Marketing Plan for a Fair Trade Company - Essay Example

? Marketing Plan for a Fair Trade company Executive Summary The report explains the nature of confectionary industry in United Kingdom (U.K The context of the report primarily focus on building an effective marketing plan for a hypothetical fair trading company in the confectionary industry of U.K. It is assumed that the name of the company is “Chocolies”. The report also discusses the SWOT and PESTLE analysis for the business of the fair trading firm. The demand and business of the confectionary market in U.K. is increasing significantly with time. At this juncture, it is highly rational to study the business of Chocolies in this industry. The report also throws light on the importance of fair trading in the contemporary world. The learnt from this report can often be used by any new business firm, which desires to start up a business in U.K. confectionary industry (Hutchens, 2009). Contents 4 Introduction 4 Situation Analysis 4 SWOT 4 Strengths 4 Weaknesses 5 Opportunities 5 Threats 6 PESTLE 6 Political 6 Economical 6 Social 7 Technological 7 Legal 7 Environmental 8 Market Segmentation 8 Targeting 9 Positioning 9 Objectives 10 Financial 10 Social 10 Marketing 11 Marketing Strategy 12 Marketing Programs 14 Metrics and Implementation Controls 14 Reference List 17 Introduction Business firms in the modern world face cut throat competition among themselves. It is almost impossible for a firm to achieve success in business in the modern world without an effective marketing plan. A business firm can only enjoy a broad customer base if it sets innovative and planned marketing strategies. A fair trading company is a company that involves in 100% just business transactions. This essay will enumerate an efficient marketing plan for a hypothetical fair trading firm in the confectionary industry. With the rise in the level of income in almost all the economies, the purchasing power of individuals have improved. Living standards of most of the consumers have enhanced with rise in per capita income levels. It is alleged that the hypothetical Fair Trading Firm in the confectionary industry engages in the production of chocolates. The name of the hypothetical Fair Trading Company can be “Chocolies”. It is true that if Chocolies can introduce an excellent marketing plan for its product then it can enjoy a wide customer base for its chocolates. This report will concentrate on introducing a marketing plan for a hypothetical Fait Trading Company in the market of United Kingdom (U.K.). Situation Analysis The essay will consider the SWOT and PESTLE analysis for Chocolies (fair trading company). SWOT Strengths The biggest strength of the company is the growing consumers demand in U.K. confectionary industry. Right from its inception, the company would experience a broad customer base already parked in the U.K. confectionary industry. The chocolate confectionary business was worth approximately € 5.41 billion in 2011, rising by almost 2.7% since 2007 (Sweet Retailing, 2012). Moreover, fair trading principles would surely benefit the brand popularity and prestige of the company. Weaknesses The fair trading company would have to accumulate lot of finances to succeed in its business and compete with the other potential rivals in the industry. The confectionary industry has other famous Fair Trading chocolate firms like the Devine Chocolate operating successfully in the U.K. market. Due to the rise in Diet conscious consumers, the aggregate demand for chocolates has fallen in market in the recent years. Moreover, the company would follow fair trading principles, as it would provide social welfare benefits and introduce fair trade prices for its chocolates; these policies would increase the cost of its chocolates. Cocoa beans are required to make chocolates; its total cultivable land availability is low. Disturbances in weather can often create problem for the company, as bargaining power of the suppliers would increase with such problems. The consumers may also feel that the company following fair trading principles should never go for profit making terms. Thus, it might be difficult for the firm to make its customers believe that its commercial principles can be merged by its worthy values (Key Note, 2013b). Opportunities If it is assumed that the company would produce natural chocolates, then it will enjoy support of Non-Government Organizations (NGO’s) and government. The share of internet users are increasing with time, thus Chocolies can easily enjoy higher demands for its chocolates if it sells its products in its online sites. Threats The company would face cut throat competition due to the existence of potential rivals like Divine Chocolate in U.K. The soaring price levels of Cocoa beans would make the business of the company more complex, as it would increase its cost of production (Winterman, 2013). It would be difficult for the new fair trading firm to reduce it’s per unit production cost at low levels like its competitors. The company would often face the rivalry with price settlements with the suppliers and the retailers in the market. PESTLE Political It is likely that the fair trading company would experience good support from the government of U.K. as it would follow justified trading principles for its business. Government may subsidize some operational costs of Chocolies because it would provide social welfare in U.K. Economical It is obvious that the company would have higher prices for its chocolates than many other chocolate companies because it would initially not benefit from economies of scale in production and its fair trading norms would surely make its chocolates more expensive. Disposable income thresholds of the consumers have significantly fallen in the recent epoch due to low velocity of circulation of money in the U.K. It can be analyzed that only fewer customers would be ready to purchase such