Organic Livestock Marketing Cooperative - Case Study Example

Organic Livestock Marketing Cooperative Marketing Plan 0 Terms of Reference Organic Livestock Marketing Cooperative (OLYMCO) wishes to market organically produced meats, predominantly Beef and Lamb. Marketing strategy uses the following terms of reference: OLYMCO wishes to market organically produced beef and lamb only. Entire UK is to be covered The market plan is to cover only the retail consumer market and restaurants. 2.0 Executive Summary OLYMCO is a cooperative set up by farmers who have agreed to join hands to market their produce. The company aims to serve all sections of the market, namely, the consumer market, restaurants and caterers as well as food processors and the wholesale trade.OLYMCO will strive to develop a profitable business with their two competitive advantages, quality and flexibility.OLYMCO will pursue ultimate quality coupled with the flexibility of an exclusive marketing organisation with a narrow portfolio of products. OLYMCO offers the entire range of high-quality organically grown beef and lamb products.The products when tested in the market received a good response. Marketing is now critical to its continued success and future profitability.Member farmers of the cooperative are fully geared to meet the quality and quantity requirements of the market. 3.0 Business Mission OLYMCO is driven by the mission to become the largest marketer of organic beef and lamb in the UK. The key to achieving this mission lies in the desire to provide the customer with value in terms of the quality of the product coupled with highly competitive prices and to ensure complete transparency in their operations. "We exist to attract and retain customers". 4.0 Market Analysis Statistics of the market and competition have been collected. A detailed survey of customer preferences and loyalty drivers was also carried out (Section 9.6). This information will help enhance growth and sustain profitability and growth. Red meat is a primary food market in which sales have recorded marginal growth (DEFRA, 2006); values have risen, as consumers have been willing to trade up to more convenient cuts (Cooper, 2006). "The Organic Market Report 2006 reveals the biggest increase in sales to be in organic meat and poultry. In 2005, the farm gate value of organic meat and poultry was an estimated 129m, a 59% increase on 2004" (Watts, 2006). The demand is projected to grow in the near future especially as healthier and more reasonably priced product becomes available, the fear of the 'mad-cow' disease abates and with threats of avian flu reducing sales of poultry (Poultry World, 2006).This is despite predictions to the contrary a couple of years earlier (see Buss, 2004). Although British retailers are under pressure to source more organic foods indigenously, it is found that imported organic meats comprise almost 20% of total sales volume (Research and Markets).The balance between supply and demand remains tight (Davies, 2006). Apart from the retail trade, there is high demand for organic meats from food processors and the catering sector. There is also rising demand from restaurants, schools, hospitals and government organisations (Research and Markets). 4.1 Market Demographics The profile of OLYMCO's customer consists of the following geographic, demographic, and behaviour factors. Geographic: The immediate target is the populace residing within the UK - a population of nearly 61 million. Of this, roughly 25 percent are vegans and others who do not eat one or the other type of meat. The boundaries of the country define the geographical area to be covered. Demographic: All people over 20 years old, representing over 70 percent of the total population. Customers belonging to the A and AB categories, i.e. having an annual household income above 25,000. Behavioural Factors: From the results of the consumer survey conducted, the customers are: Willing to pay a premium for higher quality, tastier meats, Tend to patronize higher-quality restaurants, and are Cognizant about their health 4.2 Customer Needs The customers need the following benefits, based on analysis of survey data. Selection: A wide choice of different meats should be available. Accessibility: wide distribution and ensuring availability at all kind of outlets will ensure ease of accessibility. Customer service: Customers need to be given exceptional individual attention to help understand benefits of organic and to assist in making choice. Competitive pricing: Pricing will be competitive with true substitutes. 4.3 Market Trends Themarket for organic meat has exploded within the last five years.Explanations for this trend are: Market supply: Increased supply has reinforced demandand many farms that were producing non-organic meat have moved to production of organic meat because of the increased margins and market demand. Health consciousness: The average British customer has become more health conscious and this is evident from the trends towards organic foods of all kinds in addition to meat. Customers consider organic meats as tastier as well as better for health (Harper & Makatouni, 2002). 4.4 Market Forecast Despite a number of potential customers turning away from meat to vegetarian food for the same reason of health consciousness and the ethical issues involved in the growing and preparation of meat products, the market for organic meat continues to grow especially as the product availability becomes better and competition drives prices down. 5.0 SWOT Analysis The following SWOT analysis captures key strengths and weaknesses within the company and describes the opportunities and threats facing OLYMCO. 5.1 Strengths High quality that exceeds competitor's offerings of price, quality, and service Higher than industry margins due to production efficiencies Farmer participation in the cooperative effort 5.2 Weaknesses OLYMCO lacks brand equity, which will take time to build Budget limits marketing efforts to develop brand awareness No self-production, product quality in the hands of participating farmers 5.3 Opportunities Growing market with a significant percentage of the target market not aware of the benefits of organic meat and its availability Ability to compete with all other producers due to the synergy developed with farmer participation Size of the cooperative allowing nation wide coverage, cheaper packaging and logistics as well as larger coverage of promotion expenses 5.4 Threats Recent health scares that questions the safety of beef and poultry products. Too much variety on shop shelves (Davies, 2006) Product quality dependant on natural factors beyond the control of the company Taste and ethical concerns regarding meat production methods are also important motives behind consumer purchases. Supermarket sourcing policies and inconsistent domestic supply, which allows conventional meat companies to dominate the supply of organic meats Imports remain an important threat. 