KJ Bread Company's Marketing Plan and Allocating Budgets for It Promotion - Case Study Example

Table of Content 1.0 Executive Summary……………………………………………………………………….2 2.0 Situational Analysis……………………………………………………………………….3 2.1 Market Analysis…………………………………………………………………………...3 2.1.1 Target markets…………………………………………………………………….3 2.1.2 Market Demographics……………………………………………………………….3 2. 2 SWOT………………………………………………………………………………………...5 2.2.1 Internal Environnent………………………………………………………………...5 2.2.2 External environment………………………………………………………………..5 2.3 Competitors……………………………………………………………………………………6 2.3.1 Brand competition…………………………………………………………………...6 2.3.2 Product Competition………………………………………………………………...7 3.1 Mission Statement……………………………………………………………………………..8 3.2 Marketing objectives…………………………………………………………………………..8 3. 3 Financial objectives…………………………………………………………………………..8 3.4 Strategies………………………………………………………………………………………8 3.5 Market mix…………………………………………………………………………………...10 3.5.1 Product strategy……………………………………………………………………10 3.5.2 Pricing strategy…………………………………………………………………….11 3.5.3 Place………………………………………………………………………………..12 3.5.4 Promotion…………………………………………………………………………..12 3.6 Marketing Research………………………………………………………………………….12 4.0 Implementation time frame…………………………………………………………………..12 Conclusion……………………………………………………………………………………….14 References……………………………………………………………………………………….16 Appendix A: Budget & Projected loss…………………………………………………………..18 Appendix B: Scenario planning………………………………………………………………....23 Appendix C: Perceptual Maps…………………………………………………………………..24 Executive summary K.J. Bread Company is a family-owned business located in Canberra. The company has provided Canberreans with a variety of bread products since 2005, and it has recently developed a new bread product named Fruity Delight. The bread has two main target markets: children aged 5-14 years old and the parents of these children. The bread will come in different animal shapes and will contain no artificial preservatives or colourings, as even the flavouring and colouring of the bread will come from fresh fruit juice used in production. The packaging for Fruity Delight is funky and colourful and recyclable. We will like our consumers to perceive Fruity Delight as being highly nutritious, fun and healthy. The product will attract young customers because of its superior taste, texture, and attractive design. Furthermore, the health benefits it can provide for children will attract parents as consumers. Competitors of our product include grocery store brand breads such as ‘Mighty Soft’, local bakery stores, donut and biscuit manufacturers, and food snacks that children can buy at canteens. Such competitors have strengths such as they are priced low (‘Mighty Softy’), have pleasant tastes (snacks sold in canteens) etc., but also have weaknesses such as they are not healthy (donuts and biscuits) or are located in inconvenient places (local bakery shops) etc. Our product, however, is healthy, tasty and sold in convenience locations. Fruity Delight will be sold in supermarkets, grocery stores and canteens and will be priced at $2 per bread. During our promotion campaign, we will include the use of media such as Television, outdoor media and magazines. Through such media exposure, customers will be able to gain knowledge of the nutritious benefits the bread can provide for children. Furthermore, customers will also be attracted to our products through rewards, samples and discount offers we do. We hope Fruity Delight will bring us notable profit and gain a 5% market share in the kid’s food market over the next 5 years. In order to break even, we anticipate that the sales unit needs to be at least 361,242 units by the end of Year 1 based on our retail price. 2.0 Situational Analysis K.J. Bread Company currently manufactures a range of classic breads and products are distributed across Canberra. The company is now launching a new type of bread called ‘Fruity Delight’, which combines the flavours of fresh fruits with healthy bread. The bread is made using a combination of wheat, gluten-free flour and selected fruit juices (apple, banana, berries etc.). Fruity Delight is designed to target children of 5-14 years old and comes in all sorts of fun animal shapes. Fruity Delight is baked daily in the factory and is packed in eco-friendly packaging ready to be distributed fresh to its customers. Fruity Delight is unique in its kind as no bread company in Canberra has specially designed bread products for children that incorporate healthy and ‘fun’ factors. 2.1 Market Analysis K.J. Bread Company is well informed about the markets and knows a great deal of the common attributes of their customers. With this information, the company will be in a better position to understand their customers, their specific needs and how they can communicate best to their customers. 