Smiths Original Chips Market Audit Report - Case Study Example

Smith’s Original Chips Market Audit Report Name Institution Table of Content 1.0 Introduction…………………………………………………….………………..……….3 2.0 The Australian Target Market…………………………………………..………………..3 3.0 Marketing Mix……………………………………….……………………….…………..5 3.1 The Product………………………………………………………………….…...5 3.2 Promotion……………………………………………………………….………..7 3.3 The Place……………………………………………………………….…………9 3.4 The Price……………………………………………………………..………….11 4.0 Competitive Advantage……………………………………………………..…………..12 5.0 Assessment…………………………………………………………………..………….13 6.0 References………………………………….….......…………………….…..…………..15 1.0 Introduction This market audit report is about a product by an Australian Company known as Smiths. The company itself deals with a rather wide variety of snacks and other food products. Nevertheless, the underlying distinguishing factor is that most of them are snacks. This company has been operating for quite some time now. In this report, the focus is on one of the oldest brands of the company. The company has a history of preparation of chips spanning from 1930. The audit is going to be carried out on old potato chips. This original product has undergone a lot of transformation up to the current date. The company’s original potato chip is called Smith’s original and the best. It has been on the market for about 80 years. It is prepared with 75% less saturated fats. These chips have dominated the market for a very long time. The originality that has been maintained has given the product the stability on the market that few products have managed. In terms of health, the Smith’s chips have been recommended by nutritionists. They contain the lowest saturated fats and that is one of the selling points for this product on the market. 2.0 The Australian Target Market The Smith’s chips are consumed by all members of the household. Nevertheless, the main consumers are children, teenagers and young adults. This is the main target that these products have been designed. The consumption of potato chips in Australian homes is over 65%. The largest component of consumers in that category is the children and teenagers. The consumption in homes is rated higher than in schools. In school the consumption is rated at about 45%. The various varieties of potato chips that have been made have features that specifically meant to meet the needs of the younger generation. The products are useful for growth. At the same time, the ease of preparation has made it lucrative to the younger generation. School-going children use potato chips when they are going to school and after schools in the evening. The older generation is not left behind as well. In as much as their consumption is quite dismal, they also feast on crisps. The motivation behind this is the fact that it is very easy to prepare the meal. This is because most of the crisps in this class of chips only require warm milk and a spoon of sugar. Those older consumers who are busy in various ways find this as a relief as it does not take a lot of time to prepare. To some elderly consumers, consumption of these products usually takes place when they have taken their children out on weekends. They find it fascinating to take part in children’s food. At the same time, studies have shown that young adults feast on smith’s chips or related snacks mostly when watching football or a movie. Having such knowledge, the company is keen to ensure that the market for the product is expanded through designing of products that meet the needs of older people. This is done progressively. The company undertakes regular market research to establish the changes in demand for the various products as the basis for the required decisions to be made. 3.0 Marketing Mix 3.1 The Product The product that is under consideration in this market audit report is Smith’s chip. This is what was originally known as the original potato chips. The product has maintained its features except few modifications done in relation to packaging. In real sense, this product has been on the market for about 80 years. The product under investigation comes in about twoor three forms. The first is the original Smith’s Thinly Cut and the original Smith’s. The products are 75% less saturated fats. Some of the packages are in 175g while others are in 260g. They are very tasty and crunchy and many prefer serving at parties. In line with meeting the needs of consumers, the products have been commended by many for being effective. One of the reasons why it was made is to act as a quick bite (Shoebridge,1996). While most children take when heading to school, young adults would prefer enjoying while watching soccer or some kind of a movie. They are very light to handle and it makes it fun for someone to consume while doing some other tasks. The nature of these products is consumer product. This is defined by the fact that these products are not purchased for commercial purposes, but rather for household consumption. The retailer sells to final consumers who finally consume the products. This is not limited to the original smith’s, but rather to all the products the company deals with. Similarly, the products can be classified as convenient products. This is because