Strategic Marketing Management of Fentimans Ltd - Case Study Example

Strategic Marketing Management Table of Contents Introduction 3 2. Corporate Objectives 3 3. Market Overview 3 4. Marketing Audit: Internal and External 4 4.1 Marketing Mix: 4 P’s of Marketing 4 4.2 SWOT Analysis 5 4.3 PESTEL Analysis 5 4.4 Porter’s Five Forces Competitive Analysis 6 5. Assumptions 7 6. Marketing Objectives 7 7. Strategies for New or Modified Product 8 8. Promotional Programme 8 9. Conclusion 10 Reference List 11 11. Appendices 13 11.1 Appendix 1 13 11.2 Appendix 2 13 11.3 Appendix 3 14 1. Introduction Fentimans Ltd. is one of the top soft drinks company in the United Kingdom. The business is run by the Fentimans family and they make their beverages by means of the time honoured process of botanically brewing which is the best natural ingredient. The product range of Fentiman includes curiosity cola, brewed shandy, victorian lemonade, rose lemonade, dandelion and burdock, cherrytree cola, Seville and mandarin orange jigger. The production process of the company has been modernized through the accumulation of soft carbonation (Fentimans, 2015). Fentimans Ltd is chosen for the analysis because it provides vast range of soft drinks with new flavours. The ingredients used in its products are unique. It is favoured and consumed by large group of people in the United Kingdom. The purpose of this report is to carry out the internal and external analysis of the company and to develop a promotional programme for twelve months. 2. Corporate Objectives The corporate objectives of Fentimans include achieving the sales target by increasing the sales of higher margin products, attracting new customers, maintaining current customers, to increase its market share, to increase customer traffic in store, and to satisfy the customers with the supply of unique soft drinks. Other corporate strategies of the company include increasing its earnings per share to a great extent and to beat the competition by adopting the strategies to gain the competitive advantage. The company use traditional brewing methods and unique recipes to make the drinks. They mix the finest spices, herbs, natural flavourings and use the lengthy brewing method so that goodness and flavour stay in the bottle. This process gives the refreshing and full deepness of taste (Fmcgnews, 2015). The uniqueness of their product helps them to achieve great market share. 3. Market Overview The company offer vast range of products. The Victorian lemonade is prepared with one and a half lemon juice in each bottle. Rose lemonade is made with uncontaminated Rose Otto oil and real lemon’s juice which delivers beautiful aroma and refreshing taste. Curiosity cola is made by using mixture of the best herbal ingredients. The Guardian reviewed it as “the world’s best cola”. Dandelion and burdock is made by using the mixture of burdock root and Dandelion leaves which creates the unique aroma and taste (Fentimans, 2015). The past performance of Fentimans has demonstrated a good result. Its net worth, cash at bank, total liabilities and total assets for the year 2013 have increased to a great extent as compared to 2012. The cash at bank has increased from £47,982 to £1,086,750; net worth has increased from £3,287,449 to £4,538,400; total current liabilities has increased from £1,214,328 to £4,530,733; and total current assets has increased from £3,754,441 to £8,510,067 which is a great increase and it signifies the good financial position of Fentiman (Companycheck, 2013) (See Appendix 1 and 2). 4. Marketing Audit: Internal and External 4.1 Marketing Mix: 4 P’s of Marketing The marketing mix is defined as a conceptual structure which helps in structuring the approach towards every marketing challenge (Smith and Taylor, 2004). It is used by the companies as a tool in order to help them in carrying out their objectives. It is an element of the planning process of organization and consists of scrutinizing the following marketing variables: product, place, price, promotion (Kumar, 2010). Product: It refers to everything that is competent to satisfy the wants and needs of consumers (Dogra, 2010). Fentiman offers carbonated, non – alcoholic soft drinks containing sweeteners, flavourings and other natural ingredients which deliver refreshing taste (Fentimans, 2015). Place: The purpose of the company is to make their product available to a large customer base through the help of distribution channel (Kotler, 2011). The distribution system of Fentiman has eroded players of small level in the market. The company sells its products through its store. The company has its occurrence in the American markets along with Germany, France, Japan, and Spain (Barras, 2010). Price: It refers to the sum the customer needs to pay to obtain services or a product. Product’s price depends on several factors such as production cost, and the pricing purpose of the company (Leader and Kyritsis, 1994). Due to the accessibility of vast range of products, the company had done the pricing according to the geographic and market segment. To name a few, the price of 275ml curiosity cola, dandelion and burdock, and cherrytree cola is £1.19 each, and that of 75cl Rose lemonade is £2.54 (Mysupermarket, 2014). So, it is observed that Fentiman keeps low price for its products so that it can be consumed by everyone. Promotion: Fentimans adopts several promotional and advertising strategies such as word of mouth, incentives to the retailers who sells maximum products, press reports, and also reward to the traders. 