2.1.1 Target markets There are two main markets are children of 5-14 years old and their parents. 2.1.2 Market Demographics This will focus on the customers’ geographic, demographics and behavioural factors. Geographic We target two segments: children and the parents/guardians of these children. Our customers- children-and their parents / guardians- live in the ACT. Demographics Our main customers are children aged between 5-14 years old and go to preschool, primary school or high school Our secondary market, the parents/guardians of the children, are people aged between 25-55 years old Female or male In ACT, there were a total of 4,606 preschool enrolments, 31,374 primary school enrolments and 19,367 high school enrolments in 2010 . In 2006, there were a total of 84,450 families with children under 15 and/or dependent students in the ACT region Behavioural factors These children live a healthy, normal life and are able to watch TV, buy magazines, and socialize with other children Our secondary market, the parents/guardians of the children, have moderate to high incomes and come from a variety of occupations People from this target market may be interested in any kind of activity and will have different lifestyles. However, Parents/guardians targeted should in common have their children’s health and wellbeing as their top priority, are aware of the benefits of naturally-sourced food, and are willing to try new products. Bread is not an overly expensive or complex product, so the perceived risk and level of involvement for bread should be low. We will use a concentrated targeting strategy when marketing Fruity Delight. 2. 2 SWOT 2.2.1 Internal environment Strengths: 1. Our company’s senior management team has worked in various sectors of the bakery industry. Furthermore, the owner Mr. John formerly worked as a baker at Baker’s Delight. This means we have great experience in this industry. 2. We use the most sophisticated and up-to-date machinery. 3. Fruity Delight is nutritious, made from natural ingredients, has a tasty fruity flavor and comes in many fun shapes. This means that not only is the product good for children, it will make eating bread a much more enjoyable experience. 4. Our product matches the healthy living trend that many Australians now follow, which means we can quickly gain parents’ interests and attract them as customers. Weaknesses: 1. The power for us to set the market price is weak, since K.J. Bread Company is still a relatively new business and our products cost more than large companies. 2. The price of foodstuffs keeps increasing. This in turn increases our spending on raw materials, and we may need to pass the cost on to customers. 2.2.2 External environment: Opportunities: 1. A gap in the kids’ food market--- there are currently no specific bread products made for children in the ACT. Therefore, Fruity Delight can enter the market easily without close competition. 2. Since 2006, the number of student enrolled in preschool and primary school in ACT have increased steadily every year (ABS, 2010). This means that our target potential market will be growing. Threats: 1. Shift from old product to the new product: customers may turn away from our company’s products due to changing food trends and buying patterns. 2. As a young company, we face strong competition from existing leading brands. At the same time, we have not established a strong reputation for our products, so consumers may be reluctant to try our bread. 3. Other companies may quickly copy our idea, which could lead to a loss of potential market share. 2.3 Competitors 2.3.1 Brand competition Other bread brands Other brands such as ‘Helga’s’, ‘Wonder White’, Mighty Soft are our direct competitors as they offer the same products as we do. They have the dominant share of the market (Cash cows) as dozens of bread brands can be found on supermarkets’ shelves. Their strength is that they can be preserved for a fair amount of time and are readily available in many locations. Their weaknesses are they have high-carbohydrate levels and are not entirely freshly baked. We, however, will offer our customers healthy, fresh breads Local bakeries They are also our direct competitors as almost every suburb in Canberra has a bakery that offers a range of freshly-made bread and pastries. Their main strength is that they offer freshly in-store baked products. Their weakness is that their products are less accessible for people not living in the immediate surrounding area of the shop. On the other hand, we will make Fruity Delight highly accessible by having them delivered to school canteens, supermarkets and grocery stores. 