Developing a Bonded Business-to-Business Customer Experience - Essay Example

Report on Cottage Condiments Introduction This is a marketing plan report for Cottage Condiment that includes a business plan outline, market segment, brand product and marketing considerations for the business. The business plan outline discusses the internal and external environments that affect the operation of the business. The second part contains the market segmentation and discusses Cottage Condiment’s target market whereas the third part analyses the appropriate brand for the business. The last part of the report discuses the 4 Ps of marketing and some of the elements Jon should consider so as to design a successful marketing campaign. Business Plan Outline and Recommendations for the Development of a Business Below is an outline for the business plan: 1. SWOT Analysis Strengths The major strength for Cottage Condiment is that it produces naturally flavoured products. The products are made from natural fruits and plants which give them a natural flavour. The products are also lowly priced hence making affordable to consumers in the market. Additionally the business is offering a wide range of products including pickles, chutney and relish of different flavors such as peach and ginger, traditional apple, plum and ripe tomato (Hollyoake, 2009, p. 45). Cottage Condiment products have a strong presence in the local market. This is evident from the number of sales that the business is making on a daily basis. The strengths provide a solid foundation for the business to expand into a wider market. Weaknesses The major weakness of Cottage Condiment is that its managers have very little knowledge in business. Jon Wright is a retired engineer who has never engaged in business at any point of his life. His wife also has very little experience in the operations of a business. The owners of the business are retired and have little capital to finance its expansion (Hollyoake, 2009, p. 55). This may curtail the operations and expansion of the business. Opportunities The market for pickles, chutney and relish has recorded a consistent growth in the last three years. This is a wonderful opportunity for the business to attract a significant portion of the market. The growing demand for Cottage Condiment products in the local market is also an opportunity for the business to expand its operations and serve a larger market. Threats Competition from established businesses such as supermarkets is the greatest threat that Cottage Condiment faces. This may make it harder for the business to grow and serve a larger market because it is already occupied by established businesses. The other threat is the unpredictable market performance which makes it risky to expand in an uncertain market. 2. PESTEL Analysis Political The UK has a stable political environment that is favorable for the business. Tax policies also require that businesses selling to a wider market rather than the local market register and make tax payments. Cottage Condiments will have to be registered in order to enter a wider market (Hollyoake, 2009, p. 60). Economic The Euro crisis has a compounding effect on Cottage Condiments because it has increased the cost of raw materials for production. The business will be forced to search for alternative raw materials that can be used in production. Social Consumers are very health conscious and Cottage Condiments will be required to produce pickles, chutney and relish that are very healthy. The products should have little or no side effects on consumers. Technological There are high levels of emerging technologies such as the use of electronic commerce among retail stores. Cottage Condiments will have to adopt new technologies in order to remain competitive in the market. Environmental Climate changes in Britain affect the availability of raw materials for production. The company should be well versed with all the weather conditions so as to plan its production processes effectively. Legal Health and safety laws require that manufactures maintain high levels of safety during the production process. Cottage Condiments needs to maintain safety during the production process to avoid contamination and workers getting hurt. 5 Forces Analysis The likelihood of new entry There is medium pressure for the entrance of grocers in the market for pickles, chutney and relish. There are no entry barriers as Cottage Condiment is operating in a perfectly competitive market where there is free entry and exit of businesses (Hollyoake, 2009, p. 66). However, Cottage Condiment has a cost advantage over other competitors. Most of its raw materials are sourced from farms at low or no cost. The power of buyers Since this is a perfectly competitive business, buyers have knowledge about the price and quality of products. They thus have moderate since their demand interacts with market supply to determine the price of products. They can buy at any seller but they risk losing convenience that is offered by Cottage Condiment. The power of suppliers Cottage Condiment has little bargaining power because the market has a high number of sellers which has reduced the company’s market share. However, the company may deal with established retail stores such as Tesco and Marks & Spencer so as to improve its bargaining position in the market. The degree of rivalry There is high degree of rivalry in the market since the market is perfectly competitive. There are very many retail shops in the market selling pickles, chutney and relish. However, Cottage Condiment has been able to sustain competition by providing products that are very sweet and have a natural taste while charging the uniform industry price. The substitute threat The market for pickles, chutney and relish is characterized by low product substitute where prices and convenience are concerned. Consumers have a choice to make purchases at any seller. However, customers can pay less for pickles, chutney and relish by making purchases online. Recommended Business Based on the analysis of the Cottage Condiments case study, I would recommend that Jon develops a retail business. This is because Cottage Condiment is in its early stages of growth and operates in a perfectly competitive market where sellers are price takers. Retail business makes it convenient for Jon to make an entry into a perfectly competitive market. Some of the factors that Jon needs to consider include the number of competitors, amount of startup capital and legal procedures involved in establishing a retail business (Hollyoake, 2009, p. 88). These considerations will ensure that Cottage Condiment operates effectively without problems. Market Segment The case study provides information on the consumption of pickles, chutney and relish based on a number of factors such as demography and geography. Based on such information, I will segment the market to include women aged 55-64, married couples, families with no children, full time employees and residents of Southwest. Women have a 64.7 percent consumption level of pickles, chutney and relish. The percentage includes all users with heavy users, medium users, light users and non users accounting for 9.7, 12.7, 40 and 35.3 percent respectively. These are favorable figures compared to male consumers who have an overall consumption level of 61.8 percent. Women are mostly involved with cooking in their homes and in most cases they would purchase pickles, chutney and relish. Married couples have the highest percentage of users in their category. They consist 68.7 percent of their population in the market for pickles, chutney and relish compared to singles and divorced who have 47.4 and 65.8 percent respectively. Married couples prepare meals at home more often than singles and