Brand and Market Analysis - Assignment Example

International Marketing Plan Brand and Market Analysis 1 History The history of the L’usine brand is related to the Almarai Company’s history and investment in the bakery industry. While the parent company underwent various changes in the 1990s such as the centralization of its business structure, the centralization move was considered to make sure that every product that the company traded was affordable by using low-price as a marketing strategy. However, the L’usine brand of products was introduced in 2007 when the parent company, Almarai, entered into the bakery industry. This move was preceded by the acquisition of two Western Bakeries in Jeddah. In order to expand the market target of the company with baked products, the company commenced the construction of a new bakery in 2009 in Al Kharj. The aim of the company in constructing an additional bakery was to increase the portfolio of baked products they offered to the market. In this case, the L’usine brand was adapted as a brand name for all baked products. 1.2 Target Market and Brand Positioning The L’usine brand is a family-oriented brand that offers products mainly for use as consumer products. The retail industry with reference to consumer products provides both basic products and other products used in the daily family lives. In this case, the L’usine brand provides products such as bread, burger bums, sandwich rolls, and puffs among other products. The aim of the products is to offer consumers with a variety of products that can be used for breakfast and snack purposes both at the family setting and at the workplace. However, the position of the products is related to the family segment of the market. This shows that the products do not target a certain social class and therefore targets every customer while at the same time providing the hotel industry with products to offer to their customers under customized customer-dependent orders. Based on the positioning of the products, the L’usine brand is better placed as it competes with both bread and the confectionery industry companies offering customers with quick-bites (ready to consume products). 1.3 Product Strategy The product strategy for the L’usine brand involves pricing and diversity of products. Starting with the pricing strategy, it is observed that the target market of the company allows low-prices to facilitate and increase operations’ productivity by considering economies of scale. With the market position playing a role, the pricing strategy ensures that the products sell at a low price while at the same time generating vast sales. On the other hand, the diversity strategy ensures that the company and the L’usine’s brand offers various products to the customers ensuring that a vast portfolio of products is available. This strategy is aimed at ensuring that customers are able to choose from a variety of products that meet various preferences and personal tastes. In addition, in order to beat competition, the diversity strategy aims at ensuring that customers have choices within the same brand without considering alternative and substitute products from the competition. 1.4 Pricing strategy The pricing strategy in this case is considered in a different perspective as compared to the product strategy. In this case, the low-price strategy aims at ensuring that sales from the brand are sustaining of the company’s overall mission and vision. However, through the adaption of the low-price strategy, the brand ensures that the products saturate the market by selling numerous units to small and large scale consumers. The small scale consumers include the final customers using the products and buying in small quantities. On the other hand, the large scale consumers include the wholesale and other distributive channels that buy in bulk and open the bulk to the final customers. Economies of scale is a strategy that makes use of low-price to ensure that competition is managed and customer demand is increased. The increase in demand promotes higher sales that in return accumulate large and sustainable profit margin. 1.5 Promotion strategy The promotion strategy for the L’usine brand involves the use major channels of communication as well as other promotional strategies such as sales promotion and discounting for large scale purchases. The company makes use of online channels such as social media to target customers such as the youth as well as other online services’ users. This method is employed to make sure that the company’s sales are sufficient to support its competitive position. In addition, use of advertisement through pay television has ensured that the L’usine brand is recognized by the target market which currently includes Oman, Bahrain, Qatar, Saudi Arabia, Kuwait, and UAE among others. In this case, the target market of the company and the brand at hand is based in the Middle Eastern and Gulf region. In this case, the distribution strategy of the products follows the same regional target market. 1.6 Distribution Strategy The distribution strategy of the company uses three types of logistics channels and transportation means. For local and regional retail purposes, the L’usine Brand makes use of long-haul fleet transport to deliver products to various parts within the market segment within the current Middle Eastern nations. In addition, the use of short-haul fleet provides local retail premises with the brand’s products. While products have to reach other parts with the current market, the use of cargo flights is employed in the delivery of products to high demand areas. The logistics channels used in the transportation of the products makes use of warehousing from which bulk products are redistributed to various market-divisions based on demand. With an increase in the number of dispatch warehouses, the company provides customers with the option of visiting physical stores to buy the products in bulk. However, in order to embrace the contemporary means of communication and doing business, the L’usine brand provides customers with the option of online ordering thus requiring the company to devise transportation means for local customers. This method of transportation involves the use of small trucks or vans providing location based delivery service of the products. 