An Outline Marketing Plan for Atlantic Quench Cranberries - Report Example

An outline marketing plan for Atlantic Quench Cranberries Atlantic Quench Cranberries (AQC) is a renowned fruit juice provider, which is headquartered in the US but operate successfully in the UK. The core product of the company is cranberry and it aims at providing different fruit juices to the customers, It has also introduced low sugar level fruit drinks to cater the changing demand and taste of the population in the UK. The fruit juice industry in the UK has encountered severe challenges due to the change in taste and preference of the consumers. Growing obesity and diabetic problems have forced the consumers to change their life style and consume low calories and sugar content food and drinks so as to avoid the diseases. This has resulted in switching of sweetened drinks to sugar free ones; hence there is a drastic impact on the business of the fruit juice manufactures like AQC (Case study). The paper highlights the marketing plan for AQC, which is headquartered in US and ventured in the UK. The marketing plan gives emphasis on the marketing strategies that should be implemented by the company in order to sustain in the long run. The marketing plan highlights the Porter’s five forces of the fruit juice industry, SWOT analysis of AQC followed by the pricing strategy and implementation plan. A budget is also provided, which depicts whether the plan has the ability to draw profit for the company. The findings of the paper indicate to the fact that the marketing plan is successful to draw increasing profit for AQC during the next few years. Table of Contents Abstract 2 Chapter 1 Introduction 5 Chapter 2 Current marketing situation 6 2.1 Internal Analysis 6 2.1.1. Market Description 6 2.1.2. Product Review 7 2.1.3. Competitive Review 8 2.1.4. Distribution Review 8 2.2. Macro Environment Analysis (Porter’s Five Forces analysis) 9 2.1.1 Bargaining power of buyers: Moderate 9 2.2.2. Bargaining power of suppliers: Moderate 10 2.2.3. Threat of Rivalry: High 10 2.2.4. Threat from substitutes: Weak 11 2.2.5. Entry Barriers: High 11 Chapter 3 SWOT analysis 12 3.1 Strengths 12 3.2 Weaknesses 12 3.3 Opportunities 13 3.4 Threats 13 Chapter 4 Objectives and issues 14 4.1 Objectives 14 4.2. Issues 14 Chapter 5 Marketing strategy 15 5.1. Positioning 15 5.2 Product strategy 15 5.3 Pricing strategy 17 5.4 Distribution strategy 17 5.5 Marketing Communication Strategy 18 Marketing communication is weak in case of AQC as they do not communicate with their customers directly for selling purpose. Nevertheless, in order to develop a strong customer’s base, the company has to formulate good communication strategy. AQC can open direct stores, which will allow them to communicate with the customers and it will also help in increasing the knowledge of the customers to a great extent. An interactive website will also help the company to interact with the customers and also build good relationship with the shareholders. 18 5.6 Marketing research 18 Chapter 6 Marketing implementation 18 Chapter 7 Budget ($) 19 Chapter 8 Control 20 Bibliography 23 Chapter 1 Introduction The global smoothies and fruit juice market is encountering challenges from health charities and organizations due to the high levels of sugar content in the drinks and their supposed contribution towards obesity (Lanschützer, 2013b). In the UK, the value for these products is expected to grow by 10% during 2008-2013, however, the sales volume declined by 8% during this period of time (Lanschützer, 2013a). The business suffered due to the changing of spending habits of the consumers, as the price of fruit drinks and smoothies are higher as compared to soft drinks (Szajdek and Borowska, 2008). Hence, it is difficult for the fruit juice providers to market their products in such a volatile situation. Health has become a serious agenda for the consumers’ around the globe and thus the fruit juice industry has come under the radar of health organisations as the drinks contain high level of sugar content. Hence, it is difficult for this fruit drinks provider to market their products in such a volatile market. However, it is expected that the fruit juice market will encounter 13% growth in terms of value by 2018 (Lanschützer, 2013a). In light of this, a marketing plan is prepared for the renowned US based agricultural cooperative, Atlantic Quench Cranberries (AQC), who is eager to increase its market share in the UK by selling canned fruit drinks. The report highlights the marketing plan that can be followed by AQC in the next year so that it can capture new market and expand the existing ones in the UK. Despite the market situation, AQC is determined to increase its market share in the UK as they provide low sugar content and calorie products to the consumers. Therefore, the marketing plan depicts all the processes that are undertaken by the company to reach its goal (Westwood, 2002). Chapter 2 Current marketing situation 2.1 Internal Analysis 2.1.1. Market