Appendix - Marketing Plan: The S&S Smoothie Company PDF

Preview

Summary

Marketing Plan: The S&S Smoothie Company...

Description

APPENDIX

Marketing Plan: The S&S Smoothie Company Executive Summary Situation Analysis S&S Smoothie Company is an entrepreneurial organization that produces fruit-andyogurt–based beverages with superior flavor and nutritional content and unique packaging. Within the United States, S&S has targeted a consumer market of younger, healthconscious, upscale consumers who frequent gyms and health clubs, and two broad reseller markets: (1) gyms and health clubs, and (2) smaller upscale food markets. S&S distributes its product through manufacturers’ agents in the United States, Canada, and the United Kingdom and through Internet sales. An analysis of the internal and external environments indicates the firm enjoys important strengths in its product, its employees, and its reputation, while weaknesses are apparent in its limited size, financial resources, and product capabilities. S&S faces a supportive external environment, highlighted by a growing interest in healthy living, and limited threats, primarily from potential competitive growth.

Marketing Objectives The S&S marketing objectives are to increase awareness, gross sales (50 percent), and distribution, and to introduce two new product lines over the next three years: • A line of gourmet flavored smoothies • A line of low-carb smoothies

Marketing Strategies To accomplish its growth goals, S&S will direct its marketing activities toward the following strategies: 1. Target Market Strategy: S&S will continue to target its existing consumer markets while expanding its organizational markets to include hotels and resorts, golf and tennis clubs, and university campuses. 2. Positioning Strategy: S&S will continue to position its products as the first-choice smoothie beverage for the serious health-conscious consumer, including those who are seeking to lower their carbohydrate intake.

510

APPENDI X

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

3. Product Strategy: S&S will introduce two new product lines, each identifiable through unique packaging/labeling: a. S&S Smoothie Gold: a product similar to the original S&S Smoothie beverages but in six unique flavors b. Low-Carb S&S Smoothie: a product with 50 percent fewer grams of carbohydrates 4. Pricing Strategy: S&S will maintain the current pricing strategy for existing and new products. 5. Promotion Strategy: S&S will augment current personal selling efforts with television and magazine advertising, with sponsorships of marathons in major cities, and with a sampling program. 6. Supply Chain Strategy: S&S will expand its distribution network to include the organizational markets targeted. In addition, to encourage a high level of inventory in larger health clubs, S&S Smoothie will offer free refrigerated display units.

Implementation and Control The Action Plan details how the marketing strategies will be implemented, including the individual(s) responsible, the timing of each activity, and the budget necessary. The measurement and control strategies provide a means of measurement of the success of the plan. The following sections provide typical content for a marketing plan. Note that in the right margin the relevant book part for each section is referenced. Please refer to each part opener for “Tricks of the Trade” for developing content for the related marketing plan section.

Situation Analysis The S&S Smoothie Company1 was founded in September 2004 in New York with the goal of creating and marketing healthy “smoothie” beverages for sale to health-conscious consumers. S&S Smoothie expects to take advantage of an increasing desire for healthy foods both in the United States and internationally—and to ride the wave of consumer interest in low-carb alternatives. While there are other companies both large and small competing in this market, S&S Smoothie feels it has the expertise to create and market superior products that will appeal to its target market.

Internal Environment Mission Statement The strategic direction and actions of the S&S Smoothie Company are driven by its mission: S&S Smoothie seeks to meet the needs of discriminating, health-conscious consumers for high-quality, superior-tasting smoothie beverages and other similar products.

Organizational Structure As an entrepreneurial company, S&S Smoothie does not have a very sophisticated organizational structure. Key personnel include the following: • Patrick Small, founder and co-president. Small is responsible for the creation, design, packaging, and production management of all S&S Smoothie products. • William “Bill” Sartens, founder and co-president. Sartens is responsible for international and domestic distribution and marketing. 1

S&S Smoothie Company is a fictitious company created to illustrate a sample marketing plan.

