Executive summary
This marketing plan relates to Atec Incorporation, which operates in the UAE. The firm intends to venture into the production of coffee making machines. The decision to venture into this new market segment arose from the identification of a business opportunity whereby consumers are increasingly consuming coffee. Therefore, the firm intends to tap into this new trend by developing a coffee making machine that will enable the UAE citizens to make coffee from their homes. The plan entails a comprehensive analysis of the external and internal business environments by integrating the PESTLE, Porter’s five forces, and the SWOT models. The situational analysis also outlines the key success factors and the critical factors that the firm intends to exploit in order to maximize its profitability. The plan also outlines the marketing mix strategies that the firm will use in the course of introducing the Arabachino in the UAE market. The marketing plan also outlines the firm’s financial forecasts and the mechanisms that will be used in controlling and implementing the marketing strategies. Moreover, the plan outlines the contingency plan and the associated risks and assumptions.
Company profile
At Incorporation is a private limited company that was established in 2000 in the UAE. The firm’s headquarters are located in Dubai and it operates in the UAE beverage industry. The firm specializes in producing and distributing various types of non-alcoholic beverages such as fruit juices, instant coffee, roast and ground coffee, chocolate based hot drinks, and instant tea. Atec Incorporation has attained an optimal market position and its success has emanated from offering diverse beverage products to customers.
Mission statement
To research and offer customers the best beverage products in the world
Vision statement
- The firm intends to become the market leader in the soft drink industry in the Gulf Region. To achieve market leadership, Atec Incorporation focuses on developing a high level of customer satisfaction by being customer focused.
- To maximise customer satisfaction by offering customers diverse beverage products
Situational analysis
The soft drink industry in the Gulf Region has undergone significant growth over the past few decades. A large number of companies have ventured into the industry. There are approximately 231 beverage companies in the region. Forty nine percent of these companies are located in Saudi Arabia while 27% are located in the UAE. The growth in the beverage industry has emanated from increment in the volume of exports into the region. Thus, the beverage industry in the UAE has become very competitive. Investors in the industry are incorporating different strategies in an effort to exploit the market opportunity. By the end of 2011, approximately $ 2.5 billion was invested in the industry (Cochrane & Corcoran Para.3).
However, the industry faces numerous challenges due to change in consumer behaviour. Consumers are increasingly becoming conscious of their health. The change in consumer behaviour has emanated from increment in the number of diabetes and cancer cases. The UAE ranks as the largest consumer of sugary drinks. It is estimated that the global average soft drink consumption is 43 litres. However, an average person in the UAE consumes 103 litres of soft drink per year, which explains the increase in the number of cancer cases. This trend may adversely affect firms that deal with beverage products that have high contents of sugar. To cope with the change in consumer behaviour, industry players are diversifying their operations by investing in production of healthy beverages.
Despite the growth in industry competitiveness and change in consumer behaviour, some market segments in the UAE beverage market have high potential for growth. Example of such segments includes the coffee market. Consumption of coffee in the western countries is projected to increase with a margin of 5% to 10% annually. This consumption is relatively high as compared to the 1% annual growth in the US.
The UAE residents consume approximately 3.5 kilograms of coffee annually, which is approximately twice the volume of coffee consumed in other GCC countries. The high rate of coffee consumption in the UAE has attracted a number of multinational coffee outlets (Yaqoob Para. 9). Coffee drinking culture in the UAE will lead to the emergence of coffee traders dealing in high-end beans. Atec Incorporation intends to exploit this market trend by introducing a coffee making machine. The machine will be known as Arabachino and will specialise in Arabic Coffee capsules. The machine will also be used in making special coffee.
Competitive analysis
The coffee market in the UAE is very lucrative as evidenced by the high rate of coffee consumption. The UAE has experienced an increment in the number of new entrants into the coffee market. Both local and international investors are venturing into the coffee market segment. Some of the major competitors that pose a threat to the Arabachino’s market introduction effort include Daliya Trading Company, Citronel Coffee Vending Machine, Smart Coffee Trading Company, and Cassiopeia General Trading. The firms are well established in the UAE coffee machine-making industry.
