Global Marketing in the Context of National Environmental Issues - Essay Example

?Global Marketing in the Context of National Environmental Issues Once considered a luxury of multinational corporations, global marketing has now become a necessity to ensure well-being and sustainability of any organization (Lee and Carter, 2005). Today’s marketing is same as agricultural-age-marketing building direct relationship between the producer and the consumer. However, it aims to make similar markets more accessible to the firms inexpensively through multi-channel marketing strategies which determine “how different marketing channels should integrate and support in terms of their proposition development and communications based on their relative merits for the customer and the company” (Dave, 2003). Formerly known as Warburtons’ the Bakers, Warburtons Ltd. is a producer and distributor of bakery products founded by Thomas Warburton in 1876 in Bolton, the United Kingdom. Warburtons is the strongest grocery brand after Coca Cola in the UK (Nielsen, 2010). It is a family owned business selling over 2 million bakery products daily. According to the chairman of the company, Jonathan Warburton, "From the wheat we grow to the flour we select to the bread we bake, we care because our name's on it". Company’s annual return is estimated at over ? 411 million, and employs over 4,200 staff across 13 bakeries and 11 depots positioned throughout UK (IBM, 2008). Warburtons is heavily investing in marketing and product development, and has recently launched a new ?8.2 million cross-media marketing campaign to achieve ?1 billion revenue target through product diversification and international ventures (Ingredients Network, 2012). This paper attempts to develop a competitive and sustainable marketing strategy for expansion of Warburtons bakery product group to Mauritian food market, Africa. The Product Group Warburtons product group includes bread, rolls, snacks, healthy and gluten free products. The bread variety is suitable for vegetarians and is almost similar in nutrition and calorie content to other breads ranging between 60-90 calories per slice depending on the type of the product. However, it contains more selenium than other breads. The white bread is fortified with calcium, iron and Vitamin B and the wholemeal is rich in dietary fiber. The company is not using hydrogenated fats in any of the products. To help reduce the increasing sodium intake, the company has lowered the use of salts by 30%. A complete ingredient and nutritional information is provided on all packaging (a-Warburtons, 2012). Warburton products do not have a longer shelf life and are baked in in-store bakeries to ensure absolute freshness. To maintain freshness and quality, Warburton bread is priced quite higher than other breads. Around 95% of the best quality wheat is obtained ethically and sustainably from established sources in the UK and Canada. To maintain consistent protein levels and quality, the grown varieties are specified by the company giving the products a unique taste, softness and freshness. Warburton products not only provide customers with healthy balanced diet but also ethically sound and environmentally friendly choices (b-Warburtons, 2012). The Target Market The Republic of Mauritius is located in the southeast of African continent, around 500 miles east of Madagascar. As of July 2011, the population of Mauritius was estimated at 1,286,340 with a growth rate of 0.4% and a population density of 630 people per square Kilometer. The country is well known for its stability and racial harmony among different ethnic groups including Asians, Europeans and Africans (Republic of Mauritius, 2012). The local currency is Rupee divided into 100 cents. Negligible or zero percentage of population lives below international poverty line of US$1.25 per day. People speak Mauritian Creole, English and French. As of 2008, the total adult literacy rate was estimated at 88% (UNICEF, 2010). Despite of being remote from world markets, Mauritius enjoys sustained economic growth and stability. From 1970 to 2008, the GDP growth was estimated at 4.6% per capita and consumer price inflation averaged 8.7% per year (Vandemoortele and Bird, 2010). Mauritius has also sustained competitiveness on international markets and was ranked 27th best performing country in the world (The World Bank, 2008). Mauritius economy chiefly relies on sugar, tourism, manufacturing, finance and ICT. The imports are quite limited due to high trade barriers. The country faces serious disaster risks due to global warming (Vandemoortele and Bird, 2010). Supermarkets in Mauritius are quickly expanding by direct foreign investments from South