Yeo soft drinks division SBU strategic market plan - Case Study Example

Yeo Soft Drinks Division SBU Strategic Market Plan Executive Summary Yeo Hiap Seng soft drinks division was chosen as the strategic business unit in the marketing plan. It is a division of the company in Singapore and it is the unit charged with the soft drinks marketing in the company. Being a large company with different products, YHS (Yeo Hiap Seng) strives to optimize the performance of the company through the individual contribution of the subdivisions. The subdivision deals in a wide variety of soft drinks which are to a large percentage beverages. Table of Contents Executive Summary 1 Table of Contents 2 Soft Drinks Industry Background 4 Back Ground on Company 5 Corporate: Yeo Hiap Seng 5 SBU : Yeo Hiap Seng Soft Drinks Division 7 SBU Situation Analysis 8 Employees 9 Media 9 Government 10 Customers 10 Investors/ Shareholders 10 Banks 11 Community 11 The Unit's Resources 11 Financial resources 11 Raw material resources 12 Research and development resources 12 Marketing resources 12 Yeo Hiap Seng Soft drinks division Marketing objective and Goals 12 Recommended strategies 13 Market strategies 13 Market scope strategy 14 Market Geography strategy 14 Market entry 14 Market commitment strategy 15 Product strategies 15 Product positioning 15 Product repositioning 16 Product design strategy 16 New product strategy 16 Value marketing strategy 17 Pricing strategies 17 Pricing strategy for new product 17 Pricing strategy for established product 18 Distribution strategies 18 Channel structure strategy 18 Distribution scope strategy 19 Multiple channel strategy 19 Communications strategy 19 Advertising 20 Sales promotion 20 Database marketing 20 Public relations and publicity 21 Soft Drinks Industry Background Soft drinks appear to be slowly but steadily overtaking hot drinks as the largest beverage sector in the world (Deloitte, 2008). A report by Zenith international shows that the consumption of the soft drinks is rising by 5% each year. As an industry, soft drinks market is rapidly expanding (Aqua-Trace, 2008). The industry is faced by several market trends and factors that either push or pull them to lead them in the direction that we view them to proceed. The companies operating in this industry are therefore generally faced by several challenges that include ever-changing consumer tastes, in creased emphasis on products safety and the rising power of the retailers at the global level. Due to the several factors that are considered while having a picture into what happens with this industry, it is important to explore the opportunities for process improvement which could ultimately lead to better quality products and in the process guarantee safety of the product for the consumer while at the same time optimizing resources to provide best profits. A view of all the important industry factors with an eye into the future gives a positive prospect that ultimately secures a company's business or operations in the future. Although United States remains the biggest market currently, Asia likely to be the major driver of the sales in the near future (Deloitte, 2008). The soft drinks industry is pictured by opening into the entire beverage industry. The beverage industry has had its opportunities and challenges. Constant dynamism in consumer demands and preferences, call for new ways of attracting new customers while maintaining the old ones. Since this is the only way to increase sales and consequently achieve growth. The beverage companies strive to court customers, offer high quality products, efficiently distribute them, ensure safety and keep prices low. These must all happen with the eyes still open so as to able to exploit new opportunities by launching new products. The company therefore succeeds by quickly exploiting new opportunities. As a subsection of the beverage industry; the soft drinks market has been growing quite significantly, particularly in the emerging markets which include Asia as a key player. Back Ground on Company Corporate: Yeo Hiap Seng Overview YHS (Yeo Hiap Seng), was established in Singapore in 1901. YHS(S) Pte Limited is a food and beverages company and is part of the Far East organization (Buy Singapore, 2008). It has manufacturing plants in Singapore, Malaysia and China. It produces several varieties of Yeo's product types. These products include: Asian herbal teas, fruit juices, jelly drinks, canned foods, Asian sauces and instant noodles. The noodles are produced under brand names like Yeo's, Pink Dolphin, H2O, Cintan and Justea. The company is the market leader in non-carbonated drinks in Singapore, Malaysia and the entire Far East region. YSH bottles and distributes international brands like Pepsi/Diet Pepsi/7-up, Mountain Dew and many others. This therefore provides a wide market for the company. Corporate Structure The corporate structure of YHS comprises of: Chairman, Deputy Chairman, President, two Executive Directors and six independent non-executive directors. The company has the chairman as Mr. Philip Ng Chee Tat who is also the chief executive office (Yeo, 2008). Mr. S Chandra Das is the Deputy Chairman and also the lead independent director. Mr. Tjong Yik Min is the president who is also the company's chief operating officer. Mr. Ow Tin Nyap is one of the executive directors while the other one being Mr. Marcel Bertrand. The six independent non-executive directors are: Mr. Chin Yoke Choong, Mr Chang See Hian, Mr Lim Hong Kit , Mr. Irvin David Simon, Mr. Ngiam Tong Dow and Dr Tan Chin Nam. Company Investments YHS is a public limited company listed in the Singapore stock exchange. It gets revenue from shares, dividends etc. Since this is an investment holding