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international marketing of McCain
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INTRODUCTION
McCain Foods Ltd. is the world's largest producer of French Fries and Potato
Specialities. Located in Florenceville, New Brunswick, Canada, McCain has grown to
become a global leader in the frozen food industry. McCain Foods was founded in 1957 in
Canada by the McCain brothers Harrison, Wallace, Robert and Andrew. From Canada,
across the world to Japan, from the tip of Argentina to suburbs in Australia, tasty and
convenient food products are served in restaurants and sold in retail stores; adding nutrition
and flavour to family meals time after time.
McCain Foods (India) is a wholly-owned subsidiary of McCain Foods Limited in
Canada. Since 1998, McCain has been engaged in agriculture R&D and in development of
frozen food market in India and subcontinent countries. McCain products are used by leading
fast food chains, hotels, restaurants, catering companies and are popular for in-home
consumption.
McCain constant endeavour to create good food that is delightfully fresh. In order to
maintain an impeccable standard of quality, they strive to use the highest quality ingredients.
The products are prepared simply with wholesome ingredients made by good people who
care about delivering quality in every box, every bag and every bite.
McCain focuses on providing great variety to customers and consumers. A delectable
range of products is available, world favourites like McCain French Fries, McCain Smiles
and local delights such as McCain Aloo Tikki, Idli Sambar Combo and real cheese appetizers
like McCain Cheese & Jalapeno Nuggets and Potato Cheese Shotz.
The range of World Favourites like McCain Smiles, Hash Browns and Local Delights
like McCain Aloo Tikki, Tandoori Vege Nuggets, Chilli Garlic Potato Bites and more have
been spreading delight across the globe. Some of the regions where our products are a great
success are South Africa, US, UK, Middle East & China.
McCain Foods is now the largest chip producer in the world with a market share of
almost 33% and more than 20,000 employees working in 57 locations worldwide. Since 1968
McCain GB has been operating from its UK base in Scarborough, North Yorkshire.
McCain prides itself on the quality and convenience of its product range and for over
three decades has been making healthier versions of favourite staple foods. The McCain
brothers had a simple philosophy 'Good ethics is good business'. This lies behind the McCain
brand message 'It's All Good'.
It is not just the food that is good. The philosophy also refers to the way McCain
works with its suppliers and builds its relationship with its customers. McCain believes it is
important to take care of the environment, the community and its people. It works with
around 300 farmers in the UK , chosen for the quality of their potato crop. McCain factories
are located in key potato growing areas, which help to reduce food miles.
THE MARKETING MIX
McCain strives to be a company making good, simple food in an increasingly
sustainable way, while meeting business objectives. To achieve this, the business ensures that
it balances the four elements (the four Ps) of the marketing mix.
A product or service will have its own different mix of the four Ps. The right mix will
achieve marketing objectives and result in customer satisfaction:
PRODUCT - this has to look and taste good and be made from wholesome ingredients
PRICE - the price has to be attractive to ensure enough sales to generate a profit
PLACE - the place and position of the product in the market is important to compete for
market share
PROMOTION - this has to fit the company”s objectives for the product.
PRODUCT
McCain Foods is the world's leading manufacturer of frozen potato products.
Although McCain is perhaps best known for producing Oven Chips, its product lines are
much wider. In the UK they include various other potato products such as McCain Wedges
and McCain Home Roasts, as well as McCain Sweet Potato and McCain Micro Pizza. In
other countries McCain sells a variety of foods including frozen vegetables, ready meals and
desserts.
Some products, for example, McCain Oven Chips, captured the public imagination
immediately and continue to sell well without needing to be changed. Other products change
through time or are adapted to create new variations, e.g. curly fries or thin and crispy fries.
Under product, we study about the external influences affecting McCain food and the
way they manage to retain the quality of their products. We also study the BCG Matrix to
find out the position of McCain foods in the market.
A) EXTERNAL INFLUENCES
Changes in the range are driven by a number of different factors. For example,
microwaveable snacks take account of changing lifestyles, where people are looking for food
that does not take long to prepare. McCain has also been responsive to market needs for
healthier options and its products support the governments Change4life campaign. This
encourages people to 'Eat Well, Move More, Live Longer'.
The company's philosophy supports the 'calories in/calories out' principle. This states
that to maintain a healthy weight, calories consumed should not exceed calories used. This
also forms part of the 'It's All Good' message - not only does McCain food taste good, but it
fits in with current thinking on healthy diets.
McCain now only uses sunflower oil in the preparation of its chips. It knows that
customers want to eat healthily without compromising on taste and it is careful to use
wholesome ingredients in its products. Having a wide range including healthier options, such
as Oven Chips, as well as products developed for taste, e.g. Wedges, and means the company
can meet different consumer needs for different meal occasions.
