Rachels Organic Dairy - Marketing Analysis - Essay Example

Rachels Organic Dairy: A Marketing Analysis By You Your Academic Organisation Contents Introduction…………………………………………………………….. 3 2. Report Brief…………………………………………………………….. 3 2.1 Methodlogy/Evaluation Criteria………………………………… 4 2.2 Limitations………………………………………………………… 4 3. Market Analysis………………………………………………………… 4 3.1 Demographic Trends – Ageing Consumer…………………… 5 3.2 Segmentation of the Older Market…………………………….. 6 3.3 Geographic Marketing Opportunities…………………………. 6 4. Marketing Communications Analysis…………………………….. 6 4.1 Rachels Organic Dairy – General Analysis…………………. 7 4.2 Rachels Organic Dairy – Detailed Analysis…………………. 8 4.3 Competitor Analysis – General Analysis…………………….. 9 4.4 Competitor Analysis – Detailed Analysis……………………. 9 4.5 Key Findings………………………………………………………. 10 5. Market Entry Issues………………………………………………….. 11 5.1 Risks……………………………………………………………….. 12 6. Future Roles & Relationships……………………………………… 13 6.1 Brand Definition………………………………………………….. 13 6.2 Effective Communication with Key Market Segments…….. 13 6.3 The Next Stage – Recommendations………………………… 14 7. References…………………………………………………………….. 16 1. Introduction Rachels Organic Dairy has grown by a significant margin since the 1980s, as the consumer demand for the companys organic yogurt products continues to increase. Headquartered in Aberystwyth, West Wales, Rachels Organic Dairy is currently in the preliminary research stage for proposed expansion from its traditional UK-based consumer market into Sweden, a member of the European Union. The companys intention to expand its yogurt brand presence to include Sweden is an indication that market conditions and consumer demand for yogurt, on an international level, provides for a lucrative marketing opportunity in the Baltic Sea region. However, despite Rachels Organic Dairy currently strong financial position, expanding into an unknown market creates the potential for significant risk-taking in the growth initiatives as well as creating marketing problems in relation to sending the appropriate marketing message to its new consumer population. 2. Report Brief Rachels Organic Dairy maintains sound and viable marketing campaigns which have experienced tremendous success in the UK. However, expansion into the Swedish marketplace requires an analysis of EU consumer attributes and an understanding of what drives social beliefs in this region regarding organic dairy products in order to better segment this potential market opportunity. This report will identify key issues associated with expansion into Sweden including potential risks, market conditions in the Baltic region, competitor trends, and social influences in this new potential sales environment. This report further identifies potential marketing methods available for Rachels Organic Dairy to establish a strong brand presence in the Swedish marketplace. 2.1 Methodology/Evaluation Criteria Utilising a variety of secondary resource materials, a competent competitor analysis was accomplished. Likewise, pre-existing research studies have offered this report a much clearer perspective on Swedish consumer behaviours in order to recommend a viable strategy for the expansion of Rachels Organic brand into the EU. 2.2 Limitations The only notable limitation to this research is the lack of a primary research study targeted at Swedish consumers. The utilisation of secondary research addresses questions of the reliability of previous research findings in terms of guaranteeing accuracy in relation to Swedish consumer attributes. 3. Market Analysis The Swedish marketplace is cited as consisting of consumers who demand products of superior quality whilst also exhibiting a marked awareness of product pricing levels (Wikstrom, 1997). In most respects, the Swedish consumer is recognised as multi-faceted, suggesting a duplicitous behaviour where the same group of Swedish consumers can be seen drinking champagne whilst also buying products second-hand (Wikstrom, 1997: 261). Companies actively seeking opportunities in this country face a complex consumer environment. 3.1 Demographic Trends – Ageing Consumer The ageing consumer, representing the 50+ market, is quite sophisticated and focused on perceived product quality (Crawford, 2006). Despite the fact that this over-50 market is experiencing significant growth, only 5% of total worldwide marketing budgets are aimed at this influential market (Van Riper, 2006). Further, this market is cited as a group that is mad as hell as the over-50 consumer market argues that marketing entities are not sending communications which represent their interests and lifestyles (Crawford, 2006). Worldwide, it is suggested that the majority of older consumers in developed nations maintain the highest levels of disposable income of all other markets combined, with this market exhibiting marked desires to look and feel healthy and vibrant (Boone & Kurtz, 2007). Rachels Organic Dairy maintains an emphasis on health and nutrition as part of the companys organic traditions, which is likely to appeal to the health-conscious, over-50 consumer. 