Analysing the seasonal Segment for The Amazing Chocolate Works
Strategic Marketing Planning
Seminar tutor: John Woods
Student Number: 2431203
Word count: 3,411
Katy Johnson
Contents
1.0 IntroductionPage 3
1.1 ObjectivesPage 3
1.2 SegmentPage 4
2.1 Chocoholics (B2C) Page 4
2.2 Seasonal Stockists (B2C) Page 5
2.3 Loyal shoppers (B2C)Page 5
2.4 Restaurant chains (B2B) Page 5
2.5 Government associations (B2B) Page 5
2.6 Organic/ free trade conscious (B2B) Page 5
2.7 Seasonal stockists (B2B) Page 6
1.3Marketing ModelPage 6
1.4 RecommendationsPage 9
1.5ConclusionPage 10
1.6 ReferencesPage 10
1.7 AppendixPage 12
1. Introduction
“Marketing strategy – the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships.” (Kotler, 2016) “Guided by the marketing strategy, the company designs an integrated marketing mix made up of factors under its control – product, price, place and promotion (the four P’s).”(Kotler, 2016) “To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation and control.” (Kotler, 2016)
The Amazing Chocolate Works is a small to medium business that specialises in the wholesale of chocolate, nationally. They provide a variety of frozen chocolate products to the catering market.
Previously, analysed was The Amazing Chocolate Works within a presentation. Conducted was a situation analysis regarding wholesalers, competition, about the catering market and who the customers would be. Also, developed is a trends analysis becoming aware of the needs the customers want for the products. Created a PESTEL analysis taking into account fair trade, BREXIT, NHS, GDP rates and investigated the global sugar supply. The presentation represented a SWOT analysis looking at The Amazing Chocolate Works strengths, weaknesses, opportunities and threats. Critically analysed the market map for competition by product range and quality. The key section covered is the segmentation on a B2B and B2C level. The B2C segmentation has resulted in Chocoholics, seasonal stockist and loyal shoppers. The B2B segmentation has resulted in restaurant chains, Government associations, organic/ free trade conscious and seasonal stockists.
Therefore, within this industry B2B level is dominant. From the B2B segments the seasonal stockist’s have been chosen to target. This report will entail recommendations for thissegment including creating a targeting and positioning strategy backed up with theory using the model Relationship Marketing. Finally, based on the analysis, marketing objectives will be made and a set of strategic marketing recommendations.
1.2 Objectives
The first SMART objective is to specialise within a specific segment, The Amazing Chocolate Works offer a wide range of products although do not take into account CCF’s which will result in a decrease in revenue. The aim is to increase revenue by 5% within 3 years.
The second SMART objective is to use the relationship marketing strategy to focus on value of the products and the relationship of the customer. Rather than being margin driven which The Amazing Chocolate Works are currently.
The third SMART objective is to increase 5% market share within 3 years
The final SMART objective is use the relationship marketing strategy to provide quality communication with reoccurring customers. Although currently The Amazing Chocolate Works contact all existing customers twice a week; this can become pestering.
1.3 Segment
Piercy’s perspective of targeting is “Market Targeting – selection of the market target for the new-product range from offering a new-product to an existing target, to identifying an entirely new group of potential users.” (Cravens Piercy, 2006) Whereas Bradley’s perception is this “In selecting a target market the organisation uses the broad criterion of market attractiveness compared to the organisations capabilities relative to the competition.” (Bradley, 2003) In my opinion, it is vital for a business to create segments within their market who they wish to target. Select one or a few vital segments making it easier for the company to meet customer satisfaction giving them a competitive advantage through identifying CCF’s.
The Amazing Chocolate Works is lacking in a company strategy. Their market is very well segmented although they do not apply a strategy to meet their customer satisfactions within these segments. They are not specialised in one category. Further in this section will be discussed how The Amazing Chocolate works could adapt their method to help support the relationship they have with their customers. By looking back at the previous research The Amazing Chocolate Works was identified as high quality and wide product range. Although this is a positive in some aspects it may allow them to be too many segments if their product range is not tailored to target a specific category. The Amazing Chocolate work wants to remain or increase their position within the market so they should think about this technique.
There is two ways a market could be segmented including “Consumer buying ‘B2C’ – purchases made for private use (individual or household consumption)” (Philip Kotler, 2012) or “Organisational buying ‘B2B’–purchases made on behalf of businesses & organisations” (Philip Kotler, 2012)
The Amazing Chocolate Works market has been segmented into two categories B2B and B2C. Within the B2C section there are three segments which include chocoholics, seasonal stockists and loyal shoppers. Within the B2B section there are four segments including restaurant chains, government associates (schools, military, offices etc) Organic/ free trade conscious and seasonal stockists.
2.1 Chocoholics (B2C)
Identified as compulsive buyers, parents, teenagers, regular buyer and lower class background. Their profile would be ACORN – K34, student life or ACORN – M41 (CACI, 2013), striving families. They would be married, parents buy for children 30+ or teenagers 14 – 25. Their customer choice factors (CCF’s) include taste, availability, word of mouth, regular buyer, affordable, bright packaging and deals.
