Raageshwari Eileen Palmer 517826 - Group 8 OPL – Individual Plan
Tutor: Mrs. Meijer Merel
Table of Contents
1.
EXECUTIVE EXECU TIVE SUMMA SUMMARY RY ............................................. .............................................................................. ......................................... ........ 3
.
SITUATION SITUAT ION ANALY ANALYSIS SIS .............................. ................................................................ ......................................................... ....................... 4
2.1
C URRENT ................................................................. ............................................................. ............................4 U RRENT M ARK ETIN G S ITUATION I TUATION ................................
2.2 C URRENT ............................................................... .................................................................. ....................................... ......5 U RRENT M ARK ETIN G M IX IX .............................. 3.
INTERNAL INTER NAL ENVIR ENVIRONME ONMENT NT ............................................................................... ............................................................................... 6
3.1
M ISSION & V V ISION .................................................................. ................................................................... .................................................. ................. 6 I SSION & I SION ................................
3.2 O RGANIZATIONAL ................................................................ .................................................................. ................................... 7 R GANIZATIONAL S TRUCTURE T RUCTURE ............................... 3.3 C ORPORATE .................................................................. ................................................................... ............................................. ...........7 O RPORATE C ULTURE U LTURE ................................. 3.4 P RODUCT ................................................................ ................................................................... ............................................. ...........8 R ODUCT D ESCRIPTION E SCRIPTION ............................... 3.5 P REVIOUS .............................................................. ................................................................... ........................................................ ...................... 9 R EVIOUS S ALES ............................. 3.6 M .............................................................. ................................................................... ................................................................ .............................. 10 ARK ETS ............................. 3.7 D ISTRIBUTION ............................................................................................................... .......................................... ........ 10 I STRIBUTION .............................................................................. . EXTER EXTERNAL NAL ENVIR ENVIRONME ONMENT NT ............................. .............................................................. ................................................. ................ 11
4.1
DESTEP .............................. ............................................................... ................................................................... ................................................................ .............................. 11
ARK ET A NALYSIS N ALYSIS .............................. 4.2 M ................................................................ ................................................................... ............................................... .............. 15
4.3 C ONSUMER ........................................................................................................... ......................... 17 O NSUMER A NALYSIS N ALYSIS ................................................................................... 4.4 C OMPETITIVE ................................................................................................. ... 18 O MPETITIVE E NVIRONMENT N VIRONMENT .............................................................................................. 5.
SWOT ANALY ANALYSIS SIS ........................................................ ......................................................................................... ....................................... ...... 22 T RENGTHS ................................. 5.1 S TRENGTHS ................................................................... ................................................................... .......................................................... ......................... 22
5.2 W EAKNESSES .............................................................. ................................................................... .......................................................... ......................... 22 E AKNESSES ............................ 5.3 O PPORTUNITIES ................................................................ .................................................................. ..................................................... .................... 23 P PORTUNITIES ............................... H REATS .............................. 5.4 T HREATS ............................................................... ................................................................... ................................................................ .............................. 23
6.
MARKETING MARK ETING OBJEC OBJECTIVES TIVES .............................. ............................................................... ................................................. ................ 24
7.
MARKETING MARK ETING STRAT STRATEGIES EGIES ............................................................................... ............................................................................... 24
7.1
T ............................................................................................................. .................................... ... 25 ARG ET M ARK ETS .............................................................................
R ANDING ................................. 7.2 B RANDING ................................................................... ................................................................... .......................................................... ......................... 25
7.3 P RODUCT .......................................................................................................... .............. 30 R ODUCT P OSITIONING O SITIONING ............................................................................................. 7.4 P RODUCT ................................................................. .................................................................. .......................................... ......... 31 R ODUCT S TRATEGIES T RATEGIES ................................ 7.5 P RICING ............................................................................................................ ......................... 33 R ICING S TRATEGIES T RATEGIES .................................................................................... 7.6 P ROMOTION ............................................................................................... .......................................... ........ 34 R OMOTION S TRATEGIES T RATEGIES .............................................................. 7.7 S UPPLY .................................................................................................. .................... 37 U PPLY C HAIN H AIN S TRATEGIES T RATEGIES ............................................................................... .
IMPLEMENTA IMPLE MENTATION TION............................................................................... .......................................................................................... ........... 39
8.1
S .................................................................................................................. ............................... 39 ALES F ORECAST O RECAST ....................................................................................
8.2 A CTION .............................................................. ................................................................... .......................................................... ......................... 41 C TION P LAN LAN ............................ 8.3 B UDGET ................................................................. .................................................................. ................................................................ ............................... 43 U DGET ................................ 9.
MEASUREMENT AND AND CONTROL STRATEGIES....... .............. .............. ............... ............... .............. ............. ...... 43
9.1
R ESEARCH .................................................................................................................... .......................................... ........ 43 E SEARCH . ..................................................................................
9.2 T REND ................................................................... ................................................................... ............................................... .............. 43 R END A NALYSIS N ALYSIS ................................. 10. BIBLI BIBLIOGRAP OGRAPHY HY .............................. ................................................................ .................................................................. ................................ 44
Table of Contents
1.
EXECUTIVE EXECU TIVE SUMMA SUMMARY RY ............................................. .............................................................................. ......................................... ........ 3
.
SITUATION SITUAT ION ANALY ANALYSIS SIS .............................. ................................................................ ......................................................... ....................... 4
2.1
C URRENT ................................................................. ............................................................. ............................4 U RRENT M ARK ETIN G S ITUATION I TUATION ................................
2.2 C URRENT ............................................................... .................................................................. ....................................... ......5 U RRENT M ARK ETIN G M IX IX .............................. 3.
INTERNAL INTER NAL ENVIR ENVIRONME ONMENT NT ............................................................................... ............................................................................... 6
3.1
M ISSION & V V ISION .................................................................. ................................................................... .................................................. ................. 6 I SSION & I SION ................................
3.2 O RGANIZATIONAL ................................................................ .................................................................. ................................... 7 R GANIZATIONAL S TRUCTURE T RUCTURE ............................... 3.3 C ORPORATE .................................................................. ................................................................... ............................................. ...........7 O RPORATE C ULTURE U LTURE ................................. 3.4 P RODUCT ................................................................ ................................................................... ............................................. ...........8 R ODUCT D ESCRIPTION E SCRIPTION ............................... 3.5 P REVIOUS .............................................................. ................................................................... ........................................................ ...................... 9 R EVIOUS S ALES ............................. 3.6 M .............................................................. ................................................................... ................................................................ .............................. 10 ARK ETS ............................. 3.7 D ISTRIBUTION ............................................................................................................... .......................................... ........ 10 I STRIBUTION .............................................................................. . EXTER EXTERNAL NAL ENVIR ENVIRONME ONMENT NT ............................. .............................................................. ................................................. ................ 11
4.1
DESTEP .............................. ............................................................... ................................................................... ................................................................ .............................. 11
ARK ET A NALYSIS N ALYSIS .............................. 4.2 M ................................................................ ................................................................... ............................................... .............. 15
4.3 C ONSUMER ........................................................................................................... ......................... 17 O NSUMER A NALYSIS N ALYSIS ................................................................................... 4.4 C OMPETITIVE ................................................................................................. ... 18 O MPETITIVE E NVIRONMENT N VIRONMENT .............................................................................................. 5.
SWOT ANALY ANALYSIS SIS ........................................................ ......................................................................................... ....................................... ...... 22 T RENGTHS ................................. 5.1 S TRENGTHS ................................................................... ................................................................... .......................................................... ......................... 22
5.2 W EAKNESSES .............................................................. ................................................................... .......................................................... ......................... 22 E AKNESSES ............................ 5.3 O PPORTUNITIES ................................................................ .................................................................. ..................................................... .................... 23 P PORTUNITIES ............................... H REATS .............................. 5.4 T HREATS ............................................................... ................................................................... ................................................................ .............................. 23
6.
MARKETING MARK ETING OBJEC OBJECTIVES TIVES .............................. ............................................................... ................................................. ................ 24
7.
MARKETING MARK ETING STRAT STRATEGIES EGIES ............................................................................... ............................................................................... 24
7.1
T ............................................................................................................. .................................... ... 25 ARG ET M ARK ETS .............................................................................
R ANDING ................................. 7.2 B RANDING ................................................................... ................................................................... .......................................................... ......................... 25
7.3 P RODUCT .......................................................................................................... .............. 30 R ODUCT P OSITIONING O SITIONING ............................................................................................. 7.4 P RODUCT ................................................................. .................................................................. .......................................... ......... 31 R ODUCT S TRATEGIES T RATEGIES ................................ 7.5 P RICING ............................................................................................................ ......................... 33 R ICING S TRATEGIES T RATEGIES .................................................................................... 7.6 P ROMOTION ............................................................................................... .......................................... ........ 34 R OMOTION S TRATEGIES T RATEGIES .............................................................. 7.7 S UPPLY .................................................................................................. .................... 37 U PPLY C HAIN H AIN S TRATEGIES T RATEGIES ............................................................................... .
IMPLEMENTA IMPLE MENTATION TION............................................................................... .......................................................................................... ........... 39
8.1
S .................................................................................................................. ............................... 39 ALES F ORECAST O RECAST ....................................................................................
