Market Planning - Tyrrells Company - Essay Example

MARKETING PLAN S TABLE OF CONTENTS Executive summary…………………………………………………………………….3 Mission ment………………………………………………………………………4 Objectives ………………………………………………………………………..……. .5 Market Analysis……………………………………………………………………..….5 SWOT Analysis………………………………………………………………………...6 PESTLE Analysis……………………………………………………………………….8 Marketing Strategies……………………………………………………………………10 4 P’s……………………………………………………………………………………..11 Statement of Sales forecast and financial controls……………………………………...14 Implementation and Control…………………………………………………………….14 Conclusion……………………………………………………………………………….16 Executive summary Tyrrell’s Company is manufacturer of chips which seeks to focus on the children of United Kingdom and keeping that in mind have made a marketing plan to re-introduce our light healthy baked chips. All our marketing is based on convincing our target market of the harmful effects of obesity and letting them know that CREX (light and healthy baked chips) can be beneficial for them. We position CREX in the low price high quality category where we face a fierce competition. We aim to attain a 5% market share in 5years from the competitors like Lays, Walkers and McCoy’s. For our marketing, we will adopt an Integrated Marketing Communication where all types of marketing tools that is sales promotions, advertisements, direct marketing, below the line activities as well as internet marketing are all synchronized so that there lies no conflict amongst any of them and consumers get the right image in their minds of a purely hygienic and light weight chips. MISSION STATEMENT: Tyrrell’s Company is re-introducing its CREX light and crispy chips which are not only delicious but available at cheap rates. The company aims not only to increase sales but to enhance customer equity. Our move is to increase recognition especially amongst teenage population of United Kingdom. We also aim to improve our brand image by showing other that in our attempt to sell low fat goods we are showing our environmental friendly and caring attitude towards the people who can fall a prey to obesity. OBJECTIVES: Corporate / Business Objectives: We as a “TYRELL CHIPS COMPANY” are ambitious to provide our customers the best quality of food at an affordable price. We believe in long term buyer-customer relationship and continue to adapt ourselves to the changing customers needs. Marketing Objectives: Marketing Objectives should have three characteristics of being specific, measurable and should be achievable.(Small Business notes,2009) We plan to increase sales of our low calorie baked potato chips “Crex” to the teenage group in United Kingdom. With this regard we seek to remind consumers of our product by conveying to them our Unique Selling Proposition and as a result expect sales to increase by 10% in 9 months. MARKET ANALYSIS Majority of various food manufacturers are in a struggle to produce low calorie products as pressurized by the UK government which stresses on to reduce obesity amongst children.(Red Orbit 2007) .A 10.6% share is held by the bakery products segment in which low-fat potato crisps have a lead. Hence, most of the companies use corn and rice based products to increase dietary element and reduce any chance of gaining weight especially at the teenage level. There is great competition between different potato chips manufacturers in an attempt to sell high volumes of their product. Category leader is Walkers with 57% retail share followed by P&G Pringles (Bridge, 2005). Other companies in this battlefield include United Biscuits; Golden Wonder & Kettle Foods. The smaller companies should therefore concentrate on differentiation and cost leadership strategies to combat the competition. Since all of them concentrate on more or less the same strategy offering low carbohydrates, low fat, low salt products. Hence they remain with restricted options of coming up with attractive ways to convince potential customers of their unique selling proposition and tie them in a long term relationship. SWOT ANALYSIS: It is a method to do the qualitative costs benefits analysis. It helps us to seek what opportunities are available to our product and what constraints does it have to face. Strengths of selling low fat potato chips are locating one self in a place where other competitors have set their plants so that it can have access to raw materials used in manufacturing potato chips. This helps us attain economies of scale. Secondly, our company has enough reputation in the snacks industry in UK amongst middle aged and infants. Our aim is to remind our teenagers of our product and increase sales in this age category. With this regard our existing customers will act as a word of mouth delivered by uncles, teachers and parents to the “junkie” teenage consumers. The weaknesses include the company’s ineffectiveness to convince one segment of its target market that is the teenagers. It seems a weak competitor in this market as compared to biscuits sector where it one of the leading manufacturers. After several years of introducing low calorie chips “CREX”, people still can have not been able to relate the two products of our Company. Our potential consumers especially the teenage group are brand loyal of Walkers and Pringles. Mainly, the opportunities of the low fat potato chips industry are that it is an emerging market and companies are struggling to achieve recognition amongst various other brands. It is a profitable industry as majority of the people are moving towards low calorie food before they fall a prey to obesity. According to a research conducted by Key Note 83% people argued that manufacturers should concentrate on reducing sugar, fat, and salt content in snacks. Secondly, this act of offering high fiber content and healthy foods replaced by