Ferreros Five-Year Marketing Plan - Case Study Example

Marketing Report Student’s Name Course Professor Date Executive Summary Ferrero’s five-year marketing plan is set for the purposes of growth, mapping for funding and inform its employees of the firm’s status and direction. Although the company launched its operations in China some few years ago, it products is now recognizable brand with a greater-than-anticipated demand. The trend reveals that the target market full of snacks enthusiasts and young consumers can buy more than what the company offers. The company is interested to extend its product line by adding new product lines. In addition, Ferrero plans to explore opportunities by reaching the mainland. The marketing environment appears receptive to company’s high-quality products- branded products with prices that reflect the interests of the customers. Over the next five years, Ferrero can extend its distribution, win new customers and offer new products. 1.0 Background Information Ferrero is a family-owned company that has operated in Europe for almost a century in the food industry. Its products include a wide range of confectionery and different brands of chocolate and snacks. It is a world leader in chocolate production and distribution. In 2007, the company set up a manufacturing unit in China and got a 12% market share in 2014 (Nieburg, 2015). Ferrero has one recognizable chocolate brand known as Ferrero Rotcher in China. 2.0 Product Chinese customers perceive Ferrero Rotcher as expensive and accessible luxury. The larger number of buyers comprise of young children, teenagers, and young adults. Apart from being an accessible snack mostly when on outdoor, Ferrero Rotcher is expensive and highly likable to Chinese consumers who are obsessed with status. Chinese also like to buy brands from foreign markets as well as being identified with high-quality products and brands that are the attributes of Ferrero Rotcher (Allen, 2010). The product is also accessible as the company places it at the conspicuous position of the major consumer products outlets. Ferrero Rotcher is packed in different sizes starting from 50g, 100g, 200g, 300g and 600g. They also have very clever advertising campaigns like when launched; they referred it as ‘gold sand’ (Yang, 2007). 3.0 The Marketing Environment and Market Analysis Ferrero Rotcher’s microenvironment will have a greater impact on the product. The way the product will be bought depends on how the firm develops a reputation among retailers not only in the cities but also in the mainland. Ferrero must prove to be a reliable manufacture and deliver the requested products on schedule. In turn, it needs to establish and maintain strong relationships with distributors and retailers (Teo, Mohamad & Fernando, 2010). SWOT Analysis SWOT Analysis Strengths Great products and tastes Excellent brand name and high brand loyalty Unique/wide range of sizes and product packaging Famous company- global company that deals with chocolate brand Product reflecting status - expensive chocolates products Weaknesses Not easily available in all places Opportunities Launch more varieties and customized gift packages Tap market on the mainland, retail chains, and growing cities through promotion Threats Calories conscious consumers Established local competitors and major chocolate brands PESTEL Analysis Economic and social factors mainly affect Ferrero Rotcher. Chinese consumers are likely to move towards relatively expensive products making pricing offer an important marketing strategy for the brand. Additionally, confectionery products in China have seen a higher demand. However, consumer highly looks for a soothing experience and thus, the promotional offer should be considered in the marketing strategy (Allen, 2010). Furthermore, the main customers for the brand include children and young adults with a low level of brand loyalty. In turn, Ferrero must keep its concepts fresh and come up with new product lines to retain its consumers. Social media is a factor to consider and exploit adequately. Competitive analysis Ferrero competes with a market leader, Mars with 39% market share and Hershey with 12% market share as Ferrero (Nieburg, 2015). Mars has better distribution strategy as it has penetrated into mainland China accessing a greater market. Hershey uses pricing strategy for its products sold at a very high price and targets urban markets where people have higher incomes. High products also distinguish its products as high-quality. Mars is highly recognizable in China, has many manufacturing units to handle greater production capacity and a number of product lines. However, its major weakness includes expensive products, new entrants favorable in the market and poor promotional strategies. Ferrero needs to understand some target markets like those of customers over 35 years. It needs to understand the gaps in the market that can be filled with new products like customized gift products to come up with a more in detailed SWOT analysis. 