they are found in almost every supermarket or shop in Australia and many other parts. In selling these products to final consumers, there are several attributes of the products that are very appealing to the consumer (Kennedy, 2011). One of the attributes is that they are fairly priced. This is more realistic when there is a special offer. Most of them go for half prices. Another significant attribute is in line with the fact that they are very light and easy to work with. Moreover, the products are easy to prepare for serving and therefore meet the needs of busy consumers effectively. The smith’s product can be analyzed in line with three levels of the product. The first level is the core product. The core product of the original smith’s chip is ease of preparation and serving. The product can be prepared and served within the shortest time possible. The actual product is the original smith’s product. This is what the consumer carries home after purchasing (Kotler, 2001). The last level of the original smith’s chips is the augmented product. The augmented product in this product is the fact that it is light and easy to work with. In terms of branding, these products seem to have an established brand. Some of the comments that have been posted on the eBay page in relation to this product point to the fact that the product’s brand is well established among consumers. Nevertheless, it is good to point out some indications that denote that the product is not well differentiated from other products produced by other companies. This weakens the brand of the product. The packaging of these products communicates so much to the viewers. First, the products have been named after the company’s registered name, Smith’s. This affirms the emphasis of the fact that this product is one of the original products of the company. The name of the company is seen from a far because it is written in big letters. Apart from the name denoting the company’s brand, there is also the picture of real chips on the cover. The picture is very attractive to the eye. This includes the shape and the color of the pieces of chips designed on it. The original Smith’s and the Thinly Cut chips displays well cut and shaped pieces of chips that is just mouth-watering. Any viewer would love to have a bite. From the display of the products, it is fair to conclude that the company achieved differentiation strategy through that (Steel, 1998). The name is highlighted to communicate that message and I believe it is done effectively. The products are in the growth stage. Having been on the market for over 80 years, the products have been consumed by many people indeed. At this point, it can be seen that commercial adverts for these products have reduced considerably. Most of the adverts being undertaken are those for introducing differentiated products (Steel, 1998). Moreover, promotions are meant for sustaining the current consumption and that is why they are very many. At the same time, the price has also been stabilized as a way of firming up demand for the products in the growth stage. 3.2 Promotion One of the common promotions done for Smith’s is “Do Us a Flavor” promotion. This was aired in many TV channels in Australia. Another common one is “48 hours”. Besides, another common advert about Smith’s Chips was the Open Innovation Competition. The advert was run mostly in the morning and at night. The advert was also well publicized on the company’s website. This promotion was giving a chance to consumers to come up with a flavor for the next range of chips. The company heavily invested in this campaign. There were some occasions where the advert was being aired in a special way during some common shows like Current Affairs. Such heavy investment denotes the company’s commitment to publicizing the products especially those that have been differentiated (Steel, 1998). Recently, another ad that caught the attention of the public is the ‘Gday mate’. This is an advert for Smith Chips. This ad was run on various TV channels in Australia as well as websites. The captivating aspect about that advert was the sense of humor that backed up the entire advert. These are just some of the adverts that the company has used to promote the Smiths chips. At the same time, the use of social sites has been very common in relation to smith chips and other products. This is achieved through the company’s Facebook account. This indeed is a platform that the company uses to interact with different kinds of consumers (McDaniel & Gates, 2009). The feedbacks of the consumers are carefully analyzed in order to identify their salient needs. In evaluating the effectiveness of the various forms of promotion that have been used to promote smiths chips, attention is paid to the nature of the product. These products are consumed on daily basis and they are relatively priced lowly. The use of TV adverts is aimed at reminding consumers constantly (Cialdini, 2006). It is easy to conclude that every time such adverts are aired, there is an impact in the level of demand. In relation to the use of websites, the focus is upon the fact that this is one of the cheapest ways of having a product advertised. When such promotions are posted on the company’s website, the