Marketing plan report for Masafi company - Essay Example

?Introduction Masafi is a major fast moving consumer goods company located in the Gulf and Middle East (Masafi Corporate, . The company invests in bottling water and other food products including snacks like potato chips and fruit juice. The company's main operations are located in the United Arab Emirates. However, Masafi exports to countries throughout the Persian Gulf region and the Middle East, Europe and the United States. This report formulates a marketing plan for Masafi. It does this by critically examining the marketing position of the company and how this places the company on the business arena. It would examine the trends and choices for marketing and running the business. The report goes on to examine some important trends in the markets and deduce the competitor positions. It would identify the marketing potential and from there, the paper would formulate and recommend a marketing plan after identifying the marketing gaps that exist in Masafi. Background Analysis Masafi is focuses on mineral water and other food products that they produce in their factory and sell to customers in the Middle East, Persian Gulf and different parts of the world. Their products are unique and are tapped from the rich oases and mountains of Masafi, a region in the north-east of the United Arab Emirates. Masafi's competitive strength is in the fact that it produces world class water and consumer goods with a high degree of natural freshness and health potentials. Masafi is also reputed for being environmental-friendly in its approach of doing things. Past History The Masafi mountains and region is a vegetated mountainous region in the United Arab Emirates. The region contrasts the area in the vast west of the region which is mainly a sandy desert area. Masafi has a reputation of being an area with numerous springs and oases which were documented in Roman times. The locals of Masafi have always made use of the water and natural resources and sent them to different parts of the country for generations. However, in 1976, Masafi was officially incorporated with the view of commercializing the sale of water from the springs of the Masafi geographic area (Masafi Corporate, 2013). Masafi started with a small portfolio of just producing bottled water to consumers around the local area. It used traditional systems and methods of collecting water and sending it out to nearby communities. In 1990, Masafi expanded to different parts of the UAE. They sold their mineral water to large cities of the United Arab Emirates. In 1995, Masafi expanded to different portfolios. They produced juices from natural fruits, flavoured water, potato chips, and Basmati rice. The biggest product, the 4G (Four Gallon) water was added in 2000. In 2008, Masfai gained a reputation as a natural, organic and health product when they entered the beverage market. This quest was to make the company a fast-moving consumer goods company (FMCG) by 2011. They continued to produce 100% pure and natural products for consumers in different parts of the Persian Gulf Region. Export increased with the growth of the Emirati economy. This led to the sale of Masafi products to Africa, the Middle East and different zones around the region. Organizational Setup Masafi has a capital base of $5.5 million . This capital enables it to continue to produce and fund its operations and expansion drives. The company is involved in different projects in different parts of the country. Masafi has over 1,000 employees. The primary plants are located in the Masafi regions. However, the company has different warehousing networks around the country which enables it to distribute the products to the various cities and the ports of UAE. Masafi maintains a major recycling system on its site which allows it to recycle the plastics and other containers that are used to carry out the activities of the company. Masafi is one of the most profitable entities in the industry. In 2008, they increased their profits by 36% from 2007 records (Zawya, 2009). This represents a revenue of $26 million which is very high when compared to the capital base of just $5.5 million. Industry & Product Analysis Euromonitor announces that health consciousness in the United Arab Emirates is increasing. Hence, more people are spending more time trying to find healthy alternatives to their lifestyles and consumptions (2013). This is fuelled by the fact that water is a basic necessity and most consumers just acquire the product without taking time to analyse it. Also, the improved options like carbonation and flavouring of the water makes it more attractive to consumers in the Emirates. Masafi is the leader in both volume and value terms, according to Euromonitor's statistics of activities carried out in 2011 (Euromonitor, 2013). Masafi controls 32% of the volume of mineral water produced in UAE and 28% of the sales. Masafi low prices and also provides free home delivery to consumers. In terms