Table of Contents
1.1 Company Information
Americana Group is a food corporation headquartered in Kuwait city. After being originated in Kuwait in 1964, the company currently operates in the Middle East and North African region (MENA) with its food and beverage outlets and self-manufactured food items. The activities of the Americana Group has spanned in 13 countries with a strength of 63,000 employees from 21 nations, having a diversified culture (Americana Group, 2017). The Americana Group operates in the MENA countries from 1,700 outlets and is currently considered to be the largest restaurant chain of the region. Also, the company operates as one of the most successful franchise operators throughout the world encompassing famous brands like KFC, Hardee’s, Red Lobster, LongHorn, and the Counter (Americana Group, 2017). Apart from size and extension, the organisation is considered to be the leader of Middle East food industry in terms of quality. The firm manufactures food products under 6 different brands such as, California Garden, Koki, Farm Frites, and Americana Meat (Americana Group, 2017).
1.2 Purpose of the Report
The role of the marketing department seems to be of high importance in the process by which a company acquires success in the industry in which it operates. This is because it is through effective marketing that a firm can introduce and promote its products and services to the market, therefore paving way towards sales of the substance while reaching the profit margin. Hence, the success of an organisation lies in the way it markets and promotes its products and service to its target customers (Khan, 2014). In this context, it can be stated that a company can undoubtedly launch a product without promoting the same in the market. However, the company might then face tough times, since the customers would be unaware of the product. This would, in turn, result to low sales volume and revenue followed by huge loss. In order to avoid such a situation, the current report has been prepared by the marketing manager of Americana Group for the extension of its self-manufactured product line to the beverage industry.
1.3 Scope of the Report
The current report provides the top management team of the Americana Group with a marketing and promotion plan for a new product line. For this, a review of the available literature will be conducted which will enlighten the organisation about the principles of marketing planning and customer relationship. The marketing and promotion plan will contain an industry analysis, followed by competitor analysis. This will help the top management of the company in understanding the contemporary situation of the food and beverage market of MENA countries. Also, the report will provide the management with market opportunities for the new product line, therefore helping it to generate highest possible revenue. Moreover, a demand and budget forecast has also been provided in the report so that effective business strategies can be prepared in future.
2.0 Literature Review
2.1 Principles of Marketing Planning
There exists a number of theories related to the way in which companies should prepare their marketing plans. These theories help the organisations in designing proper strategies for the marketing of their products and services, thereby reaching up to the targeted sales and profit margin. Marketing of a product or service actually includes the overall process of transferring a particular object, tangible or intangible, from the manufacturer to the user. It is done effectively with the help of several promotional processes like advertising, telemarketing, personal selling, publicity, short-term sales promotions, and direct marketing (Cravens and Piercy, 2006).
Marketing of a product or service is normally based on four principles; namely product, price, place, and promotion. These four basic principles of marketing planning, collectively referred to as the marketing mix, are considered to be the most significant for a company, prior to the launching of a product or service (Constantinides, 2006). This is because it is the marketing mix that provides the management of a company with the basis of strategic planning for the new product, therefore determining the success or failure of the product.
Within the marketing mix of a company, the product forms the most important element of planning. It might come to the market either in the form of a tangible commodity or in the form of an intangible service, depending on the nature of the object. Marketing planning needs to be done with prime importance to the characterisation of the product, since it is the feature of the product that eventually attracts customers and compels them to purchase the same. The level of attraction of a product is ascertained with the help of its name, packaging, warranty, usage, and unique features (Goi, 2009). The appraisal of a product is done on the basis of the extent to which the object is capable of satisfying its user, in a better way than its competitor.
The price of the product refers to the amount of money that a customer is ready to pay in exchange of the commodity. It the price of the product that brings in profit to the company. Therefore, the pricing of a product needs to be decided in such way that it can result to maximum profit for the company; for a price which is lower than the optimum value of the product, might lead to a reduction in the per unit profit of the company while increasing the demand and vice versa (Ivy, 2008).
The third principle of marketing planning, i.e., place, denotes the location at which a particular product can be sold so that it comes to the attention of maximum buyers possible (Kavaratzis, 2005). Promotion of a product refers to the way in which information regarding the product is communicated to the targeted audience (Mangold and Faulds, 2009). Promotion of a product is mostly done with the help of advertisement using different media, print and digital, along with word of mouth.
