Commonsense Direct Marketing - Essay Example

An outline marketing plan for the next year for Atlantic Quench Atlantic Quench CranberriesIncorporation is a US based co-operative that deals with production canned and bottled juice and juice drinks. Atlantic success has been based on extensive innovation, commercialization, media buzz, market potential and stakeholder value. The development of the company which is based on research and innovation makes it to produce quality brands of juice making it to be one of the competitive firms in North America. The paper is a marketing research report that indicates a marketing plan for Atlantic Quench for 2015. It discusses the firm’s positioning, product, pricing techniques, distribution channels, and marketing communication strategy. Atlantic Quench operations are based on the suggestive budget that indicates the major expenses that will be incurred as well as the expected 2015 profits. Chapter1 Introduction Based on the global stiff competition in the soft drink industry where Coca-Cola Company is a leader, various organizations have been established with an aim of getting a share of the local and global market. Additionally, as more quality brands have been established in the market, the demand for juice drinks as well as non-juice drinks has increased. It is worth to note that based on the health problems that sugary juices have been associated with, more consumers have diverted their loyalty towards juices that have less sugar (Bird, 2007). In their efforts to capture the attention of such consumers, mostly at the age of 50 to 65, beverage firms have embarked on production of non-juice and light juice drinks to meet their needs. Juice drinks industry is faced with a number of challenges that include volatile market, changes in climate conditions as well as changes in the market trends. As a result, it is not possible to predict the harvest that the firm will incur. It is expected that between the periods of 2012 to 2018, the global soft drink market value shall increase from 530.5 billion to 624.4 billion. Additionally, the market is anticipated to expand at a CAGR of about 4.7% from 2013 to 2018. This expansion is expected to drive the market upwards to a value of 785,269.8 million by the end of 2018 (Marder, E.2007). Atlantic Quench Cranberries Incorporation (AQC) is an agricultural co-operative based in the US. The company mission is to provide quality cranberry products that are produced by healthy Atlantic Canadian cranberries. The company major marketing strategy is through its website where it provides contact and fax that customers can use to contact the marketing team. The company objective is to expand its capital base. Thus it gets financial support from the Government of Canada and other sources. For example, in 2010, the company obtained $500,000 repayable loan from the government and another $363,400 from the Province of New Brunswick . Chapter 2 Current market situation 2.1 Internal analysis 2.1.1 Market description The global soft drink market has experienced moderate rate of growth that mostly remains over 4.0% per year. This trend is anticipated to continue in the forecasted period. Between 2009 and 2013, market consumption volume for soft drinks increased with a CAGR of 3.9%. At the end of 2014, the volume is expected to rise to 660 billion liters. This is further expected to increase to 733.1 billion liters by the end of 2018 (Berghoff et al, 2012. The market key category segmentation includes carbonates, bottled water, juices, RTD tea and coffee, functional drinks, and concentrates among others (Baker, 2008). Major players in the market are Coca-Cola Company, Tingyi Holding Group, PepsiCo, Inc, and the Hangzhou Wahaha Co, Ltd among others. The table below indicates the global soft drink market share: share by volume in 2013 (Scott and Kesten, 2007). Company % Share Coca-Cola Company 22.7 % Tingyi Holding Corporation 16.3% PepsiCo. Inc 6.6% The Hangzhou Wahaha Co. Ltd 5.6% Other 48.5% Total 100% As indicated above, Coca-Cola Company is the leading firm in the soft beverage sector globally, with a market share of 22.7%; the company offers stiff competition in the industry making other companies to adopt unique strategies to address the competition (Westwood, 2002). The key issues that the market faces as noted earlier include changes in the market as well as climate conditions that affect the raw materials needed in the production facilities as well as volatility of the market. 2.1.2 Product review Atlantic Quench, which has become the best-selling brand name in the canned and bottled juice category since 1981, has continued to enjoy great success in the UK due to its value for product diversification (Steven, 2003). As indicated earlier, the company key categories of product are juice and non-juice products with major brands being Cranberry Original Juice, Cranberry Mixed Juice Drinks, Juice Max, and Grab ‘n’ Go – Single Serve, Cranberry Sauces, and Cranberry Cordial Juice Drinks among others. The Cranberry Classic range includes juices and juice drinks. The cranberry is the core flavor that makes the company brands to be the choice for many consumers (Pride and Ferrell, 2011). Some of the major brands that have recently been introduced by the cooperative include Cranberry Classic in a 250 ml, cranberry and blackcurrant, cranberry and raspberry, and cranberry and mango. AQC also launched the Cranberry Select Premium in 2004 in a new 1.75 litre packaging. In 2005, the firm introduced a cranberry and mandarin juice drink to the market. 