Ferrero Group Marketing Strategies - Case Study Example

Marketing Report: SWOT Analysis Name Institution Professor Course Date Executive summary This marketing plan is being formulated so as to guide Ferrero Group when introducing a new product in the South Korean market. This report will be of great purpose and value to the Ferrero Group since it will guide them in decision making. Through the report they will exploit the strengths and take advantage of the opportunities while at the same time trying to address the threats and weaknesses. The report have concluded that the best strategy that is well suited for the new product in South Korea is the SO strategy and therefore, Ferrero Group need to make use of it while introducing the new product in the specified market. 1. Introduction Ferrero group through the use of its subsidiaries engages in the making of chocolates in addition to other confectionary product and it is the third biggest confectionary company in the globe (MarketLine 2015b). The group has its headquarters in Alba Italy and has operations in America, Europe, Oceania, Asia and Africa. The company is privately owned by the Ferrero family and it is also termed to be the most secretive organization (MarketLine 2015b). Since the organization is privately owned they do not publish their financial results. The company has a wide range of products in the food and beverage category such as chocolates and associated products, snacks, bakery products, mints, drinks and spreads. The company products are marketed under various brands such as Tic-tac, pocket coffee, Ferrero Rocher, kinder chocolate and kinder joy just to mention a few of them. The company also majors in a number of iced reach in lemon, peach, natural flavors and this are marketed under the name Estathe (MarketLine 2015b). This paper sets out to offer relevant background information of the Ferrero Group and South Korea and design a new product that the Ferrero group can launch in South Korea. This report will be of great value to Ferrero Group in that it will guide them on whether to launch the product in south Korea or not and the aspects to consider when operating in the country. Currently, Ferrero Group has an employee base of 21,500 employees and they also manufactures around 365, 000 tones of their products each year. The company also recorded revenue amounting to € 8.4 million which is approximately $11,447 million in the 2014 financial year and this was an improvement of about 3.9% when compared to the revenue of the 2013 financial year. Based on the fact that Ferrero Group is privately owned, no financial statement has been released (MarketLine 2015b). 2. Market description In relation to South Korea, in 2014 the confectionary market grew by 3.6% and reached a value of $1,419.8 million. Markets forecast states that he Korean confectionary market may have a value of $1,959.5 million by the year 2019; this will be an increase of about 38% when compared to 2014. Additionally, it is also forecasted that the Korean confectionary market will have an output of about 183.9 million kilograms in the year 2019 and based on these it will be an increase of about 31.9% since the year 2014 (MarketLine 2015a). Chocolates accounts for about 61.1% of the confectionary market value in South Korea therefore making it the largest segment. In relation to the geographical segmentation South Korea has a market value of 4.8% in the Asia-pacific confectionary market. In relation to the market share, Lotte Group is termed as the leader in the confectionary market in Korean market since it generates about 38.5% of the total market value (MarketLine 2015a). The players in the Korean confectionary market are diversified but at the same time they tend to focus and place much of their attention on the food and beverage markets in most cases. When this is coupled with the lost cost of switching between the companies offering the products, it encourages the rivalry between the competing companies though the low cost of switching which is evident in most cases can be mitigated by ensuring that a company has strong branding (Pride et al 2015). Through strong branding, the consumers will have to stick to ones products as opposed to switching between the products. In instances when the switching occurs, it will be minimal. Generally, the rivalry in the market can be classified as being moderate (MarketLine 2015a). 3. SWOT Table A SWOT analysis is termed as an evaluation of the opportunities, threats, weaknesses and strengths of a company. Through the use of a SWOT analysis is that it helps companies in uncovering the opportunities that they can exploit and make use of the weaknesses that have been uncovered and implement measured aimed at making them strengths or eliminating them totally (Bensoussan & Fleisher 2008). The business also has an opportunity to exploit strengths that have been identified to win more customers and a greater market share. In relation to the threats, organizations need to manage and eliminate them. Additionally, by looking at Ferrero Group against its major competitors in the market, Ferrero can come up with a strategy to help them in distinguishing themselves from their core competitors and this will ensure that they compete successfully in the South Korea (Pride et al 2015). The table below shows the SWOT analysis of Ferrero Group Strengths Weaknesses Global availability Availability of new packaging for special events and seasonal purposes Wide range of ideal products which acts as gifts Wide range of packaging for example in 3, 30 and16 and many more High prices Believe that some of its products are not healthy Strong competition which means a limited market share Opportunities Threats Introduction of new flavors Advertising using new and modern platforms An increase in purchasing power of consumers in the developing countries Imitation of Ferrero Rocher Increase of Nurti-bars which seems to be replacing chocolates Unstable economic condition 4. Findings and explanations of the SWOT table Based on the SWOT analysis table, it is clearly evident that Ferrero group has a number of strengths and opportunities that it can