This action might not be possible to undo. Are you sure you want to continue?
Chocobite By Continental Biscuits Limited
Continental Biscuits Limited (CBL) was founded in 1984 following a Joint Venture between the family of Hasan Ali Khan and the Group Danone, the French food giants. In the year 2007 Danone sold their biscuits category to Kraft Foods of USA. Today the company has a joint venture with Kraft Foods with a shareholding of 50.5% and 49.5% respectively. For more than two decades CBL is engaged in the manufacturing and marketing of the brand LU. They have an array of products which are pre-eminent in the branded biscuit business both in Pakistan and abroad. CBL's unrivalled portfolio of brands has been meeting consumer needs for well over two decades and includes such favourites as TUC, Candi, Prince and Tiger. The CBL produces some of the best known crackers, cream variants, plain and ingredient-based biscuits. The manufacturing location based in Sukkur is a centre of excellence which provides employment to 2200 people in the region. The marketing, sales, finance, commercial, IT and the human resources functions are located in the head office in Karachi employing a total of 180 employees. As a part of the leading FMCG, CBL's head office has close links both with the Regional Offices of Kraft in UAE and our manufacturing plant in Sukkur1
CBL's strategy is to be a leader in the biscuit business driving long-term sustainability and delivering sustainable performance for the company, environment and the community. This includes delivering consistently on our promise to consumers, serving their customers, developing and engaging actively with the employees, delivering superior financial results to the shareholders and minimizing our impact on the environment and interacting constructively with the communities in in which CBL operate.
Incorporated in 1984, the success story of LU in Pakistan began with the initiative of Hasan Ali Khan (the founder of Continental Biscuits), who signed a joint venture agreement with Generale Biscuits, the global manufacturers of the LU range, which was subsequently acquired by the Danone Group. Expansive investments were made including the import of technology and professional expertise from abroad. The first undertaking was to set up a factory and establish distribution centers in the country with the ultimate objective of commencing operations and marketing our products in Pakistan. CBL thus started its' operations in the country since September 1986 with an initial strength of 200 employees. 2 The company first introduced its' innovative brands - TUC, Prince and Candi which proved to be an instant success. With global merger of Generale Biscuit and the Danone Group, a more comprehensive range of products and technical know-how became available to CBL. The company at present has an outstanding portfolio, under its power brands of TUC, Prince, Tiger and Candi. These brands have an array of products that falls into the category of plain biscuits, cream variants, crackers and ingredients based. 3
Bakery Classic Bakery Coconut Bakery Butter Bakery bistiks Candi Original Candi chocolate chip Tiger Prince Chocolate Prince Choco Orange Wheatables Wheatables Sugar free Tuc Zeera plus 50 50 Gala4
TOP 10 Chocolates/Confectionery manufactures in the world with their presence status in Pakistan:
http://www.continentalbiscuits.com.pk/strategy.html http://www.continentalbiscuits.com.pk/history.html 4 http://www.continentalbiscuits.com.pk/products.html
NO. OF PLANTS
NO. OF EMPLO YEES
NET SALES 2009 US$ MILLIONS SOURCE: CANDY INDUSTRY PUBLICATI ON JAN 2009
BRANDS AVAILA BLE IN PAKISTA N
AVAILABILITY OF BRANDS IN PAKISTAN (OUTLET CLASS)
Mars Inc McClean, Va USA Nestle SA Vevey,Swit zerland Ferrero Group Alba, Italy
Mars, Snickers, Twix, Galaxy, M&M, Bounty Kit Kat, Polo, Fox, After Eight Ferrero Rocher Dairy Milk, Perk, Velvet, Crunchie, Flakes, Occasions
Selective Key Accounts, A & B+ outlets Selective, Key Accounts, A and B class outlets Selective, Key Accounts, A class
Cadbury PLC London Kraft Foods Inc. Northfield, III. USA The Hershey Co. Hershey,P a, USA
Local production facility, Excellent availability, Key Accounts, A ,B and C Very Selective, Premium, A and selective B
6 Perfetti Van Melle SpA Italy(Lain
Chocolate bars, Kisses Alpenlieb e, Fruittella Mentos,
Limited, available at Premium, A and selective B class outlets Good, Key Accounts, A & B class outlets
ate) The Netherlan d(Breda)
Happyden t, Centre Fresh, Chupa Chups
Lindt & Sprungli AG Switzerlan d * Meiji Seika Kaisha Ltd.,Tokyo Ezaki Glico Co
Lindt Chocolate Bars
Very Selective Key Accounts
CONFECTIONERY AND CHOCOLATE INDUSTRY – AN OVERVIEW:
Despite Pakistan’s confectionery and chocolate industry has enjoyed an emerging and growing trend in the recent past yet its size and growth pattern has been far inconsequential compared to other countries of Asia-pacific region. The industry has grown with an average annual rate of 6.5 to 7.5 % during 2002-2008. Domestic brands dominate the market accounting for more than 85% of total value sales of the industry. The industry as a whole can be divided between two broader sectors namely organized sector (branded segment) and un-organized sectors (generic segment). The branded segment is more of monopolistic in nature where there are nine prominent, active players in the competitive landscape of this sector. However 80% of the industry’s share is being enjoyed by the five companies listed below. A brief overview of major companies’ estimated annual sales in PKR (1 US$= 83 PKR) is as follows:
Major Product lines
Major brands Ding Dong Bubble, Fresh up bubble, Tulsi, AamRus, Kopra candy Limopani Chillimili, Fanty candy, Now, Bisconi Chocolito, Cocomo, Snack city, Sonnet Spacer, Dolphin Jellies, B.P Lollies, Dream Chocolate s etc. Dairy Milk Chocolate, Éclairs, Softmint, Velvet 4ever, Centro-
Estimated annual turn-over PKR.(1US$=83PKR )
Candy, Bubble, Jellies, Chocolates, Beans, powder Drinks, Supari
Ismail Industries Ltd.(Candyland )
Jellies, candies, lollypops, Chocolates, Biscuits, Snacks etc.
Jellies, candies, lollypops, Chocolates, Biscuits, Bread, Snacks etc.
