For Healthy School Lunch!

A REPORT ON MARKET SEGMENTATION,

TARGETING AND POSITIONING

FOR HEALTHY SCHOOL LUNCH!

Prepared for: Healthy School Lunch!

Submitted: 03 May 2010

Prepared by:

CSU STUDENT 11355339

1

Executive Summary

Single line spaced

the purpose (objectives) and scope of the report

the type of analysis conducted (and methods used)

the most important and significant findings, in summary form

the most important and significant recommendations

450-550 words

1

Table of Contents

1

Executive Summary...... i

Introduction...... 1

1.1 Authorisation...... 1

1.2 Limitations of pussy...... 1

1.3 Scope of the Report...... 1

Target Marketing...... 2

2.1 Target Marketing Defined...... 2

2.2 Mass, One-To-One and Target Marketing...... 3

2.2.1 mass marketing...... 3

2.2.2 one-to-one marketing...... 3

2.3 Market Segmentation...... 4

2.3.1 geographic segmentation...... 5

2.3.2 demographic segmentation...... 5

2.3.3 psycho graphic segmentation...... 6

2.3.4 behavioural segmentation...... 6

2.4 Market Segments...... 7

2.4.1 look at me...... 7

2.4.2 conventional family...... 8

Market Targeting...... 9

3.1 Market Targeting Defined...... 9

3.1.1 undifferentiated strategy...... 9

3.1.2 concentrated strategy...... 9

3.1.3 differentiated strategy...... 10

3.2 Potential Segments...... 10

3.2.1 Sales Potential...... 10

3.2.2 Competitive Situation...... 11

3.2.3 Cost Structure...... 11

3.3 Target Market Selection...... 12

Positioning...... 14

4.1 Positioning Defined...... 14

4.2 Segment Positioning...... 14

4.2.1 market position...... 14

4.2.2 company position...... 15

4.2.3 brand position...... 15

4.2.4 competitive position...... 15

4.3 Marketing Mix...... 16

4.3.1 product...... 16

4.3.2 pricing...... 16

4.3.3 promotion...... 16

4.3.4 place...... 16

4.3.5 processes...... 17

4.3.6 physical evidence...... 17

4.3.7 people...... 17

Conclusions...... 18

List Of References...... 19

Figures...... 21

1

Introduction

1.1 Authorisation

Healthy School Lunch! (HSL) are an online company, delivering healthy school lunches to busy families in need of quick, easy and tasty lunches as an alternative to unhealthy options at the canteen. This report is commissioned to evaluate the marketing potential in HSL and create a successful marketing mix.

1.2 Limitations

As HSL is a fictional company, there is no specific sales data nor are there specific products to analyse. Some products have been assumed and this may affect the outcome.

1.3 Scope of the Report

This report covers the entire marketing process to result in a successful marketing mix. Target marketing is defined as a useful tool for HSL, along with mass, and one-to-one marketing techniques. Facts are supported by real world examples of companies putting presented methods to use, and research by reputable sources on the subject matter.

where the information in the report comes from and how it will be gathered

don't reproduce the TOC, make overview or summary of what will be done

not bit by bit reproduction, focus on the important elements

Target Marketing

2.1 Target Marketing Defined

The process of developing a marketing strategy involves target marketing. This method has three key area's and usually seven steps (Pride et al., 2008):

• Market Segmentation

◦Identifying segmentation variables

◦Developing market segment profiles

• Market Targeting

◦Identifying an appropriate targeting strategy

◦Evaluating relevant market segments

◦Selecting specific target markets

• Market Positioning

◦Determining the positioning of each target segment

◦Developing a marketing mix for each target segment

Recently, companies were 'planning more targeted [advertising] buys for late 2009' (Wicks, 2009). Target marketing is a crucial process for HSL, as having a tailored marketing mix will produce a more profitable and efficient result from the capitol invested (Pride et al,. 2008). A recent study reveals that 'more than one in five organisations spend more than 45% of their entire marketing budgets on “target marketing.”' (“More of Budget To Target-Marketing,” 2005), with the most funds going towards 'aquiring new customers' (see fig. 1).

