Product_Launch_Plann

Product Launch Plan MKT/571 September 13th, 2010 Earl Levith Product Launch Plan KFF has created a strong brand that led to recent expansion to new markets including Canada and United Kingdom. The newest product on the KFF cereal line is the all natural soy-based product called Soy Puffs. Introduced into Canada, it has become one of the fastest growing foods in the healthy food industry. Newly introduced into UK, this product launch documents includes the product, position, and targeting methods that will be used for both countries. Next it will review the market needs, potential, and growth for each country followed by SWOT and competitive analysis. This paper will also include marketing objectives, pricing, and commutations. Finally, it will review the distribution strategy, financial information, and market research plan for this new product and markets. Product description, positioning, and targeting Introducing a product such as Soy Puffs, an organic cereal, had a high potential of success in Canada considering the desire of the market to go organic in most of the products. The desire of natural products has grown and the market is large. Kudler Fine Foods has to ensure that the introduction of this product meets the market needs. A niche market divides the populations into groups or niches. Target the right customer groups and use the technology to the full advantage are two important aspects of marketing success. Different strategies are developed for each group to ensure that the product that meets the needs of that group (Kolter & Keller, 2007). Differentiating a product from other completers is one way to gain advantage in the marketplace (Kolter & Keller, 2007, p. 159). The basic features of this product are its natural, healthy, high in protein and fiber as well as antioxidants and iron. The most important quality of this product is its rich nutty flavor. Because of the higher cost to produce organic food, the break even point for this product will require a higher price point than most cereals. However, is in line with other organic products. Market needs, potential, and growth Soy Puffs are healthy snack foods, but because they are a savory snack food, they will compete with other snacks on store shelves. When examining the savory snack food in both Canada and the UK, both markets provide a position for growth. Although both markets are dominated by potato chips, both have room for growth. In 2008 the Canadian snack food industry was worth $1.9 billion and is projected to grow by 21% by 2013. In contrast to Canada, the UK snack food industry was worth $5 billion in 2008 and is projected to go by 26.9% by 2013 (Datamonitor, 2009). In addition to market growth rates, another factor that affects the success of Soy Puff is the availability of willing UK consumers who will purchase a higher price snack food. To continue support the decision to expand into the UK, the average wage index is compared for each country. The wage index shows how wages are adjusted year over year to account for inflation. When examining the same period of the projected growth in each country, the average real wage index in Canada reduces by 4%, whereas the UK only reduces by 1%. Although this reduction in real wages could be concerning, the expected growth rate in the savory snack food industry in the UK is $1.3 billion, so a 1% dip in wages should not affect the sales of Soy Puffs (The Economist, 2010). UK has an estimated population of 61,792,000 with one fifth of the population representing children under the age of 16 and another one fifth representing residence around or above retirement with the average age around 40 (Office for National Statistics, 2010). This represents a large potential of cereal and natural food population to pull KFF’s target customer. Culturally, London is the most diverse city with more than 300 different languages and 50 foreign-based communities. This can be very important in the Kudler Fine Foods introductions of “SOY PUFFS” that has done well in Canada that also has a similar set of diversity. Skills needed to implement the strategy and costs in acquiring these skills KFF will need to use the same skills set that they have used in Canada as they have proved to be successful with the UK possessing a similar culture. Using same strategy as in Canada could prove to be cost effective. As KFF begins to launch Soy Puffs in both Canada and United Kingdom, the company must understand how to position the product within the market to obtain the highest potential for success and growth in each market. The market in which KFF will compete is in the savory snack food industry dominated by potato chips in both markets. In 2008 the savory snack foods industries in Canada and United Kingdom were worth $1.9 billion and $5 billion respectively (Datamonitor, 2009). In addition to a sizable market, both markets have growing at a steady pace since 2004 with the Canadian market increasing by 2.3% and the United Kingdom growing by 4.8% (Datamonitor, 2009). The growth rates over the four year period show that each market can support new products new products can be successful in each market. Although the market has been at a state of growth over a four year period, KFF must search for additional opportunities for growth in each market they explore. Past growth is a good predictor of future potential. Both markets have added a combined sales volume of roughly $270 million in the past four years. When examining growth potential through 2013, the figures show that each market will see significant growth with Canada’s market increasing by 21% and United Kingdom’s market increased by 26.9% (Datamonitor, 2009). These forecasted growth rates support launching Soy Puff’s in both markets as the increased market sizes will support new products and allow significant room to grow in the coming years. In addition to market growth, consumers in both counties are becoming more health