Marketing Plan for Knor Soup

Marketing planning of Knorr Soup

Contents

Page No.

1. Terms of Reference..01

2. Introduction to Unilever Bangladesh Limited (UBL)01

3. Evaluation of the findings from marketing

audit of UBL and identification of key issues01

3.1 Evaluation of External Environmental Factors01

3.2 Evaluation of Internal Environmental Factors.02

3.3 Key Issues: External and Internal Environmental Factors02

4. Marketing Objectives03

4.1 Generating Alternative Strategic Options03

5. Recommendations of segmentation, targeting and positioning.04

5.1 Market Segmentation..04

5.2 Target Market Segmentation for Knorr Soup05

5.3 Targeting Strategy05

5.4 Positioning Strategy.06

6. Suggested marketing mix for Knorr Soup..07

7. Recommendations of marketing budget.09

8. Suggested method for Evaluating and Controlling

the Marketing Plan & Budget...10

8.1 Benchmarking...10

9. Conclusion11

Bibliography12

Marketing planning of Knorr Soup

Figure

Page No.

Figure 1 : Ansoffs growth vector matrix (source: Ansoff, 1957)..03

Figure 2 : The major bases for segmenting consumer markets..05

Figure 3 : Multivariate Segmentation for Knorr Soup.05

Figure 4: Perceptual map adapted from Drummond and Ensor (2001)..06

Figure 5 : Knorr soup distribution channel.08

Figure 6: Implementation Schedule of promotional activities (GANN CHART)09

Figure 7: Marketing Budget for the First year10

1 Marketing planning of Knorr Soup

1. Terms of Reference

This task is based upon creating a medium term marketing planning (3 years) of knorr Soup

just 9 months ago launched by Unilever Bangladesh Limited(UBL). In doing this, the marketing

environment including both external and internal environment has been evaluated. Afterwards

considering the marketing objectives a marketing mix has been suggested based upon the

target market segmentation and positioning. And by analyzing all the above factors, a marketing

budget has been established to create awareness among the target market. Eventually, the

benchmarking method has been suggested for controlling the marketing plan and budget.

2. Introduction to Unilever Bangladesh Limited (UBL)

An organizational overview of Unilever Bangladesh Limited is shown in Appendix 1.

3. Evaluation of the findings from marketing audit of UBL and identification of key issues:

To enhance company performance with sustainable competitive advantage, It is very important

for UBL to conduct an insightful diagnosis of the external and internal environment which will

help to adopt a strategy that is brilliantly fit with the company's situation.

3.1 Evaluation of External Environmental Factors

Macro Environmental Factors

Although unstable political situation prevails, as a developing country Bangladesh Govt.

always encourages investments by making favorable business environment to reduce

unemployment problem.

To control inflation is very important to make the GDP growth fruitful. In such a situation,

to ensure a sustainable profit drive, UBL has to adopt the strategy for some products to

packaged into small size for low income group, for affordability.

Busy urban life need such products that can make their life easier. So, it is a great

opportunity for UBL to emphasize on an exclusive culture and embracing difference,

which will result in high demand of its products in the developing and emerging market.

UBL should always try to give importance on R&D, current technologies and launching

of modified products so it can please its stakeholders.

The Government is strengthening the consumer protection law and UBL must cope with

the law to serve consumer interest.


Working with the government in regard to climate change, CO2 emission waste

management and arrangement of various training program to ensure compliance with

the company standard for occupational health and safety will enhance the brand image.

Evaluation of Micro Environmental Factors

The micro environmental factors of UBL reveals that as UBL has access to many suppliers for

acquiring raw materials with a strong inventory management system, the bargaining power of

supplier is low. And there are various alternative choice customers can enjoy to satisfy their

needs and desire, so the bargaining power of buyer is high. Only few financially capable

companies exists to invest required capital, so the threat of new entrants is moderate. In

addition, the price of the substitute product is relatively higher than the UBL one ,so there is a

low threat of substitute. In the soup industry UBL is competing with only Nestle. The present

scenario reveals that almost 83% market is covered by Nestle. So, to increase the market share

will be a challenge for UBL.

3.2 Evaluation of Internal Environmental Factors

Internal environment could be evaluated in the context of product life cycle model & BCG matrix

which have been discussed in the task-1:

Earlier it has been revealed that the product (Knorr) is at the introduction stage. So, for

helping the product to progress further it is necessary to create awareness & trial, to extend

distribution channel and if it can be done than low sales will be turned into high and negative

profit will be turned into positive because of economies of scale.

In the Task-1, it has been revealed that Knorr Soup is operating in the high-growth market

(18.11%) with a low relative market share(17%). In such a situation 'Knorr must try to increase

the market share in order to strengthen its position. In doing this, UBL should concentrate on

long-term returns rather short-term earnings and profits.