2.2 Mass, One-To-One and Target Marketing

There are two methods to consider when approaching target marketing for HSL. Mass marketing, or one-to-one marketing with market segmentation in consideration. If carefully implemented these can both be used to compliment each other.

2.2.1 mass marketing.

2.2.1 mass marketing. Weinstein (2004), recommends mass marketing 'if the objective is the get the product into as many [customers] hands as possible'. It is an approach that is traditionally synergistic in the message across all mediums.

As HSL is a relatively new company, mass marketing on a local scale can greatly improve the customer awareness of HSL, and also help define a target market by observing who responds to it.

James Cameron's 'Avatar' is a recent success story using mass marketing, to promote with no previous franchise or customer install base. It managed to become a box office phenomenon through Twitter, McDonald's, and Coca-Cola cross promotions (Hampp, 2010).

There are recent worries about the effectiveness of mass marketing though, with fears that consumers have been desensitised from years of television, radio, print, and online mass advertising (Bayham, 2008).

2.2.2 one-to-one marketing.

2.2.2 one-to-one marketing. One-to-one marketing is characterised by tailored communication about a good or service, by using detailed data, personalised communications and customised products. It is about matching a customers needs to company offerings (“One-To-One Marketing”, 2007). If this occurs, a sale is made, and there is potential for long term relationships between customers (Weinstein, 2004).

According to a recent study, '43% of [companies] have a regular or constant program to support personalisation and one-to-one marketing' (“More of Budget To Target-Marketing,” 2005). There is big motivation for HSL to use this, according to Bayham (2008), there are six reasons one-to-one marketing trumps mass marketing, by:

• Gaining the buyers attention by overcoming 'market noise'
• Tailoring product benfits to specific needs of the buyer
• Tailoring presentation to a specific buyer type
• Allowing the seller to read non-verbal communication from the buyer
• Providing instant answers to customer questions
• Closing the deal instead of waiting for the buyer to make the move

2.3 Market Segmentation

Market segmentation is the process of dividing the total market into segments, consisting of organisations or people who share similar interests and needs. Different categories are used to segment groups, called market variables. With this, marketers can more precisely design a marketing mix to meet the needs of customers in the selected market segment (Pride et al., 2008).

Segmentation is important for HSL's marketing success as 'choosing the right user segments, and designing unique positioning strategies, can carve a profitable niche in today's highly competitive marketplace' (Weinstein, 2004). There is no best way to segment markets as different products require different segmentation.

According to Pride (2008), there are four major categories for segmentation: geographic, demographic, psycho graphic, and behavioural.

2.3.1 geographic segmentation.

2.3.1 geographic segmentation. Companies use geographic segmentation to target products to a specific region, segmenting their market into countries and states, or regions of geographic interest (Pride et al., 2008). The geographic segmentation approach is normally used by retailers, as retailers usually operate within a specific geographic region surrounding the store (Clow & Baack, 2004).

Because HSL is a smaller business it should use this smaller area to cluster segments out of smaller regions of interests like postcodes or towns into categories such as housing type, suburb, schools and others (Pride et al, 2008).

2.3.2 demographic segmentation.

2.3.2 demographic segmentation. This approach is used by companies to segment or identify customers by demographic groups, such as location, ethnicity, religion, social class, age, sex, occupation and education (Songini, 2001). This type of segmentation is the most important for HSL as it is closely linked to buyers needs and purchasing behaviour, and can be easily measured (Pride et al., 2008). As recently as the mid-1990's companies would ship collected data to third party companies for analysis and segmentation, now, with the popularity of the internet and computing power, companies keep this data in house. Customer data from HSL's website can be merged and analysed with HSL's sales figures and queries can be run cheaply on a desktop (Songini, 2001).

2.3.3 psycho graphic segmentation.

2.3.3 psychographic segmentation. Grouping customers into personality, motives, lifestyle and resources, is a form of psychographic segmentation (Della, Dejoy & Lance, 2008). Marketers use psychographic segments to help work toward the goal of matching what the company does best to the most likely customer (Clow & Baak, 2005). Psychographic segmentation involving personality characteristics is good for HSL and any other business that has a product that is similar to their competition. It is hard to measure these personality traits easily and companies tend to guess what personality their target market is or wants to be – usually a positive personality (Pride et al. 2008). This can be eased with various visual methods of classifying customer profiles such the Roy Morgan Value Segment (Pride et al., 2008), or as Barry & Weinstein have shown in a table (see fig. 2). Buyer motives are assumed to be influenced by their personal and cultural needs (Barry & Weinstein, 2009), in HSL's case, health conscious buyers would be segmented into motives for a healthier lifestyle.