4.2 SWOT Analysis Under this analysis, the major features of products which distinguish it from competition are recognized. Information regarding the probable and current future position of the trends and market conditions, target markets, and latest market position should be gathered (Hall, 2003). The managers of the company also requires to collect information regarding the probable and current future position of competitors (Sheila, 2010). Strengths: The strengths are the internal resources and attributes which support a successful result (Murray-Webster, 2010). The strengths of Fentiman are that they are having extensive distribution channel for their soft drinks, strong advertising and marketing, and excellent customer loyalty. Weaknesses: These are the internal attributes that work in opposition to a successful result and therefore they are considered as inauspicious for the company (Murray-Webster, 2010). Their weaknesses include undiversified portfolio of product. Opportunities: These are referred to the external features which the company may utilize to its benefit (Murray-Webster, 2010). Fentiman have opportunities in terms of growing demand for their healthy drinks, and growing consumption of cold drinks in the emerging markets. Threats: It is regarded as the external features which might be the possible sources of letdown to the company (Murray-Webster, 2010). The Company faces threat in terms of competition from Coca Cola Company because it is the best international brand. Changes in the taste and preference of customer are also one of the major threats for Fentiman. 4.3 PESTEL Analysis PESTEL (political, social, economical, legal, environmental, and technological factors) involves an investigation of the broad environment. It facilitates a broad scan of the environment and probable and actual factors that would have an effect on the aims if left unmanaged (Bowhill, 2008). Political factors: The political factors which have an effect on Fentimans are the tax policies and the excise and import duties for distributing their products in those countries where they does not include the outsourcing units. Economical factors: A weak and strong currency tends to influence the exporting of Fentiman’s products globally. Other factors such as exchange rates, interest rates, and price fluctuations also affect the operations of the company. Social factors: The growth rate of population is one of the most important factors to be taken into consideration because most of the time adults celebrate with alcohol and as Fentimans presents non alcoholic soft drinks so, it is an important factor to be taken into consideration. Technological factors: The advancement in technology helps Fentimans to introduce vending machines. Their technical advancement includes introduction of non refillable and recyclable bottles. Environmental factors: These factors involve the change in weather conditions as well as seasons in which customers prefer to purchase cool beverages. Legal factors: Fentimans is subjected to several laws in various states in which they carry on their business. The regulations include product safety, container deposits, labour practices, and environment protection. 4.4 Porter’s Five Forces Competitive Analysis The model suggests that supervisors or managers must originate strategies and approaches with an excellent understanding of the industry inside which they are normally competing (Schermerhorn, 2009). An attractive industry encompasses few challenges from the little prevailing competition, substitutes or new entrants, as well as low bargaining power amongst buyers and suppliers. The five forces are the competitors, new entrants, suppliers, customers, and the substitutes (Bard, 2008). Competitors: The competition that Fentimans faces is from Coca-Cola and Pepsi Co within the industry. Both are internationally established which generates a great competition. Coca-Cola is the leader of the soft drinks market. So, Fentimans really needs to differentiate its products to capture more market share. However, the products of Fentimans are already differentiated in some aspect as it provides flavoured soft drinks with an herbal extract in it for health conscious people. It can also introduce sports drinks to capture more market share. New