Marketing for Atlantic Quench Cranberries Inc - Business Plan Example

Marketing Plan for Atlantic Quench Cranberries Inc. Table of Contents The Challenge 3 Situation Analysis 3 Company Analysis 3 Company history 3 Business model 4 Goal 4 Market share 4 Customer Analysis 5 Competitor Analysis 5 Collaborators 5 SWOT Analysis 6 Market Segmentation 6 Segment 1: Convenience Snackers 6 Segment 2: British School Children 8 Segment 3: British teenagers and young adults 9 Segment 4: Dieters 10 Segment 5: Impulse Buyers 10 Alternative Marketing Strategies 10 Expand total market 10 Position the Atlantic Quench brand as a premium brand 11 Market niche strategy 11 Selected Marketing Strategy and Marketing Mix 12 Product 12 Price 12 Distribution (or Place) 13 Promotion 13 Projections 13 Conclusion 13 References 15 Marketing Plan for Atlantic Quench Cranberries Inc. The Challenge Both US and the UK consumers are increasingly becoming more conscious of their health(Anon., 2008). As a result, they are rejecting juice and juice drinks with high sugar content and opting for mineral water and other low-calorie soft drink. This trend has attracted more entrants into the health drinks industry. The implication is that, due to increasing competition, it is becoming increasingly difficult and expensive to launch new products. Also, for years, Atlantic Quench has enjoyed monopoly over the cranberry products that the company has promoted for their health benefits. However, the growing popularity of blended cranberry and superfruit juices has led to increased competition(Anon., 2008). In particular, superfruits such as acai berries, acerola and pomegranates have gained a growing share of the beverage market at the expense of blended cranberry juices. Atlantic Quench has been slow in responding to these changes. This plan seeks to make Atlantic Quench more responsive to market trends and competitive. Situation Analysis Company Analysis Company history Atlantic Quench Cranberries Inc., an agricultural cooperative based in the United States, was founded eighty years ago by three cranberry growers from New Jersey and Massachusetts(Anon., 2008). In 1974, Florida grapefruit growers joined the cooperative. Today, about 630 cranberry and 46 grapefruit farmers own the cooperative that is credited with pioneering and growing the cranberry segment. Together, the 630 cranberry farmers account for two-thirds of all cranberry produced in the world. Over the years, Atlantic Quench has risen to become the leading producer of bottled and canned juices and juice drinks in North America. The cooperative also continues to enjoy considerable success in the UK. Business model Being a cooperative, Atlantic Quench works very closely with its farmers who also own the company. The organisation buys all of the farmers crops at the highest price possible. Also, the farmers enjoy dividends at the end of the fiscal year. Under a scheme dubbed the "common stock equity quota", each farmer commits to an annual quota of production(Anon., 2008). A farmer could be penalised for failing to meet their annual quota by the organisation buying back the farmer’s shares equivalent to the shortfall and reassigning the shares. This model instils discipline in the farmers and is likely to have contributed to the success of the organisation. Goal Atlantic Quench’s goal is to remain an independent more focused organisation that upholds its successful aspects such as new product development(Anon., 2008). The goal was informed by Coca-Cola’s buyout offer at the turn of the century, an offer the farmers unanimously rejected. Market share For years, Atlantic Quench maintained monopoly in the US cranberry products segment(Anon., 2008). However, that position has since been challenged by the advent and growth of blended cranberry and superfruit juices. In 2013, Atlantic Quench entered an agreement with Gerber to manufacture and distribute juices and juice drinks in the UK under the Atlantic Quench brand. Gerber is UK’s leading supplier of branded and private-label fruit juice and juice drinks, with annual sales of over 800 million litres. Customer Analysis Traditionally, Atlantic Quench has targeted the health-conscious beverage consumers(Anon., 2008). The company has marketed cranberry beverages as possessing health benefits relative to conventional beverages. That strategy enabled Atlantic Quench to dominate the cranberry products segment. However, in recent years, blended cranberry juice products and superfruit juices have grown in popularity leading to intensified competition for Atlantic Quench. Atlantic Quench was rather slow in responding to this market trend, although it is now producing cranberry blends of pomegranates and acerola. When Chuck Berrie become the company’s CEO in 2003, one of his main challenges was to introduce cranberries to a new generation of consumers that was more inclined towards sugared beverages. In their natural form, cranberries contain virtually no sugar. Thus, Atlantic Quench had to find a way of sweetening their products while maintaining their natural flavour. The company also targets dieters with its Diet Cranberry Quench and Diet Orange Tang, two five-calorie drinks. Competitor Analysis In recent years, Atlantic Quench has had to contend with growing competition from manufacturers