2.2 Customer Communication
It is necessary for any organisation to maintain a healthy relationship with the customers. This is because it is the customer base that leads a company to the zenith of popularity followed by profitability (Payne and Frow, 2005). For maintaining a healthy relation with the customer base, an organisation needs to communicate with the target customer, thereby keeping the customer base updated with the exiting and upcoming products or services of the firm. Also, this customer relationship is essential for the efficiency of the organisation in terms of its operations. The reason behind it is that in the current scenario of upgraded communication systems, it has become important for almost all the companies to form an Integrated Marketing Communication (IMC) system, thereby making customer communication an easy process.
The system of IMC works in a way that all the points of communication of a firm with its customers, are interlinked in such a way that the stakeholder group is updated with the knowledge of changing needs and patterns of the market (Kitchen and Burgmann, 2010). With the help of this knowledge, the company can change its marketing strategy from time to time; thereby compelling the customer to purchase the company’s products and also keeping them loyal towards the brand. Therefore, it is the integration within the marketing communication process of an organisation that in turn leads to attainment of competitive advantage of the firm (B. Rakić and M. Rakić, 2014). It is due to this reason that all the organisations, big or small, tend to develop and maintain a strong relationship with their customer base (Rahmani, Emamisaleh and Yadegari, 2015).
It is due to the utter importance of customer feedback for the betterment of an organisation that companies prioritise customer communication within their marketing strategy. It is enhanced through conversations over phone, emails, sales proposals through quality templates and social media advertisements. These methods of customer communication are used so that it can be ensured that a particular customer base is aware of the brand and its products, thus reducing the time consumption allotted for marketing survey (Paul, 2014). With the help of these communication strategies, organisations aim at understanding the mind-set of the customer base while addressing to their queries as promptly as possible (Paulin, Ferguson and Bergeron, 2006). Also, if regular communication can be maintained with the customer base, people consider themselves important for the company. As a result, they pay attention to the company’s products and eventually purchase the same. Ultimately, the company becomes a gainer in terms of high sales volume, revenue and competitive advantage.
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2.3 Promotion Policy
In the marketing mix of a company, promotion comes in the place and is referred to as the communication messages that are delivered to the customer with reference to the products and services of the enterprise. In other words, promotion is a way of developing and maintaining relation, with the targeted customer base, by way of attractive communication messages (Shimp and Andrews, 2012). In the context of marketing, promotion is done so that the targeted customer base can be influenced, reminded, affected and persuaded towards the utility of the product, therefore leading them to purchase of the current as well as future deliverables of the company (Shimp and Andrews, 2012).
The worldwide firms use a number of promotional methods that are selected based on the common customer trends. As a result, the newly launched product or service can be projected successfully. In the current competitive market, no company expects to reach high sales and profit margin without proper promotion of the product or service (Mangold and Faulds, 2009). An effective promotion of a product or service can be designed when the consumers are facilitated with authentic information regarding the product. As a result, the buying behaviour of the consumers is influenced in the favour of the company, which in turn convinces the customer to buy particular product. Thus it can be inferred that promotion is a highly powerful tool that can inevitably provide the company with a competitive edge in terms of marketing (Slater, Hult and Olson, 2010).
The success of a marketing promotion depends on effectiveness, shown in the combination of the different elements of the tool. The constituents of a marketing promotional mix include the ways in which a particular company can facilitate communication with its customer base. The most popular method, which the modern companies use for facilitating effective communication with the targeted customer, is advertisement (Brammer and Pavelin, 2006). Besides advertisement, companies make effective use of other promotional techniques; which involve sales promotion, public relation events, direct marketing and personal selling; thereby paying attention to the entire customer base in a more individualised manner.
The effectiveness of the promotional methods, mentioned earlier, involve considerable amount of investment from the company’s end (Malhotra, 2008). As per a research report, it has come up that the traditional forms of marking promotion are more expensive than those that are comparatively modern. Therefore, companies operating in the modern competitive market scenario prefer social media, for promotional campaigns, to the traditional ones. This is because publishing an advertisement in the social media costs a nominal price to the company while enabling the firm with the communication to a wide base of social media users, and that too in a very small period of time (Mangold and Faulds, 2009).
