Introduction
Seconal Foods is a firm that will specialize in the retail of organic foods that have been produced in compliance with all standards and regulations of organic farming for the United States and Canada. The company’s products will contain an extremely limited amount of artificial preservatives, sweeteners, colors, and flavors; therefore, they will be superior to conventional foods (Blair, 2012). This paper aims to outline a marketing plan for Seconal Foods while focusing on the most important elements of the marketing process.
Situation Analysis
Seconal Foods seeks to provide its customers with organic foods that have a limited amount of artificial preservatives, sweeteners, colors, and flavors (Blair, 2012). The company is planning on opening three facilities in the United States and one in Canada during the first year of operation. Seconal Foods will use an extremely motivated workforce that is poised to deliver high-quality products at affordable prices to health-conscious consumers.
The company has sufficient financial and labor resources necessary for conducting the business of significant size and scale. The retailer will be financed with the help of equity investments. It already has sufficient cash reserves for covering marketing and operating expenses. The company’s management has identified the following measurable elements of marketing strategy: to serve one million customers at the end of the first year of operation, to attain 75 percent rate of returning clients, and to gain brand preference level of brand awareness at the end of the first year of operation.
Current Situation and Trends
Like all companies that specialize in the retail of organic foods, Seconal Foods is subject to the standards and regulations set forth by the United States Department of Agriculture (USDA) (Blair, 2012). Taking into consideration the fact that the company plans to open locations in Canada, it has to make sure that its products comply with the regulatory requirements of the Canadian Food Inspection Agency (CFIA) (Blair, 2012). Fortunately, Seconal Foods has already been certified by both agencies; therefore, it can be argued that the external legal environment is conducive to conducting business in the United States and Canada.
The current macro-trend of consumers seeking high-quality organic foods has been present for more than a decade, and it is expected that it will only increase in the following years (OTA, 2016). According to a recent report, the United States organic sector amounts to $43.3 billion in total sales (OTA, 2016). The authors of the report revealed that “the industry saw growth in the double digits at 10.8 percent” (OTA, 2016, para. 4) for four consecutive years. The unprecedented growth of the industry coincides with the significantly lower rates of growth of the overall food market. Only in 2015, the organic sector in the United States expanded by $4.2 billion in total sales. Therefore, it can be argued that rapid growth in the organic sector will make Seconal Foods a profitable and sustainable business.
Seconal Foods is concentrated on the retail of high-quality products, hence it will need to offset the risks posed by its major competitors such as Whole Foods, Wal-Mart, Sprouts Farmers, and Trader Joe’s by opening new outlets in Canada where the level of competition is substantially lower than in the United States (Canada Organic Trade Association, 2013). While fierce competition in the organic foods sector poses a significant threat to the company, it should be noted that it will specialize in a much narrower niche than that of the key competitors, thereby making its product range a palpable strength. Therefore, Seconal Foods is ready to face the rivalry among existing companies and establish itself in both domestic and foreign markets.
Another external trend that the company will have to deal with is increasing the bargaining power of suppliers. Taking into consideration the fact that an extremely limited number of food producers are able to meet all requirements of the United States and Canadian organic certification institutions, they are in a position to bargain for higher prices (Blair, 2012). However, as more producers enter the market, this trend will subside, thereby lowering the company’s dependence on suppliers that have manufactured their products through approved methods (Blair, 2012).
Internal Environment and Company Resources
SWOT Analysis
SWOT analysis is an essential component of a successful marketing strategy (Westwood, 2016). By critically examining the most important strengths, weaknesses, opportunities, and threats of Seconal Foods, it is possible to predict both favorable and unfavorable future developments that might affect the company.
Strengths
Seconal Foods is a company that is going to contend for a share of the organic foods market by engaging in direct competition with the key players in the field: Wal-Mart, Whole Foods, Kroger Company, Sprouts Farmers, Costco, and Trader Joe’s among others (Dalavagas, 2015). However, while these companies provide their customers with a diversified range of products, Seconal Foods strives to specialize in a narrow market niche; therefore, its product range is a substantial strength. Another strength of the company is its highly motivated workforce that helps to maintain high-quality standards. Furthermore, a substantial supplier base is another key strength that will help Seconal Foods to leverage economies of scale.
