Marketing Plan for Riverford - Coursework Example

Marketing Plan for Riverford Marketing Plan for Riverford Riverford are a family, privately owned business, which specializes in growing, packaging and delivering wholly organic fresh seasonal produce to customers. Riverford is one of the fastest growing UK businesses (Times 100, 2010). Riverford currently deliver around 47,000 boxes a week to homes around the UK from about 5 regional sister farms. The company was started 1950 by john Watson Each farm has a group of local growers. Green part of the world being closed Totnes in 1980’s the Riverford was much smaller market, niche market (Times 100, 2010). Farm in the Tiegn valley had already started this idea and they were selling 5000 to 7000 boxes initially and now they selling 47000 boxes per weak. Recession hit organic market very bad 15-25% downturn and now time is gradually improving. Riverford spent approximately £500,000 on promotion. In addition, it costs Riverford approximately £250,000 to reach out to various families while making necessary deliveries. Riverford is also provide soups, breads and milk but in not big demand. Riverford has got only 360 cows, which is 25litre of milk per day. Riverford is promoting the product by using restaurant inside in the company and how chefs making menu food. Riverford is located in Buckfastleigh, Devon TQ11 0JU, and UK. Riverford Organic was set up with the aim of making organic food more accessible and affordable. Every vegetable box from Riverford comes with a weekly newsletter, including recipe suggestions. Financial summary Riverford has been responsible for delivering organic fruits and vegetable to more than 40,000 homes to keep the health of these individuals at a higher level and satisfy the craving to lead a substantial life (Asprin Group 2004, p1). The mode of sales has been recorded through lining the individuals to the best sales representatives. However, internet has been used to advertise the new delivery system that promises to deliver faster services to the clients. The service promises to reduce travelling and advertising costs that have proved a leading setback in the market (Tungate 2007, p28). The measure has also downgraded the staff level into a manageable number with the delivery system maintained. Cost of the merchandize transacted The summation of the products sold to the clients within the next three years will be obtained from the sellers who have been tasked with keeping a record of the orders completed (Kotler, Keller, Brady, Goodman, and Hansen 2009, p16). Based on the past records, the records have suggested that Riverford affords to deliver to at least 600 homes within England on a daily basis. With the launch of the website service, the number is expected to rise to a minimum of 1000 deliveries daily. The transport cost per delivery is expected to cost 15% of the total delivery made, generating a profit of 23% of the total expenses used in production. The costs of internet services included in the profit ratings include $235 per month, which includes the e-mail service fee. Other Costs The number of trucks to be added in the new delivery routine is expected to be added in the field. The total cost per truck will hike by 10% within the next two years costing $500,000 per truck. The growth would be based on the ability of the company to employ new employees on the management field with four supervisors on the new branches to cost $2500 monthly. The demoted clients are to be compensated as they have helped generate the needed profit and will cost the company an additional $5000 annually for the next three years. The money used in rent for the new offices to be established to complement the existing blocks is estimated to be costing the financial departments a total of $4, 500/month. The other facilities needed would be new refrigerators to preserve some of the products and extra expenses on the packaging that would utilize the biodegradable packing bags to preserve the environment. There is the need to engage in other marketing ventures to sell the newly attained idea to present online marketing franchise (Baker & Hart 2007, p34). The marketing ventures would include presenting the products on online magazines, covering magazine ads and utilizing community advertising spaces. The company wishes to extend the services to a market beyond the UK presentation hence the desire to collaborate with major restaurants like McDonalds. This would cost an added fee of $1500/month in employing skilful advertisers. The above mentioned criteria can be analyzed to present the vision to present the new service on the desired demographic. The leading groups to be served would be included in the family and company setting (Kotler, Keller, Brady, Goodman, and Hansen 2009, p41). Break even To achieve the desired goods for retention of the employees and deficit the expenditure, there is the need to produce monthly sales of $50, 000 to cater for the incurred costs. The assumption would be placed in the need to venture into new strategies of advertising and completing the sales. The company expects to realize elimination of the competition from small-scale businesses and adopt the system of product selection and delivery. Analysis of Breakeven Fixed Costs; The following will make up the fixed costs of Riverford based on the above financial and cost summary: Trucks $500,000 Demoted Clients $5,000 annually Promotional Services $1,500 per month Management $2,500 monthly Rent $4,500 per month Internet Cost $235 per month The above costs will remain irrespective of the deliveries made to the homes by Riverford. Therefore, in order to work on a monthly basis, all costs apart from the costs of the truck are converted to monthly costs and then added to find the total fixed costs as illustrated below: Demoted Clients $417 monthly Promotional Services $1,500 per month Management $2,500 monthly Rent $4,500 per month Internet Cost $235 per month Total Fixed Cost likely to be incurred $9,152 every month The above calculations take into account