Francesco Sugiharto, s5182625, Situation analysis 1003MKT PDF

Preview

Summary

Download Francesco Sugiharto, s5182625, Situation analysis 1003MKT PDF

Description

Situation Analysis for

Centrum Advance Multivitamins

Author Francesco Sugiharto SID s5182625

1003MKT – Introduction to Marketing Tutor: Gaeme Hughes Trimester 2, Year 2019

Centrum Multivitamins – Situation Analysis

Page 1

Table of Contents

Table of Contents..........................................................................................................................2 Introduction and Company Background..........................................................................................3 Introduction...............................................................................................................................3 Company Background.................................................................................................................3 Situation Analysis..........................................................................................................................4 Market Analysis..........................................................................................................................4 Macro Environment Analysis.......................................................................................................5 Political Analysis.....................................................................................................................5 Economic Analysis..................................................................................................................5 .............................................................................................................................................6 Social Analysis........................................................................................................................6 Technological Analysis.............................................................................................................6 Legal Analysis.........................................................................................................................7 Micro-environment Analysis........................................................................................................7 Company Analysis......................................................................................................................7 Summary...................................................................................................................................8 Competitor Analysis................................................................................................................9 Competitive market Summary................................................................................................11 Consumer Analysis................................................................................................................13 SWOT Analysis......................................................................................................................14 Recommendations/conclusion.......................................................................................................15 Reference List.............................................................................................................................15

Centrum Multivitamins – Situation Analysis

Page 2

Introduction and Company Background Introduction When Centrum Advance Multivitamins first debuted, it was quickly deemed one of the best multivitamins for Australian consumers (healthline, 2018). However, the consumer health industry is quick to grow at an approximate 2% and 4.5% growth rate per annum (Euromonitor, 2018). This growth leads to an increasingly competitive market, with more and more competitors set to rival each other. Centrum Multivitamins only ranks 16 th in terms of brand share making it fall far behind from its competitors. This makes it very hard for them to stand firm within the Vitamin and Supplement industry.

Company Background Centrum, a brand of multivitamins, is a subsidiary company owned and produced Pfizer (formerly known as Wyeth). Officially established in 1956, Pfizer’s ultimate purpose is innovation within the medical industry, producing a variety of familiar brand name products such as ChapStick, Robitussin, Advil, Nexium, and of course, Centrum (Pfizer, 2016). However, their success is built upon their ability to collaborate and form partnerships with external organisations with similar motives. These partnerships are formed with companies with bio medical aspirations such as Kineta, Biontech and Neoflucids (Pfizer, 2016). Pfizer was first founded 1849 by two German immigrants from the USA, Charles Pfizer and Charles Erhart. Initially, the two men set up what was supposed to be a fine chemical business, releasing a toffee flavoured palatable anti-parastic drug as their debuted product. This product was not only revolutionary, but also paved the way to the company’s future success (Pharmaphorum, 2010). In the 1950’s, Pfizer commences operations in Australia, establishing its Agriculture division, which touched down on animal health. Throughout the 1960’s and the 1970’s, Pfizer continues to dominate the industry by releasing new drugs such as the spectrum antibiotic Vibramycin. Since then, Pfizer has merged with a series of companies, taking control on Warner-Lambert in 2000, Pharmacia & Amp, Upjohn in 2002 and Wyeth in 2009. (Pharmaphorum, 2010). As of today, in terms of sheer size, the organisation is now home to over 90,000 employees (Statista, 2018).

Centrum Multivitamins – Situation Analysis

Page 3

Situation Analysis Market Analysis As expected, the Australian Vitamin and Supplement industry is very large in terms of market size, totalling to $2,937.8 million AUD retail value as of 2018 (Euromonitor, 2018) with companies such as Health and Happiness (19.9%), Blackmores (18.9%) and Sanofi (10.6%) fighting for the top company share (refer to figure 1). Supplement sales for general health products, such as, vitamins and probiotics, accounts for 63% of total sales, making it the most prominent category. The remaining 36% comes from sport nutrition, dietary products, and other health related goods (SBS, 2018). In context of the Australian market, the manufacturing industry of Vitamin and Supplement goods is facing its growth phase in relation to the economic life cycle. As forecasted, the industry value that influences the contribution to the economy is projected to see a growth of 2.8% per annum within the next 10 years (Ibis World, 2018). As a result, real GDP of the economy is also influenced, forecasted to have a 2.7% annual growth rate within the same period (Ibis World, 2018). This growth is due to the surplus of consumer expenditure, increase of aggregate supply and an increase in exports within recent years (Ibis World, 2018). This growth totals up to over 8.3 million in consumer purchases as of 2018 (Roy Morgan, 2018). Consumers have developed a general conscience in terms of behaviour towards health. However, this behaviour can easily be influenced by emerging trends in terms of mainstream health practises (Euromonitor, 2018). Factors such as attitudes towards health and diet, socioeconomic status, participation in exercise and education in health contribute to the influence of consumer purchase of vitamins (Roy Morgan, 2018). In general terms, a global Euromonitor survey shows that people associate “being healthy” with their mental well-being and feeling “good” (Euromonitor, 2018). Further respondents show that over 50% of north Americans agree that the consumption of vitamins is safe and paramount to health and nutrition. Ultimately, convenience of consumption is the reason why vitamins and being purchased, and also the reason to its increasing popularity (Euromonitor, 2018).