A large number of consumers in the UAE prefer purchasing their coffee from the already established specialty outlets, cafes, restaurants, and shisha coffee shops. This aspect presents a major threat to Atec Incorporation in its effort to introduce the new coffee machine. The coffee outlets are a source of indirect competition to the firm as consumers may not purchase the machine to make coffee in their homes but may prefer readymade specialty coffee from the convenient stores.
To deal with the competitive nature of the industry, Atec Incorporation will ensure that its machines produce high quality coffee by integrating the elements of creativity and innovation in the process of designing and developing Arabachino. Thus, the firm will nurture a high level of customer satisfaction and hence loyalty. Consequently, the machine will attain an optimal market position.
Pestle analysis
Businesses are affected by changes that occur in the macro-environment. The main macro environments include the social, economic, political, technological, and legal environments. Understanding the macro environment provides entrepreneurs with insight on strategies to integrate in order to deal with external forces (Wilson and Gilligan 34). Pestle analysis is one of the models that an organisation can integrate in order to analyse the external environment.
Political environment
The UAE is among the most stable countries in the Gulf Region. Its stability has emanated from integration of effective governance. The country’s governance system is characterised by a local and federal system. In an effort to sustain the country’s political stability, the UAE government has managed to establish a high level of synergy between the federal and the local government systems. Thus, the UAE is characterised by effective formulation and implementation of government policies. The UAE government recognises the importance of protecting its citizens and their property. Consequently, the government has developed a comprehensive constitution. To ensure a high level of representation, the constitution was drafted with the inclusion of all parties in the federal and local levels. In summary, the political stability in the UAE has made the country an attractive investment destination (“UAE Interact” Para. 1).
Economic environment
The UAE government is very committed towards the country’s economic growth. Consequently, the government has adopted an open economy system. The UAE has undergone significant economic transformation over the past three decades.The transformation has emanated from the discovery of oil. The country is one of the major oil producers in the Gulf Region. Moreover, oil is one of the main sources of revenue for the UAE government. Thus, it contributes a substantial amount to the country’s Gross Domestic Product (“UAE Interact” Para. 1).
The 2008 economic recession adversely affected the country’s economic growth. However, the government has managed to restore the economic growth on a recovery trend. In 2012, the country’s GDP expanded with a margin of 4.4%. The country has one of the highest GDP per capita in the world. The country’s economic growth has led to improvement in the consumers’ disposable income and hence their purchasing power. The chart below illustrates the country’s GDP growth over the past few years.
Social environment
A significant proportion of the country’s population is composed of Arabs. As one of the Arab nations, consumption of alcohol in the UAE is prohibited, which presents a unique opportunity for entrepreneurs to produce and market non-alcoholic beverages. Consumption of coffee in the UAE has increased significantly over the years. According to a report released by EuroMonitor, most consumers in the UAE prefer drinking coffee. The country has experienced strong growth with regard coffee sales (“EuroMonitor: Coffee in the UAE” Para.1)
Technological environment
The country has also experienced significant growth with regard to technology. One of the areas of technological development relates to Information Communication Technology. Technological development in the country has played a significant role in positioning the country into a knowledge-based economy. ICT development in the UAE presents an opportunity for entrepreneurs to improve their value chain. A number of platforms aimed at supporting entrepreneurs have been established in the UAE. Examples of such platforms include First Step Business Centre and In5 innovation hub. Thus, the likelihood of Atec Incorporation succeeding in marketing Arabachino using the available ICT platforms is high.
Legal environment
The UAE government is concerned about the health of its citizens. Consequently, the Emirates Authority for Standardisation and Metrology (ESMA), which is a government agency, has formulated a number of rules and regulations with regard to production of food products. The regulations aim at ensuring product safety. The government has also integrated a number of rules and regulations aimed at safeguarding entrepreneurs. For example, the government has implemented a comprehensive law with regard to protection of intellectual property rights. Thus, entrepreneurs’ innovations in the UAE are adequately protected (“IBISWorld Inc” Para. 1).
