Executive summary:
This paper consists of the product launch plan for Arnott snacks Australia for the woman segment as a healthy snack option.
1. Introduction
This paper is about the product launch by Arnotts which is one of the most reputed company in the Australian snacks market and largest in Asia-pacific region. The company has been serving its client with various snacks options from last 144 years. This is part of day to day lives of millions of people in Australia. The company’s website claims that
“It is the icon of the Australia. Millions of Australians have grown up with ARNOTT’S during the past 144 years. This company has an efficient access throughout the Australia.”
The strategic approach and innovative products have helped the company in maintaining the financial stability in its target markets. The company employs more than 2600 people at various positions in the form of direct employment. The expenditure on the Australian biscuits and snacks for the company is more than $350 million. Company has invested above $27 million for buying new ovens and equipments at one of its bakery in South Australia. The other investment was done in ARNOTT’S Huntingwood bakery in New South Wales. This was above $19 for upgrading of the factory. Virginia bakery in Queensland received $9.4 million for upgrading. The products are well accepted in more than 40 countries across the world, particularly to the developed nations like Japan, USA, Canada, United Kingdom, New Zealand and others.
Company offers healthy snacks to the people. This is based on the fact that Australians in general are conscious about what they are eating and how that has been prepared. Since the objective of company is coherent with the objectives of people in general, the company has positive reception for its new products. Company is also involved in corporate social responsibilities where in they provide food to the needy through welfare agencies.
Financial record for last three years:
ARNOTT’s biscuits have been investing aggressively from last few years. Specific to last three financial years, the investment has been more than $83 million and each year the expenditure on the ingredients or raw material is more than $196 million. The major part of this investment goes into flour and grains followed by sugar and dairy products (as on 11March 2008). The snack food division has been spending on potatoes, maize and sunflower oil respectively.
2. Situation analysis
2.1 Internal analysis
The company is subsidiary of Campbell. The core business of Arnott snacks is the snacks and related products. The product range includes sweet biscuits, crackers, mini munchies which are further divided into various sub categories of chocolate biscuits, cream biscuits, Arnott’s shapes, Arnott’s vita-weat and many others. ,
Table: Average percentage increase in three categories of wholesale list price
“In 2009, Baking and Snacking sales decreased 10%. Pepperidge Farm achieved sales growth with gains in the cookies and crackers business, reflecting significant growth in Pepperidge Farm Goldfish snack crackers. Arnott’s sales declined due to the divestiture of certain salty snack food brands in May 2008, the unfavorable impact of currency and the impact of one less week in 2009. Excluding these items, Arnott’s sales increased due to growth in savory and chocolate biscuit products and growth in Indonesia.” sales increased due to the
favorable impact of currency, growth in biscuits, and the benefit of the 53rd week, partially offset by the divestitures of certain salty snack food brands and the business in Papua New Guinea.
Source: Annual Report Campbell, 2009
2.2 Macro-environmental.
Political
The political environment of Australia is stable.
Economic
The economic environment of Australia is strong and competitive. The country has experienced strong economic growth from last seventeen years with the growth rate of 3.3% per year. The reason for strong economic growth is the sound economic management and strong fiscal policy. Australian government has budget surplus of more than 1.8% of GDP which comes to $21.7 billion. Financial regulations of the country are strong and have transparency in the policy and legal environment. Country has developed transparent and strong corporate governance system and adopted effective competition policy (Australian Government, Department of Foreign Affairs and Trade, 2010).
Social
The social environment of Australia is influenced by its diverse culture and lifestyle. The country follows democratic traditions and values. The country is open to imbibe new traditions and influences. The society consists of the original inhabitants and migrant population who brought their culture and traditions with them. The influence of the diverse culture is visible in the food, cooking habits and eating habits of people. Australian society is egalitarian society where distribution of wealth is uneven. The unemployment rate is relatively low. Legal system of Australia treats each individual the same and recognizes equal right to be treated in respectable manner.