2.3.2 Product Competition Donut and biscuit manufacturers They have the same target markets as us as they offer products such as animal-shaped donuts or biscuits that can be seen as being similar to our product. Their strength is that donuts and biscuits have better taste and texture than Fruity Delight. Their weaknesses are that they are high in fat and contain many artificial preservatives and colourings. Fruity Delight, however, is made from the freshest and healthiest ingredients. Snacks and hot foods in School Canteens They are very popular among children but have low nutritional values. Snacks and hot foods such as instant noodles or hotdogs are considered as junk foods, so parents generally do not want their kids to consume such products. *(Please refer to Appendix D the BCG growth-market strategy matrix) Local bakeries They are also our direct competitors as almost every suburb in Canberra has a bakery that offers a range of freshly-made bread and pastries. Their main strength is that they offer freshly in-store baked products. Their weakness is that their products are less accessible for people not living in the immediate surrounding area of the shop. On the other hand, we will make Fruity Delight highly accessible by having them delivered to school canteens, supermarkets and grocery stores. 3.1 Mission Statement K.J. Bread Company aims to become the dominant bread manufacturer in Canberra and will establish a reputation for baking fresh, healthy and nutritious breads. 3.2 Marketing objectives To sell at least 361,242 packs of our product by the first year in order to break even. To gain a market share of 5% for our kid’s bread in the first year. To become the dominant market player in the kid’s bread market share by year 5. 3. 3 financial objectives To break even by year 1. Increase the sales revenue by 10% for year 2 3.4 Strategies The main objective is to position Fruity Delight in the market. The marketing strategies will seek first create customer awareness of the company’s product and then develop the customer base. The message will create a clear message for consumers that Fruity Delight is fresh, healthy and nutritious bread for kids. Advertising: Designing the advertisements Our target markets are both children (5-14) and their parents. Our ads, however, will aim to draw children’s attention. Children are easily attracted to colourful, motional and funny things they see on TV. We will show them interesting images of our product that will emphasise on the beneficial features of our bread and the animal shapes that they come in. Promotion Strategy Since our product is currently in the introduction stage, our objective is to build awareness amongst customers and encourage trialling of our product. Thus, we will adopt a push strategy. Media selection Children do not always pay attention to the media and they usually have little money to buy products. Therefore, our ads need to be seen by not only children, but also their parents. Television, magazines and outdoor media are mediums that we will use to convey information about our product towards both markets. TV ads: To obtain awareness amongst consumers that Fruity Delight is now available and to illustrate the features of the bread to consumers. Magazines ads: Combine with the TV ads to give our target audience a more specific image of Fruity Delight and to encourage consumers to try it. Outdoor ads: Provide a cost efficient way of building the image of Fruity Delight towards both kids and their parents. Sales Promotion Samples: To encourage immediate trial of Fruity Delight, we will distribute samples in supermarkets during the day. Rewards: To provide an incentive for consumers to purchase Fruity Delight, we will have cards where 40 country national flags with matching country descriptions will be printed onto a small piece of cardboard. Individuals who collect all 40 flags will be able to obtain a one year subscription to any magazine of their preference, so long as the subscription fee is less than $100 per year. Also, for every 6 months, we will include one gold ticket in our packaging. The lucky winner who gets this ticket will be able to claim a 32GB iPod touch as their prize. Allowance and discounts: To encourage consumers to buy more of our product, we will have an introduction offer for Fruity Delight (i.e. customers get 20% off their first purchase and 50% off their second one) during the first month of our product launch in supermarkets. 