the divorced. This may make it necessary and convenient for them to use pickles, chutney and relish. Additionally, this market segment includes married couples who do not have children because of their high level consumption in their group. Full time employees also provide high numbers in terms of all users of pickles, chutney and relish. According to the statistics provided in the case study, full time employees have 64.6 percent of all users in the market. This is the most significant number compared to that of part time and unemployed consumers who have 64 percent and 61.9 percent of all users respectively. In terms of geographical segmentation, residents of Southwest are the best suitable group. This is because they have the largest percentage of all users compared to other geographical areas. According to the market statistics, South West region has 72.2 percent of all users compared to other regions such as East Anglia and Wales which have 69.1 percent and 67.1 percent respectively. The above recommendations are based on the fact that the business has to identify at least two categories of market segmentation. The two identified categories include geographic segmentation and demographic segmentation. Geographic segmentation includes the inclusion of South West in the target market whereas demographic segmentation includes women, general consumers aged 55-64, married couples, families with no children and full time employees. Competing products such as Olive & Pickle Selection and Spiced Winter Pickle from Marks & Spencer and Tesco Finest respectively have a bit different market segment. The two products have their target market consisting of 45-54 and families with children. However, they also have a similar market segment consisting of married couples, full time employees and residents of Southwest. This will intensify competition and Cottage Condiments will have to offer products differentiated from competing products so as to create a competitive advantage. Position Cottage Condiment Low High Demographic Segment Old 55-64 Women Men Young Level of use M/F All users Heavy users Medium users Light users Non users Women YES YES NO NO NO Men YES YES NO NO NO Couples YES YES NO NO NO Brand Recommendation Branding is one of the most essential aspects of a business regardless of its form and size. The advantage of selecting an effective brand is that it creates a competitive advantage for the business. This is because it associates with the customer more than unbranded products. Customers have the tendency to perceive branded products to have higher quality compared to identical and unbranded products. Based on the above analysis and the information available in the case study, I would recommend that Jon designs his own label. This is because the information from the case study indicates that own-label has the highest performance compared to other brands. Retail businesses such as Marks and Spencer, Tesco and Somerfield have been able to design their own brands. Developing an own label will ensure that Jon is able to produce a unique product that will be able to compete favorably with existing brands. I highly recommend that Jon names his brand after the company so as to make it easy for customers to associate the brand with the business since he is new in business. The brand could be named Cottage Condiments. There are high possibilities that the brand will create a sense of uniqueness in the market and consumers will be curious to try and use the new brand. Attempts by consumers to try using the product may result in actual sales and the business will have a strong foundation for its operations. Elements to be Considered when Determining Price, Promotion, Product and Place Price There are two general considerations which include the internal and external factors affecting the business. In terms of internal factors, Jon should consider issues such as marketing objectives, marketing mix strategies, costs and organizational considerations. The market position of the company has a significant influence on the price strategy that the business will adopt. For instance, Jon may consider creating the image of his products as affordable. This will mean that the price will be relatively moderate so as to make them affordable. Jon should ensure that the determination of price is coordinated with other elements of the marketing mix. Cost also plays a major role in price determination because businesses determine price levels that can cover the cost of producing and distributing the product. Organizational considerations involve Jon determining the persons responsible for price determination such as the CEO and top management (Hollyoake, 2009, p. 110). External factors that influence price determination include market demand, prices and costs of competitors among other external environmental factors. In the case of market demand, Jon should consider the element of price elasticity of demand and the demand curve. Jon should also consider the costs and price of competitors so that he may determine a competitive price level for his products. Other elements of the external environment that Jon must consider include economic conditions, social considerations and government restrictions. Promotion Jon must consider three important elements that include available resources and availability of promotional tools, market size and customer information needs. There are different tools for promotion such as television and newspaper, and each tool has a cost. Jon should consider selecting a promotion tool that is affordable. In the case of market size, Jon should consider selecting a promotional tool that is cost-effective depending on the number of the target customers (Hollyoake, 2009, p. 105). Customer information needs is also an important element in promotion and Jon should consider the amount of information that he will provide to customers when promoting his products. Product Product selection is one of the most challenging tasks for an entrepreneur because there are many products that one can choose from. However, product selection is the first step towards success in business. Jon must consider a number of elements when selecting a product such as market niche, profitability, government policy and the availability of raw materials. Market niche is the most important element that Jon should consider because it represents a business opportunity to supply a product that will meet unsatisfied customer demands (Hollyoake, 2009, p. 215). Government policy such as subsidy is also an important element because it influences the cost of producing a product. Place There are a number of elements that Jon needs to consider when selecting a channel of distribution. The elements include the nature of the product, distribution of customers in the market and selling costs. Jon should ensure that the channel of distribution is appropriate to the nature of product. For instance, Jon produces commodities that have a long life hence he may use a long channel of distribution (Hollyoake, 2009, p. 120). Scattered customers require a channel of distribution involving middlemen such as wholesalers and retailers. Conclusion The success of Cottage Condiments depends on a well analysed business and marketing strategies that will be adopted. The business plan will serve to ensure that the business is able to secure financing and that its future operations are well directed. Jon Weight should always review the business plan and marketing strategies to ensure that they are appropriate with the operations of the business. References Hollyoake, M, 2009, The four pillars: Developing a ‘bonded’ business-to-business customer experience, Journal of Database Marketing & Customer Strategy Management, 16(2), 132 – 158. Read More