2.3.4 behavioural segmentation

2.3.4 behavioural segmentation. Products can have different degree's of usage for different customers (Pride et al., 2008). Behavioural segmentations in the marketplace today can be likened to videogames, which usually have three segments (Wedbush, 2009):

▪hardcore gamers (usually play a lot – heavy users)

▪casual gamers (play every so often – light users)

▪non gamers (do not play or have an interest – non users)

For HSL, these different product usage terms can be used to segment customers of the healthy lunches. This will allow decisions to be made about the needs of the product packaging or the shelf life of the food, depending on which product is used more often than others. Benefit segmentation also comes into use within behavioural segmentation. This involves the benefit a customer can get from a product (Pride et al., 2008). HSL may use different benefits of healthy foods to leverage whether something is good for a student sitting an exam, as it may have vitamins for alertness, just like juice bars have various 'shots' for differing affects.

2.4 Market Segments

Using a psychographic analysis based on the Roy Morgan Value Segments model (see fig. 3) is a good way to segment the market for an Australian business, as this model is supported by 15 years of research in choice and change in the Australian market. The model is divided into four human social dimensions and two other dimensions, price expectation and quality expectation, that ground the values into marketplace reality (Levine & Benjamin, n.d.). Two psychographic segments that are best to profile for HSL are the 'Look at me' segment as the 'student consumers', and the 'Conventional Family' segment as the 'parents with the money'.

2.4.1 look at me.

2.4.1 look at me. This segment are easily influenced by peer pressure, so they conform to their peer group while at the same time try to not conform to their parents generation. They are called 'look at me' for a reason, mostly applying to teenagers, sport, leisure and fun are their main priorities (but this can apply to any age). Short term thinking is a characteristic of this segment, not caring about consequences such as future health issues, or getting a job. Money is important, but only seen as a means to an end, as family support them, certainly earning it to live is not a priority. The 'Look At Me' segment are attracted to media that reflect their peer group and generation, this is a key point when creating advertising (Levine & Benjamin, n.d.).

2.4.2 conventional family.

2.4.2 conventional family. Representing the middle class of Australia, this psychographic segment is focused on families who are struggling to improve their basic living standards and are giving their children better opportunities than they had in their childhood (Levine & Benjamin, n.d.). These will be the families of children in the schools that HSL cater for. This is usually the segment that provides the money to the children.

This segment often have to make compromises in quality due to price, often owning a mixture of branded, and generic products. The values of conventional families fall within the average of the Australian middle class, and the readership of newspapers and lifestyle magazines is high, which should be taken into account for the medium of HSL's advertising. The Conventional family segment like to know what they are buying, so mistakes cannot be made, and money wasted (Levine & Benjamin, n.d.). Because of this, trust in HSL is important to the conventional family segment, and this fact should be considered when advertising to this segment.

Market Targeting

3.1 Market Targeting Defined

Market targeting uses various methods, undifferentiated, concentrated and differentiated strategies for creating a marketing mix for the chosen segments. These different strategies are necessary as the needs of the segments vary (Pride et al., 2008). The characteristics of chosen segments can be taken into account and give the company a better idea of segment needs when producing a marketing mix (“Market Targeting”, 2007).

3.1.1 undifferentiated strategy.

3.1.1 undifferentiated strategy. If a company has one type of product, one price and one distribution program it could use an undifferentiated strategy, such as electricity or water (Pride et al., 2008). This strategy assumes that all customers in the market have similar needs and wants, therefore they would be satisfied with a single marketing mix (Proctor, 2000). This cannot be used for HSL as all the products are different with different prices, and the nutritional needs and wants are different per customer.

3.1.2 concentrated strategy.

