The product under consideration is Husky’s breakfast cereal. The product is targeted towards the Australian South West Tourist Market with the rural area under consideration. The product is intended to attract the tourist demographic of ages 15 to 64 in the South West region and another version that is intended for the rural locals. Several macro-environmental factors impact the marketing of this product; economic, natural, cultural, demographic, political and technological. (OHS) All these forces have driven the company to create a healthy, attractive, and good quality product through modernized and efficient methods in order to stay ahead of the competition and gain market share. (PESTEL analysis).
The cereal is targeted towards the South West tourist region. People from all over the world often visit the area during their vacations. Normally, these people have a diverse range of tastes as they come from different backgrounds. They vary in almost all segmentation variables, from age to lifestyle and attitude. The local segment on the other hand is much more homogenous. They tend to be from the same cultural background and have similar tastes. The segmentation variables under consideration are explained below (Philip Kotler, 2008).
Several factors would come into play here as the target market is the tourist market, but one of the main variables would be Nationality. People from different regions have different tastes. Since this is a food item, taste plays an important role. Just as regional cuisine differs vastly, so do taste preferences. For example, Americans love fruity and sweet cereal, especially when they’re on vacation (vacation is a vacation in every sense; even from boring routine food). On the other hand, most traditional Asians prefer to rise and grain-based products. A common trait in all nationalities would be the move towards healthier cereals. That is a factor Husky’s would capitalize on (Philip Kotler, 2008).
Out of the three psychographic variables, a social class would be the most significant in this case. Social class is divided into lower lowers, lower upper, upper-lower, working-class, middle class, upper-middle, lower upper and upper uppers. The tourist population would normally consist of people from the middle class and above, that is because most of the people going on vacations need to afford travel expenses, etc. Therefore, the pricing must be suitable for those segments. Domestic tourists can be from the working class as well. As for the local rural population, the classes applicable would be between the middle and lower upper class. The product for them would be packaged and priced accordingly (Philip Kotler, 2008).
The tourist market would differ behaviorally just as much as they would culturally or demographically. Out of the many variables, the benefit would be the most considerable. This variable consists of factors such as the product quality, service, economy provided, convenience and speed. A tourist would want things quickly, conveniently and on the go. Therefore, the packaging and availability have to be handy and accessible. The product needs to provide good value for money and be of good quality since international tourists can be judgmental of a country’s characteristics based on their product quality. For the rural segment, it has to be affordable and accessible in order to be used regularly (Philip Kotler, 2008).
This category plays a significant part in terms of tourism. The variable most relevant would be the World region or Country. (climate of Australia) In this case, it is the Australian South West. The tourists would appreciate a taste of the local heritage and food culture based on the idea of a vacation which is to experience something new and at the same time taste well and be nutritious. Husky’s would need to add a touch of local flavor in order to create a unique offering for the tourists. This would work well with the rural locals as well as it would offer a sense of familiarity and accessibility. (Macro environment).
With the macro-environmental factors and demographic variables analyzed, the next step would be to identify and elaborate on the marketing objectives for Husky’s new cereal. Since it is targeted towards two different segments, one being a niche market, the objectives will be clear and specific (Philip Kotler, 2008).
- The main marketing objective for Husky’s cereal is to gain the highest market share relative to other competitor cereal brands, within six months of the launch. This includes both the tourist niche and the local rural segment. Husky’s needs to do this by creating an attractive market offering based on the marketing mix to attract more customers. For the locals, the cereal needs to be affordable, convenient, healthy and tasty. For the tourists, it needs to be of good quality, priced economically but higher compared to the local version, and marketed effectively to attract customers through advertising and promotion.
- To market a healthy and nutritious cereal product that customers of all kinds can enjoy together without the health risk and provide the energy needed at the start of the day. For this, the cereal ingredients need to be balanced and nutritious, consisting of fiber, carbohydrates and local fruits.
- To make Husky’s cereal the most widely used breakfast cereal at hotels and tourist resorts. Special deals and promotions can be developed to partner with local tourist resorts and hotels that generate mutual benefit.
- Adopt efficient distribution channels to avoid stock-outs and over-shelving extremes. This can be done through supply chain integration and maintaining communication links with the retailers and hotels/resorts.