PART ONE

511

512

APPENDI X

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

• Gayle Humphries, chief financial officer. Humphries develops financial strategy and keeps the company’s books. • Alex Johnson, national sales manager. Johnson is responsible for maintaining the sales force of independent sales reps. He also advises on product development. • Bob LeMay, Pam Sartens, and Paul Sartens, shareholders. Next to Patrick Small and William Sartens, Bob, Pam, and Paul own the largest number of shares. They consult and sit on the company’s board of directors. Bob is a lawyer and also provides legal services.

Corporate Culture S&S Smoothie is an entrepreneurial organization. Thus, a key element of the internal environment is a culture that encourages innovation, risk taking, and individual creativity. The company’s beginning was based on a desire to provide a unique, superior product, and company decisions have consistently emphasized this mission.

Current Products The original S&S Smoothie product, introduced in mid-2004, is a fruit-and-yogurt–based beverage that contains only natural ingredients (no additives) and is high in essential nutrients. Because of the company’s patented manufacturing process, S&S Smoothie beverages do not have to be refrigerated and have a shelf life of over a year. Therefore, the product can be shipped and delivered via nonrefrigerated carriers. S&S Smoothie currently sells its beverages exclusively through gyms, health clubs, and smaller upscale food markets. As a producer of dairy-based beverages, S&S Smoothie’s NAICS (North American Industry Classification System) classification is 311511, Fluid Milk Manufacturers. At present, the single product line is the S&S Smoothie fruit and yogurt beverage. This healthy beverage product has a flavor and nutritional content that makes it superior to competing products. The present product comes in five flavors: strawberry, blueberry, banana, peach, and cherry. S&S offers each in a 12-ounce and a 20-ounce size. S&S packages the product in a unique hourglass-shaped, frosted glass bottle with a screw-off cap. The bottle design makes the product easy to hold, even with sweaty hands after workouts. The frosted glass allows the color of the beverage to be seen, but at the same time it communicates an upscale image. The labeling and lid visually denote the flavor with an appropriate color. Labeling includes complete nutritional information. In the future, S&S Smoothie plans to expand its line of products to grow its market share of the health drink market. The suggested retail prices for S&S Smoothie beverages are $4.00 for the 12-oz. size and $6.00 for the 20-oz. container. S&S’s prices to distributors are $1.20 and $1.80, respectively. At present, S&S Smoothie outsources actual production of the product. Still, the company takes care to oversee the entire production process to ensure consistent quality of its unique product. With this method of production, variable costs for the 12-ounce S&S Smoothie beverages are $0.63, and variable costs for the 20-ounce size are $0.71.

Markets The consumer market for S&S Smoothie products is made up of anyone who is interested in healthy food and a healthy lifestyle. Although according to published research nearly 70 percent of American consumers say they are interested in living a healthy lifestyle, the number of those who actually work to achieve that goal is much smaller. It is estimated that approximately 80 million Americans actually engage in exercise and/or follow nutritional plans that would be described as healthy. As experts expect the trend toward healthier living to grow globally, the domestic market and the international market for S&S Smoothie products are expected to expand for some time.

APPENDI X

Table A.1

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

| Company Sales Performance

Year

Gross Sales

2004

$ 287,850

2005

$ 638,770

2006

$1,211,445

2007

$1,586,228

2008

$1,918,376

2009

$1,895,120

Customers/Sales Sales of S&S Smoothie products showed steady growth through 2008 but suffered some decline due to a downturn in the economy in 2009. Actual sales figures for 2004 through 2009 are shown in Table A.1. These sales figures plus S&S customer research show a strong and growing loyal customer base. This customer asset is important to the future of S&S. Nevertheless, research indicates that only about half of all consumers in the target market are aware of the S&S brand. Within the U.S. consumer market, S&S Smoothie targets upscale consumers who frequent gyms and health clubs. Based on research conducted by S&S Smoothie, these consumers are primarily younger; however, there is also an older segment that seeks to be physically fit and that also patronizes health clubs.