3.2 Segmentation of the Older Market The 50+ consumer market in Sweden can be segmented into two distinguishable market opportunities by age demographics: The 50-64 group and the 65+ market. Broken down further, these two market segments can be identified as the health-conscious market and the fun-seeking market, involving a personal focus on personal satisfaction and pleasurable experiences (Boone & Kurtz, 2007). Rachels Organic brand currently targets this influential group with marketing communications focusing on the pleasures of its yogurt and its taste sensations (Rachels Organic). 3.3 Geographic Marketing Opportunities Sweden maintains a low population density, with the majority of its 8.9 million consumers located in strongly urbanised regions of the country (Jupiter Research, 2007). Focusing marketing communications to target major cities, such as Stockholm, will guarantee a more effective marketing campaign and will reach a larger majority of the consumer populace. The major cities of Sweden are well-developed, with a quality infrastructure in place which allows adequate distribution of product across the country. 4. Marketing Communications Analysis Rachels Organic Dairy has found tremendous success with its existing marketing campaigns in the United Kingdom, however expansion into nations within the European Union represents significant challenges for the company. Strong competition exists in this region, emphasising the need for Rachels Organic Dairy to diversify its marketing communications to appeal to the foreign consumer and subsequently build increased value to the brand. 4.1 Rachels Organic Dairy – General Analysis Currently, Rachels Organic Dairy has segmented its existing markets into four specific consumer segments: Youth consumers (demographic), health-conscious consumers (lifestyle), fun-seekers (psychographic), and environmentally-conscious consumers, which have brought significant growth to the company and increased brand loyalty in the UK. Rachels Organic Dairy focuses its marketing efforts on the long-term, positive health benefits of its organic yogurt toward the health-conscious consumer, currently offering a low-cost diet book under the Rachel Organic brand. The company promotes a 10 lb weight loss plan under its proposed two-week yogurt diet (Rachels Organic, 2007), promoting the routine consumption of Rachels Organic products as a key to maintaining quality health. Rachels Organic Dairy further appeals to the youth consumer, offering a wide variety of portable yogurt snacks with packaging that is visually-appealing to the youth market. The companys website provides an interactive online experience, promoting trivia questions and youth-oriented communications designed to deliver increased brand loyalty to Rachels Organic brands. 4.2 Rachels Organic Dairy – Detailed Analysis Appealing to the environmentally-conscious consumer is a significant portion of Rachels Organic Dairy moral mission. The company cites its moral obligation to treat all animals as sentient beings, raising the quality of life for the dairy cow through organic farming methods (Rachels Organic, 2007). Environmental advocacy is a significantly growing trend worldwide, making Rachels Organic Dairy a leader in providing consumers with a product that gives back to the natural environment. In Sweden, a recent study indicated that Swedish consumers maintained more positive attitudes toward food products with eco-labels indicating the environmentally-friendly objectives of various food manufacturers (Grankvist, Dahlstrand & Biel, 2004). This represents a tremendous opportunity for Rachels Organic brand, as its existing focus on environmentally-conscious objectives will serve the company well in Sweden. The existing link between Swedish consumer preferences and the companys current eco-friendly marketing campaign illustrates the increased value of environmental initiatives in this EU nation. This also reflects a significant opportunity to minimise total marketing costs when entering the Swedish marketplace, as pre-existing marketing literature maintaining a focus on the eco-friendly mission of Rachels can be carried over into the Swedish marketplace. 