junk foods is a part of a movement by UK government which is interestingly supported by the potato chip manufacturers. This increased awareness has suddenly opened up new avenues of competition between the different brands. It has given us a chance to rejuvenate our product in a way to suit peoples’ needs and satisfy them. The threats that the company shall have to face are the supply shocks of potatoes that it buys. In addition arising of any bottlenecks in supply of raw materials will result in a domino effect ultimately affecting sales. Also, the company can not reduce price in comparison to its competitors or otherwise it will have to deal with aggressive marketing tactics by the competitor companies since the structure of the market is more inclined to being oligopolistic where the producers are concentrated and they all sell homogenous product with added variations by adopting differentiation strategy. PESTLE Analysis This enlists the different types of macroeconomic factors that assist managers in decision making. First is a political factor which refers to laws and regulations as well as the pressurizing feature that can have great impact on the market and the product. For instance if government imposes ban on low calorie products after discovering that companies are selling dangerous goods thereby disguising them to be healthy. In addition any laws on increasing sales tax or property tax etcetera will affect the product sales and company’s profitability. Economical factors such as occurrence of inflation and increasing unemployment will gradually lead to reduction in sales. Increase in borrowing (interest rates) would deter the company to buy loans. In this way it would not be able to increase its capacity with rising demand or will be unable to plough back profits in times when the costs of investing in the industry rises. Social factors are also influencing. They usually include factors increase in ageing population, or a change in income distribution within a passage of time. For instance the increased amount of teens at present will grow up to be adults. Hence various other marketing strategies will have to be applied then with changing demands and conditions. Technology is a boon or a bane. However, in this case we discuss its positive effects for when latest technology enables the invention of new machinery with increased efficiency; it would lead to increased investment costs in the machinery, which with increasing number of units will be covered. However the drawback of retiring workers will occur as work will be transferred from human labor to machinery. There are legislative factors which influence our decision. These comprise of employment laws, laws for competition to deter monopoly and health and safety laws. Recently UK has passed laws of minimum wage increase, introduction of age and disability discrimination. Also, the Government has stressed the requirement for companies to recycle. This will thus lead to higher costs for our Company as viewed on Gillespie Foundations of Economics. (Business strategy, n.d ) As far as environmental factors are concerned, let’s say Government puts a limit on the amount of waste to be discharged from the plant, or otherwise, it will have to pay fine. In that case, the burdens of tax will thus increase for a company. If any movement of showing corporate social responsibility is initiated by one of the competitors, all other companies will look for ways to become part of the environment by helping the needy and the destitute. This is done mostly to enhance one’s image as a product or a Company as a whole. Competitor Analysis: Competitor analysis enables you to convert data on competitors to useful insights as to the tactics they use in marketing, what chunk of the market do they focus upon and why does that portion attract them and what do they intend to achieve. It helps to clear your vision regarding the competition as to whether he is a leader, challenger or does he indulge in guerilla attacks or does he make use of flanking strategies. Hence you plan your strategy in a direction that your competitor forces you to take. ( Fahey, 2006) The pricing strategies whether it is cost plus pricing, where a certain mark-up is added to the cost price or value based pricing where one places his costs on the basis of the value it offers. For example if our company uses the cost price method where 10% markup is added to our total cost of production, while competitor uses value-based pricing, it would be clear to some extent that the competitor is a leader who’s product is valued and people are willing to pay for the differentiating element of for instance “rice made chips” only because of its quality and brand name. Therefore the challenge for our company would be to win back competitors’ customers by first conducting research on what consumer needs and why is he dissatisfied with our products. By identifying our weaknesses we can use them to transform them as our strengths. MARKETING STRATEGIES Our strategy is that we specialize in making low calorie snacks (potato chips). Our Unique Selling Proposition is that we offer “healthy and light, baked potato chips with lowest levels of salt and additives.” Our product is popular amongst the middle aged and old people ranging from 35-60 who are more health conscious. However the teenage section of the population consumes less of our product. Hence at present we aim to target them and convince them that they must increase content of low calorie food in their diet. We segment our product geographically by offering it only in UK at present. As far as demographic segmentation is concerned, we have divided our population in 4 parts, children from 3-12 years of age, teenagers 13-19, youth 20-30 and adults 31 onwards. It is mostly targeted to the