of water production, Masafi is the first company in the UAE to acquire ISO 14001 Certification for Environmental Management (Zawya, 2009). This adds up to Masafi's competitive strength and abilities on the market. The Masafi Gourmet Potato chips was introduced in 2008 to launch Masafi to the food and beverage industry. The potato chips provides a snack that can be sold alongside the mineral water that they sell around the nation and beyond. However, this is a choked market and Masafi is still fighting to control a higher market share. In July 2008, Masafi added the Masafi Tissues which was to come with so many flavours and branding. According to a study conducted by AC Nielsen, Masafi Tissues achieved cost leadership and was the number one brand in the UAE (Zawya, 2009). Masafi Tissue's competitive strength is in the fact that there is a price premium, brand penetration and personal/individual networking for sales. The market share continues to increase and expand. Industry Analysis: Porter's five force analysis identifies that there are five forces that interact to define the trends of a given industry and the position of the competitors in the industry. The five members are: 1. Risk of the entry of competitors 2. Bargaining power of suppliers 3. Bargaining power of buyers 4. Threat of substitutes 5. Intensity of rivalry amongst firms (Hill and Jones, 2011: p43). The FMCG industry requires a capital of about $3 million in UAE. This is quite low for most investors in the country and with the UAE being a very liberal country, there is a high possibility that investors can come together and set up similar companies as Masafi. The bargaining power of suppliers is quite low. This is because the suppliers of machines and raw materials for the operations of the FMCG in the UAE can do better by selling to a large base of consumers. This is because consumption is quite high and there is always a market. The bargaining power of buyers of Masafi's products include supermarkets and other sales outlets. This marks a high risk of entry because the companies have a stronger tendency to capitalize and form companies similar to Masafi to compete in the industry. The threat of substitutes is also high. This is because Masafi manufactures and sells everyday products. These products have many substitutes and different offerings that are somewhat similar to the offerings of Masafi. And hence, there is a high chance that these producers can expand to provide alternatives to Masafi's customers. Intensity of rivalry amongst firms in the industry is very high. It involves the companies that produce bottled water and have entered the FMCG markets as well and can pose a major threat to Masafi. Question 1: Masafi is a major fast moving consumer goods company located in the Gulf and Middle East (Masafi Corporate, 2013). The company invests in bottling water and other food products including snacks like potato chips and fruit juice. The company's main operations are located in the United Arab Emirates. However, Masafi exports to countries throughout the Persian Gulf region and the Middle East, Europe and the United States. The vision of Masafi is to be a leading and complete fast moving consumer goods company. Masafi's mission statement and long term objective states that: “It is Masafi's constant endeavour to provide premium quality products through continuous innovation, and strengthen its leadership in the fast moving consumer goods sector” The long term objectives are: 1. To retain long term leadership of the bottled water and FMCG industry 2. Expand the brand portfolio of the company. 3. Expand to different nations and communities around the world 4. Provide high health and social services to the wider society. PESTEL Analysis Politically, Masafi the Emirates remains stable and the rules that were made remains the same and has not significantly changed. Politically, the country remains Islamic and the country has continued to expand its dominance overseas through treaties which liberalizes and gives Masafi the power to expand to other countries. Economic: UAE has remained fairly stable economically. The country continues to increase its oil production and it is diversifying the economy. Now, the country has taken in more migrants and expanded its scope overseas. This is favourable for Masafi. Sociological: The increment in eating healthy provides a favourable terrain for Masafi this is because it allows them to sell and market their products to different consumers who want to improve their health. Technological: UAE has increased its technology. The country has made an advancement in technology and related entities around the world. Due to this, Masafi has different services available to improve its quality and enhance productivity. Environmental: Environmental consciousness has continued to improve. Since Masafi has always been ISO compliant, this is a positive thing and would enhance their legal position. Legal: There is no significant changes in laws and