As per the present global market trends it is very clear that there is a high interest growth in the direction of organic food and natural beverages.

To: Board of Directors

From: Market Analyst

Subject: Marketing Plan – Kist Absolute Juice

Date:

Student ID:

Course ID:

MARKETING PLAN

KIST ABSOLUTE JUICE

Table of Contents

1.0 Executive Summary 3

2.0 Introduction 5

3.0 Current Position of the Brand 6

3.1 Competition 7

3.2 Consumer Behavior 8

4.0 Situational Analysis 10

4.1 Macro Economic Factors 10

4.2 Micro Environmental Analysis 13

4.3 SWOT Analysis 14

5.0 Marketing Objectives 15

6.0 Strategy Development and Justification 16

6.1 Growth Strategy 16

6.2 Competitive Advantage 17

6.3 Segmentation 18

6.4 Targeting 19

6.5 Positioning 19

7.0 Marketing Mix 20

7.1 Product 20

7.2 Price 22

7.3 Place 22

7.4 Promotions 23

8.0 Marketing Budget 25

9.0 Execution Plan 26

10.0 Forecasted Statements 27

10.1 Volume and Value Forecast 27

10.2 Profit and Loss Account 27

10.3 Statement of Financial Performance 28

10.4 Cash Flow Statement 29

11.0 Monitoring and Control 30

12.0 Conclusion 32

ANNEXURE 01 – Company Back Ground 33

References 36

List of Figures

Figure 1: Brand Positioning 6

Figure 2: Beverage Categories 7

Figure 3: Consumer Decision Making Process 8

Figure 4: Global Organic food growth 9

Figure 5: Ansoff’s Growth Matrix 17

Figure 6: Porter’s Generic Strategy model 18

Figure 7: Brand Positioning 20

Figure 8: Retail Segment Performance 34

Figure 9: FMCG Segment Performance 34

Figure 10: Restaurant Segment Performance 34

Figure 11: Organizational Structure 35

1.0 Executive Summary

Cargills PLC is a well-established company in Sri Lanka. The company commenced its operation in 1844 as a general warehouse. It has currently grown into a large player in the Sri Lankan FMCG industry and the retail industry.

As per the present global market trends it is very clear that there is a high interest growth in the direction of organic food and natural beverages. This can also be seen in Sri Lanka, looking at the booming number of organic and fresh fruit and vegetable item availability in the supermarkets. Sri Lanka been a tropical country, the people in it always had the opportunity to consume fresh fruit and vegetable juices. Hence there was not a large market for the fresh juices which came in tetra packs. But with the changes taking place in life style the demand for tetra packs has been increasing. Identifying this market trend Cargills PLC introduced “Kist Absolute Just Juice” range in 2012. After being in the market for five years the company has realized the need for make the changes in the marketing strategies and to capture the market, as the beverage industry is getting highly competitive.

Through implementing this marketing plan the company expects to achieve the following objectives,

1. To increase the total revenue created from the brand by another 75% in the next two years.
2. To increase the market share of the fruit juice market to 15% within the next two years.
3. Expand the distribution channels by 25% within the next two years.
4. Increase brand awareness by 50%-75% within the next two years.
5. Increase the production capacity by 25% within the next two years by introducing new machinery and technology.

A PESTEL analysis, Porter’s five force analysis is been carried out in order to identify the current market position of the organization. Through the analysis a SWOT is been conducted to identify the potential growth areas for the business.

The plan will highlight on the importance of following the market penetration strategy as it is important for the brand to build up a strong base before further expansion. The marketing plan further discusses how the brand can create competitive advantage using Porter’s Generic Strategies. In order to benefit from the strategy it has been discussed how segmentation, Targeting and positioning need to be improved.

The marketing mix is used to highlight how the product, price, place and promotions need to be handled to enhance the impact of the strategy. In addition to this the estimated financial reports have been attached in order to provide a clear picture of the impact that the strategy will create on the finance of the organization.

Further the monitoring and controlling discusses how the implementation needs to be controlled in order to ensure there is no deviation from the plan. Hence the marketing plan provides a clear path for Cargills PLC, to enhance the performance of Kist Absolute brand.

2.0 Introduction

Sri Lanka being a tropical country is blessed with various types of fruits that have a lot of health benefits. According to research conducted by Grand View Research Inc., the global vegetable and fruit juice market is expected to reach the value of US$ 257.17bn by the year 2025. This is a significant growth in the consumption. In addition it was identified that during the period of 2009-2016, the fruit juice market has grown at a CAGR of 1.6%.

The consumers are becoming more health conscious and it has been noticed that the market share of all other soft drinks other than the natural/ health benefited drinks is declining. This increasing trend in consuming healthy food and drinks is widely reflected in the number of researches conducted relating the matter (Voorpostel et al., 2014).

