Masafi Strategic Marketing Analysis - Essay Example

? Masafi Strategic Marketing Plan Table of Contents Executive Summary 4 Background Analysis 4 Mission ment 4 Vision 5 Organisational Setup 5 Product Portfolio Analysis 5 Critical Issues 7 The product’s issue to remain competitive in the market that raises the need to devise new product strategy. 8 Branding and positioning of Masafi in the targeted segment. 8 Decline in market. 8 Social and governmental constraints on the use of polyethylene for packaging purpose which may adversely affect the business of Masafi due to state’s pollution-free policy. 8 Core Competencies 8 Future Industry Analysis 8 Market Analysis 9 Perceived Customer Value 9 Customer Analysis 10 Segmentation 10 Targeting 11 Positioning 11 Marketing Strategy 13 Service Marketing: 7Ps Framework 14 Brand Strategy 18 Final Budget 20 Recommendations 21 Appendices 25 Executive Summary The study will propose a marketing plan for Masafi’s mineral water. The project will start with the mission and vision of the organisation. Following these, the study will provide a brief history of Masafi. A PLC and BCG matrix has been implemented for the purpose of the study. Then a market analysis has been conducted in order to understand the customer value and current customer trend. Then the study will provide a marketing plan including overview of the industry, key competitors, STP analysis and Marketing Mix. Finally, the study will provide recommendation plans basis on the critical issues. Background Analysis Masafi is a growing FMCG company in the Gulf and Middle East region headquartered in Dubai. The organisation used to manufacture and distribute mineral water and other food products (Masafi, 2013a). Here the project will conduct a marketing audit for the mineral water and will propose a new marketing plan for the products. This part will highlight the mission and vision of Masafi, organisational set up, past performance analysis and some critical issues that are affecting the organisation within the competitive market place. Mission Statement The mission statement of Masafi claims that it is the organisation’s excellence to provide the products of premium quality through continuous strengthening of leadership and innovation within the growing FMCG sector. The long-term objectives of Masafi are listed below. Product diversification and business expansion in different global markets. Retention of long-term leadership within the mineral water industry. Expansion of brand portfolio and provision of social and health services for the global community. Vision The vision statement of Masafi is “Premium Products for Enhanced life”. Organisational Setup Masafi was founded in the year 1976. Masafi has been able to enter the domestic market with an estimated start-up capital of 5.5 million US dollar. In the year 2007, Masafi earned revenue of 40.2 million US dollars. Masafi has joint ventures with several international companies. For example, the organisation has joint ventured with UAE based organisation Khadamat facilities in order to recycle the plastics that are used for packaging (Carter and Dunston, 2006, p.161). Product Portfolio Analysis The product portfolio analysis will determine the key product lines of Masafi in terms of Market share, PLC and BCG Matrix. Sales or Profit In the year 2002, Masafi managed to increase its growth by 8%. At that point of time, the economic situation was not favourable for mineral water industry. However, the organisation managed to sell more than 3.6 million litres of mineral water bottles in that specific year. Several experts at that point of time expected that the organisation would avail a significant growth during the next 10 years. In the year 2012, the organisation increased its growth by 6% comparing to the last year. In terms of market share and profit, the key products of Masafi are mineral water bottles and facial tissues. Product Life Cycle Masafi’s mineral water has a short life cycle. From the starting years, the organisation has introduced mineral water of various flavours. The organisation rapidly changes the flavour, design and packaging of the products due to high competitive market (Masafi, 2013b, p.1). It is feasible that the life cycle of a particular mineral water bottle with similar flavour and design be more than 24 to 30 months. Due to huge rivalry within the industry, the organisation has to change its product attribute in order to retain long-term leadership within the mineral water industry. The products of Masafi are of premium quality and a high price. Masafi’s mineral water has reached the maturity stage. In this product’s life cycle, the company may be forced to close its production due to circumstances caused by a declining in sales due to time and the changes that comes with it. A company at this critical period try to reposition its product to enable its longevity in the market. BCG Matrix It is feasible from the product portfolio analysis by the BCG matrix that mineral water bottles and facial tissues are the profitable products of Masafi. Chips and fruit juice are not profitable enough comparing to these two products. Mineral water is the key product of the organisation with high market share and decreasing market growth (Wood & Aisharhan, 2003). The market growth rate is decreasing due to the saturated global and domestic market (Figure 2). It can be called as cash cow in BCG matrix table. Masafi tissues are the star product as the market share and growth is increasing rapidly in the European and North American markets. PESTLE Analysis Political Political stability of