NRG Potato Chips' Marketing Analysis - Case Study Example

 Article-Business Report to Weird Products Introduction NRG Potato Chips is the high quality food product manufacturer inspired by nature, supplying the customers with sweet tasty energetic Potato Chips. It not only gives you a good time with your coffee but vital nutrition also. NRG Potato Chips –They are fast growing everywhere and become the favourite food for the youngsters. Here also we can expect a solid market by using key marketing strategies. Products Energy Potato Chips: NRGSNAX ... Phoenix Fury Potato Chips, 2007, New NRG Overload Energy Chips! Visited 17/12/2007, http://www.nrgsnax.com/main.html Aim of the Research This is to prepare a Strengths, Weakness, Opportunities and Threats (SWOT) Analysis for a new product that the 'Weird Products' company may wish to import and launch. To determine the positioning strategy for your new product/service and to prepare a business report to 'Weird Products' detailing the findings and recommendations about the product/service selected. And also the aim of the research is to get beneath the existing Business Process Models adopted by the Company. To analyze whether the Corporate Strategy applied takes into consideration of all the components of BPM involved, so to improve the efficacy of the models. Objectives To evaluate and analyse the current position associated with the marketing of NRG Potato Chips. The Need for Marketing Planning The strategies are formulated and implemented by firms which want to grow like us. Such firms have to maintain sustainable competitive advantage by delivering superior value to the customer. Although it is difficult for any firm to be an ideal growth business, it is worth attempting to reach that ideal.( Tutor2u (2007), Marketing: Product positioning, at, http://www.tutor2u.net/business/presentations/ marketing/productpositioning/default.html (Accessed: May 11, 2008) SWOPT ANALYSIS In NRG Potato Chips, we have seen, and as we would like to see it in its operations more conspicuously over the time. It seems to have achieved a great deal. Starting with an excellent strategy, its turnover is a performance tool par excellence. However, it appears that much more can be achieved with the kind of resources which NRG Potato Chips has. Based on personal interviews with the partners, my own SWOPT (Strength, Weakness, Opportunities, Problems and Threats) analysis and as my comments are as under: Strengths An excellent team of professionals A manufacturing base in terms of office space, equipment and machinery Good contacts of partners with business world. Self generated export business and hence first hand knowledge of the foreign buyers and the markets. A very close and harmonious social relationship among partners is seen. It is an indicative of a similar social status of all the partners. Each partner is capable of managing the business of its own and each one of them very strong in some specific areas of operation. Thus a positive synergistic effect is possible for the entire group of members. Presence of both domestic and export markets in NRG Potato Chips market mix enables knowledge of both the market. Availability of a pool of experience and information through its association is a plus. Product line, at least the one associated with Potato Chips has a tremendous growth potential, both in international and domestic markets. 1. Capacity to raise more funds, both in emergency as well as in normal circumstances i.e., during expansion or diversification. 2. Honesty and boldness amongst partners to criticism and accept criticism. Weakness Size: To my mind this appears to be a major weakness in case of NRG Potato Chips. Unlike other large scale organisations, where only one entrepreneur manages the show, it has working entrepreneurs. It cannot remain as a large scale organisation. It has to grow big and utilise fully the entrepreneurial talents available to it. The present size is not optimum and this is leading to under-utilisation of the time of the directors. The whole Woking of it has to be reorganized to utilise the 'human resources’ available to it. Product Portfolio: Though so far has been able to generate sales from only two lines, but the lines have very narrow product-market scope and could prove vulnerable in the long term. A balanced portfolio could be one which would enable NRG Potato Chips to generate sufficient funds to achieve its growth and the present objectives. Lack of 'systems' appears to be another weakness of NRG Potato Chips. Today, whatever information (mainly financial) is generated appears to be an end in itself. (Parente, D. (2004), advertising campaign strategy: A guide to marketing communication plans, Ohio: Thomson, South Western) Further, it is being generated, because it has to be generated. Thus, the most important aspects of 'systems' to aid in decision making- advance alarming, forecasting, control, etc., are missing. This would require development of attitude, skills and a way of working. The entire organisation and not the directors alone, have to be reoriented to develop a culture for systematic working. Creation of this culture at this stage is very important as only this would enable a better growth. If not introduced today, corrective actions would prove very expensive at a later date when gaps would start surfacing between the 'operations' and 'work attitude'. Important is to arrive at as balance between 'persons based operations' and 'systems based operations' and the time to act is 'now'. There is a need to develop budgets and monthly cash flow statements. There is a need to develop reports, which would consider the various lines as different profit centres. There is a need to develop corporate plans and hence to develop strong market and marketing information systems. There is a need to develop corporate plans and hence to develop strong market and marketing information systems. There is a need to coordinate production between two units and subcontracting, and there is a need to manage materials as raw materials today from 80% of cost and 98%. Heavy reliance on borrowed funds could cause a serious financial problem. The financial position has deteriorated to the extent that seems to be having a negative working capital. It not only means reduction in profits due to heavy interest burden, but it may also mean shortage of working funds for day-to-day operations.