Chocolates(Countline s and Moulded) Toffees, Chewable mint candies Bubbles candies, lollypops, Chocolates
1.5 billion 1.20 billion
bubble, Lollies, Punch candy, Chox Creamers, Amrood candy, Éclair, Cafe biscuit Milk Toffee, Fruit BonBon, Butter Scotch, Jubilee, Golden Hearts Chini mini, Fresh’ O bubble, Choco Bisco, Milko Sip Dr. Milk, NutKut, Love candy , Cow
Mitchell’s(only Confectionery & Chocolates)
Groceries ( Squashes, Jams, sauces, Chocolates- Moulded and Countlines , Toffees and candies
Bubble Gum, Lolly Pops, Candies
Sweet Hills TOTAL
0.50 billion 13.4 Billion PKR
CONFECTIONERY AND CHOCOLATE MARKET – AN OVERVIEW
Characteristics: The branded confectionery and chocolate market is highly price elastic and growing with the bulk of sales concentrated in mid-price range products. Urban markets account for the major share and also for a higher penetration rate. Various retail price points exist within the mass market segment of chocolates between the range of PKR 3-25. In Sugar Confectionery major running confectionery items fall into the retail price segment of Rs. 0.50-1.00. The efforts made for the induction of Rs.2 Confectionery unit by industry giants have gone into vain so far. However Rs. 2 and 3 are popular price points for lolly pops and chocolates range. The industry has faced “coinbarrier” issue in sugar confectionery products at least three times during last three decades when all key players unanimously agreed to increase their products’ price due to escalating prices of raw materials (first from 25 paisa to 50 paisa- in mid 80’s, than 50 paisa to Rs. 1 – in mid 90’s and lastly from Rs.1 to Rs.2-in late 2008) whereby the active players of the industry were compelled to raise their prices not less than any thing but 100% because next jump to coin / price denomination was such that they had no way out. It would be interesting for the readers to learn that such moves however have always been proved to be a “bitter
pill” for the industry as it brought immense resistance from consumers and trade. In some of the cases decline in sales as a reaction of price increase was so huge that it forced to leading brands to take their decision back yet they were not able to retrieve their original volumes again. Mitchell’s Milk Toffees and Kidco 4ever are classic examples. To avoid and defer this situation (up to last extend) pro-active companies in Pakistani confectionery industry adopt three kinds of strategies , without reducing or with slightly reducing trade margins, namely Reduce the no. of units per pack, unit size, and packaging ( in an endeavour to reduce cost) Compromising in product quality by reducing qty and/or quality of expensive raw material By using close substitute that is available relatively at cheaper price as a replacement of expensive raw materials Distribution and Selling strategy: About (70-80) % sugar confectionery and chocolate sales generate through wholesale channel depending upon the nature of product and strategies of manufacturing companies. Almost all but precisely Hilal and B.P rely much on wholesale channel to generate bulk chunk of their total sales. To support their sales through this channel they advertise heavily on electronic media to create brand pull for their brands and subsequently it force retailers to buy these brands from whole sale. The underlying reason behind limited coverage in retail sector by these two companies is they do not have premium priced items that could yield sufficient revenues to make retail distribution viable for their distribution partners so they do a limited coverage in retail sector. Since these companies themselves do not emphasize on retail penetration so their distributors also take an escape route and adopt the way of easy selling through WS. However there are companies like Cadbury, Candyland, Mitchell’s and Mayfair that are fully aware of the importance of retail penetration .Hence these companies pay due importance and attention to retail coverage and subsequently allocate resources for retail sector. As stated earlier the emphasis of Hilal and B.P has always been on building consumer pull through mass media advertising ( mostly through television) and pushing their brands through wide-spread network of distributors and wholesalers throughout the nation . This combination of “Push
& Pull “ has proved to be a successful tool in their cases because the nature of their brands also support this strategy as they produce products of mass market with as low price as Rs.1 , 2 and beyond. Because of this pricing strategy their products are equally popular in rural and urban towns among middle and lower middle class. B.P and Hilal having this advantage enjoy the benefits of a wide-spread distribution network in 300+ towns and over 350 distributors nation wide (as they have more than one distributors in some towns). They always try to adopt cost leadership strategy and generate revenues through high volumes of sales. Frequent launches, re-launches, re-introduction of old brands with slight modifications, withdrawals, adjustments in packaging, product designing and even recipe changes are common phenomenon in the brands of these two major companies. Contrary to this Cadbury’s , Candyland and Mitchell’s believe on establishing brands and brand equity and therefore protection of quality up to last possible extend remains their top priority.
POPULAR BRANDS , PRICE POINT AND TRADES’ MARGINS: Popular Brands:
In hard-boiled (candy) category: Price range 0.50 paisa-Re.1: Fanty (Candyland), AamRus (Hilal), Choran Chatni (Hilal), Kopra candy (Hilal), 4ever (Kidco), Butter Scotch (Candyland) and (Mitchell’s), Amrood (Mayfair), Creamers (Mayfair) and Fruit Bonbons (Mitchell’s) are famous brands. In soft-boiled (Toffees) category: Price range 0.50 paisa-Re.1: Spacer (B.P) – a brand of 450- 500 million PKR, Milk Toffee (Mitchell’s)- brand
worth over 250 million PKR and Éclairs (Cadbury’s) can be ranked top three among others in this category. As of today, there hardly exist any 50 paisa confectionery unit, those that were available, have been switched to Rs.1 price point. In Lolly Pops: Price range Re.2- Rs.3/- : twin-lolly (B.P), Paint n Pop (B.P), Kidco Pop (Kidco), Funny Bunny (Candyland) are popular among consumers. In Enrobed Chocolate category: Price range Re.1- Rs.5/- : Jubilee (Mitchell’s), 5 Star ( Cadbury) Perk (Cadbury’s), Now (Candyland), Dream (B.P), Choco Dip (B.P), Kat Kat (B.P) Unitee (Mitchell’s), Sonnet (Candyland), Luxuree (Mitchell’s), Chox (Kidco) and Paradise (Candyland) enjoy major share in the market. In Moulded Chocolate category: Price range Re.2- Rs.10/- :Dairy Milk (Cadbury’s), Cone (B.P), Mr. Bear (B.P) Twin Rabbit (B.P), Golden Hearts ( Mitchell’s), Velvet (Cadbury’s) are famous among other brands. In Bubble: Rs.1: Ding Dong (Hilal) in Rs. 1 and recently launched in Rs. 2 as well. The brand has worth about 1000 million PKR, Fresh Up (Hilal) – retail Rs.5/-, Tiger (Mayfair) and Kidco Bubble, Centro (Kidco) are leading brands. Though retailer’s margin varies from companies to companies and product to product but generally acceptable margin in local items for retail trade is between 15-25%. It is lower for fast-moving brands and higher in the case of slow-moving items.