3.0 Marketing and Promotion Plan
3.1 Industry and Competitor Analysis
The Americana Group operates as a conglomerate within the restaurant industry along with manufacturing of packaged food items. In order to develop the business of the company, it is necessary to analyse the industry with reference to the current market condition and severity of competition that the firm is facing. For this, Porter’s Five Force analysis needs to be conducted so that the competitive intensity of the market can be assessed while analysing the attractiveness of the industry (Porter, 2008). The analysis is done taking bargaining power of suppliers and customers, threat of substitutes and new entrants into consideration.
Bargaining Power of Suppliers
The suppliers, who provide finished goods and raw materials for the self-developed products of Americana Group, are distributed all over the geographical business area of the company therefore enabling the firm to switch from one supplier to another, depending on convenience and availability of goods (Sahota, 2009). Also, the switching cost for the companies operating in the food industry of the MENA countries is low since the suppliers seldom integrate vertically while supplying only generic resources without much differentiation (Laeequddin and Sardana, 2010). However, leading food companies like the Americana Group enjoy the availability of substitute suppliers thus making the bargaining power of suppliers low. Hence, suppliers does not pose much severe competition to the operations of Americana Group.
Bargaining Power of Customers
Like the suppliers, the customers of the food industry are distributed evenly all over the MENA countries. Also, they have diverse choice and preference. Hence, the organisations operating in the particular sector need to offer a wide variety of products and services so as to attract and retain the customers in the long run. However, customers experience a little or zero switching cost, most of the time, since a number of substitute products are high in the market (Verain, et al., 2012). Even, the preferences and demands of the customers of the Kuwaiti food industry is currently observed to change rapidly and is forecasted to change further in future, therefore providing a high bargaining power to the customers (KPMG, 2016). Therefore, customers give rise to steep competition for the food and beverage companies, like Americana Group, operating in the MENA countries.
Threat of Substitutes
The food market of the MENA countries contain a number of companies that manufacture packaged food products while operating restaurant chains and franchising other operators. Therefore, it can be commented that the customers of the Americana Group have a number of substitutes that are always ready to serve them, may be at a lower price and higher quality thus adding higher value to the customer. Moreover, the modern customer trends show that very less customers tend to visit casual dining, the services provided by Americana Group (KPMG, 2016). Also, the industry experiences high competitors’ fragmentation thus assisting the buyers to switch companies at a very low or no cost (Al-Salman, 2008). Thus it can be inferred that the Americana Group face high competition from substitutors in the food market of the MENA region.
Threat of New Entrants
Any new company willing to enter the food industry of the MENA countries face high capital requirements in terms of employment, equipment cost, establishments, and the like. This in turn stops small start-up companies to enter the market frequently. However, once entered, the companies enjoy economies of scale though in terms of low profit margin. Also, the new entrants face difficulty in getting access to the location wise distribution channels since these are already occupied by the big brands like the Americana Group. The government has also imposed a number of regulations for the new entrants. Moreover, the rate of brand loyalty enjoyed by the company leads to least business effect of the Americana Group due to new entrants. Therefore, the Americana Group enjoys nominal threat from new entries to the Kuwaiti food market. Hence, the company seldom has to compete with the new market entrants.
There are numerous players in the food industry of Kuwait and the MENA countries. The strongest competitor base of Americana Group that often leads to rivalry against the company include Quickfood SA, Burger King Worldwide, Inc., Krispy Kreme Doughnuts, Inc. and Starbucks Corporation (Food Business Review, 2017). These companies pose high competition to Americana Group because the Kuwaiti food industry is forecasted to witness considerable growth in the recent years all the rivals offer similar products to their customers therefore portraying equal performance through quality and brand images (Al-Salman, 2008). This rivalry has become stronger since the buyers enjoy almost zero switching cost in the industry. Hence, it can be inferred that Americana Group faces intense rivalry from its competitors. The following figure represents the picture of the food industry of MENA in terms of competition:
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3.2 Extension of Product Line
It has been observed from the industry analysis that Americana Group has been facing high threat from the bargaining powers of the customers along with the chance of getting substituted by the competitors. Also, the company has been rivalled by a number of its strong competitors, therefore converging the overall business scope of it. As a result, the company has been observed to face a loss of over 2,000,000 Kuwaiti Dinars (KD), as per the annual report for the financial year ended on 31 December, 2016 (Americana Group, 2016). Hence, time has come for the company to extend its product line so that the loss can be made-up followed by the attainment of profit in the food industry of the MENA countries.
