Manufacture and Marketing of a New Breakfast Cereal in Australia - Essay Example

?ORDER No: 537232 New Product Running Head: MARKETING STRATEGY FOR NEW CEREAL Manufacture and Marketing of a New Breakfast Cereal in Australia Student’s name Institutional affiliation New Product 2 Abstract 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000The challenge is to introduce a new breakfast cereal and to seek to market it in Australia. In order to do so current marketing theories are briefly examined, and the marketing strategy is developed against the constraints imposed by changes in the following six macro-environments outside the organisation: demographic, economic, natural, technological, political and cultural. Also, having regard to the virtual dominance of the breakfast cereals market by five major companies, attention is focussed on special characteristics of the product which could ensure some market penetration. New Product 3 Manufacture and Marketing of a New Breakfast Cereal in Australia Introduction The product is a new breakfast cereal called “GoodHealth”, and it differs from those already on the market in two important respects: its ability to remain crisp for longer when milk is added, and its lower salt content (Oakenfull, 2009). The product will be manufactured to complement the existing range of food products already produced by “PolyFoods”, a small company founded in 2001 and located in the outskirts of Canberra. The first intention is to market GoodHealth throughout Australia, and then to expand into the global marketplace. In order to achieve this aim attention will be given to exploiting modern marketing theories as they apply to the appropriate macro-environment outside the organisation. The application of marketing theory The aim of marketing is to sell the product and over the years a number of theories have been developed to identify the factors which are necessary for the construction and implementation of an effective marketing strategy. Shannon (2000) suggests that traditional practices promoting brand loyalty, as advocated by Kotler et al. (2009), may have limited future success and highlights ‘Salience’, or achieving awareness and use as the key to brand growth. Linn (2010) offers the thought in “General Theory of Marketing” that the central feature is the ‘Transaction of buying and selling’ based on the perceived ‘value’ of the product by the buyer. This perception, which is underpinned by ‘brand image’ is subject to such fluctuations as needs, financial situation, experience and taste. Linn (2010) offers a dual model of the process ‘Price Asked < Perceived Value’ and states that “The condition for the transaction being performed is, in principle, that the buyer values the product to equal or New Product 4 more than the price asked” (Linn, 2010). It is now appropriate to consider the six main macro-environments which will affect the target market for the product and consequently hte company’s product strategy. Analysis of the macro-environment Demographic In the late 1990s 49% of Americans ate cereals at breakfast – almost 20% more than any other product or combination (Topher, 1997). Statistics gathered in Australia at about the same time (AUSSTATS, 1999) found that over 65% of the population ate cereals daily, although there was no clear breakdown into easily identifiable products. However, the figures showed that children in the age range 2-15 years consumed more breakfast cereals – as did adults over 45 years – than the age group 16-44 years. These trends indicated some marketing target areas. Firstly the adolescent group, and the over 65s who generally preferred ‘something warming’ such as porridge. For the former it is essential to stress that breakfast cereals are not just nourishing but ‘cool’ and for the latter it is important to stress that the added vitamins and nutritional properties of breakfast cereals, and “GoodHealth” in particular can contribute to wellbeing and delay the onset of various diseases such as cancer of the bowel and gut. The fact that the cereal stays crisp – even in hot milk – helps the ‘warming’ scenario. A change in family patterns in recent years has meant that, with two working parents, breakfast cereals make it easier for the family to get a quick nourishing meal before school or work. Conversely, people in the lower socio-economic band can enjoy a cheaper more nourishing diet. The simplicity of this scenario is, however, becoming eroded by the New Product 5 introduction of “energy bars” containing fruit, nuts and cereals which, it is claimed, can be used as a meal or consumed on the move. To counter this it is necessary to stress that such foods usually are high in sugars, and overindulgence could lead to obesity and diabetes. Economic “The main manufacturers of breakfast cereals in Australia are: Kellogg’s, The