8.2 A CTION .............................................................. ................................................................... .......................................................... ......................... 41 C TION P LAN LAN ............................ 8.3 B UDGET ................................................................. .................................................................. ................................................................ ............................... 43 U DGET ................................ 9.
MEASUREMENT AND AND CONTROL STRATEGIES....... .............. .............. ............... ............... .............. ............. ...... 43
9.1
R ESEARCH .................................................................................................................... .......................................... ........ 43 E SEARCH . ..................................................................................
9.2 T REND ................................................................... ................................................................... ............................................... .............. 43 R END A NALYSIS N ALYSIS ................................. 10. BIBLI BIBLIOGRAP OGRAPHY HY .............................. ................................................................ .................................................................. ................................ 44
1. Executive Summary This reports was commissioned to examine a company, which was originated from Belgium, called Dendermonde. Dendermonde produces several sorts of dairy desserts based on natural ingredients. Dendermonde can be loosely described as a small-scale dairy dessert producer that never took any risk or chance to develop to its full market potential. Dendermonde had experienced severe internal problems and was on the verge of bankruptcy. Fortunately, our consultancy firm has been hired to analyze the company and provide Dendermonde with new objectives, implementation plans, and strategic approaches in order to help the company recover from its downturn.
The result from Dendermonde’s company analysis draws attention to the fact that their market share in 2012 was 2%, a number far less than its competitors. The shares of their competitors such as Friesland Campina and Danone were 16.6% and 8.4% respectively. Further investigations revealed that this market shrinkage coincided due to insufficient investments to be made in the company and new demands in the dairy market not being met by Dendermonde. Due to the uprising demand for low fat and organic products in the dairy market, these product types has showed to influence choices for most of dairy purchases. These factors appear to be the major causes for Dendermonde’s low product sales and small market shares.
Our consultancy firm, Consult4u, have arranged the market penetration strategy by Ansoff to be used in guiding Dendermonde to regain its health and profitability. Dendermonde will improve existing products and introduce it to its existing markets, which are mainly supermarkets. Dendermonde will also re-launch the organic range of dairy dessert and add low fat choices to their products. Dendermonde will continue the use of private label brands because according to market research, private label brands are experiencing rapid growth of sales due to the increasing consumer needs for affordable goods. The report evaluates this decision and concludes that it would be an ideal candidate to meet the challenge presented by the market and could satisfy the new consumer demand. It is recommended: ü
Dendermonde take immediate measures to launch and promote the new organic dairy desserts alongside its existing product range.
ü
Dendermonde focuses in supplying private label brands to leading Supermarkets/ Hypermarkets.
ü
Dendermonde expands their product lines by including low fat choices for the dairy desserts.
1. Situation Analysis 1.1 Current Marketing Situation The Dendermonde Company was founded in 1949 in Belgium with the goal of creating the tastiest dairy desserts using ancient farmer traditions and secret homemade recipes based on natural ingredients. The company has expertise due to years of experience to create and market products that will appeal in the dairy market. The key reasons that Dendermonde did not reach its full market potential is as follows: ü
The lack of motivation and no clear strategies for enacting growth and value creation. The company has not set clear marketing objectives, marketing mix, and does not have a clearly defined target target group. The CEO of Dendermonde Dendermonde also claims that that he lacks the time to analyze the external environment, therefore any market trends will not be recognized by the company.
ü
Due to a vacant managerial position, Dendermonde does not have a functional marketing department. Mr. De Clercq, who is also the CEO of Dendermonde, is currently taking care of all marketing activities happening in the company. Three people are responsible for sales within Belgium and all other export activities, these two employees deal with no actual marketing concerns, causing the marketing department to be inoperative. Massive changes in the company c ompany need to be made because of the unorganized internal situation.
ü
The Belgian market mainly knows Dendermonde dairy desserts under the private label brand ‘Pur Natur’ used for a Belgian supermarket chain. Dendermonde’s own labels are poorly designed with no clear pictures available, which is the reason why the ‘Pur Natur’ brand excels over it’s own brand. The production of organic desserts, which were in high demand in 2009, was halted due to production problems. This problem caused the loss of a key customer, the Intermarche supermarket.
ü
The company also shows some export potentials but no clear internal export strategy has been set therefore causing only 5.5% of the company’s products to be exported in 2012. The contacts made for export activities also does not last long due to no customer relationship efforts to be made by the marketing and sales department. In conclusion to the current situation, Dendermonde has to rebuild its marketing
department in order for it to regain profit. A new marketing manager should be appointed to manage the department. Moreover, customer relationship polices are needed in order to retain customers and an effective marketing mix to be defined in order to expand the products
to
its
full
market
potential.
2.2 Current Marketing Mix
PRODUCT The focus of Dendermonde is mainly on dairy desserts production. In Dendermonde’s production hall, most of the products produced for supermarkets are private labels. The products that are being produced are different types of flavored yogurts and quarks. Dendermonde had the chance to produce organic desserts for a Belgian supermarket called Intermarche, but due to production problems, the organic desserts production were halted. The most popular flavors for Dendermonde’s desserts are strawberry, apricot, yellow fruit, and vanilla. The fruit fillings in the desserts can easily be changed therefore customers can choose flavors that comply with their specifications.
PLACE Dendermonde’s products are currently sold through supermarkets in Belgium such as Prima, Spar, Spegelaere, Cora, Champion, and Delhaize. Moreover, the company distributes their products through several independent retailers such as Draailing and Hoevê. The company also managed to distribute through international customers thus exporting their products.
Intermarche supermarkets used to be one of Dendermonde’s distribution channels until 2009 when productions of organic desserts were halted.
PRICE The company has generated no clear pricing strategy.Dendermonde’sproducts are classed as lower to middlesegment of dairy dessert products therefore the prices are generally lower than competitors to attract consumers.
PROMOTION Dendermonde has not attempted to promote their products to attract more customers; they have not created any promotional campaigns or activities to increase their low brand awareness. The limited effort in promotions is also shown through their poor product packaging, no clear pictures or labels has been used to attract customers to buy their products.
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3. Internal Environment 3.1 Mission& Vision
Mission We have chosen to developDendermonde’s strategic decisions and actions based on the product-driven mission statement originally created by Dendermonde: “To develop, produce, and market a broad range of reliable, natural, and nutritous dairy desserts that contributes to the well-being and vitality of life of customers and to gurantee that all products are delivered to customers as soon as possible.”
Vision
Dendermonde’s vision is the framework for the company’s Roadmap and guides every aspect of its business by describing what the company needs to accomplish in order to achieve an operational, sustainable and quality growth. Therefore our consultancy group recommends Dendermonde to: 1) Be a highlyeffective, accurate, and fast-moving organization. 2) Nurture a network of customers and suppliers to create a mutual and enduring value. 3) Be a great company where people are inspired to be the best they can be. 4) Bring to the world a portfolio of quality dairy dessertsthat anticipate and satisfy people's desires and needs. 5) Be a responsible company that values sustainability.
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3.2
Organizational Structure
As a supplier of dairy dessert products, Dendermonde does not have a very effective organizational structure. Key personnel include the following:
Mr. De Clercq - CEO of Dendermonde: He is responsible for all marketing activities since there is a vacancy managerial. He responds to complaints from customers, unsolicited inquiries from other countries, and arranges the regular improvised communication campaigns. He lacks the time to review the external environment and has no knowledge of marketing activities that can be conducted to improve sales.
Mr. Jerom - Sales representative: Mr. Jerom is responsible for all sales in Flanders.
Mr. Vander Steen, Sales representative: Mr. Vander Steen takes care of sales in Wallonia and the export activities.
Sales Assistant: Supports Mr. Jerom and Mr. Vander Steen’s in their activities.
3.3
Corporate Culture
Currently, Dendermonde does not have a corporate culture. The result is an unstructured and uncontrolled organization. Improvements need to be made in order to regain health and profitability of the company. A corporate strategy of abiding by the adhocracy culture will be chosen for Dendermonde. Dendermonde is a supplier of dairy desserts. Thus, a key element of the internal environment is a culture that encourages the importance of flexibility and innovation. An adhocracy culture will be suitable for Dendermonde, which means a business environment adjusted to adaptability and quick reactions to the changing market, competition, and external environment. An adhocracy culture is an integral component of corporate strategy in this type of business. The emphasis for this kind of corporate culture is on growth opportunities; furthermore employees are encouraged to experiment with new ideas. The fast-moving adhocracy culture values and embraces a leadership that demonstrates entrepreneurial and risk-taking abilities.