DRIVERS, CHALLENGES AND KEY TRENDS: Drivers:
Until mid 80’s chocolates were supposed to be the product of upper and upper middle class segment. In 1983 Mitchell’s Jubilee was launched first time in Pakistani market at Rs.3.50 per bar. Due to its attractive packaging, quality, affordable price and an intact media support the brand received un-matched reception and became a success story in Pakistani industry. The brand is still very popular among masses and available in three different price points at
Rs.2, Rs.5 and Rs.10. In early 2000 Cadbury’s introduced quality products with affordable price. The launch of Dairy Milk (Rs.5/-), 5 Star (Rs.5/-), Velvet (Rs.5/-) and Perk (Rs.3) with attractive dispensing-chillers was the turning and revolutionary point for making chocolates the choice for every one. The role of Cadbury’s for expansion of chocolate market in Pakistan will always be written in golden words.
The most common challenges to this industry are soaring prices of raw material, high excise and import duties on raw material, high entry barrier because of strong monopolistic competition and influx of cheap imported brand through gray-Channels.
Driven by marketing initiatives, consumer preferences are speedily changing in the favour of chocolates. Independent retailers and wholesalers are still the largest channel contributors however the role of International modern trade (Makro, Metro and HyperStar) is growing at the increasing rate. Foreign or imported brands are successfully targeting the Lucrative premium segments in urban population. Nestle has recently revamp their sales and distribution management system through appointment of one of the leading distribution house in Pakistan. Large retailers and wholesalers have already started private imports by paying less import duties through tax evasions. The largest bakery and confectionery chain of Lahore is also considering for launching their own chocolate brands in a bid to grow their private label sales. Keeping these positive signs in mind one could expect that future of Chocolate and Confectionery market of Pakistan is promising.5
CBL ENTERS INTO A NEW MARKET
Ever since its' inception the company has been playing a major role in the process of modernizing and upgrading the Pakistan Biscuit Industry, producing healthy, innovative and quality products for our consumers. We currently enjoy a market share of over 30 percent in Pakistan, and our supremacy in the biscuit industry is due to our prime emphasis on quality products coupled with an excellent distribution network. Quality and innovation are the hallmarks of CBL. Our brands are among the leaders within the country and at international levels as they are manufactured to the highest quality standards bringing nutritional goodness of natural produce to our consumers. We at all times ensure the selection of finest ingredients and hygienic conditions for the manufacture of our products. This has created a tremendous demand for our products not only in Pakistan but also in various AFME countries. Having a succesful experience in the biscuit industry, CBL is now launching a chocolate product called 'Chocoline'. We aim at sound planning and bold vision having us seen to regional leaders a decade later. Our objective is simple: to give you the best chocolate ever. The recipe consists of the following ingredients: determination, maintaining the highest standards in production, delivery and service, constantly keeping our customer's suggestions in mind, insisting on the freshest and highest quality ingredients and blending them all together for your pleasure. MISSION STATEMENT Our mission is to lead the Pakistani market providing the best chocolate ever. We will ensure a commitment to continuous improvement enhancing the taste buds of chocolate eaters.
TAG LINE Taste With Style
MARKET OPPORTUNITY AND ISSUES
After a survey conducted, it was concluded that majority of the people consume chocolate at least twice a week, and in Lahore, there is a demand for it all the time which is usually increased at the time of different occasions. People want to eat quality chocolates at the prevalent prices that are available easily. These are the requirements for its success. So there is a potential for growth.
Profitability Objectives “Profitability objectives are expressed as percentage of sales”. To increase revenue is the ultimate goal of our new product line( chocolate). The higher profitability of our product result in a better image of our product and it can serve to fulfill various financial goals of our company. Maximize Quantity One of our pricing objectives is to maximize the number of units sold or the number of customer served in order to maximize long-term profits by increasing market share and lowering costs. Price Stability and Non-price Competition Our goal is to stabilize our prices in order to avoid price wars. So, we have emphasized more on non-price competition. So, our strategy is that our product competes in the market by other components of marketing mix, for this reason we have strongly be emphasized on our product line and mainly on its promotion. Customer Convenience and quality
Another important objective of our company is to make sure that our product is of good quality and is easily available to the customers. This is important as we want to maintain a longterm relationship with the customer. For which aggressive distribution of chocobite will be ensured. MARKET SEGMENTATION a. Demographic We will consider the following demographic variables for market segmentation Age: all age groups(above 2 years kid) Family life cycle: young single; young married no children; young married, youngest children above 2, older married with children; older single; other Gender: Male, Female Income: above PKR 20, 000 Occupation: Professionals, managers, officials, students, land lords, medium & high business class, ambassador Education: graduates and above generally Religion: All religions Race: White, Black, Asian, Hispanic
b. Geographic We will consider the following geographic variables for market segmentation: Region: Asia Country: Pakistan Province: Punjab City: Lahore
c. Psychographics We will consider the following Psychographics variables for market segmentation: Lifestyle: Culture oriented, sports oriented, outdoor oriented, information oriented others Social class: middle class, upper middle class, lower upper class Brand Personality: Exciting
d. Behavioral: We will consider the following behavioral variables for market segmentation. Occasion: regular occasions, special occasions Benefits: Quality, convenience User rate: medium rate Loyalty status: strong Attitude towards product: enthusiastic, positive.
e. Media graphic The target customer will prefer the following media: TV Billboards Newspaper Magazines Radio School, college, universities internet
TARGET MARKET ANALYSIS
We are going to target the following two class’s i.e. Upper Class Middle Class This Decision is made on the basis of the buying power of the customers and for good brand image. Product positioning The basic purpose to enter in a market is not to maximize the profit only rather to enter in the lives and heart of customer. We basically want to promote our brand name. So we are designing our product to create an excellent image just to occupy the distinctive place in the mind of the target market. We are positioning our product on the basis of following characteristics; Attributes and Benefits Price and Quality Product name (Chocobite) Better promotional strategies
The product launched by our company is a consumer product. In consumer products it is a convenience product that the customer usually buys frequently, immediately and with a minimum of comparison and buying effort.
