Introduction
Kingsmill Bread Company is one of the largest manufacturing companies of bread in the U.K; its parent company is known as Allied Bakeries and it is reported that it is possessed by Associated British Foods. The company manufactures popular bread known as Kingsmill bread which has dominated the UK market for a long time.
Objectives of the Company’s Products
The first objective of the company is to manufacture bread which is not only affordable to people staying alone but which is packed in small packets and at the same time of high quality when compared to its competitors breads. The new bread to be developed by the company in essence is designed to meet the needs of unsatisfied consumers for instance those who are staying alone. The company also aims at producing Kingsmill bread and ensure that it wraps each slice in order to last long as well make the slices remain fresher for a longer time when compared to the customers bread.
PESTLE analysis
Political Factors-political factors may have a direct and indirect effect on the performance of the company. Some of the decisions made by the UK government have impacted negatively on the operations of Kingsmill Bread Company. For instance, laws on taxes imposed by the government have led to the company to part with million of pounds in terms of taxes thus having limited opportunities to better its bread; for instance, it could have utilized such funds in wrapping each slice of bread to attract more customers (Cullen and Parboteeah, 2005).
Economical Factors- Fiscal policy, monetary policy, interest rate changes, inflation rates and consumer economic factors among other economic factors affect the success of any firm including Kingsmill Bread Company. It is possible that the U.K economic climate dictates how the consumer behaves in the society. For instance the standard of living in the UK is said to be high and thus the cost of domestic products including bread are said to be high also which makes the company to sell few loaves of Kingsmill bread. The main reason here is that Kingsmill bread are large in sizes and the company should design breads in small packets that can be affordable to common person as well as attractive to someone who stays alone and does not need a whole loaf of Kingsmill bread everyday (Lovelock, 2006).
Social-cultural factors-Forces within the community such as media, family and friends have affected the way Kingsmill Bread Company has sold its loaves of bread in the UK. Most of the customers have been mislead to believe that Kingsmill bread is not of high quality and only meant for large families and those individuals deemed to filthy rich. This implies that the company has not been able to benefit well as it expected. Research reveals that social influences affect individual’s feelings, opinions, thoughts and interests on the way he view bread from Kingsmill competitors (Brassington and Pettitt, 2000).
Technological factors- The way Kingsmill operates its business has not fully changed as technology advances in this contemporary business world. For instance, the company can utilize the advance technologies by wrapping up each slices of bread well in order to last longer and remain fresher for a considerable period of time. Therefore, businesses including Kingsmill Bread Company should keep in touch with changing technology and modernization in this ever changing world.
Legal factors- The way the company operates in terms of operating rules of law. The company is engaged in legal business practice of marketing bread which is permitted by law in the UK. However, it should adhere to bureau of standards specifications for instance, in terms of quality and quantity (DuBrin, 2003).
Mintel Reports
Reports in the UK suggest that the demand of bread continue to go up despite the fact that the cost of living is still rising. It also indicates that bread markets particularly those of UK neighboring countries are expanding at a significant rate when compared to those of the UK bread market. Mintel reports of Kingsmill Company indicate that young people of the age of 13-21 years like bread more than their old counterparts. Further reports suggest that the youths who live alone may not buy Kingsmill bread since it is big enough thus opts for snacks or other breads that are offered in small packets. The UK retail sales of bread from 2001-2005 has continued to drop because of the ever escalating food prices. However, majority of the bread customers in the UK points out that Kingsmill bread does not met their personal needs; for instance their diet, too big for a single person, freshness and not affordable among other factors of dissatisfactions. An estimated 60% of the Kingsmill bread indeed demands better bread from the company. Further reports suggest that plant bakers like Allied Bakeries which is a mother plant of Kingsmill Bread Company have acquired larger market share than other manufactures of bread in the UK. However, the value regarding brand shares of bread plant puts companies like Hovis and Waburtons to be ahead of Kingsmill in terms of brand shares. Regarding promotion reports indicates that Kingsmill bread recorded a significant 85% of allocation of media advertisements time in the year 2006 to 2007. Also reports indicate that bread consumers’ habits are changing over time particularly those eating white bread. (Mintel Reports, 2006)
BCG (Boston) MATRIX
Boston Consulting Group (BCG) matrix can be used to formulate a business portfolio plan by Kingsmill Bread Company. The matrix defines businesses in to strategic business units (SBUs) thus facilitating good management. BCG Matrix can be demonstrated in the figure below; (Jones and Jennifer, 2006).
