M&M chocolate candy - Essay Example

(Assignment) M&M Chocolate Candy: Marketing Plan I. Executive Summary M&M’s chocolate candy product is manufactured, marketed, and distributed under the sixth-largest business enterprise in US known as Mars, Inc. The organization is well known for its confectionary brands like Mars bars, M&M’s, Milky Way bars, Snickers, Skittles, and Twix. Currently, the M&M’s chocolate candy is sold in over 100 countries worldwide. The most catching feature of this product is that its unique taste is appealable to people belonging to all age groups. The corporate principle of manufacturing chocolate products in domestic markets reduces the operational efficiency of the organization. In addition, the company is exposed to FDA regulations as it operates in the consumer foods industry. The SWOT analysis clearly indicates that Mars has a competitive edge over its market rivals, and hence the M&M’s chocolate candy product has a greater market scope. The strong global presence and high brand recognition are the major strengths of the company whereas expensive marketing campaigns seem to be a weakness of the business. Currently, M&M’s adopts a competitive pricing strategy because the product has been on the market for decades and there are numerous close substitutes for this product. Global market expansion, increased focus on social media promotion, and effective brand establishment are some of the marketing objectives identified for the M&M’s over the coming years. The organization is advised to rely mainly on direct and retail marketing channels to accomplish the marketing objectives proposed. The direct marketing channel strategy can benefit the organization to generate more sales through its website and to offer cheaper rates to end consumers. However, the business concern may also depend on other marketing channel strategies like advertising, sales promotion, and e-mail marketing that can increase its sales volume and meet marketing objectives. II. Product and Company Background 1. Company history and products Headquartered at McLean in Virginia, Mars, Inc. is an American multinational company dealing with confectionary and food products. It is the sixth largest privately-owned business enterprise in the United States. The organization was founded by Frank C. Mars in 1911. The company achieved annual sales revenue of US$33 billion in 2013. Although the company is a manufacturer of pet food and other food items, it is prominent for the confectionary items it creates such as Mars bars, M&M’s, Milky Way bars, Snickers, Skittles, and Twix. As of 2014, the Mars family employed over 75,000 people worldwide. The major products of the company are illustrated below. Mars bars It is a chocolate bar manufactured by the Mars Inc, and this confectionary item was first manufactured in 1932. Skittles This fruit-flavored sweet is currently manufactured and marketed by the Wrigley Company, a subsidiary of the Mars, Inc (“Skittles..”). Pedigree Pedigree is a major pet foods brand of the Mars Inc with its production facilities in England. Uncle Ben’s Similarly, the Uncle Ben’s is also a major brand of the Mars, Inc focusing parboiled rice and related food products. 2. Introduction of the new Product M&M’s chocolate candy product (the focus of this marketing plan) M&M’s are “colorful button-shaped chocolates” and a major brand of Mars, Inc inspired by Smarties (“Learn to count…”). The letter ‘m’ is printed on one side of this chocolate candy shell and they are available in a wide variety of colors. Originated in the United States in 1941, M&M’s are currently sold in more than 100 countries. Evidences from market studies suggest that there has been a growing demand for chocolate candy products not only among children but also among other age categories over the last several years. Industry analysts indicate that this trend is likely to continue over the coming years. To illustrate, rising income levels in emerging markets like India and China coupled with ongoing economic recovery in North America would lead to a 30% growth in demand for chocolate candy products by 2020 (“The future of chocolate:..”). This chocolate product is consumed by people worldwide despite age differences. As mentioned already, the major attribute of this product is that its taste is appreciated by people of different age groups. There are countless varieties of M&M’s including milk chocolate, mint chocolate, white chocolate, dark chocolate, and orange chocolate. The unique taste of this chocolate candy has assisted the M&M’s to increase its global market share massively and to gain a competitive edge over its market rivals. In addition, it is identified that the company gives particular emphasis to packaging and labeling to keep its chocolate candies appealable to the target markets. The company always uses colorful packaging for its chocolate products because they are primarily marketed to children. This is the same reason why the company promotes color changes for its chocolates from time to time. Likewise, the company employs a creative branding strategy relying on computer-animated graphics to influence the target consumer segments effectively. It is clear that the combined use of cartoon-like animated candy characters and storytelling techniques has really aided the company to enhance its brand recognition as a candy icon. In short, the M&M’s chocolate candy products are capable of raising strong competition challenges to its market rivals. III. Strategic Issues As Mars, Inc is a global company operating in