An Outline Marketing for the Next Year for Atlantic Quench - Business Plan Example

School: Topic: An outline marketing plan for the next year for Atlantic Quench Lecturer: Executive Summary The growth of Atlantic Quench in the next one year has been found to be largely dependent on how the company can vary its existing market strategy. There is no denying the fact that the company’s current strategy has brought about significant growth in the company. However, this growth has not made the company competitive enough as its sales and profit margins are below what key competitors earn. For this reason, it is important that the company uses the combination of focus and low price strategies, while developing new products and new markets to be used along the strategies. Contents Executive Summary 1 Chapter 1 Introduction 6 Chapter 2 External analysis 6 2.1 Macro Environment Analysis 6 2.1.1 Political 6 2.1.2 Economic 7 2.1.3 Social 7 2.1.4 Technological 8 2.2 Market analysis 8 2.3 Customer analysis 10 2.4 Competitor analysis 10 Chapter 3: Internal Analysis 11 3.1 Overall performance 11 3.2 Marketing mix 12 3.2.1 Product 12 3.2.2 Price 12 3.2.3 Place 13 3.2.4 Promotion 13 Chapter 4 SWOT analysis 14 4.1 Strengths 14 4.2 Weaknesses 14 4.3 Opportunities 15 4.4 Threats 16 Chapter 5 Objectives 16 5.1 Mission statement 16 5.2 SMART Objectives 16 Chapter 6 Marketing strategy 17 6.1 Strategic theories 17 6.2 Core target segments 18 6.3 Positioning 19 Chapter 7 Marketing programs 19 7.1 Product strategy 19 7.2 Pricing strategy 20 7.3 Place 20 7.4 Promotion 21 7.5 Marketing Communication strategy 21 Chapter 8 Marketing implementation and control 21 7.1 Schedule 21 7.2 Who is responsible? 22 7.3 Budget 23 7.4 Control 24 References 24 List of Figures Figure 1: Percentage share for the sector 9 Figure 2: Ansoff Matrix 18 List of Tables Table 1: Market size and growth rate for sector 9 Table 2: Market share of competitors 11 Table 3: Planned Calendar 21 Table 4: Responsibility allocation 22 Table 5: Budget 23 Chapter 1 Introduction The soft drink industry is one of the most competitive on the global market, given the high number of product and service providers in this area (Allmendinger & Gunder, 2005). To be a strong market force therefore, it is important that Atlantic Quench will have a well planned strategy that makes it possible to gain competitive advantage on the global market. This is the essence of the current marketing plan for the next one year, as it seeks to identify the best strategies and interventions that need to be put in place by the company based on its internal and external competitive environment. Chapter 2 External analysis 2.1 Macro Environment Analysis 2.1.1 Political Politically, Atlantic Quench can be said to be operating in an environment where there is very conducive environment to overcome the bargaining power of suppliers. This is because the government has subsidized incentives on farming products and farm inputs, making it possible for the company to be the producer of its own raw materials. Meanwhile, Normann (2011) noted that when manufacturers act as the source of their raw materials, they gain the advantage of minimizing the bargaining power of suppliers and thereby saving a lot on production. What is more, there is an attractive international market for the company to seek internationalization due to the good international relations of the host country (Kozak & Rimmington, 2008). 2.1.2 Economic Economically, the UK government can be said to be one that focuses more on macroeconomic development as against microeconomic development (Manopichetwattana & Kahn, 2009). Because of this, most industry wide economic variables such as inflation, interest rate and income tax which could militate against the growth of companies and increase their expenditure are often low. Because of this, Atlantic Quench is well placed to compete well on the global market, given the fact that other global competitors also have different macroeconomic variables against which they produce for the global market (Yiftachel, 2008). 2.1.3 Social An important social indicator within the UK market that is very favourable for Atlantic Quench is a strong advocacy that is always ongoing in the country against the consumption of alcoholic beverages (Key Note, 2014). Meanwhile, there are several social events that take place regularly among families and friends. Some of these are parties, birthdays, funerals, and general outings. This means that the fruit juice and other fruit products produced by the company will serve as important substitute to alcoholic beverages that are served at these functions. What is more, UK has been known to be constantly fighting the problem of unemployment, which means that Atlantic Quench operates in an environment with a lucrative skilled labour to power its human resource needs. 2.1.4 Technological The current rate of technological expansion going on in the UK has been described as motivation for businesses to take advantage of electronic commerce (e-commerce) (Kotler & Armstrong, 2012). Meanwhile Mohr and Downs (2006) described e-commerce as one of the new best things that ever happened to the business world. This is because through the platform of e-commerce, firms do not actually need to be physically present at a place in order to be part of the competition there (Krishnan, Eppinger & Whitney, 2007). One other face of the technological expansion that will be of massive benefit to the company is the opportunities that the new media provides in the advertisement and promotion of the company’s products and services (Yiftachel, 2006). 