UAE will favour the business process of Masafi. Economical Diversifying and developing economy will help Masafi to capitalise on the business opportunities. Social Current trend of consuming healthy drink water will help the organisation. Technological Technological development and adoption of advanced technology will ease the business process of Masafi. Legal The organisation has to face several legal barriers as they are in the mineral water industry. Environmental Environment consciousness will increase the brand image of Masafi’s mineral water. Critical Issues Though Masafi is the leading organisation within the UAE’s mineral water industry, the organisation had to face several critical challenges. The product’s issue to remain competitive in the market that raises the need to devise new product strategy. Branding and positioning of Masafi in the targeted segment. Decline in market. Social and governmental constraints on the use of polyethylene for packaging purpose which may adversely affect the business of Masafi due to state’s pollution-free policy. Core Competencies Presence of vitamins, which is essentially required by pregnant and lactating mothers, growing children and health-conscious people have become one of the significant competitive advantages of Masafi’s mineral water. The natural water from mountains and down wells in Ras AL Khaima is another major competitive advantage of the mineral water of Masafi. The presence or the addition of vitamins has created a different brand image of Masafi as, “the only healthy water with the goodness of vitamins.” Future Industry Analysis It is feasible from the above study, that Masafi is one of the leading players within the mineral water industry in UAE. In order to survive in this global competitive market place, they should target majorly the people from the medium and high income levels. At the same point of time, they have to focus on the quality, differentiation and price of the product (Lyons, 2010, p.109). They should target a new segment to promote their product for such consumers as pregnant and lactating mothers, growing children and health-conscious people as this process will help them achieve maximum market share. Moreover, by adopting this new product strategy, they will increase the brand awareness of the product. It will also minimise the competition challenges within the industry. Market Analysis The market analysis of Masafi mineral water will highlight the customer value and customer analysis for the selected product of Masafi. Perceived Customer Value The organisation has a direct link to its buyers transporting some of the products directly to the loyal customers. By ensuring that strategic total quality management is observed and that quality of products is put first, the customers will have a good product image and be loyal customers because of the high brand image value. The consideration of hygiene is very important because even with premium pricing it will still win the customers’ favour. Masafi mineral water, because of its high product benefit, majorly relies on customers’ health needs and ensures quality is observed. Nutrients and the added vitamins in the mineral water ensure that the factor of health and nutrition is observed and a good name is created for the company and its products. The organisation has effectively handled the customers’ complaints by an adequate follow-up strategy. It can be termed as the perceived service benefit of Masafi. Attractive design and packaging have increased its brand value. This advertisement strategy has seen the company go far in the market because more people are attracted to it. Possible Changes As the social system and family structure are changing globally, therefore, it is recommended that the organisation change its strategy according to the current trend. Moreover, the organisation should implement change strategies in order to overcome the external environmental challenges. Customer Analysis In order to analyse the potential customers for mineral water of Masafi, a STP analysis of Masafi mineral water has been implemented below. Segmentation Segmentation is done on the basis of customer needs according to their geographic, demographic, psychographic and behavioural structure. The following is the segmentation for Masafi’s mineral water. . Expecting/ Lactating Mothers: Age 21-39 This segment includes housewives or working women from higher class to middle and lower-middle class. As it is known that in Middle Eastern and Asian countries, women lack basic vitamins and minerals in their daily diet, it would be ideal for Masafi to approach this segment with a special ‘health-oriented” strategy to meet the daily dietary needs of the pregnant and the lactating mothers for the well-being of the mothers and the yet unborn child. Children: Age 8-15 This segment includes the school going children who are in stage of constant growth and development. Such children at this stage need high amount of balanced vitamins and minerals which they do not get from their diet. To meet those daily dietary needs, Masafi needs to give special attention to this segment. Health Conscious People: Age 20-45 This segment includes the university students and the employed individuals who are always busy to make both ends meet. Such people require high amount of vitamins and minerals for their mental wellbeing and physical fitness as they lack proper time to put efforts in maintaining their health. Such people are an ideal segment for Masafi. Targeting The target customers of Masafi are pregnant and lactating mothers either employed, students, or