company saves a lot of money. The only challenge is that not all consumers may be willing to visit the company’s website. Another media used in promotion is the use of social media. The social media is the new trend when it comes to advertisement. It is cost effective and it can reach a wide range of consumers all over the world (Hopkins, 1996). The company’s Facebook account effectively enables the consumers to connect with the producers. In that case, the needs of consumers can be easily understood. The company’s Facebook account is: https://www.facebook.com/family/Smith/1. The company has put the required measures in place to ensure that online consumers are also targeted. The company uses the online platform both to communicate information about the products and sell the various products. One of the online shops where one can access smith’s chips is Infor Corporate Supplies. The online shop is found using the website link: http://www.unifor.com.au/Smiths-Chips. Customers can therefore place an order online and wait for the delivery. At the end of it, the various promotional strategies that have been used are aimed at communicating certain information. One of the information being communicated in some of the adverts I have seen is discount sales. The promotion is communicated to potential consumers to take advantage of discounted sales that could take place once in an occasion. 3.3 The Place Distribution in the marketing context is the transfer of goods from the producer to the place where the final consumers can easily access (Kotler, 2000). Smith’s Company has intermediaries that are used to market the goods of the company. The goods move from the producer to wholesaler. From the wholesaler, the goods are bought by the retailer who sells them to the final consumer. The nature of the product has paved way for this kind of distribution (Kotler, 1999). This channel is the main one used for distributing most of the products. This strategy has been specifically preferred because these products are convenient in nature. It is not possible for the company to deliver them directly to the final consumer. This is because they are consumed by millions of people in Australia. To succeed in distributing them, intermediaries are used. The online shop serves few customers. The platform has not grown to the level where many customers can be served through. Again, the contributing factor is the nature of the product. The Smith’s chips are low-priced goods which mean that the consumer has to make a bulky purchase to sustain all the costs that are involved (Kotler, 2001). If that is not the case, the company may suffer loss by trying to supply such products to the consumer. Allowing sales for those consumers purchasing single products will cause the seller to include all the involved fixed charges which will raise the price to unimaginable levels. This will definitely scare consumers. Distributors Item Description SKU Bar Code Qty. Per Outer 163552 50G NOBBYS SALTED PEANUTS 320004049 9310015310010 24 163569 50G NOBBYS BEER NUTS 320003375 9310015310218 24 163590 50G NOBBYS CASHEWS 320003995 9310015311512 24 413459 175G SMITH'S CRINKLE BBQ 320003436 9310015232459 12 413473 175G SMITH'S THINLY ORIGINAL 320003490 9310015232343 12 413480 175G SMITH'S THINLY SALT & VIN 320003495 9310015232350 12 Having discussed the distribution strategy that is used to supply smith’s chips and other products, its effectiveness can be evaluated in line with the PLC of the product. As already pointed out, these products are in growth stage. The use of intermediaries to supply the products will be effective in meeting the overwhelming needs of the consumers. Direct sales cannot work for these products since they have a wide market. It requires intermediaries who are situated all over to help distribute the products. 3.4 The Price Product Price Smith’s Crinkle Chips & Vinegar 175g $3.90 per unit Smith’s Crinkle Chips Original 175g $3.90 per unit Smith’s Crinkle Chips Chicken 175g $3.90 per unit Smith’s chips multipack original 6pk 114g $3.38 Smith’s chips multipack crinkle cut variety 20pk 380g $7.20 From the price of the products under study and other competitors’ prices, it is evident that the company uses competitive pricing strategy (Page, 2003). This is mainly defined by the nature of the product. These are convenient goods that are priced lowly. The companies make good returns only when sales volume is very good. As a product that is consumed on a daily basis, the company is keen not to allow the competitors take advantage and adjust the price based on the product’s elasticity of demand (Kotler, 2000). Such products are very elastic in relation to changes in price. When dealing with such a product, only competitive pricing strategy will meet the company’s needs. In relation to pricing tactics, the tactic that seems to have been used is discount. Most of the consumers have been keen to benefit from offers that come with bulky purchasing. The comments posted by customers below the smith’s chips on the eBay account provide that evidence. Most of the customers claim that they prefer buying in bulk when there is a special offer. Therefore, discount is the best strategy that effectively meets the needs of the consumers of these products. 