Description The growth rate of the UK fruit juice industry till 2013 is 10%; however, the sales volume declined indicating major changes in the consumption pattern of the consumers. The major issues that can be encountered by the industry are related to health concerns, price competition and change in consumer demand. Despite this challenges the fruit drinks market is expected to grow in value by 13% by 2018 (Lanschützer, 2013a). The assumption is based on a number of factors that will fuel the growth, such as improvement in confidence of the consumers on fruit drinks, economy recovering from recession and lastly the rise in number of households (Wang, Bleich, and Gortmaker, 2008). In light of this prediction, the following graph is provided for elaborating the future state of the UK fruit juice industry: Figure 1: Growth in the UK Fruit juice industry (Source: Hucker, 2014) The fruit juice industry in the UK can be divided into three major divisions: fruit juices, juice drinks and energy drinks. As per the above figure, the fruit juice division demonstrated the weakest growth during the period 2013-2018. The reason behind this weak growth can be defined through the consumer behaviour; they are becoming more health conscious and aims at consuming less calorie drinks and juices, which can save them from obesity. The market segment for the AQC products can be divided into three major segments according to age groups: 15-35, 36-55 and lastly 55 and above. It is observed that the number of consumers above 65 years is going to rise in the next few years and the customers within the age limit 15-35 years will decline, who are the main customers of AQC. Hence, AQC should undertake serious efforts in developing the products that can be served to the old age groups so as to sustain in the market and also capture a good market share. 2.1.2. Product Review Consumer behaviour plays a vital role in acceptance and success of a particular product range. There are other factors that can influence development of new products so that it can meet the needs of the customers. AQC has given effort in catering the needs and requirement of new and existing markets by developing range of new products. It specializes in providing fruit juices but also sells dry cranberries (Crantanas). It has divided its product into two main divisions: juice and non-juice drinks; cranberry is the core flavour. During 2012, AQC introduced low calories fruit drinks that included blackcurrant and cranberry, raspberry and cranberry and lastly mango and cranberry. The company is encountering more than 7% growth in sales for the past four years (Case study). It has gained competitiveness by capturing majority of the market in the UK; however, due to the changing consumption pattern of the consumers, the total volume of sales is expected to decrease in future. Despite the challenging condition in the UK market, the consumption of product Crantanas has increased by 26%; this has encouraged the manufacturing capacity of Crantanas. The company also creates innovative products, which contain reduced calorie such as Cranzeal. During 2007 total sales value of the products of the company was recovered as $1.7 billion. Moreover, Cranzeal generated $ 150 million revenue for the company (Case Study). 2.1.3. Competitive Review There is a tough competition in the UK market with regard to soft and fruit drinks. For this reason, AQC is challenging situation in sustaining its market share in the UK. The main competitors of AQC are Coca Cola and Tropicana; they have captured significant portion of the UK market i.e. 23% and 15% respectively (Lanschützer, 2013a). Apart from that, the private retailers have also captured 37% of the market (Companies and Markets, 2014). The major competitors of AQC are PepsiCo and Coca-Cola, whose growth is highly dependent on sales of fruit juice and smoothies. The competitors aim at promoting the health drinks for the UK consumers. Coco-Cola has acquired Innocent Drinks in order to deliver healthy and natural drinks to the consumers (Innocent, 2014). Thus, it can be stated that the Fruit juice industry of the UK is highly competitive for AQC to launch new products. 2.1.4. Distribution Review AQC has developed strong distribution channel. During 2013, AQC have signed licensing agreement with Gerber, for manufacturing and distributing juice drinks. Gerber is regarded as the largest fruit juice and juice drinks supplier in the UK; sales exceed 800 million litres per year. The figure assists in describing the distribution channel of AQC. Figure 2: Distribution channel for fruit juices (Source: CBI, 2014) The distribution channel for AQC starts with the producer, which is the company itself. After the juice is produced in the factories, it is delivered to the compound house and processing units to further improvement of the fruit juices. Thereafter, it is transported to the retailers and wholesalers in the UK market. The major competitors of AQC employ three alternative houses for distributing their products such as SVZ, Döhler-Eurocitrus and Cargill (CBI, 2014). Other major competitors in the fruit juice industry employ multiple distribution channels to reach greater number of consumers (Linden, 2005; Porter, 2013). 