( Primary data collection methods (2007), at: http://brent.tvu.ac.uk/dissguide/hm1u3/hm1u3text3.htm (Accessed: May 11, 2008) My apprehension is that in the near future, unless finished goods are liquidated earlier, would face serious working funds problems and would be forced to borrow more money from outside at very high interest rates and become vulnerable. More professional and 'impersonal' attitude may prove beneficial for the entire organisation and hence for its partners too. Another weakness appears to be a wide gap between the skills and competence of partners and the permanent staff. NRG Potato Chips has to grow and it has to have a proper team to manage its operations. Whereas Directors have to devote more and more time on strategic and external issues,' the people employed have to be developed, such that they can be delegated with more authority and responsibility to manage internal operations competently NRG Potato Chips cannot and should not, glorify for all times to come, in the competencies of its directors. In fact, much more could come when Directors would be able to develop a competent team of working executives and ultimately play a directional role. (Kotler, Ph. 2002, Marketing Management, 11th Ed, Prentice Hall, London) Opportunities Global Aspiration The desire to explore does not have any boundaries. Adventure does not come with any limits. Discovery does not have an end. These are as vast as the greatness of the eating habits too. And it is this belief that has been continuously driving NRG Potato Chips forward in all its endeavours. It is this belief that has taken NRG Potato Chips beyond any country’s borders. And it is these beliefs that will help NRG Potato Chips push the frontiers of the style and quality to bring you only the best. With a number of showrooms already opened and opening in cities around the world, NRG Potato Chips is truly becoming a global brand. Problems Problems could be both due to internal weaknesses of the organisation as well as due to exogenous factors beyond the control of an organisation. Whatever may be the cause, they need to be known in the first place and then solutions have to be found to solve them. To my mind, the following appear to be NRG Potato Chips’ Manufacturing’s problems: 1. Uncertainty of its future, especially of its relationship with diversifies market. This uncertainty has to be removed at the earliest, as otherwise it might lead to a strange paradox; Low motivation of directors because of the incongruous relationship. 2. Low flexibility and lack of choice business, as the principal can supply only one grade and has limited capacity. 3. Increasing costs and inability to pass the higher costs to the buyers. How does NRG Potato Chips influence the potential customers in the market? These strategies are formulated and implemented by firms which want to grow. Such firms have to maintain sustainable competitive advantage by delivering superior value to the customer. Although it is difficult for any firm to be an ideal growth business, it is worth attempting to reach that ideal. Some of the important characteristics of an ideal growth business are given below. 1. A near monopoly that can dominate a market because of patents 2. A business where the rate of growth in profits is far higher than the rate of growth in sales 3. And the business which can grow independently in the economic cycle 4. A business that has a constantly high rate of inquiries and new repeated orders 5. A business that is dependent on management talent. Value for Money Growth firms provide value for money to their customers. They provide so much value to the customers compared to the cost involved that the customers are promoted to buy the product or service repeatedly and/or in larger quantities. Maintaining Leadership In a competitive environment, maintaining leadership is not easy. New substitutes and products made using new technologies would keep entering the market eroding competitiveness of existing firms. Under such circumstances, constant product improvement becomes essential to maintain product differentiation. Even in fields where competition is limited, it is worth attempting technological improvements either for cost reduction or product improvement. This means that the experience curve of such firms keep shifting continuously. Flexibility Entrepreneurs should be able to change their strategies according to environmental changes in order to register fast growth a firm would have low or high flexibility, and would operate in stable or unstable environments. The above discussion shows the need to retain flexibility in enterprise activities from the very beginning. Success and growth of new enterprises depend on their ability to overcome their inherent weaknesses and to understand the environment and factors influencing it. Quality-cost Link Another strategy which is very successfully followed by several fast growth small scale enterprises is cost leadership. Developing high quality products is certainly a rewarding strategy under normal conditions, but will be counterproductive unless the market is ready to receive it. In other words, entrepreneurs have to find an optimum mix of quality and cost strategies. Here in the company this turns to be the greatest achievement. Networking Networking should emerge itself as a system to be very effective in the long run. The style and culture of the personnel would influence it. Networks can be built up for both operating and strategic purposes. NRG Potato Chips used the vital strategy and they cannot be opportunistic in developing and maintaining networks. It always has a 'quid pro quo' sense and therefore all the parties involved in a network should stand to benefit materially or emotionally. Time Earlier it was briefly mentioned that a fast growth paced NRG Potato Chips was able to respond to customer requests fast. In these days of increasing competition, entrepreneurs can build competitive advantage based on time, shorter the time, better it is. The Need for Strategic Planning Strategies of one’s own will not make any firm fast growth oriented. Organisation structure and systems