4.0 Competitive Advantage In assessing the competitive advantage of smith’s chips, the time these products have been on the market is very significant. The products have managed to remain viable in the market for over 80 years. This in itself points to the fact that there is a secret that the company has been using to remain competitive throughout. One of the possible strategies that have enabled the company to remain competitive all through is maintaining high quality snacks (Kennedy, 2011). The original smith’s chips that we are discussing have 75% less saturated fats. This is very impressive considering the proportion of fats in most of the snacks of this group. Such snacks have turned out to be health hazards to many consumers. The fact that the two products have very low content of fats is very appealing. This is what has attracted customers who have in returned enabled the company sustain that market performance. Besides the issue of quality, checking of price against reliable parameters has also played a key role. When dealing with the products of this kind, allowing the price to skyrocket can be very costly to the company. This is because by the time one realizes the need to adjust the price downwards; the consumers would have shifted to alternative sources (Baines, Fill & Page, 2010). Therefore, in as much as the products may have a superior quality, price should never be allowed to increase so much beyond the range of most competitors. The parameters put in place are useful in assessing the elasticity of demand in order to make informed decisions regarding price variation. 5.0 Assessment In evaluating the success of the company in relation to constantly meeting the needs of consumers, the issue of longevity on the market cannot be ignored as well. For the product to be on the market for over 80 years implies that a lot differentiation has taken place over time. The performance of this product will be regarded as successful because it has managed competition for that period of time. Over that time, the company has built a brand for its products (Baines, Fill & Page, 2010). Smith’s has become a household name in Australia. The other marketing activities that have been undertaken by the company are executed with the realization that smith’s chips are already household products. Many Australians have already had a taste and this is the reason less advertisement is required. This is because the product is the growth stage and therefore sales have stabilized. Furthermore, when someone analyzes the current consumption needs, it is easier to gain an understanding on the effectiveness of the differentiation strategies used. As first pointed out, the target consumers are teenagers and children. Currently, the teenagers and children are so much used to crisps and other related snacks. Many teenagers opt to spend all their pocket money on such snacks. The trend that has been set indicates that the target group was receptive when such products were marketed to the children and teenagers. The product differentiation may not have been applied optimally because of the closeness of the products (Kotler, 2001). Much has been done especially the physical packaging in order to build a brand name using such details. At the same time, I would critique the company’s failure to design chips that specifically appeals to older. For instance, modifications in terms of packaging can work very well. This can be in form of putting a football star to appeal to football fanatics. Otherwise many consumers may want to take a bite but the design of the product sounds childish. 6.0 References Baines, P., Fill, C. & Page, K. (2010). Marketing. Oxford: OUP Oxford. Cialdini, R.B. (2006). Influence: The Psychology of Persuasion. New York, NY: Harper Business. Cresswell, J.W. (2008). Research Design: Qualitative, Quantitative and Mixed Methods Approaches. California: Sage Publications. Freenstra, R.C.(2003). Advanced International Trade: Theory and Evidence. New Jersey: Princeton University Press. Hopkins, C.C. (1996). My Life in Advertising and Scientific Research. New York: McGraw- Hill. Hubert, C. (2000). Knowledge Management: A Guide for Your Journey to Best-Practice Processes. Houston, TX: American Productivity Center. Kennedy, S.D. (2011). The Ultimate Sales Letter: Attract New Customers, Boost your sales. Avon, MA: Adams Media. Kotler, P. (1999). Kotler on Marketing: How to Create, Win, and Dominate Markets. London: Free Press. Kotler, P. (2001). Kotler on Marketing. London: Free Press. Kotler, P. (2000) Marketing Management. Upper Saddle River, New Jersey: Prentice Hall. Laurel, B & Lunenfied, P. (2003). Design Research: Methods and Perspectives. New York: MIT Press. Martinez, J., & Jarillo, J. (1991). Coordination demands of international strategies. Journal of International Business Studies, 22, 429–444. McDaniel Carl, C & Gates, R (2009). Marketing Research Essentials. New York: Wiley. Page, R.(2003). Hope is Not a Strategy: The 6 Keys to Winning the Complex Sale. New York: McGraw-Hill. Shoebridge, N. (1996). Smith’s responds as its chip sales are eaten into. BRW, 18(30), 59. Steel, J. (1998).Truth, Lies and Advertising: The Art of Account Planning. New York: Wiley. Read More