster Ltd (JFL) which is global manufacturer of sugar with a viable opportunity. In addition, the study will identify those consumer segments that are driving this growth, using relevant socio-demographic, psychographic, and behavioral variables, as well as developing detailed profiles. Furthermore, the paper will develop a detailed market mix to target the indentified segment. For instance, the variables include cost, ingredients, packaging, availability, product popularity among others. They usually influence the choice of product brand from among those in the substantial list, though may not necessarily be the most important and main determinants for short-listing brands. This study is very useful to the marketers since they are able to create different market programs that they strongly believe to be of interest to consumers. It also boosts their overall marketing strategy. Market Structure and Trend Overview Despite having experienced a high market growth rate for many years, the UK sugar confectionery is predicted to show more increase in future. In the year 2003 the UK confectionery sugar market reached $ 2.28 billions, having full-grown with a compound growth rate of 4.2% per annum between the years 1999 to 2003. This massive growth was slightly stronger than that reported in the European market itself, thereby making the UK market share to increase by 0.2% for the period of 1999 to 2003, accounting for 23.2% of the entire European market by the end of the period. The main source of revenue for UK confectionery market is jellies and gum sector, which accounted for over 28% of the market values. In terms of value, this sector amounted to $ 633 millions worthiness in the year 2003. Despite being a leading position, both gum and jellies segments outperformed by medicated sector. On the other hand, hard-boiled sweets segment generated the second largest revenue reaching $528 billions, which was equivalent to 23% of the overall market value. In the UK, sugar confectionary sector is fragmented, with two companies winning a market share in double figure. Nestle UK and Cadbury Trebor Bassett which are the market leaders, where as Master-foods, Adams, Dunhill’s, Haribo confectionery and Bendicks, all are in stronger positions. John Foster Ltd manufactures a range of products ranging from the basic ingredients to complete meals, which are savory, dietetic, sweet and infant foods. The company also has growing interest in pet care, pharmaceuticals and beverages. In addition, John Foster Ltd other brands in the market include, Fruit gums, Jelly-tots, Raw-trees, and polo as well as fruit pastilles. Even with the emergence of sweeteners in the entire market, sugar has remained to be the most widely consumed caloric food in this country. Its exceptional value for improving health becomes so evident everyday, especially when it is being used in the refined form. The economies of scale which is afforded by international resources of this leading sugar industry makes it increasingly hard for smaller national players to compete effectively in terms of distribution, price marketing spend and range of product. According to Euromonitor (2003) he attributes this increase to leading retailers functioning in conjunction with confectionery manufacturers on the state discount price promotion strategies. It is obvious that buying decision for the whole UK supermarket stores networks are made centrally a group of buyers and not just at individual store level. Segmentation, Targeting And Positioning Strategy Market segmentation is the separation of the market into different customers group with distinctly similar wants and services or product requirements. The main objective of market segmentation is to leverage the scarce resources i.e. to ensure that the elements of market mix, distribution, price, promotion and product are intended to meet different needs of various customer groups. Considering the fact that John Foster Ltd has finite resources, this makes it impossible to produce all the possible products for the entire population at all time. And instead, the best that can be achieved is providing selected contribution for chosen groups of people. This process enables the chocolate industry to focus on specific customers needs in an effective and efficient way. As Macdonald, Malcolm and Dunbar (2004) expressively commented, ‘any company with limited resources has to pick up only the best opportunities and peruse them’. The market segmentation concept is associated with product differentiation. For instance, John Foster Ltd has always aimed at different market segments, thereby, adopting different variations of its offering to satisfy those segments, and equally if the industry adopts different versions of the young offering, the same may appeal to different market segments. As a result of there will be few competitions, since the approach is less likely to be emulated by other industries and therefore, either approach will work well for John Foster Ltd. On the other hand, if the industry would have opted to starts with individual customer needs, then it would be using market segmentation approach. This would bring about a relational marketing perspective which would have replaced the existing market mix -the 4Ps either with the 7Ps or with a concise discussion of the need to plan, develop and deliver customers needs. With an increased rate of proliferation of testes and preferences in the modern society, consumers have rely increased their disposable incomes. As a result of these, John Foster Ltd has designed products offerings around the consumer demands (market segmentation) more than just around their own production needs i.e. product differentiation. Once identified, John Foster Ltd has to choose its approach to the target marketing that it is going to adopt. Among the four different approaches which can be considered: Differentiated, customized, undifferentiated and concentrated or focused target market approaches, the UK sugar industry preferred customized approach. Under customized approach, the market strategy is developed for individual customers as opposed to market segmentation. Having segmented the market very well, the next thing is to determine the potentiality and the size of the market segments as well as selected specific target market, now the next thing is to position a brand within that target market. This positioning is very important as it acts as a mean by which products care differentiated from each other thus, giving consumers a reason to go ahead and buy them. The first positioning approach concerns physical attributes, functionality and the capability that the brand offers. The second positioning element is concerned with the manner in which a brand is