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3.4 ProductDescription Dendermonde produces 7 types of dairy desserts. They produce natural yoghurts, fruit yoghurts and different types of quarks containing only natural ingredients. All the ingredients for the products are acquired from local suppliers. Due to the freshness of the natural ingredients, the product has to remain refrigerated during shipment and storage periodsbecause dairy products can spoil quickly if it is not properly stored.The shelf life of fresh and natural dairy dessert products does not last too long. Types of Yogurt & Quarks
Refrigerator
Freezer
Natural
2-3 Weeks
1-2 Months
Low Fat
1-2 Weeks
1-2 Months
With Fruit Fillings
7-10 Days
1-2 Months
Drinkable (Yogurt)
7-10 Days
1-2 Months
(EatByDate, 2012)
At present, the Dendermonde’s product line comes in 7 types of packaging. The product line is currently Dendermonde’s only core product, though it is also used under a different privatelabel brand name in some Belgian supermarkets. The present products come in several different flavors. The most favorable flavors are strawberry, apricot, yellow fruit, and vanilla. As a producer of dairy desserts, Dendermonde holds the International Food Standards (IFS) certificate for its company. The certification ensures: - Common standard with uniform evaluation systems. - Comparability and transparency throughout the entire supply. - Reduction of costs and time for both suppliers and retailers. The IFS certification allows Dendermonde as a supplier to be trusted by retailers. The certification reassures current customers and potential customers to trust Dendermonde’s quality. Dendermonde should hold this trust responsible by maintaining high quality and great natural taste of its products. Prices of Dendermonde’s current products :
From the table above, the Suggested Retail Price is the price that is suggested by Dendermonde for its retailers. The Price to Distributor is the original price which Dendermonde decided for it’s retailer. This means that Denderm onde receives revenue from the Price to 9
Distributor . (E.g. Dendermonde receives a €1.34 revenue for every purchase of the 500g yogurt drink.) At present, Dendermonde produces and manufactures it’s own dairy desserts. Dendermonde should oversee the entire production process to ensure consistent quality of its unique product. With this method of production, we can assume that the average variable costs for each product is €0.70. The annual fixed costs for supplies, management salaries, and professional services will be as follows: Employee Salaries
€ 1, 545,600
€ 441,068
Equipment and supplies
€ 32,000
Expenses related to sales (E.g. travel, etc.) Advertising and other marketing communications Total Fixed Costs
€ 50,782 € 2,069,450
Assuming all sales of the products are approximately equal, there is an average contribution margin of €0.30 per product. Based on this, to achieve break even this year, Dendermonde must sell: = 6,898,166units € 2,069,450 0.30 Again, assuming equal sales of all products, the break-even point in Euros is € 6,553,258.
3.5
Previous Sales
Sales of Dendermonde’s products have not grown extensively. In fact, some sales have also decreased since 2009 in some key accounts such as Champion and Spar. Actual figure for 2012 are shown in the table below: Dendermonde Sales Performance Customers
Turnover (2012)
Turnover changes (2009-12) 0.0%
Prima
€ 200,000
Spar
€ 1,800,000
-0.3%
Spegelaere
€ 400,000
-2.1%
Cora
€ 1,000,000
2.0%
Champion
€ 2,800,000
-4.0%
Delhaize
€ 560,000
2.0%
Intermarche
€ 350,000
1.0%
Independent Retailers Exports
€ 3,200,000
6.8%
€ 350,000
-
Total
€ 10,660,000
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3.6 Markets The consumer market for Dendermonde’s products is made up of anyone that is interested in an affordable, healthy, and sustainable lifestyle. About 70% of Belgian consumers say they are interested in living a healthy lifestyle;although the number of those who actually work to achieve that goal is much smaller. Because of the trend towards a
healthier living grows both globally and domestically, sales for Dendermonde’s organic and low fat are expected to expand and grow for some time.
Within the Belgium consumer market, Dendermonde targets middle class consumers who believe in a healthy lifestyle. While these consumers are typically adults, there are also a younger segment that seeks to be physically fit and that also patronizes sustainability.
3.7 Distribution Dendermonde currently distributes to supermarkets, independent retailers, and some export customers. In order to reach its target market, Dendermonde will place a distribution emphasis on large-scale supermarkets. The company began developing channel relationships with these retailers through individual contacts by company
personnel’s.
The company handles large key accounts such as Spar and Champion supermarkets directly. While total sales to these chains are fairly substantial, when considering the numerous branches each supermarket has, the sales are very small with much room for growth.
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4. External Environment 4.1
DESTEP An analysis of Dendermonde’s home country, Belgium, will give an insight in identifying Dendermonde’s opportunities and threat. The external analysis of the environment will also facilitate us in clarifying and generating strategies in which Dendermonde must use to fulfill their objectives.
Demographics Belgium is an advanced state in the European Union with an estimated population of 10,444,268 people and a small population growth rate of 0.061%. The birth rate in Belgium is 11.7-births/1,000 populations and a death rate of 9.2-deaths/1,000 populations.
The table shown below provides a distribution of the Belgium population according to their age groups and gender. The dominating age groups arepeople that are 2554 years old making 40.6% of the total population. The average age of the population is 42.6 years. (Maps 2013)
Age Structure 0-14 years 15-24 years 25-54 years 55-64 years 65 years and over
Percentage (%) 15.7 11.8 40.6 13.2 18.7
Male 835,569 629,753 2,145,075 681,946 819,684
Female 801,959 603,550 2,100,014 695,188 1,131,520
(CIAFactbook, 2013)
The most populated city in Belgium is Brussels with 1,019,022 people, followed by Antwerp with 459,805 people. The urban population in Belgium is reported as 97.40 % of the total population, with an annual growth of 0.8 %. This makes the remaining 2.60 % to be living in rural areas.
Areas
Population
Brussels
1,138,854
Antwerp
502,604
Gent
231,493
Charleroi
200,132
Brugge
116,709
Namur
106,284
Leuven
92,892
Mons
91,277
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Since Dendermonde’s products are all dairy -based, the company will have to obtain a large target group because typically all age, gender,or income groups can enjoy dairy-based products.Although almost everyone can enjoy Dendermonde’s products, the products are not targeted tosuit specificinfant requirements; therefore the target group will range from 5 – 65 years and over.
Economical Environment Belgium has a GDP of €382.05 Billion, together with a purchasing power parity of € 311.8billion, plus it has a GDP ranking of 18 th among the 43 European countries. Its current benchmark interest rate is 0.50%. Due to the global financial crisis, the economy of Belgium is not looking so promising, but it can be seen to slowly recover, causing the GDP growth rate of 0.2 % and an inflation rate of -0.07 %. Belgium is surviving the crisis quite well, notably with a relatively good unemployment performance of 8.1 %. However, domestic demands in the country are still weak. (BelgiumStatistics, 2013)
Belgium is among the most highly industrialized countries in Europe. The country mainly imports raw materials in great quantity and processes them largely for export. Exports equal around two thirds of the GDP, and about three-quarters of Belgium's foreign trade is within the European Union countries. Sociocultural Environment In Belgium, the average household net-adjusted disposable income is € 19,925 thousand a year. But there is a considerable gap between the richest and poorest where the top 20% of the population earns almost four times as much as the bottom 20%. The average net adjusted disposable income of the top 20% of the population is an estimated € 34,876 a year, whereas the bottom 20% live on an estimated € 8,952 a year. The household final consumption expenditures are approximately
€256.1 Billion, with 13.5 % of it going to food and drinks
expenditures.(BelgianFederalGovernment, 2013)
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The Belgium population is a major dairy consumer therefore dairy plays a big role in Belgian’s lives; they typically have milk for breakfast and fruit yogurts or quarks for snacks and desserts. Health and wellbeing is also valued deeply amongst the Belgian population. Health and wellness is shifting from being aniche to becoming a mainstream product segment. Belgian consumers increasingly expect their local supermarkets/hypermarkets to offer ranges of organic and natural products. Retailers have responded to the growing demand by launching a widening range of private label products specifying in these areas. Widening distribution and growing-health awareness amongst the Belgian populationwill support strong growth of products labeled as organic and natural. Technological Environment Belgium is a well-developed and technologically advanced country with relatively modern living standards.The country has highly developed transportation networks and high-tech information and communication technologies (ICT), this is very beneficial due to the modernized way of transactions in the business world. People, businesses and public authorities in Belgium are relatively quick in adopting new technologies. In the case of technological innovations in the manufacturing sectors, enterprises in Belgium show a good performance. The technical innovation rate for enterprises in Belgium ranks as one of the highest, with 48.2%. Ecological Environment The Belgian population is well known for their sustainability towards the ecological environment. Their sustainability is shown through their purchases of organic products. In 2013 the total supermarket organic sales increased to their highest level in 9 months, indicating Belgian consumers choosing to buy organic products as a guarantee of integrity. February sales increased 8.4% versus January. Some independent organic products suppliers have also reported an increase in sales of up to 20% over the past month.Belgian’s concern for the environment is also shown through their behavior of purchasing domestic products. By purchasing products that is manufactured locally, less carbon footprints will be emitted. Dendermonde only buys from local suppliers; therefore Dendermonde has an advantage of showing sustainability in the environmental friendly Belgian dairy market.
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Political and Legal Environment All companies, associations, institutions or establishments that originates in Belgium are liable to pay for a corporate income tax. The corporate tax rate for Belgium in 2013 is shown in the table below.Belgium also have a moderately high standard rate of Value Added Tax (VAT) of 21%, t his is the additional amount buyers has to pay when purchasing Dendermonde’s products
Band of taxable profit
Rate applicable to band
€ 0 – 25,000
24.98 %
€ 25,001 – 90,000
31.93 %
€ 90,001 – 322,500
35.54 %
(WIPFLITax, 2013)
Since the milk quota regime was introduced, milk quota has become a scarce production factor: on the one hand limiting milk production and, on the other hand, stabilising milk producer prices and maintaining dairy activities in less competitive regions. An abolishment of milk quotas is forecasted for 2015, but it is thought to increase milk supplies leading to a further 10% decline of milk prices.
