Frozen Foods for Kids - Market Segmentation and Positioning, Marketing Mix and Budget - Case Study Example

Bouncing babies Table of Contents 1.0 Introduction…………………………..……………………………………..3 2.0 The Product…………………………………………………………………3 3.0 Macro Environment…………………………………………………………4 4.0 Micro Environment…………………………………………………………5 5.0 SWOT Analysis…………………………………………………………….6 5.1 Opportunities……………………………………….….……………6 5.2 Weaknesses………………………………….………………………7 6.0 Market Segmentation……………………………………………………….7 6.1 4-10 month’s babies…………………………………………………7 6.2 10 Months and above segments……………………………………..8 6.3 Mothers with babies/Visiting Clinics………………………………..8 6.4 Women/Mothers between 18-34 years………………………………8 6.5 Health Workers………………………………………………………9 7.0 Place/Distribution……………………………………………………………9 8.0 Price…………………………………………………………………………10 9.0 Promotion……………………………………………………….…………..11 10.0 Budget…………………………………………………………….……….12 11.0 Bibliography……………………………………………………………….13 1.0 Introduction Babies’ food has grown in demand because of changes in fertility, mortality rates, technological change and economic development. Thus, many companies are concentrated in the baby food industry as either suppliers or producers. One of the companies is the Freez-Wiz, which supplies foods from other companies and currently, the company wants to introduces its’ own brand into the retail market. Therefore, the aim of this report is to introduce the product, analyze micro and macro environmental conditions, market segmentation, positioning/place and price. The report will draw a skeleton of the budget that will be appropriate in the process. 2.0 The Product The products that will be already cooked and frozen will be sold under the name of Bouncing Babies produced by Freez-Wiz. These products will be Halal because of utilization of healthy ingredients and free from artificial elements. Moreover, the products will be suitable for all varieties of babies. The products will be ranged into two parts with a wide variety of foods in them. One range is weaning range, which will be suitable for babies who are in ages 4 – 10 months. These varieties will be smooth and mild; however, there will be specific varieties that contain smaller lumps to encourage the babies to chew and to introduce a variety of tastes. The other range is from ten months and above, which will contain larger lumps and contains ingredients that are suitable for these babies. Apart from the specific range of foods, there will be also drinks and milk that can be used by all ranges. Packaging of the product plays an important role in ensuring that the product is easily utilized. Freez-Wiz bouncing babies’ range of products is packed in weights of 250 grams in a pack that is divided into two parts; this is a unique strategy that the few companies do not utilize. Moreover, the unique casing, which is tamper-evident micro-waveable trays packs will improve the positioning of the company in terms of safety that is championed by the organization and others benefits that comes with the product. The divided packs will convenient for mothers to prepare the frozen food without problems such as preparing a lot of food at the same time. Due to the current recession, such packaging will give the opportunity to the customers to preserve resulting in management of their finances. These products will ensure that the needs of babies or toddlers are adequately met. This will give the opportunity to working parents to have alternative food for their babies apart from suckling. Moreover, the ingredients that will be used will contain the right requirements in terms of mineral content and other health conscious ingredients. This will ensure that the baby can access all ingredients and minerals that are required throughout their development. 3.0 Macro Environments Government regulations play an important role in shaping and controlling the baby food industry through frequent inspecting and ensuring that the products meet the required standards, a sector that is monitored by FSI. There have been cases of food poisoning especially baby foods imported from China and so far competitors from China have been blocked (Baby Feeding Law Group, 2008). Thus, various legal and regulatory elements are supposed to be fulfilled to ensure and guarantee the security and safety of the babies’ foods (Klopper & Petzer, 2006). The safety and health nature of the baby food should fulfil the requirements of FSI. Nevertheless, currently there is the prominent economic crisis that reduces the amount of income that can be used. The many layoffs and collapse of various industries, and increased unemployment may affect negatively the market expenditure. Therefore, the economic recession negatively