company, investments are made through the shares, returns in dividends and other profits ploughed back by the citizens who purchase shares. Overall Performance The overall performance of a business can be easily pictured if it has data running over some slightly big period of time. This means that with a short period of time it is hard to determine with certainty on the trend of finance in the duration under study. It is important to have a wider spread of time to be able to make a conclusion on the trends. Looking at the trends on an overall scale we see a general increase in total sales, net income, gross margin and revenue. SBU : Yeo Hiap Seng Soft Drinks Division Overview YHS was the first company in Asia to package its Asian drinks in Tetra brink aseptic containers using Ultra High Temperature (UHT) processes in the 1960s (Brands - Beverages, 2008). Corporate Structure The YHS (Singapore) soft drinks division is a subsidiary of the bigger company YHS (Yeo Hiap Seng). Therefore, the company management is from the main company's senior administrators with an independent chief office heading the subsidiary. Overall performance Generally the unit has done well except for some of the specific juices the have registered less sales because of the ever changing tastes and preferences among the customers. SBU Situation Analysis Soft drinks SBU appraisal The soft drinks division SBU is affected by the management's decisions and goals as it lays down its own mission. The missions, goals or targets must be in line with the Yeo's senior management's missions. Therefore in some ways the company management sets goals for the SBU though the unit does modifications to hit targets above the senior management's targets but not less. Value orientation of the senior management The preset values of top management determine the missions that the SBU can set out to accomplish. Under no situation can the business unit set out to achieve a goal that contradicts or clashes with the senior management's goals. SBU culture Like all other companies operating in Singapore, the employees of Yeo must uphold some values and follow some codes as required by the government. Values like honesty and integrity are key or important for any employee in any company on the globe. Therefore the employees of Yeo are bound by the required contact codes. Stakeholders Several categories of people have interest in Yeo and its operations in the soft drinks industry. The categories include; employees, media, government, customers, investors or shareholders, banks and the immediate community. Employees The employees of any company have a direct stake and interests in the operation of the company. The Yeo's employees have interest in the operations since that is where they earn a living and any decision in the company affects them directly. Media Media advertises products of a company; it informs people of its presence and enables it to carry out its basic functions of communication. Therefore media is very vital to the working or success of any company. For the Yeo's soft drinks company to make people aware of the new drinks, it uses the media. For instance they use the newspaper or the radio to do advertisement to the clients. Government The government is supposed to play key roles like control, and ordering or guaranteeing order using its arms like the police. The government of Singapore ensures or guarantee is the legality of the operations or transactions going on in the land that it serves to guide or control. Customers These are the main or the key concern element of any person doing business. Yeo has to ensure that the business is smooth and will last if they can ensure the best relationship with customers through quality or best services. Investors/ Shareholders Public listed companies raise their companies through the sale of shares. The investors need to first know that their investment is safer and then that they can get returns from their investments. For instance when the people realize that it is no longer profitable to put their cash into some business, then they will withdraw all their investments. Banks Banks give entrepreneurs loans to start business. They give interest on deposit and they assist in flow of cash by transacting on behalf of the clients, who could be business entities or the people running the business. Community The community around the company is owed corporate responsibility by the company. Things like cleaning up the environment, paying fees for the children and hospital bills for the poor people in the company's neighborhood. The Unit's Resources The set of resources that are used in the company are varied. They include: Financial resources The mother company, Yeo Hiap Seng provides the resources for use in the unit. Since the unit is just a subsidiary of the major company, it is allocate financial resources from the mother company. Human resources Human Resources The management of the human resources just like the management of the other resources is done from the mother company, YHS which allocates all the resources. However, the strategic management unit ensures that the allocated resources are effectively utilized. Raw material resources The raw materials here are the fruits and other added items used in the manufacture of juices and other soft drinks. They are provided by the main company Yeo Hiap Seng. Research and development resources At some points, Yeo's soft drinks division realizes that they require a new juice to capture or tap into a different market segment. Research and development then comes in since we need to create a new product to fit our discovered new market. Marketing resources To get to the customers, create new customers while retaining the old