During the milk quota establishment, dairy farmers have declined by 72% and dairy herd decreased by40-45% in the EU. The EU milk quota system was originally introduced in 1984, in order to limit public expenditure on the sector, to control milk production, and to stabilize milk prices and the agricultural income of milk producers. (ConfederationFiscaleEuropeenne 2013) In conclusion, the EU has its own ''protected'' market, there is a huge subsidized overproduction of milk, quota's have already been set for years, farmers who produce too much milk get fined, so the farmers over producing milk has to ditch their milk. The EU ditches the overproduction because quota's are still way too high. Therefore, exporting neighbouring countries would just be the same as any other country within the EU, and outside the EU the export costs would be too high. This can also be seen as an opportunity to grow domestically within Belgium.
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4.2 Market Analysis A thorough understanding of the dairy market is crucial for increasing the sales of
Dendermonde’s products. Fortunately, t he dairy market is leading towards a more prosper year in 2013 for Dendermonde’s kind of products.
Milk Market The Belgian milk market has a total revenue of €4.6 billion in 2013, representing an annual growth rate of 2.2%.Market consumption volumes increased with a growth rate of 0.8%. Due to milk quotas, milk deliveries have decreased 0.9% compared to 2012.In the first months of 2013, the EU milk collection has been strongly affected by the climatic conditions and the high compound feed prices, leading to expectations that the milk production will not increase and remain constrained in 2013.
Although the value of the market has increased, the potential threat in the market is the high and rising milk prices due to limited supplies of milk. The high milk prices might affect production prices
of Dendermonde’s products but fortunately the demand for dairy products still remain strong.(EuropaAgricultureMarket, 2013)
Yogurt Market Total yogurt expenditures in 2013 have increased by 4.9 % to €1.6 billion compared to November 2012. The average price per kg of yogurts has also increased by 7.6 % year-on-year to
€2.81/ kg. This major incline in the yogurt sectors can open up more opportunities for Dendermonde to increase sales.
The total yogurt market consists of Private Label and Branded products. Branded yogurts make up about 70 % of total yogurt volumes sold. This year however, Branded products saw volumes decline 7.1 % compared to 2012.Increasing purchases of private label yogurts is thought to be the cause of the decline. The private label purchases have increased by a tremendous 10.5 %. Therefore a definite increase invalue and sales are forecasted in 2013 for
Dendermonde’s private label yogurts.
16
Total yogurt market in Europe, 2013 Total yogurt
Year-on-year (%)
Private Label
Year-on-year (%)
Branded
Year-on-year (%)
Value (€000s)
1,362,066
+4.9
303,093
+15.0
1,058,973
+2.3
Volume (000kg)
574,720
-2.6
167,915
+10.5
406,805
-7.1
Average Price (€/kg)
2.37
+7.6
1.81
+4.0
2.60
+10.1
(DairyOrg 2013)
As for types of yogurt, natural yogurt has seen the largest volume growth over the year with a staggering 16.8 %. Low fat yogurt has also seen large growths with volumes up 8.1 %. The choices of yogurts are mostly influenced by yogurts that are labeled as ‘Low Fat’ and ‘All Natural’. The largest declines for yogurt types by far are the children yogurts, sales volumes decreased by 15.5 %. As for price levels, Low fat yogurts are the cheapest with €1.78/kg, while children’s yogurt remained to be the highest with €3.18/kg. Yogurt drinks have also grown 4% from 2012, with over 1 in 3 households purchasing yogurt drinks over the year. Total yogurt market by product type in Europe, 2013
Product type
Spend (€000s)
Year-on-year (%)
Volume (000Kg)
Year-on-year (%)
Average Price (€/kg)
Year-on-year (%)
Organic / Bio set
414,333
-0.1
156,747
-6.3
2.64
+6.7
Children’s Yogurt
30,111
-4.2
9,454
-15.5
3.18
+13.4
Low Fat
2.37
+7.6
92,266
+8.1
1.78
+3.2
Natural
99,916
+21.0
53,919
+16.8
1.85
+3.6
Very Low Fat
298,042
+9.1
125,435
-3.3
2.38
+12.9
(DairyOrg 2013)
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Quark Market Quark has the potential to be the next on-trend, high-protein indulging health food. Global sales of quark reached€0.3 billion in 2012, up by 20% in current terms from 2007. Major players in the dairy industry have been introducing quarks to consumers, the consumers responded positively towards the high-protein dessert. Consumers now perceive quarks a normal dairy dessert that is highly enjoyed just like yogurt. (EuroMonitorInternational 2011)
Belgian consumers love Quark. Belgians describe the dessert as a mild creamy product without the sour taste of yogurt. Health conscious consumers keep on eating Quark due to the low fat content and high protein. The nutritional content of Quark is hard to surpass, only a few products offer such high protein content and versatility as Quark.
4.3 Consumer Analysis As our target market consist of age groups from 5 – 65 years old, we have clustered them into different groups to analyze and identify Dendermonde’s customers: 1. Young Adults Characteristics: Enjoys social and physical activities •
Shops in supermarkets and convenience stores Self-conscious and spends moderate amount of money on physical appearance.
Up to date with latest trends in technologies. Point of recognition: • Attends higher education level • Have part-time or full-time jobs Broad range of friends • Aged between 16 – 29 years old •
2. Adults Characteristics: • Enjoys social activities such as going to bars, restaurant, or staying in with friends for a homemade meal
Shops their groceries in supermarkets or hypermarkets
Have stable families and saving
Conservative and price sensitive 18
Point of recognition: Solid social relationships • • Medium income range • Lives in suburban areas • Aged between 30 – 55 years old
3. Elderly: Characteristics: • Health conscious
Enjoys eating healthy meals and doing mild physical activities, e.g. jogging.
Shops in farmer’s markets and supermarkets Spends allowances conservatively
Price sensitive Point of recognition: • Retired Solid social relationship • Family orientated •
•
Active in physical and social activities Aged between 56 – 65 years old
4. Children:
Characteristics: • High brand loyalty
Enjoys colorful packaging Surrounded by families and enjoys social activities
Dependent on families Point of recognition: Low education level • • Family orientated
•
Depends on parents for purchasing decisions, no income. Aged between 5-15 years old
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4.4
Competitive Environment
The dairy market is known for its competitiveness. In order for Dendermonde to survive, the company must analyze its competitor’s positions in the marketplace. To develop an effective positioning strategy to influence the target group’s perceptions of Dendermonde’s products, Dendermonde must understand the current situation in the same market by comparing itself to its competit ion. Branded dairy desserts are Dendermonde’s main threat because Dendermonde produces mostly for private labels. It is very important to distinct a competitive advantage between branded and private label products.
Dendermonde’s direct competitors are companies that also market dairy dessert type products, including the following:
FrieslandCampina
FrieslandCampina is a leading player in the Belgian dairy market. They account for 16.6 % market share in the dairy desserts industry. The company claimed to have a revenue of €10.3 billion euros in 2012 and as many as 1 billion consumers worldwide. Their profit increased by 26.9% from 2011 to 2012, making it €274 million Euros. The company values high quality products, sustainability, and transparency standards throughout the whole chain. They develop their dairy products based on essential nutrients needed by consumers, hence ensuring to meet customer needs. FrieslandCampina produces a diverse range of dairy desserts. Some of their core products in Belgium include: Campina, ViFit, and Fristi.
Campina FreshYo:
Campina FreshYo by FrieslandCampina is a fruit flavored yogurt drink that was popularized in Belgium. FrieslandCampina priced their yogurt drinks at €2.71 per liter. The product comes in 4 flavors; strawberry, tropical fruits, banana and kiwi, and wild berries.
Fristi:
Fristi is another yogurt drink by FrieslandCampina that is targeted amongst the younger segment group. The product contains less yogurt compared to FreshYo, the product also mentions “Less Sugar” in the packaging to emphasize the products health appearance. The product uses a creative method of packaging to attract its young target group. The product retails at €2.92 per liter. The product comes in 2 flavors; red fruit and peach. 20
ViFit:
Vifit is a FrieslandCampina product that is specifically created for health conscious consumers. The product contains 0% fat and contains important vitamins such as B11, B12, and Vitamin D. The product retails at €2.95 per liter.
Danone
Danone is the market leader in the field of nutrition and health, positioning itself around four specialties: fresh dairy products, water, baby food, and clinical nutrition. Danone, like FrieslandCampina, is also a major player in the dairy dessert market. They account for 8.4 % of the dairy market. The company values corporate transparency, sustainability, innovativeness, and quality. Most of the Danone products in Belgium are healthy brands because health concerned consumers in Belgium. In 2011 the company achieved a turnover of € 19 billion. Some of their core dairy dessert products in Belgium include: Activia, Danio,
Activia:
Activia is a yogurt range by Danone specified for health conscious consumers. The product is mainly labeled as a natural and organic diet range that promotes consumer’s metabolism. Activia yogurt retails at € 3.17 per liter. The product contains 0% fat and comes in strawberry, fig, natural, fiber grains, peach, granola, and apple flavors.
Danio:
Danio is a dairy dessert range from Danone that consists both quark and yogurt. The range varies from low fat to full cream. The products also come in various interesting flavors ranging from strawberry cheesecake, vanilla, chocolate, and blueberry cheesecake to different flavors of fruits. The product retails at € 3.40 per liter.
Danone Nature:
Danone Nature is the company’s product line for organi c yogurt and quark. The product ranges from low fat to full fat. This particular product only comes in plain/natural. The Danone Nature retails for € 3.00 per liter.