3.3 Key Issues: The followings are the key issues of external & internal environment

External Environment

Political instability could affect investment.

Real GDP growth rate is 6.7% which will influence to consume.

41.7 million people living in urban areas who have more consumption power.

Enriched R&D has the ability to introduce new products which can attract customers.


Change in international and local policy could affect productivity.

Industry Analysis

Low bargaining power of supplier will ease the raw material collection.

Bargaining power of buyer demands more customized product.

Moderate threat of entrants can bring more option for customer.

Higher cost of substitute product enhances opportunity.

Key issues of Internal Marketing Environment

Annual market growth is high

Product at introduction stage demands awareness creation.

Should concentrate on long term results.

Need more market share to gain profit.

4. Marketing Objectives

To achieve 7o% customer awareness in the target market within first 6 months.

To establish distribution channel in 42 district town within first 12 months.

To accomplish annual growth rate of at least 12% by the end of second year.

To achieve 45% market share by the end of three years

4.1 Generating Alternative Strategic Options

Ansoff (1975) developed product/market matrix which presents a useful relationship between

products and markets. The matrix reflects on four arrangements of product and market. Each

mixture proposes a growth strategy. So, for achieving the objectives, which strategic option

should be proposed to deliver a product to the market must be ensured.

Figure 1 : Ansoffs growth vector matrix (source: Ansoff, 1988)

Market Penetration,

Market Share,

Market Growth,

Customer Churn

Product Development

Market Extension/

Market Development

Diversification

Ma

rke

t

N

ew

Cu

rre

nt

Product Current

New


From the marketing objective, it can be seen that in its medium term planning Knorr tends to

dominate the market by creating awareness and extending distribution channel. Moreover, in

the task-1, in BCG Matrix it has been shown that annual market growth of Knorr is very high. So,

all this things recommends Knorr to adopt market penetration strategy.

5. Recommendations of segmentation, targeting and positioning

The phases of STP progression can be identified as follows:

Source: Gilligan and Wilson (2003, p398 )

5.1 Market Segmentation

Dibb et al. (2001) defines segmentation as: The process of grouping customers in markets with

some heterogeneity into smaller, more similar or homogeneous segments

Kotler et al. (1998, p.28) defines segmentation as: The act of dividing the market into specific

group of consumers who share common needs and who might require separate products and/or

marketing mixes

There are a number of reasons organizations undertake segmentation (Doyle, 1994):

To Meet consumer needs more precisely

To increase profits

To segment leadership

To retain customers

To focus marketing communications

So, it could be said that segmentation is about categorizing explicit groups of customers to

which an organization could realize demand with its products or services. As the chosen

product is a FMCG product, so it is necessary to use segmentation variables for the consumer

market.

1.Identify the organizations current position, capabilities, objectives and constraints

2.Identify the segmentation variables and segment the markets

3. Develop profile of each segment

4. Evaluate the potential and attractiveness of each segment

5..Select the target segment(s)

6. Identify the positioning concept within each target segment

7 Select and develop the appropriate positioning concepts

8. Develop the marketing mix strategy


Geographic and geo demographic

Geographic: region, climate, population density.

Geo demographic: ACORN, MOSAIC, PiNPOINT, SUPERPROFILES, DEFINE, PiN, FiNPiN

Demographic

Age, sex, education, occupation, religion, race, nationality, family size, family life cycle, ethnicity

Behavioral

Attitudes, knowledge, benefits, user status, usage rate, loyalty status, readiness to buy, occasions

Psychographic

Personality, lifestyle, VALS, AIO, 4Cs, Monitor

Figure 2 : The major bases for segmenting consumer markets [Source: Wilson and Gilligan (2003, p 412)]

5.2 Market Segmentation Strategy for Knorr Soup

After careful study of the market UBL will adopt the Multivariate segmentation strategy for Knorr

Soup in the following way:

Demographic Segmentation

Variable Consumer

Age 10+

Ethnicity Urban Society

House Hold Size 4+

House Hold Income 10000

Behavioral Segmentation

Benefits Sought Can be prepared promptly and easily.

Average usage rate 4 packs a week

Figure 3 : Multivariate Segmentation for Knorr

5.3 Targeting Strategy

After identifying the market segmentation it is essential to adopt a targeting strategy which will

help UBL to go after the segment for its marketing efforts.

Dibb et al. (2001, p.49) identify the different targeting approaches as: The decision about which

market segment(s) a business decides to priorities for its sales and marketing efforts. One of


the different approaches is undifferentiated or mass marketing strategy where the organization

considers the total market as being homogenous and apply just one marketing mix for the total

market. For Knorr Soup, UBL will go for this strategy because it will ensure mass awareness to

total urban society with lower operational cost (marketing, manufacturing e.g.).