Distribution In order to reach its target market, S&S Smoothie places primary distribution emphasis on health clubs and other physical fitness facilities and small, upscale specialty food markets. The company began developing channel relationships with these outlets through individual contacts by company personnel. As sales developed, the company solicited the services of manufacturers’ agents and specialty food distributors. Manufacturers’ agents are individuals who sell products for a number of different noncompeting manufacturers. By contracting with these agents in various geographic regions, the company can expand its product distribution to a significant portion of the United States and Canada. Similar arrangements with agents in the United Kingdom have allowed it to begin distribution in that country. The company handles large accounts such as Gold’s Gym and World Gyms directly. While total sales to these chains are fairly substantial, when considering the large number of facilities within each chain the sales are very small with much room for growth. The Internet is a secondary channel for S&S Smoothie. Online retail outlets currently account for only 5 percent of S&S Smoothie sales. Although this channel is useful for individuals who wish to purchase S&S Smoothie products in larger quantities, S&S does not expect that online sales will become a significant part of the business in the near future.

External Environment Competitive Environment S&S Smoothie faces several different levels of competition. Direct competitors are companies that also market smoothie-type beverages and include the following: 1. Franchise smoothie retail operations 2. Online-only smoothie outlets 3. Other smaller manufacturers 4. Larger companies such as Nestlé that produce similar products

PART ONE

513

514

APPENDI X

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

Indirect competition comes from the following: 1. Homemade smoothie drinks made from powders sold in retail outlets and over the

Internet 2. Homemade smoothie drinks made using a multitude of available recipes 3. Other healthy beverages, such as juices 4. A growing number of energy drinks that are especially popular with younger consumers

Economic Environment S&S Smoothie first introduced its products during a period of economic downturn following the dot.com bust and 9/11. Despite this, the product quickly gained momentum and sales steadily increased. As the economy of the United States has suffered a severe recession during recent years, sales have correspondingly shown some decreases. Analysts estimate that the recovery will be slow and take a number of years, during which time GDP and consumer sales will increase at a similarly low pace.

Technological Environment Because S&S Smoothie produces a simple food product, technological advances have minimum impact on the firm’s operations. Nevertheless, the use of current technology enables and enhances many of the company’s activities. For example, S&S Smoothie uses the Internet to enhance its operations in two ways. As noted previously, the Internet provides an additional venue for sales. In addition, manufacturers’ agents and channel members can keep in contact with the company, allowing for fewer problems with deliveries, orders, and so on. Finally, in recent years, the company has established a presence on social media sites Facebook and Twitter through which it can communicate with consumers in a more personal way while monitoring consumers’ feedback communication.

Political and Legal Environment Because they are advertised as nutritional products, all S&S Smoothie products must be approved by the FDA. Labeling must include ingredients and nutritional information, also regulated by the FDA. In addition, S&S Smoothie products are regulated by the U.S. Department of Agriculture. While there are no specific regulations about labeling or advertising products as lowcarb, there is potential for such regulations to come into play in the future. In addition, there are numerous regulations that are country-specific in current and prospective global markets of which the company must constantly remain aware. Any future advertising campaigns developed by S&S Smoothie will have to conform to regulatory guidelines both in the United States and internationally.

Sociocultural Environment S&S Smoothies uses marketing research to monitor the consumer environment. This research shows that changing cultural values and norms continue to provide an important opportunity for S&S Smoothie. The trend toward healthy foods and a healthier lifestyle has grown dramatically for the past decade or longer. In response to this, the number of health clubs across the country and the number of independent resorts and spas that offer patrons a healthy holiday have also grown. In addition, many travelers demand that hotels offer health club facilities. During the past decade, consumers around the globe have become aware of the advantages of a low-carbohydrate diet. Low-carb menu items abound in restaurants, including fast-food chains such as McDonald’s. A vast number of low-carb foods, including low-carb candy, fill supermarket shelves.