NEW PRODUCT DEVELOPMENT
Idea generation Chocolates are one of the most popular and yummiest types of foods that will likely stay at the top of most people’s favorite food lists. A resent survey shows that Chocolate has great health benefits. It helps with depression, high blood pressure and heart problems. It was also found that each person consumes 12 pounds of chocolate in 1 year. One ounce of baking chocolate or cocoa contains 10% of the daily recommended intake of iron which is very important for children. With people becoming aware of these facts the idea generated was to launch a chocolate. Idea screening After screening through the current market and collecting all information and observing the interest of customers we came to the conclusion to launch Chocolate. We have decided to provide our customers something in addition with chocolates unlike our competitors. Concept development & Testing The concept was further developed after observing that the people not only ate chocolates but also gave as gifts on different occasions. Survey conducted shows that 80% of people are interested in trying new product. We associate 'love' with our chocobite. Where ever love exists, whether its amongst
families, friends,spouse etc chocobite is going to be present there and let the consumers cherish the great taste and value their time with their loved ones. For this interesting packaging designs and ideas have been sort out. Market strategy The most important step is to develop initial marketing strategy. It consists of three parts. First part describes the target market, the planned product positioning; and the sales, market share and profit goals for the company. The second outlines the planed prices, distribution and marketing budget for the first year. The last part describes the planned long-run sales, profit goals and marketing mix strategy. Marketing experts were use to developed the initial marketing strategy. Business analysis The results of the questionnaire show that 80% people are interested in trying the newly launched product. Then we can predict that are sales will be high in future as the product contains the features wanted by the consumers. Product development Keeping in mind the requirements of the people the product is developed and launched in the market.
Test marketing Taste test was conducted in malls, schools and colleges showed that people liked the chocolate .They were satisfied by its taste and the variety of flavors. Commercialization High budget has been dedicated to the commercialization of the new product. It includes advertisement through T.V advertisements, Billboards and streamers.
"Chocobite" – Taste With Style
The brand name is linked with the excitement of love for family and friends. We want people to experience chocolate in a fun, loving and exciting way. Logo
We are offering wide variety with high quality. Variety of flavors like o Chocobite caramelia, premium chocolate filled with caramel o Chocobitemilky, pure milk chocolate o Chocobite nuts, chocolate mixed with nuts o Chocobite black, pure black chocolate o Chocobite mint, Chocolate with mint flavor o Chocobite zero, sugar free chocolate Excellent quality Beautifully interesting chocolate packaging according to occasions Chocolate syrups
PRODUCT LIFE CYCLE
The four stages of PLC are clear in the above diagram. Our product is now at introduction stage. We have developed different promotional strategies and campaigns to perform best at this introductory stage only then we can perform well in growing stage. For our company we are planning to launch different chocolate flavors time by time. In this way we can attract more customers by giving them more flavors, so maturity period of one product would be small. We aim at reaching the maturity stage in the period of 18 months.
By understanding how adaptable your product is, you can incorporate the necessary elements into your marketing strategy. There are five factors for measuring how "adaptable" a new product is: so by discussing them one by one we can evaluate the adaptability of chocobite.
Relative advantage of the product How superior is the innovation to the product or other problem-solving methods it was designed to compete against? So we can get relative advantage by giving Sugar free chocolates and chocolate syrups. Compatibility Does it fit with current product usage and customer activity? Yes our product absolutely fit with it. *A chocolate a day……with new health claims and the latest technology backing it up, chocolate is becoming more popular than ever. So keeping this thing in mind our customers are quite flexible to adapt this. Complexity Will difficulty or confusion arise in understanding the innovation’s basic idea? No there is no complexity which may be hurdle to understand “chocobite”. As the concept of chocolate is in market through many years so probably customers would not face any complexity. Moreover we are offering sugar free and chocolate syrup and this concept is so simple. Divisibility How easily can trial portions of the product be purchased? We are actually giving trial test to our customers. So our teams would go to universities, colleges, schools, shopping malls etc for test marketing, to check the response of consumers. Communicability How likely is the product to appear in public places where it is easily seen and studied by potential users? As promotion is the main “P” among marketing mix. So hopefully we would not face problem. Because for better communicability we are giving T.V and radio advertisement, putting teasers to attract customer’s attention, billboards, skimmers on different places according to target market.
VALUE CHAIN MODEL
Value chain model is applicable to our product as we are following all the activities:
Secondary Activities Infrastructure: Atmosphere of our firm is clean and hygienic Human Resource Management: We follow all the labor laws Technology Development: We use the latest machinery for manufacturing chocolate. Procurement: We import the finest chocolate beans from Garnada.
Primary Activities Inbound Logistics: We aim to maintain good relations with suppliers to ensure quality inputs and promptly carryout all the activities required to receive, store, and distribute inputs. Operations: All activities required to transform inputs into outputs will be done under the supervision of a team of experts to ensure quality standards. Outbound Logistics: We have our own warehouses. Company owned vans will be used to collect, store, and distribute the product.
Marketing and Sales: Team of professionals has been hired to work on the product marketing. Service: To ensure quality and customer suggestions we plan to place a toll free number on every packet. 24/7 a team will be there to take customer complaints and suggestions.