Americana Group already operates in the restaurant industry. Also, it provides franchise service to few other restaurant chains. Apart from that, the company has developed a number of self-manufactured brands which deliver the customers with a variety of packaged food products (Americana Group, 2017). However, Americana Group has still not entered into the business of manufacturing beverage products under its own brand name. Hence, it can be recommended to the conglomerate to extend its product line of the self-manufactured items by producing some beverage products.
The recommendation of extending the self-developed product line into the manufacture of beverage products will help Americna Group to earn back its lost money, thereby gaining more market share and penetration. This is because, it has come up in the industry analysis that the food industry of the MENA countries will show huge business scope in the near future. Also, it has been observed by the researchers of Databank that beverage generates the highest revenue in the overall food and beverage industry (Databank, 2011). The following figure represents the proportion of revenue generation by the beverages all over the world:
Figure 2: Revenue Generated by Beverages in the Worldwide Food and Beverage Industry
(Source: Databank, 2011)
Hence, Americana Group, if starts manufacturing beverages, will be able to generate high revenue in the near future. The popularity of the company will help in getting brand value and positive customer response. Therefore, launching a new range self-manufactured beverages proves to be the best strategy for the company for gaining the desired revenue..
3.3 Marketing Objectives
The marketing of the new beverage product of Americana Group will be done based on the following objectives:
- To provide the customers with a wider variety of products manufactured by the Americana Group, thereby attracting new customers along with the existing ones.
- To reduce the chance of getting substituted by the competitors.
- To increase the overall sales volume of Americana Group, thus becoming the market leader in the next two years.
- To make-up the loss suffered in the financial year ending on 31 December 2016, by the upcoming financial year.
3.4 Segmentation, Targeting and Positioning (STP)
In order to fulfil the marketing objectives mentioned previously, the following segmentation, targeting and positioning strategies can be used by Americana Group.
The MENA market will be segmented as per the trends of beverage consumption. Most importantly, the overall area of the MENA region will be segmented geographically, paying the highest emphasise on Saudi Arabia. This is because among the major states of the MENA region, Saudi Arabia shows the highest beverage consumption followed by the UAE, Kuwait, Oman, Bahrain and Qatar (Sherif and Sumpio, 2015).
For the new beverage product, people residing in Saudi Arabia will be targeted first. Within Saudi Arabia, the youth will be targeted since it is the young generation which consumes the highest quantity of beverage all over the world (Cleland, et al., 2008). Therefore, the people belonging to the age group between 13 to 25 years will be targeted for the new product line with self-manufactured beverage. Also, the beverage product will target the restaurant chains operated by Americana Group along with the franchises operated by the conglomerate.
The new beverage product will be positioned in the market as a refreshment drink. It will energise the consumer so that concentration at work increases.
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3.5 Marketing Mix
In order to attain the sales targets associated with the launch of the new product line of beverage, Americana Group will use the following marketing mix strategies.
The new beverage product line of Americana Group will contain tea of different flavours that will act as refreshment drink for the consumer. The beverage will initially come in the form of two different flavours, one for tea-with-milk and another for tea-without-milk.
For the new beverage product line, Americana Group will use penetration pricing strategy. This is because, currently, the company is facing a loss and reduced market share. It needs to recapture market share by entering the industry with a new product, which was not earlier sold by Americana Group (Americana Group, 2017). Hence, the company will offer the product at a lower price compared to that of its competitors, so that buyers are attracted. In this context, the aima of the company will be creating awareness among the customer base about the new product and motivating them to try the drink. As a result, the sales volume of the company will increase, therefore providing it with a better position in the MENA market.
The new product will be launched all over the MENA regions simultaneously with the highest supply at Saudi Arabia. This is because among all the major countries of the MENA region, people of Saudi Arabia have been observed to show the highest consumption of tea (Ferdman, 2014). Therefore, maximum sales volume can be expected from the Saudi Arabian states.