Australian cuisine is influenced by Asians and European cuisine due to the migrant population. The diversity within Australia also influences the food and eating behavior. Different tastes Italian, Chinese, Indonesian, Thai, and Greek, Japanese and French and many others.
As per the study of Boston Consulting Group, the average spending and income levels of Australian women have significantly grown in the recent past. Average spending of Australian woman has increased by 72% as compared to the international average of woman spending 64%. Woman participation in economy is significantly high than that of other counterpart countries (Lunn, 2009).
According to the report of Commonwealth of Australia, 2004 woman on an average spend 75% on food. This spending varies with respect to the time, employment status and distribution of resources within the family.
The demographic information of the Australian population reveals that the percent of population facing overweight and obesity problems is considerably high.
The obesity and overweight is defined as “overweight is defined by a body mass index (BMI) greater than or equal to 25 and less than 30, while obesity is defined by a BMI greater than or equal to 30. BMI is body weight in kilograms divided by the square of height in metres. Calculations are based on self-reported height and weight and exclude persons for whom height and/or weight are unknown. National Health Survey: Summary of Results, 2001 and 2004-05 (ABS cat. no. 4364.0).”
The obesity problem is higher among females than males.
Australian Government has realized the growing problems of obesity among various age groups and sex and in order to tackle childhood obesity
“The Australian Government will soon have a new weapon in the fight against childhood obesity with the launch today of an initiative to provide comprehensive national measures of what and how much Australians eat, and our levels of physical activity.” (Ministry of Health and Aging, 2005)
One of the reasons defined by WHO for the obesity risk is low physical activities whereas the primary reason ahs been ‘increased intake of energy-dense foods that are high in fat and sugars but low in vitamins, minerals and other micronutrients’.
The initiative taken by government is to educate and inform people regarding various aspects of obesity from the reasons to preventive methods and informing people regarding potential risks of other health related problems due to obesity and overweight.
Diet and exercise – age standardized(b)
Overweight/obesity – of males aged 15 years and over(g)
58.3
Overweight/obesity – of females aged 15 years and over(g)
43.8
Low usual intake of fruit and vegetables – of males aged 15 years and over
96.7
Low usual intake of fruit and vegetables – of females aged 15 years and over
93.5
Sedentary or low exercise level – of males aged 15 years and over
63.0
Sedentary or low exercise level – of females aged 15 years and over
74.6
The lifestyle of people and food habit across all the segments are unhealthy. The low intake of fruits and vegetables is more than 90% for each of the categories.
Technical
Innovation and technological advancement in various communications, food production, and packaging and preservation technologies have impacted the food industry of Australia. Food industry is one of the largest employing sectors of the Australian economy. New technologies also allow finding out the nutrient components and constituents of food items including energy supply from particular food, details on fats and carbohydrates and others.
2.3 Micro analysis –
The products by company are targeted for all the age group but primarily it is for the children. Different variants are introduced to market in order to meet with changing demands and providing consumers with variety of choices.
Competitor:
Competition in this segment is high. Market is matured and has a stagnant growth rate. The snack food industry competes with different food options available to the customers. These can be from the street food options available to customers.
The food processing industry in Australia covers a number of sectors:
Sector
Turnover(2005–06, $millions)
Bakery products
4 005
Beverage and malt manufacturing
13 289
Dairy products
9 991
Flour mill and cereal food manufacturing
3 692
Fruit and vegetable processing
4 672
Meat and meat products
17 836
Oil and fat manufacturing
1 547
Seafood processing
1 330
Sugar and confectionery manufacturing
6 456
Other food manufacturing
8 554
Total
71 372
Source: DFAT Australia
In the year 2006-2007 alone, there were more than 191400 people employed in food and beverages industry. The confectionary food market has been growing with the constant rate of 3%. The market is flooded with the new and innovative food items. In the recent past, consumers have become more aware of the healthy food options and have started preferring healthy and nutritious snacks over the traditional snacks options. The changing preferences have forced marketers to focus on the nutritional values of the products.
