Marketing Plan for the Next Three Years for Greggs Plc - Report Example

Topic: MARKETING PLAN FOR THE NEXT THREE YEARS FOR GREGGS PLC Contents Chapter Introduction 2 Chapter 2 Current marketing situation 4 2.1 Internal analysis 4 2.1.1 Market description 4 2.1.2 Product review 5 2.1.3 Competitive review 6 2.1.4 SWOT analysis 7 2.2 Macro Environment Analysis 8 2.2.1 Bargaining power of buyers 8 2.2.2 Bargaining power of suppliers 9 2.23 Threat of new entrants 9 2.2.4 Threat of substitute products 9 2.2.5 Intensity of competitive rivalry 10 Chapter 3 Marketing strategies and Objectives 10 3.1 Marketing strategies 10 3.2 Objectives 11 Chapter 4 Marketing implementation 11 Chapter 4 Control and Evaluation 14 Chapter 6 Conclusion 15 References 15 Chapter 1 Introduction A need for a marketing plan for Gregg plc in the next three years is very necessary at this particular time of the company’s operations. This assertion is made based on the trend and outcome of the company’s financial trends in the past three years. As the largest bakery chain in the UK, continued to experience growing and increasing gross profit, which is an indication for the company to have sustainable marketing plan which ensures that this position it has taken continues to be consolidated. Another impressive statistic about the company is its ability to reduce its operating income by the years and yet maintained a growing profit (Ford, 2014). With a marketing plan that will ensure that the company maintains such trend of growth, it is possible that the enviable first spot taken by the company will continue to be maintained (UK Business Park, 2013). Figure 1: Comparison between Gregg plcs operating income and gross profit Source: Yahoo Finance (2014) Chapter 2 Current marketing situation 2.1 Internal analysis 2.1.1 Market description Gregg plc operates in the bread and baked goods industry in the UK. This is a market that has experienced massive growth over the past decade with increasing demand for products. In the period of 2009 to 2014 however, there was a margin decline in volume sales of 1% (Ford, 2014). There are six major segments of the industry, which influence the market segmentation used by Gregg plc and other competitors. They are craft bakers, in-store bakers, rolls, speciality bread, sweet baked goods, and pre-packed bread (Rankin, 2013). Below is a graph that shows the retail value of each of these key bread and bakery goods. Figure 2: UK Retail value sales of the bread and baked goods industry Source: Ford (2014) 2.1.2 Product review As far as products are concerned, BBC News (2013) observed that there are several products that are offered as part of the bread sector as well as the baked goods sector. In the past three months, there have been those products that can be considered as heavily purchased and those that are least purchased. Relating sales of the products to prices, Manning (2009) observed a trend whereby products with the lowest prices on the market are those that have mostly enjoyed higher volumes of sales. Figure 3: Bread products bought in the past 3 months Source: Ford (2014) Figure 4: Baked goods products bought in the past 3 months Source: Ford (2014). 2.1.3 Competitive review As a member of the bakery group of the food industry, it is important to differentiate Gregg plc as a retailer from manufacturers. As far as retailing in bakery and break products are concerned, three major competitors can be identified. These are Tesco plc, Whitbread plc and McDonalds Restaurant ltd. Using the bread and baked goods component alone for analysis, Martin (2012) saw Gregg plc as the market leader having 1,671 outlets specialized in savoury products alone. Gregg plc’s major strategy has been through massive publicity, advertisement and promotion, including the use of celebrities. It also believes in cost leadership and universal distribution (Webb, 2013). The competitor share is depicted for products in the two sectors with the graphs below. Figure 5: Competitor position of bread and bakery goods in UK Source: Ford (2014) 2.1.4 SWOT analysis The SWOT analysis performed below is aimed at helping Gregg plc identify what its current strengths are and what its weaknesses are. Based on these, it company will know opportunities that promote growth which it can take up. It is also possible to know areas of threats that the company has to be aware of in undertaking its business. Strength Weakness Nationwide distribution due to numerous chain of shops Strong brand recognition Celebrity endorsement Criticism for unhealthy food menu Low differentiation High employee turnover Opportunity Threat Increasing demand for healthier food Expansion of electronic commerce Home meal delivery Open market structure allowing more new entrants Increasing activities of pressure groups against junk food Saturated local market 2.2 Macro Environment Analysis 2.2.1 Bargaining power of buyers Chaudhuri (2006) described the food industry as one that has a very high level of bargaining power of buyers. The situation has been attributed to the high number of service providers, most of who reduce prices as a way of attracting buyers. This situation has given buyers much urge to dictate to others who are not ready to use similar strategy to reduce their prices (Taft, 2002). As it was pointed out in the SWOT analysis, Gregg plc uses differentiation and so it is expected that it would have a way of controlling bargaining power of buyers. Specially, it is expected that the company will add customer loyal programs to its differentiation strategic option to retain customers (Cahill, 2011). 