The Atlantic Quench Cranberries Marketing Plan - Essay Example

THE ATLANTIC QUENCH CRANBERRIES INC MARKETING PLAN Executive Summary The Atlantic Quench Cranberries Inc. (AQC). Cooperative was formed about century ago by two grape farmers; the organisation has grown to about 630 cranberry and 46 grapefruit farmers to date. The cooperative has grown to become the best-selling brand of canned and bottled juices in North America since 1981.seeks to increase its growth from the current 7% annually to about 10% by 2016 (AQC, 2015). To achieve this, the management proposes market expansion in the European markets, where the company has been making huge sales, especially in UK. The target markets will be UK and USA, where the level of competition from the local companies is relatively favourable. With a strong brand and market experience, it is expected that Atlantic Quench Cranberries Inc. will have its sales increase by 20% through the current marketing plan. In order to carry out macro environment analysis for Atlantic Quench Cranberries (AQC, 2015), this plan will use Political, Economic, Sociological, Technological, Environmental and Legal (PESTEL) analysis, concentrating on the forces that are most relevant to the AQC company in order to evaluate any possible strengths, weaknesses opportunities and threats.To achieve the objectives, the company seeks to increase more funds towards promotion and research and development (R&D) (De and Meyer 2014). We plan to use positioning strategies, price discrimination and use of social media to create product awareness among the consumers. Table of Contents Table of Contents 2 Chapter 1: Introduction 4 2.2. External analysis 5 2.1 Macro Environment analyses (Pest Analysis) 5 2.1.1 Political 6 2.1.2 Economic 6 2.1.3 Social 7 UK has majority of its population being above the ages of 35. This provides a potential market for the product. They also have a culture that consumes products that have been locally produced. This provides great potential for AQC to access more consumers, who are no longer loyal to carbonated soft drinks and are seeking for products that can add the value by offering more suitable, healthier beverages. Similarly, the countries have a steady growth rate thus providing for a steady market (Johnson, Scholes and Whittington 2005). 7 2.1.4 Technological 7 2.2 Market analysis 8 2.3 Customer analysis 9 2.4 competitor analysis 10 Chapter 3: Internal Analysis 11 3.1 Overall Performance 11 3.2 Marketing Mix 11 3.2.1 Product 11 3.2.2 Price 12 3.2.3 Place 12 3.2.4 Promotion 12 Chapter 4: SWOT Analysis 13 Chapter 5: Objectives 13 4.1 Mission Statement 13 Chapter 6: Marketing Strategy 15 6.1 Strategic Theories 15 6.2 Core Target Segment 16 6.3 Positioning 17 Chapter 7: Marketing Programs 17 7.2 Marketing Communication Strategy 18 Chapter 8: Marketing implementation and Control 18 8.1 Schedules 18 8.3 Budget 19 8.4: Monitoring and Control 20 References 20 Abratt, R. (1993). Market segmentation practices of industrial marketers. Industrial Marketing Management, 22(2), 79-84. 20 Chapter 1: Introduction With the increasing levels of globalization resulting from liberalization of markets, efficient flow of information and integration of economies, the level of competition in the local and international market has increased tremendously. This has resulted from the entry of multinational companies which have a huge financial base to segment the market, attract the loyalty of the customers, and position the products strategically in the market. This has made it hard for the other companies to penetrate the market. The report by the Mintel indicates that the demand of soft drinks has been on the increase, and expected to rise by 28.2% in 2018 (MarketLine Industry Profile, 2014). Atlantic Quench Cranberries Inc. needs to have a strategy of how it will gain from the market demand. Currently, the company’s growth has been 7% annually. Its main market has been the USA where company has been selling close to 800 million litres of different brands of Cranberry juices. With an experience of more than eight decades, the company has created a strong brand and increased its sales, especially by targeting health conscious customers. The Company has created sugar free juices to respond to the increased demand for non-sugar products, especially in the European markets. With the current marketing plan, the management seeks to explore and exploit more European markets, with the main targets being UK and USA. It is estimated that by the end of 2016, the company will have increased its sales by 20% (AQC, 2015). 2.2. External analysis 2.1 Macro Environment analyses (Pest Analysis) PESTEL In order to carry out macro environment analysis for Atlantic Quench Cranberries (AQC), this plan will use Political, Economic, Sociological, Technological, Environmental and Legal (PESTEL) analysis 2.1.1 Political UK political leaders have been very careful not to interfere with the business environment. As a result, the laws that are passed in these countries take into consideration the interests of the investors. With regard to the emerging regulations on the health and safety of individual customers, it could be identified as an opportunity for AQC, because of the low saturated sugar in cranberries, the UK and USA government have placed regulations to ensure organisation produce products fit for human consumption. This makes it favourable for AQC as compared to its competitors such as Coca Cola. When considering potential taxation on sugar, AQC has an advantage over several giant soft drink manufacturers (such as Coca Cola and PepsiCo) that are currently investing high amount of resources in order to develop beverages that contain less sugar. 