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De Zuivelhoeve
De Zuivelhoeve is a dairy producing company originated from The Netherlands.De Zuivelhoeve provides dairy products at areasonably high price and but with assurance of high standards in quality. The company dates back to 1981, producing original farm-made dairy products such as milk, yogurt, and cheese. This particular company values a traditional brand image, which means they stick with producing traditional dairy products, made from traditional and original natural recipes. This company will not be following market
trends such as making their dairy ‘0% Fat’ or ‘Organic’, the company will stick to the traditionalism of their products.
The Real Zuivelhoeve Boer’nYogurt
This particular type of yogurt product is famous in Belgium amongst the elderly target group where they prefer the traditional and natural taste. The name of this particular product indicates that it is the real Zuivelhoeve farm yogurt. The product comes in only full cream and contains natural or fruit fillings flavors. This product retails for € 3.74 per liter.
Dendermonde’s indirect competitors in the market arecompanies that don't necessarily sell the same products as Dendermonde but offer different alternatives to satisfy the same customer need. As a result, even though these companies might not be directly competing with each other in the same dairy dessert industry, they still may impact each other . Indirect competition comes from the following companies:
Vache Bleue S.A.
Vache Bleue S.A. packs, sells, and distributes cheese products in Belgium. The company was founded in 1927 and is based in Lillois Witterzee, Belgium. The company accounts for 7.4 % of the total dairy market. This particular company is the major player of cheese products in Belgium. The Vache Bleue range includes products that combine healthiness with pleasure. The company values creativity, therefore the products are designed to be unexpect ed and creative such as the ‘ Selection Cuisine’ line of spiced grated cheeses, it claims to ‘ add spices of creativity to all cooking recipes’. Combining the culinary market with the dairy market emphasizes that Vache Bleue is exploring new needs in the dairy market and fulfilling those needs. They also have lactose free product range for lactose intolerance consumers, another example of how Vache Bleue is meeting new consumer needs in the dairy market.
22
Bel Group Bel Group is a company originated from France, and is
well known in Belgium. With five universal core brands and over 25 local brands, the Bel Group serves up to nearly 400 million consumers annually in 120 countries around the globe.
The company claimed that this is derived from the pleasure of eating food made with dairy goodness, and Bel Group's commitment to encouraging good eating habits and good-naturedness, form the common thread between the Group and its brands.The company reached a market share of 4.4% in the Belgium dairy market. The company claimed that the strategy of its success is to have a well-known knowledge of the market presence before
extending their products; this can explain why Bel Group’s cheese products , especially the ‘Laughing Cow’ product line, are so well known to consumers. A thorough research of the market ensures the company of real consumer needs and wants.
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5 SWOT Analysis STRENGHTS (S) S1:
OPPORTUNITIES (O) O1:
A sustainable company.
S2:
Specializes in flexibility of production.
O2:
Leading Brand.
O3:
S3:
S4:
Customer relations and creative approach towards preparations of products.
WEAKNESSES (W) W1:
High demands for private label brands of dairy products. Increasing consumer needs of low-fat products due to health awareness.
THREATS (T) T1:
No clear company objectives, strategies, and goals. No Manager to control the employees, thus lack of organizational structure.
High and rising milk prices.
Competitive dairy market.
EU milk quotas.
T2:
W2:
Rapid growth of demands for natural and organic products.
T3:
W3:
Lack of action in the marketing department.
5.1 Strengths S1: Dendermonde uses supplies from local farmers. The usage of local supplies reduces the emission of carbon footprint, benefiting both the company with its eco-efficiency. A sustainable company is proven to have enhanced brand and increase competitive advantage. S2: Dendermonde specializes in flexibility of production, which means it is able to produce products that comply with the business customers’ own specifications. S3: Dendermonde’s desserts are loved by customers and admired by competitors in the same market. Years of being in the dairy business explain their substantial experience in that specific sector and enable them to produce the leading brands in the affordable dairy product sector. S4: Customer relationship and creative approach towards preparation of products is considered to be of great importance according to Dendermonde. The company has maintained a long 24
relationship with its current customers. The company is always looking for innovation with regards to customer’s requirements in relation with producing their products.
5.2 Weaknesses W1: No clear strategies, objectives, visions and goals. Not having goals or objectives is a problem for employees, since there is no clear picture in their head of what the company strives for. W2: There is no clear structure among employees, managers and or owners. There is no hierarchy, which makes it hard to control employees. All the employees are responsible for their own tasks; the absence of a marketing manager resulted to a lack of control over employees. W3: Since the absence of a marketing manager, there are no marketing activities conducted by the company. They lack a review of the external environment and they ignore promotional activities that can enhance brand awareness.
5.3 Opportunities O1: Data shows that the demands for organic and natural dairy desserts has been increasing in the European market; consumers have increased their health-awareness and consumers have been purchasing goods that are healthy for them and the environment. O2: Private label yogurts have also been increasing in volume growth of 10.5%. This is an advantage for Dendermonde’s current private label products sold in supermarkets causing it to experience sales increases. 03: Low fat dairy products have also seen strong growth, with volumes up 8.1 %. This is expected due to consumers opting for healthier options. This gives Dendermonde the opportunity to expand their product range.
5.4 Threats T1: A potential threat could approach Dendermonde due to the high and rising price of milk. The increase in price will affect production costs in the company. The rising prices are due to the fact that there is limited supply of milk available in 2013. T2: The dairy dessert market is also very competitive due to the numerous competition (e.g. Friesland Campina, Danone, etc.) dominating the dairy market. The tough competition serves as a threat for Dendermonde and pushing Dendermonde to create competitive advantages in order of surviving in the dairy market. T3: Due to the milk quota establishment, dairy farmers have declined by 72% and dairy herd decreased by 40-45%. The EU milk quota system was originally introducedin order to limit public expenditure on the sector, to control milk production, and to stabilize milk prices and the agricultural income of milk producers. The milk quota can limit Dendermonde’s export opprtunities to neigbouring countries, but can increase domestic connections due to high milk demands and low supplies. 25
6 Marketing Objectives Category
Objectives
Financial
Market Share
Product
Brand
Customer Relationship
Increase organization-wide sales of 10% by end of calendar year. Increase market shares of current products within existing dairy markets by 0.2% within the end of calendar year. Generate sales of new organic and low fat products to 15 % of total sales within one year. Increase brand awareness in the dairy market by 10% within one year. Improve relationship with business customers to increase 3 new distribution channels by end of calendar year.
7 Marketing Strategies In Order to expand to Dendermonde’s full potential in the dairy market, Consult4u have arranged market penetration strategy by Ansoff. This means that Dendermonde will focus in selling existing products in existing markets. Although we will be adding two new product lines, this product line will continue to represent the originality of Dendermonde’s products, the only difference is its benefits, we will include both organic and low fat benefits. Dendermondeseeks to achieve four main GOALS: 1) Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, and sales promotion. 2) Secures a dominant growth in the domestic Belgian market. 3) Restructures a mature market by driving out competitors,which would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors. 4) Increases usage by existing target markets.
26
7.1 Target Markets The targeting strategy that is suitable for Dendermonde is the undifferentiated targeting strategy, which is targeting a broad spectrum of people that share a common interest of frequent dairy dessert consumptions. We have identified that the needs of Dendermonde’s target consumers are similar therefore by choosing this strategy the message will appeal to all out target consumers. The primary consumer target market
for Dendermonde’s products can be summarized as follows:
Demographics: -
Ages: 5 – 65
-
Male and female
-
Household income: € 15,000 and above
-
Household type: Single & families with children.
-
Education of head household: College degree or above
Psychographics: -
Health-conscious and interested in living healthy lifestyles
-
Believes in value for money and pays attention with what they are buying.
-
Favors natural simplicity products over complexity
-
Conscious with sustainability and the local community
-
Price sensitive
-
Spends time in evaluating alternatives before making purchases
Geographic -
Individuals in the target groups are
likely
suburban
to
be
located
areasinstead
of
in big
crowded cities. This is because they strive to live in larger and open spaces to conduct their healthy lifestyle activities.
27
Demographics Below is a demographic analysis of the population in Belgium; this can give us an insight on the feasibility of the number of our target group that makes up the entire Belgium population. -
Total population Age 5 – 65 years
= =
10,444,268 7,937,643
The figure above showed that 76% from the total Belgian population consists of the age brackets of 5 – 65 years. This amount shows that we have better chances of optimizing our sales volume due to the numerous targeted populations. When looking at the information about income distribution in Belgium, we want to keep in mind that demographic characteristics usually play their role in the income that will be paid. According to the latest Annual Survey of Hours and Earnings, age plays an important role in the gross income you should expect.The age group with the highest income is the 40-49 years old group, where the median of the gross weekly earnings was at € 541.7. The median of the 22-29 years old group was € 409. With these report we can clearly position our product price according to the income earnings of our target group. Dendermonde’s products sh ould be fixed with an inexpensive price since they are not creating a luxurious image; they’re products are valued as healthy, affordable, and natural. Psychographics
To analyze the target group’s lifestyle, we went further into dividing Dendermonde’s target group according to their psychographic characteristics. This implies that they can be grouped according to the following:
Social Class: The social class of our target group is basically families consisting of a working class parent and their children. Most parents in this class are skilled, middle, and lower working class categories. They spend time in shopping for products with health benefits and are easily driven by the distinctive quality of the product they want to purchase. Lifestyle Factor:We believe that Dendermonde’s target groups are Reformers. Reformers are groups of people that believes in freedom from restriction, induces personal growth, value for time, tolerance of complexity, anti-materialistic but intolerant of bad taste. These type of people are very curious and supports the growth of new product categories. As for brand choices, they favor natural simplicity and select brands for intrinsic quality at a reasonable price.