The promotion of the new product will be done through traditional and social media, paying more emphasis on social media. This is because social media promotions will provide the company with a wide audience, who can be reached to in a very short period of time, at a very low promotional cost (Zarrella, 2009). The traditional promotional media will include print media, direct selling and outdoor media.
3.6 Promotional Mix
The formulation of the marketing strategy for the new beverage will be done with the help of various promotional tools, including both the traditional and modern media. Following is the promotional mix for the extended product line.
Americana Group will use the print media so that it can reach the targeted customer base with the help of a static message. The message will be designed in such a way that it can attract the customers towards the brand and raise interest on the new product. The print media tools which will be used for the particular product include family and youth magazines and newspaper.
Apart from print media that will transfer information regarding the new product to individual customers, outdoor media like wall paintings, bill boards and posters will be used for the promotion. In addition to it, American Group will advertise its newly manufactured beverage through paintings in the interior or exterior walls of public vehicles. This is because these media will have high impact in terms of promotion, since advertisement through a single tool will be viewed simultaneously by a large number of people who are on the move.
The newly manufactured tea will be sold directly to the customer who visits the retailer for purchase. At the point of purchase, the customer will be recommended to try the new beverage. In this way, the company will be able to increase sales volume along with getting direct feedback from the customer at the point of purchase.
Sales promotion of the product will be done by providing the customer with discount offers and gifts. Also, customers will be offered with trial packs with other Americana Group products so that the tea can be tasted and then purchased by the customer.
Apart from the aforementioned promotional tools, Americana Group will use social media extensively for the promotion of new and extended product line. The company will post promotional messages at Facebook, Twitter and Instagram. Videos and pictures related to the features and consumption benefits of the product will be posted in social media platforms so that real time customer response can be obtained for further analysis. This method will prove to be a cost effective one, since it reaches the targeted audience almost free of cost. As a result, the profit margin will be high for the company in the next financial year.
Significant information regarding the new product will be posted on the official website of the Americana Group. This will aid people, who are loyal to the brand and keep regular track about the company events, to get information about the newly developed beverage. Therefore, customer loyalty will be enhanced, followed by increase in the sales volume.
The promotion of the new product line will be done on the basis of the budget provided in the following table:
Table 1: Promotional Budget of New Product Line of Americana Group
|Expenditure||Estimated Expense in the 1 year (KD)|
|Promotion through Print Media||700.00|
|Promotion through Outdoor Media||2000.00|
|Social Media (Facebook, Twitter and Instagram)||2000|
|Promotion in Official Website||500.00|
(Source: Author’s Creation)
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3.8 Demand Forecast
From the current scenario of the food and beverage industry of the MENA region along with the brand image of Americana Group, it can be expected that the company will be able to generate considerable amount of demand for the new beverage in the next two years. However, the degree of success of the expansion of the product line depends on the effectiveness with which the marketing department of the company can implement the promotional strategies.
3.9 Contingency Consideration
The industry shows high availability of substitute products, thus posing a threat to the newly developed brand. Also, other undue factor can affect the demand of the product in future. This might, in turn, reduce the demand of the product than that is expected. To avoid such a situation, Americana Group will perform regular risk analysis followed by effective management of the same. In the process, the possibility of occurrence of the risk will be identified. This might include unexpected attrition, huge damage during production and transportation and un-forecasted economic instabilities. To manage such a calamity, the company will maintain a contingency fund that will be equivalent to the amount of marketing budget so that the loss can be recovered.
The current business scenario of American Group has shown to be highly competitive since the company has faced loss in the last financial year. An effective marketing is therefore necessary for the company so that the sales volume can be improved in the upcoming years. For this, an expansion of the existing product line of the company has been recommended. The company is suggested to develop a self-manufactured tea and introduce the same to the MENA food and beverage market under the brand name of Americana Group. This needs to be targeted to the young and working people residing in Saudi Arabia for these people consume the highest quantity beverage all over the MENA region. The product has been recommended to launch through penetration pricing so that the customers can purchase the product at a low price than that offered by the competitors of Americana Group. A combination of traditional and social media will be used for the promotion of the tea. A budget has also been provided to the company that will help the management to develop the production plan. However, a contingency plan needs to be developed prior to the launching of the product. If all the suggestions of the marketing manager are implemented effectively, the company is bound to succeed in regenerating its lost revenue in the upcoming year.
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