affects the market, spending behaviour and customer demand and people turn to cheaper products; a strategy that the Freez-Wiz company is utilizing. Consequently, the government does not impose taxes to food staffs (Office for National Statistics, 2008). Additionally, technological changes affect the way that the products are brought to the market (distribution) and the approach that will be introduced to the customers (promotion). Nevertheless, the population of women between ages 16 – 59 is 33% while that of babies is approximately 10% (Office for National Statistics, 2008). The Office for National Statistics for the same period shows that the birth rate per woman as increased from 1.6 in 2001 to 1.9 in 2007. 4.0 Micro Environment Competition is an inherent component of any success or failure of any industry or organization. The demand for organic food is growing and most companies are maximizing on this provision. Freez-Wiz Company is exposed to a wide range of both direct and indirect competitors. The main direct competitors who produce the same variety of foods are the Numico, Heinz, Organix and Hipp Companies (Baby Feeding Law Group, 2006). These companies have developed a niche and maximizing on their reputations to extent their market share. However, there is no specific data concerning the market share but in 2007/2008 “Goodies” from Organix was the best Baby Food. The indirect competitors are the bottle and teat companies that produce accessories that are utilized by the babies, major industry players and main competitors in this sector are the Chicao, Pigeon and Avent. Moreover, there is competition towards ensuring that the companies maintain their suppliers and ensuring that they have asserted their influence. Nevertheless, the Freez-Wiz company has a wide range of both suppliers and internal machinery that can champion the development resulting to the success of their business consideration (Cespedes 1995). However, the company is not fully developed when it comes to the marketing their own brands. Thus, consideration should be put into this sector. During this time of recession, the customer has to make strict considerations in the purchasing capability. Customers buying power has been impacted by the credit crunch, even though the living standard has improved. Generally, the mothers who accounts to about 33% percent of the population and consumers – the babies who account to about 10% of the population are the main players (Office for National Statistics, 2008). Apart from the price, the customers and consumers quality products and they can go to any lengths to ensure that that their babies are feed with quality food. The main distributors are the agencies, wholesalers, retailers and sometimes directly, to the customers through the retail shops that will be strategically located. Utilizing penetration strategy most of the distributors are ready to take in the product, but with initial testing stock (small stock). Utilizing these approaches will ensure that the Bouncing Babies’ food brand reaches the customers. 5.0 SWOT Analysis 5.1 Opportunities The demand of frozen foods as increased because many mothers are employed and the fertility rate is high; lies in the range of 30-34 by 2007 (mean age of giving birth is 29.3 years). Moreover, the total fertility rate as increased to 1.9 children per woman. This creates the opportunity for the company to maximize on these age sets and number of children (Office for National Statistics, 2008). 5.2 Threats However, threats that the company as to deal with is competition. Both local and international companies are introducing a variety of baby formulae and marketing strategies that make the market turbulent. Approaches taken by Hipp, Wyeth, Numico and Heinz with the introduction of the Danone as completed changed the scenario of baby frozen food industry (Baby Feeding Law Group, 2006). 6.0 Market Segmentation and Positioning Market segmentation plays an important role in ensuring that the vision and mission statements of the organization are achieved. Frees-Wiz has split its market into five segments to ensure that they penetrate most of the specific markets. The segmentation is based on demographic strategy ensuring that the potential customers: mothers with babies, pre-natal mothers, and health workers are included in the strategy. These consumers can be found in homes and health facilities. Most mothers require natural food and have all the required nutritional standards. These segments include 4-10 months, 10-above, Mothers visiting the clinic, Mothers between 18-34 years, and the Health Workers. 