The Potential of The United Kingdom Organic Herbal Consumption Market - Assignment Example

Outline Market Plan Situational Analysis The UK represents one of the largest markets for organic herbal consumption. Presently individual residing in the UK purchase more than 4 million worth of raw material for organically based herbal products. Of these raw materials, dried herbs and essential oils make up the lion's share. Of these raw materials approximately 99% are being imported. Firth, Geen & Hitchings (2005) indicated that approximately 25% of adults within the UK purchase over-the-counter products which contain herbs as their basic ingredient. In the period from 1 November, 2004 to 31 October, 2005 there were eighty-one (81) stores selling fresh growing herbs and eighty (80) stores selling fresh cut herbs in East of England. Clearly these figures when taken in context with the vast market available for fresh growing and fresh cut herb are indicative of the fact that the market is far from saturation and can be exploited by utilize a clear and concise marketing strategy which combines the individual companies which import their herbs with the cost saving potential of exposing those companies to fresh grown and fresh cut herbs within our region. Market Analysis Within Europe alone, there are thousands of hectares that are strongly committed to the production of organic herbs. This is usually done collaboratively with marketing collectives as well as a co-op of processing plants. Within the UK alone there are only a few hundreds of these arrangements. Additionally, there are very few productions in place. The statistics indicate that there is a burgeoning market for individual companies which produce both fresh growing and fresh cut herbs. In within the UK there were nine hundred and thirty-five (935) stores selling fresh cut herbs and eight hundred and eighty-one stores selling fresh grown herbs during the time period of 1 November 2004 and 31 October 2005. These figures represent a total sale of 22,532,730 units annually, total revenue of 14,343,372, 4,433,970 customers served annually and a customer penetration of 26.05%. In the demographic region of East of England, there were only eighty-seven (87) stores selling fresh cut and fresh growing herbs combined. These stores sell 2,521,410 units with a total of 1,643,243 being generated from their sale. The customer penetration within this area is a mere 22.58%. Clearly the market for herbal products exists and there is a dire need for production systems as much of the production is done externally and the products are imported. Additionally, there has been a growth in the number of consumers who rely on medicinal herbs as well as herbs utilized for body care and hygienic needs. This has prompted an increase in the number of organic farmers and growers. Even in light of this, the market remains very far from saturation. As a commercial organic herb production company, Canfield Farm Fresh Herbs Ltd is in a unique position of being one of the very few companies to utilize horticultural advances as a means of establishing a brand that surpasses much of the industry standards. Organic Herbal Market Sectors Currently there are six distinctive sectors within the organic herbal market. These sectors include culinary, cosmetics and body care, health care/medicinal, veterinary, transplant and seed. The culinary sector includes pot grown and fresh cut herbs utilized by restaurants, food processing enterprises as well as hotels. The cosmetics and body care industry represents one of the fastest growing segments of the organic herbal market. In this sector herbs are sold as dry leaves or roots, essential oils, creams, lotions, bath oil and the like. Within the health care/medicinal sector, herbs are predominantly utilized in the form of dried leaves, fruits, roots, flowers and seeds. They are utilized by traditional herbalists as well as other consumers as an alternative to non-organic medicinal treatment. The veterinary segment represents a very small but potentially lucrative segment. The organic herbs within this segment are used in a dried form and can be utilized as a food supplement or it can be used for essential oils which can be processed into creams, lotion and shampoos. Within the transplant segment herbs are grown for other herb growers and are utilized as a means of growing future supplies. Finally, there is a seeds sector of the herbal market wherein herbs are provided as dried and graded seeds which are made suitable for growing through proper storage, ensuring there is reliability of germination and viability. Distribution Analysis Currently our product is being sold in sixty-eight (69) store within the region East of England. Both potted and fresh herbs are being sold in ten (10) extra stores, forty-five (45) superstores, eight (8) metro stores and six (6) express stores. Within our distribution area, we serviced a total of 215, 290 customers, sold 550,360 units and grossed an average of 359,055 during the period of 7 August 2006 and 29 October 2006. One interesting characteristic of our distribution area is the fact that the highest concentration of customers can be found in extra stores. Despite this, the customer saturation in extra stores remains relatively small when compared to that of superstores. Additionally, the market saturation in all of the stores in our distribution area has been consistently below 16% which is indicative of the fact that more assertive promotion and sample distribution will prove to be advantageous to our initiative. Competitor Analysis Currently the main competition for Canfield Farm Fresh Herbs Ltd. comes from the local farmers who present their products at eight farmers markets located in East of London. These farmers markets include Barleylands, Clacton, Colchester, Hadleigh, Loughton, Maldon, Takeley and Witham Farmers' Markets. These individual farmers all produce their product on a small scale. This puts Canfield Farm Fresh Herbs Ltd. in a unique position to explore the virtually untouched fresh herb market by providing a constant supply of fresh herbs to supermarkets throughout the nation. In undertaking a production expansion of this scale Canfield Farm Fresh Herbs Ltd must be aware of several risk factors. These risk factors include production, handling, price and market risks. When contemplating production risks, the notion of disease, weed and insect control prove to be very threatening. Additionally climatic, topographic and soil condition poses a concern for herb growers. As such, it is prudent that Canfield incorporate these conditions in its final consideration with regards to horticultural methods which serve as the driving force behind its decision to expand the scope of production without adversely affecting the quality of the product. The price risk must be examined carefully in that herb prices are very volatile and can vary depending on the prices offered by competitors. Any examination of the volatility of herb prices must include the notion that herb production on a smaller scale may result in greater financial gains. Finally, it is prudent to examine the market risks associated with herb growing in light of the fact that the demand for herbs is subject to change over the course