ones. This is important since the strategic business unit needs to expand the company's business size. Yeo Hiap Seng Soft drinks division Marketing objective and Goals Goals Growth: Become a leader in the soft drinks industry Promotion: Create a new name for fruit juice (Sweet One) Products: Extend the lines of products we deal in to have a variety by having Sweet One. Customers: To increase customer base by continuously attracting new customers while retaining old ones. Objectives To increase market shares To create a new name for Fruit Juice (like its Justea range) To create brand awareness for the Fruit Juice. Recommended strategies We recommend the different strategies which include; market strategies, product strategies, pricing strategies, distribution strategies and communication strategies. Market strategies Brand control, always a key concern, has never been more important (Best Practices, 2008). There are several types of marketing strategies; some of them are discussed next. Marketing strategies are the means that will enable the soft drinks division make something out of the products like fruit juice in this case while enabling them to achieve the key objectives of increasing brand awareness and market expansion. Proper implementation of these strategies will certainly result into the best results for them business unit. The purpose of marketing strategies must be the preset objectives that are to be achieved (Vadim, 2008). Market scope strategy When we look at the size of the market that we want to market it, we will market in Singapore the country within which the company's subsidiary is operating. The scope will be Singapore alone and not beyond so that we can cover as much as possible with the scope we have chosen. Since we have decided to cover only the age bracket 20-35years, we will do a single market strategy. This is a single market bracket and we will not do a multi-market strategy or a total market strategy which will be involving without necessarily giving us what is required. We just need to cover one segment the age bracket of 20-35 so that we can get the age bracket to consume fruits. Market Geography strategy In this strategy we have to consider how big size we can cover. Since Singapore a small size country we shall do a countrywide marketing strategy. We have to pick on areas that can guarantee accessibility due to the need to travel by road. We will need to transport the drinks into areas that can be reached easily. Market entry Yeo Hiap Seng will need to select a first-in entry since we are introducing a new fruit juice. We want to be leading in this business by going around letting the people know about the fruit juice so that as much demand can be created for it as possible. Getting the potential buyers, introducing the new product and getting to the lead in this is what is important now because it will allow us to get ahead and remain ahead of the competitors while getting the juice into the market and increasing the sales. Market commitment strategy In decided the level of commitment for market, the strategy of choice is strong commitment. It is important that we get to understand that we need to get it right the first time we decide to start marketing the juice. Product strategies It is important to remember that Marketing is all about providing correct collection or set of benefits to the end user (For Marketing Learners Globally, 2008). The several product strategies are as follows and each of them is addressed here. Of importance is to look at a product as a collection of benefits that one acquires when they purchase a service, a good, an idea or an experience. These are consequences that result from the purchase. As soft drink division works to meet the objectives set, then it is important that they know what they need to do. They therefore need to look at these strategies; Product positioning Yeo's soft drink division needs to put the new fruit juice into a state ready for the customers. The unit will need to get the customers to get into picture of what values the new product (the fruit juice) brings it. An image that puts the drink on table as one important item that the customers will actually go for has to be put forward so that the potential customers sees the real value in it. Since we are selling a new fruit juice, we want to put it forward, show the qualities and values that we consider its strengths. There is an important point that Singaporeans are getting much more health conscious, it is important that we give the qualities that improve health, the nutritional value of the fruit juice that will make people more healthy. Product repositioning The strategic business unit will bring the fruit juice as a reintroduced product and spell out its new or added values that make the consumers healthier. When these values are contrasted with for instance other products that the consumers already perceive as unhealthy, the soft drink's division will have cut for itself a much bigger market niche. Product design strategy I recommend that the fruit be a standardized product a fruit juice that can serve each one in the market. This will make marketing easier because it will be one standard product that is set for distribution. In this strategy we will not have to set flexibilities in the product. A set product will just be marketed in the entire market without having to modify. New product strategy Before a product is build, it should be priced (Markitek, 2008). The soft drink division should introduce a new product, new fruit juice so that they will put a new product into the market. The fruit juice will be on sale as a new product and therefore increase the market share achieving the objective of increased sales. Value marketing