5.4 Positioning Strategy

Kotler and Keller (2006) defines positioning as: The act of designing the companys offer and

image so that they occupy a meaningful and distinctive position in the target customers mind.

Having finished the target market selection it is important for UBL to make a strong position in

the target markets mind. Knorr Soup has entered the market with four flavors which are almost

similar to its competitor in terms of ingredients and customers can easily identify this. Now, on

what positioning prompts UBL should concentrate on. As Knorr has entered the market after

three years of its competitor (Maggie Soup) and has grab 17% market share after nine months

of launching the product. So, Knorr Soup should concentrate on competitive positioning.

The following perceptual map has been adapted from Drummond and Ensor (2001, p.186) ,and

shows where Knorr Soup now see itself relative to its main competitor Maggie Soup:

High Quality

Premier Sector

Mid Range

Basic Low High Quality Quality Figure 4: Perceptual map adapted from Drummond and Ensor (2001)

Price

Maggie Knorr


The above perceptual map reveals that in terms of quality the perception of consumers about

Knorr is less than its competitor. So, consumers are ready to pay higher price for Maggie Soup.

UBL thinks that people perceive Maggie in this way because it has entered in the market before

Knorr and has enjoyed monopoly business.

6. Suggested marketing mix for Knorr Soup

Wilson and Gilligan (2003 , p. 578) has the following to say about marketing mix:

The way in which a differential advantage might be achieved and sustained is through the

manipulation of the elements of the marketing mix. This mix has traditionally been seen to

consist of the four Ps of marketing: product, price, promotion and place.

So, it could be said that marketing mix is the following set of marketing tools like;

Product

Price

Place

Promotion

that a firm can manage to follow its marketing objectives in the target market. With the purpose

of creating the proper arrangement of these elements to satisfy the needs of the customer of

Knorr Soup, UBL should combine the above elements in the following way:

Product : Keeping in mind the diverse flavors of its competitor (Maggie Soup), Knorr Soup has

entered the soup industry as an actual product. The four flavors of Knorr are chicken ginger,

chicken mushroom, classic tomato & corn chicken which are almost similar to its competitor. In

case of packaging all nutritional facts have been revealed for consumers. As Knorr has entered

the soup industry as an actual product, so for attaining the marketing objectives UBL should

modify the existing features by removing those which no longer meet up the needs of a large

enough number of consumers and do not generate sufficient profits.

Price: In case of price setting Knorr has adopted market penetration pricing strategy because

the competitor has already grabbed 83% market share so knorr needs to attract the large

number of buyers in order to enlarge its market share. In doing this, the price of Knorr will be

lower from its competitor. Earlier in the characteristics of market segmentation it has been

showed that average usage rate is 4 packs per week, So, UBL should adopt the product-mix

pricing strategy like product bundle pricing including 4 packs together which will cost 100tk and

which is 20tk. lower than its competitor.


Place: For making Knorr Soup available UBL will intensive distribution strategy which means the product will be available in the target region. Afterwards for distribution channel organization

UBL should adopt a distribution channel structure in which producers, wholesalers and retailers

act as an integrated system. In doing so, UBL should concentrate on establishing distribution

channel in the district town by the following way:

Direct Selling

Figure 5 : Knorr soup distribution channel.

In case of choosing whole seller UBL prefer agents and brokers who will not take possession of

the goods but will be paid a commission for aiding buying and selling. Moreover, UBL must

ensure the prerequisite of products at the quality level preferred by the leading number of

customers in that target market, while maintaining the costs of stock inventories, transportation

and warehousing as low as possible.

For making the channel more effective UBL should assign the tasks to all channel members so

that the whole work could be done smoothly to attain overall channel goals in the following

way;

To maintain a relationship between retailer & whole seller to ensure product placement

in the targeted city for achieving a revenue target

To cluster various territories along with conflict management & trouble solution.

To make all the channel members responsible for the sales within the whole targeted

area for Knorr Soup.

Promotion: Philip Kotler (2003, p.18) has the following to say about promotion: Promotion is that part of communication that consists of company messages designed to

stimulate awareness of, interest in, and purchase of its various products and services.

For Knorr Soup UBL should emphasize on Integrated Communication Approach which means a

management idea where all characteristics of marketing communication will effort in a combined

way. Wilson and Gilligan (2003, p.589) has identified: when a product is at introduction stage

Unilever Bangladesh

Limited (UBL)

Distributor Whole sellers in the target

market (district town)

the

Retailers

Consumers


needs heavy spending to build awareness and encourage trial among early adopters and

distributors. So, For Knorr Soup UBL should conduct the following promotional activities:

Advertising, Sales promotions, Merchandising, Personal Selling, Public Relation e.g.

