Marketing plan for organic valley

Organic Chocolate in UK

Kunal Gudhka

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Executive Summary

Organic Valley is preparing to enter mature market of UK with its new high quality organic

Chocolate. We can easily compete with non-organic chocolate producers as our product is purely

organic and healthier than them. With other organic chocolate manufacturers, we will be

competitive in price. We will be introducing chocolates in the Countlines segment of chocolates.

We will be positioning our company in price between non-organic chocolate manufacturers and

organic chocolate manufacturers. We are targeting specific segments in the consumer markets

like Tweens (11-14 years), Students and ‘Over 55’s’. We will introduce ‘50g bar’ and ‘After dinner

mint’ chocolates for Over 55’s and ‘25g minibars’ for Tweens and Students.

The primary financial objective is to achieve first year UK market share of 0.5% in chocolate

confectionary market. The primary marketing objective is to make Organic Valley as a

sophisticated organic chocolate brand.

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Table of Contents PAGE No

1.0 Situational Analysis 03

1.1 Company Overview 03

1.2 PESTEL Analysis 04

1.3 Porters Five Force Analysis 06

1.4 SWOT Analysis 08

2.0 Objectives 09

3.0 Market Segmentation, Targeting and Positioning 10

3.1 Market Segmentation 10

3.2 Target Market 12

3.3 Positioning 13

4.0 Marketing Strategies 15

4.1 Product Description and Branding 15

4.2 Pricing Strategy 16

4.3 Distribution Strategy 17

4.4 Marketing Communications 18

5.0 Implementation and Controls 19

References 20

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1.0 Situational Analysis

1.1 Company Overview

Organic Valley is a US based organic agricultural Cooperative Company formed in 1988. Initially it

was known as Coulee Region Organic Produce Pool (CROPP). Later Organic Valley brand name

was formed and CROPP was for Cooperative Regions of Organic Producer Pools. Organic Valley

is headquartered in La Farge, Wisconsin, United States. It served its various organic products in

US, Japan and Canada. It is one of US’s largest producers and distributors of organic produce,

dairy, soy and eggs. Beef, Pork, Turkey and Chicken products are marketed under Organic

Prairie brand (Annual Report 2012).

Organic Valley is purely owned and run by farmers. Each and every farms of CROPP is certified

Organic by the National Organic Program. Organic Valley’s aim is to create and operate a

marketing cooperative that promotes regional farm diversity and economic stability by use of

organic agricultural methods and sale of certified organic products (Annual Report 2012). Organic

Valley is not present in Europe and UK till now. The Chocolate confectionary market in UK is the

largest among the European Union (30 percent of the EU market) with British citizens consuming

more chocolate than any other EU nation (Barnett, 2006). So now they are planning to enter UK

market with a new organic Chocolate products. Also Chocolate confectionery is expected to

increase by 13% in the forecast period 2012-2017 (Euromonitor International 2012).

Organic Valley is already producing organic milk, so now they have to only grow organic cocoa

which is important ingredient for manufacturing organic chocolate. This marketing plan shows how

company extend its market to consumers of the UK.

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1.2 PESTEL Analysis

The Macro environmental factors which affects the Organic Valley’s organic Chocolate in UK is

determined by PESTEL analysis as follows

Political/Legal

Agricultural Regulations on

organic farming

Laws on Taxation

Market Regulations

Type of Government –

autocratic or democratic

Future Legislation or laws

Export-Import laws of UK

for food industry

Economic

UK’s Economy situation

and trends

Consumer’s purchasing

power

GDP and Disposable

income of consumers

Currency Fluctuation

Social/Cultural

Shift in consumer

preference for organic

chocolate

Perception that Chocolate

do not promote a healthy

lifestyle

Brand name or company

image

Technological

Social Media’s influence on

people’s purchasing

decisions

Online presence of

company

Mobile applications

Technology licensing and

Patents

Environmental

Cacao can grow 15-20

degrees below and above

the equator

Cacao is seasonal crop

Climate or weather change

can affect its production

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The key drivers affecting the industry are

1) Global Recession

2) Less disposable income

3) Climate and Weather change

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1.3 Porter’s Five Forces Analysis

FIGURE 1: Porter’s Five Forces Analysis

Source: Adopted by Gudhka K. (2013) from http://www.tutor2u.net/business/strategy/porter-fiveforcesmodel.jpg

Force Information Result

Threat of Substitute

Products

One can easily switch to conventional non-

organic products such as non-organic

chocolates.

High

Bargaining Power of

Suppliers

Have our own farm lands and organic

valley is one of largest organic producer

and acquirer.

Medium

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Bargaining Power of

Buyers (Customers)

Fixed Retail price for most of the products Low

Threat of New Entrants Entry barriers are high as organic farming

is difficult and is less practised.

Medium

Intensity of Rivalry

within the industry

High competition from other organic

producers having a good brand value.