Figure 1 showing strategies in developing a portfolio plan by Kingsmill Bread Company
Relative Market Share
HH
STAR 20%
LH
QUESTION MARK/PROBLEM CHILD 35%
HL
CASH COW
40%
LL
DOG/ CASH TRAP
5%
Industry
Growth
Rate
After the company has launched its new products i.e. bread in identified market segments the management of the company has an obligation to monitor each segment; it can effectively carry out such analysis by dividing its market segments in to four groups i.e. SBUs as follows:
The star is regarded to be the most significant SBU with superior market share in an emergent industry.
A star is thought of to be attaining significant profit but requires large quantity of assets to sponsor lengthened growth of the firm. Market share may be maintained or amplified through more advertising practices as well as improving distribution channels. As industry growth slug down a star ultimately turn out to be a cash cow. Here, Kingsmill Bread Company will categorize segments that small packets bread as well as bread that has its slices packed uniquely does well despite the fact of investing a lot of funds in promotional and manufacturing activities (Kotler, Armstrong, Saunders and Wong, 1999).
Cash cow is regarded to be the principal SBU with high market share in a moderately declining industry. It has a consistent and a well-known consumer foundation thus its sales are reasonably constant. Despite of rising marketing outlay, a cash cow creates supplementary proceeds than is required to maintain its market share in the marketplace. Proceeds and incomes from such SBUs can be applied to maintain the development of other SBUs regarded to be low achievers and necessitating more funds so as to achieve huge market share i.e. markets of small packet breads and bread with each slice packed uniquely. Under such situations therefore Kingsmill’s marketing strategy is aimed at regular timely promotion, price discounts and maintaining superior distribution channels of the small packed and slices packed bread.
Question mark/problem child will be regarded to be an SBU that has achieved less influence in the marketplace in an expanding industry. Problem child necessitates substantial assets in so as to augment market share if there is high competition in the industry. The firm’s executive has to come up with resolutions on supplementing promotion budget, increase product quality, cut down costs of the products or even get rid of the SBU in question.
Dog/cash trap is thought about to be an SBU that has minute market share in an established industry and it is complex to rescue its fall down. In spite of adequate time dedicated in the market place a dog will not be competent to attract a huge number of customers and can easily succumb to competition from rival’s product sales, expense composition, and growth. Therefore those markets where slices packed and small packed bread do not pick up can be closed by Kingsmill Bread Company and use funds that could have been used for such markets to further the other segments that does better in the market place.
Different strategies will be suitable for different SBUs of Kingsmill discussed above as follows; build strategy is suitable for a star and a problem child. Hold strategy is suitable for the cash cow in order to make use of the steady revenues. Harvest strategy is best suitable for all SBUs except the star while divest strategy is appropriate for problem child and dogs (Murray, 1989).
SWOT analysis
Strength can be described as a certain skill or distinctive capability that a firm can do relatively better than other companies especially its competitors and which the firm have and contribute to the achievements of the stated goals or objectives. Kingsmill Bread Company has a strong brand name which helps the organization to have a competitive advantage over the other bread producing companies. According to latest research, the company has investments nearly all over the UK, which has led to the success of the company. Customers of bread purchase mostly bread associated with Kingsmill Company.
Research further indicates that this bread company has the best distribution channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other strength associated with Kingsmill Bread Company is it has the ability to identify the market segments and hence the competitive position of the company and has in the process developed workable marketing strategies. Kingsmill has got many assets that help it to serve a wide range of customers. This company has got core operating units that have helped it to have a very firm structure (Steven and Mary, 2003).
A weakness can be defined as any aspect of the firm which may hinder the company from attaining its objectives or goals. Usually, it covers the firm’s assets, resources, and capabilities. Latest research indicates that Kingsmill Bread Company is faced with few weaknesses which if not taken care of it may hinder the company’s success. The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Also the human resources, that is, the employees and the management have been performing poorly of late in their respective responsibilities.
Further, laxity on the side of the marketing managers has been pointed out and reports suggest that it has not come up with suitable marketing strategies to cope with the ever increasing competition in the industry. Several individuals have questioned the firm culture of doing things and reputation. For instance, there was a time when a needle was found inside the Kingsmill bread by one particular customer. The systems of production, controls, and work methods have been under scrutiny in the past few years. There have been fears that the work methods used are not convenient in the company if they need to cope with change and the ever increasing competition (Hoyer, 2001).
An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favorable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a company’s operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth.
There are many opportunities that exist for Kingsmill Bread Company in relation to emerging markets all over the world. There are great emerging markets in the UK and there is great investment demand in these places that Kingsmill Bread Company can maximize on it. There is significant increase in the consumption of bread which creates a great opportunity for the company to expand its investments in the UK. Kingsmill Company has an excellent developed financial base as compared to their rivals meaning that it don’t have financial problems in opening branches in potential markets in the UK.