6.1 4-10 months babies The products that will be produced will be smooth and mild. This is the most important segment that when their requirements are fully fulfilled will define the approach towards the 10 and above month’s segments. At this stage, most women (mothers) will be asking such questions How our formulas complements breast milk and how does it contribute to baby development? Thus, answering such questions fully will ensure that the customers’ loyalty and retention is on course. 6.2 10 Months and above segments This is an important stage because the babies should start been taught to chew and a place where introduction of various ingredients plays a crucial role. The formulas that will be offered will contain larger lumps that will ensure that the babies begin to chew. Moreover, specific ingredients will be include that will introduce the babies to a different course of food. The success of this stage will be determined by the extent of completion and fulfilment of the 4-10 months segment. Customer retention and loyalty in the 4-10 months segment will make work easier for this segment. 6.3 Mothers with babies/Visiting Clinics This is the most crucial point and convincing these mothers will increase Frees-Wiz supremacy in the market place. Mothers determine the formulas that their babies will use. Educating the mothers and ensuring the benefits that their babies will have when they utilize the formulas will play a crucial role. Proper strategizing at this stage and appropriate communication will increase the chances of these mothers been satisfied with the formulas of Frees-Wiz. 6.4 Women between 18-34 years From the statistics that are obtained, the fertility rate of women as increased and the birth rate is about two children per women. Moreover, the approximate age that the women give birth is twenty-nine years. Educating and informing this age group will improve their decision-making approach and satisfaction that they perceive. Moreover, most women in this stage are working and are ready to embrace the culture of frozen foods and at the same time ensure that there babies and children consume health and safe food (Office for National Statistics, 2008). Thus, communicating the quality of the Frees-Wiz and informing them the benefits that their babies and children will have. 6.5 Health Workers The health workers are the important people since most parents try to inquire from them the right approach to feed their babies. Winning the consideration of health workers will ensure that they are ready to market the Frees-Wiz formulas. Moreover, the health workers will be monitoring the development and growing of the baby. Thus, ensuring that the health workers are in the side of Frees-Wiz will ensure that the company formulas are at a better stand compared to the competitors. 7.0 Place/Distribution Distribution of the product and place defines the organization in the perspective of the customers. Place defines the location the product will be sold, logistic and channel availability and the market coverage. Distribution and logistics plays an important role in ensuring that the consumers receive the products. The organization will use both direct and indirect approaches towards supplying the Bouncing Babies’ formula to the consumers. The direct method includes purchasing through the internet and specific locations that the company has offices. Moreover, they will supply using the same strategy that they sell the other non-branded products (not produced by Frees-Wiz). The indirect method is the utilization of channel intermediaries such as wholesalers and retailers. Other location that plays an important role in the distribution channel is through health facilities, baby and women clubs and through supermarkets. Fig 1: Distribution Channels 8.0 Price Price is the only revenue generating part of the marketing mix. The others are the product, promotion and place, which are the cost centres. Pricing is a crucial point in which organizations are able to sell and gain revenues from their products. Factors that play an important role in setting the price include the cost of the entire production to the customer cost and the profit margin that the organization will acquire from the process. The organization should strategize a convenient approach that will result in the company gaining the market and at the same time profits. The approach that the Frees-Wiz will utilize is the price penetration strategy (Donnelly & Peter, 2002). This method is introducing a product into the market at a lower price to enable the product to gain market. Moreover, through economies of scale, if the product is liked and many consumers purchase the products, it will increase the revenues that will be collected. The cost of product of one tray is 75 pence. Additionally, there are the external factors that should be included e.g. promotional costs, distribution cost and taxes. The organization is expecting to make a profit of between 2% – 5% after they sell the product. The final price will be determined after analyzing and obtaining quotations from agencies and other distribution channels to enable calculate the profits that each level will get. Generally, the formulae that will be utilized will be Price – Cost=profit. At the end of the day, the Bouncing Baby foods price will be lower in relation to all the competitors. 