Final report - Aspire Food Group: Marketing Cricket Protein Brand PDF

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This is a report for the class of BUSI 2208 on the brand Aspire Food Group, it was given as a topic to be used and analyzed by the group....

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Final Marketing Report Aspire Food Group: Marketing Cricket Protein Brand

Lilith La, 101155614 Dylan Bukera, 101159220 Masa Daghlass, 101161294 S M Adnan Rahman, 101206975 Abdelrahman Darwazeh, 101148001

Murray Sang BUSI 2208 E April 5th, 2021

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Table of Contents Executive Summary

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Problem statements

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Internal Analysis Marketing

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Manufacturing

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Finance

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Research and Development

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Human Resource

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Information System/ Technology

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External Analysis Regulatory/ Political Force

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Economic Force

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Social Force

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Technological Force

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Culture

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Demographic

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Competition

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Segmentation Analysis

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Strategic Alternatives

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Recommendation

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Implementation

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Conclusion

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References

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Appendices

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Executive Summary Exo bar - Aspire Food Group’s new protein bar product made from crickets struggles to gain attention and awareness from the North American market, mainly due to its stigmas surrounding insect consumption. To mitigate this problem, three strategic alternatives are proposed: penetration pricing for the mass market, premium pricing for the niche market, and marketing for students. Penetration pricing targets the low-income and youth segment with pricing based on competitors. Premium pricing focuses on high quality along with higher pricing to mainly serve professionals and athletes. Marketing for students strategy focuses on marketing affordable products through infomercials or events at schools, universities since the youths are more adaptable to changes. The premium price, which targets athletes, is the recommended strategy as it aligns with the brand’s objectives and caters to the same market segment as well as has potential for new customers. However, this option can be pretty costly due to rebranding and aggressive promotional campaigns. Despite that, it is recommended for Aspire to implement this strategic alternative.

Problem Statement Aspire Food Group’s new product Exo bar, a protein snack bar is going to hit the markets. Its primary ingredient and source of protein is cricket. The company is primarily focused on making the product familiar to the consumers. It is essential to raise awareness of an unfamiliar product to make it more sellable. Although the concept is very innovative and it is backed up by several benefits and facts as analyzed in this report, it will surely face quite a lot of difficulties. The first and the most obvious problem is the introduction and familiarization of an insect-based food to the North American market that is unfamiliar and uncomfortable to entomophagy. Along with that, there are already established protein brands like Clif Bar in the mass market, who will act as competitors in the market, along with other

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insect-based protein brands, for example, Naak, who are in this niche market. Aspire has to compete in both the markets.

Internal Analysis Marketing - Strength The cricket proteins brand is still expected to gain recognition in the upcoming years, due to the cricket's high ratio of protein. It is estimated that crickets are 20x much more resource-efficient than cows (Exo, 2020). Crickets are easier to take care of since they require less space and less food and water, moreover, crickets can be nurtured organically which causes less environmental damage, Although a cricket infused protein bar would be considered quite unusual, it has many health benefits such as gut health, vitamin b12, iron, and is infused with all 9 essential amino acids (landish, 2020). These sources help with stronger muscles, growth, and repair, which is the ideal product for athletes. The brand strategy is to advertise the product in order to collect a more wide-reaching customer base. According to data, there are several groups that a cricket protein bar would sound appealing to, such as the millennial generation, those born between the years of 1980-1997. as well as individuals who are more concerned about their nutrition and their state of health, along with individuals who preserve a busy lifestyle. Moreover for the product to acquire the recognition it deserves, there will be some traditional promotional strategies used, such as flyers and articles, giveaways, surveys, and merchandising promotion. Manufacturing - Strength Aspire food group is the single largest, far-reaching cricket-producing protein company. It is estimated to reach around an average of $1,336 million for insect-selling products (prnews, 2020). Aspire food group requires not more than 30 minutes to produce 2 to 3 packages of cricket protein bar, with each package containing 5 grams worth of crickets, at the current