As per the research conducted by Aaker (2007), it was realized that while there is only a 2% average growth in the soft drink market the fresh juice market is globally increasing at an average value of 9%. Being in a line with this global trend, the food and beverage industry in Sri Lanka has been witnessing a significant increase in the healthy and natural food and drinks.

Understanding this trend Cargills PLC introduced Healthfest in 2012 with the support of the Sri Lankan Health Ministry and in parallel to this programme the company launched the Kist Absolute Juice Range. The range was introduced in 2013 and the brand has been growing since. While celebrating five years since the brand has been introduced to the market the company will be focusing on more market opportunities in order to grow the brand locally.

This marketing plan will discuss the market opportunities available and how the company should respond to the market needs in growing the brand.

3.0 Current Position of the Brand

Kist Absolut Juice is still in the growth stage of the product life cycle. The following perception map highlights how the brand itself is being positioned in the current market in Sri Lanka.

Figure 1: Brand Positioning

The brand is currently competing in the beverage industry. Sri Lanka’s food and beverage industry experienced a 13.6% growth in 2015 according to Cenral Bank Statistics. The fresh juice category in a tetrapack is quite a new concept to the Sri Lankan market. But the competition that the fresh juice segment will have to face is quite significant when studying the market competiotion.

3.1 Competition

The beverage category is mainly been segmented as follows,

Figure 2: Beverage Categories

As per the market research conducted by the company’s internal research team, it has been identified that the corrent market share of the Absolute range is only about 8% from the total fresh juice market. This is mainly due to the direct and the indirect competition that the brand face. Even though there has been a 12% increase in revenue generated from 2016 to 2017, the company will need to focus on facing competiotion effectively. The following competitor analysis will enable the company to identify the impact of the competition in the industry when creating the new strategy to enhance the growth of the brand.

Below is a competitor analysis conducted for the direct competitors.

3.2 Consumer Behavior

In positioning the brand it is vital to understand how the consumers behave in the current market. Schiffman & Kanuk ( 2007), highlights that the concumer is more of a ational decision maker who is mainly focuses on its own benefits and self interest. Cox et al (1983), introduced a five stage model that influence the consumer decision making process.

Figure 3: Consumer Decision Making Process

In the present market many consumers has identified the need to consume healthy food. The global increase in consumption of organic food, has impacted the organic food industry in Sri Lanka. Below are global statistics,

Figure 4: Global Organic food growth

The trend in Sri Lanka has also been the same and it has been noticed that consumers show interest in buying natural food items. This market trend can be used positively for the growth of Kist Absolute brand. Therefore as per the first step in the model highlighted above (figure 3), consumers has already identified the need for healthy food. Hence Cargills should focus on reaching the customer from this stage itself.

4.0 Situational Analysis

The situational analysis enable the organization to identify the current position (“where are we now?”). in conducting the analysis the following factors will be taken into consideration,

1. Macro Economic Factors
2. Micro Economic Factors
3. Identification of future opportunities and threats

4.1 Macro Economic Factors

PESTEL Analysis will discuss the Macro Economic factors in introducing the new strategy. Through the PESTEL analysis market opportunities will be identified which will be used in the SWOT analysis.

4.2 Micro Environmental Analysis

This analysis can be used in order to identify how certain forces can impact the internal environment of the organization.

BARGINING POWER OF CUSTOMERS – HIGH

• Customers have a large number of products which is available to select from.

BARGINING POWER OF SUPPLIERS – HIGH

• With high direct competition, suppliers will always have a wide range of options available.
• The suppliers would want to work with an establish company like Cargills rather than with other manufacturers.

COMPETITIVE RIVALRY WITHIN THE INDUSTRY – HIGH

• The competition in the beverage industry is very high due to the number of players.

THREAT OF NEW ENTRANCE – HIGH

• With the increase in regulations introduced to the food and beverage industry entering the market will be difficult.
• Manufacturing in large scale would require a large capital which will not be easily affordable for many players.

TTHREAT OF SUBSTITUTE PRODUCTS – HIGH

• Fresh juice industry is competing with many substitute products in Sri Lanka.

4.3 SWOT Analysis

This analysis enables Cargills PLC to identify the opportunities in the market and the possible threats that need to overcome in making the strategy a success.

Identifying the current status of the brand in the market, Cargills next step would be to develop the objectives of the marketing plan in enhancing the product performance.

5.0 Marketing Objectives

The marketing objectives will enable the organization to set up the path in implementing the strategies. The objectives will provide clear guidance in identifying where Cargills would want the Kist Absolute brand to be in the future.

1. To increase the total revenue created from the brand by another 75% in the next two years.

Currently after 5 years in launching the brand, the contribution made by the brand to the organization’s FMCG category is merely 2%. The company in the next two years will focus on increasing the revenue generated from the brand in order to increase the contribution to the category.

