New Product for Walkers Crisps - Essay Example

BUSINESS REPORT ON NEW PRODUCT FOR WALKERS CRISPS By Presented to Introduction Walker’s CRISPS isa company in the United Kingdom that manufactures snacks. The main snacks produced are potato crisps but the company has gone ahead to produce other snacks like waffles, French fries, chipsticks, doritos, mix-ups and many more. Walkers produce approximately 58% of the crisps in the British market.( BOONE et al 2011) This company was founded in Leicester back in the year 1948 by a man known as Harry Walker and this company is currently the largest in production of potato crisps worldwide. These crisps are produced from British potatoes. When the company started, its first flavours released to the market were cheese and onion flavours. Currently, Walkers has introduced very many types of flavours in the potato crisps produced and this has attracted a lot of customers who appreciate the different tastes that come in the different flavours. Due to its vast numbers in its customers, Walkers has proved to be a company that can accommodate the introduction of new products. Therefore, I propose introduction of Walkers Fresh Juice production and sale. Despite the beverages sold in the PepsiCo. Inc, the company does not produce fresh juice. With its huge acres of land for farming potatoes for the manufacture of crisps, I feel this company can use part of that land to grow fruits that can be used to make the fresh juice. For a company that is currently aiming to produce and sell healthy foodstuff, it is my strong belief that making fresh juice for sale will serve this purpose while attracting a great number of customers who are already loyal to Walker’s crisps company. It is also part of PepsiCo’s mission, to be the global company for production of consumer products that will produce the best foods and beverages. (BOONE et al 2011). Relevant Trends One of the growing trends in the United Kingdom in food production is the desire by the consumers to have healthy and safe snacks. According to recent studies and research projects, it has been noted that a high number of people are much interested in natural and healthy drinks and also foods. An example is how fat content and even salt has been reduced in the manufacture of some snacks so as to respond to the issues that have been raised concerning health.( GREAT BRITAIN 2004). This trend has been accelerated by the government of the United Kingdom, when it put strict regulations in labelling of nutritional value of foods and beverages as a measure of controlling obesity in the country. In this market, there has been a lot of emphasis to the manufacturers to use more ingredients that are natural instead of using supplements and substitutes. Therefore with this, production of fresh juice will get a warm reception by the customers of Walkers. Another trend is how the media is able to control the choice of consumers on foods and beverages globally. This comes in especially when they try to find out the amount of calories present in a particular food product or drink. The internet has become a very essential tool in availing information about the products. Therefore, upon production of the fresh juice, marketing it to the consumers will not be a heavy task, especially with internet as the main tool of communication. Also, a lot of consumers prefer investing in products that have very little effect on the environment negatively. This trend has now been tapped by retailers and marketers so as to produce more ethical products, leading to rebuilding of brands. In the analysis of the trends, we can use the PESTLE analysis to elaborate more on this point. The first one is the Political environment. In the United Kingdom, there are three bodies that regulate the labelling of food products. They are; Food and Rural Affairs, Food Standards Agency and the Department for Environment. The second part of PESTLE analysis is the Economic environment. In 2009, there was a great recession in the economy of United Kingdom. The income for consumers is between medium and low-and the household expenditure increased. Although the economy is recovering, there has been an increase in the global prices of commodities. This has indirectly increased the prices of food. This has a negative impact on Walkers because increase in foods means that the cost of operation is high and competition is also high in terms of prices by reducing prices to get more market shares. (YESHIN 2006) The third part is the Social environment. This has a lot to do with the health problems associated with some food products and beverages. With obesity as a major problem in the United Kingdom, eating healthy has become a trending topic. The consumers criticize the ingredients present in foods and drinks and also the labelling of the nutritional content and value as part of choosing the right food or drink to take. By using fresh natural fruits to make fruit juice, Walkers will respond to the choice of consumers to switch to healthy drinks just like when they used sun seed oil to fry the potato crisps as a way of reducing the content of saturated fats in the crisps. The next part is the Technological environment. A very large number of the United Kingdom population use the internet. Walker’s crisps have for a long time connected to their customers, by adapting the internet trend, through the internet and social media. Therefore, with its wide range of consumers online, it will be easy for Walkers to interact with the consumers and market the fresh juice and also get feedback concerning the drink. (YESHIN 2006) The next part is the Legal environment. This entails the regulations and rules imposed by the United Kingdom government to