The Marketing Mix
The marketing mix consists of the actual product that will be sold to the customer, the price at which the product will be sold, the place where the product will become accessible to the customer and the promotional efforts that will be undertaken to sell the product. (Philip Kotler, 2008)
A product is a combination of goods and services that a company offers to a large market. In this case, the product is Husky’s breakfast cereal. There are several components to a product that needs to be considered when on the subject. These include variety, quality, features, packaging, etc. with Husky’s cereal; the three components of the product would be Quality, Brand name and Packaging. The reason these elements are important is that the cereal will sell itself based on them. (marketing mix) Quality is an important consideration and will be emphasized in the premium niche product. The cereal has to be nutritious and healthy.
The brand name is another element on which Husky’s will promote the cereal. Brand recognition is one of the objectives as Husky wants to gain market share. Packaging plays a big role in cereal products. It has to be attractive and communicative in order to sell something that is inside and can not be tasted and tried. By making customers loyal to the brand, Husky’s would ensure that the products will be bought and the customers will exhibit dedication towards the cereal. To create a brand, Husky’s would need to offer its customers a whole breakfast cereal experience rather than just a product. Research done by marketing guru Martin Lindstrom shows that smell and sound play a huge role in a customer’s attachment towards a product. Therefore, it is the entire buying and using experience that creates brand recognition. (Importance of Economic Conditions)
Product classification is a way to categorize a product in the vast variety of product categories available in the product market. A product’s category is usually decided by identifying and considering its use and characteristics, relative to products available in the market and how they are categorized. A product can be a personal care item; going further into the category it can either be a hair care item or a skincare item – there can be numerous levels of classification. Husky’s cereal can widely be classified as a food product and can be narrowed down as a processed food product, grain and cereal product, and finally a breakfast cereal. Husky’s cereal is made of processed grain and dried fruits and therefore fits the classification well.
Product positioning is referred to as the position or status a product has in the minds of the customers, compared to the competitors’ products. To gain customers’ buying share and the overall market share, Husky’s needs to position its cereal among the customers through promotional efforts, product quality, and straight out product awareness (Marketing- Buyer behavior).
Price is the amount of money the customers have to obtain the product. Pricing strategy is the planning and implementation of what amount of money to charge from the customers for the particular product being sold. It is an important strategy because it impacts the product’s performance in the market. If a product is priced too low, profits can be compromised and the product can be perceived as invaluable. Pricing it too high would compromise sales. Therefore the pricing strategy makes sure that the product is priced correctly and according to the product’s life cycle stage which changes the pricing strategy.
The main types of pricing are value-based pricing, cost-based pricing, and target profit pricing. Value-based pricing consists of two types; good value pricing that offers the right combination of quality at a fair price. The other is value-added pricing in which a higher price is charged but value-adding features are attached to the product. In cost-based pricing, the cost incurred manufacturing and marketing the product is considered and a certain level of markup is calculated and charged over the cost. Target profit pricing involves setting a target level of profit first and then pricing the product accordingly to achieve the target.
The cons of cost-based and target profit pricing are that they are very productive and profit-oriented and ignore the value that needs to be provided to the customer. Value-based pricing bases the prices on the value provided to the customer. Husky’s would adopt value-based pricing as well. Good value pricing seems to be a good way of providing quality and value to the customer and receive value accordingly. Value-added pricing will be used as well as part of special promotional endeavors in collaboration with other products in the future, as a free cereal bowl with a cereal pack. For the local cereal product, a toned-down version of good value pricing will be used; low profile packaging and smaller contents at a lower price.
At the time of introduction, a market penetration strategy will be used instead of skimming because the objective is to gain market share and perform mass promotion. Entering at a moderate/low price with a good promotion will result in customers switching over or trying the new hyped-up product. This will ensure a good market share that Husky’s can improve upon. Upon trying out the product, Husky’s job is to make sure that the customer likes and enjoys the taste, quality and value in order to make them switch over to the new product. Prices can be increased in the long run.
Husky’s will be competing with other cereal brands on a combination of price and non-price factors. Price definitely plays a part and will be the basis of the competition. But there are other significant factors as well. Of these, the main ones would be the quality of the product and promotion. These two factors count significantly in addition to the price when it comes to customers buying breakfast cereal. Husky’s would need to gain an edge by offering the tourist market a local taste with energy and excitement, and offer the local market good value and nutrition at an affordable price (Philip Kotler, 2008).
Place strategy refers to the activity of developing an efficient and effective way of storing and handling goods and products, distributing them, and getting them to the customers in the market. It is an important concept because a product that is not accessible by the customer is useless. The whole point is to get the product to the customer as efficiently as possible to incur minimum costs and earning a higher profit by selling the product to the customer. The customer needs to have easy access to the product due to intense competition. The customer would only buy something easily available if there are many identical products in competition. Husky’s business is located a few miles out of the Southwest tourist district, where the facility is located. Cereal is prepared and packed there and transported to the local market through distributors. The location is ideal because it is close to the cereals’ grain-based raw materials and local fruit suppliers. It is not a residential zone and is safe for production. Apart from that, it is the nearest lace available to the southwest region which is the main market.
