Brand Marketing Plan for Nestle Purina - Case Study Example

Contents Executive Summary 2 Current marketing issues 2 Potential for market and brand growth 3 Market, segment and category lifecycle stage 4 Competitive actions and future behaviour 6 Potential and future competitive advantage strategies for the brand 6 Threat of new entrants 6 Threat of substitute goods 7 Suppliers’ bargaining power 7 Customers’ bargaining power 7 Competitive Rivalry in the Industry 7 Analysis 8 Overall strategic objectives for the brand 8 Brand Conceptual Model 9 Pricing Strategy 10 Place & distribution strategy 10 Promotional strategies 11 Brand marketing action plans and tactics /Marketing Mix (Four Ps) 11 Overall brand action plan and tactics 11 Product action plan and tactics 12 Pricing action plan and tactics 12 Place and distribution action plan and tactics 13 Promotion action plan and tactics 14 Conclusion 15 References 15 Executive Summary Nestle Purina is a global leader in the manufacture of pet foods. The company offers a range of cat foods such as wet cat food, dry cat food, car litter and car treats. Its key product brands include Cat Chow, Purinary Veterinary diets, Purina One, Fancy Feast, Secondnature, Whisker Lickin and Pro Plan (Nestle Purina 2013; Nestle 2012). This paper proposes a marketing plan for Pro Plan brand of pet food. Nestle Purina is one of Australia leading pet food manufacturers. Pro Plan cat food is manufactured and marketed under the logo of Purina. Purina has a long history with pet owners since 1914. The product is manufactured by Nestle Purina PetCare, which was a result of a merger between Friskies PetCare and Ralston Purina, which was later acquired by Swiss-based Nestle in 2001. Pro Plan is formulated with fish and meat as the major ingredients. Other ingredients include corn gluten meal, soy protein isolate, chicken by-product meal, animal fat and salt (Nestle 2012). The pet food’s prime nutrients include proteins, vitamin E, omega 3 and fatty acids and essential minerals. Pro Plan is one of the products that were recalled in 2007 because of contamination with melamine, leading to low sales and reduced customer base. This plan outlines how the company intends to expand the distribution of Pro-Plan, enter new frontiers and increase customer base (GlobalData 2013). Two opportunities are identified for the product, namely product differentiation and strategic pricing. Current marketing issues Australia’s pet food industry caters for the increasing number of consumers that have recently adjusted to online shopping, a sector that has increased significantly over the last five years through 2012 (IBISWorld 2012). The below PEST analysis lists the factors that affect cat food manufacturing and sales. Political: Government agencies, interest and pressure groups that influence and restrict customer that advocate for animal rights. This means quality of cat food should meet the industry standards, such as being safe, palatable and nutritious. Environment: The government and environmental lobbyist are pressuring pet food industries to become green. Recycling is also an issue of global importance. Increased environmental awareness among consumers offers pet food manufactures an opportunity to sell themselves as green, therefore garnering customer loyalty. Societal: Communities in New South Wales and Victoria embrace ethnic heritage and multicultural integration. In the regions, retail stores and grocery stores have tailored their messages to appeal to multicultural communities. This provides advertisement opportunities. Technological: The communities in the suburban of New South Wales and Victoria represent a fast growing population that is technological savvy, and embrace mobile phones, PCs, tablets, online video and other technological advances. This provides more platforms that can be used to advertise cat food. Potential for market and brand growth From the perspective of marketing theory, identifying the salient problems in the market helps identify the facts to assemble and analyze in order to solve the problems (Saren 2009). The one-year marketing plan for Nestle Purina’s line of pet food for cats is developed to increase the market share, to satisfy customer, increase profitability, increase the length of the product line and to bolster competitiveness. The product has experienced great demand for its product in the last five years, and research has indicated that the target market of cat food buyers and retailers in Australia would like to buy more of the product than what Purina currently offers (IBISWorld 2012). Purina is targeting to explore opportunities for online trading. The marketing channel has been greatly responsive to the company’s high quality pet food for cats. Purina should expand its customer base, stay competitive and consolidate brands in the industry (Civic Technologies 2009). Market, segment and category lifecycle stage The customers for Pro Plan include the pet owners in Australia. With nearly 8 million households, Australia has one of the world’s largest numbers of cat owners, with pet part of 63 percent of the households. Even though the levels of Australia’s pet ownership has been comparatively static in the last five years, it now stands at around 2.35 million, representing an estimated 23 of households that own a cat (ACAC 2010). Additionally, the cat population has increases slightly over the last five years. A number of factors such as technology and competition