housewives, growing children and employed, studying and health-conscious people. The main aim of Masafi is to target the right consumers depending on their needs and demands with the right product strategy which is based on health and purity of the substance. Positioning Masafi needs to position itself in the target market as a “health-oriented” and “pure” mineral water with the goodness of added vitamins, which are highly required by the pregnant and lactating mother, growing children and health-conscious people. The brand needs to position itself as the only pure and healthy water that contains minerals and vitamins and that is suitable for pregnant and lactating mothers, growing children and health-conscious people. It would be positioned in the market as a ‘health product made to quench the thirst” and to meet the nutritional needs and values of the potential customers who need extra nutrients and vitamins as a part of their daily diet, which they normally do not take on regular basis, such as pregnant and lactating mothers require high contents of vitamins and, at the same time, high amount of water to avoid dehydration; therefore, drinking Masafi mineral water which already contains the goodness of vitamins would be a good choice for them. Perception Mind Map According to the previous positioning strategy, mineral water bottles of Masafi can be referred to as Brand P in the perceptual map as the organisation used to believe in premium pricing strategy. It is also important to note that product quality is emphasised, and according to the mind map, the quality of the products is paramount in ensuring that the market will be ready for the product. Premium pricing strategy goes hand in hand with the products quality and the total quality management so as to make it a culture deeply rooted in the organisation. By this strategy, premium pricing can take effect because target customers are ready for the best at any cost. Key Competitors There are several potential competitors of Masafi that compete in the UAE market, such as Al Ain Water, Gulfa Water, Nestle Water, Aquafina Water (Clements, 2002, p.232). Total dissolve solids in a 500ml Masafi mineral water bottle is 130, while Al Ain has 110 dissolve solids. The price level of Masafi depends upon the flavours, while the competitors’ price is fixed at 1 Dirham. In terms of product Masafi has introduced mineral water bottle with various flavours comparing to its competitors. In terms of style and labelling, Masafi has innovatively developed these factors. They have been able to attract more customers than other competitors through their attributes and creative packaging and new product strategy. Marketing Strategy Objectives Masafi has aimed to expand its target market for the health wellbeing of pregnant mothers and children. The company has aimed to increase its sales to meet the objective of achieving 20% market share in 2 years. To remain competitive in the market, Masafi would expand itself into other segments in 2015. Another key objective is to create brand awareness in the health sectors within 22 months. Strategies The above objectives can be achieved through these following strategies. By adopting the pricing strategy of penetrating the market. Providing sponsorship to sports teams and several effective promotional activities will increase the brand awareness of Masafi’s mineral water in global market. Offering discounted price and providing rewards or incentives to the retailers and distributors will help the organisation achieve its sales target within the next three years. Service Marketing: 7Ps Framework Product, price, place, promotion, people, process and physical evidence are the seven elements of service marketing mix. Product Masafi mineral water is a high quality healthy water product to quench the thirst of people who appreciate drinking healthy and safe water. The mineral water comes with the goodness of added vitamins based on the daily dietary requirements of the individuals such as pregnant mothers, small children and health-conscious people. The bottle packaging is clear in order to prevent colour-based chemical exposure. The bottle is packaged in a hard plastic bottle, which is better than the soft plastic bottles due to health reasons. The core company strategy is based on providing healthy pure water as per the ISO standards to meet the daily requirements of pregnant and lactating mothers. Masafi has aimed to enhance its leadership in the market by continuously enhancing and improving its product line for the targeted customers. The addition of vitamins would help the pregnant and the lactating mothers, the growing children and the health conscious people to meet the daily requirements water needed by the body. Price Masafi should enter the market by adopting the technique of market penetration to attract a larger number of customers. By offering quality water at a low price would penetrate the market, which would attract the customers and affect the competitors. The product would position itself as “quality healthy water at affordable price’. This strategy would help the company target the customers from upper class all the way to middle and lower-middle class. Place Distribution plays an important role in the promotion of the product. Masafi would use the indirect distribution channel for its product. Masafi would target the end-consumers through retailers. Retailers would play a direct role in promoting the “healthy side” of Masafi to the customers. Manufacturer------Wholesaler----Retailer------Consumer Channel Decision Design: In Channel Decision Design, the company