Weaknesses
The company’s overdependence on the United States market is one of its major weaknesses. A lack of presence overseas means that the retailer will have to rely on proceeds generated by domestic sales which will make it vulnerable to economic swings. To address these concerns, it is necessary to open facilities in Canada which will create some revenues from the foreign market. Another weakness of the company is a lack of brand awareness which will make it hard to influence the purchase decisions of its future customers. High prices associated with the absence of economies of scale will make it difficult to gain a competitive advantage in the stiff market. The limited supplier base is also a weak point that has to be addressed if Seconal Foods is to become a successful company.
Opportunities
International expansion can provide the company with an opportunity to take hold of the rapidly-growing market. A report produced by the Canada Organic Trade Association (2013) reveals that the size of the Canadian organic foods market has tripled since 2007. The total sales amounted to $3.7 billion in 2012, which is a substantial figure even in comparison with $43.3 billion in total sales in the United States (Canada Organic Trade Association, 2013; OTA, 2016). Therefore, the company has to use this opportunity to its advantage. Another opportunity that should not be missed is value-added services such as a provision of dietary plans for Seconal Foods’ customers. The management of the company should also consider market segment expansion and complementary assets.
Threats
The company is faced with a high level of competition in the organic market niche which will not be limited to domestic players in case of international expansion. Moreover, the threat of competition also comes from “national and international supermarkets, natural food stores, warehouse membership clubs, online retailers, farmers, markets, and restaurants” (Dalavagas, 2015, para. 7). Rising costs of labor can present another threat, especially considering that the main competitors of Seconal Foods such as Wal-Mart, Whole Foods, Kroger Company, Sprouts Farmers, Costco, and Trader Joe’s among others are offering similar products at extremely low prices (Dalavagas, 2015). Government organizations such as USDA, CFIA, the Food and Drug Administration (FDA), and the Consumer Product Safety Commission (CPSC) present another threat that might result in substantial penalties and severe legal repercussions (Dalavagas, 2015). The risk of economic downfall also has to be taken into account if the company is to succeed.
Company Resources
According to a recent article by SBDCNet (2016), “the organic food industry today is very much governed by a rule of high volumes and low margins” (para. 6). Therefore, to start an organic food operation, it is necessary to aim for significant size and scale. For the aim of this marketing plan the following presumptions will be used:
- Time for achieving maximum capacity utilization—three years from the start of operations;
- Margin money—30 percent of capital investment;
- Rate of interest on capital—13 percent per annum.
Financial Capabilities
Seconal Foods will be financed with the help of equity investments. It already has sufficient cash reserves for covering marketing and operating expenses. Furthermore, the company’s investors will provide it with additional funding if need will arise. In terms of materials, the company will need to cover the costs of preliminary and pre-operative expenses, as well as technical consultancy services. As for fixed assets, Seconal Foods will require land and buildings, quality control testing instruments, packaging materials and machinery, ozone generators, refrigerators as well as furniture and official accessories among others.
Operation Capabilities
The company can open up to three locations in California. However, it will have to outsource distribution, warehousing, and transportation. The decision to outsource logistics is especially important in light of the necessity to open locations in Canada where it will be extremely difficult to manage retail distribution channels. Therefore, to successfully run supply chain functions, Seconal Food will hire both the United States and Canadian third-party intermediaries.
Marketing Research Concepts
To determine the existence of the market as well as which locations should be served, the company conducted marketing research. The main objective of the research was to provide the management of the company with comprehensive information on both domestic and foreign market trends. Other key objectives were to assess behavioral patterns, needs, and demands of customers in Canada and the United States.
By meeting these marketing goals and objectives, Seconal Foods was able to develop a successful pricing strategy as well as create a positioning plan necessary for launching its operations. Moreover, by conducting effective research, the retailer was provided with an opportunity to distinguish itself from its main competitors operating in the two countries. The research allowed Seconal Foods to better understand the products offered by its competitors as well as demand for them at both national and international levels.
The primary market research was conducted with the help of online customer questionnaires that were distributed among two primary consumer groups: millennials and baby boomers. The questionnaires revealed that millennials are the group of potential customers that has the highest interest in organic foods. Taking into consideration the fact that they make up approximately 25 percent of the United States population, it can be argued that the company will have a substantial customer base (Duff & Phelps, 2016). The data gathered by interviewing focus groups shows that the Great Recession has negatively influenced young adults making them more willing to refrain from visiting restaurants and, instead, purchase organic foods from the local retailers. The key expectations of millennials from Seconal Foods are freshness, quality, and speed.