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time the company receives a modest value of orders, which is applicable with the daily amount of production. The crickets are properly cleaned and dried to remove any excess oils and moisture, afterwards it is added to any natural flavouring such as coconut and blueberry vanilla, to make the product tasty and appetizing for its customers. Finance - Weakness The Exo cricket producing company has examined the costs of goods sold and the purchased product expenses it holds, like the packaging and shipping costs. As seen in Appendix D, the shipping cost stands out the most since it's almost double the price of the product itself. This method is going to discourage customers from buying the product. Research and Development - Strength Aspire Food group has a strong product line that offers a multitude of different protein powder variants, like the power or protein bar, they even sell the powder separately to give you, the consumer, the ability to fuel your drinks and food with the perfect mix that is said to be used. Research and development concluded that crickets are the closest thing in the world to a perfect source of protein. There was some research done to input cricket powder into pet food with cricket powder. It is said that there is a much higher source of protein for your household pet as such; Aspire Food Group is willing to collaborate with any pet industries willing to take a chance in the future of protein (See appendix G). Human Resources - Weakness The company has a small size of approximately 50-200 employees, it is a growing company with a very high chance of success. Because of this, the company may not be completely strong enough to beat thriving companies that are its competitors. However overall the company's HR sector is not very feasible as it is still an up-and-coming business. Information Systems/Technology - Strength As a company Aspire believes that “insects are the protein of the future and that

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technology has the power to bring this to life” (Edible Insect Technology, 2016). By using robotics and automated data collection to get insects to have similar quality to meat and a much smaller environmental footprint, closer to plants. Aspire is committed to innovating, and bringing superior food nutrition making Aspires technology the best in class. The technology used will revolutionize the food-protein industry as it brings low cost and consistent reliability. By using sensor technology and Internet of Things (IoT) to be able to capture real-time data on the insects in the Aspire farms. By always keeping an eye on the Aspire insects the application of zero waste is very much in our jurisdiction.

External Analysis Regulatory/Political force- Threat Entomophagy, defined as the practice of eating insects, is still considered a primitive behaviour in most Western countries. Therefore, laws and regulations, in most of the cases, are absent or unclear (FAO, 2013). In Canada, insects and more precisely crickets-based products are under regulation as Novel food (Government of Canada, 2020). This regulation can be found in the Food and drug regulations in Division 28 B.28.001 and states that: “a novel food means a substance, including a microorganism, that does not have a history of safe use as a food;”. This implies that such products need a pre-market notification, and it means that no businesses are allowed to sell or advertise it unless they have notified the Minister in writing their wish to sell or advertise the product and have received a written notice from the Minister (Justice Laws Canada, 2021). Finally, a team of health Canada scientists needs to review detailed scientific data before authorizing it for sale (Government of Canada, 2020). Economic force - Threat Due to the COVID-19 pandemic, Canadian’s economy has suffered from the deepest recession known in modern times (Conference Board of Canada, 2021). Economists have

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evaluated that the real GDP has dropped by 5.7% in 2020 (Deloitte Economic outlook, 2021). Despite the fact that recovery has begun, they estimate that the real GDP growth will cap at 4.2% this year (see appendix H), mostly because public health restrictions are still in place. However, we can see positive trends in some sectors. In manufacturing sales, we can observe that the food industry has known growth of approximately 3% from February 2020 to October 2020 (Deloitte, 2021). Furthermore, during the same period, food and beverage retail sales increased by roughly 10% (Deloitte, 2021). The index of consumer confidence in December 2020 showed that it rose by 11.7 points and it reached the highest level since March 2020 (Conference Board of Canada, 2020). Small businesses started to re-open and there is hope that the growth will continue (BMO, 2020). Social force - Opportunity Edible insects are becoming more socially accepted in Canada. For example, Loblaws’ President’s Choice has a cricket powder brand, cricket bars can be found in supermarkets and more restaurants are including grasshopper tacos and marinated ants on their menus (CBC, 2020). The trend is based on the fact that crickets are eco-friendly and sustainable protein. It is a functional food very high in fibre, iron, vitamin B12, calcium and omega. Cricket products are also becoming more popular among endurance athletes (Triathlon magazine, 2017). However, a large number of westerns view insects as pests that harm humans (Food Safety News, 2020). Technological force - Opportunity During the last few years, scientists looked for ways to develop new technologies concerning edible insects. The Karlsruhe Institute of Technology in Germany worked on improving the incorporation of insects into baked goods (Forbes, 2020). Several technologies have also the objective to turn insects’ ingredients into non-recognizable and more pleasant forms. It includes drying methods such as sun-drying, freeze-drying, oven-drying, fluidized