So, UBL will implement the above promotional activities in the form of multiple tasks like

the following way:

Figure 6: Implementation Schedule of promotional activities (GANN CHART)

7. Recommendations of marketing budget

To market a product, it is very imperative to estimate a realistic cost which will ensure the

marketing objective to achieve 7o% customer awareness in the target market within first 12

months along with the permission of concerned authority. For this, UBL need to determine the

budgeting method which will ensure a realistic budget for knorr soup.

Implementation Schedule

Three Years (3) Medium

Term promotion Planning

Year-1

April, 2012- March, 2013

Year-2

April,2013-March,

2014

Year-3

April,2014-March,

2015

Months

1 2 3 4 5 6 7 8 9 10 11 12

Task Description

Product Development Television Advertisement News Paper Advertisement Magazine Advertisement Radio Advertisement Billboards Advertisement Point of Sale (POS) commission, free offer

(Price off, sample) Personal Selling Campaigning Canteen/Cafeteria Branded Mobile Vans Product Modification Price Changes


Among the several budgeting method Knorr should use the combination of objective & task and

judgment method. In the marketing audit part (Task-1) it has been found that the soup industry

growth is high and knorr is at the introduction stage. So, keeping the marketing objective in mind

to gain 45% market share by the end of three years along with the analysis of social trend

extracted from external environmental analysis the following marketing budget is recommended.

Advertising Cost in Taka

Television 20,00,000

Radio 60,000

News Paper 250,000

Magazine 50,000

Billboards 10,00,000

Merchandizing or Point of Sale (POS) 200,000

Out of home activation

Canteen/Cafeteria branding (Chosen

University, College, School in the targeted

area)

120,000

Branded Mobile Vans 300,000

Sales Promotions

Free Offer 150,000

Sample Distribution 120,000

Public Relation

Campaigning 110,000

Sub Total 42,40,000

Figure 7: Marketing Budget for Knorr Soup [Note: 1 pound=132.50 tk.]

8. Suggested method for Evaluating and Controlling the Marketing Plan & Budget

With the aim of taking corrective action for better performance of knorr it is vital to adjust the

marketing objective with the course of time along with evaluation of setting standard. In doing

this, marketing department of UBL could consider profit analysis (return on investment), cost per

unit analysis e.g. along with measuring the each component of marketing mix like market share,

sales, profit margin, channel growth, stock levels, media coverage, awareness level e.g. which

must be relevant with marketing objective and planning. And for all this things Knorr should

adopt benchmarking method

8.1 Benchmarking: Drummond et al. (2008, p.286) defines benchmarking as: A systematic

and on-going process of measuring and comparing an organizations business processes and


achievements against acknowledged process leaders and/or key competitors, to facilitate

improved performance. Hence, Knorr soup should scrutinize its competitors (Maggie) activities,

strategy, operations which help them to increase their market share. For example; if Maggie

adopt market penetration strategy or more invest on TV media or Billboard and it brings success

to them then knorr soup should study on that. Moreover, Knorr could set up their performance

standard like; by the end of one year Knorr will increase its market share by 15%.

9. Conclusion

To form a marketing strategy, any proactive organization needs to evaluate its external and

internal environment so that it can understand at what point it needs to improve, what strengths

and opportunities it has. UBL should use the market penetration strategy outlined in Ansoffs

matrix in relation to other strategies, not in separation and it will help UBL to increase its market

share.

UBL needs to develop the marketing mix in a way so that it can cover the target market because

for creating awareness and for getting response it is very important. As the product(knorr) is at

the introduction stage and the industry growth is high, it is very important for UBL to make a

substantial marketing budget considering the objective and task method along with judgment

method which will help knorr to advance. Eventually, benchmarking method would be

appropriate for UBL to compare itself with its competitor.


Bibliography

Book

Drummond, G. et al (2008) Strategic marketing planning and control. 3rd edition. Oxford,

Butterworth Heinemann.

Drummond, G. and Ensor, J. (2001) Strategic marketing planning and control. 2nd edition.

Oxford, Butterworth Heinemann.

Kotler, P. et al (1998) Principles of marketing. Harlow, FT/ Prentice Hall.

Dibb et al (2001) Marketing: concepts and strategies. 5th edition. Boston, Houghton Mifflin.

Kotler, P and Keller, K.L. (2006) Marketing management.12th edition. Englewood Cliffs, NJ,

Prentice Hall.

Megicks, P. (ed), Donnelly, R. and Harrison G. (2009) CIM course book: the marketing planning

process. Oxford, Butterworth Heinemann.

Wilson, R.M.S. and Gilligan, C.(2003) Strategic marketing planning. Oxford, Butterworth Heinemann .

Kotler, P (2003) Marketing insights from A to Z. New Jersey, John Wiley & Sons, Inc.

WEB Site

Official Web site of Bangladesh Bureau of statistics (www.bbs.gov.bd)

Official Web site of Unilever Bangladesh (www.unilever.com.bd)

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Marketing Plan for Knor Soup