1.7 Marketing Audit Conclusions Based on the above analysis of the current L’usine’s marketing strategy and other areas affecting the brand’s sales and profit sustainability, it is observed that the current market for the brand is mostly Middle Eastern and Gulf nations. The distribution channels for the products reflect the company’s target market which is concentrated within the Middle Eastern and Gulf regions. Based on cost of products, the L’usine brand trades at a low-prices ensuring that the brand sales increase by attracting price-sensitive customers. In addition, the Almarai Company is observed to have centralized its operations in order to have a better perspective of the current target market. In this case, the company is able to control various bakeries to ensure that the high demand provoked by reduced prices is managed and met at all times. Finally, the brand is positioned to target families as it provides breakfast and snack products such as bread, burger bums, and puffs among other products. 2 New Target Market 2.1 UK Market The United Kingdom is a member of the European Union and offers various marketing challenges as well as opportunities for companies aiming at entering the market from other regions. With reference to the bread and baking industry, the UK is considered one of the most vibrant and competitive environments. This consideration takes into account the value and volume of companies within the market dealing with baked products business. According to Bakers Federation (2014), it is observed that the UK’s bread market is made up of three categories of baking companies. For instance, the large plant bakers, which target a larger scope of the UK market measure at 78% in value while at the same time producing up to 80% of the total consumed volume. On the other hand, it is observed that in-store bakers make up to 17% in value while an equal portion is considered in volume. Finally, master bakers make 3% of the total volume required to serve the UK market while standing only 5% in value. The merit of selecting the UK market is that it offers a larger market since the UK is a territory made up of four nations; Northern Ireland, Scotland, England, and Wales. By considering market size, the UK stands a better chance of promoting high volumes of sales. In addition, based on the L’usine brand’s products portfolio, the UK market is better placed in attracting more customers than any other member of the EU. This consideration accounts for the UK’s population of more than 64 million people as of 2014 estimates by Europa (2014). 2.2 Marketing Environment Analysis (PESTEL) Political The UK’s political environment is one that favors foreign investment. The governing bodies and authorities have managed to ensure that political calm is ensured for both the citizen and for visitors. In addition, as a means of increasing direct foreign investment, the UK governing authorities provide policies that aim at regulating the market as well as the operation of both small and large scale companies. However, based on incentives and relaxed duty on imports, the UK political landscape is conducive for businesses looking forward to investing in any of the numerous industries. Economic Since colonial times tracing back to the 18th and 19th century, the UK has been regarded as an economic power house. The organization of the economic landscape makes use of resources both available locally such as labor as well as international resources such as the acquisition of raw materials from various other nations around the world. In this case, due to increased population, the demand for consumer products within the UK has continued to increase thus enticing investors to launch companies that provide products for certain market segments. Based on this facts, the UK’s economic landscape is favorable for both SMEs and large scale business models. Social The UK’s social order is not one of the best when it comes to foreign investment. With reference to high levels of crime, discrimination, and racial profiling, the social order leaves a lot to be desired in terms of integration. However, ignoring the social challenges, the UK social environment is comprised of wealthy young adults as well as well-off families providing efficient and sustainable market for consumer goods. Technological The UK is one among the most advanced regions in the world when considering technological factors. The communication industry in the UK is made up of various large scale local and international companies that provide the market with reliable high speed broadband connections. In addition, globalization has increased the need for customers to acquire handheld devices that enable and facilitate online purchases as well as business models’ promotional strategies. Environment Ecologically, the UK environment is protected by treaties and membership to various conventions that aim at ensuring that pollution is controlled. The manufacturing industries which make the largest portion of environmental polluters, are regulated by the imposition of fines with reference to volume of CO2 produced. Based on the Geneva Convention, the UK environmental factors favor and promote companies to adapt corporate social responsibility in order for companies to compete ethically and fairly. Legal Forces The legal environment of the UK is made up of various branches of authority that provide security to business models at various levels. For instance, macroeconomic companies are governed and controlled by the federal government which can bail them out if they risk affecting the economy of the entity. In addition, small scale companies and business models are protected by marketing and trading policies that ensure large scale companies do not restrict the entry of these companies. In this case, the legal environment is reliable to support and protect large and small scale companies and business models from affecting each other negatively. The ethical order of businesses in the UK depends on the legal environment; which in the UK’s case is reliable. 2.3 Competitive Environment Analysis The UK’s competitive environment is seen to be affected by factors such as the size of a company. As earlier pointed under the market analysis, the UK bakery industry is made up of three classes of companies. Large plant bakers make 80% in volume, in-store bakeries make up 17% of the total volume, while master bakeries make only 3%. This competitive market division requires companies entering the market to be observant of how they position their products and who they target. The UK bakery industry is valued at £3.6 billion and serves as the biggest markets within the food industry. In this case, regardless of the division in competition, it is considered one of the most sustainable markets since it provides basic consumer products. In this case, the based on the size, the bakery industry in the UK offered small scale and large scale producers an opportunity to enter the free market (investors can enter and leave at their convenience). 