affect the brand’s and their life cycle. Pro Plan is at its growth stage in the Australian cat food industry. The pet food has just started to make profits, the sales have been increasingly rapidly over the past two years with some cost on marketing, such as brand building. This means that sales and profits have been rising exponentially. Competitors have started entering the market. This implies that Purina has to focus on increasing distribution to enhance more sales. In addition, the company has to focus on improving the quality of the cat food, by adding various flavors and features, since more companies are entering the industry with competitive brands. The company may also be prompted to lower the prices of the cat food to gain better market share. Competitive is on steady rise as competitors are continuing to recognize profit potential in the cat food market, and are entering the market with own brands. The overall implication of the brand’s life cycle is that, as competition continuous to intensify, strategies should focus on what will best help in differentiating the brand from that of the competitors. Nestle Purina should therefore make Pro Plan more different from competitors’ brands as well as find sources of competitive advantage. In addition, it should segment the market and develop a more focused marketing strategy for the segment of interest. The major cat owners are females, who are married and have children, who are employed and who live in suburbs. This forms the market segment that this plan targets with the Pro Plan (Petnet 2013). In addition, Victoria and New South Wales accounts for nearly 60 percent of the pet owners in Australia, with the former leading with about 11.6 pets while the latter has 7.7 million pets. Tasmania is the leading state for cat ownership per 100 people (ACAC 2010; Australian Veterinary Association 2013). With this regard, the segment accounts for the largest cat owners in Australia, meaning it forms a potential market for buyers of pet food. Victoria and New South Wales’ buying power is expected to rise due to the rising number of cat owners in the regions (Consumer Victoria 2012). In response to the growing number of cat owners, the Pro Plan brand must be strategically aligned to target this segment, particularly in Tasmania, Victoria and New South Wales, as well as in Tasmania (William, McMellon & Torres-Baumgarten 2004). Competitive actions and future behaviour The segment accounts for the largest cat owners in Australia, meaning it forms a potential market for buyers of pet food. Victoria and New South Wales’ buying power is expected to rise due to the rising number of cat owners in the regions (Consumer Victoria 2012). Nestle Purina’s major competitors have concentrated on advertisement to promote their products to increase their market shares. Their advertisement messages have tended to focus on feelings and emotions of the pet owners in Australia, by developing advertisement themes in selling their cat foods. Competitors have also ventured in online trading to sale their cat food products. Competitors also use various advertisement platforms such as radio FM channels, cable and satellite channels and TV commercials to target the pet owners. Based on these prevalent trends, it is evident that most competitors will continue to use advertising to highlight their brands’ preoccupation with emotions, feelings and sentiments of pet owners. Potential and future competitive advantage strategies for the brand Porter’s Five Forces Model was applied to offer a framework for cat food industry analysis and development of business strategy. Five different forces, as singled out by Porter, affect the competitive intensity that portrays and image of the level of attractiveness and profitability of the cat food market. These include threat of new entrants, substitute good, bargaining power of suppliers, bargaining power of customers and competitive rivalry. Threat of new entrants The cat food industry in Australia is small and less competitive, as a result, more companies are entering the market to gain a share of its profitability. Fortunately for Nestle Purina, it has been in the industry for almost a century and therefore boasts of brand repute, quality products and consumer satisfaction, allowing it to acquire substantial market share. The threat of new entrants is therefore moderate. Threat of substitute goods Because of the nature of the cat food industry in Australia, Nestle Purina is overwhelmed with threat of substitute products. From homemade to manufactured products, a range of similar products are direct competitors for Pro Plan. Nestle should therefore develop the quality of its product. Suppliers’ bargaining power Nestle Purina boasts of creating and maintaining positive relationships with its suppliers from across the globe. Because of the company’s large purchasing power and since suppliers of agricultural commodities provide unique products, the company holds more bargaining power than its suppliers. Customers’ bargaining power Nestle Purina’s customers have more bargaining power regarding their consumption of Pro Plan. There are close substitutes of Pro Plan, which enable for preference of customers to be much influential. The company should understand the unique needs of its customers and meet them. Competitive Rivalry in the Industry Nestle Purina faces direct competitions from Big Dog Australia, Kinta, Wirrawidgee, Quinn's Foods, Avon Pet Meats, Robinsons