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bed drying and microwave drying (Melgar-Lalanne Hernández-Álvarez & Salinas-Castro, 2019). There was also the creation of new processing methods made for protein, fat and chitin extraction (Melgar-Lalanne et al, 2019). Furthermore, changed atmosphere packaging methods have been researched in order to increase the having a much lower risk of transmitting zoonotic diseases shelf-life of the products (Melgar-Lalanne et al, 2019). Culture - Opportunity Euromonitor’s consumer lifestyle survey in Canada showed that more than half of respondents try to have a positive impact on the environment through their everyday actions (see Appendix A). This applied to all age groups from 15 to 60+, approximately 65% of the sample are concerned about climate change (see Appendix A). Aspire’s protein source is from insects which could be raised in small spaces, with effective heat, water control systems. Therefore, the brand produces fewer greenhouse gases and is more environmentally friendly which appeals to most consumers’ values. Consumers are also concerned about local food safety and want to be reassured that the food they buy is of high quality (Elster, 2020). Insects have a much lower risk of transmitting zoonotic diseases so they serve as a safer source of protein (Ivey Business School Foundation, 2020). Moreover, there’s a growing trend of being vegetarian from age 20 to 39 in Canada’s population (see Appendix B). Insects can be an alternative to beef consumption as it is more humane (Exo, 2020). Demographic - Opportunity Canada remains an attractive market for a premium-priced product like Exo bar since the country has a growing consumer base with a relatively high level of income (Ha, 2020). Recent modern lifestyle, convenience food and lack of exercise have surged health problems (Ha, 2020). Due to this reason, people are more health-conscious and demand more healthrelated products. They mostly focus on clean and natural products (Ha, 2020). Exo cricket bars’ key benefit is clean ingredients and appropriate for people who want to exercise.

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Besides, Canada has an ageing population with a median age of 41 in 2019 and will continue to grow in the future. This can be a new potential consumer group as bars are easier and quicker to eat than meat. Competition - Threat North America’s sports nutrition market is highly fragmented due to the presence of a large number of prominent brands like Clif Bar, Optimum Nutrition, Muscle Milk, BSN, Cellucor (see Appendix C). One of Aspire’s biggest competitors is Clif Bar- an industryleading, purpose-driven brand. Clif Bar’s leadership created and follows a business model they call the Five Aspirations - “Sustaining our Business, Brands, People, Community and the Planet” (Clif Bar & Company, 2020). The company supports causes related to sustainable food systems. This is very similar to Aspire’s motivation. Since 2003, Clif Bar has utilized organic ingredients and organic farming in their products. They also made various investments in organic research as well as created funds for farmers, small businesses (Mainwaring, 2019). They are known for the good causes, organic ingredients but without the stigma of eating bugs which drives business growth. Although Aspire has similar views with sustainability and similar products, their image revolves more around making eating insects common which can discourage the majority of North American consumers.