Competition from conventional non-organic

chocolate manufacturers like Cadbury,

Nestle, Mars etc.

High

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1.4 SWOT Analysis

STRENGTH

Healthier chocolates than conventional

non-organic chocolates

Highly nutritive

Very few organic chocolate

manufacturer currently

No use of synthetic and harmful

chemicals like pesticides, DDT etc.

WEAKNESS

Prices are higher than non-organic

products.

Very difficult to change consumers

mentality towards buying organic things

Everyone is not concerned about health

and nutrition.

OPPORTUNITIES

Increasing demand for organic things

Consumers becoming more health

conscious

THREATS

Non-organic producers does not have

to follow organic standards

Due to higher price than non-organic

chocolates, more chances of product

failure.

Increasing cost of raw materials

Use of antibiotics for increasing milk

production

2.0 Objectives

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Financial Objectives-

We are setting aggressive but achievable target for 1st year and 2nd year of market entry.

1st year Objectives- We are aiming of 0.5% of UK chocolate confectionery market share

2nd year Objective- Launching of Organic Coffee in UK market

Marketing Objectives-

To market world’s best organic chocolates in UK

To develop Organic Valley as a sophisticated organic chocolate brand

To build a good marketing team that promotes organic chocolate very well in UK

Societal Objectives-

To practice and promote organic farming.

To provide Quality and taste with Health safety.

3.0 Market Segmentation, Targeting and Positioning

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3.1 Market Segmentation

Figure 2- UK chocolate market value

(Source: Business Insights; Chocolate Confectionery Industry Insights, 2008)

Organic Chocolate market is popular among those consumer which focus on health and

environmentally safer ingredients. The current market can be broken down into the following

segments:

Boxed- Chocolate assorted consisting of a selection of high-added-value individual units

(Booth, 1990)

Countlines- Chocolate-covered bars with an individual centre which can be eaten with one hand,

so called named because these items are sold by number rather than weight.

Moulded Bars- Regular bars of chocolate with or without inclusions i.e. nuts or filled centres i.e.

soft caramels

Seasonal Chocolate: Chocolate confectionary specially produced for Easter through ‘eggs’ and

Christmas in ‘gift boxes’ and ‘miniatures’

Straightlines- Small items which are identical and eaten as casual snacks on the move i.e.

Cadbury’s chocolate buttons.

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Above figure suggests that Countlines segment is most revenue generating segment generating

2244.44 € million yearly. Thus it is a potential area for Organic Valley to introduce into for Organic

chocolate. People prefers ‘on-the-go’ lifestyles so Countlines which can go easily into handbags,

suit pockets etc. are convenient snacks (UK Essays 2003).

3.2 Target Market

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Children below 10 years are not part of our target segment because it requires awareness to

choose healthy and organic food items. Organic Valley’s target segment will be constituting of

Tweens (11 to 14 years), Students and over 55 years (‘Over 55’s’) age people. Over 55’s are

consumers with higher disposable income so they can spend money on buying organic

chocolates as they become more health conscious. Students and Tweens are biggest consumers

of Chocolates so by making them aware about health and organic chocolates, they can become

our biggest target audience. Also most Tweens use their pocket money on chocolates so by

introducing 25g bar at same price as of Mars 45g, they can be easily targeted (Youth TGI, 2009)

3.3 Positioning

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According to Kotler and Keller “Positioning is the act of designing a company’s offering and image

to occupy a distinctive place in the minds of the target market. The goal is to locate the rand in the

minds of consumers to maximize the potential benefit to the firm.” (Kotler 2012). Positioning is

consumers thinking of our product against competing products and can determined by plotting

graph of Health vs price and taste vs price diagrams

Health

+

- + Price

C- Cadbury

N- Nestle

G- Green and Blacks

O-Organic Valley

-

As seen from graph, our product will lie between Cadbury and Green & Black’s Chocolates in

pricing and healthier than Green & Black’s who also produces organic Chocolates.

+Taste

OG

CN

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O

- + Price

C- Cadbury

N- Nestle

G- Green and Blacks

O-Organic Valley

-Taste is purely individual’s perception and is different for different people. We want to be placed

as shown above in taste vs price graph.

4.0 Marketing Strategies

G

C

N

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4.1 Product Description and Branding

1) Over 55’s – We will introduce 2 types of chocolates for this segment. First will be 50g

weight, average size premium chocolate bar containing individual centres of nut or

coconut. Also it will contain anti-oxidant properties in form of flavonoids, Cocoa and

reduced milk. It will be purely organic with all certificates and standards. Lines will be

“premium milk with added cocoa”. The differentiating factor with this brand is the fact that it

is organic milk chocolate with added cocoa, for ‘a premium creamy milk chocolaty taste

with all the anti-oxidants of dark chocolate’. Second will be ‘After dinner mint’ chocolate

balls. This will be sold in a packet of 4*25g chocolate balls containing mint and nut along

with cocoa. It will be also organic.