4.3 Competitor Analysis – General Analysis Groupe Danone, one of the worlds leading organic yogurt producers, headquartered in France, has experienced a significant increase in market share in the organic foods industry through aggressive sales and marketing campaigns. Danones products can be found in Europe, the United States, and Asia, having recently established a joint venture with China Mengniu Dairy Co. to produce and distribute quality dairy products (Wall Street Journal, 2006). Group Danone remains focused on expanding its yogurt brands on a global scale, representing a significant competitive player in the EU marketplace. Group Danone maintains a wide variety of recognisable, international brands including Activia, Actimel, and Stonyfield Farms, the companys foreign subsidiary operation (Danone.com, 2007). 4.4 Competitor Analysis – Detailed Analysis Groupe Danone, outside of its vast yogurt product line, is actively establishing the presence of its brands in the European Union, with an emphasis on building perceptions of corporate social responsibility. Recently, Danone partnered with the EU Childhood Obesity Programme, designed to generate nutritional research into reducing the volume of overweight children in Europe (Ooms, 2004). Moreover, Groupe Danone cites that 58 percent of its total dairy sales revenue is generated by consumer markets in Europe (Danone.com, 2007). This represents a significant marketing effort to build brand preference and brand loyalty for the Danone brand within the European Union. With statistics illustrating that the EU makes up nearly 50 percent of the total market for organic food products (Dimitri & Oberholtzer, 2004), Group Danone is well on its way to establishing a strong brand in the EU, representing a significant competitive challenge for Rachels Organic brand. Group Danone promotes its healthy yogurt products with a strong reliance on television advertising. Its most recent product, Actimel, features people engaging in high-energy activities including limbo-dancing and roller-blading (Precision Marketing, 2006). In Europe, Actimel brand proposes a two-week challenge, promising to enhance better health in a short period of time through consumption of this high-cultured yogurt product (Precision Marketing). Danone carries a strong cash position (Danone.com), allowing this competitor to utilise the vast television-viewing society in the EU to promote its brands through broadcast mediums. 4.5 Key Findings Of all of the nations in the EU, Swedish consumers appear to be the most familiar and favourable toward product logos and various corporate symbols on food packaging (Leire & Thidell, 2004). This acknowledgement represents that building brand recognition through the appropriate utilisation of the company logo represents a significant brand-building opportunity in Sweden in the pursuit of out-performing Group Danone in this growing marketplace. Further, it is recognised that French consumers are highly-resistant to foreign influence in relation to national pride in Group Danone. A recent situation where PepsiCo had been rumoured to desire acquiring Group Danone led to overwhelming national revulsion at the idea of a foreign industry takeover of Danone (Hartnett, 2005: 30). This represents a considerable competitive challenge for Rachels Organic brand as devout patriotism of Group Danones significance to the French people tends to illustrate that Danone will aggressively battle foreign marketing efforts in order to remain the European leader in organic products. 5. Market Entry Issues Currently, Sweden imports only 30 percent of the organic products the nation consumes (Lohr, 2006). This 30 percent statistic includes not only yogurt products, but a culmination of meats, grain and other organic products. Though this represents a 30-40 percent increase in the last decade (Lohr), it does represent a significantly smaller ratio of importation than that of other developed nations. Strong domestic food production is a notable limitation to potential export volumes for Rachels Organic Dairy. Sweden is part of Scandanavia, however this region is cited as a very messy market with lots of different languages and cultures (Tunage, 2006: 31). This suggests that conquering this particular Baltic region is a significant obstacle in terms of supplying the appropriate marketing messages to a diverse consumer population, and ensuring adequate translation in all Swedish language-oriented communications. 