In addition to primary research, the company conducted secondary research by using reports from the government organizations and private firms such as Duff & Phelps, OTA, USDA ERS, Soil Association, CFIA, the Food and Drug Administration (FDA), and the Consumer Product Safety Commission (CPSC) among others (Blair, 2012). The secondary research showed that British Columbia is a Canadian province that consumes the biggest amount of organic foods in the country.
According to a report issued by the Canada Organic Trade Association (2013), “Alberta and Ontario have the most developed organic markets based on mainstream locations” (p. 4). Therefore, to achieve the highest foot traffic, Seconal Foods should open its facilities in the province. Other locations for consideration are Toronto, Quebec, Montreal, and Vancouver. Given that Toronto and Vancouver are located near large American cities — Detroit and Seattle, which are also considered primary locations for opening Seconal Foods outlets, expansion to Canada will be much easier. Moreover, fresh organic foods are not always available in these cities; therefore, the successful marketing campaign will help to attract a substantial consumer base (Canada Organic Trade Association, 2013).
Marketing Goals and Objectives
The main marketing objective of the retailer is to establish the needs and requirements of Canadian and the United States consumers to become a preferred destination for health-conscious people for purchasing organic foods in both countries. By making this goal a part of the overall strategic objectives of Seconal Foods, it will be easier to achieve brand awareness as well as guarantee the successful outcomes of the future expansion overseas (Horn, 2015). The company has developed the following measurable elements of marketing strategy:
- Serve one million customers at the end of the first year of operation;
- Attain a 75 percent rate of returning customers;
- Gain brand preference level of brand awareness at the end of the first year of operation.
Marketing Strategies
According to a recent report, the United States organic sector amounts to $43.3 billion in total sales (OTA, 2016). Another report reveals that in terms of psychographics, the market can be divided into two groups: true believers and enlightened environmentalists (IBT, 2013). True believers are determined to stay healthy and earn on average $65, 000 (IBT, 2013). Enlightened environmentalists, on the other hand, are driven by their concern for the environment and their average income amounts to $57, 000 (IBT, 2013). There are also two main demographics for the organic foods market: Millennials and Baby Boomers (Curiel, Castro, & Quisimalin, 2015). Seconal Foods is interested in the delivery of high-quality, premium products. This positioning will allow organic foods offered by the retailer to be separated from similar propositions of competitors such as Costco and Wal-Mart.
Marketing Mix Strategies
4Ps Analysis
The assessment of marketing mix strategies will help Seconal Foods to determine whether it is capable of reaching its prospective customers most effectively. The marketing mix will be examined with the help of 4PS analysis which concentrates on four essential elements: product, price, promotion, and place.
Product
Seconal Foods’ products are organic foods that have been produced in compliance with all standards and regulations of organic farming for the United States and Canada. They will contain an extremely limited amount of artificial preservatives, sweeteners, colors, and flavors, which will make them superior to conventional foods. At the level of products, Seconal Foods is going to use its marketing mix with the utmost efficiency by offering its customers a wide range of products. All product lines can be divided into three groups: Basic Value, Seconal Foods Market Brand, and Vegetarian Seconal. The first group will target price-conscious consumers who would like to stay healthy but are not willing to spend too much on organic foods. Seconal Foods Market Brand is an attempt to create a product line that can be placed at the top of the retailer’s brand portfolio. Vegetarian Seconal is the third group of products that will accommodate buyers that have special dietary needs or restrictions and those that show vegetarian preferences.
Place
The place is an essential component of the effective marketing mix; therefore, the company emphasizes its distribution venues that will help to deliver the freshest organic foods to its customers. During the first year of operation, Seconal Foods is planning to open three facilities in the United States and one in Canada. During the second and third years of operation, the retailer will add new locations, thereby expanding its base of customers who are willing to become a part of a global community. Furthermore, Seconal Foods is going to sell organic foods online, thus reaching a much larger audience of health-conscious buyers. To address distribution issues associated with a delivery of products purchased online, the retailer will start a partnership program with a group of independent contractors led by Instacart. The company also offers its shopping services to industry giants such as Whole Foods and Safeway (Kusek, 2015). A report issued by Canada Organic Trade Association (2013), suggests that Alberta, Ontario, Toronto, Quebec, Montreal, and Vancouver have the highest interest in organic foods; therefore, one of these cities will be chosen as a primary location for opening a facility in Canada. Given that Toronto and Vancouver are located near large American cities — Detroit and Seattle, expansion to Canada will be much easier.