of time. Essentially any marketing plan must operate from the vantage point that the demand for one herb may be high during one year and may show a marked decline in the next year. In developing a market plan, one has to change its plan in response to both the customer demand and the competitive pricing of other fresh herb growers. Financial Analysis An examination of the sales figures of Canfield reveals that there was an underlying 13.71% gain in the sales for the entire Canfield product line over the course of the year between the 2004-2005 fiscal year and the 2005-2006 fiscal year. Additionally, within that year, there was a 5.59% expansion in the customer base. Overall, the sales of herbs by Canfield has effectively and efficiently demonstrated the ability of retaining its customers well as ensuring that those customers return at a greater frequency. Marketing Strategy In attempting to establish Canfield as one of the leading herb growers in East of England, we propose a marketing strategy which entails a tri-modal approach. First and foremost, we will seek general distributions capable of handling the distribution of both fresh potted and freshly cut culinary herbs. In seeking distributors we will look for distributors with a strong track record for taking an active role in the promotion of new products. In so doing, we will exclude distributors with a tendency for simply passively selling its products. Essentially, the qualities which will be sought in distributors are those which will foster a mutually beneficial relationship which puts the interests of Canfield first and thusly enhancing its interest. As such, I envision needing as few as two distributors and as many as four to cover Canfield's penetration in the national market channels. We may need as little as two distributors, and as many as four to cover the range of market channels we are interested in entering. The distributors with the highest potential for covering the markets are East Anglian Food Ingredients Ltd, Redbox, Cambridge Commodities Inc., Freshwashed Herbs Ltd. & The Organic Herb Trading Company. These distributors are well positioned in culinary herb market. Negotiations are needed to narrow this list and to specifically carve out a clear and concise area of sales territory and to effectively promote the fresh cut and fresh potted culinary herbs offered by Canfield. The second mode of our marketing approach involves the development of direct relationships with larger or more prominent and innovative companies which might be interested in developing a "Canfield themed" culinary herb product line. An example of this may be unique spices with exceptional taste derived from Canfield's unique horticultural practices. The third mode of our marketing approach is one which involves the pricing of our herbs. It is prudent that we develop a relationship in the communities whereby customers who are in close proximity to Canfield are offered prices which are meant to bolster sales. The idea behind this strategy is to monopolize on the ides that smaller companies or product innovators in the culinary herb industry have established direct relationships with the community as an inexpensive means of illustrating the quality of their products. Essentially, by introducing cost-effective culinary herbs, the customers will try these herbs and become repeat customers as well as the source of free referrals. Marketing Objectives The marketing objectives proposed are market penetration, market development and production development. It is felt that Canfield is capable of using its current products to meet the need of the market. This is most evident in the customer penetration numbers which are relatively low for both Canfield and its competitors. In fact, the data indicates that the majority of the consumers of fresh herbs are those profiled as young families. In attempting to further penetrate the market, Canfield would benefit the most from targeting the population of pensioners from the vantage point that fresh herbs hold the potential of impacting the health of its users. In pensioners, it can be proposed that the utility of fresh herbs effectively minimizes the use of salts while maintaining the taste quality of most foods. This will prove to be most effective as the salt content in food can be detrimental to the health of the elderly. The implications of this can be an increase in the frequency and number of prescriptions taken. In pointing out that the minimization of prescriptions and the cost-savings which can result in an expansion of the customer base for Canfield. Another viable marketing objective can be seen in the area of market development. In undertaking a market development initiative Canfield is able to look for new uses for their fresh herbs as new markets for those herbs. To a great extent market development and expansion has so far been restricted by the extreme measures required to ensure that fresh herbs remain fresh as well as the limited knowledge available with regards to the most efficient method of handling and storing fresh herbs. One alternative which may be explored is the wholesale of fresh herbs to companies which produce dried spices. In exploring this market, Canfield will be in the unique position of expanding its customer base to include its competitors who may find it more lucrative to simply process fresh herbs rather than growing them in addition to processing. Finally another marketing objective would be in the area of product development. Canfield is in the position to explore product development alternatives. In exploring this notion, Canfield may explore the possibility of producing its own herbal seasonings utilizing the high quality inherent in its fresh herbs. In so doing, it would produce a product that is less expensive than its current product line as well as gain a larger product base. In conclusion, the sales figures, customer demographics and the increased market awareness of Canfield have served to establish its market position. Canfield is seen as a company which holds the potential to expand its demographic area of consumption to include national consumption. Within the demographic area of East of England its market penetration is comparable to the overall penetration of all companies which produce fresh cut and fresh potted herbs. With this in mind Canfield can now attempt to expand its reach further as it has already shown that ability to penetrate the market to the extent of all other companies with a similar product base. The challenge here is to further penetrate the market. This marketing plan holds the potential of achieving further penetration. It can build on a strong positive financial base and can exploit the expertise of Canfield. References Attra (1999). Direct Marketing. (Online) Retrieved 20 January 2006 from, http://attra.ncat.org/attra-pub/PDF/directmkt.pdf Firth, C., Geen, N. & Hitchings, R. (2005). The UK Organic Vegetable Market (2003-04) (Online) Retrieved 20 January 2006 from, http://www.gardenorganic.org.uk/organicveg/downloads/UKOrganicVegMarketStudy2003-04.pdf Food Navigators.com-England (2005). Salt-reduced foods grow in popularity (Online) Retrieved 20 January 2006 from, http://www.foodnavigator.com/news/ng.aspid=62900-salt-pepper-herbs. Read More