3.1.2 concentrated strategy. This is put to use in a heterogeneous market, a market with diverse product needs and wants (Pride et al., 2008). HSL has a heterogeneous market, with various nutritional needs, different food trends within schools and different socio economic statuses and values. A company will segment the market and concentrate a marketing mix onto just one segment of a heterogeneous market if it employs a concentrated strategy. This can make a company more specialised, which will give it more selling potential for the chosen market segment(Pride et al., 2008). Tourism New Zealand has had a very successful '100% Pure' marketing campaign using concentrated marketing (Heeringa & Cropp, 2009). Putting all the resources into one market though can be dangerous, as it can solidify a company into one segment, which will make it hard to break into others (Pride, et al. 2008).

3.1.3 differentiated strategy.

3.1.3 differentiated strategy. This strategy still applies to a heterogeneous market but a key difference is the use of different marketing mix's to cater for a few select segments. This strategy is more expensive because it 'often demands more production processes, materials and people' (Pride et al. 2008, p. 129). HSL may be capable of two marketing mix's if it has the resources and product variety to accomplish this. Because HSL is in a unique situation, with the parents as customers paying for the product and the children consuming it, the product doesn't necessarily have to be different, but the advertising to the customer and consumer will need to be.

3.2 Potential Segments

Further analysis on the potential market segments is needed to better select the appropriate market segments (Pride et al. 2008).

3.2.1 Sales Potential

3.2.1 Sales Potential. A Quantified Purchasing Capacity (QPC) can be used to determine a monetary value after asking the question, “If this [customer] bought everything they could from me in the next 12 months, how much would it be?” (Kahle, 2007). Having a QPC is information to prioritise the highest value customers. A QPC cannot apply just to all of the 'look at me' segment for HSL, as any student for year 9 and below we can assume does not have a job, or a high paying one, as the legal age for work ranges between 14 to 16 years (“NSW Government”, 2008). Therefore most of this segment will be using their parents for food purchases and a QPC should include the 'conventional family' segment. This segment according to the Roy Morgan Research (Levine & Benjamin, n.d.) is comprised of middle income families. According to the Australian Bureau of Statistics (2008) the average middle class Australian mean gross income per week is $1035, and the mean weekly expenditure on food is 17.5%. This equates to $181.13 per week on food. The average number of persons in the household is 2.8, so every customer in the conventional family segment should have an average of $64.69 to spend on food per week. A student goes to school 5 days a week, so the QPC on HSL food is an average of $12.94 per day. Therefore HSL food should be priced accordingly with this sales potential in mind.

3.2.2 Competitive Situation

3.2.2 Competitive Situation The immediate competition for HSL products in the 'look at me' segment will be the food products that are sold along side HSL's products in the school canteen. Another competitive factor will be the mothers themselves within the conventional family segment, packing ready made, unhealthy snacks into the children's lunch boxes, which open up an array of companies that can be competition. What sets HSL apart from others is the 'healthy' status of the food, something that can't have a long shelf life on the supermarket though. A successful marketing mix can be created to combat the competition, but it will need to happen in the canteen as well as in the homes, as the competition comes from both sides.

3.2.3 Cost Structure

3.2.3 Cost Structure Thankfully, only a few types of packaging need to be created to supply to both segments. Because the food is healthy and fresh, the packaging can be clear and simple, to show the product within. Cheap (but stylish), custom branded, disposable sandwich and baguette containers can be purchased from whole sale food packaging retailers such as 'The Packaging Place' (n.d.), which sell 500 for $137.84. Promotion and advertising within school newspapers is usually FREE, which will give the message to the parents quite efficiently. Advertising in local newspapers for the area's of the schools can cost around $50 to $200, depending on the size and placement, a colour advert in 'The Land' (n.d.) would cost $104.06. One of the best and most cost effective ways to target specific people in this modern society are geo-targeted online adverts (“Ikea unveils local geo-targeted ads.”, 2006). A good start is to use Facebook ads, HSL can target only the 'look at me's' on Facebook attending selected schools, and the pricing for adverts are only 1 cent per click up to a designated budget (Facebook, n.d.). If 500 food packages last for a fortnight, a reasonable yearly budge for packaging would be $3588 per school. A reasonable yearly advertising budget for HSL for both segments would be $2800 per school including newspaper and social networking adverts.