is in need to create or design the consumer needs. The channel objectives or the channel constraints are formulated on the consumer demands. Masafi is a local company in Dubai which is using all the distribution channels to make it available everywhere, especially in universities, hospitals, restaurants and health clubs. Promotion Masafi has implemented a mix of several effective promotional tools such as digital media advertising and print media advertising in order to increase the market growth and brand awareness. Moreover, the organisation has invested in several sales promotional activities, such as Masafi Shopping Spee, Win Diamonds Campaign, rebates and contests. These are the effective sales promotions that have increased the awareness of the brand. Also, Masafi needs intense promotional activities to create awareness among the masses and to penetrate the market for mineral water. The company’s campaign are centered on: 1 - Advertisements: This strategy would target the customers by approaching them through TV commercials, magazine ads, billboards and other health-based ads through which the targeted customers can become aware of the product and its health benefits. 2 - Direct selling: This strategy includes direct targeting the customers by approaching them by introducing the brand through sending short messages on cell phones, door-to-door selling, approaching through emails or through telemarketing. 3 - Sponsorship: Sponsoring of events like health shows, sports to encourage young people to know about the health benefits of the product. This strategy would help in creating a “health-oriented brand image for the product. The promotional strategies should focus on children and the future mothers including the health-conscious people. As the number of users of social media network is increasing rapidly, Masafi should put advertisements on Facebook and Twitter. It will enable them to attract customers and will create awareness in the minds of the young generation people, especially young pregnant mothers towards the newly developed product. Sales promotion like providing discounted prices and rewards to the retailers and distributors will increase the sales volume of the newly developed products. People Here ‘people’ means the employees of the organisation. Masafi’s skilled and dedicated employees are the strongest asset of the organisation, but it is fact that the employees of Masafi did not use to get appropriate reward or the appraisal according to their performance. The organisation has very inadequate employee retention policy (Dege, 2011, p.26). It is recommended that the management of the organisation should organise effective training programmes for the employees. Moreover, they have to focus on the employee retention policy by giving the employees reward and incentives according to their effective performance. Process Masafi depends on the skills and competencies of the employees. The organisation has failed to implement a similar kind of business process in all the operating places. They have implemented several unique strategies in the business process. It is recommended that they should implement mobile vender van for all the operating areas including the metro cities in global market. This process strategy will help the organisation to increase its brand value. Physical Evidence It is important for the company to label its mineral water bottles with the contents present in the bottle along with its nutritional value for the pregnant and lactating mothers to know what is required by their body and how much their body requires the specific amount of nutrients. Similar strategy should be adopted for the knowledge of parents of the growing children as well as for the health-conscious group. The quality of the bottles should match the international health standards as well as the standards set by the government. The bottles should be of clear hard material, not coloured soft material, to ensure the healthiness of the product to the end customers. The logo of the brand should be clearly written along with the emphasis on the world “vitamins” to make it clear to the customers that the water holds goodness of the vitamins necessary for good health. Brand Strategy Masafi Mineral Water is a high quality healthy water product to quench the thirst of people who appreciate drinking healthy and safe water. The mineral water comes with the goodness of added vitamins based on the daily dietary requirements of the individuals such as pregnant mothers, small children and health conscious people. The brand needs to establish itself as a health conscious brand by associating itself with the promotion of health programs and events. The brand needs to make itself as “health oriented, eco-friendly, consumer friendly” to make people understand that Masafi cares about the well-being of its consumers. Resources There are two important resources for a company. One is capital and the other is labour. According to sales forecast and estimated cost of sales for the next three years, Masafi needs 146,000 AED in the first year, 150,562 AED in second year, and 161,604 in third year of its business operation. Though, the company can reinvest its profit of the first year in the second year and profit of the second year in the third year to reduce the cost of capital borrowings. For another resource, i.e. labour, the company needs to hire experienced employees from the local market with a competitive market wage rate. Another important resource is raw material. For this, the company may get supply of bottles from the existing suppliers so that it can