2.2.2 Bargaining power of suppliers Suppliers are very useful in the food industry for the supply of raw materials. Specifically for the bread and bakery goods retail sector, insiders have greater need of suppliers who must make fresh products available on a constant basis. Luckily for Gregg plc, there are as many suppliers as can meet the demand of service providers (Gad, 2010). This situation has helped in controlling the bargaining power of suppliers. This notwithstanding, recommendation will still be made for the company into the next three years to use identified suppliers whose products can be trusted for its top quality. This is because rushing to overcome bargaining power of suppliers may pose a risk where the company may begin relying on suppliers who provide inferior products (Iacobucci and Calder, 2013). 2.23 Threat of new entrants The bread and baked goods sector of the food industry sees new entrants coming on board every day. Campbell (2012) also noted an interesting trend where each of these new entrants seems to have their own market segment with whom they do business. In a situation like this, the threat of new entrants becomes intensified for older businesses. For Gregg plc, it is expected that in the next three years, the company will be well placed to overcoming this threat of new entrants. To do this, the company must continue using its marketing strategy which emphasises on promotion and publicity. This is because doing so will ensure that the company develops a brand equity which will make it the preferred choice among buyers (Robinson and Megrove, 2012). 2.2.4 Threat of substitute products The threat of substitute products for bread and baked goods do not come with specific emphasis on these products as snacks. It rather comes as what a person may want to eat when the person is hungry. When taken from this context, it can be seen that there is a very huge threat of substitute products that Gregg plc suffers from. This is because there are several options that buyers can fall upon when it comes to food choices. Knowing this, it is important for Gregg plc to intensify its diversification programs. This is because with diversification, the company can also be focusing on other substitutes and alternatives that buyers may want to select from (Ford, 2013). 2.2.5 Intensity of competitive rivalry Regardless of the fact that Gregg plc is considered the largest bread and baked goods chain store operator, the company can still be said to be faced with some level of high intensity of competitive rivalry. This is because when the company is compared with competitors such as McDonalds and Whitbread from the perspective of the food industry in general, it would be seen that those competitors are larger and well positioned than Gregg plc (Kapferer, 2004). This means that those companies take advantage from the threat of substitute products against Gregg plc. The next three years should thus see a Gregg plc which expands its current market value in order to compete well (Haig, 2013). Chapter 3 Marketing strategies and Objectives 3.1 Marketing strategies Bowman’s Strategy Clock identifies eight major strategic positions that Gregg plc can implement as part of its marketing strategy to ensure that it remains resolute to its current market performance. Of the eight, the most recommended for the company shall be focused differentiation. In this, the company shall be required to combine focus strategy with differentiation strategy (Afuah, 2013). The rationale for selecting focus differentiation is that the use of focus will help the company to identify new market segments where it can base its market expansion programs on (Lassen, Kunde & Gioia, 2008). This will ensure that instead of relying on the same saturated market, the company shall have a new area to turn to for marketing (Sparks, Dawson and Findlay, 2006). The differentiation on the other hand will help the company address the issue of product quality which it is currently faced with as part of its weakness. This is because through differentiation, the company will be expected to add more value to its existing products (Martins, 2010). Such differentiation is also expected to come with additional cost and thus increased prices of products (Krake, 2013). Once this is done, the company’s revenue can be expected to expand and grow from it is currently placed. This is so because there continues to be a growing population of the bread and baked goods market whose buyer behaviour has been shifted on the need to getting the best of products that can be regarded as healthy and value added (Ajzen, 20011). 3.2 Objectives Based on the selected marketing strategies, the following SMART objectives are set for the company in the next three years. 1. Find new focused market segment which is 5% of the current market share from the beginning of the next year 2. Report on improved value of its bread and baked goods products from the beginning of the next year 3. Increase its existing market value by12% by the end of the next three years Chapter 4 Marketing implementation As part of processes to rolling out the plan that has been identified above, and in order for Gregg plc to achieve the objectives that has been set for it, the following implementation procedures which are directly linked to the 7Ps are expected to be used. Product: Gregg plc is expected to find ways in which its products can fit the needs consumers want to be fixed with by purchasing bread and baked goods. With this said, the implementation is expected to focus on three major areas which are quality, image and branding. Quality must be seen in the company’s products if it can justify its differentiation strategy (Stahl, 2005). While doing this, it is important to build on the company’s image and overall brand through the publicity of its high quality products. Once this is done, the company can be assured of enhanced brand equity (Butkevičienė, Stravinskienė & Rūtelionė, 2008). Promotion: It is expected that Gregg plc will use promotion as a way of bringing its products and what it stands for as a business entity closer to its customers. Promotion is an