The marketing plan relates to American Instant Incorporation which operates in the US food industry. The firm intends to extend its product lines by developing a new variety of instant tea, specifically green instant tea. A comprehensive situational analysis of the industry is conducted by considering a number of components. Some of the components considered include market summary, market trends, market demographics, market needs, market growth and competitive environment. A SWOT analysis is done.
In addition, key success factors and the critical issues are also analyzed to determine the probability of the product succeeding. The marketing strategy which entails the firm’s mission statement, marketing objectives and target market is illustrated. In addition, the firm’s marketing mix strategies are analyzed by considering the pricing, product, promotion and distributional strategies. The plan also entails market research with reference to competitors and consumers as the key market elements. The firm’s financial forecasts are also shown by conducting a sales forecast. To ensure that the plan is successful, control and implementation plans are also illustrated.
American Instant Incorporation is a private limited company located at Flanders, New Jersey. The firm was established in 1961 under the US Food Preparations Manufacturers. The firm has been successful in its operation. This is evident in that it has an approximate revenue of 20-50 million annually. Its human resource base ranges from fifty to ninety nine employees. In its operation, the firm has incorporated the concept of product diversity. This is evident in that it deals with production of a wide range of products. Some of these products includes granita, fresh brewed tea, coffee and hot chocolate. In its quest to attain its profit maximization objective and a sustainable growth, the firm’s management team has come to a consensus to develop a new product. This product will entail production of a new variety of green instant tea. This will be attained through incorporation of the concept of product line extension.
Over the past decade, the US tea industry has witnessed significant change. Instant tea (or Ready-To-Drink) has increasingly dominated the United States of America market. This is evident from the fact that a large number of supermarkets are devoting extensive sections for various varieties of instant tea. This has resulted from an increment in the rate at which firms are conducting innovation (Simrany, n.d, para. 2). In addition, various supermarkets have integrated various tea promotion strategies such as placing vending machines at their entrance and exit. The decision to incorporate instant teas by various retail firms in their operations has resulted from a shift in demand in the consumers’ consumption behavior. A large number of consumers are increasingly appreciating instant tea in their consumption patterns compared to other competing beverage products.
According to a market research conducted by the firm, it was revealed that instant tea is amongst the fastest growing market segments in relation to beverage products. In addition, the US have experienced extensive demographic changes in terms of its population. This arises from a high immigration rate making the country become a cosmopolitan society. Other changes in the market relates to increased health conscious nature of consumers with regard to consumption of tea products. These changes indicate that there is a high potential for growth in relation to market for instant tea. As a result of a large number of investors venturing into the sector, there is a high probability of the industry becoming saturated. According to Sharma and Nakamura (2003, p.210), it is vital for firms to consider developing strategies aimed at increasing their customer base in such situations. One of the avenues through which firms can capitalize on the activities presented in the external environment is through development of a new product.
For a firm to effectively penetrate into a given market, it is vital for it to have the required expertise. Considering the intensity of competition associated with instant tea both in the domestic and foreign market, it is paramount for American Instant Incorporation to assess its expertise. This will ensure that the firm has the necessary technology to enable it attain a high competitive advantage.
Over the past few years, the tea industry has been characterized by a high degree of inconvenience compared to other beverages and soft drinks. However, emergence of instant teas presents a significant potential of growth (Joe, 2000, p.1). From a market research conducted to determine the probability of market potential, the firm’s management team revealed that there is a high probability of market growth. The findings revealed that there is a significant shift with regard to consumption of tea. Currently, tea is being sold even in various non-traditional outlets such as gas marts, warehouse clubs, convenience stores, mass merchandisers and drug stores. Growth in food service and vending sectors also presents a feasible potential for growth of instant tea through an increment in distributional capacity (Simrany, 2000, para. 6).
Considering the lucrative nature of the tea industry, a large number of investors are venturing into the industry. In addition, the existing players are increasing their scale of operation. For example, a large number of Indian firm are venturing into the foreign market through various market entry strategies. One of their preferred investment destinations is US. According to Randy (2002, p.2), approximately 70% of instant tea consumed in US is imported from India. Nestle is amongst the firms which pose a competitive challenge to the firm. Nestle has a wide range of instant tea products which are marketed within the US market and in foreign markets. In its operation, the firm has managed to develop substantial competitive advantage.
