Marketing Report

Marketing Report

Student’s Name

Institutional Affiliation

Table of Contents:

Executive Summary 3

1. Background to the Company 3

1.1 Situational Analysis

1.11 Macro-Environmental Analysis 3

1.12 Micro-Environmental Analysis 5

1.2 SWOT Analysis5

1.21 Strengths5

1.22 Weaknesses 6

1.23 Opportunities6

1.24 Threats 6

1.3 Target Market and Positioning6

1.4 Marketing Mix Analysis 8

1.5 Recommendations9

Marketing Report for Arnott’s Biscuit Company

Executive Summary

This report provides the marketing strategies for Arnott’s Biscuit Company, which manufactures fruit tasty biscuits to compete effectively in the sweet biscuit industry as an alternative product for a healthy choice. The report shows that the biscuit company is not performing well in the use of effective promotional techniques, poor positioning of the product and inability to incorporate the needs of the existing target group identified as modern households.

Background to the Company

Arnott’s Biscuit Company is a private and foreign-owned company considered as one of the largest biscuit manufacturers in Australia and also the second-leading supplier of snacks. The company began as a mini-bakery in New South Wales in 1865, where the company engaged in the supply of bread, biscuits, and pies to the local community. It also supplied the snacks to the crews operating the coal ship docking in the neighboring port. Currently, the company is becoming an Australian national icon and exists as more than a food manufacturer. The report covers the company’s Snack Right Fruit Slices fruit pillows, a fruit-made biscuit whose production began from 1882. The snacks are packed with wholesome greatness of real fruits and using locally grown wheat.

Situational Analysis

Macro-Environmental Analysis

The key external elements that influence the operations of Arnott’s Biscuit Company include political, economic, and cultural factors. Political factors comprise of governmental efforts to reduce food wastage resulting from manufacturing processes. The Australian government is directing efforts towards the establishment of cold rooms to aid in food preservation. Therefore, it implies that the cost resulting from wastage will reduce and hence improving production efficiency for Arnott’s company. In terms of economic factors, the Australian government is focusing on raising the value-added tax levied on biscuits. It implies that the prices of biscuits will increase therefore chasing away potential customers. Additionally, the disposable income of the consumers is on the increase which is crucial for an increase in the amount of snack purchase. However, the cost of inputs which is sugar and wheat has been unpredictable due to currency fluctuation and the anticipated increase in the coming years (Rogers, 2016). It, therefore, poses a danger to the snacks as it implies a rise in total production costs. The situation is further worsened by the challenge of climate change and fluctuating weather conditions that threaten the growth of wheat and sugar. With the competitive nature of sweet biscuits sectors, the passing of extra costs to final consumers is not viable. Cultural factors also influence the company’s activities.

The Australian working mothers are characterized by the observance of a healthy lifestyle. It means that if the company does not produce fruit filled biscuits as a healthy alternative, then the likelihood of a reduction in the customer base will be high. Similarly, changing consumer tastes and preferences is an emerging trend with limited alternatives due to the expansion of the food industry. Currently, there is a common trend where consumers are demanding food products that cater to various allergies such as dairy, eggs, and gluten (Crowe, 2014). Based on traditional biscuit recipes that focus essentially on the three ingredients, it has resulted in increased pressure on biscuit products to modify their ingredients or adjust their product lines to better satisfy the needs of the consumer.

Micro-Environmental Analysis

The Micro-environment for Arnott’s Company is significantly based on different features that the internal factors demonstrate. The company owns several marketing intermediaries throughout the country which allows it to conduct effective marketing around the country. It also makes it possible for the company to supply the fruit-filled and fruit pillows in all parts of the country. The marketing intermediaries enable the company to supply its products at a lower price, therefore, making the products more affordable to the target group of customers. Customers are also part of the micro-environment as they are highly valued by the company. Most of the company’s resources have been channeled towards ensuring the highest level of customer satisfaction (IBISWorld, 2016). The objective of achieving customer satisfaction is made possible by the use of well-developed customer services and prompt response to customer suggestions and complaints. Additionally, Arnott’s Company has developed good relationships with the suppliers hence ensuring the efficiency of the production process. The suppliers are also known to comply with the contracts and supply the production materials within the required timeframe, hence reducing the challenges caused by the delay of materials. Because of the suppliers’ efficiency, the company produces on a just in time model where they react quickly to orders placed by customers.

SWOT Analysis

Strengths

One of the strengths of the Arnott’s Biscuit Company is the reputable brand name, which has been recognized in the entire Australian snack market and trusted by most customers. The second large scale supplier base which enhances the efficiency in the production process and reducing the production lead time (Armstrong et al., 2015). The third strength is the company’s high bargaining power with both the buyers and the suppliers as compared with the competitors because of its large scale operations. Finally, the real fruit ingredient of the product satisfies the consumers’ needs and meets the required health standards.