ensure that the food and drinks produced are safe for consumption. There are several Acts that ensure that foods and drinks produced do not pose any injury to one’s health and that consumers get food that has the right substances as indicates and that the quality is not compromised. There are heavy penalties dictated by the Acts for any offenders who break the law. This Acts will be put into consideration in the production of the fresh juice. Industry There are other companies that produce fresh juice. However, the main competitor would be the largest company in the United Kingdom that produces fresh fruit and vegetable juices called the Tropicana UK Limited. It has been in existence in the market for a long time and has already established itself as a drink for breakfast for many families in the United Kingdom. This company has a very efficient method of advertising thus it has pushed its products throughout the country. This would be the major competitor despite the presence of other juice producing companies. Therefore to check if the entry into the market is possible, an analysis should be done. For any starting company or existing one, it is important to use the Porter’s five forces to analyse if the industry attracts the new entrants. The five forces are; - competition within the industry-this is competition from the players in the industry itself-in this case, the Tropicana. The other one is competition from new entrants. This analyses if there are new comers in the industry and the reasons for their entry- if it is due to the high returns in the industry which increases competition. This weakens the company’s power. If the capital required to enter the industry is low, it will allow easy access for the new comers. (YESHIN 2006) Another one is the threat of substitute products. This is when customers shift to products that are similar to the product intended for sale. An example in this case is when the customers shift to soft drinks or carbonated drinks if the fresh juices become too expensive. Also this threat is increased if the substitutes available for the customers are healthier than the ones being produced by the company. Another force is the bargaining power of the consumers-this is when the consumers are not many or the customers are in a position that gives them a strong bargaining power. This reduces the freedom of action leading to the company being forced to agree with the terms and conditions that suit the consumers instead of them. The last force is the bargaining power of the suppliers. If the suppliers are not many, or seem to have some sense of monopoly, their terms may not be easily accepted. However, in the analysis of the Strength, weaknesses, opportunities and threats of Walkers Crisps, it proves that producing and selling of this new product will be able withstand competition and grow into a big venture in the company. The strengths of the company include; the Walkers crisps is the leader in the manufacture of crisps in the United Kingdom therefore it is well established. The company also uses natural ingredients since it uses its own potatoes in production of crisps. The company also has a well organised team of board of directors and management teams that are very experienced therefore with such a strong leadership backing up the project, it will succeed. The company also has a very good system of manufacturing and distributing. Also it has a very strong support for finance from the PepsiCo. Inc and this company was the first to launch the Carbon Reduction Label. ( NORDIC COUNCIL OF MINISTERS 2011) The weaknesses include the decreasing of the sales of the brands in Walkers. Also there have been complaints over the improper and inaccurate labelling of nutritional content. Also, the prices of the products have been inconsistent. The company also produces new products at a high rate. The opportunities include; the rising desire and consumption of snacks and beverages, currently, the healthy lifestyle through healthy eating has become a trend. There has also been an increased demand for foods and drinks that have been packaged well to be friendly to the environment. The technology has been updated making the internet trend an important tool in marketing. The threats associated with Walkers Crisps are;- the snacks produced here are viewed to be generally unhealthy due to the calories associated with them. Also there has been heavy competition. There have been problems in the foreign exchange rate that are not really friendly to the economic status of the company. Market segmentation The targeted market is all ages-from children, to teenager, the youth and the older generation with the main age group being the adults between 25 to 50 years old. Also the target includes all the customers that have already been attached to the products of Walkers Crisps. This target age group-25-50 are the adults that are very cautious on what they take because they really want to live healthy by eating right. (GREAT BRITAIN 2004). The fresh juices are supposed to come in different flavours using the different fruits available. The British market has a lot of natural fruits that are of high quality. Importation of fruits that are not readily available may also be necessary to increase the range of flavours. Due to how Walkers crisps outstands from its competitors in terms of producing products that are healthy, unlike its rivals who are perceived by their consumers to produce fattening products, the production of fresh juices will be appreciated as soon as the concept is implemented. (YESHIN 2006) The targeted population is also that of an average person. The aim is to produce and sell fresh juices to all kinds of people therefore it should be