1. To increase the market share of the fruit juice market to 15% within the next two years.

The research has indicated the current market share of the brand is only 8% in fresh juices. Implementing the new strategies the company is expecting to grow the market share up to 15% which will enable the brand to have a better competitive advantage.

1. Expand the distribution channels by 25% within the next two years.

Expanding the distribution channels will enable the organization to reach the target groups effectively. This will have a positive impact on the revenue generation and on expanding the market share.

1. Increase brand awareness by 50%-75% within the next two years.

Currently the company has identified the brand awareness is very limited among the consumers and it is important to follow a strategy that enhances the brand awareness. Through creating better brand awareness the company will be able to enhance sales and profits from the brand.

1. Increase the production capacity by 25% within the next two years by introducing new machinery and technology.

After studying the manufacturing process of the global players, the new technology adopted by such organizations can be introduced locally in order to improve the production capacity for the Kist Absolute brand.

The above set objectives will be the focus of the company is setting up the strategies in enhancing the performance of the brand.

6.0 Strategy Development and Justification

In focusing on strategy development the marketing plan will initially focus on the growth strategy that will be followed.

6.1 Growth Strategy

Ansoff’s matrix will be the main base used in identifying the growth strategies in order to achieve the objectives discussed.

Figure 5: Ansoff’s Growth Matrix

In growing the brand in next two years the company will be focusing on the market penetration strategy. Selecting this strategy will enable the organization to grow within the current markets within the next two years before focusing on other growth strategies.

With the brand entering its growth stage it is important to have a strong platform in the current markets. Therefore using market penetration will enable the organization to enhance sales and awareness.

6.2 Competitive Advantage

Using Porter’s Generic Strategy Model will enable the organization to identify the strategy that needs to be followed in creating competitive advantage for the brand.

Figure 6: Porter’s Generic Strategy model

As the focus is on a broad target market, and analyzing the intense competition in the current market the company should not focus on cost leadership. Cost leadership will not support the brand in creating a strong platform with the high competition in the market. Hence Cargills should focus on the differentiation strategy in creating competitive advantage. The company will need to highlight on the product uniqueness. The following can be highlighted in the marketing campaigns and product awareness programmes.

1. Highlight the health benefits of using fresh juices.
2. Highlight the health benefits of using apple juice for dengue patients. (As per the statistics released by the Health Ministry, the reported number of dengue patients in Sri Lanka in 2016 was 55,150 where in 2017 the total number reported was 175,644)
3. Focus on elaborating the technology that is being used in manufacturing the juices and the tetra packs.
4. Discuss how the recyclable material is being used in the manufacturing process.

Using differentiation as a competitive advantage Cargills will get the opportunity to capture the market for Kist Absolute creating a positive impact on the brand.

6.3 Segmentation

Armstrong & Kotter (2005) discusses segmentation as the process of identifying buyers who have similar needs or who experiences similar characteristics where certain products or unique marketing mixes should be used in attracting those buyers.

Segmentation will be conducted base on the following,

6.4 Targeting

Once the segmentation is been done as per the above table the company will then focus on which groups that needs to be targeted. The Marketing strategy that needs to be followed when addressing each target market will be different.

Using a different marketing mix for selected target group will enable the brand to enhance the sales and improve market share.

6.5 Positioning

Product positioning is all about the place that the consumer has given to the product in his mind taking into consideration the product benefits, attributes, positive and negative feedback etc.

The positioning for the brand will be as follows compared to competition,

Figure 7: Brand Positioning

The company will continue focusing on the market position as being a natural fruit juice that is safely packed and moderately priced.

7.0 Marketing Mix

The marketing mix would need to be effectively used in addressing the target groups as follows,

7.1 Product

The Kist Absolute fruit juice range consists of three products. The products are as follows,

Product	Orange (1L)	Red Apple (1L)	Green Apple (1L)

The anatomy of the product is been discussed below,

While focus on providing the same 1L tetra pack for all target groups. But a special mini tetra pack 200ml should be created for T3 group. This is mainly because it will be convenient for the patients to use. The sample pack is shown below,

This will also provide opportunities to focus on new target groups.

7.2 Price

The current prices of the Absolute range is as follows,

Product	Orange	Red Apple	Green Apple
Price (1L)	LKR 350	LKR 350	LKR 425
Price (200ml)	LKR 50	LKR 50	LKR 60

The pricing will change as per the pack size.

7.3 Place

Currently the products are available in,

• All Cargills super markets.
• Selected Arpico Super Centers
• Laugfs Super Markets
• Selected online sellers

When focusing on market penetration the company would need to focus on a strong distribution channel. The following can be considered in expanding the distribution,

• Expand distribution using Keells Supermarkets.

Cargills is not distributing the Absolute range through Keells super markets another large retail player in the industry. As currently none of the other supermarkets have a fruit juice brand under their own name. Hence the management should focus on working together with Keells in enhancing the availability.