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Geographic Suburban areas are the typical choice for our target group because they favor simplistic suburban lives over the busy and complex metropolitan areas. We will choose the most populated suburban areas to centralize our marketing activities in order of reaching Dendermonde’s target groups. The capital region of Belgium, Brussels, is the most populated region with1,138,854 inhabitants. Dendermonde can target popular areasshown in the table below. Areas Population Brussels
1,138,854
Antwerp
502,604
Gent
231,493
Charleroi
200,132
Brugge
116,709
Namur
106,284
Leuven
92,892
Mons
91,277
As we can see from the above, we would start from the most populated region, Brussels, and then proceed downward as shown in the table above. We plan to cover other remote counties in the Belgium as we make progress in our research on various geographical regions across Belgium. Cities shown in the table have a large number of stores, the cities also have vast numbers of our target group and so we will be anticipating a high sales margin.
Age 5-12 years
35-50years
Educational level:
Low
High
Brand awareness:
Low
High
Quality demand:
High
High
Brand loyalty:
High
Average/ High
Potential market:
High
High
Main Target Group: From the list above we can easily say that the age group between 35-50 years scored highest compared to the other groups. Therefore, adults within the age of 35 – 50 years old are Dendermonde’s main target group. This target audience makes up approximately 2.1 million of the current Belgian population. 29
We believe that these target audiences values the high importance of healthy nutrition and quality. High quality is thetarget groups’ first inspection element in persuading buying behavior.Dendermonde’s target audience feels responsible for the environment and tolerates the use of product containing chemicals. Overall, this target group is searching for goods that meet the standards of health and sustainability. This type of target group is generally also concerned with their health and personal appearance. These consumers prefer purchasing products with less fat content. This is the reason why Dendermondeis including choices of ‘Low Fat’ to their product range. The availability of the low fat product ranges will increase the chance of purchases from this type of target group. When it comes to purchasing, Dendermonde’s customer are very price sensitive. This is due to the value for money mind set orientation. When comparing two similar products, Dendermonde’ consumer will go for cheaper brand alternatives that promote sustainability; they will also choosecheaper unknown products that offer the same value as branded products. This consumer group does not necessarily think that expensive branded products would bebetter and of higher quality than the cheaper ones. This consumer group feels satisfied when purchasing products with numerous beneficial values at a reasonable price. Dendermonde’s products will be desired as an affordable product that still provides health and sustain benefits to its target consumer.The target audience also wants to experience a new sensation of natural taste. In the advertisings, we will accentuate Dendermonde’s use of ancient farmer’s traditions and secret homemade recipes in creating their tasty dairy desserts, to promote the product’s sensation of natural taste, made by only natural ingredients produced by local farmers. The motive to buy Dendermonde’s product is shown in the fact that there are only several dairy dessert producers who are offering organic dairy desserts to consumers. Dendermonde’s target audience does not want to taste chemicallyinduced dairy products due to their health awareness’s. Dendermonde will offer consumers realingredients in their desserts. The organic dairy desserts will be renowned for its purity, clean taste, and natural flavors. Subsidiary Target Group: From the list above we can see that the age group between 5-12 years scored lowest compared to the other groups. Therefore, children within the age of 5-12 years old are Dendermonde’s subsidiary target group. This target audience makes up approximately 820 thousand of the current Belgian population. Another reason why children group scoredlower is because we cannot judge the children market by how much money they have or how highly educated they are. Dendermonde has a product specifically designed for children. The packaging is designed to be creative to attract child consumers. The children market are interested in great taste and colorful appearance. Dendermonde can attract more children markets by improving its product through designing in more colorful packages for this particular market. 30
We can also see this group as a stepping-stone in order for Dendermonde to penetrate their first target group, adults. To some extent , children ́ s needs can directly inluence their
parent ́ s purchasing behavior . Most of the population in the first target group is considered to bea household consisting of parents and their children therefore children plays an important role for reaching our first target group. Business as a Target Audience: As a second target group, we have identified thebusiness-to-businesscustomers, which
are Dendermonde’s retailers, namely supermarkets/ hypermarkets, and independent retailers. It is very important to choose the retailerswisely because they areactive participantsthat influence the perception ofend consumers towards Dendermonde’s products. Dendermonde needs to establish a long-term and well communicating relationship with their business partners. To attract and to maintain good relations with business customers we will make use of a variation of promotional tools, such as improving discount policies, which will be explained in the promotional strategies.
7.2
Branding
Dendermonde’s brand is the company’s promise to its customer. It tells them what they can expect from the products and it differentiates Dendermonde’s offering from its competition’s offering. Since the brand is derived from how Dendermonde is perceived, we would suggest Dendermonde to make their products to be perceived as a low-cost and high value brand that delivers sustain and health benefits to its target customers.
Logo
To enhance the image of natural goodness, health,
and sustainability, Dendermonde’s products will have a new logo design that will remind target customers of nature, hence the green leaf above the logo. The color green in logo can emphasize nature and serenity. The color green in logo reminds customers of nature, the idea of nature relates the product to natural and healthy goodness.
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7.3
Product Positioning
Product positioning is the perception in the consumer’s mind of the nature of a company and its products relative to competitors. We recommendDendermonde to use the product attribute approach. The fact that their dairy desserts uses natural ingredients from local farmers are features that sets the product apart from the competition. There are three components making up attitudes and behaviour towards products, these components are Cognitive, Affective, and Conative. The cognitive component is made up of the consumer’s understanding, image and knowledge of the product. In the case of Dendermonde’s dairy desserts, the consumer will learn or know that the products are natural and sustainable, which is very beneficial for one’s health and environment. Secondly, the affective component occurs, which is the feelings and emotions the consumer develops towards the product: a person may feel or believe that he or she will be more healthy when Dendermonde’s dairy desserts. Thirdly, the conative element takes place because of the consumer’s actions and behaviour, which lead to the purchase of Dendermonde’s dairy desserts. Perceptual Map UPSCALE
HIGH PRICE
LOW PRICE
DOWNSCALE
Perceptual Map Summary From the map we can deduce that Danone is right within the high price andupscaleposition, which means consumers view theirproducts as high quality being purchased at a premium price. Other competitors like FrieslandCampina, Bel Group, and Vache 32
Bleue also fall within this range. Danone has an average of higher prices and quality products when compared to other competitors. De Zuivelhoeve has a relativelyaffordable range of dairy products and optimal standards for quality therefore this company placed within the downscale and low-priced segment. We can see that the column for low price –upscale dairy products is blank because consumers will not buy a premium dairy product at a low price. It is either they go for a downscaleproduct at a low price or buy an upscaledairy product at a high price. Unique selling point
Dendermonde’s product has a truly unique feature that sets itself apart in the market. It offers an affordable alternative with the same healthy benefits as other expensive premium products. The natural recipes and fresh local ingredients really stand out to consumers looking for affordable products with health and sustainable values. Positioning Statement
“For the middle-Belgian consumers seeking for sustainable and healthy dairy desserts, Dendermonde’s brand provides an affordable and satisfying choice.”
7.4
Product Strategies
Three Layers of Products
Core Product The benefit that Dendermonde’s products will provide customers is it s affordable health and sustainable benefits. The use of natural ingredients and supplies from local farmers ensures the well being of both the customer and the environment. Dendermonde serves dairy desserts wit h ‘quality tailored for customer’s needs’.
Actual Product
Dendermonde’s dairy desserts come in 7 delicious flavors; Strawberry, yellow fruit, apricot, peach, blueberries, mix berries, and vanilla. The product comes in three types of
product
line,
which
are
Dendermonde Original, Dendermonde Organic,
andDendermonde Low Fat .
Augmented Product
The augmented part of Dendermonde’s products is the fact that the product has accessibility. Dendermonde’s products are sold in supermarkets and independent retailers that are very accessible for target consumers. 33
New Product Lines To increase its leverage in the market and to meet its sales objectives, Dendermonde needs additional products. Two new product lines are planned: 1. Dendermonde Organic: This new product line will be introduced to the market to meet the high consumer demands for organic products. This product contains organic and natural ingredients to satisfy the taste buds of Dendermonde’s health-conscious consumers. The product comes in six unique flavors: - Apricot - Yellow fruit - Strawberry - Vanilla - Mixed Berries - Peach 2. Dendermonde Low Fat: This product line is specifically designed for the self-conscious consumers opting for a healthy alternative. The Dendermonde Low Fat dairy desserts will have approximately 75% less fat than the original dairy desserts. The low fat range will come in the following four flavors: -
Strawberry Blueberry Peach Vanilla
34
Packaging We believe that the product packaging can play a role in the success or failure of the sales of the product; the purpose of packaging is much more than just containing and protecting the products, how a product is packaged may be what attracts the customers to take a look on the products as it sits in retail shelves. Dendermonde will need to emphasize the design of simplicity and nature in it’s packaging. The label ‘All Natural’ and ‘Local Farmers’ will be attached in the packaging to increase the healthy appearance of the products. The organic product lines will include the label ‘Organic’ and the low fat products will include ‘Low Fat’ labels in the packaging to differentiate them from the original packaging. The packaging will include the nutritional value, ingredient contents, company website, and customer service number. Private Label Brands Dendermonde will continue producing for its current private label products in order of complying with the sales objectives. Dendermonde will include three additional private label brands, namely:
Pur Natur During 2009, Dendermonde was producing organic desserts for the ‘Pur Natur’ private label but due to a production halt, the production has to stop. The re-launch of the organic product range will enable Dendermonde to produce for this private label again. Albert Heijn Dendermonde will start producing desserts for the house brand of the supermarket called Albert Heijn. The original dairy dessert products will fall under the label AH Huismerk/ House Brand. The organic and low fat product range will fall under the ‘AH Puur&Eerlijk’ brand which are the private labels consisting of organic and environmentally beneficial products. Carrefour Dendermonde will be producing for the house brand of the supermarket Carrefour. The house brand will include all of the three product ranges, the original, organic, and low fat.