9.0 Promotion Promotion plays a paramount role in introducing the product to the consumer. In the cases of Frees-Wiz, the appropriate approach that will be used is the push-pull strategy. Push strategy is important in a scenario that the customer does not know the product. Thus, the information and the product are “pushed” to the consumer through distribution and promotion (Wilson & Gilligan, 2005). Hence, in the case of Frees-Wiz, the new product Bouncing Babies’ formula is new to the market. Various approaches can be used to communicate the products to the consumer. The appropriate approaches may include advertising in parenting magazines, leaflets in clinic, bounty packs and through e-mails/Internet. Moreover, the distribution channel can be used to promote the product each wholesalers convince retailers and then retailers convince the consumer. The other approach is through pull strategy (Wilson & Gilligan, 2005). This usually occur when the customers knows the benefits of the product. At the beginning of promotion, this strategy will not go well with the company since the product is new. However, the previous records of the company e.g. supplying of baby foodstuffs can help it. Utilizing this avenue will champion the pull strategy in ensuring that the customers “pull” the product. On the other hand, pull strategy may came into play after the successful promotion through push strategy. 10.0 Budget Transactions in ₤ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals Personnel                           Salaries 750 750 1225 1225 1225 1225 1225 1225 1225 1225 1225 1225 13750 Benefits       300 300 300 350 350 350 200 200 200 2550 Taxes       250 250 250 200 200 200 100 100 100 1650 Bonuses           300     400     600 1300 Personal Total 2000 750 1225 1775 1775 2075 1775 1775 2175 1525 1525 2125 20500 Market Research                         Primary Research 750     750     750     750   600 3600 Sec. Research   350     350     350         1050 Total 750 350 0 750 350 0 750 350 0 750 0 600 4650 Marketing Comm.                         Parenting Magazine 750 750 750 600 600 600 550 550 550 350 350 350 6750 Leaflets 400 400 400 400 400 400 400 400 400 400 400 400 4800 Bounty Packs 750 750 750 750 750 750 750 750 750 750 750 750 9000 Emails/Internet 650 650 650 650 650 650 750 750 750 700 700 700 8250 Total 2550 2550 2550 2400 2400 2400 2450 2450 2450 2200 2200 2200 28800 Customer                         Lead Generation 150 150 150 75 75 75 75 75 75 75 75 75 1125 Loyalty       750     750     750     2250 Total 150 150 150 825 75 75 825 75 75 825 75 75 3375 Channels                         Communication 500 500 500 600 600 600 400 400 400 350 350 350 5550 Promotions 650 650 650 600 600 600 750 750 750 600     6600 Commissions 120 120 120 100 100 100 100 100 100 100 100 100 1260 Totals 1270 1270 1270 1300 1300 1300 1250 1250 1250 1050 450 450 13410 Other                         Telephone 700 700 700 550 550 550 550 550 550 350 350 350 6450 Computers 1500     750                 2250 Travel 750 750 750 600 600 600 500 500 500 400 400 400 6750 Postage 300 300 300 150 150 150 120 120 120 100 100 100 2010 Total 3250 1750 1750 2050 1300 1300 1170 1170 1170 850 850 850 17460 Monthly Expenses 9970 6820 6945 9100 7200 7150 8220 7070 7120 7200 5100 6300 88195 Quarterly Expenses 23735     23450     22410     18600 88195 11.0 Bibliography Baby Feeding Law Group, (2006), Strategies Used by the Baby Food Industry in the UK, Available at: http://www.babyfeedinglawgroup.org.uk/pdfs/hardsellformula.pdf [Accessed 7 March 2009] Cespedes, F., Concurrent Marketing: Integrating Product, Sales and Service, 1995, Harvard Business Press, New York. Donnelly, J.; Peter, P., Preface to Marketing Management, 9th Ed, 2002, McGraw-Hill, New York Klopper, H.; Petzer, D., Marketing Fresh Perspectives, 2006, Pearson South Africa, Cape Town. Office for National Statistics, 2008, UK Statistics Authority, Available at: http://www.statistics.gov.uk/default.asp [Accessed 7 March 2009] Wilson, R.; Gilligan, C., Strategic Marketing Management: Planning, Implementation and Control, 3rd Ed., 2005, Butterworth-Heinemann, London. Read More