Microenvironment
Porter’s five forces
Understanding the prevailing industry dynamics is paramount in organisations operation. The Porter’s five forces model can assist managers in their quest to understand the industry (Baker 23).The model is used in the process of analysing the threat of entry, buyer power, supplier power, and threat of substitute and the extent of industry rivalry. The industry is characterised by high threat of entry as because of the lucrative nature. More firms may decide to enter the industry in an effort to exploit the prevailing trend with regard to consumption of coffee. Currently, there are no suppliers of arabachinos in the UAE, which presents a perfect market opportunity to Atec Incorporation. By designing the new machine, the firm will be in a position to maximise its sales revenue. Thus, the supplier bargaining power is high. On the other hand, the buyers bargaining power is low. Lack of direct competitors with regard to Arabachinos makes the degree of industry rivalry to be low. The chart below illustrates a summary of the coffee making machine industry in the UAE.
SWOT Analysis
Atec Incorporation is faced with intense competition from existing businesses and new entrants into the industry. The competitors are comprised of local and multinational companies. Some of the major competitors include Coca Cola, PepsiCo, and Nestle. The firms are increasingly diversifying their product and service offering in an effort to survive. For example, the firms are integrating hot teas in their product offering. Thus, growth in tea consumption is likely to counter the success of Arabachino. Despite the intense competition, Atec Incorporation has managed to nurture develop substantial competitive advantage. The chart below illustrates a summary of the firm’s strengths, weaknesses, opportunities, and threats.
Marketing strategy
Atec Incorporation intends to propagate the culture of drinking coffee in the UAE. Moreover, the firm is committed towards developing a high level of customer satisfaction. The firm intends to achieve this goal by ensuring that Arabachino is effective in making the coffee. The firm’s marketing strategy will emphasise on the strength of Arabachino.
Critical success factors and core competences
Atec’s success can be attributed to a number of factors. Some of the critical success factors in Atec Incorporation include market dominance, effective brand management, and customer service. The firm’s core competence is associated with product innovation. The firm is conscious of changes in consumer taste and preferences. Thus, the firm has integrated the concept of continuous product research and development.
Target market and segmentation
Effective market targeting is critical in the process of introducing a new product or service into the market. Lamb et al. (46) define target marketing as the process of identifying a specific group in the market to which the firm intends to introduce and market a particular product or service. Effective market targeting enables an organisation to formulate effective marketing strategies.
Atec Incorporation will target both individual and institutional customers. Individual customers will include consumers of diverse demographic characteristics residing in the UAE. Currently, both the elderly and young consumers are integrating consumption of coffee. Decision to target diverse individual customers was informed by the need to maximise the sales revenue.
The firm intends to exploit the change in attitude amongst the UAE citizens with reference to consumption of coffee. The firm is of the opinion that the increase in the consumers’ disposable income will contribute towards increment in the sale of arabachinos.
The firm will also target institutional customers such as restaurants and other outlets that deal in selling hot coffee.
Marketing objectives
Atec Incorporation intends to achieve the following objectives by introducing Arabachino into the UAE market.
- To develop a high level of brand recognition: the firm projects that Arabachino will appeal to a large number of potential customers. The firm intends to develop brand recognition by integrating the concept of brand management. Some of the brand management elements that will be taken into account include brand identity, brand culture and brand image.
- To increase the firm’s customer base by creating sufficient market awareness regarding the new product.
- To improve the traditional coffee making machine in order to help customers produce high quality coffee.
- To achieve a market share of 25% within one year after introducing the new product into the market
- To maximise the sale of Arabachino in the UAE: the firm intends Arabachino’s sales revenue to reach $1.5 million within one year upon its introduction into the market.
- To increase the firm’s net profit to $ 4 million within one year upon introduction of Arabachino
Positioning
Market positioning plays a critical role in the long-term survival of firms in different economic sectors (Jobber and Fahy 234). Market positioning enables a firm to shield itself against various market forces such as competition. To survive in the new market segment, Atec Incorporation will position itself as an innovative and aggressive organisation that deals in the manufacture and distribution of high quality Arabachino machines. The firm’s marketing efforts will be guided by the element of customer focus. Thus, the process of developing the coffee-making machine will be guided by the need to ensure that the machine produces high quality coffee.