Weaknesses

A major weakness faced by the company is the lack of an effective promotional strategy which reduces the rate of expansion in the market. The second is poor evaluation of the consumer needs which results in the production of inferior snacks in comparison to those provided by the competitors. Lastly, Arnott’s products are limited in their availability as they are only sold in Woolworths supermarkets.

Opportunities

The change in consumer tastes and preferences as well as the rise in the demand for healthy snacks and biscuits has paved the way for more opportunities for developing new products to meet the changing needs. Additionally, the functional health benefits associated with sweet biscuits are comparatively niche and a new line of product establishment and less competition.

Threats

The major threat faced by the company is the decline in the biscuit industry, which makes it highly saturated and limits further penetration into the market. There is also a common perception among consumers that biscuits have negative effects on human health. Finally, the limited barriers of entry into the biscuit market contribute to increased competition.

Target Market and Positioning

Target marketing is an essential factor in ensuring that a product succeeds upon entering the market. The key target market comprises of women due to the general perception that women are the leading consumers of confectionery food products. Similarly, it is largely considered that women play a crucial role in making decisions related to buying food products in almost all households (Armstrong et al., 2015). In Australia, there is an increasing trend where the proportion of women being employed is on the rise and hence their purchasing power is on the increase (Richardson, 2016). It implies that there is a high possibility of the women shifting their purchase preference by increasing their consumption of confectionery products, which forms a good market opportunity for Arnotts.

The snack positioning applied by Arnotts is built on the preferred food features of the target market. The product features are chosen to better demonstrate how the company’s current snack offering differs from those of the competitors. The positioning of the Snack Right biscuits is based on the following product features

Use of natural ingredients: The modern household target is characterized by the consumption of sweet biscuits made only from natural ingredients. It means the ingredients are easily recognized on the product label and any artificial ingredients are avoided.

Production of allergy-sensitive biscuits: Modern generations express higher levels of allergies and intolerances. Therefore, it is concluded that parents of children from the modern household segment will prefer food products that are allergy-friendly.

Production of biscuits with low sugar content: As stated previously, consumers are becoming more health-conscious and hence many are avoiding the consumption of products with high sugar content or even those with sugar as an ingredient.

Non-use of preservatives: Arnott’s biscuits do not have preservatives which are meant for colorings and additives. It is because of modern household’s demand for products without preservatives as this is part of their healthy lifestyle.

Market Mix Analysis

Product: Snack Right provides two kinds of fruit biscuit, which is the Sultana fruit slice and fruit pillows. Based on this comparative analysis, the Snack Right has the highest amount of sugar levels in their biscuit per 100g relative to the sugar level applied by its competitors. Whereas the high sugar content is associated with large amounts of natural fruit component contained in the biscuit, there are extra amounts of added sugars in form of condensed milk and processed sugar as part of their ingredients. It is detrimental to Arnott’s marketing strategy as the consumers are shifting to the consumption of healthy and sugarless products (Butschli, 2016). Additionally, the company offers Snack Right packaging in high volumes of 250g for Fruit Slice and 200g for fruit pillows. It, therefore, limits the company’s desire to meet the needs of the target segment especially in terms of providing a convenient snack package.

Price: The retail prices of Snack Right is considered reasonable as each snack sells at $4.19. Since the brand is targeting households with children, and particularly parents and the product is a little engagement product, this pricing range is convenient. Additionally, this pricing is similar to that of the product’s competitors such as Naturally Good Muesli pies that retail for $ 4.96 and Leda’s biscuits whose retail price range from $3.95 to $4.95(Arnott’s, 2017). Similarly, it is essential to mention that Snack Right provides consumers a higher quantity of biscuits for every dollar spent as compared to the existing competitors. It is also evident that disposable income is expected to rise and consumers, particularly young adults, and parents are willing to spend a certain amount of income on foods that are considered healthy. It gives the Snack Right a chance to potentially charge a higher price if it is in a position to provide biscuits that satisfy the needs of their customers and even supersede their expectations.

Place: In terms of distribution, Snack right is supplied directly to the retailers. Produced by Arnott’s the biscuits are then distributed to supermarkets for easy access by the customers. Arnott is one of the food-production companies that does sell directly to consumers. Snack Rights are only available in Woolworths supermarkets. It is not available in general and other health stores available in Australia. In Coles supermarket, Arnotts has selected to place a different fruit biscuit type named the Full O’ Fruit (Arnott’s, 2017). The product is sold in both Coles and Woolworths supermarket because of the possibility of sales to reduce and the popularity of the Snack Right which prompts the company to strategically curtail distribution. In terms of product placement, the Snack Right is given little shelf space as compared to other products offered by Arnott. Snack Right is given a small space on the topmost part of the shelf with just one shelf spacing provided to the unit brand. Therefore, it makes the product difficult to be noticed and accessed by customers. Additionally, the product is placed on the aisle with sweet biscuits, unlike the Snack Right competitors’ products which are placed on the health food aisle. It reduces the Snack rights likelihood to fall in the category of products desired by the health-sensitive group of customers.