communicated and how all consumers perceive the brand relative to other rival brands in the market place. The two elements brings about an aspect of communication which is vitally important as it represents what is done to the product in the market, i.e. what is usually done to the mind of a prospect (Ries and Eric, 2011) that basically determine how a brand is positioned in the market. The key to this process of positioning is the identification of attributes that are considered to be essential. They may be intangible or tangible attributes which will only be achieved by understanding what consumers regard as ideal standard or a level that each attribute has to attain and how the rate the entire attributes to each brand. Therefore, positioning is all about products design and attribute, how the product is communicated to the customers as well as the way in which these elements are merged together in the mind of the consumer. Product Description and Branding Strategy No mater how effective a promotion and packaging strategy may be, a firm will always find it so hard to market a product that do not satisfy customers need. In most cases, consumer’s decision-making process is generally influenced by a number of factors such as social, psychological, cultural and personal. Culture factors to some extent exert the broadest as well as deepest influence on consumer behavior. It represents beliefs and in most cases, people learn to act through observing and interacting with other members in the society. Generally, consumer buying process gives two useful perspectives which are: decision making process that is associated with consumer buying as well as other factors which affect the entire buying process for chocolate products (Rowley, Jennifer and Richard, 2008). In the UK, the social factors such as family reference group, consumer’s small groups, social role as well as status do affect consumer’s response and end up influencing their buying behavior. In addition, personal factors like lifestyle stage, education, stage, occupation and economic situation and the psychological factors such as perception, beliefs, motivation, learning and attitude also plays a key role in consumer decision making process. To some extent, market programs have a substantial amount of influence on consumer buying decision. It often become immaterial for consumers to think about the quality of products when already they are influenced by its marketing strategy as consumer satisfaction is the major objective of marketing concept according to (Dibb, Sally, and Lyndon, 1996). On the other hand, consumer behavior is also affected by some socioeconomic conditions that exist in the markets namely, mobility, media access and income (Ries and Laura, 2002). It is common in the UK that, per capita income as well as disposable income indicates the overall amount of resources consumers distribute to consumers goods. Brand Image Strategy Pricing Objective Strategy Branding is a collection of attributes that consumers expect from a particular product, which will strongly determine their buying pattern (Wheeler and Alina, 2009). Such brands can be obtained using the company’s name. The brand name promises consumer some benefits like quality and value for any single coin spent, with the same expectations built up over a longer duration. A brand name is considered to be an intangible asset to the company (Ries and Laura Ries, 2002). A catchy name as well as distinctive packaging is the most vital ingredients in any particular brand image, though the actual and true brand identity lie in the mind of consumers i.e. the perception about a product. For any company, it must constantly be aware of this perception and make sure that it preserve by building on them via advertising and other promotions. This branding allows marketers to build an extra value into products and even differentiate them from those of their competitors. It is vital for any firm as it is the case with UK Sugar Company that its marketing objective is very compatible with the overall corporate objective. In trying to select strategy and corporate objective, a firm may refer to the Boston Matrix, simple SWOT analysis or even Ansoff’s matrix to establish the current position of the company and where it is heading to. The main advantage of maintaining a strong brand image for any competitive market is the degree of pure flexibility in the pricing strategy. In most cases, it is s common characteristic of imperfectly competitive markets for many producers to concentrate on non-price competition. For any organization that capitalizes on customer’s satisfaction, gains a competitive advantage through enhanced operation efficiencies, greater sales volume, reduced marketing expenses, positive word-of-mouth publicity and enhanced customer loyalty. On the other hand, pricing is fundamental since it is the only market mix element that actually creates income (Wheeler and Alina, 2009). In order to achieve this, price decision has to be adapted to a number of market segments and situations. This eventually calls for a well planned and organized market approach that will lead to satisfactory price levels. A core issue of pricing is the immediate impact of price on sale and demand volumes. For the chocolate industry in the UK to achieve this, a channel of communication that normally works in two way traffic system wherein the information transfers to the user and later bounces back to the producer is determined. In response to the available information, the consumers give some reactions or behavior. This can be exhibited with the volume of goods customers are enthusiastic to purchase at a definite price. If the volumes are very low, then the industry has to consider revising their pricing strategy and quality of products and the nature of brands offered in order to win back the same consumers and even more. Retailing and Distribution Objectives and Strategies Retailing of confessionary products depends heavily on their availability, with all market research indicating that over 60% of all purchases are on impulse (Euromonitor, 2003). As a result John Foster Ltd tries to supply a lot of outlets as much as possible both under retailer and wholesaler channels. Point of sale merchandising is also very essential when consumers are making snap, instant decisions from a wide array of products on view. Instant recognizable packaging assist in tempting customers, at the same time it is also expected that confectionery, a long with foodstuffs, will definitely become available to the public through media such as television, internet as well as articles. In order to achieve the retail objective, John Foster Ltd has used a wide range of endorsement tactics with other companies. It