also play significant roles in turning a strategy successful. These three things - namely, analysis of the market demand, the competitive situation, and the trade practices — NRG Potato Chips utilised very much are important for sound market assessment. Market Demand Analysis One of the trickiest questions that haunt an entrepreneur is: Whether the product or service that he wishes to offer to the market will have sufficient demand or not? The actual situation, however, is not so simple. The demand picture for most products and services is very complex and unstable. Even after much advancement in the field of marketing, demand forecasting remains a grey area. There are a large number of variables and assumptions involved in any exercise of demand estimation.” Many factors that impinge upon the demand for a product are external to the firm and hence uncontrollable. These include behaviour of the customers and competitors, government policies, technological breakthroughs, and general economic conditions. Many assumptions are required to be made which may or may not come true. The process becomes more complex for products which are innovative and yet to be tried in the market.( ANSOFF HI1984 Implementing strategic management New Jersey: Prentice) Product Positioning: Positioning in the market-place means deciding how the product will be perceived by potential customers. A product positioning statement should clearly show the end-use, and the benefit sought to be delivered. For example, a possible positioning statement for a light commercial vehicle could be "a’ tough, long lasting, durable, reliable, premium-priced vehicle designed for fast and easy loading and maintenance". The specific consumer benefit offer by a product is an integral part of the products position, but position is a more comprehensive concept. Positioning reflects the fusion of product class, product proposition and distance from competing brands to enable the best possible approach to the target consumers. Perceptual mapping and other marketing research inputs are used to map positions in consumer perceptions and products are targeted at these. A statement of product positioning should define how the product will be placed in the market and in consumer perceptions relative to the competitor's products. PRICING THE PRODUCT There are two basic approaches to pricing a new product, the cost plus pricing and the market oriented pricing. The former involves estimation of all cost elements and adding of the targeted rate of return to arrive at the price. Market oriented approach on the other hand centres on estimation of consumer's valuation of the product/some basic guidelines could be use the products target market and positioning strategy. If the product is arrived at a niche market, one with specialized needs and if the positioning is a highly differentiated one, in essence you have a mini monopoly situation. A premium price strategy would be a good route to follow. Conversely if the product is not well differentiated from competitive products and if the target market is also served by others, a competitive pricing policy would be more appropriate. Low price marks a good weapon to apply when you have a real and sustainable advantage. Similarly, a low price strategy makes sense when it is a part of a long- term strategy to sacrifice profits to cultivate market share. Market Demand According to one definition, demand refers to the willingness and ability of consumers to buy products and services. Thus, when the consumers have both willingness and ability to buy a product, we say that there is demand for it. This is a very broad definition and if we consider all the potential customers who have the willingness and ability to buy a product we arrive at what is termed as its 'total market' or its 'potential market . A firm has its own area of operations and is normally concerned with the demand for the product in that particular area or market. Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing programme. As far as NRG Potato Chips is concerned, this has been utilised considerably. Conclusion The general overview of the system adopted by the NRG Potato Chips according to information revealed by the management is that company at present has show rooms located at different metropolitan cities and supply of the goods happen from these locations to direct retail outlets as per the order placed or anticipated orders. The SWOPT analysis has very clearly pointed out the Strengths, Weaknesses, Opportunities, and Problems etc. The efficacy of logistics understands these elements as, what of the source that company lack need to be outsourced and what company has needs to be strengthened as early as possible. The entire purpose is to understand the elements of business process to develop a corporate strategy that would fulfil the goals of the organisation. Recommendations In NRG Potato Chips we would like to see it in its operations more conspicuously over the time and for that concerted efforts are needed at all levels even though it seems to have achieved a great deal. Starting with an excellent strategy, which it has already undertaken, the company can periodically take stock of the progresses made at various levels so as to bolster other plans that could go into making the company the best runner in its segment. The company must also look at the weaknesses that it has and keep working on the same so as to create zero error working and production environment. REFERENCES 1. Kotler, Ph. 2002, Marketing Management, 11th Ed, Prentice Hall, London Start your market research here, R567-579/ (Accessed : May 11, 2008) 2. Parente, D. (2004), Advertising campaign strategy: A guide to marketing communication plans, Ohio: Thomson, South Western 3. ANSOFF HI1984 Implementing strategic management New Jersey: Prentice. 4. Primary data collection methods (2007), at: http://brent.tvu.ac.uk/dissguide/hm1u3/hm1u3text3.htm (Accessed: May 11, 2008) 5. AAKER DA 2001. Developing business strategies. 6th edition. New York: Wiley. 6. Tutor2u (2007), Marketing: Product positioning, at, http://www.tutor2u.net/business/presentations/marketing/productpositioning/default.html (Accessed: May 11, 2008) **************************************************************** Read More