Sanitarium Health Food Company, Uncle Tobys and Lowan Whole Foods [Gograins]. These five companies have a virtual stranglehold on the industry and this, compared with the relative “inelasticity” of the nature of cereal makes competition difficult. The development of new breakfast cereal products is not difficult, but market entry is harder due to the economies of scale and name recognition. Some progress could be made by reducing transportation costs, resuming the inclusion of ‘packet toys’ and competitions, and use of the media to encourage brand and benefit recognition. A less desirable solution for a new product could be to ally the company with one of the majors in producing an attractive subsidiary product. Natural The growing insistence of the ‘Green Lobby’ for all sectors of industry to make their products ’environmentally friendly’ is introducing new constraints, in many cases, backed by governments. Whilst most people and organisations have a vague idea of what is involved, it should go beyond waste management and the elimination of unnecessary packaging. Leonidou (2006) of the University of Leeds has carried out a formidable literature survey and, as a result, proposed “A Political Economy model of enviro-marketing strategies”. This, it is hoped, will elucidate the profile of a number of enterprises including “the mediating role of the firm’s environmental orientation, as well as the elements of environmentally-based New Product 6 marketing mix… [and] the consequences of implementing strategy on the firm’s marketing performance” (Leonidou, 2006). There are elements in such an approach which could be of value in the breakfast cereal market, which could be coupled with greater use of the internet and TV so as to indicate that the product uses green resources to promote its marketing. It would also be sensible to consider highlighting the advantages of recycling the packaging. Another solution would be to use ideas from the coffee producers. They offer basic rigid containers – glass or plastic – with refill packages offered at a considerably lower price. In the case of breakfast cereals a plastic container could be provided [with an airtight lid to keep the product fresh]. The pack could be decorated with pictures of cartoons or ‘favourite’ characters. Cheap disposable refills would be available at a much reduced cost. Technological The presence of harmful chemicals in foodstuffs has raised some concerns throughout the developed world and, the European Union (EU) in particular carried out an assessment of acrylamide levels in food over the period 2007-2009 (EU, 2011). Whilst levels were generally under control the three foodstuffs contributing to high levels of acrylamide were fried potatoes [crisps & French fries], soft bread and cereals. The remedy for the presence of any suspect chemicals in breakfast cereals would be to introduce a sampling procedure which could be applied to particular products in different years. The results should be reported, and particular emphasis given to the successful lowering of harmful products. A typical example of this technique is that adopted by Marks & Spencer in their drive to reduce salt levels in some foodstuff where the reminders are visual and continuous. Again the strategy for this cereal marketing should be to emphasise the purity of the product and where appropriate to New Product 7 provide a breakdown of the composition [in writing] – and in TV and Internet advertising – of the product, highlighting the favourable comparisons with other breakfast cereals. Political The likely constraints here are concerned with government legislation in the light of the uncertainties of the possible duration of the present government. A major enthusiasm at present is “Aiding the World’s Poorest” a slogan adopted by the Christian organisation TEAR AUSTRALIA (2009). Undoubtedly Australia has a considerable amount of people who are close to starvation level, and this is occupying the energies of many NGOs who are busy formulating policies. If and when these become crystallised action can be taken. In the meantime representation could be sought on one or more of these bodies so as to be seen to be helping to formulate policy. When this is clear, special deliveries could be made to selected ‘poor’ communities of ‘aid’ in the form of good nourishing food such as GoodHealth. Alternatively, a voucher scheme could be introduced which could be used to purchase the product at discounted prices. These initiatives could also be used to generate favourable publicity in the media. Cultural A range of cultural constraints affecting global communication strategies are described by Perner (2008), and he suggests that in Australia, as in the US, the wish to outdo the rest of the group is common. Australians are also humorous and, at the same time, prefer the