reduce the investment that is required for manufacturing of the containers. Final Budget All values are in AED except units. Unit Price (AED) for 1 liter bottle 1       Sales forecast           Years 2013 2014 2015   Sales (units) 182500 200750 230862.5   Sales (Value) (AED) 182500 200750 230862.5 Costs           Manufacturing cost 109500 110412.5 115431.3   Promotional cost 27375 30112.5 34629.38   Distribution cost 9125 10037.5 11543.13   Total 146000 150562.5 161603.8 Profit   36500 50187.5 69258.75 Profit margin   20.00% 25.00% 30.00% Assumptions According to the assumed budget table, it is feasible that Masafi has kept the unit price for 1 litre mineral water bottle 1 Dirham. The organisation is focusing on the increase of sales by 10% in the second year and 15% in the third year. It is identified that the assumed sales value for the newly developed product has significantly increased. Masafi has estimated that in first year, the production cost will be 109,500 ADE. In the second and the third year, the organisation will reduce its manufacturing cost by 5% and 10% respectively. The promotional and the distribution cost will be constant for the three years. If everything goes right for the new product, then the organisation can achieve the forecasted profit margin for three years. If Masafi is able to achieve the profit margin, then it will be proved that the newly developed product has been able to take the advantages of economies of scale. Recommendations After finding the critical issues and analysing the marketing plan and activities, a few recommendation plans have been proposed to Masafi in order to lead the global market place. Masafi should focus on their current global expansion strategy as it will help the organisation to maximise business profit. This is because maximising on its scope in the product and marketing through expansion across borders, it will consequently translate to more consumers and to more profits generated. As environmental laws regarding carbon emission and environmental sustainability are creating major concerns, Masafi should focus on the recycling and reusing of water and solid waste. It will help the organisation to sustain its business practices. Moreover, they should concentrate on using papers or polyethylene more than fifty micron in terms of product packaging. These strategies may regulate the environmental threats and increase the brand reputation of Masafi in global market. Providing official sponsorship to sports team and promotional activities like print media advertising, social media advertising, digital media advertising and several campaigning activities will increase the product awareness of Masafi in global market. The mineral water company Masafi should make a point to make available vending machines in learning institutions, cabs and hospitals to facilitate the target customers in accessing their products. Pull marketing strategy will help the organisation achieve its sales target within next three years. They need to implement cost leadership strategy in order to reduce the price of products. Therefore, Masafi can attract people from all income segments. Moreover, providing rewards or incentives to the retailers and distributors will automatically increase the sales volume of the products. Masafi should do some corporate social responsibilities by associating itself with the sponsoring of health programmes centered on pregnant mothers, children’s health and people who are alarmed about their health. This will also promote an association with the mentioned groups and good for business. To attain its objective of greatest market share, the company needs to implement pull strategy by submission of discounts, free-coupons and rewards to the consumers, the retailers and the distributers. The need to improve the company’s product line for the consumers who are specifically targeted is paramount to put in consideration; this should be done by enhancing the leadership in the market by absolute dominance in the market. Product value adding is one of the aspects to be considered, such as vitamins addition in the mineral water. There should be strategic and creative improvement of the perceptual mind map whereby product affordability is maintained to appeal to customers, more creative bottles and casings and labeling. A constant review on the pricing is important in the market and should avoid discouraging customers and maintaining their loyalty. Effective consideration of the product life cycle is essential in maintaining the relevance in the market. It is advisable to keep the products up to the dynamic trends of the market wants in accordance with the changing times. This will help in controlling the sales in the whole product life cycle. References Carter, T., and Dunston, L., 2006. Dubai City Guide. London: Lonely Planet Online Shop. Clements, F., 1998. United Arab Emirates. California: Abc-Clio Incorporated. Dege, N., 2011. Technology of Bottled Water. New Jersey: John Wiley & Sons. Lyons, C., 2009. The Unofficial Guide to Dubai. New Jersey: John Wiley & Sons. Masafi, 2013a. About Us. [Online]. Available at: . [Accessed on April 18, 2013]. Masafi, 2013b. Products. [Online]. Available at: . [Accessed on April 18, 2013]. Wood, W., and Aisharhan, A., 2003. Water Resources Perspectives. Philadelphia: Elsevier. Appendices Figure 1: PLC Figure 2: BCG Matrix Year (2012) Relative Market Share High Low Market Growth Rate High Star Masafi Tissues Question Mark Masafi Fruit Juices Low Cash Cow Masafi Mineral Water Dog Masafi Potato Chips Figure 3: Perceptual Mind Map Figure 4: Distribution Map Read More