3.5 Market mix 3.5.1 Product strategy The core product The primary benefits of Fruity Delight are: it can satisfy hunger and provide children with energy and nutrients. The product also comes in different animal shapes, so children will have a more enjoyable time when eating the snack. The actual product Trade name: Fruity Delight The actual product is bread made from flour, fresh fruit juice, yeast and other naturally sourced and fresh ingredients. The bread is moulded into different animal shapes that will feature the animal’s basic features. The fresh juice of 5 different fruits- apple, banana, pineapple, strawberry and grape are used to add colouring and taste. Packaging Packaging will be colourful, have interesting prints and the product logo will be printed in a clear and noticeable manner. Since our product is made from fruit, the colour of the packaging will depend on what kind of fruit the bread is made from. 40 different country flags with the particular country’s descriptions will be printed on a piece of cardboard and be included in the packaging. Brand Brand personality: energetic, funky, funny, healthy, etc. Brand equity: high quality, tasty, innovative bread for children We hope that after the launching of Fruity Delight, consumer will have healthy and energetic image of our products. The augmented product Together with our core product, we will offer a money back guarantee to any customer who is not entirely satisfied with our product. We also provide free delivery for any bulk orders. 3.5.2 Pricing strategy Objectives: Pricing will reflect the high quality of our product Must be high enough for the company to make a profit by the 4th quarter of Year 1 Reasonable enough to gain a market share of 5% in kids bread market by the end of Year We have calculated that our variable cost for this product is $0.8 per unit and the fixed cost for establishment and promotion activities is $463,490 for Year 1. Extra research has been done in regards to the development of the product and more attention has been paid towards the packaging and the form of the bread. Also, since our product is produced using the freshest and finest ingredients, production costs for Fruity Delight will be higher than normal bread. Hence, in comparison to other bread products, Fruity Delight will need to be priced at a premium. On the other hand, since the bread industry is highly competitive, demand will be sensitive to any pricing changes, so we cannot price our product too high. In addition to the competition within the bread industry, consumers’ needs are another important factor to consider when deciding the pricing strategy. Therefore, we have decided that the retail price will be $2 per bread- a price that we believe will reflect all these considerations. 3.5.3 Place The regular places where our consumers can buy our product are at schools and supermarkets. We also aim to sell more of our product in supermarkets that are located in big shopping centres because people will have more chance to buy our product. 3.5.4 Promotion Objectives To create awareness about the launch of Fruity Delight amongst our two target markets: children (5-14) and their parents. To inform people, especially children, about our new healthy, fresh and nutritious bread. To convince children and their parents that Fruity Delight is their best choice. To encourage people to try Fruity Delight 3.6 Marketing Research K.J. Bread Company has tested all its products not only with its principals but also with the many other dedicated and newbie users. The extensive product testing by a wide variety of users provides K.J. Bread Company with valuable products feedback and led to several design improvements. 4.0 Implementation time frame Table 1: Table of time frame for the marketing strategies Introduction of the product Start to sell in school canteens 04/03/2013 Start to sell in supermarkets and grocery stores 06/05/2013 Start developing new healthy bread for adults Pricing Offer a discount of 20% for the first purchase and 50% for the second purchase 04/03/2013 – 31/01/2013 Return to normal pricing After 01/02/2014 Advertising: We hope to reach our target audience in the holiday period before school starts. Our TV ads will be shown during the few weeks prior to the start of the new semester, i.e. July. Magazines ads and outdoor media are relatively low in cost, so we will use such media advertising throughout the entire year. TV ads ABC kids: 4.30pm Play School (for 10 seconds) 04/03/2013 – 31/07/2013 Nickelodeon (pay TV) 5.30pm (for 10 seconds) 18/05/2013 – 31/07/2013 Magazine ads Dolly (half page) 01/06/2013 – 30/06/2014 Ben 10 Alien Adventures (half page) 01/06/2013 – 30/06/2014 Carving (one page) 01/06/2013 – 31/12/2014 Outdoor Media Transit ads on buses (for 2 buses) 07/05/2013 – 31/12/2014 Figure 1: The chart of the time frame for variable marketing activities. Conclusion We have done intensive research and have put much consideration into the preparation of this