Investments and Tip investments. These companies are engage in endless battle for more market share. Concerning advertisement, the companies spends millions of dollars to outcompete each other. This means the industry will continue to experience ever-improving cat food brands. Analysis The strategy “Threat of Substitute Goods” is the most applicable for Pro Plan. The Five Forces Model indicates a competitive yet profitable market for cat food products, placing Nestle Purina at a comfortable position. The model also creates a moderate threat of new entrants into the market and a significant threat of substitute products. It also shows that Nestle Purina maintains an upper hand over its suppliers and that customers have the upper hand in the market. Therefore, Nestle should continue to develop quality products to enable product differential. Second, the company should engage in competitive pricing. Overall strategic objectives for the brand Nestle Purina should focus on what will best help in differentiating the brand from that of the competitors (substitute goods). The company should therefore focus on improving the quality of the cat food product, by adding various flavors and features, since more companies are entering the industry with competitive brands. This will help strengthen the brand name and add barriers to entry for new competing brands (Rasoava & Russell 2003). The company should also engage in competitive pricing, such as by lowering the prices of the cat food to gain better market share. Pro Plan will have to be sold at most competitive price determined by quality of product (Kotler 2009; Chaneta n.d). Brand Conceptual Model Based on the competitive and market analysis, PCDL conceptual model proposed for brand strategy is proposed for Pro Plan. The four elements of the model include leveraging the brand equity, positioning the brand, ensuring brand performance and communicating the brand (Ghodeswar 2008). Brand Position: Nestle Purina should endeavor to create the assumption of Pro Plan in the customer’s mind as well as attain product differentiation that it stands apart from competitors’ products, and that it meets customer expectations. Communicating brand message: Pro Plan should carve a vision of how the customers should perceive it. Nestle Purina should develop brand identity and communication themes that appeal to customers. Advertising will help communicate the unique features of the product that makes it different from competitor’s products. Ensuring brand performance: Nestle Purina should continually monitor the performance of Pro Plan against substitute products. Possible measures include tracking the level of consumption, purchasing, brand recognition, recalls and advertising awareness. Leveraging brand equity: Nestle Purina should engage in brand extension, co-branding and ingredient branding, to enhance the differentiation of Pro Plan from that of the competitors (Ghodeswar 2008). It should also develop a more competitive price based on the prices of substitute products. Based on the PCDL model, Nestle Purina should focus on product differentiation and pricing strategy. Product Differentiation Nestle Purina currently offers a brand of high quality pet food that bear the company logo and slogan. The company will use the most popular color for its items that customers have seemed to enjoy, such as cactus green and rock gray. Over the next 12 months, Nestle Purina should promote Pro Plan as the most preferable for cat owners across New South Wales and Victoria (Civic Technologies 2009). Pricing Strategy Nestle Purina pet foods should be priced with competition in mind. The company should set low products for Pro Plan, as well as focus on attaining the goals of offsetting low prices through sale of large product quantity. (Nestle 2012). Place & distribution strategy Nestle Purina should ensure that its distribution channels allow pet owners to learn the differential features of the product, purchasing, using the product, and if necessary, returning the product. Nestle Purina should also use to primary distribution channels, including direct e-commerce channel and traditional retail channel, which will complement each other, with retail being the predominant means of learning of the new differential features and buying Pro Plan. Promotional strategies The promotional strategies aim at creating product loyalty. Nestle Purina currently communicates with its customers, distributors and retailer about its products through the Internet and in person. The company should develop an email listing of its customers and start direct mailing. The company’s promotional strategy also seeks to distinguish the product from those of its competitors (Civic Technologies 2009). The company should also focus on making personal contact, whether on the phone or through emails, with retailers to establish Pro Plan in their stores. Through the contacts, Nestle Purina will be able to convey its message about the brand, such as the new unique aspects of the product, as well as bolster relationships with the customer base. Brand marketing action plans and tactics /Marketing Mix (Four Ps) Overall brand action plan and tactics The strategic marketing tools, such as promotion, place, price and product, have to be fine-tuned to enable product differentiation and competitive pricing. Table 1: the Gantt chart below shows the overall brand action plan Completion Month Description Dept Responsible 1 2 3 4 5 6 7 8 