Entrants: New participants are not really a competitive force for soft drinks business. The industry of soft drinks is completely saturated and the growth is also small. As Fentimans is providing healthy soft drinks with beautiful aroma and refreshing taste so, the entry of new entrants does not affect the business of Fentimans. Another obstacle towards entry is the soaring costs for labour, warehouse, and the economies of scale. Therefore, new participants cannot challenge the prevailing players in price because of lacking of economies of scale. Substitutes: Substitute products are referred to those competitors who do not exist in the industry of soft drinks. Such alternatives for Fentimans are sports drinks, tea, and coffee. Tea and coffee are competitive substitute because the people who buy more soft drinks might replace it with coffee, if they desire to go on with caffeine and drop sugar in their diet. Customers: Individual customers are the final purchasers of the soft drinks. The real buyers of Fentimans are the local bottlers. The important channels are vending, fountain sales, and supermarkets. Suppliers: The main raw materials utilised by Fentimans are sugar, fermented extract of ginger root, pear juice concentrate, herbal infusions and natural flavourings. The company has held authority over the suppliers of sugar, herbal, and juice. 5. Assumptions The substitutes for Fentimans are tea, coffee, and sports drinks. Sports drinks are popular among those consumers who are health conscious. So, the company might consider introducing sports drinks for the health conscious customers. High consumption of soft drinks can lead to unnecessary calorie intake, thereby contributing towards childhood obesity. Sports drinks will help the people to reinstate lost fluids. People who do not prefer drinking normal water after exercise may like to drink flavoured sports drinks to meet their needs of increased fluid. Introducing sports drinks will help the company to increase its market share as the size of the target market will increase now and it will result in more revenue. 6. Marketing Objectives The marketing objective of Fentimans could be increasing its market share by providing sports drinks with its existing flavoured soft drinks. Other objectives could be increased profit and sales revenue and customer satisfaction from their products. Their marketing objectives may include increase their revenue by 13%p.a. in each of the next five years, increase market share of the UK to 17% and to increase average customer spending by 5%. The company can provide satisfaction to customers by having sufficient knowledge of their attitudes and behaviour. Nowadays, people are more conscious about their health so, introduction of sports drinks as a new product will be considered as a good move for Fentimans. 7. Strategies for New or Modified Product Ansoff’s matrix will help in analyzing the growth opportunities for Fentimans. It explains that in order to deliver expansion in the business, a company needs to decide where and how it requires to compete i.e. in new or current markets and through new or existing products (Lester, 2009). Market penetration: It means increasing the share of market within current market segment. Fentimans can achieve increase market share through selling more products to the existing customers. It offers various ranges of soft drinks which delivers beautiful aroma and refreshing taste to the customers. So, it will be able to attract more customers because the flavours provided by this company are rarely found anywhere. Product development: It includes developing fresh or new products for current markets. Introducing sports drinks in different flavours will help to attract existing customers. Market development: This involves finding new customers for current products. The products offered by Fentimans are Victorian lemonade, Rose lemonade, Curiosity cola, and Dandelion and burdock which encompass ingredients like lemon’s juice, uncontaminated Rose Otto oil, herbal ingredients, mixture of burdock root and Dandelion leaves which create the unique aroma and taste. These products are hardly provided by other soft drinks’ company. So, the company will not find any difficulty in attracting the new customers for its existing products. Diversification: This involves shifting new products in latest markets at the similar time. The company can provide its new product i.e. sports drinks in 600ml bottle or its existing products in small bottle of 1 litre or 600 ml. The diversification strategy will help the company to attract more new and existing customers as well as to achieve more market share. 