marketing plan. We have also detailed each specific promotion step so that K.J. Bread Company will find it easy to allocate budgets for it promotions, be able to follow a precise time frame, and have a guide to compare whether the product is successful or not. However, we did not have enough time to do consumer research such as focus groups, and we have also made several assumptions about costs, so our budgeting is not entire reliable. Despite these shortcomings, our marketing plan will be highly practical and useful for K.J. Bread Company. References ABS (2010), “Australian National Accounts: National income, Expenditure and product” Australian Bureau Statistics, retrieved on 14th January 2013 from http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206 ABS (2010), “National Regional Profile: Canberra (Statistical Division) POPULATION/PEOPLE” Australian Bureau Statistics, retrieved on 14th January 2013 from http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/805Population/People12004-2008?opendocument&tabname=Summary&prodno=805&issue=2004-2008&num=&view ABS (2009) “SCHOOL STUDENTS ENROLLED, by Sector and School Level, ACT, 2005 onwards” retrieved on 14th January 2013 from Daniel, P (2009), “Food trends 2009: comfort food to be prominent”. January 2, 2009. Retrieved on 14th January 2013 from Media kit (2009), “Dolly rate”, Media kit Manager http://download.mediakitmanager.com/ACP/Womens%20Lifestyle/MediaKit-Dolly.pdf> Solomon et al (2011), Marketing: Real People, Real Choices, 2nd ed., Pearson Education, Sydney, Australia. Strategic Business Insights 2011,“V.S Framework and VALS™ Types”. Strategic Business Insights, < http://www.strategicbusinessinsights.com/vals/ustypes.shtml> The Australian 2009, “The rise and fall of our daily bread”, retrieved on 14th January 2013 from, http://www.theaustralian.com.au/news/opinion/the-rise-and-fall-of-our-daily-bread/story e6frg6zo-1225854419081 Appendix A: Budget & Projected loss Our expenditures are calculated on a yearly basis. The fixed costs are calculated based on the entire factory. We believe that the fixed cost of producing Fruity Delight is about 15% of the overall business. Fixed cost Table 2: Calculation of fixed cost for Fruity Delight Yearly cost ($) *15% For the whole factory Rental payment 200,000 30,000 Maintenance fees 70,000 10,500 Salary 1,000,000 150,000 Utilities 50,000 7,500 For Fruity Delight Initial expenses 10,000 Equipments 100,000 Trade promotion 2,000 Direct marketing 8,000 Total 318,000 Variable cost Including; cost of sale, delivery costs, raw materials, packaging and other operating expenditures. We expect the variable cost to be $0.8/unit. Market share Table 3: Calculation of market size Number of students Yearly bread consumption (kg) Market share Yearly consumption (packages) Government Preschool 4021 Primary school 18812 High school 9772 Non-government Preschool 585 Primary school 12562 High school 9645 Total 55397 30* 5% 553,970 * The Australian, The rise and fall of our daily bread, **: 55397 × 50kg × 5% /0.15kg= 553,970 packages Advertising cost Table 4: Calculation of advertising costs Unit price ($) Units Total ($) ABC TV ads 5000/10secs 14 days 70,000 Nickelodeon TV ads 2000/10secs 14 days 28,000 Dolly 250/half page 12 8,290* Ben 10 Alien Adventure 150/half page 12 2,000 Carvings 300/half page 4 1,200 Transit ads on buses 3000 per bus/month 2*6 36,000 Total 145,490 *Please refer to appendix G for detailed magazine ads rate and sizes. Break-even analysis (for 2011) Total fixed cost: $463,490 Variable cost: $0.8 per unit Revenue: $2 per unit Appendix B: Scenario planning Scenario 1: Competitors follow our new product strategy and introduce similar products Effects: 1. Loss of some market share. How to react: 1. Value creation and perception: promote our bread as a quality, healthy and tasty product. 2. Rewarding customers by sending vouchers and giving discounts. 3. Conduct surveys to identify customer needs and making changes accordingly. 4. Lower the product price to eliminate direct competitors. Scenario 2: New products are introduced by competitors The food industry is active with many competitors, so new products from other brands will keep appearing. How to react: Our company will continue to do R&D and produce new products for new potential markets. Appendix C: Perceptual Maps Price vs. quality Healthy vs. taste Appendix D: BCG growth-market strategy matrix Market Growth Rate High Stars Question Mark Local bakeries Low Cash Cow Other bread brands such as ‘Helga’s’, ‘Wonder White’, ‘Mighty Soft’, etc. Dog Snacks and hot foods in School Canteens Donut and biscuit manufacturers High Low Relative Market Share Figure 5: BCG matrix for Fruity Delight’s possible competitors Read More