Marketing mix
Product strategy
In an effort to tap into the emerging market trend with regard to consumption of coffee, Atec Incorporation will design a coffee making machine. Currently, Arab countries do not have a coffee machine that is specifically designed to make Arabic coffee. The machine will be known as Arabachino. The machine will be used in the process of making or blending a variety of Arabic coffee capsules. As a result, consumers will be in a position to make a variety of specialty coffee. In the process of making the machine, the firm will focus on ensuring that the machine results in high quality coffee by setting standards that will be adhered in the process of making the machine. The machines will be subjected through a comprehensive quality control process.
Atec Incorporation appreciates that customers have a diverse product and services needs. Consequently, the firm will incorporate the concept of product diversification, which will not only enable the firm to meet the customers’ needs but also increase the sales revenue (Brueckner 36). The firm will produce different types of machines that will be used make Arabachino coffee. The machines will be used to make the beverage from different varieties of coffee capsules that are effectively roasted. Some of the machines that the firm will deal with include drip coffee makers, grinders, espresso machines, and specialty brewers. Product diversification will enable the firm address the customers’ tastes and preferences (Kahn 68).
Pricing strategy
Price is an important component in a firm’s effort to market a product or service as it determines the ability of an organisation to achieve its profitability. Atec Incorporation will venture into a new market segment by producing the coffee making machine. In a bid to exploit the market opportunity successfully with regard to consumption of coffee, the firm will conduct a comprehensive market research. The research will focus on both the consumer and the competitor. The competitor market research will provide Atec Incorporation management with sufficient insight on how to price the new machine. The competitor market research will enable the firm understand the pricing strategy adopted by the competitors. On the other hand, consumer market research will enable the firm to understand the consumers’ decision-making process. Therefore, the firm will be in a position to set optimal prices.
In the process of introducing the new product, the firm will adopt two main pricing strategies, which include penetration and psychological pricing. According to Lamb et al. (66), penetration pricing entails setting the price of a product at a price at a point that is relatively low as compared to the price of competing products in the market. On the other hand, psychological pricing strategy will entail setting the price of Arabachino at a point that will influence the customers’ emotion. Gilligan and Hird (335) assert that psychological pricing strategy influences the consumers psyche. One of the most common types of psychological pricing strategy entails even-odd number pricing. The strategy entails setting the price point of products and services at odd numbers such as $499.
Consequently, the firm will influence the customers’ purchase decision-making process. The firm’s management team is of the opinion that adopting penetration and psychological pricing strategies will attract a large number of customers for such number of customers will perceive the price of Arabachino coffee making machines being fair.
Promotion strategy
The success of a particular firm is influenced by the effectiveness with which it has created market awareness regarding its products and services (Koekemoer and Bird 73). One of the ways through which an organisation can create and sustain sufficient market awareness of its products and services is by developing an effective market communication plan. Despite the firm being in operation for over a decade, Atec Incorporation will undertake a comprehensive market awareness campaign. The campaign will aim at publicising the new coffee-making machine.
Different market communication methods will be used. Some of the methods that will be used include advertising, direct marketing, sales promotion, and public relations. In its advertising process, the firm will integrate diverse mediums. These mediums will include traditional and emerging mediums. Some of the conventional mediums that will be used include radios, print media such as magazines, newspapers, banners, brochures, billboards and the television. The firm will post pictures of Arabachino on various local dairies. Moreover, the firm will enter an advertising contract with local television and radio broadcasting houses. The contract will entail airing the adverts during prime time such as during major programs. As a result, the likelihood of creating awareness to a large number of potential customers is increased (Luther 94).
Atec Incorporation intends to maximise its sales revenue. Thus, the firm appreciates the importance of reaching various customer groups. In order to achieve this goal, the firm will integrate emerging information communication technologies. The firm will integrate the concept of online marketing. The firm projects that the high rate of internet penetration and usage in the UAE will enhance the effectiveness and efficiency with which the firm informs its target market.