of blended cranberry products and superfruit juices(Anon., 2008). The former have been responsible for a 20% growth in fruit juice sales. The growing list competitor organisations are mainly due to growing interest in healthy living. Whereas Atlantic Quench has responded to the growing demand for blended cranberry products by blending cranberry with pomegranates and acerola, the company is yet to respond to the trend towards superfruits. Collaborators In 2007, Atlantic quench and Coca-Cola entered a long-term strategic alliance where Coca-Cola North America bottles, markets and distributes single-serve cranberry juice products in Canada and the US under the Atlantic Quench brand(Anon., 2008). The agreement also incorporates opportunities for the development of new products in the future. Both organisations saw the strategic alliance as a positive move. For Coca-Cola, the alliance presented the opportunity to cash on the Atlantic Quench brand that has become synonymous with cranberries. For Atlantic Quench, the collaboration makes it possible for them to reach more consumers. In the UK, in 2013, Atlantic Quench entered an agreement with Gerber, UK’s leading supplier of branded and private-label fruit juice and juice drinks. Under the agreement, Gerber manufactures, markets and distributes juices and juice drinks in the UK under the Atlantic Quench brand. SWOT Analysis The table below presents Atlantic Quench’s SWOT analysis. Strengths Strong relationship between the organisation and its supplier farmers who are also shareholders Strong brand recognition Successful new product innovation The “common stock equity quota” system that instils discipline in the farmers Strong strategic alliances with Coca-Cola North America and Gerber in the UK Opportunities More strategic alliances in emerging markets such as Brazil and China New nutritional standards in British schools that demand more intake of fruits and vegetables The growing trend of convenience snacking among the British Growing awareness on the need for healthy eating Weaknesses Slow response to market trends Fluctuating crop prices Threats Growing competition in the health beverages segment Market Segmentation Segment 1: Convenience Snackers Description The majority of UK adults snack on the go that is, while moving around or traveling(Anon., 2008). Convenience snacking is estimated to generate £3.6 billion a year in retail sales. One-third of these consumers snack while traveling while the remaining two-thirds snack on the go due to work related pressure.Due to longer working hours and shorter or no lunch breaks, snacks come in handy as an alternative to proper meals. Their preferences As convenience snackers become more aware of the benefits of healthy living, they are more likely to be concerned about what they eat(Anon., 2008). This trend provides growth opportunities for Atlantic Quench especially because some of the company’s products combine hydration and health benefits. Atlantic Quench’s Crantanas, the dried fruit snack made from husks, are the ideal range of products with which the company can target this segment. The products have proved a big success in North America and the same success could be replicated in the UK market. For instance, in 2007, Crantanas accounted for $150 million of the $1.7 billion worth of sales that year. Their use of product Given their busy schedules, convenience snackers are less likely to buy snacks in bulk. Rather, they are more likely to buy in small quantities as and when the need arises. The implication is that Atlantic Quench must package its Crantanas is small convenient packages. The company launched its slimline cans specifically aimed at the convenience market. The cans have proved to be popular. Support requirements In order to satisfy the convenience market, Atlantic Quench will need to persuade British supermarkets to add dedicated Crantanas aisles, after the fashion in which the company encouraged US supermarkets to add dedicated juice aisles in the 1960s(Anon., 2008). The idea is to make the snacks readily available to consumers. Means of reaching them In recent years, Atlantic Quench’s television advertisements in the UK have tended to target educated women aged between thirty and forty-five years. Apparently, this is the age bracket that is most prone to lifestyle diseases and also the one that is most conscious about healthy eating. Television advertising will remain the main means of reaching this market segment. Price sensitivity This market segment is perceived to be less price sensitive. Convenience snackers are willing pay higher prices for healthy snacks provided that manufacturers can convince them of the health benefits of their products(Anon., 2008). The implication is that Atlantic Quench can afford to charge a premium for its Crantanas range and still control a considerable share of the market. Segment 2: British School Children Description In September 2006, new nutritional standards were introduced for UK school children(Anon., 2008). The standards prohibit schools from serving children with potato chips and chocolate and other confectionary. Instead, schools are required to serve pupils with at least two portions of fruit and vegetable at each meal. Schools are also required to stop selling unhealthy drinks