The major foreign competitors which pose a threat to American Instant Incorporation include Lapak and Rasna companies. Indian firms venturing the US instant tea market such as Rasna are amongst the firms which pose intense competition to the firm. These firms are already established within the US instant tea industry and have attained extensive recognition. In addition, these firms have been in operation for a number of years and are well fitted with current technologies. American Instant Incorporation will also face intense competition from other substitute beverage products such as soft drinks. To cope with the challenging nature of instant tea industry, the firm’s management team has formulated comprehensive competitive strategies aimed at increasing customer loyalty. In order to attain this, the firm’s management team will ensure that the quality of the services offered in its domestic and foreign market is high. This will contribute towards the firm being optimally positioned in the market.
The table below gives an analysis of the firm’s strengths, weaknesses, opportunities and threats.
|Strengths ||Weaknesses |
|Opportunities ||Threats |
Key Success Factors
According to Sexana (2005, p.91), there are a number of factors that affect the success of a firm in a given industry. These factors results into attainment of effective marketing process and are referred to as Key Success Factors (KSF). In developing new products, it is paramount for a firm’s management team to ensure that these factors are considered. This will contribute towards ensuring that the new product penetrates the market effectively. In developing the new green instant tea product, the firm’s management team has identified a number of key success factors. One of the factors that will be considered is quality. Product quality is one of the factors that consumers consider in their decision making process.
According to Monika (2003,p. 86), quality in food products plays a significant role in influencing the rate of customer satisfaction. This means that quality is a measure of the consumer’s associated value. Monika (2003, p.86) further asserts that quality has become a key issue in the current market. In the instant tea market, increased requirement of high quality results from an increment in the rate of competition in the industry. In order to achieve market demands in terms of quality, the firm’s management team has incorporated the concept of quality control. This will ensure that production of green instant tea meets the set market standards. Through continuous quality improvement, the firm will be able to increase the level of its sale hence its revenue.
The management of the firm will also ensure that there is effective inventory management. For instance, Just-in-Time (JIT) inventory control will safeguard the raw materials necessary for production of green instant tea from running out of or overstocking of inventory in the firm. This means that the firm will be able to track the consumption rate and minimize ordering and stocking cost. Inventory control system will also help the firm’s management tea in identifying whether the product is being transformed into bestsellers.
As a result, it will be possible for the firm to deliver quality to the consumers. This will contribute towards the management team structuring its ordering process more efficiently since it will be possible for the firm’s management team to identify the quantity of products which meets the market demand. Inventory management will also assist the management in analyzing the customer trends.
In addition to quality, teamwork is another key success factor that should be considered in the process of developing a new product. This arises from the fact that a comprehensive market research has to be conducted. Teamwork is vital to ensure that there is proper coordination of the product development process. In order to be effective in developing green instant tea, a team of experts which will operate under effective coordination will be developed. The team will be well equipped with all the necessary skills needed to ensure that all the aspects involved in the production processes are adhered to. Teamwork is vital in product development since it ensures that all the efforts of the parties involved contribute towards attainment of the predetermined organizational goal.
The management of the firm has identified repeat business as a critical issue in the success of the new firm. To attain this, the management will ensure that it builds a strong foundation to attain a high level of core group. The core group will entail a number of satisfied customers who will purchase the new green instant tea repeatedly. Repeat business will be built on a strategic mix of high quality products and services and customer experience. In addition, the management will establish a follow through program for its core group.
American Instant Incorporation is dedicated at propagating the growth of instant tea market in United States. The firm’s management team is also committed at ensuring that the firm provides a high level of customer experience and satisfaction by creating a superior experience upon consuming instant tea. As a result the management team of the firm strives towards providing high quality beverage products.
To survive in the long term, the management of the firm is committed at ensuring that continuous product innovation is integrated in the firm’s course of operation.
- By developing a new instant tea product, the firm’s management team intends to attain a significant recognition in the domestic and foreign market. This resulted from realization of the fact that positive public image can enhance products market performance. This will be attained through incorporation of the concept of brand management in its strategic management process. Various components of brand management will be considered in an effort to attain this goal. The key components considered includes brand identity, brand image and brand culture.
- To increase its profit potential, the firm’s management team intends the new green instant tea developed to be of different flavors. This is inline with the firm’s objective of attracting a large number of potential customers.