important part of the implementation as it is only through this means that the company can get customers responding to its overall marketing plan (Paul, Alan and Arun, 2014). As far as promotion is concerned, there are also three areas that the company is expected to emphasise on. These are marketing communications, personal promotion and sales promotion. All these are expected to be carried out in a simultaneous manner. Price: The marketing plan will be effectively implemented when Gregg’s products are seen as representing good value for money. The implementation of the plan must therefore be equipped with the right setting of price which will ensure that customers acknowledge the value they get from the company whiles the company also breaks even and makes profits (OConnor, 2013). For this to be possible, there are three aspects of marketing that are expected to be focused on. These are positioning, discounts and payment methods. With these three, not only must prices be determined but customers must also find the easiest ways of settling for payments. Place: In the next three years, it is expected that Gregg plc’s products will be available from where the company’s target consumer finds it easiest to shop. This means that the company’s reputation for distribution must be enhanced even further. To achieve this, three areas of implementation will be emphasised which are trade channels, sales support and segmented channels. People: The company must rightly identify all people who help it get its business underway from the production section to the sales section (Ampuero & Vila, 2006). To do this, Gregg plc is expected to invest more in human resource who will ensure the implementation of the marketing plan that has been designed. With this said three areas of focus for improving the people aspect of the plan must be individuals on marketing activities, individuals on customer contact and recruitment. Process: The procedure by which the company’s products are presented to customers is very important. Based on this, the company is expected to have particular emphasis on customer focus, business-led model and IT supported processes. These three models of process will ensure that the company rightly combines physical processes with technological processes, all of which have very important roles to play in the implementation of the marketing plan (Peter and Olson, 2007). Physical evidence: Luckily, Gregg’s business outlook makes it possible to have much physical evidence of what it does. In the next three years, it is expected such physical evidence will be further enhanced. As customers engage in business with the company, it is expected that the physical evidence received will be in the area of improved health and general wellbeing of the customers. This can be effectively done when there is particular emphasis on sales contact experience on brand, product packaging and online experience (Olins, 2013). The implementation through the use of the 7Ps are summed up in the table below Product Promotion Price Place People Process Physical evidence Quality Image Branding Marketing communications Personal promotion Sales promotion Positioning Discounts Payment methods Trade channels Sales support Segmented channels Individuals on marketing activities Individuals on customer contact Recruitment Customer focus Business-led model IT supported process Sales contact experience of brand Product packaging Online experience Chapter 4 Control and Evaluation The marketing plan and its objectives shall generally be controlled and evaluated through the use of a mixed evaluation procedure. This shall comprise the use of both qualitative and quantitative evaluation procedures. As far as quantitative control and evaluation is concerned, a cross-functional team shall be created from within the company that ensures that a monthly assessment of the company is undertaken. This monthly assessment shall be quantitative in nature because it shall compare the numeric outcomes and performance of the company from the previous month to the next. In terms of the objectives that has been set, the quantitative control and evaluation shall be very specific on the quantitative objectives which employ the company to get 5% new focused segment and 12% increase in its market value. It is expected that the quantitative control and evaluation will be useful in ensuring that there is an empirical and evidence based quantification of how well the company is doing. The team shall present its report to management on a monthly basis, backed by recommendations on what the company needs to do to ensure that successes are maintained and failures are curtailed. There shall be a qualitative component of control and evaluation which shall be committed to knowing how well the company’s differentiation through value addition is achieved. This objective is qualitative in nature and thus the reason for using a qualitative control and evaluation. The qualitative control and evaluation will generally involve the collection of customer and expert opinions on the company’s products. Chapter 6 Conclusion In conclusion, it can be started that Gregg plc is a formidable performer in the bread and baked goods sector of the food industry but the company still has a lot of competition to overcome. This is largely because most competitors of the company are well diversified to take advantage over threat of substitute products. Through the focus strategic option therefore, Gregg plc is expected to be more conscious about diversification of business. Such diversification can be guaranteed of success because of the brand equity that the company already has in the area of the food industry. This means that Gregg plc has to use what it has done to get what it wants to do. References Afuah A. (2013) Innovation Management. (2nd ed.) 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