Africa and Kenya. However, multinational supermarket chains have not yet penetrated Mauritius significantly (Romanik, 2007). Around 75% of the Mauritian food needs are met through imports costing more than USD $ 860 million. Due to limited land area, the country is setting up food security projects, and innovative production and marketing processes are actively being encouraged. Though Mauritius is considered a quality producer of food, commercial production of wheat commodities is not available in the country and hence is also being encouraged by the government (Board of Investment, 2012). The Competitors There are no well established and dominant international bakery chains in the entire region. However, direct as well as substitute competition may arise from various national and local manufacturers, retailers and suppliers such as Bake Master Ltd, Quartier Gourmet, Farrow Brothers &Amp Co Ltd, Welcome Bakery, Patisserie Les Caprices de Gervais, Au Four A Sol, Bin Dawood Bakery & Pastry, Boulangerie & Patisserie Ideale Vatel Blue & Co, Boulangerie & Patisserie de Sainte Croix, and Macadams etc. The only advantage these companies enjoy compared to the Warburtons is their lower price structure. For instance, a loaf of fresh white bread (500g) cost ?0.37 in Mauritius (Numbeo, 2012) and Warburtons Toastie Thick Sliced White Bread (800g) is priced ?1.35 in the UK (Mysupermarket, 2012). The Pricing Strategy Since prices of Warburtons bread and other bakery goods are already too high compared to other brands in the target market, in-store bakeries should be established in all major cities to reduce the transport and packaging costs. The prices can even be increased a bit as our competitive strategy is the quality of the product and theirs is the price. According to Robert Grant (2005), “When the external environment is in a state of flux, the firm itself, in terms of its bundle of resources and capabilities, may be a much more stable basis on which to define its identity”. Warburton is a highly recognized brand with established quality standards and can mobilize its resources for preparation of augmented products exceeding consumer’s expectations to generate additional revenue streams. Differentiated pricing strategy can be adopted while marketing products to distant areas. Some of the products such as Warburtons snacks are totally not available, hence facing no competition and can be priced higher than normal to compensate the price of bread or other products that are in direct competition. The performance level can also be lowered according to target market and competitor products. If a loaf of Warburtons white bread (800g) costs at ?1.35 in the UK, returning ? 0.25 profit to the company, then lower labor and transport costs would allow Warburtons to sell it for 1.25 at same return. The profit could be reduced initially to ? 0.20 or even less till the firm positioning of product in the target market. A Product Positioning Map The STP (segmentation, targeting and positioning) Strategy According to Kotler and Keller (2006), "a company discovers different needs and groups in the marketplace, targets those needs and groups that it can satisfy in a superior way, and then positions its offerings so that the target market recognizes the companys distinctive offering and image”. As commercial cultivation of wheat in Mauritius is insignificant, sufficient need exists for processed food in all of the islands. The brand conscious elite and middle class groups would particularly appreciate Warburtons products even at higher prices. As Mauritius is one of the most vulnerable countries to threats posed by climate change, environmentally sustainable production of Warburton products throughout the value chain shall occupy a distinctive place in the minds of the target market. Key target customers include quality conscious, freshness conscious, safety conscious and environment conscious individuals and families. Convenience minded costumers can also be targeted by providing speed delivery services at the comfort of their homes with some additional charges. Once rightly positioned in mind of the prospect, a relevant promotional strategy should trigger the product demand. The Promotional Strategy The creation of consumer demand through promotion is vital for success of any marketing strategy. The integration of internet technologies has systematically changed the traditional marketing practices reducing costs and enhancing reach. Along with TV, print, mail and other media, firms also include internet as part of a multi-channel marketing strategy. Due to lack of consumer experience with Warburton products, a promotional pull strategy i.e. advertising and consumer promotion would be more effective to boost demand. Telecommunication channels can be utilized to communicate the benefits and value propositions to the costumers such as a TV add depicting more branded tender, fresh and quality bread at a moderate premium price. Sales promotion strategy through provision of incentives to consumers or distributors will be adopted for stimulation of demand. For instance, if a loaf of Warburtons white bread (800g) costs at ?1, purchase of three loaves can be sold at ? 