APPENDI X

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

There are approximately 125 million American adults aged 15 to 44. Demographers project that this age group will remain stable for the foreseeable future, with an increase of less than 8 percent projected to 2025. Similarly, incomes should neither decrease nor increase significantly in the near future in this segment of the population.

SWOT Analysis The SWOT analysis provides a summary of the strengths, weaknesses, opportunities, and threats identified by S&S Smoothie through the analysis of its internal and external environments.

Strengths The following are the strengths identified by S&S Smoothie: • A creative and skilled employee team • A high-quality product recipe that provides exceptional flavor with high levels of nutrition • Because of its entrepreneurial spirit, the ability to remain flexible and to adapt quickly to environmental changes • A strong network of manufacturers’ agents and distributors • The growth of a reputation of a high-quality product among health clubs, other retail outlets, and targeted consumer groups

Weaknesses The following are the weaknesses identified by S&S Smoothie: • Limited financial resources for growth and for advertising and other marketing communications • Little flexibility in terms of personnel due to size of the firm • Reliance on external production to maintain quality standards and to meet any unanticipated surges in demand for the product

Opportunities The following are the opportunities identified by S&S Smoothie: • A strong and growing interest in healthy living among both young, upscale consumers and older consumers • Continuing consumer interest in low-carb alternatives that offers opportunities for additional product lines

Threats The following are the threats identified by S&S Smoothie: • The potential for competitors, especially those with large financial resources who can invest more in promotion, to develop products that consumers may find superior • The continuation of a slowed economy that might affect sales • Fizzling of the low-carb craze if other forms of dieting gain in popularity • Increase in popularity of energy drinks like Rockstar, etc.

PART ONE

515

516

APPENDI X

PART ONE

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

Marketing Objectives The following are the marketing objectives set by S&S Smoothie: • To increase the awareness of S&S Smoothie products by at least 10 percent among the target market • To increase gross sales by 50 percent over the next two years • To introduce two new product lines: a line of low-carb smoothies and a line of gourmet flavored smoothies • To increase distribution of S&S Smoothie products to include new retail outlets both in the United States and globally

Marketing Strategies PART TWO

Target Markets Consumer Markets S&S Smoothies will continue to target its existing consumer markets. Company research shows that the primary consumer target market for S&S Smoothie beverages can be described as follows:

Demographics • Male and female teens and young adults • Ages: 15–39 • Household income: $50,000 and above • Education of head of household: College degree or above • Primarily located in midsize to large urban areas or college towns

Psychographics • Health-conscious, interested in living a healthy lifestyle • Spend much time and money taking care of their bodies • Enjoy holidays that include physical activities • Live very busy lives and need to use time wisely to enjoy all they want to do • Enjoy spending time with friends • According to the VALS2™ typology, many are in the Achievers and Experiencers categories

Media Habits • Individuals in the target market are more likely to get their news from television or the Internet than from newspapers. They are likely to view not only the news channels but also the financial news networks. • The consumers prefer watching edgier shows such as Weeds and Californication. • They are likely to have satellite radio installed in their automobiles.

APPENDI X

|

MARK ET I NG PL AN: T HE S&S SMO O T HI E CO MPANY

• They are heavy users of social media, spending between 2 and 3 hours a day on sites including Facebook, Twitter, LinkedIn, and Foursquare. • Frequently read magazines such as Men’s Health, BusinessWeek, Sports Illustrated, and The New Yorker.

Organizational Markets In the past, S&S Smoothie has targeted two categories of reseller markets: (1) health clubs and gyms, and (2) small, upscale specialty food markets. To increase distribution and sales of its products, S&S Smoothie will target the following in the future: 1. Hotels and resorts in the United...