35
7.5
Pricing Strategies The pricing for Dendermonde ’s products will be decided based onthe market orientation.
This type of strategy would be getting a price based upon analysis and research compiled from the target market. This means that Dendermonde will set prices depending on the results from the market research. For instance if the competitors are pricing their products at a lower price,
then Dendermonde should put a price below the price of the competitor’s to attract more consumers.According to Porter’s generic strategies, Dendermonde’s products would fall under the cost leadership model, which means the company delivers a good quality product at a lower price than the competitors. Another way of positioning Dendermonde’s pricing would be a penet rated pricing, which means Dendermonde’s products will be the low -priced within the market but offers a great deal of value. The current prices for Dendermonde’s products are as follows:
(Table 7.5 A - Price List)
Competitor’s Price:
Dendermonde’s prices are going to be lower than its competitors. This is part of the pricing strategy to create a competitive advantage in order for consumers to opt for Dendermonde’s products. The price list f or Dendermonde’s competitors are shown in the table below: Types of Product
Price (Per KG)
Danone Activia Danone Danio Danone Nature Campina FreshYo Campina Fristi Campina ViFit De Zuivelhoeve Boer'nYogurt
€ 3.17 € 3.40 € 3.00 € 2.71 € 2.92 € 2.95 € 3.74
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7.6
Promotion Strategies
In the past, Dendermonde has used mainly personal selling to promote its products to the distribution channels. We will continue using personal selling to increase the Dendermonde’s distribution channels in order to generate more sales. The personal selling has previously been handled directly by Dendermonde’s sales team to the retailers; this is called a point-of-sale merchandising. Point-of-sale merchandising can be said to be a specialist form of personal selling. This type of merchandising involves face-to-face contact between Dendermonde’s sales representatives and the retail trade. Dendermonde’s sales representative will visit a range of suitable retail premises in the target area and encourage the retailer to stock products from the product range. The visit also provides the opportunity for Dendermonde to check on stock levels and to check whether the product is being displayed optimally. To support this personal selling approach, we came recommend that Dendermonde promote itself through internet marketing in order to introduce its new product lines and meet its marketing objectives of boosting the company’s awareness.
Internet Marketing: Internet Marketing can provide significant benefits to an organization by providing a reach, range, and scale that before the Internet was invented it was not possible. The convergence of technology has also driven an increase in the number of devices organizations can leverage to reach their target market. Website Firstly, a proper company website for Dendermonde will be created. The first and most obvious advantage of a business website is the potential for reaching a wider audience. The Internet is used by millions of people and all of them are looking for something. So taking the business online will potentially allow Dendermonde to take advantage of the growth and expand its business. Even if Dendermonde has no intention of using a business website to sell, Dendermonde still might want to let their customers know about their business. People commonly research businesses online before actually visiting the business location. So having a well designed website will help encourage them to come and visit Dendermonde or be able to find out about the company.
Dendermonde’s website needs to be well structured in order for customer to beprovidedwith necessary information about the company. Also, there will be a catalogue of the product range in the website. For business customers there will be an option of ordering products in the website and detailed contact information of the sales department (telephone, email and address). The website will be available inFrench, Dutch, German, and English. The website URL is www.Dendermonde.com.
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Cost of creating a website: - Domain Name - Hosting - Web Design - Website Maintenance Total Cost for Website
= € 10 = € 150 = € 2000. = € 500 per year. = € 2160 (Plus € 500 per year for maintenances.)
Social Media Facebook and Twitter are the social media platforms most commonly used for marketing. Facebook offers the option of creating a fan page for a company or product, while Twitter makes use of a limitation of 140-character posts that users follow. Blogs are online journals written by users, which can be influential in spreading news and information. YouTube is a repository for podcasts and videos, with a viewership of millions around the globe. Some sites offer display advertising options, but the majority are simply a method of sharing information with others. The most visible advantage of social media advertising is that it is very cost-effective, some sites such, as Facebook, Twitter, and YouTube, are free of charge. Dendermonde will create a Facebook, LinkedIn, Twitter, and YouTube company account in order to easily communicate with their consumers. Dendermonde can introduce the new product lines and post the advertising and news about the product in the social media networks, making consumers aware of it anywhere and at any time.
E-Mail Marketing To stay constantly in the memories of our customers , Dendermonde’s sales team will be sending promotional information to customers through emails with the purpose of enhancing Dendermonde’s relationship and to encourage customer loyalty. In the e-mails, the sales team will inform our customers about new insights, promotions, and developments within Dendermonde. The main tasks of e-mail market ing for Dendermonde’s sales team are:
To send email messages with the purpose of enhancing the relationship of Dendermondewith its current and previous customers, as well as encouraging customer loyalty and repeat business. Sending email messages with the purpose of acquiring new customers and convincing current customers to make purchases of Dendermonde’s products. Adding advertisements and newsletters to e-mails and sending it directly to customers.
Sampling:
Dendermonde can introduce its new product range by sampling. The purpose of a free sample is to acquaint the consumer with a new product. It is similar to the concept of a test drive, where the 38
customer is able to try out a product before purchasing it. Sampling of Dendermonde’s products at selected supermarkets will provide an opportunity for prospective customers to become aware of the product and to taste the great flavors. Sampling will include only organic and low fat products, which are products that are being introduced. Venues for sampling will be in supermarket where Dendermonde uses its own brand name such as Spar, Aldi, Champion, and Intermarche. Cost of sampling: - Products (7,000 units) - Supermarket Contract - Retail Sales Person Total Cost for Sampling
= € 8,400 = € 4,000 = € 18,000 = € 16,900
Magazine Advertising:
Consumers in Dendermonde’s target market are avid magazine readers, thus magazine advertising will be attempted this year. Dendermonde will advertise through a health and lifestyle magazine in Belgium called BioGezond. The magazine reaches up to 567,000 readers annually; these readers compose of well-educated readers with average income, they also have an interest in improving their health and lifestyle. 52% percent of readers are below 49 years old while the rest are above. This shows that BioGezond is the right choice forDendermonde because of the suitable target consumer group. The website of the magazine will also serve as a great promotional with 120,000 page views.
-
7.7
Cost of magazine advertising: 3 months, ½ Page Online, Homepage Banner Total Cost for magazine Adv.
= € 10,722 = € 4,000 = € 14,722
Supply Chain Strategies In the past, Dendermonde has targeted three categories of distributions: -
Supermarkets / Hypermarkets
-
Independent Retailers
-
Exports
To increase distribution and sales of it’s products, Dendermonde will focus on distributing to supermarkets in Belgium. Dendermonde will not conduct exports until the health and profitability of the company has been regained.This is because the company needs to focus in strengtheningits distribution chains in Belgium by this year in order of meeting its objectives. Dendermonde will 39
continue to distribute to its existing retailers in Belgium with the addition of Albert Heijn and Carrefour as private label brands, and Aldi as its own brand. Albert Heijn Albert Heijn (AH) is a supermarket established in Netherlands that became quite popular in Belgium. Although AH is considered to be selling middle to high priced products, the supermarket has a range of house brands that is well known by AH’s customers. AH is one of the biggest supermarkets in Belgium with high market shares, the types of retail store includesconvenience markets and hypermarkets. The stores are located in almost every city in Belgium and the reason why we chose Albert Heijn is because we think that Albert Heijn will help Dendermonde in generating more sales because of AH’s popularity. Carrefour Carrefour is a French retailer that became popular as supermark ets, convenience stores, and hypermarkets in Belgium. Carrefour has one of the largest chains of hypermarkets around the world. The company rates number two in highest earning revenue amongst hypermarkets. This company can direct Dendermonde into generating more sales due to its wide target consumers, easily accessing Dendermonde’s products.