The pricing is the most important step in the development of the product. The price of the product should be such that it may cover the cost and provide some profit per unit. The following table shows the prices for the chocolate bars of different sizes based on the survey that was done in which most of the respondents were willing to pay Rs.30 for the small sized bar. The different sizes of the chocolate bars and their respective prices are given:
Small sized bar Sugar free small sized bar Medium sized bar Sugar-free medium-sized bar Large sized bar Sugar free large sized bar Chocolate box (Event pricing)
Rs.30 Rs.40 Rs.50 Rs.60 Rs.70 Rs.80 Rs.300 – Rs 1000
As we are introducing a product for which a well saturated market already exists, so in order to get market share we are keeping prices lower than the other competitors and using the “Market-Penetration pricing” strategy for our product. The objective is to maximize market share and providing higher sales volume with lower unit costs and higher long-run profits.
The demand is relatively elastic so it will have some effect for the customers, and they will at least try it once and once they like our product, we can have some of the market share. As the market share of our product increases, we can increase our prices accordingly.
MARKET DEMAND AND PRICE SENSITIVITY
The demand curve for the product is elastic:
The curve shows that the demand of our product is relatively elastic. So keeping prices less than the others can increase the customer share in the saturated market even.
We are already selling at price lower than the competitors so we are not providing any discounts to the customers but in order to get the shelf space and managing intermediaries, we will use a Push Strategy in which various forms of communications such as advertising and promotion will be used to entice the retailers to carry the product and sell to consumers. To ensure that retailers demand our product and give us good shelf space in their store we will also give them special deals such as quota discounts.
The price of the product covers all the variable and fixed cost per unit. Initially this price will yield less profits as the business is in starting stage and in order to get market share, we are keeping the prices as low as possible but enough to cover our costs.
Overall Prices are kept lower in the initial stage, but we are providing good quality to the customers even at lower prices. Value pricing strategy is being used. Special event pricing is being used in case of events where a box of chocolate containing 15-50 chocolates is being offered at a price ranges Rs.300 to Rs 1000.
SELECTION OF THE LOCATION
Choosing the right location is of the utmost importance as the success of the product is dependant upon it. We want to make sure that “Chocobite” should be distributed in a way so that it is easily available to all its customers therefore; perfect physical distribution is required for this purpose. It has to be ensured that when deciding on the place from where the chocolate will be physically distributed and sold several factors are considered. 1. To select places that draws a large customer base to ensure larger sales. 2. To select places based on their sales effectiveness.
SELECTION OF DISTRIBUTION CHANNELS
Marketing channel consists of the intermediaries that act as the middle agent in providing the product to the customer. Since we are a new company, we will be using existing intermediaries. This will include several established retailers and a few trucking companies. This will allow us to make our products widely available and accessible to the customers, which we cannot achieve on our own. As the market that we are catering to is a small market therefore, we will use both direct and indirect marketing channels. In managing our intermediaries we will use a Push Strategy in which various forms of communications such as advertising and promotion will be used to entice the retailers to carry the product and sell to consumers. To ensure that retailers demand our product and give us good shelf space in their store we will also give them special deals such as quota discounts.
INDIRECT MARKETING CHANNEL
We will mainly sell through the retailers. As for CBL, this will be the most efficient way to deliver value, in the desired time. Another advantage of selling through retailers is that it will allow us to reduce the overall logistics costs. Selling through a large number of intermediaries will be too costly for us. As we are a new company this strategy is most
suitable, and will allow us to gain adequate market coverage with more control and less cost compared to intensive distribution.
TYPES OF RETAILERS
1. Super stores 2. Super markets 3. Shopping centers 5. Departmental stores 6. Convenience stores 7. Chain stores
Super stores Our product will be available in super stores like: HKB Alfatah ARY cash carry
Shopping Areas Super markets selling chocobite would be: Liberty Mall Fortress
Shopping Centers Examples of shopping centers selling our product are: City Tower PACE Sadique Trade Centre
Chain Stores Gourmet Shezan Fresh Inn Good luck Cakes & Bakes Utility Stores
CONVENIENCE STORES Convenience stores are the small shops situated in colonies and residential areas that sell small grocery items such as bread, eggs, soft drinks and candies etc. we will also supply our chocolate bars to these convenience stores around the city.
DIRECT MARKETING CHANNEL
We will also use direct marketing channels to sell directly to the consumers. This will involve delivery of the chocolates to different schools, colleges and universities. The company will use its own delivery vans that will supply chocolates to the canteen owners. The reason for selling directly to these institutions is that children and teenagers are our biggest purchasers and consume chocolates and candies on a regular basis. They are a permanent source of revenue generation.
Examples are City school Army public school Convent school Lahore college Garrison college Kinnaird College Punjab University LUMS FAST
As chocolates are a type of snack food, those consumers seek to buy frequently or in a variety of locations, therefore, it would be appropriate to opt for intensive distribution. This will allow us to increase coverage and sales. It will also increase the product availability. As
our target market is Lahore, intensive distribution of the product will allow us to compete with other manufacturers especially the local chocolate brands.
We will be using a one-level channel, where the intermediary consists of established retailers. Therefore the channel members consist of the CBL (Manufacturers), HKB, Alfatah etc (Retailers), and the consumers.
PARTNER RELATION SHIP MANAGEMENT
Each member of our distribution channel will be treated with respect, and will be given the opportunity to be profitable. For the distribution of our product we have chosen retailers that have lot of experience in the retailing business, the size and quality of the sales force, are financially strong, cooperative, and have good service reputation. This is very important because to customers the channels are the company, and the retailer’s image has a significant impact on the sale of the product. We will also evaluate our channel member’s performance on a regular basis against standards such as sales quota attainment, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs. This will allow us to decide which retailers to continue doing business with and which to drop from the distribution channel. MARKET LOGISTIC DECISIONS 1. Inventory Management We have developed a computerized inventory management system that will allow us to keep track of our inventory. Most of our retailers except convenience store and canteen owners of schools and colleges all have computerized data bases that allow them to keep track of there inventory. We, in collaboration with our retailers will ensure that whenever, the retailers are in need to replenish their stock of chocobite, they can communicate the exact quantity needed on time. This will reduce lags in the delivery process and ensue that we meet customer demand. 2. Warehousing
Another important issue is that of warehousing. In order to store our finished goods we will rent a warehouse and use our fast transportation system to deliver the orders. This decision to decentralize the inventory has been made because during our initial stage we will only be catering to a restricted target audience that is based in Lahore. Therefore, there is no need for purchasing expensive warehouses, as this will just add to the expenses and the final cost of the product. 3. Transportation We have will purchase trucks and a few delivery vans that will be used to transport the finished goods to the retailers. This is to ensure speedy delivery, and also because if the goods are being transferred by road they are less likely to get damaged.