conscience. As each society turns to better eating habits, new demand is created for healthy snacks in each market. As the demand grows and consumers begin to watch their caloric and fat intakes closer, consumers will find that Soy Puff provide an alternative to the market leading potato chips. A serving of Soy Puff provides 120 calories and 3.5 grams of fat (Lindora, n.d.). While potato chips, the industry leader, provides 155 calories and 10.5 grams of fat (About, Inc, 2010). The nutritional values of Soy Puffs, in an expanding market will help KFF indentify the uniqueness of the product and increase their share in each market SWOT and competition analysis Understanding the size of the markets and potential for growth are important to a successful product launch. Another key element is to understand what sets the company apart in each market. A consumer can purchase Soy Puffs at a number of different locations, but to understand what will drives customers to purchase this product from KFF, and how KFF will distinguish itself in the market, will require a strength, weakness, opportunity, and threat (SWOT) analysis for each market. The purpose of the SWOT analysis is to understand the forces applied to the company from both internal and external factors. KFF will be competing in two different markets, which will require a different SWOT analysis for each market. KFF will have similar points in each market as the point will relate to the company, while some points will be specific to the market. The complete SWOT analysis for each market can be found in appendix A. The next assessment is conducted on KFF’s competition in each market. In this examination, KFF can review back to their SWOT analysis to understand how to compete better within the market as a company. In addition to examining a company that KFF will compete against, an analysis of Soy Puffs competition will also need to be understood. Understanding how Soy Puffs will compete on the shelves of the stores will be important to understand as KFF launches the product in their stores. In both markets KFF will compete with Whole Foods. Whole Foods offers a similar product as KFF and focuses its marketing on providing organic and nutritious foods. Whole Foods is well established in both Canada and United Kingdom and has a loyal customer base. Whole Foods also offers an interactive website for consumers “to exchange recipes, share special diet concerns, and interact about food and environmental issues” (Apollo, Forums, para 1). The website helps customer connect directly to the values of the organization and helps the customer to become more loyal to Whole Foods. KFF does not offer this level of connection with their customer base and will need to find a way to overcome Whole Foods in this capacity. In addition to heavy competition from Whole Foods for KFF, the competition within the savory snack market is fierce. In both Canada and the United Kingdom, the Pepsi Company holds the lion’s share of the market with a 25% share in Canada a 42% share in United Kingdom in 2008 (Datamonitor, 2009). Pepsi Company holds that market share through its Frito-Lay and Quaker Foods companies. Frito-Lay primarily produces potato chip and potato chip like products, which are less competitive with Soy Puffs because of differences in their nutritional value. However, Quaker Foods produces savory snacks such as granola bars and other salty snacks that offer a higher nutritional value than potato chips and could compete with Soy Puffs. Marketing objectives and strategies Advertising plays an important part in Marketing of soy puffs. According to Kotler and Keller advertising offers a reason to buy (2007). Looking at the product life cycle of soy puffs will determine the advertising approach. Because this is a new product for Canada advertising and promotion requires additional investment to build awareness and gain a consumer base. In the UK the product is new to the market and a similar approach will be required to build increased awareness. The market share opportunity is larger in the UK and may require more advertising than in Canada to gain the same amount of market share. KFF has many competitors in both markets and which will require additional advertising to communicate the KFF brand and differentiate Soy Puffs from their closest competitor. In developing advertising campaigns in both markets, an effective message will include advertisers, message generation, evaluation, creative development, execution, and social responsibility review. It is important to consider the target audiences media habits such as radio, television, and Internet in both countries. Language may be a barrier with 59.3% of the population speaks English and 23.3% speak French. In the UK, English is the predominant language with over 90% but there remain pockets of Celtic speaking along with Islam and Hinduism (Spain Exchange, 2010). Increasing the repetitions in the market will convey the brand’s message to customers in a more effective manner (Kotler & Keller, 2007). Therefore, it will be important that we advertise in both the UK and Canada through the local radio and television stations, local newspapers and health magazines and ensure that we make as many repetitions as possible. Newspapers offer good local coverage, broad acceptance, and high believability for both regions. In both countries, the Internet provides interactive communication especially for teenagers who may require more persuasion by highlighting the health benefits they derive from Soy Puffs. Sales promotions can attract new customers in UK and reward loyal customers or increase the repurchase rates of occasional users (Kotler & Keller, 2007). In Canada, KFF will have to promote the product to attract brand switchers who look for good value and quality. Persuading an intermediary to carry more units of Soy Puffs by providing incentives to them will stimulate retailers to promote the brand by highlighting the product