2.2. Macro Environment Analysis (Porter’s Five Forces analysis) 2.1.1 Bargaining power of buyers: Moderate The fruit drinks and soft drinks are distributed to the consumers in the UK through the hypermarkets and supermarkets, which accounts for about 55% of total sales volume (Market Line, 2014). Hence, the main buyers of these products are retailers of beverage and food. The markets in Europe are highly concentrated with large number of supermarkets like Tesco, which is the most dominant player in the UK. It strengthens the power of the purchasers. The retailers demand for the best services and shorter period of delivery from fruit and soft drink companies (Market Line, 2014). Consumers in the UK are affected by the brand names, which reduces the buyer power. Hence, it can be stated that the purchasing power of the buyers are moderate in the UK market. 2.2.2. Bargaining power of suppliers: Moderate The power of the suppliers in the UK market is moderate. This is because the raw materials or inputs required for preparation of the fruit drinks are substitutable and subject to price fluctuations. The raw materials such as fruits and artificial ingredients are available to every supplier and thus it decreases their power to ask for higher prices from the fruit drinks companies. Apart from the ingredients, water is an essential input for preparing the fruit drinks. Scarcity of water can cease the operation of these companies (Market Line, 2014). 2.2.3. Threat of Rivalry: High In the UK, the competitive rivalry between the players are strong as all of them are renowned brands and have established their market by attracting new customers. The degree of rivalry among the existing players exerts pressure on the new firms. The main competitors of AQC are PepsiCo, Coca –Cola and other private labels, have developed stiff competition for the company, which is difficult to manage. Strong competitors have employed advanced technologies and have hired technology experts to produce healthy drinks containing less sugar content as per the present market trend in the UK. The rivalry among the existing players will intensify as they have concentrated in providing healthier alternatives to the customers in the UK (Market Line, 2014). 2.2.4. Threat from substitutes: Weak The threat of substitutes is moderately low as there is no direct substitute for fruit juice drinks. However, soft and hard drinks can act as substitutes for fruit drinks. It is observed that the soft drinks providers have introduced flavoured aerated drinks which can be consumed in place of fruit juice. Moreover, increase in health conscious consumers has weakened the threat of substitutes in the UK market (Market Line, 2014). 2.2.5. Entry Barriers: High The strong players in fruit juice industry in the UK enjoy high level of economies of scale (IBIS World, 2014). The brands are difficult to imitate; the financial strength of the companies such as PepsiCo and Coca-Cola have imposed threat on the new players from entering the UK market. Despite of the strong competitive market, new companies can enter market through licensing agreement with the bottling companies. Nevertheless, this option is quite expensive for the new entrants due to high investment. The set up of new venture are highly capital intensive and thus it is quite challenging for the new entrants to enter competitive markets. Chapter 3 SWOT analysis 3.1 Strengths AQC is regarded as the leading producer of bottled and canned juice drinks in North America and also the best selling brand since 1981. It has also encountered great success in the UK market. As the market for fruit drinks are volatile and is dependent on the climate change, AQC responded to this situation very tactfully by reducing marketing and advertising budget. The New Product Development (NPD) department is significant for success of AQC. Company has established strong association between the suppliers, which forms competitive advantage (Pride and Ferrell, 2011). 3.2 Weaknesses The foremost weakness of the company is the competitive market, where there are string of players such as PepsiCo and Coca-Cola. For this reason the company is unable to increase its market share in the UK market. The changing taste and preference of the consumers in the UK towards healthy food items and drinks is depicted as weakness of the company, as it resulted in loss of markets share. The consumers in the UK market have lost confidence in purchasing cranberry juices; this has affected the sales of the company as cranberry is the core product. 