2.1.3 Competitive review Recently, soft drink industry has been faced with new opportunities, and challenges due to the changing consumer’s preferences that call for adoption of unique strategies to maintain the existing consumers and attracting new clients (Andidas, 2003). High profitability in the industry has attracted significant number of firms with an aim of increasing their revenue. As a result, a cut-throat competition has emerged (Scott and Kesten, 2007). The major competitors that AQC face in the market includes Coca-Cola and PepsiCo, US based firms. Coca-Cola Company, whose market share in US stands at approximately 45% as more that 500 brands with main ones being Coke, Sprite and Fanta among others. On its part, Pepsi which controls approximately 27% of US soft drink market also produces quite number of brands that include Gatorade, Lipton Teas, Cheetos, Tropicana, Sierra Mist and Pepsi Max among others (Folsom, 2011). 2.1.4 Distribution review In their efforts to access the consumers regardless of their locations, soft drink companies emulate various distribution channels. AQC has various distribution outlets in US. With the major cleaning plant being located in Kent, the company gets its raw materials from areas such as Dorchester, Kent town, St. Andre and Fredericton area. Supermarkets form the leading distribution channel in the global soft drink market, which accounts for 55% share of the total market’s volume (Baker and Hart, 2007). Other channels that are involved in the distribution of the brands include on-trade-17.6%, independent retailers-10.8%, convenience stores-5.4%, and others take the remaining 1.1% (Scott and Kesten 2007) 2.2 Macro Environment Analysis 2.2.1 Bargaining power of buyers: Moderate Consumers in the soft drink industry are most likely to be influenced by brand, and many firms in the industry have managed to develop strong brands (Michael et al, 2011). As a result, it tends to decrease buyer power as buyers feel obliged to stock certain products to meet the preferences of their customers. Buyers are also large in number and thus they tend to make decision without necessarily consulting each other. 2.2.2 Bargaining power of suppliers: moderate During the production of the soft drinks, a number of raw materials are required. In most companies, there are usually substitutes. For instance, if aspartame is unobtainable, it can be substituted by saccharine or similar products (Kotler and Armstrong, 2007). This makes the suppliers to have moderate power. The suppliers have the opportunity to choose any buyer they wish to supply their products. This implies that they do not need to form supplying organization, consult each other during supplying or come together. 2.2.3 Rivalry: moderate The players in the soft drink market provide similar products. This makes the firms to compete implying that market fluctuations affect the firms almost in the same way (Buchanan, 1982). As the result of moderate rate of the growth of the market, the intensity of rivalry decreases. Given the similarity and the quality of the brands of the competitors, their rivalry is not so much stiff. 2.2.4 Threat from substitutes: moderate Soft drinks substitutes include tap water, non-ready-to-drink hot drinks, and alcoholic beverages. Established players such as AQC have diversified product portfolio thus reducing the threats posed by the substitutes (Quinn, 1980). With the innovation culture that results to production of new products, the cooperative is faced with a moderate threat of substitute. Additionally, most of the substitutes offer different ingredients that the soft drink consumers look for in AQC and Coca-Cola brands. This implies, substitutes will not play a significant role in the industry. 2.2.5 Entry Barriers: moderate International soft drink market is dominated by large, multinational companies such as Coca-Cola and PepsiCo. Despite the fact the firms control significant share of the market, new entrants can still exploit the market. Despite the notable market share that the major companies have operated, middle sized and small companies can also enter the industry since the customer base is still expansive and the demand for soft drink products is high globally. Chapter 3 SWOT analysis 3.1 Strengths Best selling brand name in the canned and bottled juice category Strong marketing and advertising Customer loyalty Corporate social responsibilities 3.2 Weaknesses Significant focus on carbonated drinks Undiversified product portfolio Deteriorated relationship between management of the corporative and farmers 3.3 Opportunities Growth rate of juice consumption Increasing demand for non-sugar beverage Growth through strategic alliances such as the 2007 alliance with Coca Cola Company Growing demand of soft drinks in the emerging markets will make the company to increase its sales once it enters the markets 3.4 Threats Scarcity of water Adjustment in consumer preference Competition from Coca Cola and PepsiCo companies Chapter 4 Objectives and issues 4.1 Objectives Based on the growth that Atlantic Quench has enjoyed, the firm aims at attaining a growth rate of approximately 7% next year. In 2013, the consumption of Crantanas increased by 26%. Through an extensive advertising, AQC aims at expanding its advertising strategies especially to parents as well as population within the age 15 to 24 years in to increase the consumption of Crantanas by more than 40%. 