that the cost of the truck will have to be catered for throughout the entire period until it is written off. Variable Costs: Transport Costs 15% of the total delivery made Therefore, since for breakeven analysis variable cost is calculated per deliver; the variable cost will be 0.15 (15% of the total delivery assuming total delivery is 100) Selling Price Sales $50,000 monthly (30,000 deliveries in a month) Since the total expenditure is not provided as it is comprise of both variable and fixed costs, the idea of profit being contribution will be used instead; Profit 23% of the total expenses Like variable costs, breakeven analysis uses the selling price less variable cost, which in essence is the contribution. The contribution is the same as the profit = 0.23 Therefore, the selling price will be 0.38 Therefore, from the formula; = 39,792 deliveries have to be made at breakeven With the introduction of the internet services, it is assumed that Riverford will be making approximately 1000 deliveries on a daily basis. However, this taking into account all the associated costs will not be sufficient to breakeven. Riverford should therefore make sure that during a given month approximately 39,792 deliveries are made. Sales forecast The sales have picked up since the company started supplying fruits to the customers who appreciate a wider concentration of the products needed. There company also presents an establishment of the branches that not only specialize in the vegetables, but also witness participation in producing juice that sells the Riverford brand. The strategy applied to boost sale has been through the merger with other suppliers in Pimhill organic, Cropwell bishop, Mandy Johnson and Godminster. The strategies to be applied to increase the sales would be included in an annual rotation of the selected schedule. The presented data issues the sales expected within the next three years with the mode of advertising to be applied 2012 2013 2014 Printed ads 68% 63% 58% Internet 65% 69% 80% Other 70% 73% 71% 2012 2012 2014 Printed Ads 68% 63% 58% Internet 65% 69% 80% Other 70% 73% 72% Average 67.7% 68.3% 70.0% From the above figures, it is established that there will be growth in sales due to the three factors; printed ads, internet, and others. Therefore, there is need to obtain an average growth of sale that will be as a result of the three aspects within a given year. The graph below indicates the rate at which sales will grow over the next three years: In 2012, Riverford made sales of approximately £39.5. From this basis, it is possible to calculate sales forecast for Riverford for 2012, 2013, and 2014 given the above average growth rate as a result of establishment of the internet services. 2011 2012 2013 2014 Sales (Growth rate) 67.7 68.3 70.0 Sales Forecast £39.5 £66.24 £111.48 £189.5 Interpretation The data suggests that the consumers would be willing to invest in the internet a mode of service delivery as compared to printed ads. The presentation can be extended to the social networking system that has gained recognition as a modern communication tool to invest in the desire to complete tasks. The use of the form would be increased over the years to create room for creativity in delivering cheap services and an increased convenience level. However, there would be other forms of advertising including television and billboards that would still remain as preferred source to acquire information (Moutinho & Chien 2008, p65). Riverford plans to invest in all the three modes to witnessed an increased sales rate and inform the new market intended of the services to be offered. Accounts Payable Riverford would need to acquire the necessary funds from eternal sources to cover the extra expenses to be incurred in delivering satisfactory services to the desired market (Riverford.co.uk, 2012). This would include a $30, 250 loan from the bank to be refunded on an interest of 10% of the total amount annually with a deposit of $200/month. The rest would be deducted from the profits made to cover the deficit. Mission statement and Market Overview All this amounts to the Riverford Mission (Riverford.co.uk, 2011): To provide fresh, unadulterated food, produced without damaging the environment, selling certifiably organic products wherever possible. To make shopping at Riverford a pleasurable and educational experience. To provide a service that meets our customers’ expectations, needs and requirements (Riverford.co.uk, 2012). To be a good employer, training and developing a satisfied skilled and motivated team (Riverford.co.uk, 2012). To provide food at prices affordable by customers with a real interest in good, healthy food (Riverford.co.uk, 2012). To trade fairly with our customers and suppliers and wherever possible promote fair trade with the Third World (Riverford.co.uk, 2012). To trade profitably with integrity (Riverford.co.uk, 2012). To develop the business in a proactive manner in order to meet whatever demands might arise (Riverford.co.uk, 2012). Also the main focus of the Riverford is 10 different boxes, which is the cost £8.95 to £17 and Riverford also using leaflet as a promotion of the business to attract their customers (Riverford.co.uk, 2012). Riverford is also trying to promote more seasonal products for example information in the veg box will be about seasonal products (Riverford.co.uk, 2012) Market Overview The company has grown to gain recognition within the market as a leading supplier of the products to deliver a variety of assorted vegetables to a market that requires satisfaction on the materials supplied (Moutinho & Chien 2008). The other competitors have been retail stores and small-scale farms that offer similar services at much lower rate. This would threaten to constrain Riverford’s mission and create competition within the market (Riverford.co.uk, 2012). The advantage presented in the company’s operations has been included in the established brand name in the subsequent years. The sales volume for the function of organic modified vegetables segment in the Riverford