8. Promotional Programme Understanding market programmes: The market problem is that nowadays, people are health conscious so they prefer more sports drinks. Therefore, launching of sports drinks will address the health related issues of the customers. The new product will be launched to address the existing problems. As it will be available in different flavours so, it will be consumed by large group of people. This will be done in the first month (See Appendix 3). Accessing customer needs, competition and target market identification: Understanding the needs of customers is very important to launch a new product. This activity will be carried out in the second, third and fourth month before the launch of product. Customer requirements show that they need healthy drinks in different flavours. Fentimans will do the competitive analysis in order to recognize the differentiation that subsists in their new product in the fourth and fifth month. Identification of target market will also be done in the fourth and fifth month (See Appendix 3). Developing marketing plan and budgets: Fentimans will develop the marketing plan about how to launch their new product in the fifth month. The budgets which will be required in launching sports drinks will be finalised in the fourth and fifth month (See Appendix 3). Pricing strategy and product launch: An estimation of price during the launch of product will be decided in the sixth month and then the product will be launched in the seventh and eighth month (See Appendix 3). Developing advertising and promotional strategies: Fentimans can do its advertising through TV, magazines, internet, billboards, newspapers, and posters. It will help to enhance the customer traffic. The company can also adopt public relations approach such as new media to promote its new product. Sales promotion activity such as offering price discount and providing its product in small containers will help to attract more customers and also to augment revenue. They can implement digital communications strategy such as social media, and online advertising through its website will popularise the new product. Fentimans can also conduct after sale customer survey to know the satisfaction level of customer from their new product. It will also assist to understand whether the sports drinks are competent of satisfying their needs and desires. Developing advertising and promotional strategies will be the post launch strategy. It will be done in the tenth, eleventh, and twelfth months (See Appendix 3). 9. Conclusion Strategic marketing management executes the mission of the company through focused methods to acquire the most out of the prevailing marketing plan. The main aim of this report is to apply the elements of marketing mix in the operations of Fentimans Ltd. It focuses on the weaknesses and strengths of the company along with its threats and opportunities. Different factors which have an effect on the company have also been discussed. Porter’s five forces model is also applied for understanding the industry within which Fentimans are competing. Ansoff’s matrix helped in analyzing the growth opportunities for Fentimans. Further, an action plan has been created to depict the ways the company will apply its strategies in order to meet its goals. Reference List Bard, T., 2008. Opportunity Recognition. Michigan: Tim Bard Multimedia. Barras, C., 2010. International Marketing. United Kingdom: Newcastle University. Bowhill, B., 2008. Business planning and control. New Jersey: John Wiley & Sons. Companycheck., 2013. Fentimans Ltd. [online] Available at: [Accessed 15 Jan 2015]. Dogra, B., 2010. Rrural Marketing. New Delhi: Tata McGraw Hill. Fentimans, 2015. Fentimans Botanically Brewed Beverages. [online] Available at: < http://www.fentimans.com/soft_drinks> [Accessed 15 Jan 2015]. Fmcgnews, 2015. Fentimans voted ‘Best Drinks Brand’. [online] Available at: < http://www.fmcgnews.co.uk/index.php?option=com_k2&view=item&id=267:fentimans-voted-best-drinks-brand&Itemid=90> [Accessed 15 Jan 2015]. Hall, R.E., 2003. Starting a small business. United States of America: Infinity Publishing. Kotler, P., 2011. Marketing Insights from A to Z. New Jersey: John Wiley & Sons. Kumar, P., 2010. Marketing of hospitality and tourism services. New Delhi: Tata McGraw Hill. Leader, W.G. and Kyritsis, N., 1994. Fundamentals of marketing. United Kingdom: Nelson Thornes. Lester, A., 2009. Growth Management. London: Palgrave Macmillan. Murray-Webster, R., 2010. Management of risk: Guidance for practitioners. Ireland: The Stationery Office. Mysupermarket., 2014. Fentiman’s at Tesco. [online] Available at: < http://www.mysupermarket.co.uk/brands/fentimans_in_tesco.html> [Accessed 15 Jan 2015]. Schermerhorn, J.R., 2009. Exploring Management. England: John Wiley & Sons. Sheila, M., 2010. Customer Centric Product Definition. United States: PDC Professional Publishing. Smith, P. and Taylor, J., 2004. Marketing Communications: An Integrated Approach. United Kingdom: Kogan Page Publishers. 11. Appendices 11.1 Appendix 1 Key financials of Fentimans Ltd. 11.2 Appendix 2 Key financials of Fentimans Ltd. 11.3 Appendix 3 Gannt Chart of Promotional Programme Read More