2.1.2 Economic Both UK and USA have a stable growth rate. Although they were affected by economic slowdown in 2008, they have been able to recover significantly. The soft drink segment has been on the decline, falling highs of 37.4% in 2010 to 34.5% by 2014 (Key Note,). This could be due to the negative publicity that has affected fruit juice market because of the high saturated sugar (PWC, 2015). New marketing strategies have to be established to create awareness to potential customer of the health benefit they derive from using our products. SOURCE: MARKETLINE 2.1.3 Social UK has majority of its population being above the ages of 35. This provides a potential market for the product. They also have a culture that consumes products that have been locally produced. This provides great potential for AQC to access more consumers, who are no longer loyal to carbonated soft drinks and are seeking for products that can add the value by offering more suitable, healthier beverages. Similarly, the countries have a steady growth rate thus providing for a steady market (Johnson, Scholes and Whittington 2005). 2.1.4 Technological The current trend is being referred as “Snacking on the go” this is as a result to the busy state of the people. AQC will benefit from this trend because they are able to access busy locations, such as train and bus stations, office buildings or even gyms and schools. In order to avoid high costs of developing and maintaining such technology AQC could potentially choose to “rent” these from already existing company. 2.1.5 Environmental Changes in climate pose a great threat to the growth of cranberries. Cranberries are mainly grown in regions of North America (PWC, 2015). It is expected that the rain patterns are predicted to continue changing (EPAGOV, 2015). It is therefore, a threat for AQC because all of their cranberries are grown in the areas. This potentially will affect the quality and quantity of cranberries which could lead to AQC fail to meet the demand for the end products. 2.2 Market analysis The soft drink company has been very competitive with the entry of new rivals and the presence of strong brands, such as Coca Cola and Pepsi Co. for instance, the Coca Cola Company has a global market share of close to 22.7%. Other companies include Tingyi Holding Corp with a global market share of 16.3% and The Hangzhou Wahaha Group Co., Ltd with a market share of 5.6% (MarketLine Industry Profile, 2014). In short, four companies control more than 50% of the global market share (Lanschützer, 2014). Global soft drinks market category segmentation: % share, by value, 2013 TOTAL VALUE SALES OF FRUIT JUICE, JUICE DRINKS AND SMOOTHIES, BY SEGMENT, 2010-12 SOURCE: BASED ON INFORMATION RESOURCES, INC/MINTEL Fruit drinks are deemed as health drinks and therefore, as a result of interest in living healthy lifestyle it has led to the high demand. Consequently the juice sector is increasingly gaining market share as a result of loss of popularity of the carbonated sector, which has a poorer image among consumers. 2.3 Customer analysis The customer bargaining power is said to be moderate owing to the fact that consumer’s tendency to develop strong taste and preference for a particular brand. As such, they become loyal, hence unlikely to consume products from another rival. For fruit juices, consumption penetration in Great Britain was slightly higher among women than men, at 39.1% compared with 32.6% (Key Note, 2015). By age, consumption penetration was relatively similar across almost all age groups, ranging between 34.3% and 40.5% between the 15 to 19 and 55 to 64 age bands, with notably low penetration recorded among those age 65 and over, at 29.4% (Key Note, 2015). The highest level of penetration was recorded among those aged 25 to 34 and 20 to 24, at 40.5% and 40.3%, respectively (Key Note, 2015). 2.4 competitor analysis While there is increased competition due to the sale of similar products, the rivalry is said to be moderate. Form both the direct and indirect competitors. The direct competitors are those organisations that are in the production of other verities of fruit Juices. One of the great direct competitors to cranberry juice is the super fruit juice. The company has brought about the introduction of other fruits such as gogi, pomegranates and acai into an industry that was traditionally dominated by the cranberries. The indirect competitors are the companies that are in the same industry, but are engaged in the production of other refreshment drinks. A good example is the Coca Cola Company. Atlantic Quench Cranberries Inc. has continued to enjoy a growth rate of 7% annually. This is an indication that customer’s tastes and preferences towards a product play an imperative role in determining its sales volume (Pride and Ferrell 2011). The increased health concerns in the market are opening new opportunities for new market entrants who are ready to provide healthy drinks. In addition to this, the new market entrants who are able to differentiate the products, and make them superior to that of competitors can still make significant gain in the market. However, it is still difficult to compete favourably with the already established markets. Atlantic Quench Cranberries Inc., for instance, has been in the market since 1930s, hence has more experience about customer’s tastes and preferences. Chapter 3: Internal Analysis 3.1 Overall Performance The Atlantic Quench Cranberries Inc. has been in operation since 1930s. It is an agricultural cooperation that depends on cranberry as the main raw material. The perceived health benefits of the Cranberry have helped the company gain a competitive edge in the market. However, this has slowly changed as new competitors, which super fruits such as pomegranates, acerola, and gogi have also entered the market. At the management level, the decision making process is affected by the interests of farmers, who are out to protect the independent of the cooperation. Despite the increased competition in