Organic Company was the most recommendable in 2011 for having the largest volume of in terms of kilograms of vegetable (Riverford.co.uk, 2012). This product segment has shown a steady growth since 2009: an increase over a period of 3 years, which has been an excellent performance for the three consecutive years (Marketingmagazine.co.uk, 2011). The consumption rate per capita in 2011 has reached recommendable measures, which present an equal proportion in increase in profits compared to 2009. The growth of this particular market is largely due to a slow shift in consumer trends (Moutinho & Chien 2008). Change in eating habits has led to a diversified increase in profit. Through in few years back vegetables were equal or even better than other products like flesh in the mind of many of our consumers. In the recent years, however, vegetables have become more popular (Riverford.co.uk, 2011). Today, while the vegetable industry’s value has increased in 2010, the volume sales of vegetables increase is as a result of large proportion of consumers who are opting for the trend towards healthier alternatives hence opting to become vegetarians (Marketingmagazine.co.uk, 2011). Companies have been actively engaged in new vegetable product developments in order to counter the growing concerns about negative health effects, but also to increase the demand in a market where product are now readily available (Moutinho & Chien 2008). The functional market is expected to show sustained growth and consumer interest in the next three years as consumption shifts to trendier, healthier and more complicated products. Table showing expected growth in the next three years. SWOT FOR RIVERFORD The following are strengths, weaknesses, opportunities, and threats that surround Riverford (Riverford.co.uk, 2012) STRENGTHS Innovative business model which involves growing organic food, working with local farmers and producers to keep food miles low and business close to customers. It delivers and distributes ready packed organic food boxes free of charge Strong brand Small, family business means it is easier to manage and control. Also profits do not have to be paid out to shareholders Fresh, organic, locally produced product range Close relationships with local farmers and producers. Suppliers considered “stakeholders” Closeness to market means business has good knowledge of local market and a close relationship with customers as well as a loyal customer base Wide choice of food boxes available Free deliveries add value to their service Accessible, attractive, user-friendly website and newsletters allow customers to place orders online very quickly and conveniently and keep up with up-to-date product range and seasonal box choices An ethical and environmentally friendly business Reasonably priced products Clear and simple business aims One of the fastest growing UK business in 2010 No middle link required as the chain of production goes from producer direct to consumer WEAKNESSES Business is small, mainly family run and may not be sufficiently equipped to expand, particularly abroad, if it stays small Difficult to achieve economies of scale if production is kept to a small scale. This means prices may not remain competitive Limited marketing budget as this is still quite a small business. This may impact on future growth. OPPORTUNITIES EU funding available for organic food producers and agriculture as a sector in general which could help Riverford expand into the EU and cover set up and training costs The organic food market is growing in volume No tariffs on exports within the EU Harmonised tax and accounting system should make it easy for Riverford to carry out administrative, banking and tax procedures Consumers are becoming more health conscious and more interested in how the food is produced and that it is ethically and environmentally produced and sourced. Studies estimate that the market for organic products is growing by 10-15% a year. THREATS As this is a growth market, competition is also growing, which endangers market share and future growth. Business must stay competitive Large supermarkets more able to compete on pricing may attempt to enter this market The Riverford organic food box concept is relatively easy to copy Seasonality of production and weather conditions may impact on sales Exchange rates fluctuations may impact on company’s profits i.e. shifts between the £ and the Euro Business has to comply with local laws and regulations as well as with EU and UK standards. This may require changes to packaging, production, marketing and prove very costly Sales of organic food fell between 2008 and 2009 due to more cost conscious consumers adjusting to the “credit crunch”. Farm shops and home deliveries organic food boxes schemes also suffered during the recession and sales dropped by about 20% (www.mailonline.co.uk 12/4/10) An idea for a new product or service for the company Every product is subject to repetition including an increase chapter followed by a maturity chapter and finally an eventual period of decline as sales reduce. Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves through each stage in the market (Marketingmagazine.co.uk, 2011). The marketer must also consider the additional products. The new product to be included within the next three years would be the involvement in supplying food supplements that promises to compete for the market share grabbed by other commodities. This would be evident in Riverford practising the need to supply other food products (Riverford.co.uk, 2011). The food products would contain ingredients to cater for protein and carbohydrate nutrients. The provision promises to satisfy the leading objective in delivering a healthy family within Riverford’s market setting (Marketingmagazine.co.uk, 2011). The nature to be used in advertising would involve the incorporation of social media network in the operations of sales and advertising. The market is bound to increase with majority of the UK population engaging in social networks in twitter and facebook. Marketing