B) MANAGING QUALITY
To protect quality throughout the whole supply chain, McCain manages its own potato
seed development. After specially selecting the seeds, McCain works closely with around 300
farmers to ensure the potatoes are grown to a high standard and harvested at their peak. Only
the best potatoes are chosen to make McCain chips and potato products.
McCain Foods' product offering extends outside the home to include food service. This
provides products specially designed for use in restaurants and canteens.
PRICE
In pricing its products, a business must consider four things:
1. Business objectives. The business may set its pricing to achieve a number of different
objectives. These may be to:
maximise profits
achieve a target return on investment
achieve a target market share
match the competition.
2. Costs. In order to make a profit a business must make sure that its products are priced
above their cost. The total cost of a product includes overheads such as research and
development, investment in equipment, people and technology, as well as direct costs, such
as raw materials and ingredients.
3. Competitors. If there is no competition the business can set whatever price it chooses. On
the other hand, if there is perfect competition then the business must accept the market price
for its products. In most cases the reality is somewhere in the middle.
4. Customers. The business needs to consider what its customers' expectations will be.
McCain uses a range of pricing strategies associated with adding value for money. For
example, 'extra-fill' packs can give the customer up to 30% extra free. This rewards regular
buyers of a particular product. McCain may also offer its products at a special promotional
price using price-marked packs to encourage people to try the product.
PLACE
Place describes the channels McCain uses to position its products in the market place.
As a business-to-business (B2B) organisation, McCain does not sell directly to its
consumers. Instead it places its products with wholesalers and retailers, such as major
supermarket chains. McCain may then be able to influence how its products reach the
consumer at the point-of-sale. For example, it may secure key positions for its products in
stores. By paying for end-of-shelf positions for its products, customers are more likely to see
and buy them.
McCain does not use its own vehicles to distribute products to its customers.
Transportation is outsourced, which means another organisation carries out the deliveries.
Products are delivered directly to retailers' central depots for onward distribution to their
stores. Alternatively, they may go to wholesalers, who sell them on to other businesses such
as restaurants.
McCain takes the need for sustainability and reducing its impact on the environment into
consideration in transporting its products. For example:
Where possible local farmers are used to reduce food miles.
Double-decker trucks are used, saving in the region of 2,000 lorry journeys a year.
The lorries have built-in solar panels which helps to provide additional power, for example,
to help with the internal lifting mechanism
PROMOTION
A further demonstration of the 'It's All Good' ethos is McCain Foods' ethical stance on
promotion. McCain makes a commitment not to advertise to children under 12 years old.
It also ensures that the retail labelling on its products carries clear information on
levels of fat, saturated fat, salt and sugar to help shoppers choose healthier options. Its
labelling is in line with the Food Standards Agency (FSA) traffic light scheme and the food
industry's Guideline Daily Amounts (GDA).
Promotion falls into two main categories:
A) ABOVE-THE-LINE
Above-the-line promotion is paid-for and includes traditional advertising routes such
as television, radio and the press. These are good for carrying marketing messages to a large
audience. However, it is less easy to measure the impact of these channels, for example,
whether a TV advert has increased sales.
McCain, too, does the above the line promotion of its products by promotions
products through television ads and newspapers.
Special displays or positioning in stores or advertising on supermarket trolleys are
also examples of above-the-line promotional activity at McCain Foods.
B) BELOW-THE-LINE
Below-the-line promotion can take many forms and is usually more under the control
of the business. Typical examples include events or direct mail. McCain uses a combination
of below-the-line activities including:
Door-to-door leaflet drops or books of vouchers which give customers discounts over
a period of time. These help to attract consumers and establish brand loyalty so the
consumer buys the product again.
Email newsletter for consumers. This creates a relationship with consumers, which is
unusual for a B2B organisation. It not only allows McCain to communicate directly
with and listen to consumers, it also enables the business to collect information, for
example, about their lifestyles and product choices. This is used for feedback,
research and promotions.
PR AND SPONSORSHIP
Public relations (PR) is a form of promotion that is concerned with developing
goodwill and understanding between organisations and the public.
For example, McCain uses its relationship with UK Athletics to deliver 'Track and
Field' road shows across the UK. These emphasise the link between healthy food and healthy
lifestyle. Again, this aligns with the 'It's All Good' message.
McCain also takes part in different types of sponsorship, such as:
TV show Family Fortunes. This brings the McCain brand to a wide audience through a
popular family programme.
McCain Athletics Networks which encourage young people to get involved in the sport
through local clubs. This further supports the company’s approach to balancing calories in
with calories out.
McCain also aims to promote better understanding of where food comes from through
initiatives such as The Potato Story. This is an educational resource that helps teach children
about how potatoes grow and their place in a balanced healthy diet.