the consumer foods industry focusing on six key business segments, it faces a series of strategic issues in the global market context. While analyzing the current business environment, it seems that one of the major strategic issues is to drive efficiency throughout the value chain while adhering to a fundamental corporate principle of manufacturing chocolate products in domestic markets (Lanner). When the organization is forced to manufacture the chocolate products in local markets, it cannot benefit from some foreign markets where cost of materials and labor is low. Hence, it is really a challenging task for the business enterprise to follow this corporate principle of manufacturing and to maintain greater value chain efficiency simultaneously. In addition, the company does not foster bulk storing of chocolate products in the long-term as it puts particular emphasis on quality. Although this approach is good to enhance product quality and to meet consumer satisfaction, it may hinder the firm’s ability to meet supply needs in the event of a demand surge. Hence, the M&M’s struggles to deal with capacity planning, which is a strategic process to ensure that the chocolate supply meets the demands of the business. The firm’s efficiency will be hurt if its supply is not capable of meeting the demand. Since M&M’s operates in a highly competitive business sector, it would quickly lose its market share to competitors once there is a delay in the supply. Since the M&M’s operates in the consumer foods industry which is exposed to strict government policies and regulations, the company often faces legal issues when it plans to make a change to the product. For instance, the company is strictly required to comply with fat, sugar, and flavor standards set by the government while manufacturing a chocolate candy product. In addition, as the M&M’s brand offers a wide variety of chocolate products, it is not an easy task for the company to manage the marketing and distribution of all these items efficiently. It is interesting to see that the Mars, Inc adopts the concept of global practice groups (GPGs) to deal with its key strategic challenges. “These groups are communities of purpose, networks of senior associates who are charged with delivering a step-change in performance in an area of strategic importance to Mars, Inc” (Milton,159). IV. Competition 1. M&M’s SWOT analysis Strengths The worldwide recognition and strong brand reputation constitute the major strengths of the organization. In addition, M&M’s is a part of the Mars business group so that it can take advantages of the economies of large scale operations. The company has a well-established advertising and branding strategy that has been successful over the years. Weaknesses The major weakness of the organization is that its marketing campaigns are very expensive, and hence it spends too much money on marketing efforts compared to its competitors. Opportunities Interestingly, M&M’s shops worldwide are famous tourist attractions too, and it adds value to the future growth potential of the company. As the firm maintains a worldwide market, it is easy for the company to deal with launching and positioning of new products. Threats The growing degree of competition in the confectionary and chocolate markets seems to be a potential threat to further growth of the company. In addition, the cost of materials and labor is rising constantly, and it increases the firm’s total cost of manufacturing. 2. Analysis of top two competitors 2.1 Baby Ruth SWOT analysis Strengths Broadened distribution and sales network Enhanced growth rate Strong competencies in the domestic market Improved market reputation Weaknesses Higher loan rates Weakened tax structure Increased reliance on debt financing High staff turnover ratio Mounting operating costs Opportunities The growing scope of acquisitions The fast recovering global market economy Increasing demand for chocolate products Diminishing cost of foreign market trade Threats Price fluctuations in the global market Growing labor costs Increasing interest rates Fast changing technology Rising cost of raw materials 2.2 Hershey SWOT analysis Strengths High-profile CSR initiatives such as the Milton Hershey School for orphans A well-performing R&D division Strong brand recognition A wide variety of products Exemplary treatment of employees Weaknesses Higher level of debt compared to competitors Weakened control due to broadened geographic distribution Mounting advertisement expenses Opportunities Increased access to markets worldwide due to its diverse range of products Health advantages of the firm’s dark chocolate A number of untapped emerging markets Threats Intense competition from rivals like Mars and Nestle Growing health concerns of US people 3. Market share assessment Fig.1 The Fig.1 indicates that Mars, which is the parent of company of M&M’s, notably dominates the global confectionery market with 14.6% share of the global market. Hershey, the second top shareholder of the global confectionery market, has only a share of 4.6%. Hence, while assessing the market share of M&M’s, Hershey, and Baby Ruth, it is clear that M&M’s enjoys a massive advantage over its potential competitors and this strength adds to the performance efficiency of the company. Undoubtedly, the unique taste of M&M’s together with innovative marketing campaigns has assisted the company to own a significant percent of the global confectionary market. In addition, the company regularly reviews its product lines, packaging, and labeling so as to