Aldi Aldi is a German discount store and supermarket that also became popular in Belgium. Aldi is seen as an affordable choice supermarket therefore Dendermonde can use it’s own Brand for this supermarket. Aldi is sure to be well known by Belgian consumers due to its high revenue of € 58 Billion. A German market research states that 95% of blue-collar workers, 88% of white-collar workers, 84% of public servants, and 80% of self-employed people shop at Aldi. This type of target group suites Dendermonde’s target market that are made of customers looking for affordable yet valuable products. We
recommend
Dendermonde
distribute
mainly
through
supermarkets and hypermarkets mainly because by selling through those channels,Dendermonde will be more accessible for its potential consumers. We chose to channel as a private label brand to AH and Carrefourbecause the Return on Equity is 13.4% and 6.73% respectively. The benefit of selling to private label brands is the obvious high profit margins. Dendermonde will only have to produce the product and ship it to the supermarket ’s distribution center while the retailer manages the shelf spaces, marketing and branding of the products. 40
As an alternative to exclusivity, or in addition to it, Dendermonde could also operate as a wholesaler of private label brands and offer limited access to other retailer who pays Dendermonde premium acquisition costs for the right to carry Dendermonde’s brand. This not only generates more income, but it a lso spreads the exposure of Dendermonde’s brands even further. A relationship with a high volume reseller can le ad to more customers buying Dendermonde’s brands. The most important part of the supply chain strategy is the creation of accessibility, selling through supermarkets or hypermarkets will create more accessi bility for Dendermonde’s target market rather than independent retailers.
8 Implementation 8.5
Sales Forecast
We believe that the following activities that we have planned fore Dendermonde will influence sales for 2013:
New product ranges
(+3.0%)
Promotional Activities
(+2.5%)
Increased private label brand sales
(+1.5%)
New distribution channels
(+3.0%)
The two added product range, organic and low fat desserts,would affect sales tremendously due to the fact that the demands for these types of products areskyrocketing. An estimated of 3.0% increase in sales will be forecasted due to more volumes of sales. The promotional activities
will help boost sales of Dendermonde’s brand; the increase in brand awarenes s is estimated to affect 2.5% of increased sales. The current niche for affordable and healthy products are boosting sales of private label brand sales, more customers are opting for a healthier and cheaper alternative, causing an estimated rise of 1.5% of total sales due to gained purchases of private label products. The new distribution channel; Albert Heijn, Carrefour, and Aldi, are estimated to contribute a 3.0% increase in total sales due to the increases of sales volumes to be sold.With the new forecasted sales, the estimated new market share of Dendermonde in 2013 will be approximately 2.2%. The increase in market share is mostly due to competitive pricing strategies, promotions, and increased overall sales within Dendermonde.
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Dendermonde’s Sales Forecast 2013
Month
Previous
Optimistic
Average
Pessimistic
Sales
Forecast
Forecast
Forecast
June
€ 903,333.00
€ 1,056,861.55
€ 997,039.20
€ 937,216.85
July
€ 903,333.00
€ 1,056,861.55
€ 997,039.20
€ 937,216.85
August
€ 903,333.00
€ 1,056,861.55
€ 997,039.20
€ 937,216.85
September
€ 888,333.00
€ 1,039,312.18
€ 980,483.19
€ 921,654.20
October
€ 873,333.00
€ 1,021,762.81
€ 963,927.18
€ 906,091.55
November
€ 873,333.00
€ 1,021,762.81
€ 963,927.18
€ 906,091.55
December
€ 873,333.00
€ 1,021,762.81
€ 963,927.18
€ 906,091.55
January
€ 873,333.00
€ 1,021,762.81
€ 963,927.18
€ 906,091.55
February
€ 873,333.00
€ 1,021,762.81
€ 963,927.18
€ 906,091.55
March
€ 888,333.00
€ 1,039,312.18
€ 980,483.19
€ 921,654.20
April
€ 903,333.00
€ 1,056,861.55
€ 997,039.20
€ 937,216.85
May
€ 903,333.00
€ 1,056,861.55
€ 997,039.20
€ 937,216.85
€ 10,660,000
€ 12,471,751
€ 11,765,803
€ 11,059,855
Total Sales
From the table ‘ Dendermonde’s Sales Forecast’, the Optimistic, Average, and Pessimistic Forecasts were calculated based on average uses of products per year by Dendermonde’s current customers. The Optimistic Forecast was calculated using an estimated heavy usage of 53 products per year. The Average Forecast was calculated using an estimated average usage of 50 products per year. The Pessimistic Forecast was calculated using an estimated light usage of 47 products per year. We estimated the demands using the Chain Ratio Method; the data used to calculate the estimations for 2013 are shown in the table below:
The Chain ratio method is an analysis tool especially offering optimistic forecasts. The chain ratio methodbased the forecasts on market trends instead of actual orders and inquiries, which best suits the company due to Dendermonde’s lack of sufficient company data. We can conclude that the overall forecasted sales for Dendermonde would increase 10% by the end of the calendar year. The forecasted sales increase results to a 0.2% increase of market share, making it 2.2% in 2013.
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8.6
Action Plan
The action plan details activities necessary to implement all marketing strategies. In addition, the action plan includes the timing for each item, the individual responsible, and the budgetary requirements. Objective 1: Increase 10% sales by the first year. Action Plan 1: Increase Distribution Channels Action Items
1. Identify key supermarkets, hypermarkets, and convenience stores where Dendermonde’s products can be sold. 2. Make initial contact with larger supermarket chains; Albert Heijn, Carrefour, Aldi. 3. Follow up initial contacts with all potential resellers and obtain contacts for coming month.
Beginning Date June 1
Ending Date August 1
Responsible Party Marketing Manager
Cost
Remarks
€ 46,800
A marketing manager will be hired therefore the cost will be the annual salary.
August 1
October 1
Marketing Manager
€ 2,000
Travel expenses.
August 15
Ongoing
Marketing Manager and Sales Representatives
€ 15,000
€ 15,000 are budgeted for travel expenses although actual expenditures are asneeded basis and cannot be preplanned.
Responsible Party Marketing Manager
Cost
Remarks
€ 3,000
€ 3,000 are budgeted for research expenditures.
Action Plan 2: Launch new product lines Action Items
1. Analyze the external environment to identify potential opportunities and threats withholding the company that could affect the products. 2. Aware current and new customers of the new products range availabilities through promotional tools and contacts. 3. Visit retail channels of product lines to review the product’s shelf positioning.
Beginning Date June 2
Ending Date
Ongoing
June 5
September 5
Sales Representativ es
€ 10,500
€ 500 are allocated for pamphlets, brochures, and €10,000 for travel expenses.
July 1
Ongoing
Marketing Manager
€ 5,000
Travel Expenses.
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Objective 2: Increase 10% brand awareness in the first year.
Action Plan 3: Increase Brand Awareness Action Items
Beginning Date June 4
Responsible Party Marketing Manager
Cost
Remarks
July 6
€ 2,660
June 11
Marketing Manager
0
June 10
Ongoing
Sales € 1,000 Representatives
The cost of building the website. This cost is applicable per year. The company profile represented in the sites should look attractive and interesting. The budgets are allocated for logo, brand, and newsletter design.
2. Create social media networks: Facebook, YouTube, LinkedIn, and Twitter.
June 10
3. Prepare logo and brand. Send advertisements and newsletters about the company to customers through email. 4. Prepare advertising material for BioGezond Magazine.
June 15
June 25
Marketing Manager, Advertising Designer
€ 15,722
6. Review placement of Advertising.
September 1
December 1
Marketing Manager
0
7. Sampling of new product range in supermarkets.
December 1
March 1
Sales € 16,900 Representatives
1. Development of company website
Ending Date
€ 1,000 are allocated for the advertisement design and €14,722 for the actual advertising cost. Placement of the advertising will be inspected thoroughly. Sales representatives will visit different supermarkets to sample its products within 3 months.
Objective 3: Construct a fully operational marketing and sales team. Action Plan 4: Fully Operational Marketing Department Action Items
Beginning Date
Ending Date
Responsible Party
Cost
Remarks
1. Marketing staff briefing; allocation of new marketing manager. 2. Cross-training between employees.
June 1
June 1
CEO, Marketing Manager, Sales Representatives
0
June 2
Ongoing
Marketing Manager, Sales Representatives
0
3. Employee event; product launch celebration.
September 5
September 5
All Staff
€ 1,000
A proper employee introduction is crucial in building cooperation. Cross training are to be conducted weekly to ensure useful knowledge is shared between the staffs. Rewarding employees to improve motivation during work.
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8.7
Budget
Marketing Budget Plan 1) 2) 3)
4)
€ 3,000 € 1,000
Research Employee Events Advertising: - Website - Logo - Magazines - Sampling - Brochures Travel
€ 2,660 € 1,000 € 15,722 € 16,900 € 500 € 32,000
Total
€ 72,782.00
9 Measurement and Control Strategies Dendermonde’s marketing strategies are required to be monitored, evaluated, and adapted to meet the changing market environment, needs, and opportunities. Marketing control ensures performance improvement by minimizing the gap between desired results and actual results. If the actual results of the plan are found deviated from the expected results, plans and strategies can be adapted to bring the results back to the desired level. In order to perform marketing control, a variety of activities will ensure effective measurements of the success of the marketing plan and allow the firm to make adjustments as necessary. This includes market research and trend analysis that will be conducted. The marketing manager will be responsible for these duties.
9.5 Research
Dendermonde needs to conduct a continuous market research to understand brand awareness and brand attitudes among their target groups. Dendermonde will therefore commission exploratory research and descriptive benchmark studies of its target consumer and reseller markets in a monthly basis. 9.6
Trend Analysis
Dendermonde will do a monthly trend analysis to examine sales by reseller type, geographic area, chain, agent, and distributor. These analyses will allow Dendermonde to take corrective action when necessary.
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