HOW McCAIN RESPONDS TO CHANGES IN THE MACRO ENVIRONMENT
A business' ability to meet the objectives depends on two main groups of factors:
1. the internal strengths of the organisation for example being able to make the right
products in an efficient way
2. being able to identify external influences in the business environment and on its
consumers and adapt accordingly.
The external environment today is changing fast. The external environment consists of
everything outside the business. McCain needs to identify changes in the external
environment. It must then rise to the challenges posed by change.
The McCain product most people recognise is Oven Chips. McCain is the world's
largest producer of chips. McCain buys 12% of the British potato crop. McCain is also one of
the world's largest frozen foods companies.
McCain is a privately owned company with a strong market focus. This means that it
carries out research to find out what consumers want. It then uses this market information to
create products that consumers want to buy.It provides consumers with a wide variety of cut
and seasoned potato products through UK retailers, like supermarkets and restaurants. These
include roast potatoes, potato wedges, hash browns, waffles and potato croquettes.
McCain produces more specific potato shapes like Potato Smiles, Crispy Bites and Sum
things (shaped as numbers) which appeal to younger consumers. McCain also makes pizzas.
EXTERNAL CHALLENGES
One of the biggest environmental factors affecting McCain in 2005/6 was the growing
concern about obesity, particularly in children.
McCain's view is that its chips can and do play a role in a healthy balanced diet and it
is continually finding ways to ensure McCain products are as healthy as possible.
Thus in order to be able to understand its customers' requirements and respond to other
changes, it is important for a company to analyse its environment.
A SLEPT analysisis a tool that helps to analyse the environment.
To create a SLEPT analysis the company needs to examine the key environmental factors that
affect its business. Having carried out the analysis it must then take action to respond to the
important changes that have been identified. Of course, some of the factors in the SLEPT
analysis can be placed under more than one of these headings.
The following analysis outlines SLEPT factors and indicates some of the changes that
McCain has made and is making.
SOCIAL FACTORS
Social trends are one of the key factors affecting a business. Consumer buying
patterns are determined by trends. Just as the demand for some popular clothes are
determined by fashion, demand for food products is determined by eating patterns. Eating
habits are always changing. Currently one in four of all British potatoes consumed are eaten
as chips.
Recently McCain and other food producers have seen a slow down in sales as a result
of campaigns to encourage healthier eating such as that spearheaded by Jamie Oliver.
McCain has responded to this challenge in two main ways:
1. By reducing quantities of salt and oil throughout its potato products range.
McCain argues that these figures are very low already. For example, McCain's Oven
Chips contain only 5% fat, 0.8% saturated fat and 62mg of sodium in every 100g
portion. They are made with only natural ingredients - specially selected potatoes and
sunflower oil.
2. By seeking to get the message over that its chips are not unhealthy. The message
that it communicates through public relations campaigns and advertising is that all
McCain potato products are made from simple ingredients such as whole potatoes and
sunflower oil.
A key way in which McCain has responded to changing customer tastes has been to
improve the nutritional make-up of its products. All of McCain's potato products are now pre-
cooked in sunflower oil instead of regular vegetable oil to reduce saturated fats. There is no
added salt in oven chips and added salt has been reduced by up to 50% in other potato
products.
LEGAL FACTORS
Responsible businesses not only abide by the law, they seek to create standards above
minimum requirements.
McCain has to be aware of a number of legal factors. The government's Food
Standards Agency has recommended that firms put 'traffic light' labels on food to help people
understand what they are buying and to help them make the right choices:
Red represents high levels of ingredients such as fats and salts.
Green represents low levels.
McCain has put 'traffic light' labels on its British products as a response to consumer
concerns about healthy eating. All of McCain's potato products are able to display the green
label for saturated fat and none of its products show a red label.
Also featured on the labels are Guideline Daily Amounts (GDAs) which show how much fat,
saturated fat, sugar and salt each product contains. This helps the consumer to achieve a
consistently balanced diet.
In addition McCain's products comply with a range of laws, including:
The Food Safety Act, covering the way in which food is prepared and served.
The Trades Descriptions Act, which states that goods and services must be exactly as
described.
The Weights and Measures Act governing such aspects as giving the right weight on packs.
For example, McCain's oven chips come in packs of 454g, 907g, 1kg, 1.5kg, and 1.8kg.
ADVERTISING
In the UK, advertising of products is supervised by a voluntary body within the
advertising industry. It is called the Advertising Standards Authority (ASA).
McCain makes sure that all its advertising sticks rigidly within the requirements of the
ASA. The ASA sets out that all adverts must be:
legal
decent
honest and
truthful.
ECONOMIC & POLITICAL FACTORS
Economic factors include changes in buying patterns as people's incomes rise. For
example, as incomes go up people prefer to buy what they see as superior varieties of a
product type. We see this with the development of ready prepared foods.