2.2 Seasonal Stockists (B2C)
Characteristics were identified as occasional buyers, seasons, gifts, weddings and parents. Their profile would be ACORN – comfortable communities, G24 (CACI, 2013), middle aged parents, married and professional. Their CCF’s are identified as extras e.g. gift wrap, personalisation, convenience, taste, value, occasional buyers and diets.
2.3 Loyal shoppers (B2C)
Their characteristics was identified as stick to the brand, nowhere else, regular buyer and affordable. Their profile would be ACORN – career climbers (CACI, 2013), E18 career driven young families, any, older, higher income, married and professional. Their CCF’s are identified as reliability, taste, past purchases, regular buyer, affordable and bright packaging.
2.4 Restaurant chains (B2B)
Their underlying need are cheap, need to make a profit but with high quality. Their direct competition are the fine confectionary company, town and country fine foods. Their indirect competition is Reynolds – fruit suppliers and pastryisart – pastries. Their characteristics include profit driven, regular deliveries to multiple chains and having to stick to menu specifications. Their profile are medium scale restaurants and pubs such as chains and Weatherspoon’s or Frankie and Bennies. Their CCF’s are taste quality, large quantity and reliable deliveries.
2.5 Government associations (B2B)
Their underlying need are large quantity, regular deliveries, lower quality, low price and nutrition conscious. Their direct competition are HB ingredients and Whitakers. Their indirect competition is Chefspantry. Their characteristics are large scale, none or low profit and nutrition guidelines for schools/ military. Their profile are large scale organisations and standardised meals. The CCF’s include low price but large quantity and nutritional value.
2.6 Organic/ free trade conscious (B2B)
Their underlying need are special requirements, free trade, organic, ethical and possibly dairy free. Their direct competition is Plamil and The Green Market. Their indirect competition is Lakeland – hand-made own chocolate and Suma. Their characteristics are smaller scale restaurants, cafés and customers are very ethic conscious. Their profile includes small restaurants/ cafés, fairs, shows and conventions. Their CCF’s are organic/free trade, quality and dairy free/vegan options.
2.7 Seasonal stockists (B2B)
Their underlying need are a large variety to go along with seasonal trends. Their direct competition includes Lindt – Brownies/ Reindeers and Chocolato. Their indirect competition is party pieces – toys for gift bags. Their characteristics are visitor attractions – Santa’s grotto, Easer egg hunts etc. Their profile includes only need to order a handful of times throughout the year. Their CCF’s are variety, gift wrapping/packaging and size.
“The marketing concept holds that achieving organisational goals depends on determining the need and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.” (Nicolaud, B., Hooley, G.J., & Piercy, N, 2012).
“The process of target marketing…is the manipulation of the marketing mix such that a distinctive product is made available for each chosen market segment. It involves formulating market coverage policies that determine the segments of the market that present the best opportunities.” (Michael Armstrong, 2006)
The market is B2B dominant and through analysing the CCF’s, the seasonal stockist segment it will be the most worthwhile due to that it can fit into both B2B and B2C segments. This segment will be targeted at certain times of the year where The Amazing Chocolate Works will make the most revenue. Having analysed the CCF’s it allows a better understanding of what the consumers wants and needs are for seasonal time periods. Such as the Christmas time period, customers are more willing to spend more on loved ones at this time of year.
The Amazing Chocolate works should cater their products for seasons targeting the seasonal stockists. This could include seasonal adverts e.g. Christmas as a reminder of the brand. When presenting their products, they could offer a wrapping option where the staff would wrap the product for the customer ready to give to the consumer. The products should also be seasonal for example with their chocolates they could do them in Christmas shapes like Reindeers or Santa’s. If the product itself is eye-catching and appetising the customer will be more likely to buy it. These strategies can gain competitor advantage making them remain in their position within the market.
1.3 Marketing Model
“Four quadrants of Ansoff’s matrix (Ansoff, 1965): market penetration, market development, product development and diversification. In the analysis, we used this framework to categorise growth strategies and then attempted to relate them to other variables such as growth history and expectations.” (Watts G, Cope J Hulme M, 1998) Refer to Appendix 1.1 for visual version of Ansoff Matrix. The Amazing Chocolate Works should implement market penetration to meet their SMART objective of gaining 5% market share within 3 years. Market penetration is achieved by initiatives within the marketing mix designed to take share from competition and develop new customers and uses(Watts G, Cope J Hulme M, 1998).
“Relationship marketing is the practice of building long-term satisfying relations with key parties – customers, suppliers, distributors – in order to retain their long-term preference and business.” (Philip Kotler, 1997)
“The recent proliferation of research in relationship marketing has focused on business-to-business (BTB) relationships but conspicuously neglected consumer relationships. “(Gruen, T.W, 2000)
“Establishing contact with a potential customer and achieving the first scale often costs so much that the return on the deal is marginal or even negative. Only when the relationship is continuing and leads to more business does the customer become more profitable.” (Woods, 2016).The ultimate goal for The Amazing Chocolate Works is to use create long term satisfying relationships with customers. Therefore, there will be a boost in long term profit. If the company create multiple long term customer relationships this will create a better position within the market for the Amazing Chocolate Works, this is why the most valuable strategy is relationship marketing.