4.0 Markets: Segmentation, Targeting, and Positioning Ferrero needs to look at its market and focus on criteria that would promote it to reach a widespread customer base. For instance, demographic segmentation will help it use strategies to reach students who like giving gifts and perceive Ferrero Rotcher as affordable and applicable in most situations. Geographic segmentation will help it to concentrate on the cities where there are many customers and penetrate in the mainland later (Guercini & Ranfagni, 2012). Psychographic segmentation will help it leverage the market for its new products like customized birthday and graduation chocolates as congratulations gifts. Income segmentation will promote it to know where to concentrate some packages more. For instance, in the mainland, small packages can be more affordable. Finally, gender segmentation will help them apply strategies like product and packaging colours to respond to tastes and preferences among women. Above all, Ferrero should concentrate on demographic segmentation since youth and primarily students comprise of the greatest number of customers for snacks. The active consumers represent a demographic group of young, single or recently married and educated individuals at all levels of household incomes. Chinese youth and mostly those at 30 years and below like products with a reputation or status. Ferrero Rotcher uses a clever advertising strategy. In turn, young consumers often give it as a gift. They share with their friends and use to promote friendly environments that are a basic part of the Chinese population. The product responds to part of a wonderful Chinese gift-giving culture (Yang, 2007). Ferrero should place have its products in outlets near learning institutions. Young ladies also like snacks and highly like trendy colours like pink, cream white and gold. Ferrero Rotcher use of more colours, it will attract more purchasing trends. 5.0 Product Product Development Perceptual map in relation to Ferrero Rotcher Positioning Statement Ferrero Rotcher is the Chinese Favourite Cookie that delivers the sweetness and luxury because only Ferrero Rotcher can bring your friends closer every time ever where. Three levels of products Core Product- Ferrero Rotcher is an accessible daily snack providing fast nutritional needs and refreshment. The product is made of chocolate and milk to provide the body with fast energy. Generic Product- Ferrero Rotcher is a unique and accessible gift, luxurious, expensive and recognizable as a world quality brand. It will fulfill the interests of consumers who are somewhat status oriented. Augmented Product Ferrero Rotcher is a world leading brand, stylish, with trendy colors and made by a Ferrero company that has operated for over a century. It is accessible at supermarkets and in different-sized packages giving good value for consumers’ money. Product Lifecycle (PLC) graph. Ferrero Rotcher is at growth point in China, this being its seventh year in the market. At this early stages, promotional strategy and distribution strategy matters a lot to Ferrero Rotcher in China. The company need to have interesting and creative advertising and campaigns to promote brand recognition among the consumers. Distribution strategy should focus on penetrating and availing the demanded products on schedule and reach a market with over 1.3 billion consumers. At the maturity stage, product and pricing strategies will matter a lot as they will help to increase the product line and price. They can come up with customized products to cater for a market with less buying trends but with high incomes and thus sell the products at a higher price. 6.0 Price As pointed earlier, Ferrero’s products pricing takes into account the competition in the market. Ferrero will not set high prices for the sake of signalling luxury or prestige. It will also not attempt to achieve its goals by offsetting low prices in order to sell high quantities of products. However, it will use value pricing as the best practice so that its customers will feel comfortable when purchasing on a daily basis or occasionally (Guercini & Ranfagni, 2012). In turn, they can even buy a number of products even if it is just because the product’s new colours are appealing to them. Additionally, the pricing strategy makes Ferrero products good gifts to use for birthdays and graduations. The customized products will sell for Yuan 20 to 40 more compared to regular Ferrero products. Any new product will be priced competitively to offer a good value for the competition. 