middle and lower middle tier of the population. Psychographic segmentation is highly essential as we tend to focus on those people who are health conscious and do not want to risk their lives by increasing intake of high- calorie food. They use all possible methods to avoid obesity. But at the same time they want to buy delicious and appetizing food items. They want their children to adopt these types of healthy snacks as well before their inherited genes of obesity become dominant in their children. Under all the segmentation above, we tend to focus mainly on our teenage population who do not know the harmful effects of obesity which may result if they continue consuming fast food items like cheese burgers or mono-saturated snacks. We aim to increase consciousness amongst this target market and also receive recognition by the Government for working for awareness of healthy life for the most important chunk of the population who will later grow up as youth and ultimately adults. We will now position CREX on a perceptual map at high quality but low price item so that it is affordable for most of our targeted population. High quality refers to the absence of any artificial ingredients or additives in the chips which would be effective in its main function of offering low diet for people of UK. In this category there is aggressive competition and the different brands adopt low cost methods and differentiation strategies to bring out the most benefits for its consumers without having to pay much. This market for low calorie snack foods is growing at alarming levels as awareness and pressurizing by the Government is increasingly at it verge. Hence a market where customers demand producers to offer products that will cut back the added fat in them; there is a need for the companies to bring out the most hygienic, lowest in oil content food to satisfy their customers. Hence in a market led by Walkers, Pringles and McCoy’s, our Company aims to get a 5% of market share amongst the teenage population of UK. 4 P’s Product We offer a product to our customers especially the teenage component of our market a healthy snack food with the least amount of fats and carbohydrates content in it. You will be compelled to buy it again because of its taste and affordable price. It will be made available in different Stock Keeping Units are 100g and 150 g. Price The price of CREX will be £1.6 based on cost plus markup method adopted by most of the competitors. We will adopt a penetration marketing strategy in order to compete with big manufacturers like Walkers and McCoy’s. We aim to offer discounts especially in summer season when children are on holidays and after gaming all day, they need some light snack especially in the evenings. Promotional and Communicational Plan Our strategy is offering light food at low price. Hence in this case we will adopt pull strategy in order to buy back the teenage share from other big brands. Our main focus is on revitalizing our brand especially focusing the teenage population of UK. Isaac, A, says an integrated marketing communication links the tools of advertising, public relations, direct marketing and sales promotion together. This helps in developing a strong brand image amongst the people. Our company will excessively spend in this area in an attempt to boost sales of CREX amongst teenagers. The different steps of sales augmenting will include advertising not only on print media that is newspapers and magazines but radio, television and most importantly Internet. Hence advertisements can be placed there. In addition, we aim to make blogs and invite teenagers to comment on this blog and discus their needs and requirements and persuade them how light and healthy CREX is for them. Besides, personal selling will be planned by conducting various surveys by our company to the different schools composed of high population in UK so that maximum number of audience can be targeted. In this attempt, an hour discussion with them can be planned where they are shown what harmful effects can the junk food in their diet result in and how they should consume CREX which is light and healthy rightly meant for the teenagers of our society. The electronic advertisement will include a celebrity of teenager’s interest, a musical band or an athlete who can testify how the introduction of CREX in their diet has led to decreased fat levels and reduced weight. This will prominently induce our potential customers to imitate the habits of their ideals. An advertising agency shall be given the task of making the advertisement. However before making an Advertisement, story board should be made by the agency which can then be verified by our Marketing managers confirming whether their idea is properly tuned with the image of the product that they aim to portray. Sales promotions will be aimed at teenagers. For instance, they will be offered different types of gifts through a lucky draw if they send the empty wrappers to us. Gifts would include school water bottles, Nintendo Wii Fit, skates and others. We can also conduct below the line activities by setting up stalls on fun fairs arranged on special occasions. In addition, we can put up stalls in malls and offer them different souvenirs or gifts like key chains, pens, Barbie doll. Place / distribution: Our product will be manufactured in different cities of UK and from there on they will be distributed to the different warehouses of our Company. The entire distribution system will be outsourced to another company which will provide our manufactured products to the final customers. However someone from our company will monitor the distribution activities to ensure that the product is placed in the right market or outlets or general stores or wholesale stores such as Costco, Tesco. They will