4.2 Issues Issues that Atlantic Quench faces in the market are the common problems that plague the soft drink industry. These includes Volatility in farm produce: The overproduction in 2000 lead to reduction of prices from $60 to less than $20. This made AQC to reduce its advertising expenditure and marketing budget Changes in climate: Poor climatic conditions results to poor quality of raw materials leading to low quality brands (Steven, M. 2003). Changing market trends: Excess production led to lowering of prices an aspect that led to poor relationship between farmers and cooperative management (Quinn, 1980). Chapter 5 Marketing strategy 5.1 Positioning Atlantic Quench positions itself as a health providing brand. The firm aims at creating a major healthy refreshment business focused on cranberries. Just like Coke a brand that Coca-Cola use to position itself in the market, Atlantic Quench will create strong positive customer-brand relationship through cranberries (Charles, 2005). Extensive promotion and advertising of the 3 new brands which are chocolate-covered Crantanas, ready-to-drink mixed flavoured juices and Cranzeal will greatly enhance the expansion of the company next year. Atlantic Quench products are unique based on the innovative approaches to packaging (Marketing Equity, 2013). The company uses polyethylene terephthalate (PET2) plastic bottles to make them recyclable. Through the nutrition information that Atlantic Quench’s product indicate, the brands have proved to be popular among the consumers. In the recent US promotions, Atlantic Quench has adopted humor, health benefits, as well as American heritage of cranberry (Morris, 2014). Some of the unique strategy that Atlantic Quench emulates in its positioning is use of simple and sincere humor in its advertisement that targets women between the ages of 30 to 45 years. 5.2 Product strategy Atlantic Quench aims at producing innovative products that meet the needs of its customers. Atlantic Quench is a brand that is attained through a marketing research that is undertaken by the company itself or through a company such as Mintel. In its effort to provide quality product that meet the needs of its con summers, the co-operative has established the new product development (NPD). Through the NPD, Atlantic Quench has provided new products that it uses to penetrate new markets. Atlantic Quench Ansoff Matrix Source – (Ansoff, 2013 ) Ones the Atlantic Quench has successfully met the needs of existing market as indicated by the Ansoff Matrix above, the firm will embark on product development and innovation that will result to new products in the market come next year. In this way it will effectively meet the needs of existing and new customers. 5.3 Pricing strategy Pricing strategy for Atlantic Quench is one of the strategies that will make the firm to acquire significant number of customers once it establishes new brands in the market. Through penetration pricing, which entails setting the prices at a lower level than the eventual market prices, the firm will be in a position to acquire more new customers (Steven, 2003). 5.4 Distribution strategy As indicated earlier, supermarkets form the major distribution avenue that is adopted by firms in the soft drink industry. On its part, Atlantic Quench will not only use supermarkets in foreign countries, but also it will access its customers through on-trade avenues, independent retailers, and convenience (Baines et al, 2011). Through the use of established distributors in major towns, Atlantic Quench brands will easily be transported by use of trucks to the retail outlets. Just like the way Coca Cola use tracks in distributing its products and use Wal-Mart and Tesco as key outlets, Atlantic will also create a strong competitive advantage by use of these distribution strategies. 5.5 Marketing Communication Strategy Atlantic Quench customer segments can be distributed broadly into two major categories. These include bulk buyers as well as individual consumers. Additionally, the company targets young and old consumers. This implies that Atlantic Quench will have a separate communications strategies for the segments. In the case of the bulk buyers, Atlantic Quench will use face to face communication as well as telephone conversations (Simon, 2011). Notably, during the ordering process and prior to delivery of the products, the company and the buyers will have an opportunity to communicate with each other through telephone (Werner, 1984). Atlantic will also use social media to advertise its services as well as educate the tech savvy young consumers. This will make the firm to be in line with the competitors within the industry where social marketing has taken a major marketing tool (Clow and Donald, 2007). To ensure that the old consumers are aware of the product information, Atlantic Quench will use television programs as well as roadside shows where it will provide information that touches on the benefits of its brands, local and global outlets, available opportunities, and new brands in the market (Michael, 2008). As a way of making the customers to feel as part and parcel of Atlantic Quench, the firm aims at providing a more detailed feedback system where they will be given an opportunity to forward their ideas as well as complaints. 