2.4 Analysis of Market Size and Potential With the consideration of the population of the UK, which is 64,308,261 as of 2014 (Europa, 2014), the size of the UK market is efficient enough to provide companies and small scale businesses with sustainable demand. In addition, it is observed that the market is only made up of three divisions of companies and businesses. The limited categories provide grounds for positioning and entry in to the market. In this case, based on sizes and output of companies, the market provides room for entry based on the capabilities of the company at hand as well as the marketability of the products’ portfolio. 2.5 Conclusion With reference to the PESTEL model as well as factors such as market size and competitiveness, it is observed that the UK bakery is both competitive and reliably sustainable. In addition, the UK market is favored by factors such as the business interaction of four nations. This market size offers prospective investors with the opportunity to enter and leave the market at will. However, the market size and availability of three competitive divisions provide companies and business with a platform of ensuring that companies are able to position their models in the right and best market segments. Hence, while factors such as competition are considered threats, the size and ability to enter at will provides prospective investors with grounds of analyzing their chances of trading competitively with the market 3 Marketing Strategy for the New Market 3.1 Positioning The L’usine brand in a new product to the UK market and therefore it observes the competitiveness of the business environment. In addition, the brand placement considers the 64 million population size which offers investors an opportunity to verify the market segments that exist within the market. Based on the competitive segments identified earlier in the market analysis section, it is observed that the number of factors for consideration in the position of the brand is related to the company’s financial capabilities. Currently, the L’usine brand is sold in 7 nations within the Gulf and Middle East region. However, based on the size of the UK market, the entry must consider four nations at once. Hence, as a financially stable company, the sale of L’usine brand in the UK is backed up by a strong financial support. The competitive segments identified coincide with the company’s financial capability to ensure that the company enters as a large plant baker. In this case, the brand will be trading under the 80% volume bracket targeted by the large plant bakers. The competitive positioning targets the mass production of the products to meet the current demand. However, while the market size and value comprises of 64 million people and a sector economy of £3.6 billion, the 80% competitive portion will attract considerable market share from the current market. 3.2 Product Strategy The marketing message for L’usine Brand will be, “L’usine Health Bites; Buy Quality, Buy Qatar’. The message recognizes the benefit of health eating as well as the origin of the product. On the other hand, the product strategy considered in this case is the diversity strategy which aims at saturating the market with products meeting various customer demands. On the other hand, the UK is observed to be a western region with social problems such as obesity from fast food eating habits. However, based on activism and other social movements, it is observed that companies within the UK have to assimilate and integrate with the social environment in order to develop corporate social responsibility. In this case, while the L’usine brand is characterized by specific ingredient combination, the level of fat used in its products is a concern under the UK market. In this case, the product strategy will ensure that low calories and sugar levels are considered factors in the product processing. While the fast food industry and the confectionary industry are blamed for increased health issues especially diabetes and cardiovascular complications, the L’usine brand has to be modified to fit the social order of the UK market. In addition, the target market for the products is the family (general) and therefore, the expansion in to the UK must comply with health standards which may require the company to modify its products’ processing procedures. The modification will require the consideration of the lean production concept of mass customization (Duray, Ward, Milligan, & Berry, 2000). Based on different customer demands, the company will ensure that its variety of products give customers the option of choosing among different products containing sugar and calories and counterpart alternatives for health-sensitive customers. By providing customers with sufficient options to choose from, the brand will reach out to a majority of the target market. In addition, the products will offer close alternatives while using differentiation as a competitive advantage. 3.3 Pricing Strategy The pricing strategy for the L’usine products within the UK will be different from that used in the current market. The pricing strategy in this case will make use of product differentiation such that products differ considerably from those of the competition. However, the product differentiation will ensure that various market segments are targeted by a product or two. While products such as the L’usine Puffs compromise of sugar as an ingredient, alternative versions for customers with health issues related to sugar will available for the same price as the sugar-rich versions. Following the product differentiation, the pricing strategy will ensure that corporate cannibalism is not a problem developing from the strategies. For instance, the consideration of too many product versions has the potential of ruining one product’s marketing success. In this case, to ensure that products differ considerably with that of competitors, the launching of the brand will ensure that pricing is considered with respect to market segment. For instance, puffs target children and workers who do not have time to get full meals during working hours. In this case, a variety of flavors will be considered to offer customers with a high number of options. However, in terms of pricing, the products’ range under one category will balance the price-sensitivity such that no differences in prices are encountered under one category of products. The aforementioned approach will be aiming at ensuring that various products versions do not inconvenience one another based on the price. Finally, while products will have close alternatives within the same brand, the pricing of products will consider low prices all through as basic consumer products are not affected by product life cycle. However, the launch of the product will consider factors such as entry price. In this case, the entry price will consider a 5% price cuts on all products based on the UK’s market price of substitutes. This move is merited by the fact that consumers will buy a brand they are familiar with unless a motivation factor is considered. For instance, the consideration of low-pricing will attract price-sensitive customers to try the new brand. However, the pricing strategy does not aim at compromising on other factors such as quality and meeting demand. Based on the trade-off concept (Silver, & Slack, 2001), the launch of the product line in the UK will ensure no variable is compromised for another and average profit generation will be considered an aspect traded off for lower-introductory prices. 