IDENTIFYING A TARGET AUDIENCE
We as a marketing communicator have started out with a clear target audience in mind. We are targeting the Upper and middle class. This includes all age groups.
DETERMINING THE COMMUNICATIONS OBJECTIVES
We decided on as to what stage of the BUYER-READINESS SATGE does our target audience stood. Since we are launching a new product, we should create AWARENESS and KNOWLEDGE about our product. Only then would we be able to develop a consumer’s LIKING FOR OUR PRODUCT. For this purpose we have start out with an extensive TEASER CAMPAIGN. We will use Radio, TV and Print media to create awareness for the product.
DESIGNING A MESSAGE Message Content
Our message content is based on a rational appeal. It refers to the audience’s self-interests. It focuses on getting a chocolaty lifestyle that could be related with a funky and trendy attitude.
Message Structure Our message draws a conclusion We are presenting the strongest points first and foremost. The message is one-sided.
Message Format For conveying our message effectively we are using all the media i.e. radio, print and TV. We are very vigilant regarding the announcer’s voice, the headlines that will appear in the print ad, and gestures and emotions for the TV ad.
Choosing Media Electronic Media Print Media Online
PROMOTIONAL MIX AND STRATEGIES Advertising
Advertising Objectives To create awareness and persuade consumers to buy our product.
Advertising Strategy PERSUASIVE ADVERTISING is the form of advertising that we are using. The company’s objective is to build selective demand. We aim at persuading consumers that our product offers the best quality and value for money. Creating Advertising Message We are planning to spend heavily on ads, be it the any media. Our message focuses on developing a trendy and chic lifestyle, so the basic theme that our message would convey will be LIFETSYLE. Selecting Media REACH: our aim would be to reach a large percentage of the target market that is exposed to the ad campaign during a given period of time. FREQUECY: launching our product for the first time we want a high frequency. IMPACT: the ad campaign would be run most widely on Television and Billboards because these two sources are most reliable and easily accessible in Lahore where we are launching our product. Choosing Among Major Media Types The media used for our ad campaign are given below in order of their preference: TV Outdoors Newspapers, magazines Radio
Media Vehicles The most popular media vehicles that we are using are: TV: Indus TV Network, ARY Digital TV, Geo TV, PTV OUTDOORS: billboards, streamers NEWSPAPERS: Dawn, the News, Jang RADIO: FM 101, FM 89, FM 91, FM 106.2 INTERNET: Everybody is online already; we may want to be there to be able to find customers online. We will advertise through www.facebook.com, www.apniisp.com Once we will be able to cover our costs and be profitable, we will use other sites like www.yahoo.com and www.hotmail.com PUBLIC RELATIONS Sponsorship For our business development, we are also into giving sponsors. As one of our target markets is youth, we arrange some events for them. These events can be concerts, musical nights and certain other events. We will sponsor such events. This also helps us in the development of our business through publicity. Awareness seminars We will organize seminars to create a positive image of our product for example a seminar on a topic like to clear up the myth that eating too much chocolates causes acne. Similarly, we will also organize seminar to tell our target audience that sugar free chocolates are good for health conscious people.
SALES PROMOTION Free offers or give away People always look for free stuff. Nothing can make them come running as fast as when we offer them something they can have with no costs. We have decided to give our retailers some discount to place the product in their stores. Once they see that we are serious in our purpose, they will realize how we value our business. It will make them want to do business with us. Point of Purchase Displays Point of purchase displays are used as a part of the sales promotion tool. PoDs will be displayed at all the major retail stores which we have considered in the PLACING of our product. Chocobite on special occasions Giving special chocolate boxes to match various occasions and festivals are also a part of our sales promotion. For instance right after the launch Friendship Day would be approaching and for this we will be giving out special Friendship Day box. Say it on Chocolate Similarly, we have planned to launch a campaign “Say it on Chocolate” before Valentines Day. It is a personalised, inexpensive, effective way of reinforcing our brand and it will set us apart from our competition. Till then, we would be in a position to handle direct orders and provide personalized services to our customers that will help us to promote our brand. Lucky draws We conduct lucky draws of our consumers and a prize is given to the winner. The purpose of this type of lucky draws is also the promotion of consumer sales.
DIRECT MARKETING The company is going for Direct Marketing. We have planned to introduce chocolate cycles just like the ice-cream cycles are there. These cycles will be a source of providing chocolates most conveniently, saving the consumers the trouble of actually going and buying chocolates. This will enhance the sales of the product in turn.
We have decided to associate chotobite with love. It is going to give the consumers a chance to enjoy love in the flavor of chocolates. We are going to make chocobite an ideal gift to be given on any occasion. For which we have planned out various packging according to occasions. NEW BORN : Every newborn brings a new beginning, dreams, hopes and possibilities abound. Celebrate those unique moments: first word, first steps, first day of school, with that special gift. At Chocobite we offer various chocolates as well as gift arrangements for all occasions
CHRISTMAS/ NEW YEAR: When you are selecting that special gift or looking for the perfect centerpiece, think of Chocobite. We offer a full assortment of chocolate delights specially wrapped for the winter festivities. Smooth and creamy or dense and crunchy, we have something to soothe your chocolate passion. At Chocobite we offer various chocolates as well as gift arrangements for all occasions.
the Eid gathers EID: From year to year together friends and family to celebrate and observe the holidays. Chocobite is there to provide traditional favorites or spark the fun of the occasion with new family-pleasers. Whether searching for that special gift or gracing your own table, Chocobite is there with years of experience and understanding of your requirements. Relax, enjoy, you have given them the best. At Chocobite we offer various chocolates as well as gift arrangements for all occasion.