“Marketing is to establish, develop and commercialise long-term customer relationships so that the objectives of the parties involved are met. This is done by mutual exchange and the keeping of promises.” (Woods, 2016)The features of relationship marketing are to focus on customer retention. The Amazing Chocolate Works must provide quality as the concern of all and quality customer service. There should be a high level of commitment and customer contact. It is much easier to gain contact with a company directly now as the majority will provide services; help line for any issues amongst customer purchases, providing improved information exchange. It is important that through The Amazing Chocolate Works supply a quality of service that is run through the whole chain so every customer meets their customer expectations.
The concepts of relationship marketing originated in B2B markets in considering ways of improving the effectiveness and efficiencies of the supply chain (Woods, 2016).Refer to appendix 1.2, for an illustration on the relationships supply chain, the B2B segments; restaurant chains, government associations, organic/free trade conscious and seasonal stockists there would be a relationship within the supply chain. The diagram shows that suppliers’ supplierswould sell to supplier who then supply to The Amazing Chocolate works. Thus, selling to customers (seasonal stockists)who would provide the product to the consumer. Referring to Appendix 1.4 (Woods, 2016) This illustrates building stronger partnerships through multiple linkages between the supplier and customer. It represents the traditional relationship and relational relationship. The importance of this diagram is that The Amazing Chocolate Works should be targeting to be the relational partnerships. Improves on work on just in time delivery, good communication and profitable relationships.
If the Amazing Chocolate Works builds strong relationships it will provide competitive advantage to both parties and should be a relationship orientated culture. The key for The Amazing Chocolate Works is how much effort they put into each customer. They should give more support and effort into existing customers. This is due to them currently gaining a profit which may go long term. Although, it is still important for the company to have a strategy for new customers. “It takes, on average, 5 times as much time, money and effort to gain a new customer as it does to retain an existing one.” (Woods, 2016) This supports my theory of focusing on existing customer and providing more effort, investment and time. The 5 key aspects to allow this to be provided are technical support, expertise, resource support, service level and risk reduction;taking into account the demand when thinking of service. Communicating directly to the customers is through social media; Twitter, Facebook etc. People will openly post their thoughts of The Amazing Chocolate Works. This will help allow the company to the view CCF’s for the segments they are targeting.
The value of long-time customers is that they are less price-sensitive. Also, will be less likely to be seduced by short-term competitive offers due to them being brand driven. More likely to purchase additional products and services. They are accepting and accommodating of errors. Looking at long-term these customers will be more profitable over their life span. This is why The Amazing Chocolate Works should focus on long term customers such as seasonal stockists due to them being reoccurring customers on a seasonal basis and more willing to spend larger quantity on products. “Not all customers are of equal value to an organisation and companies often find that between 20% and 40% of their customers are not profitable. The first step, then, is to identify the key customers meriting relationship management.” (Orwell, 1945).Referring to appendix 1.4 (Reichheld, 1996) This illustrates why loyal customers are more profitable and backs up how The Amazing Chocolate Works can effectively use data on reoccurring customers to show their long term effective, profits they provide to the business.
It’s very simple for companies to gain competitive advantage within their industry through effective use of data. Quite often it seems some businesses tend to collect lots of data e.g. quantity of revenue through tills and not actually use the data efficiently. This data can offer specific customer spends and the times of purchase. Allowing the company to know when products are trending. An effective way The Amazing Chocolate Works can uses this data is to offer products which may be of interests to specific customers or discounts. This will be based on customers’ past purchases.
Referring to appendix 1.5 This illustrates customer retention, which is a theory by Jobber and Ellis (2013) it incorporates tactics to keep loyal customers to boost profits. It uses 6 key tactics; bonding, internal marketing, building trust, service recovery, promise fulfilment and targeting customers for retention. These factors will help The Amazing Chocolate Works to retain their loyal shoppers. They will need to build a bonding relationship with the customer to meet their expectations and customer satisfaction. The internal marketing represents the process to correct a fault the customer has. The Amazing Chocolate Works can do this by providing a help line service where they can deal with any issues and keep customer satisfaction high. The building trust factor comes from the company it tends to be perspective the public have on it. If customers hear good reviews about the company they will be more willing to spend at this company which will incorporate trust, a good example of this would be a bank. A bank would need to great deal of trust from its customers and they will be represented by word of mouth. A company will need to be reliable when providing specific services or products to their clients. The service recovery and promise fulfilment implement each other, companies will be need to provide a promise through the brand and provide a service that will meet the customer expectations.Therefore, if a company does not fulfil a customer’s satisfaction they will need to provide a clear way of correcting it that the customer will approve of, this is the service recovery factor. The final factor is targeting customers for retention this means they should create segments to target so it makes it easier for the company to fulfil the customer’s needs and wants.