and snacks in snack shops and vending machines. The new nutritional standards have favoured fruit juices and juice drinks to the detriment of carbonated drinks. Manufacturers have responded by introducing new and improved juice and juice drinks targeted specifically at school children. Another sector that has benefited from the government’s move to improve the nutrition of school children is the lunchbox sector. Means of reaching them In recent years, changes to advertising regulations have made it more difficult for manufacturers and marketers to market to children(Anon., 2008). As a result, parents and schools are likely to remain the target. Parents remain the main buyers of juice and juice drinks. Atlantic Quench stands to gain by targeting parents with busy schedules and whose solution lies in preparing lunchboxes. Indeed, parents largely influence what their children eat and drink; more than half of British parents assert that children should eat whatever is given to them. Only about twenty percent of parents have difficulty dictating what their children eat. Price sensitivity Atlantic Quench has the options of manufacturing for school feeding programmes or the lunchbox sector or both. However, should the company opt to pursue the school feeding programme, it should be prepared to accept lower prices given public schools’ limited budgets. Nonetheless, the lower unit prices could be offset by large and steady volumes of sales(Bangs, 1998). By contrast, if the company chose to serve the lunchbox sector, it could charge a premium for its products and still control a significant share of the market as affluent parents are likely to be less price sensitive. Segment 3: British teenagers and young adults For some time now, 15-24-year-olds have been the leading consumers of juice and juice drinks in the UK(Anon., 2008). Between 2000 and 2005, this segment grew by almost 10% a year. Between 2005 and 2010, the segment continued to grow, albeit at a slower rate of 3.2% per annum. Clearly, this is a cohort worth pursuing for the following one year and beyond. The main channel through which to access this segment will be television advertising. Segment 4: Dieters For some time now, Atlantic Quench has successfully targeted the dieters in the US with its two low-calorie products – Diet Orange Tang and Diet Cranberry Quench(Anon., 2008). In the UK, the 45-54 year cohort registered the greatest growth between 2005 and 2010. This cohort is perceived to be more prone to lifestyle-related diseases and, therefore, the greatest generator of dieters. Health, not price is likely to be the primary concern for this segment. Again, the primary means of reaching the group is television advertising. Segment 5: Impulse Buyers Increasingly, impulse buyers tend to go for fruit juice drinks as opposed to confectionary that is regarded a less healthy option(Anon., 2008). Convenience juice drinks are particularly a favourite with sports people who are in need of a quick yet healthy way to restore fluids and energy after exercises. For this segment price and packaging are likely to be major influencers of the decision to buy. Thus, Atlantic Quench may need to invest highly captivating packaging while keeping the price modest. Again, ready availability of the product is key to the successful pursuit of this segment. Thus, the company may need to convince retail outlets to dedicate whole aisles to its products. Alternative Marketing Strategies There are several marketing strategies available to Atlantic Quench. Three of these are proposed and discussed in this plan: expand total market, position the Atlantic Quench brand as a premium brand and market niche strategy. Each strategy is discussed in some detail. Expand total market There are many ways through which Atlantic Quench can expand the total juice and juice drinks market. First, the company could generate new users through market penetration where the company sells more of its products to existing users; market development where the company sells more of its existing and new products to new users and geographical expansion where the company could enter new markets in addition to North America and the UK(Whalley, 2010). Secondly, the company could develop new uses for its products(Kotler, et al., 2013). An example is where the company started to produce Crantanas from cranberry husks that were hitherto useless. Finally, the company could engineer increased use of its products. An example is Michelin, the French tyre maker. In a bid to get the French to drive more (and buy more tyres in the process), the company rated the best restaurants in Provence and Riviera. Then, the company proceeded to publish and distribute among its customers guide books with maps(Whalley, 2010). Position the Atlantic Quench brand as a premium brand Premium brands charge a higher price in exchange for premium quality(Benson-Rea, et al., 2011). This is the strategy used by the automakers Mercedes-Benz and BMW(Bangs, 1998). In many respects, the Atlantic Quench brand is a premium brand. Since 1981, the brand has been best-selling in the canned and bottled juice market. Moreover, most consumers in North America associate cranberries with Atlantic Quench: the company is credited with introducing and developing the product. Under this