- To establish American Instant Incorporation as an experts in manufacture of instant tea. The management of the firm has integrated the concept of customer focus in the production process. This means that all the operations of the firm will be aimed at satisfying the customers in relation to their energy needs.
- The firm’s management team intends to attain a market share of 20% within the first year of launching the new green instant tea in the market.
- It is the objective of the management team that the firm will attain a mark up of 30% within its first financial year.
- The management team intends the new product will result into an increment in the firm’s annual revenue with a margin of $ 1 million within its first year of operation.
The success of a firm is influenced by how effective the firm’s management is in targeting the market. According to Kurtz, MacKenzie and Snow (2009, p. 79).), target market refers to the specific category of potential customers that a particular firm’s management team intends to capture and supply its products or services to. Target market is identified through a market research conducted prior to designing and production of the desired products and services. Kurtz, MacKenzie and Snow (2009, p. 79).143) asserts the entire market should be divided into various segments for the firm to be successful in selecting a target market. In addition, selecting a target market should be conducted by determining the specific market needs. The management team of American Instant Incorporation has also realized that selecting a target market will benefits both the firm and the customer. This is due to the fact that the management will be able to understand its customer’s product and services requirements. As a result, the new firm will be able to deliver products and services that contribute to a high level of customer satisfaction.
In developing the new product, the firm’s management team is focused at ensuring that the product provides the market needs. Two main categories of potential customers have been identified. These include individual and institutional customers. To ensure that the firm attains a high level of customer satisfaction, the management of the firm has integrated demographic variables in targeting and segmenting its potential customers. Some of the demographic variables considered include age and income level. The new product will benefit both the elderly and young customers. Targeting these customers resulted from realization of increased health consciousness amongst the customers especially with regard to cancer. Globally, a large number of consumers are shifting their tea consumption preference to green instant tea. This results from its effectiveness in improving blood circulation and enhancing energy.
According to Transtod (1995, p.7), effective positioning in the market plays a significant role towards the long term success of a firm. This is due to the fact that it acts as an effective defense mechanism to the competitive challenges. To position itself in the market, the management team of the firm has incorporated a high level of expertise in its operation. This means that the management of the firm will be more concerned with the quality of its product delivery. This will ensure that a high level of customer loyalty is achieved and maintained in the long term.
Integration of an effective mix is vital in the process of marketing products and services. Marketing mix results into development of a synergy between the various requirements for effective marketing.
A high degree of expertise will be incorporated in the process of developing the new product. This arises from realization of the fact that the success of a new product depends on the differential advantages presented by the product to the consumer. It will be ensured that the green instant tea has different natural aroma, taste and color. Consideration of different aromas will serve in ensuring that the product appeals to different consumers. In addition, the product will provide numerous health benefits to consumers. It will be ensured that antioxidant polyphenols specifically Epigalocatechin -3 gallate or EGCG found in green tea is not destroyed during the production phase. This product is linked to being responsible for most of the health benefits associated with green tea. The tea will be produced from freshly harvested tea leaves. The tea leaves will be steamed immediately to prevent fermentation which might result into maintenance of green color.
The EGCG present in the tea will also delay ageing symptoms. This will make the product appeal to both the elderly and young consumers. The product will also contain sufficient quantities of Tannins and Caffeine which are key stimulants. These components will help in reduction of fatigue, sleepiness, laziness and improvement of blood circulation. The astringency found in green instant tea will increase longevity of consumers’ teeth. This arises from the fact that the tea will enable effective contraction of the gums thus keeping them tight. The catechins compound found in the green instant tea will aid in neutralizing free radicals found in the body that are mainly responsible of causing cancer. This will play a significant role in minimizing the probability of suffering from cancer.
Considering the fact that the firm is venturing into a new market, the management of the firm will conduct a competitor and a consumer market research. The objective of the competitor market analysis will be to identify the pricing strategy of other firms in the industry. This will aid the management in the process of formulating its price strategy. On the other hand, the consumer market research will aid the firm’s management in determining the price sensitive nature of the customers. From the research, the management will be able to formulate a good pricing strategy.
In its effort to introduce the new product in the new market, the management of the firm will incorporate the concept of penetration pricing strategy. This will involve setting the price of its products and services at a relatively low level compared to its competitors. As a result, the new green instant tea will appeal to a wide range of customers considering the fact that consumers are price sensitive and their desire is to maximize their utility level.