Price
Seconal Foods is interested in the delivery of high-quality, premium products. It means that in terms of the strategies for determining the price of the company’s products, organic foods from the retailer will be separated from similar propositions of competitors such as Costco and Wal-Mart. However, their positioning in the market is similar to that of Whole Foods. The manager chose this pricing strategy because it is aligned with the overall strategy of broad differentiation which is aimed at maximization of product quality and ensuring customers that Seconal Foods’ products have significant intrinsic value (Panmore Institute, 2015).
Promotion
The target market will be reached through the combination of direct and Internet selling. Communication with customers will be conducted with the help of social media and television advertising. This communication strategy was deemed the most efficient because, in this age of technology, young customers increasingly use social media as a primary means for receiving information. A television marketing campaign is necessary for reaching Baby Boomers who do not use the Internet in significant numbers. Therefore, the combination of online engagements and an innovative TV marketing campaign is the best way to communicate with Seconal Foods’ customers.
Media Selection
The combination of TV and Internet marketing campaigns will be used. Advertisements will be featured in primetime slots 4 times per day on Fox News because it is primarily viewed by the older audience. Thirty-second advertisement will cost $5, 465 (National Advertising Agency, 2016).
Implementation
Marketing Action Plan
Control
To maximize the effectiveness of the marketing plan, it is necessary to put in place controls that will allow monitoring the plan’s progress (Root, n.d.). The following metrics will be used to gauge success: customer feedback, target market sales, budgeting, and market share (Root, n.d.).
Contingency Plan
The contingency plan devised by the company’s management is an essential part of the risk management strategy of Seconal Foods. There are three types of marketing risks addressed by the contingency plan: financial, operational, and legal (Markgraf, n.d.). In case the sales of the company’s products become sluggish, it is necessary to launch a more aggressive advertising campaign involving mobile, print, online, broadcast, and guerrilla, outdoor, public service, and product placement advertising among others (Westwood, 2016). By leveraging a marketing campaign with the help of the complex form of communication, Seconal Foods will be able to deliver its message to a wide range of potential customers, thereby stimulating sales and growth of the business.
The contingency plan also has a strategy for dealing with new competitors entering the market. Having established itself on the organic foods sales market, Seoncal Foods will have absolute cost advantages over new entrants. It has to do with the fact that the company will be able to easily obtain access to cheaper funds due to close relationships with its creditors who understand that the established company represents a low financial risk. Moreover, the retailer will offer its customers attractive deals, coupons, and discounts, thereby strengthening brand loyalty.
Conclusion
The marketing plan for Seconal Food shows that there is a substantial level of competition in all segments of the organic foods market. However, it also suggests that the company’s products will be well-positioned in both geographic areas. Moreover, the 4Ps analysis shows that Seconal Foods has a great chance of distinguishing itself from other retailers of organic foods operating on the market.
References
Blair, R. (2012). Organic production and food quality (1st ed.). Ames, IA: Wiley-Blackwell.
Canada Organic Trade Association. (2013). Canada’s organic market: National highlights, 2013. Web.
Curiel, J., Castro, J., & Quisimalin, M. (2015). Organic consumer segmentation. Sociology Mind, 5(1), 176-187.
Dalavagas, I. (2015). SWOT analysis: Whole Foods Market, Inc. Web.
Duff & Phelps. (2016). Industry insights: Food retail industry insights-2016. Web.
Horn, J. (2015). Business Objectives. Web.
IBT. (2013). Here’s who eats natural and organic foods, and why: Market research. Web.
Kusek, K. (2015). Five lessons retailers can learn from whole foods market’s q1 performance. Forbes. Web.
Markgraf, B. (n.d.). Marketing contingency planning. Web.
National Advertising Agency. (2016). Fox News channel and business news advertising sales. Web.
OTA. (2016). Organic market analysis. Web.
Panmore Institute. (2015). Whole Foods market’s marketing mix (4Ps) analysis. Web.
Root, G. (n.d.). Examples of controls in a marketing plan. Web.
SBDCNet. (2016). Organic food retailers. Web.
Westwood, J. (2016). How to write a marketing plan (1st ed.). London, England: Kogan Page.