Section 10 deals with Marketing. Marketing is the process of planning and executing pricing, promotion, product and distribution to satisfy the consumer’s needs. However, before this can happen, the business must develop a marketing strategy which begins with the vision, mission and objectives of the business.
The Food & Beverage Processing in Manitoba Reference Manual (Third Edition, 2017) provides a comprehensive strategic marketing framework for entrepreneurs to use when developing a preliminary marketing plan. There is an emphasis on matching new product attributes to consumer requirements and a competitive analysis of companies and their products. Also included is a discussion on exporting and marketing products in the US and abroad.
Marketing is a general term used to describe the process of planning and executing pricing, promotion, and distribution of a product to satisfy individual and organizational needs. On a more basic level, marketing begins with the product itself, by making sure that the product matches the needs of a well-defined customer group. Marketing consists of making decisions and implementing strategies relating to the four P's of marketing.
- Product (see Section 4 Product Development)
- Place (synonymous with Distribution, see Section 11 Distribution)
- Promotion (see Section 12 Promotion)
- Pricing (see Section 13 Pricing)
Companies need to use a process or framework to coordinate and manage making their four P decisions. A suitable framework for food and beverage processors to use, along with an outline of potential options to consider in making decisions about the four P’s is described below. It is a six stage process that is commonly referred to as strategic marketing:
- Company Vision and Mission
- Company Goals and Objectives
- Competitive Strategies
- Marketing Objectives
- Marketing Strategies
- Marketing Programs
Vision and Mission
Company Goals and Objectives
Goals and objectives can often be categorized into the follow types:
Performance measures quantitatively tell business managers something important about products, services, and the processes that produce them. They are a tool to help understand, manage, and improve what organizations do. Each objective should have one or more performance measures. Performance measures can indicate:
- How well the business is doing
- If goals are being met
- If and where improvements are necessary
- If customers are satisfied
Competitive Marketing Strategies
Once a company has determined its objectives, a competitive marketing strategy can be developed. A competitive strategy is developed so that a company can create advantages over the competition. It focuses on four P decisions that specifically address what competing companies are doing in the marketplace and how their products are positioned. For example, a strategy of overall cost leadership refers to being a low cost manufacturer and should not be confused with setting low prices. Cost leadership can be achieved by producing on a large scale or accessing low cost raw materials.
A differentiation strategy involves changing the product so that it is perceived as unique. It can be based on technical superiority or using premium ingredients.
A niche marketing strategy occurs when a product is sold to a small number of the total potential customers that have a particular characteristic or preference. Targeting the specialty food and beverage market is often referred to as niche marketing since products are marketed to a very small group of buyers. Niche marketing requires the business owner to identify customers with similar demands and serve their needs extremely well.
Marketing objectives for individual products can only be developed after the corporate vision, mission, goals, objectives, and competitive strategies have been developed. Typically, marketing objectives are developed within four general areas:
- Sales volume
- Market share
- Cash flow
The task for any business is to decide on specific targets for sales, market share, cash flow per period and profitability that are challenging yet reasonable considering the resources of the company.
Marketing strategies outline exactly how marketing objectives will be achieved. For example, if the marketing objective is to increase market share by 4%, the marketing strategy states exactly how the market share increase will occur. A marketing strategy is a way to give marketing orientation to a business by deciding to position a product in terms of buyer needs and wants. Inexperienced business people often make decisions based on what they like or want, leaving the customer out of the picture. A marketing orientation brings the customer into the center of the picture.
The marketing objectives for profits, cash flow, and market share can be achieved using the following strategies:
- Increase the number of users by increasing their ability to buy
- Increase the rate of purchase by broadening usage occasions for the product
- Retain current customers by meeting what the competition offers
- Acquire new customers by line extensions (variations of existing products designed for existing markets)
A marketing program is the summary of the detailed analyses and resulting decisions relating to four P’s (pricing, product, place, and promotion). The marketing program should be closely aligned with the mission statement, company objectives, competitive strategies, marketing objectives, and marketing strategies adopted by the business.
Here is a simplified example of a marketing program for a new product being developed for a specific target market that has been researched and selected by management.
- Pricing – Premium pricing (8% over the market leader) to support the new product’s image of being artisanal (manufactured using a traditional batch process and a generations old family recipe).
- Product – Use of premium ingredients; a clean label strategy is employed i.e. avoidance of additives, preservatives and colorants will be emphasized in advertising messages. Packaging and labelling will be selected and designed to support the artisanal product positioning (unique container shape, smaller volume, graphics avoid fonts and colours associated with mass merchandising and value pricing)
- Place – High volume discount stores will not be used. Sell in boutique/specialty stores in high income urban centres. Direct store delivery will be used in local markets (within 300 km of the warehouse). Specialty distributors will be used to expand sales in regional markets.
- Promotion – extensive in-store sampling will be used to introduce the product to new consumers and encourage trial purchases. Cross promotion with other gourmet foods will be used during sampling to provide ideas for the product’s potential applications. Sale pricing will be avoided. To support the image of a socially responsible community business, communication messages will inform that $1/unit will be donated to a local charity or special needs group. Extensive use of social media will be used to support product uniqueness, quality and to promote availability at retail outlets.