things remain the same. This remains constant and hence, Masafi can grow and expand at its original pace. Question2: Euromonitor announces that health consciousness in the United Arab Emirates is increasing. Hence, more people are spending more time trying to find healthy alternatives to their lifestyles and consumptions (2013). This is fuelled by the fact that water is a basic necessity and most consumers just acquire the product without taking time to analyse it. Also, the improved options like carbonation and flavouring of the water makes it more attractive to consumers in the Emirates. Masafi is the leader in both volume and value terms, according to Euromonitor's statistics of activities carried out in 2011 (Euromonitor, 2013). Masafi controls 32% of the volume of mineral water produced in UAE and 28% of the sales. Masafi low prices and also provides free home delivery to consumers. In terms of water production, Masafi is the first company in the UAE to acquire ISO 14001 Certification for Environmental Management (Zawya, 2009). This adds up to Masafi's competitive strength and abilities on the market. The Masafi Gourmet Potato chips was introduced in 2008 to launch Masafi to the food and beverage industry. The potato chips provides a snack that can be sold alongside the mineral water that they sell around the nation and beyond. However, this is a choked market and Masafi is still fighting to control a higher market share. In July 2008, Masafi added the Masafi Tissues which was to come with so many flavours and branding. According to a study conducted by AC Nielsen, Masafi Tissues achieved cost leadership and was the number one brand in the UAE (Zawya, 2009). Masafi Tissue's competitive strength is in the fact that there is a price premium, brand penetration and personal/individual networking for sales. The market share continues to increase and expand. The third operation which was introduced towards the end of the FMCG journey, they produce flavoured drinks and blends. This is gaining grounds with the fact that it is 100% pure juice and more people in the MENA region are interested in consuming healthy and natural products. 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 Growth-Market Share: Boston Consulting Group Analysis of Masafi Products Masafi Tissues are the leaders in the UAE. The tissues can be sold to other markets in the Middle East and North America. And it can be enhanced and grown further around the world. This makes it a star. Masafi Fruit Juices are loved and popular. It has potential, but there is a significant proportion of the market that can be captured. Water, the main product of Masafi is the cash cow. However, the market is saturated and the markets outside the UAE is also saturated. Countries like Oman have banned the export of mineral waters to their country so the market is reducing. However, there is still a strong market control of the company. Hence, there is the chance to use the money from the sale of mineral water to support the Masafi Tissue and Masafi Fruit Juices. Masafo Potato Chips is a doc because the market share is low and the growth rate is low. This is because there are many known and popular competitors. This makes it undesirable to invest in it further. The company may want to invest in another product line in its stead. Question 3: What is the customer perceived value for your focus product? List benefits and costs and explain how you think value may change in future and why? The focus of Masafi is on promoting a number of things which makes customer feel the power and the value that they offer. This includes: 6. Product quality: Masafi is made up of nothing but high quality products and materials. This makes it a high quality product which supports a higher quality of life than other competitiors. 7. Personal touch: Masafi has a direct connection to consumers by providing a whole range for a family and also transport some products directly to consumers. 8. Food safety: Masafi produces according to very high quality standards and levels. This makes Masafi a great choice for consumers. 9. Customer Complaints: Masafi has a strong link to consumers by providing solutions to consumers complaints. This add up to the interpersonal linkage which allows consumers to contribute to the emergent strategy of the company. 10. Best quality design and packaging: The design and packaging is done according to the highest quality and standards. 