Psychological pricing will also be integrated in the firm’s pricing strategy. This will involve setting price points that have psychological effects on the consumers purchasing process. For example, the price of 500mg of instant tea will be set at $ 3.99. These price points will play a significant role in ensuring that the firm’s products price appeals to the emotions of different customers in their purchasing process. As a result, individuals of different income groups will perceive the lounge pricing strategy being fair.
Market communication plays a significant role in the success of a product in the market (Shane, 2003, p.45). Considering the competitive nature of the instant tea industry, the management team of American Instant Incorporation has formulated a comprehensive promotion strategy. The strategy is aimed at ensuring that there is comprehensive market awareness.
Market awareness will be conducted by integrating both the traditional and emerging market communication techniques. The marketing communication techniques that the management has considered include advertising, sales promotion, public relation and personal selling. The management team has considered using various mediums in conducting advertisement. The traditional mediums of market communication considered by the management team include use of television, radio and print media such as newspapers and magazines. The management team has also considered integrating emerging information communication technologies. To achieve this, the management of the firm has considered integrating the concept of electronic commerce. This will be achieved through incorporation of the internet so as to conduct electronic marketing more efficiently and effectively.
In addition, the firm’s management team has come to a consensus to integrate emerging social networking tools such as wikis, blogs, YouTube and Face Book. Use of wikis and blogs will enable the firm to conduct effective market awareness. This arises from the fact that the wikis and blogs will act as both interactive and informative tools. For instance, the wikis and blogs will enable the customers to communicate their views about the new variety of instant green tea developed by posting their comments on these tools. By using YouTube, the management of the firm will be able to create market awareness to a wide number of customers. This is due to the fact that these tools are accessed by a large number of individuals on a daily basis. In addition, use of YouTube is more a cost effective method of advertising since it does not require specialized knowledge to implement it. The management will also enter into a contract with major search engines such as Yahoo and Google. The contract will entail posting product information related to the products on the sites of these search engines.
The management team of the firm is committed at ensuring that the new green instant tea product is accessible in the entire global beverage market. To attain this, the team has formulated a comprehensive distribution strategy. The strategy will integrate both direct and indirect forms of distribution. Direct distribution methods will be used within the local market. This will be attained by incorporating vertical distribution system in its supply chain. The energy drink will be supplied to wholesalers and retailers in the entire domestic market. In addition, the management of the firm will open distribution outlets in all the regions of its domestic market. In its internationalization phase, American Instant Incorporation will make use of foreign agents as its intermediaries in the foreign market. This is due to the fact that the foreign agents are conversant with the foreign market beverages distribution channels.
Conducting a market research can enable a firm to develop competitive strength. Market research should be integrated in the firm’s strategic management (Shane, 2003, p. 134).A comprehensive market research will be conducted before developing the new product. The research will incorporate both primary and secondary market research with reference to competitors and consumers as the key market variables. Primary market research will entail use of interviews and observation. On the other hand, secondary market research will involve conducting research through the internet.
Consumer market research
Understanding the consumers need, preferences and development of a tough market orientation plays a significant role in the process of designing a new product (Sexana, 2005, p.91). Primary consumer market research will be conducted to identify the demographic market variables that affect consumer purchasing behavior of the firm’s target market. The demographic variables to be considered include consumer’s level of income, age and occupation. The research will also focus on the customers’ consumption patterns and product preferences. This will enable the firm to deliver the exact market demand to the potential customers. This will ensure that the customers who purchase the green instant tea developed attain a high level utility. This will play a significant role in the process of the firm developing customer product loyalty. The management of the firm will ensure that a continuous consumer market research is conducted. This will enable the firm’s management team to identify the trends in consumer behavior. The consumer market research will also consider the changes in consumer’s lifestyle. This will enable the management of the firm to determine the attractiveness of the selected market.
Competitor market research
To ensure that the firm positions itself effectively in the market, the management of the firm will conduct an industry analysis to identify the major competitors within US instant tea industry. The research will be conducted by visiting the websites of these companies. Through the company websites, it will be possible to identify the competitor market research. The research will also be conducted to establish the nature (quality) and type of the products that the competitors deal with. The research will help the management to identify key gaps and omissions of the competitors. One of the variables that the research will consider is the competitor’s customer service. This gaps and omissions will present an opportunity for American Instant Incorporation to capitalize on. The competitor market research will also be aimed at identifying the competitor’s strengths and weaknesses.