3.3 Opportunities Due to the increase in demand for healthy fruit juice, there is an opportunity for AQC to introduce new drinks that will cater to the needs of the majority of the consumers in the UK. According to the market projections, there will be no sign of future decline in demand for convenience fruit drinks, thus this is a great opportunity for the company to cater the needs of the new markets and launch new fruit drinks apart from cranberry. AQC has the opportunity of targeting those consumers who are health conscious and prefers to consume low sugar content drinks in forms of fruit juice. The company can also tap those markets where the consumption of fruit juice and smoothies are not prominent. There is an increase in impulse purchasing in the UK market, which is a great opportunity for the company to increase its sales. 3.4 Threats The major threat for AQC in the UK market is the high level of competition. This have affected the business to a great extent as the competitors provided healthy fruit drinks that are preferred by the consumers because of shift in trend. Change in taste and preferences of the consumers play an important role in threatening the sales of the company; as the consumers do not prefer cranberry juice any more. These have affected the sales of AQC to a great extent. Chapter 4 Objectives and issues 4.1 Objectives The main objective of AQC is to increase its customer’s base and market share by 2% through strengthening of its present market position in the UK. According to the market research report, the demand for fruit juice will increase by 13% by 2018 in the European Union (Market Line, 2014). Conversely, the sales of these products are going to decrease in Germany and the UK. Hence, the situation is quite challenging for AQC to increase its market share in the UK. However, it is immensely important for the company to concentrate on the health conscious food and drinking habits. If the company is successful in attracting more customers and improve its market share, then AQC will gain customers of carbonated drinks. This can even change the drinking habits of the individuals in the UK and make them healthy and fit in their daily life. 4.2. Issues Presently, the individuals in the UK have become health conscious and thus aims at avoiding high sugar content drinks and food items. In order to sustain in such a market, the primary issue of AQC is to manage the sugar level of the fruit drinks so that they can guarantee healthy food habits to the consumers. A recent survey in the UK reflected the fact that juice drinks and fruit drinks that are prepared exclusively for the children contains high levels of sugar and it is equal to that of carbonated drinks, which are injurious to their health. They need to consume healthy fruit juice which will prevent them from future diseases such as obesity and diabetes (Case study). The growth rate of obesity among the consumers has forced them to avoid cranberry juices, which is the core ingredient of AQC. Hence, it is difficult for the company to survive in such a market till it strategize their products to cater the needs of individuals in the UK. Moreover, another issue that bothered the company is failure to harvest adequate cranberries, which led to insufficient supply of fruit drinks in the market. Chapter 5 Marketing strategy 5.1. Positioning According to marketing management theories, Segmentation, Targeting and Positioning forms an important part of the literature and also marketing plan as it enhances the strength of the products that is going to launch before the customers. If the customers are well aware of the specifications of the products then sale are inevitable (Dahlstrom, 2010). Positioning of a product is very important for its success since the consumers in the UK are eager to purchase healthy fruit juices, only if the products can derive emotional and functional benefits from the product (Loudon and Della Bitta, 1993). In order to position the products in the UK market, AQC can highlight on its most important features i.e. the fruit drinks are fresh and nutritious. Moreover, the fruit juices does not only offer great consumption experience to customers but it will also deliver particular health benefits that will protect from respiratory disorders and urinary tracts infections. 5.2 Product strategy Before devising in any product strategy, the companies closely study the perception of the consumers regarding the product. This strategy assists the company to place the products in the target market after ascertaining the taste and preference of the consumers in that market. The product strategy can be explained with the help of Ansoff matrix: .Figure 3: Ansoff Matrix (Source: Ringland and Young, 2007) The target market of AQC is divided into different age groups such as 0-14, 15-24 and 44-55 and 55 and above. According to market report, it is observed that proportion of customers of 50 years age and above is going to rise in the next few years. Moreover, it can be stated that vegetable and fruit juice combined together can develop such products which will be beneficial for the health of this group of customers. Hence, AQC should undertake devise of new market-market development strategy in order to acquire strong customer base and spread awareness regarding the new products. 