11. Product Price: The prices reflect the quality that is offered and consumers are willing to pay for the high value that is given to them. Possible Changes to Masafi's Value The value of Masafi is likely to change as more and more family structures change and social systems change and are modified. This means that the company would have to restrategise to target young adults and people living in single family units. Another matter that can cause Masafi to change is the possibility of changes in the external environment which could change the work environment and cause the company to go into another business line. Question 4: For the sake of proper analysis, the competitors of Masafi can be categorized as local and global competitors. And these competitors have different outlooks. The main local competitor is Al Ain water. This is located in the city of Al Ain in the United Arab Emirates. It operates on a model similar to Masafi. And it is incorporated by the Agthia Group according to principles similar to Masafi. Global competitors include Nestle, Aquafina and Pepsico. These are international companies which produce global brands which are at the same level as Masafi's activities and sales. These global entities compete with Masafi in the UAE and also in the nations in the Middle East and North Africa where Masafi sells. The strategic benchmark for this are the 4Ps, product, price, promotion and place. This is the main factor that determines the success or failure of the FMCG market. Masafi Al-Ain Nestle Aquafin Pepsico Product Concentrates on four core products Concentrates on four core products Sells a wide variety of products Focuses on water and adds up a few other brands Focuses on snacks and drinks including Pepsi Pricing Segmented prices, but mainly sells at high prices to reflect the quality Price leader in the Emirati industry Low to medium pricing but sells according to high international exposition. Low priced Low priced and provide a high variety of products. Promotion Local, Emirati focused and brand exposure in the traditional level Focuses on local niches and concentrates on Al-Ain Global promotion drive and limited local growth Limited promotion in sales point. Global promotions, high presence in UAE. Place Sells through third party outlets and depots Sells through mother company Sells through malls and other supermarkets Distributes to third parties Sells in their own depots and through events. Question 5: There are four main classes of consumers that Masafi targets. According to the primary research conducted for this study, the following were identified: 1. Children: Masafi targets children and young people in order to get them to become interested in the company and its products. Children identify strongly with Masafi products and encourages them to become interested in it. 2. Family: The company tries to create a product lifestyle. This is done by packaging the products and advertising for different members of a standard family. This includes the segmentation to cover young adults, adults and younger members of the family. 3. Active Healthy Lifestyle: Masafi customers also like the product because of the perceived healthy lifestyle that it promotes. This includes the fact that Masafi produces for consumers who are health conscious and want to watch what they consume closely. 4. Sophisticated Lifestyle: High end brands are produced and made available to consumers. These are consumers who want upmarket products and services. Masafi makes it readily available to consumers and enables them to acquire such products Geographically, Masafi is grouped according to local and international customers. The local consumers are the UAE consumers whilst the international consumers are those outside the country. References Euromonitor (2013) Bottled Water in the United Arab Emirates [Online] Available at: http://www.euromonitor.com/bottled-water-in-the-united-arab-emirates/report Accessed: March 4, 2013. Hill, C. and Jones, G. R. (2011) Strategic Management in Integrated Approach Mason, OH: Cengage Masafi Business (2013) Business [Online] Available at: http://www.masafi.com/en/corporate/faqs/business-with-masafi/ Accessed: March 4, 2013. Masafi Corporate (2013) Corporate [Online] Available at: http://www.masafi.com/en/corporate/ Accessed: February 28, 2013. Supabrands (2012) Masafi Overview [Online] Available at: http://uae.superbrandsmena.com/pdf/pdffile1345102363.pdf Accessed: March 4, 2013. Zawya (2009) Masafi Profit Spurts [Online] Available at: http://www.zawya.com/story/Masafi_profit_spurts_36_in_08__records_35_yearonyear_growth_to_touch_AED378_million_Launch_of_Masafi_Gourmet_innovative_products_caps_exciting_year-ZAWYA20090119083107/ Accessed: March 4, 2013. Appendix: SWOT Analysis Strengths 1. Solid capitalization for the industry 2. Highly skilled staff members 3. Innovative systems and structures 4. International standard for environmental and health consciousness 5. Market leadership 6. Innovative products and service 7. Brand equity 8. International Markets Weaknesses 1. Price increases over the past year. 2. Poor cultural relations outside the Arab world. 3. Limited product range Opportunities 1. New markets to expand in the developing world. 2. Possibility of expansion to other products. 3. Potential to diversify to other markets in UAE like the real estate market. 4. Focus on research to become research leader for the healthy lifestyle industry. Threats 1. Entry of new competitors. 2. Potential of the marketing becoming choked. 3. Failure in international markets. Read More