with in-store displays and price reductions. Engaging in trade shows and convections will also increase sales in both countries (Kolter & Keller, 2007). Pricing and communication plans Pricing in a competitive market regardless of country of origin requires a unique trait that separates the product from its competitors and substantiates a high end price for that product. The average profit margin in grocery marketing is around 2%. Initially, Soy Puff brand products will need to be priced below the profit threshold to compete in the competitive cereal marketplace. As more efficiency in distribution is developed, this price can be adjusted to reflect a target-return pricing to ensure a profitable rate of return on the investment (Kotler & Keller, 2007, p. 240). As a customer base grows, and more information regarding the benefits of the product is communicated, the price point can be established above market brands to meet the higher cost to produce an all natural product. Several factors are considered when creating an effective communication plan. The first is to determine the market type. In KFF’s situation, the focus is on the consumer market. However, selling to supermarkets, or business, who with some persuasion, can take more stock and increase display area. Second, customer’s perception is affected by the advertising he or she receives. Personal sales and promotions are more effective on consumers in a stage of readiness. It is important to emphasize the health benefits and the customer’s perceives Soy Puff in that manner. This will bring an element of worthiness of the product to the consumers. Last, looking at the product life cycle can determine which communication plan is best to pursue. When examining Soy Puffs, advertising and publicity are the most cost-effective ways to promote a product in the new stage of production. This would be true for both markets (Kotler & Kelly, 2007, p. 290). The first step in building a communication strategy is to define the message strategy. In Soy Puff’s case, the message must explain the high quality and benefits that soy products can bring to their lives. This message can be for both the domestic and the international markets as both demographics and communication modes are similar. A creative strategy using an informational appeal will explain the benefits of the product. However, there may be room for a transformational appeal by exploiting the image of a natural lifestyle. Initial mass marketing will introduce the product to both markets explaining the benefits of soy-based product as well as integrated advertising that encourages younger consumers to buy this product. Finding the most cost-effective media to deliver this message and identify the number of exposures is best determined by using a test marketing strategy (Kotler & Kelly, 2007). As Canada is the primary country, winning strategies can be rolled into both countries and further testing can be explored. Whichever method is pursued, it is important to measure the communication results so that the strategy can be adjusted to meet the individual needs of the target market. Distribution Strategy During the commercialization stage of Soy Puffs introduction into the UK and Canadian markets it is important to ensure that the chain of intermediaries chosen allows the product to be easily accessible to the consumer. Direct to consumer marketing is not a feasible option for KFF. Therefore, KFF must employ a system of marketing channels or intermediaries to distribute their product to the consumer. Marketing channels allow manufacturing firms to distributed and sell their products to consumers around the world. In Canada, KFF employees a system of value network where partnerships and alliances allow KFF to move their products across borders to distribution centers until shelf space is available within the grocery and specialty markets (Kotler & Keller, 2007, p. 241). This is a two-level or three-level channel approach depending on the need for sales and additional intermediaries in more competitive areas (Kotler & Keller, 2007, p. 244). To sell the product in UK, KFF has planned to employ a push strategy where a sales force in that country to entice intermediaries to carry, promote, and sell products to consumers. This method maximizes the expertise of the distributors and grocery markets and provides incentive for both the intermediary and manufacturer to make a profit when other methods are not available (Kotler & Keller, 2007, p. 240). This strategy requires continual monitoring as it will change over time as alliances are created and more profitable methods of distribution are established. Financial information The initial product for Soy Puffs will contain bars individually packaged with six to a box. The retail price will mimic other similar product at approximately three dollars per package or $36 US dollars per case. For the first few months, special offers will be presented to dealers including one free case for every four cases purchased. This along with cooperative and advertising allowances should entice dealers to stock the product. Free samples will be given on a door to door basis. Coupons will be offered in local newspapers. In comparison to similar products, the total sales budget will be $3,000,000. An advertising budget will be split in half between national and local media with 2/3 for television and the other 1/3 for newspapers and high end magazine articles. Advertising will include the benefits and educate on the nutrition and convenience and Soy Puffs. Appendix B shows a three-year plan calculating the cost of Soy Puffs introduction into UK and Canada. It is important to underline the fact that the product has proved to be successful in Canadian Market, we would be using strategy in launching the product in the UK and therefore will have a similar budget. On the analysis of the budget it was determined that KFF will not make money in the first year of launching but