6.0 Competition OLYMCO faces competition in the market from: 1. Similar localised farmers: These are very similar operations to OLYMCO but usually smaller. 2. Large distributors: Existing distributors of conventional quality meat who have long-term contracts with the major supermarket chains are like to offer stiff resistance. 3. Farm Assured Meat: competition from conservation grade and farm assured meat is making selling of organic meat more difficult. 7.0 Marketing Objectives 7.1 Strategic Thrust OLYMCO budgets are limited and the strategy developed attempts to attain maximum mileage with minimum expenses. The simple strategy aims to develop high visibility and brand equity. To achieve this OLYMCO will advertise in both the Register Guard as well as Eugene Weekly. Advertisements will be for MG individually, as well as some co-branded ads with the Farmer's Market. In addition to the advertisements, OLYMCO will leverage a networking campaign among the upmarket restaurateurs to drive commercial sales. 7.2 Strategic Objectives 1. Maintain positive, steady growth each month. 2. Increase new customers and turn them into long-term customers. 3. Generate brand equity with customers as well as within the commercial restaurant industry and food processing markets. 7.3 Financial Objectives 1. Realise a 5% increase in gross profit margins through efficiency gains every year. 2. Reduce the transportation and infrastructural costs associated with product delivery by 10% by the end of the first year. 8.0 Core Strategy 8.1 Target Markets OLYMCO identifies two sets of distinct customers as the target market segment: 1. Individual consumers: This group of people buy rare meats and the best cuts. Average citizens who are used to eating cheap are typically unadventurous in terms of culinary habits. These are NOT the customers targeted in the initial strategy. The brand represents a product that the average citizen aspires to. The primary target is people that appreciate healthier, tastier alternatives. 2. Box Markets: Box schemes are a popular retail venue in the United Kingdom. Fresh organic food is collected and delivered, either directly to the door, or to a central drop-off point. 3. Restaurants: Not all restaurants use organic meats, only restaurants offering fine dining serve organic. The restaurants are year round customers, which is helpful to balance the seasonal variation in demand of the individual consumers. 8.2 Competitive Advantages The single objective is to position OLYMCO as THE finest producer of organic meats in the entire country and strategy will be to command a majority of the market share within five years.The marketing strategy will seek to first create customer awareness regarding services offered, develop the customer base, and work toward building customer loyalty. 9.0 Marketing Mix Decisions 9.1 Product Organic food has to meet legally regulated standards laid down by the Organic Farmers and Growers Organic Standards. For animals, it means they were reared without the use of antibiotics and without the use of growth hormones; this definition has now been extended to cover the feed given to animals also must be organically grown. An important aspect is to have clean and transparent abattoir operations (Singer, 2006); OLYMCO will leverage this to boost sales. 9.2 Promotion: The promotional strategy will use the media in order to inform the public of the launch and availability of organic meat from OLYMCO. To maximise impact, funds are allocated as under: The plan is to penetrate by mailing and passing out brochure menus, placing ads in newspapers, creating bus and metro billboards, as well as creating a web site. Endorsement by the Ministry of Food (DEFRA) and Organic Trade Association along with approval and placement of Organic Product label on each package would complete the strategy. 9.3 Positioning Organic meat will be positioned as: Healthy food High-quality producer Professional Reliable 9.4 Price Pricing strategy will aggressively offer most competitive prices 9.5 Place Packaging: Packaging design will be developed to highlight the 'Organic', 'Green' and 'Health' aspects and in convenient sizes. Customer service: Obsessive customer service is the mantra. In the long term, this investment will pay off with a fiercely loyal customer. Distribution: Target to make product available and visible on all shelves 9.6 Marketing Research During the initial phase of themarketing plan development, we requested several respondents to fill a questionnaire to gain insight into prospective customers.This research provided helpful insight into the decision-making processes. Copies of the questionnaire and significant findings are at Appendix A. 10.0 Marketing Organization Tom Dick is responsible for all marketing activities. A team consisting of 3 Regional managers and 15 Area representatives supports him. Personnel of distributors and supply chain elements are to assist the initial pre-launch activities. 10.1 Implementation The following milestones identify the key marketing programs. It is important to accomplish each one on time and on budget. Milestones Milestone Start Date End Date Budget Manager Department Complete Marketing Plan March 1, 2007 March 15, 2007 0 Tom Marketing Advertising Campaign March 15, 2007 Ongoing 30,000 Tom Marketing Launch April 1, 2007 3,000 Tom Marketing Totals 33,000 11.0 Controls The purpose of the OLYMCO marketing plan is to serve as a guide for the organization.The following areas will be monitored to gauge performance: Revenue: monthly and annual Expenses: monthly and annual Repeat business Customer satisfaction References: Buss, J. (2004): Organic meat sales are set for struggle, Farmers Weekly; Vol. 141 Issue 7 Cooper, O. (2006): Quality meat opportunities as 'foodies' raise demand. Farmers Weekly, Vol. 145, Issue 14 Davies, R. (2006): Carcass spec key to sheep profit. Farmers Weekly, Vol. 144, Issue 20 DEFRA (2006): Department for environment, food and rural affairs, statistics published on December 15, 2006. Harper, G.C. and Makatouni, A. (2002): Consumer perception of organic food production and farm animal welfare, British Food Journal, Volume: 104 Issue: 3/4/5 Page: 287 - 299 mlc, URL accessed on January 31, 2007 from: http://www.mlc.org.uk/news/2006_releases.asp Poultry World (2006): Avian flu shows UK fragility, Vol. 160, Issue 9 Singer, P. (2006): Look your dinner in the eye. New Scientist, Vol. 191, Issue 2572 Research and Markets, URL accessed on January 31, 2007 from: http://www.researchandmarkets.com/reports/297013/the_uk_market_for_organic_meat_products.htm Watts, A. (ED) (2006): Organic produce records 30% surge. Farmers Weekly, Vol. 145, Issue 2 Read More