2.2 Market analysis Atlantic Quench operates in the fruit juices, energy and juice drink sector of the overall soft drink market in the UK. Since 2009, the market share of this sector has been known to be increasing significantly in terms of sales made at retail selling price and percentage of market occupancy. The table below shows the market size and growth of the sector since 2009. Table 1: Market size and growth rate for sector Year Sales at retail selling prices (£m) 2009 4,392 2010 4,764 2011 5,169 2012 5,378 2013 5,529 2014 5,955 Source: Key Note (2014) In the graph below, the percentage of growth for fruit jiucies, energy and juice drink sector is given from 2009 to 2014. Figure 1: Percentage share for the sector Source: Key Note (2014) From the graph given above, it is seen that the market share of the sector in which Atlantic Quench operates has been increasing for most of the years. Based on this, the sector has been forecasted to grow at an annual rate of 4.3% from 2018 (Key Note, 2014) 2.3 Customer analysis The major customers of the company comprise everyday people who see fruit and energy drinks as an important substitute to alcoholic drinks. Going into the next year, the company’s major segment is proposed to be focused more on people who do not consume alcohol at all or only consume very little alcohol. This segment has been noted to be relatively large, even though they have been marginally neglected by most industry players (Yiftachel, 2014). It is for this reason that it is competitively advantageous for Atlantic Quench to emphasise on this market. Example of such focus consumers can be students, sports personalities and pregnant women. 2.4 Competitor analysis Three major competitors can be associated with the industry and sector in which Atlantic Quench operates. These are Coca Cola, AG Barr plc and Britvic Soft Drinks Ltd. The strategies used by almost all these competitors have been noted to be the cost leadership, where they produce at very low cost and thus charge lower prices for their products (Pelsmacker, Geuens & Van den Bergh, 2010). By so doing, they are able to attract very large consumer base that belong to the middle and lower class of the social status ladder (Bazin, 2012). The table below summarises the market positions of the competitors as manifested through their sales and pre-tax profits. Table 2: Market share of competitors Company 2013 sales 2013 pre-tax profit Coca Cola £1,794,602,000 £234,453,000 AG Barr plc £237,595,000 £31,822,000 Britvic Soft Drinks £44,328,000 £9,053,000 Source: Key Note (2014) Chapter 3: Internal Analysis 3.1 Overall performance The market performance of Atlantic Quench for the last 5 years has generally been described as an impressive one, given the fact that the company has been recording strong annual growths. For example the sale growth of the company has been pegged at more than 7% per year with a market share gain that is at par with competitors. There has been a 26% increase in the consumption of Crantanas, which is a major product of the company. This has been responded to with an impressive fourfold increase in manufacturing capacity of Crantanas (Key Note, 2014). The major strategy used by the company over these years has been the cost leadership strategic option, just as has been used by others in the industry. It also gains a lot of competitive advantage from its strategic alliances with Coca Cola, which can be described as the market’s leader. 3.2 Marketing mix 3.2.1 Product Atlantic Quench is generally in the soft drink industry but specifically belongs to the fruit juices, energy and juice drink sector of the industry. As part of this, some of the products that have dominated its sales have included fruit juices. The company has however focused strongly on new product developments, the outcome of which is the sale of dried cranberries which is sold under the brand name of Crantanas (Worren, Ruddle & Moore, 2009). As far as juice products are concerned, such branded drinks as Cranberry Original Juice, Cranberry Mixed Juice Drinks, Juice Max – pure juice, and Grab ‘n’ Go – single serve are offered. Non-juice drinks also include Cranberry Sauces, Cranberry Cordial Juice Drinks, Fresh Cranberries, New Dried Cranberries, and New Conserve. 3.2.2 Price As part of its cost leadership strategic option, the company has always offered the lowest prices for products (Manning & Reece, 2007). This is done with the aim of attracting as many demographic dynamics of consumers as possible. This is because Nunnally (2008) noted that in any typical market, there are several consumers who are seeking to be part of pricing model that offers them the highest return on their bargain (Osborne & Brown, 2005). Having said this, there has been a strategic pricing model where Atlantic Quench always emphasises on the need not to be the lowest priced company on the market. This is because Roy (2008) feared the outcome of an excessively low pricing strategy where consumers tend to have the notion that products are inferior. 3.2.3 Place Taking full advantage of the technological expansion on the UK business market, Atlantic Quench can be said to operate two forms of marketplaces which are actual or physical markets and virtual markets. In terms of actual or physical markets, the company relies on both distributors and retailers who base on the concept of convenience snacking to make the company’s products available to all categories of consumers in the UK (Lincoln & Guba, 2005). It is therefore very common to find an Atlantic Quench in most public places in UK. The virtual marketplace is largely dominated by the use of e-commerce, where the company focuses on the placement of order from consumers. 