Promotion: It entails the evaluation of the strategy used by the company to develop and maintain awareness of the Snack Right product and to relate with customers. The analysis entails monitor5ing of the social posts and the level of engagement that the company conducts on social media platforms such as Facebook and Instagram within the last three years (Arnott’s, 2017). However, the analysis shows that Snack Right does not even own a single website or social media page, unlike other product lines such as Tim Tam, another famous product from Arnott. Besides, it appears that most of the promotional activities carried out by Arnott have been channeled to promoting profitable products such as Tim Tam and the new product line “Twisted Favourite.” Snack right has been ignored in terms of promotion (Alex’s, 2010). The analysis also entailed the evaluation of the Snack Right’s availability in the general promotional media and interestingly, no availability of the product is established since 2009 when the product was first brought to the concern of the public negatively. The claim was that Arnott’s provided misleading information to consumers concerning the type and amount of fruit ingredients within the Snack Right. The claim resulted in a negative perception of the product among the existing and potential consumers which led to a significant reduction in the total amount of sales.

Physical Evidence: Arnott’s Company is centrally managed from George Street 24, in North Strathfield, Sydney, in New South Wales, Australia. The environment is free from adverse weather conditions with a highly decorated physical layout and store design that sets it apart from other companies within the proximity. The physical location of the company is also considered strategic as it is located next to a port in the South Wales region.

Process: Most of the delivery process of Snack Right is done through a retail outlet, which is the Woolworths supermarket which is the only retail outlet for Snack Right products. However, some of the deliveries are conducted through online sales where customers place their orders and deliveries made to the door-step, timely, and efficiently.

Staff: The company consists of more than 4,300 employees. The company is focused on employee motivation which is a crucial factor in enhancing performance and improving profitability. The company values employee contribution to the development of the company and motivates them through the provision of performance-related rewards (Arnott’s, 2017). It gives the employees a sense of worth hence impacting positively on performance. Arnott’s employees possess a high level of accountability in executing different organizational activities and upholds the organization values which are essential for building organizational culture.

Recommendations

Based on this marketing report, it is evident that Arnott’s company needs to consider certain issues to harness the success of the Snack Right brand in the biscuit industry. One essential recommendation is that Snack Right should adopt an effective repositioning strategy to change the prevailing perception of the consumers on the Snack Right product and all the fruit-filled biscuits in general. There is a need to move the customers’ beyond the perception that sweet biscuits are part of unhealthy food which one should avoid leading a healthy lifestyle. Thus, the Snack Right must be positioned as a healthy snack that offers the consumers biscuits that are nutritionally balanced with functional advantages on the consumers’ health. The second recommendation is that the company should actively invest in effectively promotional strategies that are being employed by the competitors. The company should invest in conducting promotions through the use of modern platforms such as social media and websites. Conducting promotion provides a means through which the existence of the product in the market is recognized. It also increases the customer case as more potential customers become aware of the availability of the Snack Right product in the sweet biscuit market.

References

About Arnott’s. (2017). http://www.arnotts.com.au/about-arnotts/Alex’s, H. (2010). Australian biscuit industry report. Retrieved from https://alexdsn.wordpress.com/2010/09/09/australian-biscuit-industry-report/

Armstrong, G, Adam, S, Denize, S & Kotler, P (2015). Principles of marketing. Vol. 6th, Pearson, French’s Forest, N.S.W.

Arnott’s Fruit Biscuits. (2017). http://www.arnotts.com.au/products/fruitbiscuits/

Butschli, J. (2016). Package Sustainability Now an Expectation. Healthcare Packaging, Retrieved from https://www.healthcarepackaging.com/sustainability/strategy/package-sustainabilitynow-expectation

Crowe, T. (2014). What Australians are really eating? Retrieved from https://www.medibank.com.au/bemagazine/post/food/what-australians-are-really-eating/

IBISWorld. (2016). Arnotts Biscuits Holdings Pty Limited (Premium Report). Retrieved from http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/enterprisepremium/ default.aspx?entid=9959

Richardson, A. (2016). Biscuit Manufacturing in Australia [Industry Report]. Retrieved from IBISWorld Database.

Rogers, E. (2016). Sugar values set to rise as global production goes into deficit for the first time in five years. ABC News, Retrieved from http://www.abc.net.au/news/rural/2016-02-01/global-sugar-deficit/7130168