the soft drink market, the company has a large market share in the UK market. This has been attributed to the tastes and preferences of the product in the UK market. The company sells both the juice and non-juice products, a situation that has assisted in increased the competitive edge of the company. The company has been able to respond to impulse buying, a new lifestyle market trend, by launching Cranberry Classic in a 250 ml can. The report by Mintel indicates that this kind of impulse buying generates close to 3.6 billion pounds in revenue annually (MarketLine Industry Profile, 2014). Mintel estimates that the demand of soft drinks will continue to rise. In 2018, for instance, it is estimated that the market will have a volume of 733.1 litres, up from 571.9 litres in 2013 (MarketLine Industry Profile, 2014). This provides a great opportunity for Atlantic Quencher to foster its growth and development. 3.2 Marketing Mix 3.2.1 Product The range of product includes both the juice and non-juice products. The juice products include cranberry original juice, Juice Max, and Grab ‘n’ Go. The non-juice is Cranberry Sauces, Fresh Cranberries, New Dried Cranberries and New Conserve. The cranberries have, for many years, attracted huge number of customers due to the health factors. With an effort to respond to the high demand for healthy products, the company has produced several ‘light’ low calorie fruit drinks. The demand for the product is currently highest in the UK market, (Westwood 2002). 3.2.2 Price To attract more customers and overcome the current market competition, the company sells its products at a relatively lower price. In also applies the price discrimination strategies aiming to serve both the high-end markets and target middle-income earners. This strategy has seen the company increase its annual income tremendously. 3.2.3 Place In order for the company to reach the target market, it needs to use direct distribution methods. However, in areas that are far from the source of the product, the company can use logistical companies which have invested heavily in distribution sector (Close 2012). However, the company must enter into contracts with the external investors in order to prevent them from being manipulated by the competitors in order to create delays. 3.2.4 Promotion The company should use audio, visual, and print media. In addition, the company should use the social media especially in order to reach the young generation target market. This will be significant in increasing sales. Chapter 4: SWOT Analysis S The company has an experienced workforce The company has a strong financial base The firm has diversified its product, an aspect that has enabled it to reduce the risks and uncertainties associated with concentrating on a single product. The organization has a strong brand name that will enable it to penetrate the new market W The firm has been experiencing internal wrangles which have been slowing its growth There is low brand awareness in the new market The company has not invested heavily in social media and internet marketing O There is a high demand in foods and beverage industry, with an estimated growth of approximately 25.8% in 2018 The company has an opportunity to acquire struggling firms in UK. This will enable it to have a local outlook. T High competition from large corporations such as Coca Cola and Pepsi Co Unpredictable weather conditions that is likely to affect the quality and amount of yields Lack of autonomy in the management as farmers is part of decision-making, a situation that may hamper growth and development of the company. Chapter 5: Objectives 4.1 Mission Statement Make Atlantic Quench the leading producer of quality canned and bottled fruit juices in both North America and the U.K. To achieve the mission, the following objectives are going to be used in issuing directives for the marketing plan. Aim Foster growth of the industry by 10% in the next one year. Year Industry growth Profits margins $ Units 2014 7% 14,000,000 200,000 2015 8% 30,000,000 350,000 2016 10% 50,000,000 480,000 Currently, the company has had an annual growth of 7%. The company faces many challenges owing to the level of competition and market trends. On the contrary, the company has many opportunities owing to the increased demands for soft drinks. The company has enough raw materials that will be able to respond to the increased market demand (Chaffey, and Smith 2013). Another main objective is to ensure that the management becomes more innovative and creative in looking for market niche. Currently, the company has focused on UK market, which is not enough to guarantee its growth and development beyond 10% (Clakins 2012) . 4.2 Smart Objectives To increase production of healthy drinks to respond to market demand To foster market expansion in the European market, U.S and Asia to counter the market competition To address the conflict between farmers and cooperative to address the challenge of instability Chapter 6: Marketing Strategy 6.1 Strategic Theories Ansoff Matrix Market\ Product Existing Product New Product Existing Market Market penetration Product development New Market Market development Diversification The theory focuses on market penetration, product development, market development and diversification. The product development is the act of manufacturing new products in existing markets with an aim of responding to market demand. In the case of Atlantic Quench Cranberries Inc., the main goal will be to manufacture new products that respond to market demand. This will include more healthy drink, which are in high demand in European market. The market penetration strategy is important since the management is already aware of the market demands (Bird 2007). However, this strategy can hinder innovation, hence the need for company to invest in new market. Market development refers to the act of availing the existing products in new geographical locations. In this regard, Atlantic Quench Cranberries Inc. is working towards expansion in new markets, especially in UK. The diversification strategy involves the sale of new products in new markets, a situation that sees a company generate more income. In the case of Atlantic Quench Cranberries Inc., the goal is to diversify the soft drinks to ensure that the current market demand can be addressed. 