strategy The unit will provide the product as an increased value item. This will allow them to put on table an item of higher value; this will result into increased sales. Pricing strategies Pricing can be used as a tool by a manager of a cultural organization by altering or modifying the many variables that exist to strike an optimal point for the marketing of the product (Baker, 2008). If correctly modified, the basic objectives will be met. The soft drinks will need to make variable adjustments like a decision on what will be the unit to be measured for marketing and at what cost a single unit of say fruit juice in this case go. A proper set will market the fruit juice; however an incorrect choice of parameters will also ruin the marketing and acceptability of the fruit juice by the consumers. Pricing strategy for new product It is recommended that the soft drinks division introduces the new product fruit juice. The new product should be introduced with some set of favorable product which will then be able to capture a bigger market. To find or set a good pricing structure, you need to know the composition of your target market (The Web Hosting resource kit, 2008). Pricing strategy for established product Pricing is a very difficult yet important aspect of a business (Entrepreneurs, 2008). The soft drinks division will need to set proper pricing for the established products. Distribution strategies Distribution strategy is a way of ensuring that you get the right product to the right customers and the right place and time (Jain, 2004). Channel structure strategy An organization evaluates investments options and then selects the right one for its business (Logistics, 2008). From the look and understanding of the distribution of fruits by the soft drinks division, we realize that drinks are being distributed both directly and indirectly. Distribution channels are organized structures of buyers and sellers that bridge the gap of space and time (Jain, 2004). From direct channels, the buyers are able to get soft drinks straight from the sellers or distributors while indirect is where there are intermediaries that allow for the consumers to get the fruit juice from the intermediaries who distribute for soft drinks distributors. Distribution scope strategy The distribution scope will be intensive. Intensive distribution serves to maximize the availability of the product. Increasing the availability makes it almost certain that anytime someone needs the product anywhere they will be likely to get. Multiple channel strategy In markets, winners "buck the trend" when markets are weaker and move on when they see really opportunities (Multiple channel, 2008). The strategic business unit will use multiple channel strategy because this guarantees more sales than the single channel strategy. This is because the individual channels contribution sums up to get more resulting sales for the fruit juice. Communications strategy Communication strategy should be used to reach much more people who would be convinced to make a purchase. There are many people within the age bracket 20-35 do like interacting and they would very easily purchase the fruit when convinced to try it. To build organizations' customers loyalty, the customers must be convinced that the product or service that you are providing is the best solution to their needs and also go ahead and convince them that you will continue to exceed their expectations (Macro, 2008). Advertising Advertising as a communication strategy will allow an influencing on the customers or potential customers and there allow for the increase in sales. This method is able to influence customer perceptions, build brand equity. Building brand equity implies that the customers will be able to understand the brand and have a chance of picking on it. Sales promotion In sales promotion, a set of communication activities are used in an effort to provide value additions or incentives to consumers or organizational customers like retailers in an attempt to stimulate immediate sales (Sales Promotion, 2008). Sales promotion is likely to result into immediate sales response. When you talk to people with a product in hand, immediate purchases are likely to be seen. This will result in increased sales immediately. The soft drinks division will need to go about promoting the fruit juice which will increase its sales instantly. However, this does not create a brand loyalty and is also not desirable for long run. Database marketing The principle which controls database marketing is that by collecting information about your business, you can achieve reduced costs and maximize on profits(Damon, 2008). The soft drinks division will need to keep a record of customers so that they can be contacted later. In the computing systems, there are contact management systems that help in keeping track of the customers so as one can get back to them. Public relations and publicity Public relations (PR) are very fundamental to building your successful building of business (Don, 2008). It is important that while marketing the personal relations are not compromised and interaction or communication is as effective as possible. The public relations and publicity can make it easier for the sell of the fruit juice. It is a low cost method with potential positive impact due to third party endorsement. References: Aqua-Trace (2008). Soft Drinks Industry. Retrieved from http://www.biotrace.co.uk/uploads/documents/23.pdf Date Accessed 21st May 2008. Baker (2007). How to make more money from pricing. Retrieved from http://www.baker-richards.com/pricing/home.htm Date Accessed 21st May 2008. Best Practices (2008). Marketing strategy. 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