Launching Sushi in the UK - Essay Example

Marketing Major Executive Summary Launching a product in an effective manner and ensuring its long-term sustainability requires a series of concertedefforts. These efforts range from locating the exact needs of the market, obtaining data about present market dynamics and thereby locating the exact market gap that needs to be served. This research was undertaken to launch Sushi, a food product that is broadly a part of the FMCG group. The chosen market for the product is the U.K. where it has been found that the popularity of Sushi and related products is on a rise. However, there are only two major players in the market serving the consumer needs. The market gap represents signs of potential success. The product is mainly targeted to three segments, namely the youth, professionals who have a tendency to eat convenient food and health-conscious people who survive on a healthy diet. The product is being positioned in the market as a healthy one which is supreme to its competitors on account of taste and quality. The target consumers lie in the age group of 16-24 and 26-45 mainly so a wide range of media support has been devised. For instance, radio and television has been mainly used to target all the age group on account of their popularity. On the other hand social media like facebook and LinkedIn has been used for promoting the product launch among the youth and young professionals. Magazines like The Economist have been used to communicate with the young professionals. Contents 1.0 Introduction 4 1.1 Research Background 4 1.2 Objectives 4 1.3 Methods 5 2.0 Market Structure 5 2.1 Overview 5 2.2 Market Gap 7 2.3 Product Attributes 7 3.0 Market Analysis 8 3.1 PESTLE analysis 8 3.2 Porter’s Five Forces 9 3.3 Ansoff Matrix 10 3.4 SWOT 11 4.0 Segmentation, Targeting and Positioning 11 4.1 Segmentation 11 4.2 Targeting 12 4.3 Positioning 12 4.4 Competitors 13 5.0 New Product Development and Launch 13 5.1 Marketing Mix Strategies 14 Reference List 17 1.0 Introduction Fast moving consumer goods (FMCG) include a variety of products which are sold at low prices and their sale occurs relatively faster. The target market for FMCG is quite vast but proper segmentation of the market and adding value to the customers are formidable challenges for any FMCG company. According to the traditional definition FMCG goods can be described as goods which are purchased very frequently. These goods are generally sold in large volume in order to generate profits for the companies which produce them. These goods are priced relatively lower compared to consumer durable goods and are perishable generally. These goods can include a wide range of items like soft drinks, toiletries, packed food items and chocolate bars to name a few. The shelf-life of the products is relatively lower for which they are manufactured in large quantities to compensate for the small price. The FMCG sector is a key component of the U.K. economy and accounts for 10% of the GDP of the country and 20% of the entire market (The Statistics Portal, 2014). The food and beverages sector is one of the most important components of the FMCG group and has an estimated value of £62.5billion (Steenkamp and Dekimpe, 2009). This paper has utilized academic and management tools like PESTLE analysis, Porter’s five forces, competitors’ analysis and Ansoff matrix have been used to analyze the market and suggest strategies that should be adopted by the company. 1.1 Research Background In the past ten years the popularity of Sushi products has been growing consistently in London (Mintel, 2013). This is in line with the rising concern of the people regarding their health. The purpose of this paper is to conduct external and internal market analysis to launch a new food product, sushi in the U.K. market. 1.2 Objectives In the first year the expected sales volume is £1 million and the corresponding profit volume has been estimated to be £200000. In the second and third year, profit is expected to grow by 6% and 10%. It is expected that in the first year the market share is going to be 5% and in the next two years it is going to rise 10% annually. 1.3 Methods In order to ensure the success of the sushi product, both primary and secondary research has been conducted. A primary research has been conducted to obtain a basic understanding regarding the acceptability of the product in the U.K. market. A questionnaire was circulated containing the basic questions regarding the product and its attributes. The following questions were included: The feature that is appreciated the most about the product. If the consumers are willing to recommend the product to their friends. Any opinion they have regarding the improvement of the product. The answers obtained from the respondents had clearly shown that they have a high interest regarding the product. This has prompted a rigorous secondary research into the topic to analyze the market structure and to obtain an overall understanding regarding the success of the product launch. 