The technological innovation, for example, that of e-commerce has been utilized and has resulted to expansion of the market share of the company thus increasing its profits and enhancing growth. Since Kingsmill Bread Company is the largest producer of Kingsmill bread, its competitive advantage allows the company to penetrate to more new markets than its rivals. If the company can fully utilize this it will have the upper hand in terms of competition and explore new markets and profit margins will shoot up thus gaining more power to compete both locally and globally (Baker, 2000).
A threat on the other hand can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. Kingsmill Bread Company is now facing stiff competition from its main rivals thus there has been a significant drop in terms of its market shares thus a reduction of its revenues. The marketing strategies of Kingsmill Bread Company need to be reviewed in order to cope with the increasing competition. For it to continue succeeding in the UK the marketing managers have the task to incorporate recent technological developments like doing business online (Anthony, 1998).
Action plan for implementation
Kingsmill Bread Company should plan for the activities to be carried and ensure that sufficient funds and capital are provided to enhance the success of the objectives i.e. marketing small packed bread and each-sliced wrapped bread. The strategies that have been formulated should be implemented effectively in order to counter the moves of its competitors. The use of pre-testing techniques while introducing the wrapped sliced and small packed bread to new markets should be utilized in order to give the management the insight of how the products will perform in the market. The methods of entry adopted by the company should be implemented too (Hoyer, 2001).
Constant evaluation should be carried out to ensure that the company’s marketing activities are a success. The managers should monitor how the products are performing in both old and new markets of the company as compared to that of its competitors thus will be able to formulate marketing strategies that can be a success to the firm. Because the company has diversified online marketing will be efficient method to use. Online marketing also referred to as E-commerce is based on the technology of internet and the usage of personal computers.
Through internet branches of the company can develop networks, through which they could keep up to date with business progress and could improve service provision to customers. E-marketing is relatively a new advancement in the field of marketing even then there are many business and customers who have switched from traditional to online marketing. The reason being quite obvious, the convenience and flexibility it provides cannot be ignored. Flexibility of time, place, human resources and consists involved. As internet globalizes this world and in the same rate online marketing is becoming global and thus Kingsmill should utilize such innovation while marketing wrapped sliced and small packed bread to its customers (Cullen and Parboteeah, 2005).
GANTT chart
The following Gantt chart indicates the events to be followed in the implementation of our new product idea and it highlights the project management and marketing activities prior, during and after product launch
Events
Duration in months
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Identify the needs of the customers
2 months.
Identify the market segment as per the needs of customers
2 months.
Develop new product i.e. small packed breads and wrapped sliced breads
2 months.
Launch and advertise the products i.e. loaves of breads
2 months
Sell and Distribute the loaves of breads
2 months
Monitor and evaluate the performance of breads in the market place
2 months
Conclusion
In order to achieve better investments and enhanced market opportunities in the UK market, Kingsmill Bread Company will be necessitated to carry out a continuous primary and secondary market research in order to ensure that information regarding the small packed bread, slices packed bread, competitors and other possible challenges are ascertained in advance.
Reference
Anthony C. (1998): SWOT Analysis: An explanation of the S.W.O.T. Analysis process; Macmillan Press, New York
Baker, M. (2000): Marketing Management and Strategy: – 3rd Edition: Macmillan; London.
Blythe, J. (2001): Essentials of Marketing: – 2nd Edition: Prentice Hall, New York
Brassington, F. and Pettitt, S. (2000): Principles of Marketing: 2nd Edition: Prentice Hall, Harlow- New York
Cullen, B. and Parboteeah, K. (2005): Multinational management: A strategic approach, 3rd Edition, Mason publishers, Thomson South-Western
DuBrin, A. (2003): Essentials of Management. 6th Edition, Peterborough, Ontario, Thomson South-Western
Hoyer, S. (2001): HRM concepts, Practices and Strategies; 4th European Edition. Houghton Mifflin, Boston
Jones, G. and Jennifer, G. (2006): Contemporary Management. 4th Edition, McGraw-Hill Irwin; New York
Kotler, P.; Armstrong, G.; Saunders, J. and Wong, V. (1999): Principles of Marketing: – 2nd Edition: Prentice Hall, New Jersey
Lovelock, J. (2006): Services Marketing, People, Technology, And Strategy:
Prentice Hall, New York
Mintel Reports, (2006): Groceries Market Inquiry- retrieved from, www.competition-commission.org.uk/inquiries/, accessed on May, 16 2008
Murray, A. (1989): Top management group heterogeneity and firm performance. Strategic Management Journal Vol. 10
Steven, P.R. and Mary C. (2003): Management. 8th Edition, Prentice Hall, New York