The method of selling the product is through retailers and local wineries. The product is available wherever breakfast is served, that is at restaurants, tourist resorts and hotels as well. Intermediaries are the links in the chain that help distribute the product. These can retailers who sell products at local shops, wholesalers who sell the product in bulk at low prices to retailers and other customers, distributers that distribute the product to wholesalers and retailers as well as other large customers, franchises, that are independent businesses that operate a particular brand and pay royalty and finally agents who sell products and earn a commission on the sales. For Husky’s, retailers play an important role because that is the main place where customers purchase cereals. It is the main outlet for all cereal brands.
There are can several distribution channels as well. Road transport is the simplest one in which a logistics department or firm transports the goods to distributors, wholesalers and retailers. Other methods can be by air or sea or electronically. The most relevant in this case is road transport. Trucks from a third party or husky’s own logistics service would transport the product to wholesalers and retailers. The reason for this choice is because the cereal is a simple product with a relatively long shelf life and since the factory is located nearby and there are well enough road networks connecting the market to the factory site, road transport seems to be the ideal choice. Costs would not be great and the model is simple.
A promotion strategy is what markets and sells the product to the customers. Without it, a product is useless. A promotion strategy may include advertising; a nonpersonal form of paid communication through mass media, public relations; which involved developing links and relations with the organization and public to sell products and create brand awareness, sales promotion; used to generate sales in the short term through promotions like coupons, personal selling; one-to-one selling of a product and direct mail; mailing manually or electronically to promote a product gibing information and highlighting benefits. IMC is an integrated marketing communication and involves several modes of promotion and integrating them to create an effective communication plan to sell and promote a product. The main goal of IMC is to build brand equity, product awareness and gain the customer’s attention and buying a share. It is an important concept because it is responsible for creating an image for the product. It gives the product a certain personality and affects the way a customer perceives the product and the brand name attached to it. It is responsible for selling the product. (Philip Kotler, 2008)
As far as IMC budgeting is concerned, Husky’s will adopt a Task Method approach. This is because the budget is based on the IMC objectives and takes into consideration all concerned marketing variables. It is a step-by-step process that is based on research of the market and its opportunities, and then the next steps that follow include setting objectives, tasks to achieve those objectives, and the costs associated with those tasks and activities. That will allow Husky’s to comprehensively plan and assess all costs and expenditures.
Communication will be done through advertisements through different media and possibly also create a brand mascot that will appeal to children. This method is adopted by several other competitors like Kellogg’s different cereal lines. Other methods will be through public relations and direct marketing. This will be done by attaching tourism and local heritage links with the product’s packaging and promotion. This will have several benefits. Tourists are looking for ways to learn about the local culture and geography. With just a section on the packaging dedicated to tourism like a history section on each box would work well with tourists, explaining about a certain landmark or recommending a tourist spot. Apart from that, it will set the product apart from competitors and gives Husky’s an edge.
A push strategy is when the information and promotion are pushed onto the customer regardless of whether the customer requires it or not. Examples can be unwanted direct email and postal mail. A pull strategy lets the customer pull information at will and based on their requirements and convenience. Husky’s would adopt a combination of both with more emphasis on the pull. It will not irritate customers with unwanted advertisements and promotions and let the customer opt-in to receive and look at advertisements (Philip Kotler, 2008).
Husky’s cereal has an attractive and promising target market with the South West tourist region and the local rural market taking into account the segmentation variables, Husky’s needs to adopt a suitable marketing mix and IMC strategy to achieve its marketing objectives. These objectives are mainly market share, brand awareness, health and nutrition and an efficient low-cost distribution channel.
In the marketing mix that Husky’s needs to adopt, the product has to be of good quality and nutritious as well as attractive and accessible. The pricing strategy used will be value-oriented and a fair amount of profit will be made based on the value provided to the customer. Retailers, wholesalers, resorts, and hotels will be the main outlets for the cereal and will serve as the place where customers will have access to Husky’s cereal. Promotion needs to be intense to penetrate the market and create immense brand recognition and equity. This will be done through advertising and public relations, promoting tourism, and providing a unique market offering. With these efforts, Husky’s cereal will no doubt be a market leader and achieve its marketing objectives within the specified time.
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