2.0 Market Structure 2.1 Overview The U.K. fast food industry represents a competitive landscape. At present the total revenue of the food industry has been estimated to be at 7 billion pounds and the annual growth of the industry has been noted to be 2.5% (IBIS World, 2013). Key players in the food sector of the U.K. are the restaurants and have an overall market share of 70%. On the other hand the market share of the leisure segment is only 20% of the aggregate value (Mintel, 2013). The growth of the U.K. fast food market is depicted in the figure below. Figure 1: U.K. fast food market growth (Source: Market Line, 2013) The segmentation of the current market can has been depicted in the following graph. Figure 2: Share of fast food service providers (Source: Market Line, 2013) Takeaways and mobile vendors have the smallest market share according to statistics. It has been estimated that the expected growth of the fast food sector in the U.K. is about to be 16% by the end of 2011. At present the current market scenario is dominated by independent players like sandwich shops, chips and fish outlets, fried chicken and other takeaway options. It has been observed that 56% of the customers have shown a trend towards eating healthy foods and the major players in the market are trying to cater this trend (Euromonitor International, 2013). London has become the hub of experimental fast food and presently harbours a large variety of fast food retail chains and independent market players (International Markets Bureau, 2011). Ever since the recession had a negative impact on the U.K economy the share of takeaways has been rising. Even during the recession Yo! Sushi, a major market player in the sushi products had opened 10 outlets per year (Tabbitt, 2012). 2.2 Market Gap Presently, the market of sushi in the U.K. is in the nascent stage and is far beyond the point of saturation. Sushi is currently considered as lunchtime favourite for the exotic value it provides. There are currently two major producers catering to the demand of the market namely Yo! Sushi and Feng Sushi chain of restaurants. The demand has been observed to be very strong among the 16-22 year olds and 30-45 years old at present. Presently London owns 40% of the market share and Scotland is the second largest represented 30% of the market share (Sushi Trade, 2014). The death of producers combined with the rising popularity of sushi implies there is a gap in the market that can be served profitably (Sushi Trade, 2014). 2.3 Product Attributes The main product is going to be wrapped in an edible leaf with the layer of rice occupying the central position. The juicy and delicious fish topping garnishes the rice delicately with specially chosen herbs sprinkled on the top. These exotic herbs bring out the sublime taste in the product and satiate the taste buds. There are going to be nine sushi cakes in one box. The box will have nine moulds and it will be covered with a transparent covering allowing consumers to take a quick look at the product. A rough overview of the product is shown below: 3.0 Market Analysis 3.1 PESTLE analysis The external forces affecting the business of a company can be comprehensively captured by the PESTLE analysis. This technique is widely acceptable among managers because it helps them to scan a variety of factors but helps them to determine the most important factors that are important for conducting the business (Dobson, 2009). Political: The government regulations in the U.K. are particularly strict regarding the food sector when it comes to the safety of consumers. The high rates of obesity in the country have also forced the government to undertake policies of healthy-eating among customers (Food Standards Agency, 2012). In this regard the new product is likely to have an added advantage in the market because the sushi is highly nutritious and does not have high calories. Another major factor is the increase in pressure that is being put by the government to reduce the carbon footprint of the food industry (Leatherhead Food Research, 2012). Economical: The global financial crisis of 2008 had particularly affected the U.K. economy and high-priced food has been suffering losses. The recession have presented a formidable challenge for the key players in the fast food industry as consumers have largely shifted from expensive restaurants to takeaway options which are relatively cheaper (Leatherhead Food Research, 2012). However, consumer spending on convenience foods that are priced low is on a rise and this is expected to enhance the profitability of the sushi sales. Social: The increasing rates of obesity in the market have caused rapid changes in the eating pattern of the consumers. It has been found that consumers are increasingly shifting towards healthy eating options and demand for low-fat, low-salt and low-sugar meals are consistently on a rise. This particularly represents a plethora of opportunities for the new sushi product. As the product has low-calorie and zero saturated fat so it is likely to be popular in the market. Technological: Rapid technological changes like online mode of delivery have been rapidly implemented in the core business strategy of key players. This has made most of the retailers to create an online presence. Legal: The legal specifications of the fast food industry is mainly guided by the food standard agency which has taken measures which requires the food companies to make disclosures regarding their ingredients and the potential causes of allergies and other statutory warnings on the packaging (Food Standards Agency, 2012). There are talks regarding imposition of limits on salt, fat and sugar to combat obesity (Brimelow, 2013). Environmental: There is a rising pressure on the part of the government so that fast-food companies incorporate environmentally sustainable strategies in their production techniques to bring down their carbon footprint. Concepts of recyclable packaging have also been introduced by key players to reduce environmental harm (Food Standards Agency, 2012). 