3.4 Positioning Strategy Under the first section on the business strategy, positioning is considered in the basis of where within the UK market the L’usine brand should be positioned. This section on the other hand, provides a plan of how the positioning will take place. The UK market has three competitive segments made of large plant bakers, in-store bakeries, and master bakers. However, without the consideration of the competitive segments, it is observed that the UK market place requires market knowledge useful in the provision of information necessary for sustaining beneficial competitive business approach. In this case, based on the competitive segments, the introduction of L’usine brand should be launched with reference to a local business partner. While the L’usine brand is a new line or products in the UK, the UK environment as seen in the PESTEL analysis is a new market place with different challenges from those of the products’ current market. Thus, the launch of the L’usine brand will take into consideration the rating of current UK bakers to acquire a reliable partners. Research shows that Allied Bakers is one among the biggest bakers in the UK and one of their products, Kingsmill loaf is the sixth bestselling baked product in the UK. The popularity of the company as well as the trading success of the Kingsmill loaf ensures that L’usine while use the current publicity to its advantage to promote sales. In addition, the company’s established brand name will host L’usine in its portfolio ensuring that market information and segmentation is in favor of the business partnering. The advantage of the partnership entry is that it ensures that L’usine does not suffer from poor entry strategy and will make use of relevant information based on Allied Bakeries’ market analysis (Allied Bakeries, 2015). 3.5 Distribution Strategy The distribution strategy in the trading of the L’usine products will consider the current channels used by the considered business partner, Allied Bakeries. This move is aimed at ensuring that the company at hand does not invest too much in new hauling fleets while the partner will have this resource at its disposal. In this case, long-haul and short-haul fleets will be used to ensure that delivery of products to various businesses and customers is timely and economical. However, it is predicated that Allied Bakeries makes use of 100% of its hauling fleet to ensure timely delivery of products to its target market. In this case, the launch of the L’usine brand will consider the hiring or contracting a fleet of large and small trucks to ensure delivery and distribution is flawless. In this case, the company faces a potential opportunity of contracting distribution services from other companies within the UK. However, based on cost-benefit analysis, the contradicting of distributors is beneficial in the short run and uneconomic in the long run. Thus, the launch will consider additional budget for acquiring both short and long haul fleets after every quarter of the company’s financial year. This move will be sponsored by the parent company, Almarai whose financial strength will facilitate gradual acquisition of company-owned fleet to distribute products within the target market. In addition, logistics strategies for cutting back on inventory costs will consider the application of cross-docking distribution which allows inventory to be distributed from central warehouses whose accessibility by target market efficient enough to cut back on inventory management costs. 3.6 Conclusion and Recommendations While the UK market is perceived as a reliable or sustainable business environment, it is observed that the market is comprised of competitive forces that encourage and discourage business sustainability. Among the positive points include the role played by the technological environment which allow companies to use virtual resources such as online ordering and marketing for the company. In addition, it is observed that factors such as high population exceeding 64 million provides sufficient market for current products and offers an opportunity backed by calm political environment and legal constraints which balance the marketing environment for both large and small scale. In this case, the introduction of L’usine brand will take into consideration factors such as the social order within the market to acquire a business partner to offer valid market information and provide an integration platform for the brand. The current products will be modified based on customer demand and health sensitivity of the UK market. While products such as Allied Bakeries’ Kingsmill loaf have historically garnered positive reviews, it is recommended that the launch of the L’usine considers reception in order to predict product performance. The analysis results will ensure the market demand forecasts can show product reception in different demographical segments. In addition, based on social movements requiring health eating, it is recommended that the company considered printing health risks of its products as part of promoting ethical business operations as well as corporate social responsibility. References Allied Bakeries. Fast Facts. Accessed online on May 10, 2015 from www.alliedbakeries.co.uk/about-su/fastfacts. aspx Almarai. (2015). L’usine. Accessed online on May 10, 2015 from www.almarai.com/en/brands/lusine Bakers Federation. (2015). UK Bread Market. Accessed online on May 10, 2015 from www.bakersfederation.org.uk/the-bread-industry/industry-facts/2012-01-23-15-54-03.html Duray, R., Ward, P., Milligan, G. & Berry, W. (2000). Approaches to mass customization: configurations and empirical validation. Journal of Operations Management 18. 605–625 Europa. (2014). European Union. Accessed online on May 10, 2015 from www.europa.eu/about-eu/countries/member-countries Silver, G., & Slack, N. (2001). Exploring the Trade-off concept. International journal of Operation & production management, Vol. 21 No. 7; pp. 949-964 Read More