• Place mini vending machines in hospitals

It should be made convenient for care takers of the patients to get the mini tetra packs. Cargills should work closely with the hospital management and the health ministry in placing vending machines to make the process easy. In order to start with the company should select main five government hospitals.

• Fitness centers

Making the product available at fitness centers will enable the company to reach the health concern target audience easily.

There for by expanding the distribution will enable the company to reach the mentioned target audiences effectively.

7.4 Promotions

When adopting the market penetration strategy promotions play a very important role. The promotion mix is been discussed as follows,

8.0 Marketing Budget

The expected Marketing Budget for the first year is as follows,

9.0 Execution Plan

In implementing the plan the company will be following the mentioned time lines in order to execute the layed out marketing plan in the beginning of 2019.

10.0 Forecasted Statements

The following forecasted statements provide the performance that can be expected after implementing the new strategy.

The figures can be affected by inflation, Cost of material, increase in expenses such as labor, electricity, fuel etc.

10.1 Volume and Value Forecast

The 2018 figures are expected volume and sales, which is only a 8% increase from 2017.

10.2 Profit and Loss Account

The budgeted P&L account highlights that a profit increase of 85% can be expected with the implementation of the penetration strategy.

10.3 Statement of Financial Performance

10.4 Cash Flow Statement

In creating the budgeted financial statements the following assumptions were made,

1. The cash collected from the revenue generated 70% is assumed to be cash sales and 30% to be credit sales. The cash for the credit sales were received in the following year.
2. Closing stock value is assumed to be 20% of the cost of sales each year.
3. 60% of the purchases are assumed to be cash purchases and 40% credit purchases where the all credit purchases are settled the next year.
4. There is no raw material and work in progress.
5. Income tax rate is taken as 5%.

11.0 Monitoring and Control

In the event of executing the plan it is very important to have an effective monitoring and controlling techniques. This will provide early warnings in case if any deviations are taking place from meeting the set objectives.

A gap analysis will be conducted on a monthly basis to identify the sales and volume deviations. This will enable the management to implement certain changes to ensure the expected results are been delivered.

In order to ensure that the performance is at the expected level the management will provide KPI’s that will help to identify the performance of the departments and where the performance is lacking. Using the following KPIs enable the company to conduct the gap analysis better.

In addition the above KPIs should be measured on a monthly basis and evaluation meetings should be conducted on a weekly basis to achieve the goal.

When adopting the market penetration startegy it is very important to analyze the effectiveness on the promotions and the ROI generated from promotions. This is mainly due to promotions playing a great part in the penetration strategy.

The process will provide support for the organization to meet its objectives within the next two years.

12.0 Conclusion

The Marketing Plan will help the organization to enhance the performance of Kist Absolute brand. As the brand is presentlt in its primary stage it is very important to identify how well the company should invest in expecting a better return.

The situation analysis conducted highlights that there is a growing demand for fruit juices and the external factors are supporting this growth. Therefore the company can use this marketing plan to provide the aswers to,

1. What is the brand’s current position?
2. Where does the company want to see the brand in another two years?
3. How will the company take the brand there?
4. Is the company going in the planned direction?

Following this Cargills PLC will be able to enhance the performance of Kist Absolute brand in the next two years.

ANNEXURE 01 – Company Back Ground

Cargills (Ceylon) PLC strated operations in 1844, as a general warehouse, import and wholesale business. Initially the business was given the name “House of Gargills”. In 1946, the company was incorporated as a Public Limited Liability Company. After Ceylon Theatres acquired the company in 1981, the operations commenced under a new strategy and a new management.

The company got themselves into FMCG in 1993 and started revolutionizing the industry by cutting down the middle parties when buying fruits and vegetables from farmers. In 1999, the company directly bought from farmers giving the benefit to both farmers and customers.

The company has become a large growing leader in the retail industry and is being opersted under the following Vision and the Mission statements.

Vision – To be a global corporate role model in community – friendly national development.

Mission – Serve the rural community, our customers and all other stakeholders, through our core business – food with love – and other related businesses, based on the three main principles of;

• Reducing the cost of living
• Enhancing the youth skills
• Bridging regional disparity

Šby enhancing local and global markets.

The company’s functions takes place under three main operations.

1. Retail Operation
2. FMCG Operation
3. Restaurant Operation

The performance of all three operations is highlighted below.

Figure 8: Retail Segment Performance

Figure 9: FMCG Segment Performance

Figure 10: Restaurant Segment Performance

With the growth taking place in all segments, the company is now focusing more on introducing fresh and organic fruits and vegetables to consumers. The company is been functioned under the following structure,

Figure 11: Organizational Structure

Further in the near future the Cargills (Ceylon) PLC is focusing on expanding the business and become a very important part in the community and in the lives of all the customers.

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