5.2 Risks Competitive entities are rapidly identifying the EU nations as tremendous marketing opportunities. The largest risk to Rachels Organic Dairy involves limited shelf space at local retailers in Sweden. Stoneyfield Farms, a subsidiary of Group Danone, suggests that the largest issue in yogurt distribution is a high volume of competitor products leading to a localised inability to dominate grocery shelf space (Hartnett). Much the same as other Westernised nations, Sweden maintains rigorous legal systems to protect the consumer from unethical marketing practises and misleading advertisements. The Swedish Consumer Ombudsman is authorised to generate legal action against any foreign marketing entity which utilises inappropriate marketing campaigns (econsumer.gov, 2007). Though Rachels Organic Dairy maintains the utmost morality with its current marketing campaigns, the existence of Swedish consumer advocates tends to illustrate that consumers are marketing-savvy and are fully-prepared to identify any misleading product suggestions. Further, the currency of Sweden is the Swedish krona, however the establishment of the euro currency format has been known to provide significant difficulty for foreign marketers in the Baltic region. Firms often experience issues in getting their financial organisations to accept credit charges in more than one currency, making it difficult to indicate precise prices in more than one denomination (Perner, 2005). Exchange rate differences between the krona and the euro can potentially create price discrepancies which can erode profitability. 6. Future Roles & Relationships In order for Rachels Organic Dairy to build a strong brand presence in Sweden, it must identify its appropriate target segments and establish appropriate marketing messages designed to appeal to various cultural beliefs and lifestyle preferences. Rachels Organic brand faces considerable positive opportunities to make a name for itself in this diverse market. 6.1 Brand Definition Currently, Rachels Organic Dairy is a leader in the United Kingdom marketplace. However, in order to entice Swedish consumers to provide a similar loyalty as their counterparts in Britain, the firm must position its brand from a pre-existing focus on the tangible product to that a lifestyle brand (attitude branding). 6.2 Effective Communication with Key Market Segments In Sweden, 73 percent of the population are active Internet users (Kavanagh & Skold, 2005). Furthermore, Sweden boasts 4.4 million subscribers to TVHH, a pay-TV service which is currently providing multi-channel service to 90 percent of Swedish homes (Jupiter Research, 2007). This provides ample opportunity for Rachels Organic to establish massive advertising campaigns using modern media technologies. It has been established that eco-friendly initiatives will serve the company well in Sweden. The utilisation of existing marketing literature emphasising the companys vested interests in providing organic-quality yogurt products and in sustaining quality breeding for dairy cows must be geared toward the Swedish environmentally-conscious consumer. This represents a rather low cost effort on behalf of Rachels Organic Dairy as its brand is currently positioned in the UK to highlight its eco-friendly initiatives. Appealing to this market can be accomplished through the establishment of a Swedish-language website heralding the accomplishments and history of Rachels Organic Dairy as a leader in environmental initiatives. It is further cited that Swedish consumers respond positively to companies which exhibit an ethical orientation (Belk, Devinney & Eckhardt, 2005). To appeal to its proposed eco-friendly market segment, Rachels Organic brand must strongly emphasise its current environmental policies regarding its organic production strategies. 6.3 The Next Stage – Recommendations Sweden maintains a strong economy in relation to other EU nations, boasting a considerably low unemployment rate This represents a potential market with increased availability of disposable incomes, allowing Rachels Organic Dairy to appeal to the fun-seeker segment in Sweden. Yogurt is recognised as shifting away from its traditional consumer perceptions to more of a lifestyle staple item in Europe (Hartnett). This represents an opportunity for Rachels Organic brand to position its yogurt as a lifestyle, staple product, appealing to both the health-conscious segment and mass markets in unison. Since Rachels Organic Dairy currently maintains no presence in the European Union nations, the company faces a tremendous challenge in the preliminary stages of international marketing. Building brand awareness is the first step in gathering consumer loyalty for this quality brand of yogurt products. With such a high percentage of Swedish consumers currently online, Rachels Organic brand should promote a strong incentive to trial the yogurt brand using a buy one, get one free opportunity, promoted on the companys Swedish-language website. Using the Internet as a marketing tool will provide broader consumer exposure to Rachels Organic brand and also provide a short-term inducement to steer the target audience immediately toward a product