make sure that its products fit the needs of modern candy consumers. Furthermore, the strong brand image of the Mars has also benefited this chocolate candy brand to increase its global market share markedly. V. Pricing It is identified that the M&M’s adopts a competitive pricing strategy to market its chocolate candy products worldwide. Under this pricing strategy, the firm sets prices for its products based on what competitors are charging for their products. Since the attributes of the products remain almost similar in the chocolate candy market, M&M’s management holds the view that the firm’s strong brand recognition and superior quality services would assist it to take advantages of the competitive pricing approach. Scholars indicate that generally a business enterprise adopts the competitive pricing strategy once the price has attained a level of equilibrium, which occurs when the particular product has been on the market for a long time and there are numerous close substitutes for the product. It is obvious that M&M’s candy product has been on the market for a long time and many substitute products are available in the market currently. Furthermore, the Mars is in a position to set whatever price it wants as the company is financially sound and stable. Hence, the current market position of the company as well as its chocolate candy product justifies the adoption of the competitive pricing strategy. VI. Positioning Statement There are four components of a positioning statement such as target audience, frame of reference, point of difference, and reason to believe. In the following part, the positioning statement of the M&M’s is discussed in the light of these four components. Target audience As discussed already, today chocolate candy products are appealable to all segments of customers regardless of their age, occupation, or social status. However, the M&M’s focuses specifically on children and youngsters who are more likely to consume chocolate products. As the company has a global focus, it targets on young consumer segments worldwide. Frame of reference The M&M’s operates in the chocolate candy market trying to meet the needs of chocolate-loving people. It is clear that M&M’s is well-recognized global brand offering unique taste, and therefore people who like the taste of M&M’s chocolate would not be interested in alternative products. In other words, people wanting an M&M’s chocolate candy may not be happy with just another chocolate. Point of difference On the strength of its unique taste and brand identity, M&M’s chocolate candies can own a place in the hearts of millions of customers compared to competitors. The most appealing feature of this brand is that M&M’s chocolate candies satisfy the tastes of its target audience at competitive prices. Furthermore, this product is available in all major global markets. Reason to believe The M&M’s has been operating successfully in the chocolate candy market since 1941, and this long market presence has assisted brand to gain a great customer trust. When people obtain tasty chocolate candies at competitive prices, they do not want any other reason to believe the brand. 1. Statement The M&M’s chocolate candy is a world’s leading chocolate brand that offers unique taste at competitive prices to consumers of all age groups. 2. Tagline M&M’s chocolate candy: Welcome to the world of a new taste – This tagline is really effective for this chocolate candy, because it reflects the unique taste of this chocolate product. Undoubtedly, people give primary focus to the aspect of scrumptiousness when they think of buying a chocolate. In this regard, this tagline seems appealable to the target audience. VII. Marketing objectives 1. Increase market share by 25% by 2020 The primary marketing objective of the Mars is to increase the sales of its M&M’s brand by 25% by the end of 2020. Currently, the brand has a presence over 100 countries worldwide and hence it has broader market coverage relative to the competition. Considering this broader global market presence of M&M’s, it may not be a cumbersome task for the company to accomplish this goal. It is advisable for the organization to invest more in promotional activities as it is the best way to enhance the sale of a product like chocolate candy. Compared to its competitors, Mars has a stronger financial background and managerial expertise to use different promotional techniques so as to influence the target market. The company may even initiate a price war to meet this objective because it has been placed in a better market position. 2. Direct marketing efforts on social media Statistical evidences found on Pew Research Center website suggest that the use of social media by all internet users increased from 8% in 2005 to 73% in 2013. The use of social networking sites by people under the age group of 18-29 rose dramatically from 9% to 90% over the same period (“Social Networking Fact Sheet”). Hence, it is clear that the number of social media users, particularly young users, is increasing rapidly. In this context, it is a sensible approach for the M&M’s to focus more on social media promotion to develop a broad customer base at limited costs. The most fascinating aspect of this strategy is that a social networking site is a virtual platform where the company can meet its existing and prospective customers to gather their feedbacks and suggestions. Hence, social media marketing can benefit the organization to obtain great understanding of the customer perceptions of the products/services. 