The firm will integrate a number of strategies in its promotion strategy. First, Atec Incorporation will enter a contract with various search engines such as MSN, Yahoo, and Google. Through the contract, Atec Incorporation will post images and information regarding its products. Currently, consumers are using various search engines in the process of searching for information on diverse aspects. Thus, the likelihood of the firm maximising its sales revenue is high. The firm will also post information and images of the new machine on its official website.
The firm will also make use of emerging social communication platforms. The firm appreciates the role of social networking sites in creating market awareness. Some of the social networking tools that the firm will utilise include You Tube, Blogs, Wikis, Facebook, and Twitter. With regard to You Tube, the firm will develop a short video clip. The clip will illustrate how the new machine will work. Consequently, the firm will educate potential customers on how to make coffee at home using the machine. On the other hand, the firm will also post information regarding the new product on the most famous Blogs and Wikis in the UAE. The two platforms will improve the effectiveness with which Atec Incorporation interacts with potential customers.
In an effort to reach the young generation, the firm will also create awareness using Facebook and Twitter by creating a Facebook and Twitter account that will be used to inform the customers on the new machine. The two social networking sites will provide Atec Incorporation with an opportunity to develop a high level of customer loyalty as the firm will be in a position to interact with customers directly. Thus, they will not only act as informative tools but also interactive tools.
In an effort to reach consumer groups who are not technologically perceptive, the firm will integrate outdoor advertising. The firm will enter a contract with leading outdoor advertising companies in the UAE. The contracts will enable the firm to elect banners on the advertising companies’ billboards. The banners will be effectively designed in order to attract the attention of commuters by drafting a catchy slogan, that is, ‘drink it with a difference’. The firm projects that the slogan will appeal the customers’ emotions with regard to consumption of coffee. Thus, the likelihood of appealing customers is high. However, the firm will select outdoor advertising companies whose billboards are strategically located.
The firm will conduct a grand ceremony in order to launch the new machine into the market. During the ceremony, participants will have an opportunity to win a coffee making machine. Other promotional activities that will be held during the product launch ceremony include offering customers free samples of coffee made using the machine. The coffee free samples will aim at providing consumers with an opportunity to taste coffee made using the machine. As a result, they will make a decision on whether to purchase the machine. Customers will also be given an opportunity to purchase the machine at a reduced price.
Distribution strategy
Atec Incorporation is focused towards ensuring that the new coffee making machine penetrates the local market. In order to achieve this goal, the firm has developed a comprehensive distribution strategy. The strategy will entail distributing the machine through the existing retail outlets. Moreover, the firm will also enter a contract with major retail chains that deal with distribution and marketing of food processors and blenders. The firm will also liaise with major super markets and wholesalers in the UAE. The contract will provide retailers with an opportunity of carrying the new machine. Through these distribution strategies, the firm will market its products to a large number of potential customers.
Financial forecast
Atec’s management team projects that the new coffee-making machine will contribute towards improvement in the firm’s sales revenue. The firm is of the opinion that introducing the new machine will attract a large number of customers. The high quality of specialty coffee produced through the machine will motivate consumers to purchase the machine. The firm projects that the sales revenue from the machine will be on an upward trend. The chart below illustrates the projected number of units to be sold during the from the firm’s headquarters during the first 12 months. Considering that the firm has established a number of outlets, the number of units sold is expected to increase. Thus, the firm will maximise its sales revenue.
Projected pro forma income statement
The table below illustrates the projected income statement from the sale of Arabachino coffee making machine.
Marketing budget expense
Atec Incorporation management team is committed at ensuring that the new coffee making machine is successfully introduced in the market. In a bid to achieve this goal, the firm projects that it will incur substantial cost in the course of marketing the product. Atec Incorporation has allocated an initial amount of $ 130,000 in its marketing budget. The money will be used in various promotional activities such as advertising and conducting consumer market research. To develop substantial market awareness, the firm will conduct the market awareness for three years. Thus, the budget expense is expected to increase as illustrated in the chart below.