As people become cash-rich and time-poor they prefer to switch to ready meals and
simple to prepare foodstuffs that they can quickly heat in an oven or microwave. Rather than
buying potatoes and making chips at home or taking the time to go to a fish and chip shop, it
may be seen as more desirable to buy oven chips. Of course, it may be cheaper to make your
own chips by peeling and cutting up potatoes. However, with growing affluence people
prefer ready prepared oven chips.
Responsible eating and healthy exercise encourages everyone's health and well-being.
McCain has risen to this challenge by creating a range of varieties e.g. McCain's Straight Cut
Oven Chips, Home Fries, roast potatoes and wedges, to appeal to a variety of customers.
On political factors, the UK government has increased the pressure on food suppliers
to come up with healthier foods. The government publicises and supports healthy eating by
creating initiatives such as 'Healthy Schools'. This encourages pupils to think about the
choices they make when choosing what to eat.
McCain supports the government's initiative. It believes that the foods that it provides,
including potato products which are nutritious and are prepared in a healthy a way.
TECHNOLOGICAL CHANGES
Food technology is one of the most dynamic technologies in the modern economy.
Food technology involves researching and developing new techniques for making products as
diverse as ice cream, probiotic yoghurt, frozen oven chips and muesli bars.
Each of these products involves finding technical solutions to problems such as how to:
freeze while retaining flavour
maximise natural nutritional characteristics
turn a frozen product into an oven heated product.
McCain is continually being faced by new challenges from technological factors. It
should be no surprise therefore that McCain's food technologists were only too happy to rise
to the challenge of making its potato products even healthier. McCain needed a solution that
not only reduced fat and salt, but also kept the sort of flavour that would delight customers.
The solution was to use sunflower oil which reduced saturated fats by 70% across the
whole potato product range. Food technologists know that by working with real
potatoes they are dealing with a product with a very strong nutritional pedigree.
It is a little known fact that potatoes are a major source of vitamin C for the UK diet.
As a product, potatoes are the second most important staple food in the world today
(rice is the first), providing essential carbohydrates that help us to generate energy.
Potatoes also have tremendous future potential. In 1995 the potato became the first
vegetable to be grown in space. NASA worked with top scientists to develop super-
nutritious and versatile potatoes. These can be used to feed astronauts on long space
voyages and NASA hopes one day that these will feed space colonies.
CONCLUSION
'It's All Good' is a message that is embedded in all aspects of McCain Foods'
marketing mix.
Not only are the products designed to look and taste good, they are produced from
good quality crops in a way that addresses people's concerns about issues such as health and
the origins of their food. This helps to ensure that McCain remains a trusted brand.
McCain also takes great care to minimise its impact on the environment. Its products are
placed in the market in a way that reduces both food miles and carbon emissions.
Promotion of the products focuses on the positive relationship between McCain food and a
healthy diet and reinforces the importance of food and exercise in a healthy lifestyle.
Change comes from a number of sources Social, Legal, Economic, Political and
Technological. Change is the one constant in the business environment.
Because McCain is a market-focussed company, it recognises that it has to respond to
what its consumers want. There are clear indicators that toSday's consumers want to live a
healthier lifestyle.
Consumers are increasingly aware of food content and food issues. More and more
people look at food labelling and read information in the press about what is good for them.
They listen to people like Jamie Oliver and government spokespeople. They listen to advice
from teachers and nutritionalists.
The challenge has been, and continues to be, to prepare chips and potato products in
the healthiest way possible. Fortunately for McCain, it has market researchers and food
technologists who enable the company to keep in tune with the changing environment.
McCain's advertising supports the company's message that chips are nutritionally
acceptable provided they are made in the right way. The challenge now is to keep listening to
consumers and to the external environment in order to continue to give those consumers the
best value healthy chips and other food products.
The setbacks in the Indian frozen foods R&D sector is firstly limited or non-
availability of core infrastructure like high-tech controlled production facilities, grading,
packaging, warehousing, integrated processing units, poor transportation and erratic power
supply are the major concerns for efficient supply of frozen foods in India.
The frozen food market in India is very nascent and is typical of a market, which is in
the early stages of development. For the Indian consumer, frozen food is a new category
altogether and they are still getting familiar with it.
McCain’s local range of frozen food offerings are growing well and products with local tastes
are registering good acceptance. Aloo Tikki, the most popular of McCain’s local product,
introduced in 2008 is gaining good acceptance in the retail and food service channel and it
also won the coveted SIAL d’OR Country Award 2010 for the best ethnic adaptation.
The evolving market demand made us introduce McCain 3-minute Idli, which marked our
foray into non-potato-based frozen product in India. Made of real rice and lentils, the product
offers great convenience as it gets ready in microwave in just 3 minutes.
Today, McCain products are being used by leading fast food chains, hotels, restaurants and
catering companies in India and abroad, and are also very popular with retail consumers.
McCain Foods India also exports Made in India products across the world.