6.2 Core Target Segment Currently, statistics indicate that the biggest consumers of soft drinks are the between 15-19 years of age. However, those above 25 years of age are more likely to consume healthy drinks. For this purpose, core target segment will be the younger generation, who will assist in ensuring that the company’s competitive edge is enhanced. Through marketing research, the company will be able to know whether the consumers of healthy drinks are significant in number in order to make an informed decision. The company also seeks to target customers in urban centers, who are the largest consumers. The main target will also be students in higher institutions of learning. 6.3 Positioning Positioning refers to identification of a marketing opportunity and availing necessary resources to fill the market gap (Kerin, 2014). The positioning strategy focus on how an organization communicates with customers, markets its products, and the location of its operations. Through the market experience, the management has been able to establish the market gap in UK. Consumers have a high taste and preferences for healthy drinks. The rationale for choosing the European countries over the United States is that there has been a decreased demand for the soft drinks owing to weight concerns. The second rationale of investing in UK is the low competition in the local market. A market gap is unsaturated, which a reputable company, such as Atlantic Quencher Cranberries Inc. should take advantage. However, the company should be aware of the fact that most of the UK consumers will demand healthy drinks (Porter 2013). Chapter 7: Marketing Programs 7.1 market placing strategy The objective is to make the potential customers aware of the substitutes of the high sugar content being offered by Atlantic Quench. With the rise in demand for natural and healthy drinks, (Luther, 2001) There, will be a light versions of fruit drinks offered by the company are going to take over the market if properly advertised. Health oriented promotions also are part of the program that would see this fruit juice firm better their sales. Such promotions include free campaigns that alert the public of the increasing obesity cases in Europe. The benefit of this is going to be increased sales. Product Non-carbonated products Cranberry flavours Price Lowered prices for our products Discounts for repetitive customers Place Online buying Cranberry shops Promotion Discounts for repetitive customers Free samples 7.2 Marketing Communication Strategy The company seeks to target customers, in the urban areas, especially the high institutions of learning. The target age is between 15-24 years, who are the main consumers. The marking communication strategy goal is to ensure that the company maintains the customer base, and attracts new ones with an aim of increasing the awareness. The marketing communication strategy will also be used to create the product awareness in the new market. One of the promotion strategies that will be applied is advertisement (Baines, Fill, and Page 2011). The company seeks to increase its allocation more for advertisement in the new market to inform customers about the product. The Atlantic Quencher Cranberries Inc. will seek to use the most effective media in order to reach more customers within a shorter time and at lower cost. The social media is the most effective communication strategy (Hucker 2014). With most of the target customers having access to internet, and Smartphones, communication will be made effective between the company and the target market. The direct communication will be more efficient in creating awareness in the market (Faheem 2015). Other main promotion strategies will be the use of samples, especially for customers visiting the supermarkets and hypermarkets. It is one of the most effective in that the customers get to taste the products to make their informed choices. Chapter 8: Marketing implementation and Control 8.1 Schedules Date Activity Responsibility January –March 2016 Market Research (new markets) Research department April – July Advertisement Marketing department August 2016 Setting production area Q & D department September 2016 Recruitment Procumbent department October 2016 Beginning operations Operation Manager 8.3 Budget The following is the figure represents the budget estimates for the year 2016. Expected expenditure in 2016 (amount in $) Personnel Salaries and wages 1,000,000 Allowances (e.g. medical) 400,000 Other expenses 500,000 Total 1,700,000 Research and development Primary research 15,000 Secondary research 10,000 Total 25,000 Marketing Traditional media (TV) 100,000 Social media 50,000 Events 100,000 Print 100,000 Total 350,000 Grand Total 2,075,000 Expected sales Sugar free Cranberry cherries 5,300,000 Sugary juice products 3,575,000 Total expected sales revenue 8,875,000 Expected profit before Tax 5, 000, 000 The above is an estimate budget and what the revenue the company is expected to make in the year 2016. This will also see the increase an increase in the number of litres of juice sold in the same margin. 8.4: Monitoring and Control The management seeks to monitor the business operations in the new market to ensure that the operations are as expected. Constant monitoring will enable the identification of any flaws and correct them in good time. 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