3.2.4 Promotion The company’s major promotional platform has been its virtual marketplace, where it uses new media and the internet in general to encourage its consumers to be actively involved in the activities and programs of the company. Parmenter (2007) stressed that promotion is one means by which consumers can be encouraged to select one product on the market over others. With this known, the company has constantly used discount sales and consumer reward programs as a major means of encouraging consumer patronage. Li and Atuahene-Gima (2012) was emphatic that companies that use such promotional avenues are always guaranteed of customer loyalty. Chapter 4 SWOT analysis 4.1 Strengths 1. There is brand equity for Atlantic Quench, which has been gained largely because the company has been in operation on the UK market for several years. 2. The company suffers very little from bargaining power of suppliers. This is because the company’s structure comprises farmers who act as the internal suppliers of the company’s raw materials. This way, the company is constantly guaranteed of timely supply of raw materials (Carnall, 2013) 3. Atlantic Quench has constantly followed a well disciplined corporate structure, which takes its inspiration of the utilisation of corporate governance principles. Because of this, the company is highly investor attractive, given the fact that investors feel safe in investing in disciplined companies (Osterwalder & Pigneur, 2009). 4.2 Weaknesses 1. Even though the company introduced Crantanas as dried cranberries product, it has largely failed to take advantage of new product development interventions that could make it expand into other sectors of the soft drink industry 2. Because major raw materials of the company are seasonal fruits, the company is always at the mercy of the weather and other natural climatic changes, leading to high spending on storage facilities. 3. Atlantic Quench lacks adequate control over most other forms of raw materials, even those which are not produced directly by its farmers. Example of this is cranberries. 4.3 Opportunities 1. Atlantic Quench has a market niche opportunity with growing number of people within the market who decide to be alcohol-free consumers of drinks. This is largely in response to various health promotional campaigns for the consumption of fruit drinks instead of alcohol (MacKinnon, Warsi & Dwyer, 2014). 2. Atlantic Quench has Coca Cola as a major market competitor. Meanwhile, Coca Cola is largely known for producing carbonated drinks. There are also ongoing health campaigns against the consumption of carbonated drinks, which means that the natural fruit juices of Atlantic Quench is the most preferred alternative for the market. 3. The company’s growing finances means that it is better positioned to compete on its national and global markets (Lukas & Ferrell, 2010). 4.4 Threats 1. There continues to be alliances springing up in the industry from companies known to be market leaders in other industries. Once this happens, capital competition against Atlantic Quench is created due to the existing dominance that these mergers have in terms of operating income (Gunder, 2013). 2. Coca Cola and other competitors have started shifting their focus from the exclusively production of carbonated drinks to fruit drinks, which means an intensified competition for Atlantic Quench (Weick & Quinn, 2009). 3. Atlantic Quench faces lack of strategic diversification as almost all market competitors including those ranked as high and low competitors are using the same strategic option, which is cost leadership. Chapter 5 Objectives 5.1 Mission statement Into the next one year, Atlantic Quench has a mission to be the best alternative provider to alcoholic drinks, whiles improving its value of fruit drinks to existing consumers. 5.2 SMART Objectives The following objectives emanate from the company’s SWOT analysis for the next one year: 1. To attain a sales growth of 11% with newly discovered market segments 2. Overcome key competitors in terms of market share based on the implementation of new product developments 3. Reduce the cost of internal production by 15% due to continual reliance on internal suppliers 4. Form three new strategic alliances which respond to the threat of new emerging mergers within the industry. Chapter 6 Marketing strategy 6.1 Strategic theories For the four SMART objectives set for the company above to be achieved, it is very important that for the next one year, Atlantic Quench will develop a highly penetrative strategy that identifies all consumers on the market who can be considered as marginalised and unutilised by competitors (Christensen & Lærgreid, 2002). With this said, there are three major strategic theories that come to mind, each of which offers a related strategy to be used. These strategic theories are Ansoff matrix, Bowman’s strategic clock, and Porter’s genetic positions (Porter, 2008). As showed below, Ansoff matrix makes it possible for the company to strategically plan for existing products, new products, existing markets, and new markets. But based on the objectives, new products and new markets will be of importance to Atlantic Quench in the next one year. Because of this, the two selected strategies are product development and market development. Figure 2: Ansoff Matrix Source: Palmer, Danforth & Clark (2014) As a direct relation to the two strategies above, it is important to use focus strategy from Porter’s generic positions and low price from Bowman’s strategy clock. When these four strategies are used, the overall indication is that Atlantic will be introducing new products unto a new market focus market, where the need to charge low prices as competitors will be maintained (Wing-Shing, 2000). 