5.3 Pricing strategy AQC can target different niches of the market; hence, the pricing can be set accordingly. The company produces differentiated products, which aims at fulfilling the taste and preference of the consumers. If the products satisfy their needs then they are ready to sacrifice any price. Specifically, AQC can adopt price skimming strategy which can help them in rapidly gaining their capital investment and also enhance the product longevity in the market providing a scope for larger consumer brand awareness. 5.4 Distribution strategy The company distributes its product through Gerber in the UK market; however, its competitor has multiple distribution channels such as Cargill and Döhler-Eurocitrus so that they can communicate with the consumers easily. Therefore, it is highly recommendable that the company should employ strong distribution channels in the UK and establish good relation with the distributors. Moreover, multiple distribution channels will assist the company to maximize its revenue. The AQC have involved in strategic alliance with Coca-Cola and have maintained good relationship with the suppliers. This strategy can induce innovation in supply chain, which act as source of competitive advantage. 5.5 Marketing Communication Strategy Marketing communication is weak in case of AQC as they do not communicate with their customers directly for selling purpose. Nevertheless, in order to develop a strong customer’s base, the company has to formulate good communication strategy. AQC can open direct stores, which will allow them to communicate with the customers and it will also help in increasing the knowledge of the customers to a great extent. An interactive website will also help the company to interact with the customers and also build good relationship with the shareholders. 5.6 Marketing research AQC conducts research at three important areas such as impulse purchase, nutritional requirements of the products and convenience snacking. All this areas are significant for the success of the product as it determines the taste and preference of the consumers to a great extent. The needs of the population are determined in through online and offline survey. The main respondents of the survey are customers, distributors and retailers of fruit juices. This survey will help AQC to determine the exact taste and preference of the UK market. However, it will also assist the company to spread awareness regarding the new product. Chapter 6 Marketing implementation The marketing plan will be implemented after following the basic steps, which are discussed henceforth. Firstly, the internal issues are solved that provides strong evidence of a good management with efficient employees. In this stage not only the internal issues are rectified, in fact the external issues such as complaints pertaining to the content of fruit juice are also solved. Secondly, the consumer segments are identified followed by the target market. This is done in order to develop the business successfully and cater to the needs and exact requirements of the customers in the UK. However, after the target market is determined, the distribution channel is ascertained, which will ensure that the products are delivered to the customers through reliable and efficient channel. Lastly, the promotional activities are produced, which will spread awareness reading the product among the mass in the UK. For implementing the marketing plan the following financials are taken into consideration. The total marketing budget is assumed to be $ 2,500,000 dollars. The personnel expenditure is expected to be $5, 00,000 dollars. Other expense includes offline and online advertising, promotional plans and research development, which is significant for the growth of AQC in future. Chapter 7 Budget ($) The budget denotes that after implementing the marketing plan, the company will be successful in earning increased profit over the next years. Hence, the plan is deemed successful. Chapter 8 Control The main control of the marketing plan will be directed towards reduction of the operational expense that will readily increase the profit of the company. The cost of production process can be reduced by streamlining the activities. The cost of inventory will be reduced by taking into consideration the production volume. The logistics should be managed in such a way that there is no delay in delivery of the products to the customer. Hence, all the operations are to be controlled efficiently in order to achieve operational excellence in the UK market. Reference List CBI, 2014. Trade Channels For Market Entry. [pdf] Available at: [Accessed 26 November 2014]. Companies and Markets, 2014. UK fruit juice market led by Tropicana with a 15% value share. [online] Available at: < http://www.companiesandmarkets.com/News/Food-and-Drink/UK-fruit-juice-market-led-by-Tropicana-with-a-15-value-share/NI7484 > [Accessed 26 November 2014]. Dahlstrom, R., 2010. 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