Control and implementation
According to Sahafn (86) effective control and implementation are paramount in firms’ marketing processes. Control enables entrepreneurs to ensure that the formulated strategies are effectively implemented. As a result, the entrepreneurs eliminate deviations that might occur in the course of implementing the marketing plan. To eliminate deviations in marketing Arabachino, Atec Incorporation will adopt a comprehensive implementation and control program. The Gnatt chart below illustrates the activities that Atec Incorporation will undertake in the marketing progress and the timeframe within which the activities will be completed.
Upon introducing the coffee making machine into the UAE market, Atec Incorporation will engage in continuous control of the marketing product. In a bid to control Arabachino marketing process effectively, the firm will integrate a number of measures. First, the firm will evaluate the actual results against the projected financial performance. Atec Incorporation will analyse its trend with regard to sales revenue and market share. Such an evaluation will give the firm’s management team insight regarding its trend with regard to profitability. Analysing the trend in sales revenue will give the firm’s management team insight on whether Arabachino has gained substantial market acceptance. Thus, the firm will implement strategies that will contribute towards an increase in the firm’s customer base. Consequently, the firm will increase the size of its market share in the coffee market segment. The firm will hold monthly meetings in order to discuss and adjust any deviations that might occur in the marketing process.
Arabachino’s marketing process will be undertaken under the watch of the firm’s marketing department. The department is comprised of professionals and is headed by the marketing manager. The marketing manager will assume the responsibility of organising the entire marketing process. The manager is charged with the responsibility of ensuring that the process of developing and marketing of the new coffee making machine is customer focused. Moreover, the manager assumes the responsibility of evaluating the set goals in order to determine their relevancy.
Milestones
Atec Incorporation will conduct a number of promotional activities upon the introduction of Arabachino into the market. These activities are expected to be completed within a specific timeframe as illustrated in the chart below.
Contingency planning
The firm’s management team is committed towards ensuring that introduction of Arabachino contributes towards improvement in the firm’s profitability. Thus, the firm will undertake continuous industry analysis. The analysis will focus on understanding the changes in the coffee market. Thus, the firm will adjust the new product in accordance with market changes. Analysing the industry will enable Atec Incorporation improve its competitive advantage. For example, the firm will be proactive to market changes hence increasing the likelihood of succeeding in the new niche market.
Risks and assumptions
In the course of developing the new machine, the following assumptions have been made.
- Atc’s management team assumes that the process of developing and introducing the new product will not be affected by techneological changes. Thus, the risk of obsolescence will be zero.
- It is also assumed that the firm will have sufficient funds to develop the product and to implement the aforementioned strategies. Thus, the project will not be hindered by the risk of over budget.
- Major competitors in the industry will not diversify their operations by venturing into production of substitute products.
- There will be no major legal changes that will affect the process of producing and marketing the new machine
Conclusion
The market analysis shows that the likelihood of Atec Incorporation succeeding in introducing the coffee making machine is high. Coffee consumption in the UAE is expected to grow. By exploiting this market trend, Atec Incorporation will maximise its profit. However, the effectiveness with which the machine penetrates the UAE market will depend on the quality of the machine. Before introducing the product into the market, Atec Incorporation will ensure that the machine meets the set standards. The machine will also be tested before its market launch in order to ensure that it produces high quality coffee. As a result, the firm will satisfy the customers’ needs. In their consumption patterns, consumers are becoming conscious of their health and safety. To meet the customers’ health needs, the firm will ensure that the new machine does not threaten the consumers’ safety in the process of using the machine.
The firm’s management team will also ensure that the set marketing mix strategies are effectively implemented, which will increase the likelihood of achieving the predetermined marketing objectives. Despite the fact that there are no similar machines in the UAE, the firm’s management is conscious of threat of new entrants. In a bid to deal with this challenge, the firm will conduct continuous market research in order to establish market trends. Moreover, the firm will also evaluate the level of customer satisfaction, which will give the firm insight on how to improve the coffee making machine. The firm projects that the new product will successfully penetrate the market.
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