6.2 Core target segments Two of the four strategies discussed above give the need to have core target segments. These are market development which is based on the Ansoff matrix, and focus strategy, which is based on Porter’s generic position. As it has been hindered earlier, there is a growing population of people who see the consumption of alcohol and carbonated drinks as harmful, due to ongoing health campaigns against these. It is therefore important that in the next one year, Atlantic Quench delves deeper into such populations or segments, where the consumption of fruit juice is considered a serious alternative. Having said this, three target segments must be used, all of which have lower or no consumption of alcohol allowed. These are students, prisons, and pregnant women. 6.3 Positioning Into the next one year, it is important that Atlantic Quench clearly identifies conditions and factors that draw it closer to consumers. Once this is done, it can be said that the company has gained strong market positioning (Das, Binod, Kar & Rauno, 2012).based on the notion that new markets will be developed on the grounds of preference for fruit drink consumption over alcohol and carbonated drink consumption, the positioning of the company will be to place itself in such a way that it is seen as a health oriented fruit juice and drink provider. Chapter 7 Marketing programs 7.1 Product strategy Basing on the objective to develop new products and at the same time diversify the company’s product line, a new product strategy will be developed, which will basically seek to offer multiple health oriented benefits. This will be done by adding additional vitamins and nutrients to existing and new fruit drinks. This is because Maguire (2013) explained that the product strategy of a company’s marketing program must make the consumer answer the question of what benefits is derived from a purchase. 7.2 Pricing strategy Already, several competitors are known to be offering cost leadership strategic option. As a result of this, it is important that even though Atlantic Quench will also be offering low cost, it uses a dynamic pricing strategy that is unique from what is already in place. To this end, the major pricing strategy will be to target institutions such as schools, prisons and hospitals, which will be given the already low priced products on credit or with instalment payment plans. 7.3 Place So far, Atlantic Quench uses e-commerce or virtual marketplace only for the placement of orders, after which customers come to the stores in person to take their orders. To ensure that the company is closer to customers and actually found in every place, this strategy will be enhanced by guaranteeing online delivery through the use of same day delivery services. For a start, this will be done mainly for businesses before extending it to individual customers. 7.4 Promotion It is important that in the coming year, Atlantic Quench can clearly identify the purchasing pattern on the market and take full advantage of this. To do this, special occasions and seasons within the year where purchasing is at its peak will be identified. At these times, more promotional packages such as buying two products to get one free will be introduced. It is hoped that when this is done, the company will win the favour of customers over competitors who will also be seeking to attract customers at the same time. 7.5 Marketing Communication strategy A new marketing communication strategy will be developed through the extensive use of social media to create awareness of the proposed Atlantic Quench Health Brand to consumers. There should therefore be a strong social media representation for the company, where it communicates its marketing philosophies to consumers. Chapter 8 Marketing implementation and control 7.1 Schedule The overall schedule of the proposed plan is one year. For each quarter of the year, one of the SMART objectives is expected to be achieved. These summarised in the calendar below. Table 3: Planned Calendar Time First Quarter Second Quarter Third Quarter Fourth Quarter Objective Form strategic allegiance with Ministry of Health, Prison Service, and Ministry of Education Introduce Atlantic Quench Health Drinks Reduce the cost of internal production by 15% To attain a sales growth of 11% 7.2 Who is responsible? For each of the four SMART objectives, very specific people will be put in charge of their implementation or execution. This is outlined below. Table 4: Responsibility allocation Human Resource Public Relations Officer Health and research team Production manager Sales and marketing team Objective Form strategic allegiance with Ministry of Health, Prison Service, and Ministry of Education Introduce Atlantic Quench Health Drinks Reduce the cost of internal production by 15% To attain a sales growth of 11% 7.3 Budget The following budget is proposed to be used. Table 5: Budget Expenditure Personnel Salaries 234,320 Motivation 90,232 Other 13,000 Sub-Total 337,552 Production Raw materials 823,232 Storage 54,223 Plant and utilities 102,300 Manufacturing 60,000 Sub-total 1,039,755 Marketing Research 40,000 Print media 30,000 Internet 20,000 Open-air 25,000 Electronic 60,000 Sub-total 175,000 TOTAL 1,552,307 Returns Sales 3,000,500 Growth rate 11% Profits 1,448,193 7.4 Control Atlantic Quench is expected to use five major metrics in measuring its performance. These are employee performance, employee engagement returns, departmental performance, customer endorsement, and shareholder satisfaction. This form of control is to be achieved through the use of both quantitative and qualitative evaluation methods. References Allmendinger, P. & Gunder M. (2005). "Applying Lacanian Insight and a Dash of Derridean Deconstruction to Plannings Dark Side," Planning Theory, vol. 4, pp. 87–112. Bazin, A. (2012). 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