3.2 Porter’s Five Forces Rivalry among existing companies: It has been observed that the overall fast food segment of the U.K. is moderately fragmented though concentration exists in some of the segments like burger markets. Competition has been observed in terms of price as competitors have joined the race to provide value meals (Market Line, 2013). Overall the rivalry is high. Power of the buyers: It has found that the personal taste of the consumer is the main determinant regarding his choice of fast food type as price differences are not very steep. Established brands however use their brand name to attract customers (Market Line, 2013). Overall the buyers have moderate power. Power of the sellers: A close study of the U.K. market reveals that the suppliers are highly concentrated and BFS Group Ltd and Brakes is the largest supplier for the food industry. Particularly for the fast food industry labour costs represents 20% of the operating expenditure so labourers can be considered as suppliers as well (Market Line, 2013). Overall supplier power is medium. Threat of new entrants: Setting of new fast food retail shops is a relatively easy task in the U.K. as the capital and the legal requirements are small. Franchising has been found to be a very popular method in the country for expansion of existing players. Barriers may arise when the existing players use techniques such as price war to create entry deterrents (Market Line, 2013). Entrants pose moderate threat. Threat of substitutes: Frozen food, homemade food and food that can be reheated can act as a substitute for fast food. Health conscious customers however have a tendency to eat homemade meals (Market Line, 2013). This force can be considered as moderate. 3.3 Ansoff Matrix In order to make a product strategy successful it is imperative to create a positive perception in the minds of the target market. The ansoff matrix acts as a reliable tool to justify the product strategy that is adopted by a company (Kotler and Armstrong, 2008). Figure 3: Ansoff Matrix (Source: Kotler and Armstrong, 2008) The current market scenario in the U.K. has revealed that 56% of the consumers prefer to eat healthy food and there is a growing trend among the existing players to change their menu towards healthier eating options. This means that product development can act as a suitable strategy for the development of the new product. This is because sushi is a highly nutritious product which can largely cater to the health-conscious customers. The sushi market has specifically experienced a growth of 21% in the past five years and represents 39 million pounds market value (Esprit Sushi, 2014). So, the market is far from saturation and represents new avenues for exploring. 3.4 SWOT Strength The rising popularity of the sushi products in the U.K. The growing trend among consumers to eat healthy food. Weakness Recession has reduced the consumer spending on fast food. The price war between existing players. Threat Intensifying completion in the market and changing government policies. Changing taste of the youth which is difficult to predict. Opportunities Relatively new product with ample opportunities. Government support to promote healthy eating. 4.0 Segmentation, Targeting and Positioning 4.1 Segmentation It has been found that in the U.K. men have shown a higher tendency to purchase fast food compared to the females. On an average, men had consumed 151 takeaways whereas women ordered 126 (Mccann, 2013). This indicates gender can act as influential variable in the product launch. Additionally lifestyle of the consumers is also going to be an important variable because it has been observed that £110 are spend by an average person in the U.K. on takeaway and fast food (Mccann, 2013). Again 80% of the consumers have shown a tendency to eat healthy fast food in particular making lifestyle an important variable while segmenting the market (Leatherhead Food Research, 2012). 4.2 Targeting The primary target of the product is mainly teens and youths in the age group of 16-24. These groups have been found to be the consuming fast food in high quantities in the U.K. (Yudd Rudd Center, 2013). The secondary target market will be the professionals specifically in the age group of 26-45 who prefer to eat convenient food in their busy working schedule. It has been observed that rising work pressures in the contemporary times have greatly influenced professionals to consume take away food. This group can obtain high benefits by consuming the product as hunger satisfaction is guaranteed and the product has nutritious value. The third target market can be of gym instructors and health-conscious people also in the age group of 26-45 who have a tendency of eating less calorie-containing food. Again it has been found that the number of health care centres in the U.K. has gone up by 2% and the membership has risen by 4.5% (IBIS World, 2014). 