objectives and strategies If you have numerous objectives, ensure they are steady and not in disagreement with each other. It is appropriate to be sure that the other marketing plan mechanism - the advertising method, financial plan, achievement programs, controls and measures hold up your advertising objectives (Marketingmagazine.co.uk, 2011). The advertising plan part of your arrangement summarizes your game arrangement to attain your advertising objectives (Shimp 2007, p12). It is, fundamentally, the kindness of the advertising plan. The marketing policy part should contain information about: Manufactured goods can be an objective item, a repair, or a plan. Keep away from conversation to a great deal you could without doubt say the erroneous thing and end up removing yourself right away of a contract. Only increase on your point if you are asked precise question about your idea. Register the value of your goods and explain without showing how you came up with calculations. List price ranges for product lines only (Marketingmagazine.co.uk, 2011). For instance, if your manufactured goods are a line of cosmetics, include information in this strategy section about your lipsticks. Consumers may take their product in bulky address then in terms that suits the firm for example in carton or dozens. Rather than a detailed product price list that may look cumbersome to customer (Klein 2010, p19). Describe any price elasticity or negotiating opportunity, as is common with bulky purchases such as cartons. Draw round any discounts you offer for the long-term customers, bulk purchases or on time payment. It is advisable; include the terms of sale, that every consumer or buyer should adhere to if he is going for extended payment plans, and whether you agree to credit cards. If you are not excellent at presentations, moreover exceed on the responsibility to your associate or hire an important person to approach with you to the gathering to carry out the main part of the arrangement, as you explain positions and respond any question from your viewers. Polish you are thought to near perfection. That means if you still have a few snags in a new computer program that you have developed, take the time to iron them. Investigate, and then experiment your point again prior to going into any appearance. If your thought is a new result or repair, have it untested or have the manufactured goods name trademarked if it is central to the concept. Prepare a small folder of information regarding your idea for each meeting attendee The Forecast and Budget Builder Excel is a streamlined tool for developing a 3-year business forecast and a 12-month budget. It requires minimal inputs and generates Optimistic to Pessimistic forecasts for your business. From your forecasts, a 12-month master budget is built. You then have the capacity to refine this budget as required. The methodology used applies relationships between current data and relative indicators for future performance to produce a verifiable budget quickly and easily. This forecast and budget tool can be utilized for existing and proposed businesses, products, or services. Outputs include a 3 Year Forecast with Sensitivity Analysis, and a Budget by Month in tabular and graphical form. The leading strategies to be applied in the market include, Utilizing updated measures to complete the advertising process, preferably in social media and internet technology Taking advantage of the established position in the market niche and engage in expanding the brand name The other strategy applied would be through using other companies that promise to deliver a consistent brand name through their established networks. These companies have been named in the above section that includes sales forecast Riverford’s objectives The objectives are included in maximizing on the profit generated to reach a maximum peak within the next three years To develop strategies that retain the market share gained To acquire a suitable Market that would promise to sustain the companies missions and ambition to gain added results in achieving growth To present a competitive platform that delivers satisfaction to the customers who enjoy the presentation in the products delivered in Riverford’s branch and the partners. These objectives are aimed at aligning the leading goal of profit maximization through promising a consistent service delivery on presenting a sustainable environment to deliver high quality services. The other joint objective has been extended to the customer’s satisfaction who develop the realization to achieve the expansion needed to deliver objective completion (Lindstrom 2008, p18). These have been the basis applied in the subsequent years and would be carried to the preceding three years. References Asprin Group (2004), Aspin management system, retrieved on April 5, 2012 from: Baker, M & Hart,S , (2007), Product Strategy and Management, London, FT Prentice Hall. Kotler, P, Keller, KL, Brady, M, Goodman,M and Hansen, T, ( 2009), Marketing Management. New York, Pearson, Prentice Hall. Klein, N, (2010), No Logo Fourth Estate, 10th Anniversary Edition, New York, Pearson. Lindstrom, M, (2008), Buyology, How everything we believe about why we buy is wrong, New York, RH Business Books. Marketingmagazine.co.uk, 2011. Brand builders: Riverford farm. [Online, cited] Moutinho, L & Chien, C, (2008), Problems in Marketing, Applying Key Concepts and Techniques, London, Sage. Riverford Organic Veg (2012), Find the right box for you, retrieved on 5 April 5, 2012 from: Riverford.co.uk, (2011). About us. [Online, cited] < http://www.riverford.co.uk/sacrewell/about_riverford/franchise_with_riverford/the_sums/> Shimp, T, (2007), Integrated Marketing Communications in Advertising and Promotion, Thomson, Southwestern. Tungate, M. (2008) Fashion Brands, Branding Style from Armani to Zara, London, Kogan Page. Tungate, M, (2007), ADLAND a Global History of Advertising, London, Kogan Page. Zeithaml,V , Bitner, MJ & Gremler, D. (2009) Service Marketing, New York, Mc Graw Hill International . Read More