expensive natural chocolates of Chocolies in U.K. (Nicholls and Opal, 2005) Social It is found that that the consumers in U.K. are extremely fond of having chocolates and they spend substantial amounts for its purchases. Thus, it would be easy for Chocolies to park a lot of chocolate buyers in its basket provided it serves chocolates of good quality and at low price. Since Chocolies is a fair trading company, it would generate high social and cultural values. If the company can introduce norms by which its cocoa beans farmers would be potential stakeholders and allow them to enjoy the profits of its business, then the firm would suffice excellent ethical principles. Technological U.K is known all over the world for its expertise in technology in manufacturing processes. Chocolies should try to introduce capital intensive modes of manufacturing that would help it to reduce its long run manufacturing costs. Rather the company should also try to actively market its chocolates in the digital markets. The proportion of internet users are increasing with time, so the company would surely enjoy cost effective ways to market its product if it sells its chocolates in internet and enjoy broad customer base. Legal The government of U.K is extremely rigid regarding the rules and regulations that business firms must abide. The company must follow the norms mentioned in the Trade Practice Act to avoid fines and penalties in business. It would be difficult for the company to achieve cost efficiency if it is not able to reduce the amount of penalties and fines in its business. Environmental The individuals of U.K. are extremely aware about environment protection and preservation. If the company engages in production of natural chocolates it would be an excellent method to preserve the aesthetic value of the environment. The company must use eco-friendly packages for its chocolates. Market Segmentation The fair trading firm would not be able to suffice everyone’s demand appropriately without market segmentation. Market segmentation is a process by which a business firm would differentiate its clientele, in groups that exhibit similar characteristics of demand. Figure 1: Market Segmentation (Source: PPT) The above diagram shows the various factors through which a producer may segment its consumers and business markets. The company can concentrate in demographic form of market segmentation. Under the demographic segmentation the fair trading firm may differentiate its consumers in terms of age and income. Targeting Chocolies may divide its consumers in terms of two age groups, one group may comprise young consumers of age group 4 to 16 years and the other group may comprise buyers of 16 years old and above. In terms of income the company may classify the consumers in terms of moderate and high income groups. The fair trading company may introduce its high calorie, tasty chocolates to the young aged group of consumers and may try to attract the senior consumers with its low calorie chocolates, since they are more health conscious than children. The company should try to sell its expensive chocolates to the moneyed chocolate lovers and sell comparatively less costly chocolates to the consumers with lower income (Wood, 2013). Positioning Figure 2: Position Map (Source: PPT) According to the above diagram, the company may aim to make its consumers believe that it would serve chocolates of high quality, with comparatively lower prices. The fair trading company may claim to serve high quality chocolates (100% natural) to all its consumers. It should also declare that following fair business principles, it would treat its cocoa bean farmers as stakeholders and allow them share the gross surplus of the firm. In short the company should serve good both in terms of product quality and ethics (Key Note, 2013a). Objectives The business of the company would only succeed if it sets proper reachable aims and objectives for its working. Financial The company should aim to lead the market of U.K. in terms of revenue. Chocolies should try to generate maximize profit in its business subject to minimization of its cost. It should aim to augment its turnover by at least 10% annually. Social The company should imbibe the importance of fair trading among all the individuals in the U.K. economy. It should make the retailers and buyers aware about the underlying ethics and social values followed in fair business affairs. No matter how high is the price of cocoa used in the chocolates, the company should pay fair trade prices for all the cocoa beans used for producing chocolates. Chocolies should never compromise with its chocolate quality at the cost of lowering its selling price. Marketing The company should attempt to win over a considerable share of the total aggregate chocolate purchases in U.K. It may aim to suffice the demand of at least 70% of total aggregate chocolate purchase in U.K. after 10 years of its inception (Monotti, 2008). If it is assumed that the company only produces core chocolates, it may aim to expand its product line in future to attract more customers. This can be done by the company by introducing liquor chocolates in future. Chocolies should intend to incorporate at least 20% of its annual economic surplus in marketing and sales promotional purposes. Marketing Strategy It is assumed that Chocolies would market its chocolates in U.K. It is empirically observed that the consumers in U.K spend a considerable share of their disposable income in purchase of chocolates and cosmetics (Euromonitor, 2013). Thus, if the fair trading company applies good marketing strategies it would surely be able to park more potential buyers. Figure 3: Value Delivery Process (Source: PPT) The marketing strategy of Chocolies should always be highly associated with providing customer values. The above diagram shows the possible structure of value delivery process for the fair trading company. The