To ensure that the firm obtains extensive information about the competitors, the management of the firm will have some of its employees become customers to the competitors. Alternatively, the management will have a chat with the competitors’ customers. This will form a legitimate ground through which the management will obtain credible competitor information in relation to their culture, pricing and customer service.
American Instant Incorporation management team intends to derive a significant proportion of its revenue from the sale of green instant tea. This results from an increment in the consumption of green instant tea in US and the foreign market. Due to increased incorporation of instant tea in their consumption patterns, the management team of American Instant Incorporation has forecasted a potential increment in its sales revenue. The table below illustrates the firm’s sales forecast for the next four years.
Amount in $
Amount in $
Amount in $
Amount in $
|Sales forecast according to customer category |
Individual consumers Institutional customers
|Direct cost of sale||2,200,000||2,700,000||3,000,000||4,500,000|
The firm’s management team has forecasted that the firm will incur significant marketing cost in its marketing process. It is expected that the marketing cost will increase across the years as the firm intensifies its marketing process. To cater for the marketing expense, the management team has allocated $1,500,000 in its marketing budget. The table below illustrates a breakdown of the various expenditure items that firm will incur in its marketing process.
Control and Implementation
To ensure that all the activities are undertaken, an implementation will be developed. According to Milne (2008, para. 2), the implementation process is significant in marketing since it turns the plans into actions. In addition, Milne (2008, Para. 4) asserts that the implementation defines the day to day activities which will contribute towards the plan’s success. Implementation is paramount in contributing to the success of a firm’s marketing plan (Kurtz, MacKenzie & Snow, 2009, p. 79). This is due to the fact that the probability of market failure is high during the operation phase compared to planning phase.
In its operation, the firm’s management team has formulated a comprehensive implementation plan which will ensure effective execution of the various strategies developed. The firm’s implementation plan has incorporated a schedule which defines the activities to be undertaken. The table below illustrates the activities which will be undertaken and the time in which they are expected to commence.
|Obtaining approval by the firm’s top executive managers||By 20thJuly 2010|
|Formulation of an advertising plan by the advertising agency||By 22ndJuly 2010|
|Selection of the sales team||By mid August 2010|
|Training the sales team on the marketing activities||By 3rdAugust 2010|
|Formulating an incentive plan for the marketing department||By 7thAugust 2010|
|Availing the sales team with a program describing the entire marketing project||By 10thAugust 2010|
|Official launching of green instant tea||By mid August 2010|
|Launch of promotional campaign through television, radio, newspaper and outdoor advertising.||By August 19, 2010|
|Advertising through social networking tools||By August 22, 2010|
American Instant Incorporation management team realizes the fact that a marketing plan cannot result into the desired success if it is not controlled. As a result, the firm’s management team has integrated the concept of marketing control in marketing the product. Through control, the management team will be able to mitigate the probability of deviations from the set plan. The ultimate result is that firm will be able to attain the set goals.
In marketing green instant tea, the firm’s marketing department has set a number of control standards to ensure that the marketing process is successful. The green instant tea marketing standards are set by integrating a number of approaches. These approaches will be used in analyzing the success of the firms green instant tea both in its domestic and foreign market.
The firm’s marketing department will conduct an analysis of its product’s market share compared to those of the competitors from time to time. This will enable the management team assess the progress of the instant tea in the market. Through market analysis, it will be possible for the firm’s management team to determine whether the product has successfully penetrated the market. The percentage of market share attained by the product will serve as an indicator with regard to the degree of market acceptability.
Sales analysis will be conducted from time to time to determine the performance of the product. This will be achieved by identifying the trend of the green instant tea sales volume. The sales analysis will be conducted with reference to the various geographical areas in which the product will be marketed. The management team has also integrated continuous quality control by conducting customer satisfaction surveys through its Customer Relationship Management software. This will enable the firm to determine the extent to which the customers are satisfied. As a result, the firm’s management team will be able to formulate strategies aimed at improving the quality of its green instant tea.
Amount in $
Amount in $
Amount in $
Amount in $
|Cost of promotion|
|Advertising cost (TV, print media, radio television, social networking tools)||120, 000||100,000||150,000||120,000|
|Cost of consumer market research||40,000||44,000||50,000||50,000|
|Cost of competitor market research||20,000||25,000||30,000||30,000|
|Total expected marketing and sales cost||260,000||254,000||320,000||230,000|
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