2.50. The Distribution Strategy Country’s infrastructure and institutional development has far-reaching implications on a marketing strategy. The infrastructure development includes roads, telecommunication channels, legislative authorities, and law and order situation. In Mauritius, the basic infrastructure to major cities is well developed. Establishing our own marketing channels to major cities will build trust and offer a far greater return. However, if the retailing return comes out to be far less or half of the production returns, it is not feasible to do our own retailing (Kotler and Keller, 2006). For enhancing reach to remote cities and small towns, intermediaries are efficient alternative for targeting such markets. Amit and Zott (2001) have described a successful business strategy as, “A business model depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities”. Producers save sales and infrastructure costs which can be passed on to customers creating a competitive edge. The flow can be diversified by delivering products directly to customers through in-store bakeries as well as supplying to dealers who will then transport products to other retail stores. The Socio- Economic and Cultural Challenges The economic powers in Mauritius are dominant over political powers that inhibit market competition, distort policy making and encourage monopolistic tendencies. Cultural and religious groups also have influential impact on government policies. Due to flawed and out-of-date Mauritian education system, the standard of skilled labor is quite low. Rapid pace of global warming is also threatening the available infrastructure and development activities on the Mauritian island (Vandemoortele and Bird, 2010). Gender inequality prevails in many parts of the country and there is social stratification due to various class and caste systems. Majority of population lies in the lower class. The Franco-Mauritian own most of the land forming a privileged high class. Though there is racial harmony among various ethnic groups, the possibility of riot breakouts due to weak cultural development cannot be totally neglected. Warburtons will acknowledge its corporate social responsibility in Mauritius by measuring and reducing its carbon footprint, adopting socially sound and environmentally sustainable business practices, and continuing its tradition of charitable giving and helping to support the surrounding communities. References Amit, R. and Zott, C., 2001. Value creation in e-business, Strategic Management Journal, 22 (Special Issue), pp. 493–520. Board of Investment, 2012. Agro-industries, investment opportunities. [Online] Available at: http://www.investmauritius.com/Agro3.aspx [Accessed 14 February 12]. Dave, C., 2003. E-business and e-commerce management. 2nd ed. London: FT/Prentice Hall. Grant, R. M., 2005. Analyzing resources and capabilities: Contemporary strategy analysis. 5th ed. Malden, MA: Wiley-Blackwell. IBM, 2008. Warburtons rises to meet new challenges with IBM and SAP. [Casestudy online] Available at: [Accessed 25 February 2012]. Ingredients Network, 2012. British bakery Warburtons targets growth with ?8.2 million marketing drive. [online] Available at: < http://www.ingredientsnetwork.com/news-content/full/british-bakery-warburtons-targets-growth-with-8-2-million-marketing-drive> [Accessed 25 February 2012]. Kotler, P. and Keller, K. L., 2006. Marketing management. New Jersey: Prentice-Hall, Inc. Lee, K. and Carter, S., 2005. Global marketing management: changes, challenges and new strategies. New York: Oxford University Press. MySuperMarket Limited, 2012. Groceries, bread. [Online] Available at: http://www.mysupermarket.co.uk/#/shelves/bread_in_tesco.html [Accessed 14 February 12]. Numbeo, 2012. Cost of living in Mauritius. [Online] Available at: http://www.numbeo.com/cost-of-living/country_result.jsp?country=Mauritius [Accessed 14 February 12]. Romanik, C. T., 2007. 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[Online] Available at: http://www.warburtons.co.uk/our-products/snacks [Accessed 14 February 12]. Warburtons, 2012. Corporate responsibility. [Online] Available at: http://www.warburtons.co.uk/corporate-responsibility [Accessed 14 February 12]. Read More