VALENTINE'S DAY: Days of celebration mark the milestones of our lives. Each day never equaled. Chocobite maintains its pledge to deliver the freshest and richest taste sensation everyday to make sure we are there for you on your special day. Hearts, flowers, chocolates simple yet so sublime.
WEDDINGS: A dream fulfilled, two hearts joined as one, the start of a new life
together. Chocobite has created masterpieces of elegance and style to match the beauty of the occasion. Each piece, is an accent for the evening and a keepsake to live on in memories for years to come.
GIFTS: Last minute invitation? Surprise visit from the in-laws? Corporate gifts? Or simply can't make up your mind? Chocobite is always there for you with a wide range of wrappings and an even wider range of chocolates, and the expertise to present both beautifully. Rest assured, the gift to suit your tastes, budget, and the occasion is waiting for you. Say it sweetly, say it with Chocobite.
REVIEW AND CONTROL
Review and control process is equally important for any company for its existence in the market in contrast to the increase in competition. So, for long term concerns companies do pay attention to the review and control process. Basically this process involved the need to monitor and control marketing activities which might costing them extra money or resources. In order to have review and control process formulation our company would be using the technique given in our text book and they are broadly used by companies worldwide. There are four steps which describe the marketing control process. Those steps are as follow; Annual plan control Profitability control (revenue and expense) Efficiency control (customer feedback) Strategic control (marketing log)
ANNUAL PLAN CONTROL Annual plan control aims to ensure that the company achieves the sales, profit, and other goals established in its annual plan. For this purpose, first our company’s top management would set monthly, quarterly or annual goals as per company policy. In second phase, middle management would monitor its performance regarding market output results. In third phase, middle management will figure out any deviation regarding the achievement of performance goals. In fourth and last phase, top and middle management would take corrective action in order to close the gap between set goals and performance. For the evaluation of these four phases, top and middle management can adopt approaches like sales analysis (sales in each period of time), market share analysis (% of market capturing along with competitors position), sales to expense ratio (expense in relation with revenues) and financial analysis (balance sheet, income statement etc) which would portrait the clear picture of the company performance in view of established or defined goals. PROFITABILITY CONTROL Profitability control aims to ensure that where the company is making and losing money. So, it’s all about managing its revenues and expenses because both of them have direct relationship. In our company, marketing controller is appointed to do the required work for the company. All this activity is based upon internal sourcing which is related to cost attached to the cost of goods sold, operating activities and admin expenses. He/she would also gave recommendation to formulate the pricing of the product keeping in view the price fluctuation of raw material, maintenance cost of equipment or other regular occurring operations. To measure the profitability control process, our company’s marketing controller would adopt the approaches like product cost (cost attached with inventory making), territory (cost attached with purchase and maintenance of fixed assets), order size (revenue generation calculation from size of order placed) and trade channel (cost attached with the shipment or distribution channel) as per company policy.
EFFICIENCY CONTROL If company’s profitability analysis describes that the company is having poor earning profits in certain product, territories or markets along with the customer feedback about the product. So, to allocate more efficient ways to manage the sales force, advertising, sales promotion and distribution in relation to the marketing entities efficiency control process would be in practiced under the supervision of marketing controller along with line and staff management. Purpose of this process is to evaluate and improve the spending efficiency and impact of marketing expenditures. In efficiency control process, major emphasis would be firstly on sales force efficiency because may be sales team would be performing activities which would have attached high cost with it. Which would be in shape of making contact with buyer in expensive way. Secondly, would keep an close eye on advertising efficiency because may be company spending too much in advertising campaign with ignoring the fact that product or company don’t need that much advertising. It can also work by doing better positioning of product, proper guidance for the media selection and defining advertising objectives clearly. Thirdly, sales promotions can also be the factor to consider in order reviewing the efficiency. Management would record the cost and sales impact of each promotion. Whereas sale promotion manager would analyze the result of different promotions and advice the product manger about the most cost effective promotion to be used. Fourthly, management would also have a glance on distribution channel cost which consists of transportation of inventory from warehouse to display centre or outlet. STRATEGIC CONTROL Company with the passage of time would have a critical review of overall marketing goals and effectiveness. This review would be done or handle by top management along with marketing auditors. In this control process company will reassess its strategically approach to the marketplace. For this purpose company would first consider marketing effectiveness review which would reflect five major attributes. That would include customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation and
operational efficiency. Secondly, marketing audit whose work would be to examine comprehensively, systematic, independent and periodic evaluation for the company with a view to point out the areas having problem and opportunities along with recommending a plan of action to improve the company’s marketing performance. Thirdly, marketing excellence review which would describes the standing of the company in relation to the best practices of high performing business. It would clear the company standing in the market. Lastly, company can review on the base of fulfilling the role related to the ethical and social responsibilities.
Annual plan control
Profitability plan control
Efficiency control Strategic control
OBJECTIVES Financial planning is the process of assessing a firm’s financial goals, taking an inventory of the money and other assets which a firm will reach and estimating what the firm will need in the future. A good financial plan is much more than a simple investment strategy that takes into account a firm’s tolerance for investment risk. A financial plan should offer a comprehensive overview of a firm’s short- and long-term financial objectives, and sources of income – both present and future. Once complete, a financial plan should provide a
snapshot of a firm’s current financial situation and give the firm a roadmap that shows the firm how to achieve its future goals. Key Assumptions (a) Machinery Assumptions Starting of business with capacity of 8 production machines. Production per machine is 5 boxes per day. Where each box would have 10 packs. Production per day – approximately 400 chocolate packs (40 boxes). Production capacity - approximately 100%. Waste/Rejected production is (% of production) 5%.
Operating Assumptions Hours operational - 8 hours per day. Days operational - 26 days per month. Days operational - 312 days per year. No. of shifts per day - Single.
Economy Related Assumptions Electricity cost growth rate 20%. Wages growth rate 5%.
Cash Flow Assumptions Accounts receivable (average) 20 days. Accounts payable (average) 15 days.
Revenue Assumptions Sale price of chocolate packs vary from Rs.30 to Rs.70 depending upon size of pack. Sales growth rate in first year 15% and in second year 20%.