expect to make a profit in the next two years of launching the product in Canada with a 10% growth rate. A similar strategy is used in Canada, the same purchase and profitability patterns will be expected in UK’s market. Forecast Forecasting was conducted to identify the market segmentation to chose its target customers, identify their needs, and determine its market positioning to both Canada and UK markets. In appendix B, Soy Puffs launch is being introduced using. The market potential of at least $ 20 million and a 10% growth rate was expected. The return on sales would be at least 20% return on sales and a 30% in investment. It is important that KFF determines the consumer needs and interest, a competitive analysis, and a technical appraisal during each quarter and make the relevant adjustments that would assist in achieving 10% annual growth rate (Kolter & Kelly, 2007). Marketing Research Research involved studying customer needs, employees throughout the company in Canada and ideas were filtered out, researching competitor’s products and customer’s likes and dislikes of such products. Company sales representatives and intermediaries in Canada provided feedback on test populations. In addition, trade shows highlighted industry competitors and identified similarities and differences between products. A brand positioning campaign will be carried out with price points based on individual country research. The product price was determined to fall into the low-price market especially in the initial stages of launching in the UK. Research was also conducted on buying stores audits and consumer panel information to monitor market reaction and buying rates. According to Kotler and Keller (2007) new products fail often because of misinterpretation, overestimation, poor design or pricing, and inadequate marketing plan that does not consider the risks and opportunities of the each market. This can be overcome with carefully consideration for each market potential prior to selection as well as identifying products as unique and superior along with quality of execution in all stages and market attractiveness Conclusion As KFF continues to grow and new products are introduced, a sound marketing plan and analysis is needed to guarantee to success of each new product. KFF will need to focus on the consumer needs and wants. The market potential is enormous and therefore it is important that the KFF maintains its marketing strategy to the word and provides a fair amount of flexibility to adjust to the consumer changing wants and needs. With the pricing strategy, marketing communication plan, and product launch detailed KFF has a good start to success with their launch of Soy Puffs in the UK while maintain the same growth pattern in Canada. References About, Inc. (2010). Calories in potato chips. Retrieved from http://caloriecount.about.com/calories-potato-chips-i19411 Apollo Group, Inc. (2008). Kudler Fine Foods [Computer Software]. Retrieved from Apollo Group, Inc, Simulation, MKT 571 website. Datamonitor (Ed.). (2009). Savory Snacks in Canada industry profile. New York, New York: Datamonitor. Retrieved August 26, 2010, from MKT 571. Datamonitor (Ed.). (2009). Savory Snacks in the United Kingdom industry profile. New York, New York: Datamonitor. Retrieved August 26, 2010, from MKT 571. The Economist Intelligence Unit Limited 2010. (2010). EIU Data Services. Retrieved from http://secure.alacra.com/cgi-bin/alacraswitchISAPI.dll Kotler, P., & Keller, K. L. (2007). A framework for marketing managemen. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Lindora. (n.d.). Protein bars and snacks. Retrieved from http://shop.lindora.com/Crunchy-BBQ-Soy-Puffs-Protein-Bars-and-Snacks_stcVVproductId21214829VVcatId476054VVviewprod.htm Office for National Statistics. (2010). National Statistics. Retrieved from http://www.statistics.gov.uk/cci/nugget_print.asp'ID=6  Spain Exchange. (2010). International student resource. Retrieved from http://www.spainexchange.com/guide/CA-language.htm and http://www.spainexchange.com/guide/GB-intro.htm Whole Foods Market IP, L.P.. (2010). Whole Foods. Retrieved from http://www.wholefoodsmarket.com/forums/ APPENDIX A KFF SWOT Analysis Canada |Strengths |Weakness | |1. Well known for natural products. |1. High product price with low perceived value | |2. Knowledgeable Staff |2. Limited Product Selection | |3. High Level of Customer Service |3. High Overhead Costs | |4. No language barrier | | | | | | | | | | | |Opportunities |Threats | |1. Changing local demographics |1. Low Cost Competition | |2. Expansion of Specialized Services |2. Changes in Local Demographics | |3. Distribution opportunities |3. Government Regulations | | |4. High level of competition | UK |Strengths |Weakness | |1. Store atmosphere and operation hours |1. High product price with low perceived value | |2. Knowledgeable Staff |2. Limited Product Selection | |3. No language barrier |3. High Overhead Costs | | |4. Unknown in the marketplace | | | | | | | | | | |Opportunities |Threats | |1. Changing local demographics |1. Low Cost Competition | |2. Expansion of Specialized Services |2. New distribution chains | |3. Growing awareness of benefits of natural food products |3. High advertising and overhead cost | | |4. Government regulations | Competition SWOT Analysis “Whole Foods” |Strengths |Weakness | |1. Well established. |1. Not using source of cheaper & faster food | |2. Expanded assortment of products |2. Higher priced foods | |3. Great website |3. High Overhead Costs | |4. Offer additional services | | | | | | | | | | | |Opportunities |Threats | |1. Commitment to high quality food |1. Increased Low Cost Competition | |2. Free rewards cards |2. Changes in Local Demographics | |3. Promotion of brand identity |3. Government regulations | APPENDIX B Financial Information Showing the budget showing the Launching expenses and projected unit forecast by quarterly for 3 years in the UK and Canadian Markets. [pic] [pic]