Figure 1: Company Share (Euromonitor, 2018) Centrum Multivitamins – Situation Analysis

Page 4

Macro Environment Analysis Political Analysis On December 20th, 2015, China and Australia introduced a Free Trade Agreement (ChAFTA) (Austrade, 2019). With China being Australia’s largest trading partner, holding 29.2% of total Australian exports (World’s Top Exports, 2019), and over US$57.7 Billion worth of Chinese imports (Trading Economics, 2018), the free trade agreement has allowed further trade access between the two. However, some countries that conduct international trade fail to maintain a political relationship. US and China, and more recently, Korean and Japan has suffered trade wars due to lack of communication, change of policies without mutual agreement and expensive tariffs. As a result of ChAFTA being enforced, imported and exported goods are significantly cheaper due to the elimination of tariffs between China and Australia (DFAT, 2019). Not only does this trade agreement further improve Australia’s political relationship with China but creates further opportunities for the Australian economy. This directly influences the manufacturing of vitamins, as materials used packaged these goods are made from raw materials imported from overseas.

Economic Analysis Australia’s unemployment rate remains untouched at 5.2% in June 2019 (Trading economics, 2019), which is 0.2% over Australia’s full employment benchmark rate of 5%. This remains to be the highest level since August 2018, and matched forecasted expectations (refer to figure 2). As a result, the economy only provided 500 jobs, while the number of unemployed increased by 6,600 (Trading economics, 2019). An increase of the unemployment rate will directly affect the vitamin and supplement manufacturing industry. If the demand for these goods were to increase, and unemployability was at a higher rate, manufacturing these goods with insufficient employees would impose a challenge.

Centrum Multivitamins – Situation Analysis

Page 5

Figure 2: Unemployability rate (Trading economics, 2019)

Social Analysis Consumers have become more wary of their health, with over 31% of Australians closely reading the nutrition labels of food and beverages (Euromonitor, 2019). Furthermore, people particularly look for convenience when it comes to consuming daily nutrition. A recent study conducted by Euromonitor suggests that convenience is a growing area of interest for consumers, particularly for people that spend money to save time (Euromonitor, 2018). Australians are becoming increasingly busier (Kneebone, 2019), hence why consumers tend to rely on multivitamins as they are quick and easy to consume. With convenience and accessibility being the main factors when it comes to consumer behaviour, it explains why consumers chose to purchase multivitamin products.

Technological Analysis In terms of trends of consumer behaviour, online shopping has become a popular method of trading goods and services, with retailers such as Woolworths introducing online grocery services in 1997 (Courier mail, 2009). Though physical stores will forever prevail, more and more people are embracing the perks of the online marketplace. Research has found that 9.46 million Australians have purchased goods online within an average 4-week period (Roy Morgan, 2018). An additional 5 million Australian grocery buyers are interested in the concept and are willing to purchase online groceries within the next year (Roy Morgan, 2019). The notion of quick access to the online marketplace is a concept that consumers like. With this access, sales for multivitamins can potentially boost, as they can now be purchased in an online grocery store where purchasing items is quick and easy process.

Centrum Multivitamins – Situation Analysis

Page 6

Legal Analysis Enforced by both the Australian and New Zealand Government, the Food Standards Australia New Zealand (FSANZ) requires packaged and unpackaged foods to clearly label nutritional information. This also includes (by law) compulsory warnings and advisory labels for consumers with allergies or to indicate other potential hazards (Better health, 2017). By doing this, consumers are vividly aware of what exactly they are consuming. Though labelled nutritional information is still required amongst vitamins, In Australia, the Therapeutic Goods Administration (TGA) set regulations for the quality of all vitamins and other therapeutic goods. These goods undergo a process where quality and safety are assessed before entering the market (TGA, 2019). This ensures that the multivitamins available for purchase are safe for human consumption.

Micro-environment Analysis Centrum Multivitamins – Situation Analysis

Page 7

Company Analysis Positives of Pfizer Engaging with the community – Pfizer acknowledges the community with the launch of Pfizer Cares, a Corporate Social Responsibility Program that focuses on ethical activities. They do this by supporting local charities, commencing fundraising initiatives and make sure they give aid to communities that need it most. (Pfizer, 2016) Brand Reputation – Pfizer has been around since 1849, meaning that the company has been around long enough to establish within the market and build its reputation. When relating to the global Vitamin and Supplement market, Pfizer now ranks 2nd in terms of Company Share value, trailing behind Amway Corp (Euromonitor, 2018). Negatives of Pfizer Mergers – Though Pfizer’s mergers had the potential to open closed doors for business opportunities, it had negatively impacted the R&D divisions of the company (Forbers, 2019). Following the merger with Wyeth, it had closed a large number of R&D sites worldwide and announced plans for anything up to 20,000 redundancies (Pharmaphorum, 2010). Lawsuits – Pfizer has faced numerous lawsuits of their prescription medications to treat health conditions (DrugDangers, N.D). Most notably, antidepressant drugs such as Zolof and Effexor, was known to trigger life-altering birth defects. Despite knowing the birth defect risks, Pfizer continued to actively promote its use. This led to over 250 lawsuits in 2012. (DrugDangers, N.D)