5.6 Marketing research In terms of marketing research, Atlantic Quench plans to use the reports by Mintel on the demand for alternatives to the high sugar content, which naturally occurs in most fruit juice drinks. The firm has realized that an opportunity still exist in the sale of drinks made fresh pressed juices and smoothies where the market is still not mature (Chaffey et al, 2009). Weight-conscious US consumers have rejected juice and juice drinks with high sugar content and turned their attention to bottled water or other low-calories soft drinks. It is out of this information that Atlantic has responded by introducing light version of juice drinks and juices with more specific functional properties (Berghoff et al, 2012). While it targets 15-24 years old, who are the UK heaviest consumer of juices and juice drinks, Atlantic Quench must continue with more research to determine whether the consumption pattern will change. In addition, the company should continue with the study on the consumption pattern of 45-54 years old group especially in the areas of fruit and vegetable in the next 1 year (Bradley, N.2011). Through an extensive research, Atlantic will also identify the best advertising avenue that will be cost effective but appropriate to reach more market segment. In this way, it will be in a position to remain competitive. Chapter 6 Marketing implementation The total budget overlay for 2015 is 50 million USD with a significant portion of the expenses being diverted to promotion, advertising and market research. Through continuous research in the US and UK markets where the demand for soft drinks is very high, Atlantic Quench will acquire effective strategies that will ensure that it provide products that are of high quality and which will outdo the competitors brands (Marder, 2007). The marketing plan is essentially focused at employing experienced marketing personnel who would be in a position to oversee different marketing strategies including road side shows, online and web promotions, sponsoring of local and foreign events, social media marketing, print advertisement, and media advertisement. Given the importance of online platform in the contemporary business atmosphere, Atlantic Quench will allot 15% of its marketing expenditure on this marketing technique (Close et al, 2012). This will ensure that it penetrates the growing economies where online marketing has now been a major way of reaching the consumers as well as buying foreign products. The company aims at establishing social media group where juice drinking consumers will get an opportunity to share their experiences (Chaffey and Smith, 2013). One of the key ways that Atlantic visibility will ensure product visibility will be through sponsoring cultural events such as cooking competitions, football matches, and health education forums among others. Chapter 7 Budget ($) Expenditure Matrix 2014 2015 Personal Salaries and wages 200,000,000 Allowances 45,000,000 Other expenses 1,120,000 Total 246,120,000 Manufacturing expenses 325,250,000 Research Primary Research 24,000 Secondary research 15,000 Total 39,000 Marketing Media advertising 1,200,000 Web advertising 140,000 Road side shows 125,000 Sponsoring of events 185,500 Print advertising 150,000 Social Networking 350,000 Total 2,150,500 Grand Total 248,309,500 Response matrix Booking units 45,000 Value per booking 7,000 Gross revenue 315,000,000 Profits 66,690,500 Chapter 8 Control The marketing plan will incorporate a review that will be conducted on a quarterly basis to ensure that any deviation from the stipulated budget is addressed. Within the first quarter of 2015, Atlantic Quench is expected to utilize quarter of its expenses (Luther, 2013). Any increment will be followed by an evaluation and investigation to deal with the high expenditure (Pfeffer and Salancik, 2010). In conclusion and based on the above discussion, it is clear that Atlantic Quench performance in 2015 will largely depend on how well the cooperative manages its current resources. Despite the stiff competition that the firm faces from established companies such as Coca-Cola and Pepsi, Atlantic Quench has effectively taken over canned bottled juices segment an aspect that has made it to remain competitive in Northern America. Major products that the company will provide in the market in 2015 includes Cranberry Original Juice, Cranberry Mixed Juice Drinks, Juice Max, and Grab ‘n’ Go – Single Serve, Cranberry Sauces, and Cranberry Cordial Juice Drinks among others. 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