strategy, the company will seek to strengthen its positioning as a premium brand. Market niche strategy Market niche strategies work well with small firms such as Atlantic quench. Niching is profitable as it enables a firm to understand its customers and their needs more intimately(Storbacka & Nenonen, 2011). The intimate understanding makes it possible for the firm to better meet customer needs. In return, the customers become loyal to the firm. Under this strategy, the company will pursue the various segments identified earlier. However, for niching to be successful, certain conditions must obtain: the segments being pursued should be large enough to sustain demand for the products with which they are targeted; have potential for growth; and be of negligible interest to competitors(Whalley , 2010). In addition, the firm must have resources and skills for successful niching and be able to defend itself against competitor intrusion through customer goodwill(Bangs, 1998). Nichers must also be specialists in several areas: geography, channels of distribution and quality-price balance among other areas(Bangs, 1998). Selected Marketing Strategy and Marketing Mix This plan proposes a combination of two marketing strategies: premium brand position and market niche. Atlantic Quench is a brand that has established itself since 1981. The strong brand position made it possible for Atlantic Quench to enter strategic alliances with Coca-Cola North America and Gerber in the UK(Anon., 2008). Under this combination, over the next one year, Atlantic Quench will pursue the above-identified segments while underscoring its strong brand position. Bearing in mind the short-term nature of this plan, the market expansion strategy may not be feasible. However, the company may pursue it in the longer-term. The combined strategy will be accompanied with the following marketing mix aspects: Product Atlantic Quench will expand its product line in order to effectively target the various segments identified above. In expanding the product line, the company will ensure consistency in quality. At the same time, the company will continue the use of innovative packaging to make the products attractive(Kotler, et al., 2013). The brand name will be displayed conspicuously on the packaging. Price Except for schools, the company will charge a premium for all its products. Schools that buy the products in bulk will enjoy a discount that will be determined by the quantity of purchase. Terms of payment for schools will also be negotiated between the company and respective schools. Distribution (or Place) The products will mainly be distributed through retail outlets. In North America, Coca-Cola North America will be responsible for supplying the retail outlets with the products while Gerber will do the same in the UK(Anon., 2008). In addition, Gerber will put in place arrangement to deliver products directly to client schools in the UK. Promotion Advertising will mainly be done through the television and outsourced to marketing agencies. The company will also engage in public relations activities throughout the year. Promotional programmes targeted at UK schools will also be undertaken. The annual budget for all promotional activities will be pegged at no more than 30 percent of the total budget(Whalley, 2010). Projections The corporation will not turn a profit on the proposed expansion. However, by capping the budget at 30 percent of the total budget, the company should be able to break even (Whalley, 2010). Conclusion For years, Atlantic Quench enjoyed a virtual monopoly in the cranberry segment. However, in recent years, consumer tastes have changed in favour of blended cranberry products and superfruits (Anon., 2008). Several new and existing manufacturers have responded to the trend by introducing a myriad of blended cranberry products. Even though Atlantic Quench too responded, it was rather slow. This plan seeks to make the company more responsive to changing consumer needs and, therefore, more competitive. The company enjoys an advantageous position because of its strong brand recognition and strategic alliances(Anon., 2008). This plan proposes that, over the next one year, the company pursues the following segments: convenience snackers, British schools, impulse buyers, British teenagers and young adults and dieters. The plan demonstrates the importance of the UK market in the growth of the company. In order to effectively serve these segments, the company will employ a two-fold strategy: premium brand positioning and niche marketing. The strategy will be accompanied with a marketing campaign. References Anon., 2008. Case Study. s.l.:s.n. Bangs, D., 1998. The Market Planning Guide: Creating a Plan to Successfully Market Your Business, Products or Service. 5th ed. Auckland: Upstart Publishing Company. Benson-Rea, M., Woodfield, P. & Brodie, R., 2011. Sustainability in Strategy: Maintaining a Premium Position for New Zealand Wine. Bordeaux, 6th AWBR International Conference. Kotler, P., Armstrong, G. & Harris, L., 2013. Principles of Marketing. 6th ed. London: Pearson Education. Storbacka, K. & Nenonen, S., 2011. Markets as configurations. European Journal of Marketing, 45(1-2), pp. 241-258. Whalley, A., 2010. Strategic Marketing. 1st ed. London: Ventus Publishing. Read More