purchase (Siegel, 2006: 305). The intention of such an incentive is to build rapid brand awareness and, ultimately, brand preference for Rachels Organic. In many respects, the current marketing strategies experiencing success in the UK are sound and viable tactics to appeal to the Swedish consumer segments. It is recommended that a majority of pre-existing campaigns be carried over into the Swedish marketplace, with additional cultural recognition and language-appropriate advertisements designed to appeal to the health-conscious and fun-seeking consumer categories; suggesting that segmentation strategies focus more on psychographic segementation in relation to lifestyle and values. Future success of Rachels Organic Dairy is strongly dependent on social beliefs which currently link healthy lifestyles with yogurt consumption. A decade-long increase in total sales volumes of organic yogurt tend to illustrate that consumers will continue to perceive yogurt as a healthy dietary supplement for years to come. It is recommended, however, that Rachels Organic Dairy continue to monitor social trends routinely (through appropriate marketing research) to witness whether consumers have adopted alternative food options in the pursuit of a healthy, balanced life. In this event, Rachels Organic must reposition its product to fit these potentially new consumer preferences. 7. References Belk, R., Devinney, T. & Eckhardt, G. (2005). Consumer Ethics Across Cultures. http://repositories.cdlib.org/cgi/viewcontent.ogi?article=1024&context=crb. Accessed 19/4/2007. Boone, G. & Kurtz, D. (2007). Contemporary Marketing. 13th ed. Thomson South-Western, United Kingdom: 218,225. Crawford, Matt. (2006). Over-50s Marketing: To turn the New Grey into Gold. http://www.iqpc.co/uk/binary-data/IQPC_CONFEVENT/pdf_file/10643.pdf. Accessed 18/4/2007. Danone.com. (2007). Danone goes organic. http://www.danone.com/wps/portal/ jump/DanoneCorporateIntl.Press.News.CommunZoom/news. Accessed 18/4/2007. Danone.com. (2007). News. http://www.danone.com/wps/portal/jump/ DanoneCorporateIntl.Press.Commun2004PressRelease/. Accessed 19/4/2007. Dimitri, C. & Oberholtzer, L. (2004). Europe Subsidizes Organic Farms while Market Obsessed US Does Little. Organic Consumers Association. http://www.organicconsumers.org/ofgu/subsidies021206.cfm. Accessed 20/4/2007. Econsumer.gov. (2007). How Sweden will handle your complaint. https://www.econsumer.gov/english/contentfiles/country/sweden/handle.html. Accessed 19/4/2007. Grankvist, G., Dahlstrand, U. & Biel, A. (2004). The impact of environmental labelling on consumer preference: negative vs. positive labels. Journal of Consumer Policy. Dordrecht: 27(2), 213. Hartnett, Michael. (2005). The Yogurt Culture. Frozen Food Age. 53(6), 30-32. Jupiter Research. (2007). Sweden. http://www.jupiterresearch.com/bin/item.pl/ research:vision/1243/id=98493/. Accessed 19/4/2007. Kavanagh, R. & Skold, B. (2005). Libraries for the Blind in the Information Age Guidelines for Development. International Federation of Library Associations and IFLA Professional Reports. Number 86. Leire, C. & Thidell, A. (2004). Consumer perceptions, understanding and use of product related environmental information. International Institute for Industrial Environmental Economics. Copenhagen. Lohr, Luanna. (2006). Factors affecting international demand and trade in organic food products. Economic Research Service. http://www.ers.usda.gov/publications/wrs011/wrs011j.pdf. Accessed 20/4/2007. Ooms, Winny. (2004). EU, Academics and Industry Join Forces to Investigate Consequences of Early Nutrition on Adult Health. Group Danone. http://www.danoneinstitute.org/EUchildhoodobesity/corner_media/ downloads/early-nutrition-presspack.pdf. Accessed 18/4/2007. Perner, Lars. (2005). The Global Marketplace. University of Southern California. http://www.consumerpsychologist.com/international.htm. Accessed 21/4/2007. Precision Marketing. (2006). Danone hands Actimel to Liquid. London, p.1. Rachels Organic. (2007). Organic Beliefs. http://rachelsorganic.co.uk/about/ beliefs.php. Accessed 19/4/2007. Rachels Organic. (2007). Yogurt Diet. http://rachelsorganic.co.uk/news/features/yogurtdiet.php. Accessed 19/4/2007. Siegel, Carolyn. (2006). Internet Marketing. 2nd ed. Houghton Mifflin Company. New York: p.302. Tunage, Mark. (2006). Freestyler. Campaign. p.31. Van Riper, Tom. (2006). Sell Old!. Forbes.com. http://www.forbes.com/2006/ 03/03/marketing-seniors-retirement-ex_tvr_0303bookreview.html. Accessed 19/4/2007. Wall Street Journal. (2006). Group Danone: New Dairy Venture in China Expands Asia-Pacific Reach. New York, NY. Wikstrom, Solveig. (1997). The changing consumer in Sweden. International Journal of Research in Marketing. Amsterdam: 14(3), 261-270. Read More