Segmentation Analysis As mentioned previously, the primary focus of Aspire regarding their Exo bar is to create awareness of the product. To achieve this, Aspire must target the groups of consumers in North America who are willing to adapt to a change for a higher goal, or environmental and health benefits. Since Exo bar is targeting the North American market only in this case, geographical segmentation is unnecessary, as most of North America is unaware and not familiar with

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entomophagy. However, demographic, psychographic and behavioural segmentation is not only possible, but necessary here. We can segment Exo bar’s potential market primarily into two segments. This segment targets primarily the demographic segment of occupation. It comprises sports professionals and athletes, ranging from high school athletes to athletes on international platforms. This segment is chosen specifically because of their lifestyle, profession and mindset. These people are ready to compromise almost everything to improve their performance. With the right kind of marketing backed by superior nutritional facts, these individuals are more likely to choose Exo bar over conventional dairy, soy, artificial, etc based protein. The size of this segment was 19.5% of the U.S. total population in 2015 (U.S. Bureau of Labor Statistics, 2003-15) according to one source. However, this data is obsolete. Another source reports that in 2019, 19.3% of the U.S. population was engaged in sports every day (Statista, June 2020) (See appendix E). This data is more contemporary and relevant. It is safe to say that this segment size is not small. Another group is psychographically segmented due to their values. This segment pertains to people who hold dietary values. Entomophagy can be integrated into quite a few kinds of diets. For example, vegetarian diets may include animal byproducts and fish. Diets are very subjective but most people follow these diets for reasons such as environmental welfare, health benefits, prevention of animal cruelty. In these regards, Exo bar is far better than dairy and meat-based protein. Adding onto that, there are very few sources of protein from plant sources, and Exo bars can take the place of a safe protein source. Therefore it poses an opportunity to convince this segment to buy Exo protein bars. Around five percent of the U.S. population claim to be vegetarians (Hrynowski, 2019). Along with vegetarians, there are flexitarians and people who follow the paleo diet, the diet of ancient humans. These groups sum up to make this segment, which might not be very large but is a potential group.

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These two segments are the major segments that Aspire should target. These two groups have a common need, which is nutrition. Cricket protein offers a higher protein to gram ratio compared to meat such as beef, and protein is essential to both these segments. However, these two groups have a very important heterogenous need, which is price. Price elasticity or responsiveness/sensitivity to price is different for these two groups. Performance athletes and others in the first segment can earn from better performance, that is why they are ready to spend more too. They can be charged higher prices and the demand would not fall as much. On the contrary, vegetarians and the rest in the second segment are not necessarily willing to pay premium prices. Even if they want a better source of protein, they might not want to incorporate a completely new food product into their diet which is also very expensive. They might choose to exclude it altogether. These two segments differ at this factor, and the troublesome fact is that, if prices are set too low to satisfy the second segment of vegetarians, the first segment of athletes and sports professionals might consider Exo bars cheap and it can lead to them not trusting Aspire’s claims regarding Exo bars. To tackle this issue, Aspire might need to introduce more variety, but Exo bar does not have a wide product portfolio yet, and it has probably chosen a premium pricing strategy as mentioned in the case analysis, resulting in a higher price. Therefore, the market position of Exo bars is not favourable. A perceptual map (See appendix F) is drawn which illustrates the position of Exo bar in its niche market along with other insect-based protein brands. Exo bar is a high-priced product, which cannot be afforded by a lot of consumers and the price alone might make the product unattractive to many customers, also Exo bars do not have high variety. Having a variety that is cheaper would allow it to achieve higher sales volume and be more affordable by consumers, but it is not in that position. Since Exo does not have a high product variety, customers will not have too many options to choose from this brand. They might go to other brands if they offer a higher variety. As a result, Aspire might lose quite a

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few customers to its competitors of Exo bar. Grub is the lowest priced competitor in this market, and it also offers the highest variety, similar to chirps, but again, at the lowest price. It can be said that Grub is in the most favourable position among the products in the low price section. This map is drawn from the data collected online regarding prices and variety. Aspire should aim to position Exo bars in the low to moderate price and high variety position like Grubs to be able to target more segments, for example, premium performance product line for athletes, and clean and cheap variation for vegetarians, flexitarians and other similar groups. S...