straight-talking honest approach. They are also becoming increasingly health conscious and aware of the constraints on household budgets resulting from global market problems. This means that health claims on the packet as well as advertising in the media and on the internet New Product 8 are a good selling point, and this fits into the strategy adopted by such cereal producers as Goodness Superfoods (AIFST, 2011). The company has latched on to the fact that high-fibre content is seen as particularly desirable in preventing cancers of the bowel and gut, and therefore are spending considerable resources on promoting the BARLEYmax breakfast cereal. The emphasis on additives is also becoming more prevalent, and additional vitamins are seen to appeal to the healthy male (Haskell, 2009). Buying habits are also changing across the country, particularly in young people. An increasing number now use the internet, not only for shopping, but also for research on the benefits of different foods. The Australian Government is also engaging in and industry support and promotion programme to extol the benefits of increased consumption of cereals (CSIRO,2005). This translates to emphasis on health, truthful advertising on packets, the press, internet and TV, sponsorship deals with promotion of athletic events. Although there are cultural differences across Australia, they are generally not thought to be so severe as to require market segmentation and, initially at least, a standard product will suffice. Conclusion The manufacture and launch of a new breakfast cereal have been discussed in the light of modern marketing theories, and a number of unique and attractive selling points were identified. The strategies required were next considered in the light of the following macro-environmental factors: demographic, economic, natural, technological political and cultural. While each one imposes its own particular constraints, some overlap, and the same maketing strategies will apply in the main, but with small modifications In the case of the political constraints to marketing strategies, the outcome is more uncertain and some of the decisions have to be made in the light of changing governmental priorities. The general conclusion is New Product 9 that emphasis should continually be made on the good – and often unique - points of the product. Where possible too advantage should be taken to promote not only the advantages of the product but also in the philosophical and helpful attitude of the company, particularly towards events and situations which are close to the heart of most Australians: health, poverty sport and national pride. New Product WORD COUNT Introduction 112 Marketing theory & strategy 1492 Conclusion 177 New Product 10 References AIFST. (2011) More breakfast cereals with BARLEYMax. Retrieved from http://wwwfoodaust.com.au/newproducts.htm AUSSTATS (1999). National Nutrition Survey: Foods Eaten, Australia 1995. Australian Bureau of Statistics 4804.0. Retrieved June 25, 2011, from http://www.abs.gov.au/AUSSTATS/abs@nfs/0/9A125034802F94CECA2568A9001... CSIRO. (2005). Food Futures: Flagship overview. Retrieved from http://www.csiro.au/foodfutures EU. (2011). Results on acrylamide level in food monitoring years 2007-2009 and Exposure assessment. EFSA Journal, 9 (4): 2133-2180 Kotler, P. et al. (2009) Marketing (8edn.), Pearson Publishing Leodidou, C. (2006). Antecedents and Consequences of Enviro-marketing Strategy: A Political Economy Perspective. Retrieved 23 June, 2011, from University of Leeds, Leeds University Business School e-mail buscl@leeds.ac.uk Linn, C. E. (2010). General Theory of Marketing. Metamanagement Publishing, Stockholm. Retrieved 24 June, 2011, from meta@metamanagement.se Oakenfull, D. (2009, May). Children’s cereal review and compare. CHOICE, Article 01, Children’s cereals: not all equal. Retrieved 24 June, 2011, from http://www.choice.com.au/reviews-and-tests/babies-and-kids-/food-and-health/kids-fo... Perner. L. (2008). The Global Market Place. Retrieved June 22, 2011, from University of Southern California, Marshall School of Business Web site, http://www.consumerpsychologist.com/international_marketing.html New Product 11 Shannon, R.M. (2000). The Emerging Science of Modern Marketing: Theories that Dispel Myths and Help Businesses. 94-100. College of Management, Mahidol University, Bangkok, Thailand. TEAR (2009) Aiding the World’s Poorest: Some Suggestions to TEAR AUSTRALIA. Retrieved June 27, 2011, from http://www.epds.apana.org.au/Teams/Australia/Aid_Poor.htm Topher’s Breakfast Cereal Character Guide – Analysis of the Cereal Industry. (1997). Retrieved June 22, 2011, from http://www.lavasurfer.com/cereal-analysis.html Who makes breakfast cereals in Australia? (n.d.). Retrieved June 22, 2011, from http://www.gograins.com.au/grainsnutrition/is/print/print10.pdf Read More