4.3 Positioning Researchers had identified that there are three main types of positioning strategy namely functional positioning, symbolic positioning and experiential positioning (Kotler, Keller and Brady, 2009). According to the present market dynamics functional positioning is the most suitable positioning. This is because the new sushi product is expected to provide a variety of health benefits to the consumers at an affordable cost. In this regard it can be considered as a double benefit positioning strategy. Firstly, the product is highly nutritious compared to the most of the other variants of fast food available in the market like burgers and French fries. Secondly, the product will be priced marginally higher compared to its closest competitors to incorporate the superior quality of the item while making it affordable at the same time. 4.4 Competitors Direct competition for the product is expected to come from Yo Sushi which is already an established fast food retail chain in the U.K. that has become highly popular among the consumers. The outlets are spread almost across the entire city and the brand continues to grow. Feng Sushi, another London based chain of sushi restaurants has also become very famous off late and can prove to be a tough competition for the new product. Feng Sushi operates more than nine restaurants in London (Feng Sushi, 2014). Indirect competition can also come from the existing range of fast food restaurants that are present in the market serving burgers, fish and chips and sandwiches. McDonald’s is the key player in the U.K. market and has been quite popular among the consumers (Market Line, 2013). Reports published by research agencies also suggest the growing popularity of the takeaway counters and they can provide tough competition. 5.0 New Product Development and Launch It has been found that new product development had to pass through five main stages namely the generation of the idea, screening of idea, testing of the concept, analysis of the business, development of product, testing of market and commercialization (Chernev, 2010). The concept of launching sushi in the U.K. market has been quite unique as the product is relatively new in the market. Furthermore, the initial primary research has shown that the product has generated a positive response among the consumers making its probability of success higher. In this stage the 7ps of marketing mix can act as a guide to provide the steps that can be followed by the product in order to make its launch a successful venture. 5.1 Marketing Mix Strategies Product: The product sushi is rapidly becoming a popular product in the U.K. and it requires only simple ingredients like soya sauce, gari, wasabi which is readily available. The product is highly nutritious and is expected to satiate the hunger of the customers. According to Cravens and Piercy (2008) a product that satisfies the cognitive needs of the customers and satisfies their needs is likely to be successful when launched. Researchers have also argued that product in the marketing mix strategies also include packaging of the products, its value and the image of the company (Codita, 2010). In this regard sushi is likely to be successful as a recyclable packaging technology has been used for packing the product. The package is eco-friendly and this can create a positive image in the minds of the customers. Price: The product price is kept slightly higher compared to its closest competitors as the product provides health benefits to the customers. Traditional meals do not have the superior quality of the sushi and therefore they have lower price. This type of a pricing strategy has been termed as the price skimming strategy where producers generally charge a price that is higher than the existing competitors (Cravens and Piercy, 2008). In this case the nutritious value of the food is expected to create a positive perception regarding the product in the minds of the target consumers and they are likely to pay a higher price. Place: It has been decided that the product will be sold by using the services of delivery network of Intelligent Life Corp. It has also been decided that the product is to be sold via online website to enhance its visibility. The product is to be delivered in restaurants as they represent the highest share in the U.K. food industry, take away counters on account of their rising popularity and retail stores. This is expected to provide maximum visibility of the product and allow customers to easily access the product. Additionally, customers can also purchase the product via the website of the company as it has been found that online purchasing has become highly popular in the food industry. Promotion: This product line will use aggressive promotional strategies for generating awareness among consumers, both above the line and below the line promotional techniques is to be utilized in this regard. It has been found that there are going to be three target markets for the product broadly divided into two age groups 16-24 and 26-45 so the promotional strategy has to be designed explicitly that covers the wide age groups. Use of television, radio and newspaper is to be used for above the line advertising method. Advertisement on magazines is expected to capture the interest of the professional crowd. Magazines like Bloomberg