2.4 SWOT
Strengths
Company has strong financial position and a well established brand name. The organization has wide range of products and sub categories of products. The company has been increasing the wholesale price list of various products. The company has sustainable performance from last many years. The company is one of the best and most reputed brands in Australia. This is a household name.
Weaknesses
There is no as such weakness for the company in the present scenario. However there have been certain incidences in the past like threat of poisoning of Arnotts products. The company has been questioned by regulatory authority for the packaging and labeling problems wherein the percent of the particular component in the food item was much below than the labeled information.
Opportunities
There has been change in the trends of consumer behavior and preferences. People in the present scenario are more focused for the nutritious choices for their food and snack items. Company has already started focusing on the nutritious food and launched Veta-weat which is a whole wheat bread. There is lots of scope for the nutritious snack options that company can utilize. The opportunity exists for the healthy snack options for woman, working mothers, toddlers and children below twelve years of age, college students and working professionals. The nutritious snack options that can help in meeting the dietary requirements and keeping fit is demand of the present scenario.
Threats
Threat for this category comes from the competition. The changing preferences have been recognized by competitors across the industry. From McDonald to Frito-Lays, the healthy and smart snack options are included in the product range. McDonald has introduced scrambled eggs whereas Pizza Hut offers the salad bar for dine in consumers. Frito-Lays have launched produced with lesser calories and free from Trans fat.
3. Justification for product launch:
This is clear from the SWOT analysis and PEST analysis that there is a need to incorporate certain new things to the approach of the company to the same market. Company has already have recognized the need to the healthy snack choices and included some variants under the same. The demands of the healthy snack options are increasing. Government is also initiating the programs which can help reducing the level of obesity and overweight among various customer groups. The target population for this particular product is women. The product is mainly targeted to meet nutrient needs of woman at all the level and stages.
· The product is a cookie with whole wheat and other grains, with additional calcium and iron. This is sugar free and baked with lowest fat butter.
· The cookie is rich in fiber and the taste of the product has been maintained along with its dietary value.
· The soya extract and herbs used in the cookie preparation has the properties to bind with the fatty acids and reduce the absorptions of fat in the intestine.
· Rich in protein, minerals and micronutrients
· The shelf value of the product is 2-3 weeks.
· The high value of calcium and iron has been maintained according to the daily intake requirements of an adult woman and recommended frequency of snacks.
The reason behind choosing this item is the large customer base and changing food and preferences among people. People, particularly woman are looking for better option to meet their nutritional requirements, keep their calories intake to minimum required and stay fit and healthy. Snacks consisting of high sugar, butter or other fat items, high level of carbohydrates such as potato chips are usually avoided by this group. The snacks launched for children are usually matched to their growing needs. However for woman these snacks are not that appropriate apart from the taste of these snacks. Therefore it becomes important for woman as well to have healthy food option for their snacks.
The high nutritional value and easy snacking option will provide value for money for the product for its buyers. This will make consumers buy this product.
4. Market segment(s) to be targeted & the planned positioning strategy
The product is developed for the following consumer profile group:
Demographic
These are woman in their 20s or above.
Purchasing power is high
Belong to the high value consumer groups
Psychographic
These women are health conscious
They are very attentive in what goes in their body and what can be the implications
These consumers want to keep them fit or lose some pounds of weight.
They have active lifestyle
Behavioral
These consumers are good buyers who read the labeling carefully before choosing any product to buy. They have active lifestyle and less time to think about themselves due to work or responsibilities of their households. They are the decision makers when it comes to eating of family in terms of what needs to be cooked and who should eat what.
Positioning
The product has been positioned as healthy snack option for woman meeting its dietary requirements. The product will be positioned as healthiest snack for woman category. This category belongs to the people with more problems of obesity and overweight. There is no competitor in this category. This is a niche segment where company can position its product at premium price.
5. Demand estimate
More than ninety percent of the total woman population across all age group lacks of nutrients intake in their daily diet. The population of economically active woman is more than fifty percent of the total woman population in Australia. Even in the households where woman is not economically active, the decision regarding food items are taken by woman only.