also ensure that CREX is kept at the right position compared to its competitors from where they are prominently seen by the customers. STATEMENT OF SALES FORECASTS AND FINANCIAL RESULTS Year 1 Year 2 Year3 Sales 200000 300000 515000 less: variable cost 80000 180000 329600 Contribution margin 120000 120000 185400 less: fixed costs 85000 85000 85000 Net profit 35000 35000 100400 Year 1: 100000 units Year 2: 150000 units Year 3: 257500 units Sales have increased by 50% in the second year and later by 71.67% in the third year. This is because of the excessive advertising campaigns conducted at various levels. IMPLEMENTATION AND CONTROL For effective implementation to especially target the teenage population we will have to be careful that other sections of our target population that is the young children and adults are not compromised either. In addition in order to implement a new idea one should go through four steps of Plan, Do, Check, Act as viewed on Quality Tools website at < http://www.asq.org/learn-about-quality/project-planning-tools/overview/pdca-cycle.html> The planning and forecasting of the steps that will be followed for marketing our product has been done so far. We also know that we have enough funds to cater to the market demands. However in case of any environmental change, we being a reputable company can apply for loan as well; only when needed. We will ‘do’ this by increasing our production in the first year as well as increasing our fixed and variable costs. This will be a test or trial year. All depends on how successful we will be in our promotional efforts in this year. Next comes the check act where we will monitor through different ratio analysis and profitability and asset turnover ratios to find out if we can plough back more profits the very next year. If negative results are observed then we will not move ahead with this plan and find out our flaws. We can do this by comparing ourselves with other benchmarked companies. If there are any chances of growth in the sector then we should go ahead with the marketing plan and act upon it that is execute it. We should be ready to suffer losses in the initial years until the fixed costs are utilized with increasing number of units. There are different steps of keeping control of the entire plan. We should be ready for any unexpected happenings or downfall of the chips industry or any sort of mishaps such as termination of agreement with the distributor or the supplier. In that case we should respond quickly by taking distribution in our hands for some time before we can find a new distributor. Also, control should be stressed in areas of wastage and disposal. We should make attempts to make our production functions more effective so as to increase efficiency and reduce costs. As far as disposal of waste is concerned we should be extremely careful and keep a check on how the waste is disposed before we become a target of media claiming us to be environmentally unfriendly. We should place strong emphasis on developing our image as manufacturers of light and healthy CREX and should continually participate in events which can help us interact directly with our customers. These may include fun fairs for children, placing our stalls in different malls and participating in festivals like Christmas and Easter and giving yearly discounts. We should also keep close eyes on our competitors who can attack us at any point of time especially when we are not vigilant. Pricing strategies should be responsive to any changes in the strategies of the competitors. Research should be continually conducted and we should know what our competitors are planning next so that we can frame a surprise attack on them before they alarm us. CONCLUSION: Tyrrell’s Company seeks to target the teenage group in UK and induce them to buy their already established baked chips which are healthy and light. The objective is to coordinate ourselves with the Governmental pressures of persuading our children to buy these chips at an affordable price as they give you the maximum benefits at the least price. Although the competition by big companies is fierce however it is not impossible to achieve our objective of taking away 5% of the market share in around 5 years. We plan to involve children in our promotional campaigns and show them in the most authentic manner without manipulating their young minds how they can catch obesity if they continue to consume fried and oily confectionaries and fast food. Bibliography: 1. Small business notes, 2009, viewed 09May, 2010, Available at: http://www.smallbusinessnotes.com/planning/marketingplan/marketplanobjectives.htm 2. Red Orbit,2007, viewed on 09 May 2010 , available at: < http://www.redorbit.com/news/business/907430/focus_on_the_diet_foods_market_strategic_overview_market_analysis/index.html> 3. Bridge, 2005, Haymarket, viewed on 09 May 2010 < http://www.marketingmagazine.co.uk/news/488084/Sector-Insight-Crisps-savoury-snacks---Crunch-time?DCMP=ILC-SEARCH> 4. Liam, F, 2006, Focus on: Competitor analysis- Turning data to insight p1, viewed 09 May 2010. Available at : (http://www.biasca.com/archivos/for_downloading/management_surveys/Mgmt_Focus_On_Competitor_ ) accessed at 09 may 2010 5. Gillespie: Foundations of Economics - Additional chapter on Business Strategy, Oxford University Press, viewed on 09 May 2010, Available at : < http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm> 6. Isaac, A, Integrated Marketing Communications: A Customer-Focused Approach In Marketing Modern Businesses., Ninth Annual IBER & TLC Conference Proceedings 2009 , Las Vegas, 1-8 7. Quality Tools, viewed 09 May 2010, Available at : 8. PESTEL Analysis and Application (n.d), viewed on 9th May 2010,available at: http://www.improvementnetwork.gov.uk/imp/aio/1033478 Appendix Read More