3. Establish M&M’s as a synonym for chocolate candies Like what Windows is for Operating Systems, Mars has to establish M&M’s as a synonym for chocolate candies. For this, the management should design innovative marketing campaigns that would be appealable to a broad market territory. M&M’s is already prominent for its technologically advanced marketing campaigns that have captured a great market focus. It is recommendable for the organization to invest notably in R&D to improve the product quality constantly and to sustain its business growth. The firm may also consider introducing the product into new foreign markets in order for making itself a globally recognizable brand for chocolate candies. VIII. Marketing channel strategies 1. Strategies for supporting the marketing objectives In the previous section, three marketing objectives such as market share growth, social media promotion, and brand establishment in the global market were identified. For the first marketing objective (market share growth), it is good for the organization to focus on direct and retailer marketing channels. It seems to be a recommendable strategy for the organization to direct its prospective customers to the firm’s official website where they can purchase product directly from the company. Considering the great brand recognition and other competencies of the M&M’s, the direct channel can benefit the organization to generate improved net profits. When it comes to the second marketing objective (social media promotion), it is advisable for the business enterprise to rely on leading social networking websites such as Facebook, Twitter, You Tube, and Instagram to communicate its marketing message to the target audience. For the third marketing objective (brand establishment), the company may adopt the franchising channel to increase its global presence and to strengthen the brand image with minimal investments. 2. Choosing the right strategy It is recommendable for the organization to adopt the web-based direct channel strategy to achieve its marketing objectives. The ultimate objective of these marketing strategies is to direct more people to the firm’s websites and retail outlets and to increase the sales volume. Hence, the direct channel approach can assist the organization to exercise more control over its marketing and distribution activities and to enjoy a greater profit margin. When a franchising channel or similar approach is adopted, the organization will have limited control over its operations and the situation may perhaps leads to a brand value decline. When people buy the chocolate directly from the company, they do not need to pay middlemen, and hence they can save money. Undoubtedly, the reduced costs would meet the interests of consumers and therefore they would remain loyal to the company in the long-term. Marketing professionals indicate that the direct sales method benefits the organization to maximize profits and controls the delivery methods (“Direct Store Delivery for Consumer Products Companies”). 3. Recommendations In addition to the above described marketing channels, the company may adopt some other potential marketing channel strategies like advertising, sales promotion, and e-mail marketing to enhance the sales of the M&M’s chocolate candy. Although advertising is a traditional marketing channel, it is still relevant to enhance the reach of the product to diverse market segments. It is recommendable for the organization to create ads to depict the M&M’s chocolate candy as a quality product having no detrimental impacts on health. Using the sales promotion strategy, the company may send its chocolates to people as gifts on their birthday or wedding anniversary. This tactic can aid the business to make their prospective customers to taste their products. Likewise, the e-mail marketing is a modern marketing channel strategy whereby managers and other company officials send promotional mails to people on their e-mail contact list. There is no doubt that adoption of such marketing channel strategies can benefit the business enterprise to increase the number of prospective customers and thereby maximize profitability. Works Cited “Direct Store Delivery for Consumer Products Companies”. SAP Direct Store Delivery. Web. 11 November 2015. http://www.sap.com/bin/sapcom/pt_br/downloadasset.2013-11-nov-27-09.direct-store-delivery-for-consumer-products-companies-pdf.html “The future of chocolate: why cocoa production is at risk”. Goodyear. Web. 11 November 2015 http://www.theguardian.com/sustainable-business/fairtrade-partner-zone/chocolate-cocoa-production-risk Lanner, Mars. “Improves Business Planning and Drives Commitment to Quality with Predictive Simulation”. Web. 11 November 2015. http://www.google.co.in/url?sa=t&rct=j&q=strategic+challenges+to+Mars+chocolate+business&source=web&cd=2&cad=rja&uact=8&ved=0CCMQFjABahUKEwjjvNLr7frIAhWF4qYKHaaADdc&url=http%3A%2F%2Fwww.lanner.com%2Fen%2Fpdf%2Fgetpdf.cfm%3FtheCaseStudyID%3D8E2408CA-D4AE-52C7-7049AD60183AFE9B&usg=AFQjCNF0iH7wqnOoAv96VQ1Y1klkLtaCYQ&sig2=PJZbdM7nmHmQMXrPGsNQaw “Learn to Count make Numbers 1-10 with M&Ms and Smarties”. Youtube. https://www.youtube.com/watch?v=c1ZZCdFhXAc Milton, Nick. The Lessons Learned Handbook: Practical Approaches to Learning from Experience. US: Elsevier, 2010. Print. “Social Networking Fact Sheet”. Pew Research Center. Web. November 2015. http://www.pewinternet.org/fact-sheets/social-networking-fact-sheet/ “Skittles: Taste The Rainbow”. Wrigley. Web. 11 November 2015. http://www.wrigley.com/global/brands/skittles.aspx Read More