affordable to all. The market size is huge, as this includes all the customers that go to Walkers for snacks. The accessibility of the company is very easy since this organisation is already well established and rooted. Since it was founded a long time ago, it has already matched to its major competitor, Tropicana which earns its good reputation because of how long it has existed in the market. Critical Analysis There are things that need to be done to ensure that this idea succeeds. One of them is to properly come up with a budget that is realistic and objective. Another way is to research and get where the natural products and ingredients can be obtained which are of high quality and of a reasonable price. Since Walkers has a big farm for the potatoes, it is important to find out if part of the land can be set aside to grow some of the fruits. If the land is not available, there should be an option for getting a farm that can grow some of the fruits since most fruits require 3 months-6months averagely for example, water melons, passion fruits and so on. As long as the ingredients are of high quality, the machinery and labour personnel are also of high quality, and then the end product will be of high quality, making the project a success.( YESHIN 2006) The production of the fresh juice will benefit the company. By producing fresh juice that is 100% fruit extract without any addition will be an added advantage to the company which aims to produce products with more of the natural ingredients. There are other beverages sold here but in relation to all existing products, the new product will be able to fit in as the consumer can take both the snacks and this beverage together. Therefore, the fresh juice can boost the sales of the other products that can be taken together with the fresh juice for example the Doritos can be taken together with the fresh juice. In the sales, the BCG matrix will be able to show how the new product will benefit the portfolio of the company.( YESHIN 2006) It is my belief that the new product will fit in. The matrix involves four categories that can determine which product will be given the priority over the others. The portfolio should have products that have high growth and require a lot of money and also products that have low growth but make a lot of money. The four categories resulting from BCG Matrix are; Stars which are the products that have high growth. These products use a lot of money and also produce a lot of money. The others are cash cows which have growth that is low requiring less money but generate a lot of money in return. The other category is the Dogs, which are the products that have low growth and return very little amount of money. These products should be given last priority and their production should be minimized. The last category is the Question marks, which includes products that have demand that is high but the returns are low. This is the worst category and if nothing is done to change the share of the market, a lot of money will be absorbed by these products. In my opinion, the new product will fall under the stars category since the money needed for input is not little but the returns will be high. Since the consumers are more interested in eating healthy food snacks and beverages, the addition of fresh juice will maintain Walkers crisps’ advantage over competition with the other firms that are competitive both in the fresh juice production and the crisps production too. Conclusion Walkers crisps is a well established company with an incredible market in the United Kingdom. It provides to its consumers the best quality of snack products. This company has occupied a huge part of the United Kingdom’s market share and they have proved to have marketing strategy that is also incredible. However, with all this, this company has a huge potential for growth and expansion, with introduction of new products or improving the existing ones and creating new ways of marketing the products. Walkers should also explore and implement strategies that can help them penetrate into new markets where their products have not reached. New customers should also be targeted including those of the competitors. Upon introduction of the new product, the competitors will also increase therefore the Walkers will increase its number of customers who may also come from the competitors in the fresh fruit juice industry. Once the fresh juice starts being produced, its presence in the internet and also on social media will expose the other products of Walkers crisps. Therefore, the new product will offer some kind of symbiotic relationship between it and the existing products. Both products can influence the sale of the other. By updating and passing information about each product using the advanced technology, the products’ quality will be improved thus achieving the goals and objectives for the company. Therefore it will be worthwhile if the company to develop a full marketing plan for production of fresh juices. Appendix Reference List BOONE, T., GANESHAN, R., & JAYARAMAN, V. (2011). Sustainable Supply Chains: Models, Methods, and Public Policy Implications. New York, NY, Springer New York. GLENN, M. (2005). The best job in the world. Cobham, Compton House Publishing Limited GREAT BRITAIN. (2004). Obesity. London, Stationery Office HANCOCK, G. (2001). GCSE graphic products for OCR. Oxford, Heinemann. MCLOUGHLIN, D., & AAKER, D. A. (2010). Strategic market management: global perspectives. Hoboken, N.J., Wiley. NORDIC COUNCIL OF MINISTERS. (2011). The environmental impact of the consumption of sweets, crisps and soft drinks. Copenhagen, Nordic Council of Ministers YESHIN, T. (2006). Sales promotion. London, Thomson Learning Read More