Business Week, Wired, Fortune and The Economist are going to be targeted as these magazines are highly popular among the professional crowd. Below the line advertising like pamphlets, handbills and stickers is to be used primarily outside the universities and offices. Finally, social media is also to be used in order to magnify the interest. It has been observed that social media like facebook, twitter and LinkedIn has become highly influential to shape the opinion of the consumers. Mode of Advertisement Target Audience Rationale Television All the three segments namely youth, professionals and health-conscious people. Television is widely viewed by people of all age groups. Radio All the three segments People while commuting listens to the radio and the message can be transmitted simultaneously. Magazines Particularly the professional crowd seeking to have convenient food. The wide popularity of the magazines among professionals. Pamphlets, handbills and stickers. Can create awareness among all the three segments. Going to be distributed outside universities and offices. Facebook and LinkedIn Youth and young professionals. These groups have been found to be very active on the internet. People: In the services marketing the people who are involved in the consumption either directly or indirectly must be rewarded (Cromie, McGowan and Hill, 1995). In this case appointing the appropriate staff and people for preparing the product is of utmost importance. Great care is being exercised to select staff who can guarantee customer satisfaction. Physical Evidence: The manufacturing facilities are highly hygienic and the product uses top class standards to ensure that the food satisfies all the regulations. This has been done to ensure that the regulations framed by the food securities agency of the U.K. are not violated by any means. Process: Finally, the process of delivery of the product is also a very important determinant regarding maximization of customer satisfaction (Dess and Lumpkin, 2009.). Delivery of the product is a primary agenda regarding the product and care is being taken to eliminate problems regarding expiry date. All these factors combined with the eco-friendly nature of packaging the sushi is expected to make this product launch a resounding success. Reference List Brimelow, A., 2013. Consider tougher regulation in obesity fight – Labour. [online] Available at: [Accessed 11 December 2014]. Chernev, A., 2010. Strategic marketing management. London: Thomson Learning. Codita, R., 2010. Contingency factors of marketing-mix standardization. USA: South-Western: Cengage Learning. Cravens, D. and Piercy, N. F., 2008. Strategic marketing. New Jersey: McGraw-Hill Irwin. Cromie, S., McGowan, P. and Hill, J., 1995. Marketing and entrepreneurship in SMEs: an innovative approach. London: Prentice Hall. Dess, G. and Lumpkin, G., 2009. Strategic management: creating competitive advantages. London: McGraw-Hill Education. Dobson, P., 2009. Strategic management: issues and cases. New Jersey: John Wiley & Sons Inc. Esprit Sushi, 2014. The fast food industry: A buoyant market. [online] Available at: [Accessed 11 December 2014]. Euromonitor International, 2013. Fast food in the United Kingdom. [pdf] Euromonitor International. Available at: [Accessed 11 December 2014]. Feng Sushi, 2014. Feng sushi restaurants in London. [online] Available at: [Accessed 11 December 2014]. Food Standards Agency, 2012. Food law: Code of practice (England). [pdf] Food Standards Agency. Available at: [Accessed 11 December 2014]. IBIS World, 2013. Takeaway & fast-food restaurants in the UK: Market research report. [pdf] IBIS World. Available at: < http://www.ibisworld.co.uk/market-research/takeaway-fast-food-restaurants.html> [Accessed 11 December 2014]. IBIS World, 2014. Gyms & fitness centres in the UK: market research report. [online] Available at: [Accessed 12 December 2014]. International Markets Bureau, 2011. The United Kingdom: A diverse food service sector. [pdf] Her Majesty the Queen. Available at: [Accessed 11 December 2014]. Kotler, P. and Armstrong, G., 2008. Principles of marketing. New Delhi: Pearson Education. Kotler, P., Keller, K. and Brady, M., 2009. Marketing management. London: Person Education. Leatherhead Food Research, 2012. Increasing number of UK consumers have greater awareness of health and well-being. [online] Available at: [Accessed 11 December 2014]. Market Line, 2013. United Kingdom - Fast food. [pdf] Market Line. Available at: [Accessed 11 December 2014]. Mccann, J., 2013. Takeaway UK. [online] Available at: [Accessed 11 December 2014]. Mintel, 2013. Fast food market research. [pdf] Mintel. Available at: [Accessed 11 December 2014]. Steenkamp, J.E.M. and Dekimpe, M.G., 2009. Marketing strategies for fast-moving consumer goods. Financial Times, [online]. Available at: [Accessed 12 December 2014]. Sushi Trade, 2014. Your customers. [online] Available at: [Accessed 11 December 2014]. Tabbitt, S., 2012. YO! Sushis expansion from start-up to the mass market. The Telegraph, [online]. 29 March. Available at: [Accessed 11 December 2014]. The Statistics Portal, 2014. Fmcg - Market Statistics & Industry Facts. [online] Available at: [Accessed 12 December 2014]. Yudd Rudd Center, 2013. Fast Food Target Marketing. [pdf] Yudd Rudd Center. Available at: [Accessed 11 December 2014]. Read More