is obvious that customers perceive only the end result of a host of strategies, actions and plans that create new sets of distribution centers, stores, services and technologies that determine operation and structure of the marketing channels. On the other hand, marketing channel effect lives of hundreds of million of such customers who rely heavily on them to make myriad of both services and products from entire nation. Distribution costs to some extent account for a significant proportion of the final product price. In fact, distribution costs are much higher than the cost of raw materials, manufacturing cost and component parts (Ries & Eric, 2011). Therefore, marketing distribution channel is viewed as one of the major marketing decision areas that the marketing management must consider addressing promptly. Integrated Marketing Communications Objective Strategies As at today, marketers are aware that achievement in marketing does not lie solely in products, accessibility, good and attractive price, rather, communication plays a significant role in marketing. Therefore, sugar industry in the UK need to communicate with potential and present stakeholders not forgetting consumers in order to achieve the business objective. According to Dalton and John (2003), communication is a fundamental foundation of human relation and concern exchange of ideas, information or even feelings. It is a collective term for all the communication functions used in the market for promoting product sale. The main objective of marketing communication is to add some persuasive value to a product the consumers (Kitchen and Pelsmacker, 2004). The conventional tools for market communication mix are public relations, promotion, advertising, personal selling, direct marketing and as of late, internet marketing or cyber and sponsorship. Integrated marketing communication is one of the concepts of marketing communications planning that identifies the added value of comprehensive plan. Then the industry has to assess the strategic role of a number of communication disciplines and combine them together to provide clarity, maximum communication and consistency which impact through the seamless integration of discrete messages (McDonald and Malcolm, 2011). Integration marketing communication usually advances through a number of stages which include: awareness, coordinated integrations, image integrations, functional integration, stakeholder integrations, consumer based integrations and relationship management integration. At every stage, effective communication strength and weakness of promotions marketing, advertising, direct response marketing, corporate public relations and marketing public relation are weighed and disinterested to create the best mix. A fully integrated marketing strategy will allow each form of communications so as to contribute to the success of the overall corporate mission. One of the greatest degrees of market integration for Sugar industry in the UK emerges out of corporate effort of the conventionally separate fields of public relations, personal selling, advertising, direct marketing and promotions marketing. Evaluation and Control Mechanisms The art of forecasting for the future has always been a human attribute as human beings are thinking individually. In essence, a project can easily be captured on the paper with a few elements i.e. the commencement date, termination date, the tasks that must be undertaken and when should they be finished bas well as some ideas of resources which will be required during the course of the project. If the plan for the sugar industry is that one which involves diverse things occurrence at various time, then some of which are interrelated on each other, plus some additional resources at varying times as well as different quantities and maybe working at different rate, control and monitoring of such project is needed for its successful and even timely completion. Control is therefore, referred to a device mechanism that is used to guide or regulate the operation of the system. All organizations including sugar firms use controls to regulate their individual business processes which include finance, production and distribution. This control helps the organization to correct and restrain a typical behavior, reduce and prevent the spread of errors. Control is described as solitary of the four fundamental functions of the management that includes planning, organizing and coordinating Merchant and Kenneth (2011). It is used to evaluate performance and monitor progress of the entire business. Controls are implemented through technology, internal controls, culture and social structure. It is the corporate structure that establishes appropriate internal process management and financial control. In addition, board of directors of the company has to set out corporate governance guidelines so as provide framework in order for management as well as the board to operate efficiently and effective together to achieve the stated company objective. On the employee side, for the this sugar industry to establish better controls over the hired labor, it is very essential to consider all potential employees fill an application form in their own handwriting (Merchant and Kenneth 2011). These are some of the major controls that once implemented, the industry will definitely achieve the business objective which is to maximize profit and meet customer’s satisfaction. Reference: Dalton & John, Managing corporate reputation a specially commissioned report, London: Thorogood, 2003.  Dibb, Sally, & Lyndon Simk, The market segmentation workbook, New York: Routledge, 1996.  Euromonitor, An Industrial Analysis of the UK confectionery Industry: London, 2003. Kitchen, Philip & Patrick Pelsmacker, Integrated Marketing Communications New York: Routledge, 2004. McDonald, Malcolm & Hugh Wilson, Marketing strategy and How to organize them, as well as How to Use Them, New York: Wiley, 2011.  McDonald, Malcolm & Ian Dunbar, Market Segmentation, Boston: Elsevier Butterworth- Heinemann, 2004.  Merchant & Kenneth, The management control systems. Harlow: Financial Times Prentice Hall, 2011.  Mintel, UK chocolate Confectionery Report October 2003 accessed through Mintel Database, 2003. Mintel, UK chocolate Confectionery Report October 2003 accessed through Mintel Database, 1998. Ries & Eric, the Lean Startup, New York: Crown Business, 2011.  Ries & Laura Ries, The 22 Immutable Laws of Branding, New York: Harper Business, 2002.  Rowley, Jennifer & Richard Hartley, Organizing knowledge, Aldershot: Ashgate, 2008. Simms, J. Sector Insight block chocolate breaking the impasse: Marketing 9 June 2004: 40-41. Wheeler & Alina, Designing Brand Identity, New York: Wiley, 2009.  Read More