Summary Centrum Multivitamins – Situation Analysis

Page 8

Pfizer’s success was not achieved overnight. Throughout the millennium of constant innovation, Pfizer has built its way up within the industry. However, although they are now one of the largest multinational pharmaceutical companies in the world, they still display acts of humility, ensuring that community needs are still met despite their huge reputation. They also make good use of its investments, increasing their market share, and ensuring that they have a competitive advantage over other competitors by utilizing mergers. However, desperate of a competitive advantage, Pfizer may have merged with companies without considering present factors, resulting in the closure of many R&D facilities. Without R&D, innovation, particularly for companies in the pharmaceutical industry, is very hard.

Competitor Analysis

Table of Competitors of Centrum Multivitamin For Adults Competitor Berocca (Direct)

Blackmores (Direct)

Swisse (Direct)

Centrum Multivitamins – Situation Analysis

Points of Difference (POD)

Points of Similarity (POS)



Consumed differently – Tablet is dissolved into water and taken as a beverage.



Both are consumed to boost energy and stamina using B group vitamins.



Holds fewer vitamins in comparison to Centrum.



Both do not contain any caffeine or any artificial stimulants.



Blackmores is an Australian based company.





More diversity in terms of the vitamin products they sell. (Doesn’t solely focus on multivitamins)

Much like Centrum, Blackmore provides a range of multivitamin types that caters to consumer needs.



Contain similar vitamin groups as ingredients.



Much like Centrum, Swisse conducts a lot of social work by supporting charities and working with communities.



Contains similar vitamin groups as ingredients.



Takes a more natural approach to the ingredients used.



Swisse is an Australian based vitamin product company.



However, since 2015, 86% of the company is held by Chinese company H&H Group (The Sydney Morning Herald, 2015).

Page 9

Vitamin Water (Indirect)



Sells a range of vitamin products.



Only produces ‘Vitamin Water’.



Owned by Coca-Cola



Advertised as a beverage rather than a multivitamin.



Contains B group vitamins to boost energy, much like many other multivitamins.

With the sheer size of the pharmaceutical industry, there a very few indirect competitors in relation to multivitamins. Multivitamins alone are a very specific type of product. However, given the amount of companies producing them, there are a wide range of direct competitors that rival Centrum. A common characteristic amongst these companies is that they are using the same, if not similar ingredients to produce the multivitamin. This gives consumers a wide range of options to choose from. However, as a result, direct competitors are selling similar products, making it harder for Centrum to stand out within the industry.

Centrum Multivitamins – Situation Analysis

Page 10

Competitive market Summary Competitor

Target Market

Product

Price

Promotional

Distribution

Strength/ Weakness

Berocca

Children 12 years and over, Adults

Multivitamin tablet that is dissolved into water.

$22.99 for 60 tablets

Iconic “Berocca Big Day” advertisement

Chemists, Woolworths, Coles, Convenience stores, others independent retailers

Strength: Unique for its way of consumption. Very few competitors imitating them. Weakness: 13th in brand share for the vitamin and supplement industry. (Euromonitor, 2018)

Blackmores

Children 12 years and over, Adults, 50+ seniors

Vitamins

Standard Multivitamin costs $44.99 for 180 tablets

Brand ambassadors – Partnered with Chinese tennis legend Li Na to promote the company in China (Blackmores, 2015)

Chemists, Woolworths, Coles, other independent retailers

Strength: Has operations in 12 countries. Has built its international reputation (Blackmores, 2014). 2nd In Brand Share for the vitamin and supplement industry (Euromonitor, 2018) Weakness: Due the use of natural ingredients, products are more on the expensive side.

Swisse

Children 12 years

Vitamins

Standard

Uses many

Chemists,

Strengths: Has

Centrum Multivitamins – Situation Analysis

Page 11

and over, Adults, 50+ seniors

Vitamin Water

Children 12 years and over, Adults

Beverage/Vitamin

Multivitamin costs $27.99 for 120 tablets

Australian celebrity brand ambassadors – Chris Hemsworth, Ashley Hart

Woolworths, Coles, other independent retailers.

operations in 7 countries. Has built its international reputation (Swisse, N.D). Leads Australia in brand share for the vitamin and supplement industry (Euromonitor, 2018) Weaknesses: Use of natural ingredients makes products more expensive.

$3.25 per bottle

Initially owned by renowned rapper, 50 cent, however later sold to CocaCola. The thought of purchasing a drink owned by their favourite rapper could be appealing to some consumers.

Woolworths, Coles, other retailers

Strengths: Conve...