Expense Assumptions Consumption of ingredients per pack 2.5 to 5 gram. Ingredients purchase price (per pack) Rs.10 to Rs.30 Insurance rate on machines and vehicles (on written down value) 5%. Packaging cost per pack Rs.2 to Rs.4 ( per box would be Rs.20 to Rs.40) Freight per box Rs. 2.
Financial Assumptions Equity 100%.. Minimum Cash Balance approximately Rs.2,000,000
Capital Structure Design To start this business our initial capital will be Rs. 8 million and we have decided to finance our project with 100% equity (i.e. Rs. 8 million). The equity will be equally put in by all the eight group members. Warehouse Location & Cost We desire that we must have a warehouse of our own but an economic base rule, that, “Our wants are unlimited but our resources are scarce”. In start we will not have enough capital to build our own warehouse so initially we will start our business through hiring a warehouse on rent. Our proposed locality for warehouse will be “Peco Road near Ittefaq Foundry, Lahore”. For 8 production machines setup we require approximately 8-10 Marlas. We will
get land on rent of approximately Rs. 20,000/month for one Kanal by depositing a security of Rs. 200,000. This land is very inexpensive and is best suited for our purpose. Availability of Telephone Service We will acquire PTCL wireless telephone connections keeping in view that we will need them for carrying out our business operations successfully. It will cost us near Rs. 2000 per telephone set plus connection charges. Availability of Shipment Service For doing shipment of the orders at specific places of the city along with the buying/purchasing of raw material which would include ingredients and packaging mostly. Company would buy mini tracks/mini pick vans. Which would be four in figure initially. Cost; the cost of the vehicles would be around 2 million. Trade Mark Registration & Its Cost The term Trade Mark means any mark capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertaking. A trade mark is a distinctive sign which identifies certain goods or services as those produced or provided by a specific person or enterprise. Trade Mark enables consumers to identify a product of a particular company so as to distinguish it from other identical or similar products provided by other companies and also trade mark enables companies to differentiate their products from their competitors’ products. Under Trade Mark Ordinance, 2001, An application for registration of trademark is required to be made in duplicate in Form TM-1 to the registrar of trademark along with the prescribed fee i.e. Rs.1000/-. Registrar shall on payment of the registration fee of Rs. 3000 enter trade mark in the register and issue a certificate of registration to the applicant. Cost: Trade mark registration will cost us Rs. 4,000.
Partnership Registration & Its Cost A partnership is a relation between two or more persons who have agreed to share the profits/losses of a business carried out by all or any of them acting for them on the basis of certain terms and conditions. Persons who have entered into partnership with one another are called individually “partners” and collectively a “firm” and the name under which their business is carried on is called the “firm name”. A partnership is regulated under the provision of the Partnership Act, 1932. Cost: We will start business in partnership, under the status of AOP (Association of Person) which will cost us Rs. 1000. We are eight partners in total. Note: Some important documents such as the partnership form, the flow chart for registration of partnership and the trade mark registration form (TM-1) are also included in this project. Break even analysis 1. Revenue/ box 2. Variable cost/box 3. Contribution/box 4. Fixed cost = (30*10)+(50*10)+(70*10) = Rs.1500 = Rs. 900 = Rs 600 (Rs.1500 – Rs900) = Rs 3 million
= Rs 3 million/ Rs. 600 = 500 packs
Break – even sales would be around 50% of the production capacity.
Sale Forecast Sales forecast is actually an estimate of the market demand for the product and to estimate the total volume of the product that would be bought by customers. Sales forecast can be estimated on the basis of research questionnaires analysis. Research is based on sampling plan which includes: People of middle, upper middle and elite class. The sample is selected randomly in which both the males and females had the chance to be selected. The sample contains people in the age bracket of less than 15-above 75 years. The size of sampling unit was 150 people selected randomly. Sampling procedure included convenience sampling. The researcher selected the most accessible population members. Sales can be estimated on the basis of: Income/ pocket money Average purchases/ frequency of purchases. Price respondents are willing to pay for the small sized bar.
As is evident from the survey that the greater number of students fall into the income/pocket money of 30,000-50,000 and most of the respondents are willing to pay a price of Rs.20-30 for a small size, and greater number of respondents said that they purchase chocolates ½ time a week; so this data can be useful for the pricing of the product and its sales. The demand for chocolate does not vary seasonally; it remains constant and fluctuates very rarely. So any seasonal influence is not estimated for our product but we can’t ignore it as well. Consider the sample of 150 people buying this chocolate. Out of these people 66 said that they purchase chocolate 1/ 2 times a week, so the numbers of units for sale are estimated accordingly. If the price of small sized bar is kept Rs.30 and if it is assumed that the people buy it 1 / 2 times a week.
The sales forecast would be:
Price per unit
NO. of units Total for sale /week
sales Total /month
sale Total /year
30 (Small sized bar) Min. units for sale 70 (large sized bar) Min. units for sale 66 132 =132*70 =Rs.9,240 528 =528*70 =Rs.36,960 6,336 =6,336*70 =Rs.443,520 66 132 =132*30 =Rs.3,960 528 =528*30 =Rs.15,840 6,336 =6,336*30 =Rs.190,080
All the marketing activities are planned after careful analysis of the market and environmental trends, but there maybe some specific environmental developments which may prevent the proper functioning of the above mentioned plan. A contingency plan in our case would be careful monitoring of the product, its price, its place and the promotional strategies. Based on customer feedback and profitability, it will be analyzed where the actual problem is arising from. Whether it’s the products quality, its packaging, its taste, its accessibility, its price or its promotional campaign that is not giving the desired results, that area will be monitored and reviewed again and the respective steps to overcome such pressures will be taken by conducting a meeting and discussing the issue.
The marketing plan has been made after a careful analysis of the market trends. First a few of the product categories will be introduced and then coming up with all the varieties. It is first being launched only in Lahore and then will move to different cities of Pakistan. It is very strongly hoped that CBL is going to achieve its goal and will well penetrate into the chocolate industry and grab the market share as planned.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.