exploit to their advantage (Barney 2002). At the same time it needs to deal with the threats and weaknesses so as to enhance their success in the Korean market. Strengths and weaknesses A major strength relates to its global presence. Ferrero group is available in the following continents America, Europe, Oceania, Asia and Africa making. Ferrero Group also engages in new packaging for special events and seasonal purposes and for promotional purposes and this mainly attracts the customers who are enticed by the new packaging (Barney 2002). The strength is the wide range of packing which ensures that consumers can make purchases based on their need. Additionally, a good number of Ferrero products are well suited and act as gifts. A major weakness of Ferrero Group is the high prices of their products. By pricing their products highly they target a specific group of customers which may be advantageous and also a disadvantage at times (Barney 2002). Additionally consumers all over the globe are becoming more health conscious and this may be a major blow to Ferrero group since some of their products are termed as being not healthy. Furthermore, the industry has a wide range of players making competition intense and this has an effect in that it may reduce the market share of the players in the industry. Opportunities and threats A major opportunity that Ferrero Group can take advantage of is the introduction of new flavors. The new flavor will be market to the already existing customers of the company. Based on the technological advancement, Ferrero Group need to take advantage of these and make use of digital platforms to market its products. Additionally, it can increase its presence over the globe by focusing on developing countries since consumers in these markets have experienced an increase in disposable incomes. In relation to the threats, they need to curb the imitations of their products and diversifying so as to include other products such as Nurti-bars which seem to be replacing chocolates. They need also to take note to global economic conditions for them to avoid being caught unaware (Hanson et al 2014). 5. Recommendations a. Target market Segmentation is a key marketing strategy that aims at dividing a broad target market into various subsets that tend to have common interest, needs as well as priorities (Fleisher & Bensoussan 2003). In this regard, demographic segmentation will be used in the new products to be marketed in South Korean market. The new product to be marketed will mainly focus more on the young people in South Korea since it will be a luxury product which can be consumed on the go and these target market seems to fit well with these characteristic. b. New product description When stating the new product descriptions it is essential to make use of the marketing mix which is a tool used by marketers for marketing and it is crucial in determinant the product offer and mostly it includes the four Ps namely product, price, promotion and place (Hanson et al 2014). The product to be introduced in the market will be flavored chocolate. Price is termed as the amount that a customer pays so as to get the product. In relation to pricing, since the product will be new in the market it will be fairly priced to ensure that it is purchased by a great number of people in South Korea. The pricing of this product will also complement the other three elements of the marketing mix. In relation to promotion new and advanced methods will be used. The target group being targeted tends to spend a considerable amount of their time online. Thus, the best suited promotion strategies are those that are related to technology such as internet advertisement and social media adverts. Lastly, the product will be available in a number of places to as to ease the access of the products by the consumers in the market and it will also stimulate the demand of the product through information (Hanson et al 2014). c. Customer value proposition Ferrero group will make use o the following customer value proposition as an essential part of their marketing to their target audience (Hanson et al 2014). The customer value position states that the consumers will be provided with state of art products that meets the value of money they have paid for and that meet their needs in the most appropriate manner. d. Justification of the choice of new product using at least one strategy Ferrero Group new products fit well with the SWOT analysis. A major strategy profile that is being addressed in this case is the SO strategy which matches the internal strengths with the external opportunities. Based on these, Ferrero group need to protect their strengths, such as, the global availability by extending their competitive advantage and shoring up the firm’s resources making the firm stronger and more competitive in the industry (Barney 2002). Through the use of these strategy Ferrero group will market their new products and attain the success. Through the use of this strategy, Ferrero Group will be exploiting an opportunity that has been identified in the SWOT analysis table by introducing the new product or flavors of the already existing products (Ferrel, Niininen & Lukas 2015). References Barney, J 2002, Gaining and Sustaining Competitive Advantage, Prentice Hall, Upper Saddle River, NJ. Bensoussan, B & Fleisher, C 2008, Analysis without paralysis: 10 Tools to make better strategic decisions, Pearson Education Inc, Upper Saddle River NJ. Ferrel, O, Niininen, O & Lukas, B 2015, “Marketing Principles’, Chapter 2: Marketing planning and strategy in a competitive environment, Cengage Learning, Australia. Fleisher, C & Bensoussan, B 2003, Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition, Prentice Hall, Upper Saddle River, NJ. Hanson et al 2014, Strategic management: competitiveness and globalization, Cengage Learning, Australia. MarketLine 2015a, Industry Profile: Confectionary in South Korea, MarketLine, London. MarketLine 2015b, Company Profile: Ferrero Group, MarketLine, London. Pride et al 2015, ‘Marketing Principles’, chapter 2: Environmental Analysis and Competitors Analysis, Cengage Learning, Australia. Read More