company may introduce the 4 P strategies to market its product. (Source: Authors Creation) Chocolies should make its consumers believe that though the chocolates sold are high in prices, they are excellent in terms of quality and taste. U.K. consumers are already potential buyers of chocolates. If the company can make the consumers believe that its chocolates are the best in the market, only then the buyers will have high utility from its consumption. The company may adopt the policy of penetrating pricing. At the beginning it may set its product prices comparatively low, once it taps a good pool of consumers, it may augment its selling price. The corporation should first launch its products in the rich zones of the nation. In order to promote its chocolates, the company may introduce many attractive commercials for its chocolates in internet. The number of consumers in the digital markets is rising rapidly over time, thus advertising its chocolates over internet will help the company enhance its sales. The fair trading company should introduce colourful and eco friendly packages for its chocolates. Marketing Programs Since chocolates are mainly liked by children, while beginning its business Chocolies must adopt the program of free sampling in different schools in U.K. The enrolment rate for primary and secondary education in U.K. is very high. Thus, the program of free sampling would be expensive for Chocolies at the initial stage, but would surely help it to introduce its chocolates among almost 90% of children in U.K., who are potential buyers of chocolates (KPMG, 2012). The fair trading business firm may also sponsor many junior sports events. Sports events are not only watched by many viewers but also covered by social media. Sponsoring on such events would help the company enjoy a broad customer base for its chocolates. The company may conduct many poverty reduction programs like donating funds for the poor and needy individuals or funding education for orphans. Involvement of the company in such social welfare programs would make the consumers believe that it indeed values fair business principles and thus make them loyal customers for its chocolates (BCCCA, n.d). Metrics and Implementation Controls The table below explains the three broadly classified marketing programs Chocolies. Programs Activities Objectives Implementation Control Metrics Free Sampling Free Sampling of chocolates in schools. Sales Promotion, since children are the most prominent clientele for chocolates. Built a sales team across different regions of U.K. and distribute free samples of chocolates at a random sample of 500 schools in U.K. Make sure that the free samples are not misused or not offered for sales. Total amount to be spent for this program would be € 100 million. Estimated returns from the program in form of sales € 120 million. Sponsorships Sponsoring junior sports events. Sales promotion, since it involves media attention and large number of spectators. Spent in at least in 3 city level junior soccer tournaments. The games conducted must be focussed through different modes of media. Total amount to be spent for this program would be € 35 million. Estimated returns from the program in form of sales € 59 million. Corporate Social Responsibility Conduct and fund in poverty reduction programs Make consumers believe that it gives value to fair trading principles. Subsidize in at least one orphan child donation program and adult literacy program. Introduce an efficient prolific team of NGO’s who would work for these programs. Total amount to be spent for this program would be € 2 million. Estimated returns from the program in form of sales € 4million (Trading Visions, 2011). Reference List BCCCA, n.d. Creating a sustainable chocolate industry [pdf] Available at: < http://www.cocoafarming.org.uk/pdf/times100_casestudy.pdf > [Accessed 17 September 2013]. Euromonitor, 2013. Chocolate Confectionery in the United Kingdom. [online] Available at: [Accessed 17 September 2013]. Hutchens, A., 2009. Changing big business: The globalisation of the fair trade movement. Camberley: Edward Elgar Publishing. Key Note, 2013a. Consumers continue to enjoy chocolate and sweets, as market sees 7.5% growth. [online] Available at: < http://www.keynote.co.uk/media-centre/in-the-news/display/consumers-continue-to-enjoy-chocolate-and-sweets-as-market-sees-75%25-growth/?articleId=782[Accessed 17 September 2013]. Key Note, 2013b. Confectionery [pdf] Available at: < http://www.mbsportal.bl.uk/taster/subjareas/marketing/keynote/129757Confectionery%20Update%202012.pdf > [Accessed 17 September 2013]. KPMG, 2012. The chocolate of tomorrow [pdf] Available at: < http://www.kpmg.com/RU/ru/IssuesAndInsights/ArticlesPublications/Documents/chocolate-of-tomorrow.pdf> [Accessed 17 September 2013]. Monotti, C., 2008. Future chocolate market growth in four EU countries. British Food Journal, 110(7), p.671-690. Nicholls, A. and Opal, C., 2005. Fair trade: Market-driven ethical consumption. California: Sage. Sweet Retailing, 2012. UK chocolate market size. [online] Available at: < http://www.sweetretailing.co.uk/index.php/confectionery_advice/view/uk_confectionery_market_update_mintel_2012 > [Accessed 17 September 2013]. Trading Visions, 2011. The chocolate scorecard [pdf] Available at: < http://www.tradingvisions.org/downloads/ChocolateScorecard2011.pdf [Accessed 17 September 2013]. Winterman, D., 2013. Chocolate: The rise of the cocoa purists. BBC News Magazine, [online] 29 March. Available at: < http://www.bbc.co.uk/news/magazine-21847447 > [Accessed 17 September 2013]. Wood, L., 2013. Research and Markets: Chocolate Confectionery Market in the United Kingdom is expected to Increase to a Value of $8,295.9 Million by the End Of 2016. Yahoo Finance, [online] 12 March. Available at: < http://uk.finance.yahoo.com/news/research-markets-chocolate-confectionery-market-180400379.html > [Accessed 17 September 2013]. Read More