Even if we take 0.05% of the total population of female (7,121,613 as per CIA fact book) as target market segment, the number will come to 35,608 unit everyday that can be acidized in 3 years if the product is well accepted in its target market
Year 1
Year 2
Year 3
10000
20000
30000
Rationale for forecast 3-year sales
The forecast is based on very practical and reasonable growth rate. Ten percent growth rate for a genuine and accepted product is a nominal thing. Targeting 0.05% of the total market also signifies that only the niche has been targeted, who are particular to their dietary requirements and ready for a nutritious snack option
This is also based on a small survey done with the population of age group of 15 to 65 years of females in Australia. The prospects show curiosity for the new product at affordable prices
6. Marketing mix strategy
Outline of 4 P’s strategy.
Product:
Healthy nutritious snack options: Cookies, bread
Price:
Pricing strategy is slightly higher than the regular cookies and bread options available on the same segment. The price difference will not be very high. However slightly overpriced products sometimes give positive messages to the client.
Place
At initial phase, the product will be launch in Sydney which has the most diversified population in Australia. The product testing period in Sydney will help in understanding the drawbacks and improving various strategies. Than it will be launched and distributed to the major retail outlets across the country.
Promotion
The promotion will be carried out in three phases. The first phase will be Teaser phase to create curiosity. This will be followed by the informative and educative phase where in the health issues of woman due to lack of nutritious food will be highlighted. In the third phase the product will appear and various benefits will be discussed. Once the product is launched, regular advertisements will appear in the woman oriented publications and commercials between popular programs.
7. Conclusion
This report is based on the Arnott Snacks which is subsidiary of American giant Campbell soups. Campbell has been considering withdrawing from the snack market of Australia due to increasing regulation on the product packaging and shrinking markets. On the other hand the focus of the market has shifted from just snacks option to the nutritious snacks options. This led to a situation where company needed to be more innovative with products. Company has innovated new snack option for the females of age group of 15-65 years. These females want to keep themselves fit, slim and healthy. However the snacks options available for look conscious and heath conscious females was very limited or almost negligible. This particular market segment is huge and untapped. Woman usually does shopping on their own and does all kind of purchasing for the food items for the family. In such case, the chances of product being sold or reach to the target market are high. Improved visibility and right marketing mix will help to serve this segment profitably.
8. Bibliography
Policy Research Paper N 23 (2004) Commonwealth of Australia retrieved on 4 May 2010 from http://www.fahcsia.gov.au/sa/women/pubs/general/womeninaustralia/2007/Pages/part1.aspx
Lunn S (2009) On gender scale, we’re more equal than others retrieved on 4 May 2010 from http://www.theaustralian.com.au/news/on-gender-scale-were-more-equal-than-others/story-e6frg6no-1225766935248
Arnott profile retrieved on 4 May 2010 from http://www.arnotts.com/about-us/corporate-profile.aspx
PUBLIC SUBMISSION TO ACCC GROCERY INQUIRY BY ARNOTT’S BISCUITS HOLDINGS PTY LTD ON 11 MARCH 2008 available at http://www.accc.gov.au/content/item.phtml?itemId=812799&nodeId=e07a9fbb1fc8fbfa407aefb58866e525&fn=053%20-%20Arnott’s%20Biscuits%20Holdings%20(3%20pages).pdf (11March,2008) accessed on 5 may 2010
People, culture and lifestyle http://www.dfat.gov.au/facts/people_culture.html retrieved on 4 May 2010 from http://www.dfat.gov.au/facts/foodindustry.html
Competitive Economy retrieved on 4 May 2010 from http://www.dfat.gov.au/aib/competitive_economy.html
Annual Report, Campbell Soup Company retrieved on 4 May 2010 from http://files.shareholder.com/downloads/CPB/910238141x0x320834/0a34b982-31c3-4cb4-bebb-96301d23a4bd/CPB_2009_Annual_Report.pdf