7.0 Distribution (Place) Currently, Ferrero is marketed through major food store outlets and supermarkets in the cities and towns. However, it has not reached some regional and local shops scattered in mainland China across the South. Festivals and holidays like Chinese New Year are seasons that tend to dictate sales (Yang, 2007). These seasons Ferrero products sell more as people like to share more. Ferrero obtains its much information concerning the overall industry trends from different geographic areas as well as various types of supermarkets and retail outlets from various trade organization and Food Industry Association. In the next three years, Ferrero seeks to expand its products distribution to retail shops in the mainland throughout the country. Focus will mainly seek to penetrate to Southwest regions. In addition, Ferrero fully intends to have an effective monitoring and strategies to maintain strong relationships with various food outlets channel and members. 8.0 Promotion and Implementation & Control Ferrero communicates with most of its consumers and retailers concerning its products in various ways. Information about Ferrero as the company and its products is dispersed via the Internet, in person and direct mailings. The promotional efforts in the firm highly seek to differentiate its products through the use of slogans and logos to make them recognizable from those of other competitors. Public relations and sales promotions currently account for the bulk of Ferrero’s promotional strategy. Ferrero marketing staff interacts with retailers when offering short-term promotions mostly tied to holidays, events or contests. In addition, the staffs’ works with several groups during events to offer Ferrero items for the purposes of promotion (Checchinato, Lala & Vescovi, 2014). Over the next two years, Ferrero will use non-traditional marketing methods as they require little money and can apply a lot of creativities. These methods will perfectly apply to the promotion activities of Ferrero. Since Ferrero’s operations in China is new and the firm is a flexible organization, it is possible for the firm to easily implement ideas like distributing candies, free water and discounted coupons during schools, regional and national outdoor sporting events. During the next two years, Ferrero focuses on engaging in the various marketing efforts: There will be a Ferrero Tour where its several staff will take turns moving across the country to various campgrounds for the purposes of distributing promotional items like Ferrero Rotcher products, stickers, T-shirts with company logos and slogans. These groups represent various institutions and regions and will help to popularize Ferrero products. Attend various events during Chinese New Year, organize outdoor events like kayak races, rock climbing and bicycling events and competitions. The participants will receive free t-shirts, water, stickers, and hats. Mostly, the activity will aim to include participating retailers to develop strong relationships and make them advocate for the firm’s products. Ferrero will design contest with group artists’ and musicians to select a theme song and winning slogan or logos to add to its products. The events will be aired through major national televisions one day per week for three months. The groups that are popular among youth and students will attract more consumers to purchase the product. The event will be repeated by the end of the year to choose another theme, slogan and logos. Ferrero seeks to engage in marketing by contributing to environmental programs to develop good public relations and create a good image among existing and potential consumers. Evaluations will be conducted on a fortnightly basis during the contests and every 45 days after contests to determine the approach that is more effective in the promotion. References Allen, L. L. (2010). Chocolate Fortunes: The battle for the hearts, minds, and wallets of China's consumers. Thunderbird International Business Review,52(1), 13-20. Checchinato, F., Lala, H., & Vescovi, T. (2014). Do distributors really know the product? Approaching emerging markets through exports. Approaching Emerging Markets Through Exports (October 1, 2014). Department of Management, Università Ca'Foscari Venezia Working Paper, (2014/19). Guercini, S., & Ranfagni, S. (2012). Rebranding strategies for the Chinese market. Finanza, Marketing e produzione, 30(4), 153-175. Nieburg, O. (March 2015). Ferrero Plans first factory in strategic Chinese market. Confectionery, Retrieved [2 May, 2015] from http://wwwconfectionerynewscom/Manufacturers/. Teo, P. C., Mohamad, O., & Fernando, Y. (2010). Chocolate Brand Familiarity and Product-Country Evaluation Among Young Consumers In Malaysia.Research Journal Of The Institute Of Business Administration Karachi-Pakistan, 5(1), 117. Yang, L. (2007). Why are Chinese crazy about Ferrero Rocher chocolates? Quora, Retrieved [22 April 2015] from http://wwwquoracom/. Read More