2) Tweens and Students – 25g weight mini bar formulated with milk chocolate and will contain

individual centres of caramel, toffee or nuts. It will be also purely organic with certificates

and standards. Lines can be solid milky and nutty chocolate.

The brand and logo will be displayed on our products and packaging as well as in all

marketing campaigns.

4.2 Pricing Strategy

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50g premium chocolate for over 55’s will be introduced at 90p and 42p for 25g mini bar for

Tweens and Students. 100g ‘After dinner mint’ chocolate balls packet will be sold at 95p as it only

contains a nut, mint and cocoa. These prices reflects a strategy of attracting desirable channel

partners and taking share from existing competitors. Green & Black’s organic chocolate of 50g is

of around £1.10 and other non-organic chocolate bars of 50g is for 60-70p. Therefore we have

placed our price between both of our competitors.

4.3 Distribution Strategy

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Over 55’s

For this segment, Distribution channels will be very wide. 50g bar chocolate will be available

everywhere from small market to mass outlets. The current trends like internet and mobile

applications will be used to maximise product launch. These distribution channels are very

advantageous as they are very cost effective, can penetrate large market and easy maintenance

once they are set up. Super stores which will scale our products will be Tesco, Morrison, ASDA,

Waitrose and Sainsbury.

‘After dinner mint’ will be available to selective three to five star hotels having good reputation.

With this, we will able to create good brand impression to our target segment which will be visiting

those hotels. Hotels will include Holidays Inn, Premier Inn, Feathers Hotel etc.

Tweens and Students

Distribution channel for this segment will be slightly different than above. It will be distributed

through channels like supermarket and small shops as above. Use of internet for distribution will

be must for this segment as current trend is toward online shopping. We will use amazon, ebay

and other online stores for distributing our chocolates. We will also do tie ups with coffee shops

such as Costa, Starbucks etc. and ice-cream outlets as these are students favourite spots.

4.4 Marketing Communications Strategy

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We have planned integrated marketing strategy for all three products which is hitting UK market in

selective ways. Guerrilla marketing tactics is not applied as it a high quality product. We should

use selective media and not shot gun approach as profit margins are lower and we are

introducing a new product.

In initial phase of campaign, we will introduce our product and its benefit to create brand identity.

We will tell consumers about the value which we will deliver. In second phase we will do

promotion and advertisement of our brand. For promoting our brand we will only use integrated

marketing communication strategy tools such as advertising, direct marketing and our own

website.

We will only advertise in print media such as best food journals and newsletter of UK. For e-media

we will make 30 sec advertisement. We will air our ads on music channels for Tweens and

Students and local channels for 55’s. As our product is high quality, we will not use sales

promotions as it might create negative impact.

Direct marketing will include venues such as golf clubs, day centres, community centres for over

55’s and gymnasiums, coffee shops etc. for students and tweens. E-marketing will be done by

providing special offers and vouchers which can be redeemed by purchasing online from specified

sites.

5.0 Controls and Implementation

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Quality of chocolate will be monitored very closely using tight control measures as our product is

highly qualitative. Quality Control department will be placed in manufacturing plant. Using different

types of research we will find out features and benefits our target market segments value.

Different Surveys, brand awareness feedbacks will help us monitor the effectiveness of our

marketing strategies. Customers attitudes towards competing brands will be also be measured

and analysed. Customer satisfaction will help us to measure market reaction. All the surveys and

feedbacks will be conducted on quarterly basis. All of this will help us to react quickly in correcting

any problems that may occur. As a warning signals, monthly sales and monthly expenses will be

used for deviation of plan or strategy (Kotler 2012).

References

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1) Booth, R (1990) ‘Snack food- An AVI book’; Springer

‘Britons are Europe's biggest chocolate-lovers; Louise Barnett – 13/04/2006’: Available at:

http://www.independent.co.uk/news/uk/this-britain/britons-are-europes-biggest-

chocolatelovers-473928.html [Accessed: 17 Dec 2013]

2)  Cropp Cooperative 2012 Annual Report. [Online] Available at:

http://issuu.com/organicvalley/docs/13-55001_annreprt_2012_web?e=7846503/2805343

[Accessed: 17 Dec 2013].

3) Undefined. Organic Valley - Why a co-op? [Online] Available at:

http://www.organicvalley.coop/about-us/our-cooperative/our-co-op/ [Accessed: 17 Dec

2013].

4) ‘Youth TGI (Target Group Index)’ [Online] Available at http://kantarmedia-tgigb.com

[Accessed 04/03/10]

5) UK Essays (2003). UK Chocolate Market Analysis Marketing Plan Marketing Essay. [online]

Available at: http://www.ukessays.com/essays/marketing/uk-chocolate-market-analysis-

marketing-plan-marketing-essay.php [Accessed: 17 Dec 2013].

6) Philip Kotler. (2012). Marketing Management. 14th ed. Harlow: Pearson Education Limited.