9 10 11 12 Marketing research Sales & marketing Dept Quality improvement IT & design Dept promotional messages Sales & marketing Develop Microsite It & design dept Online retailing IT & Design New Cover Design Production dept Ads on Radio Sales & marketing Pricing Product action plan and tactics In the third and fourth month, Nestle will have to improve the quality of Pro Plan to gain a competitive advantage against other brands of cat food. Currently, Pro Plan is formulated with fish and meat as the major ingredients. Other ingredients include corn gluten meal, soy protein isolate, chicken by-product meal, animal fat and salt. The pet food’s prime nutrients include proteins, vitamin E, omega 3 and fatty acids and essential minerals. Pricing action plan and tactics In the twelfth month, the price for Pro Plan will need to be set at a level where Nestle Purina can break even, basing on its new design and improved quality. Nestle Purina will need to sell at reasonably large quantity of products to maximize the prospects being successful by increasing awareness through advertisement. Nestle Purina will have to engage in a number of sales forecast methods, such as through studying buyer’s intentions, which will help in determining the probability of pet owners to purchase the cat food brand at the set price, as well as a market test to determine how buyers will respond to the price that Nestle Purina has set (Chaneta n.d.). Nestle Purina will determine the general pricing objective that enables the brand to break even in the first six months, and increasing profits afterwards. To help determine the price point, Nestle Purina will approximate the cost associated production and demand curves. As the situational analysis has shown little direct competition, a competitive analysis will be anchored in the features and the use of the brand, which will be applied in the establishing of alternative prices as well as choosing the price that generates a price based on target returns and mark-up methods. First, Nestle Purina will have to determine the demand curve for Pro Plan to help in setting the price. Starting with these prices, research will be used to determine the curves based on interview of buyers at pet stores or retail stores (Chaneta n.d.) Nestle Purina can then analyze the demand by conducting surveys of the pet owners. Nestle Purina will then estimate the cost of Pro Plan production (variable and fixed cost) to determine the average cost. This stage is significant as it is the point where the company experiences losses by setting low prices that fail to exceed the cost of production. Nestle Purina will use the mark-up pricing method, through adding a standard mark-up to the cost of production. The company will also analyze the indirect competitor’s prices of the cat foods to help set the price. Place and distribution action plan and tactics Pro Plan is currently marketed through leading retail and chain stores scattered around Australia. Thus far, Pro Plan has not been distributed through its national outlets (Nestle 2012). In the seventh week, Nestle Purina should have established an online retail site offering free delivery in New South Wales, Victoria and Tasmania. Additionally, Nestle Purina should place internet kiosks at mega stores to allow its customers to order and receive products that are customized to the health needs of certain cats (Pulendran,Speed & Widing 2003) Promotion action plan and tactics The promotion action plan and tactics will be carried out by Nestle Purina’s sales and marketing department. Over the next one year, Nestle Purina should engage on several marketing efforts including creation of a Nestle Purina tour, in which a number of employees take turn in touring the country to distribute promotional items such as Nestle Purina’s discount coupons and stickers. It should also organize sports challenges and events, such as mountain climbing across the country, during what time discount coupons and stickers can be distributed (Pulendran, Speed & Widing 2003). Nestle Purina should as well organize prize giving ceremonies, where owner with the healthiest cats are awarded some prizes. As this point, the stickers and discount coupons can be distributed. Nestle Purina can as well hold a design challenge, where individuals with the winning logo and slogans that is relevant to Pro plan are awarded. In the eleventh month, ads that run for 30 seconds during morning shows will be initiated. The social media using Nestle Purina’s Facebook Page will also be used. In the fifth and sixth month, other strategies will include web banner on Nestle Purina’s website page, which connects to Pro Plan’s microsite. Miscrosite will have an interactive game, where users will be asked to submit pictures of cats to win prizes. Advertisement will also be initiated through traditional media such as print and TV in the eleventh moth. Through Earned media, such as strategic press release that proclaims positive stories about the brand. By the end of the sixth month, the Pro Plan microsite should be online, and the e-newsletters and banner ad template ready for use. Conclusion In conclusion, cat food is in its growth phase in the pet food industry in Australia. Competitive and marketing analysis of cat food market shows that Nestle Purina should improve the quality of Pro Plan enable product differential. Second, the company should engage in competitive pricing. 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