GRADUATE ASSESSMENT COVER SHEET Name and Student ID: Tamara Saleh 796479 Frances Guastalegname 698669 Zixuan Hu 740209 Yaliang Lai 735183 Yuxuan Long 735205 Subject Number and Name: MKTG90004 Marketing Management Due Date: 29/05/2017 5:00pm Seminar Leader: Liliana Bove Seminar Time and Day: Monday 2:15 Assessment Type: Assessment 3 Sweet Biscuit Situation Analysis Word Count: 3240 Excluding Appendices, Executive Summary and References
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GRADUATE ASSESSMENT COVER SHEET · See Appendix 2 for a five forces analysis of the Sweet Biscuit Industry. 1.3 SEGMENTATION: We have segmented the sweet biscuits market on the basis
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GRADUATE ASSESSMENT COVER SHEET
Name and Student ID:
Tamara Saleh 796479 Frances Guastalegname 698669 Zixuan Hu 740209 Yaliang Lai 735183 Yuxuan Long 735205
Subject Number and Name: MKTG90004 Marketing Management
Due Date: 29/05/2017 5:00pm
Seminar Leader: Liliana Bove
Seminar Time and Day: Monday 2:15
Assessment Type:
Assessment 3 Sweet Biscuit Situation Analysis
Word Count:
3240 Excluding Appendices, Executive Summary and References
Based on our competitor analysis we can conclude that in Snack Right’s current
competitive environment its competitors are meeting more of the target consumer’s
needs in relation to sweet biscuits. This includes such things as being allergy friendly,
using no added sugars and offering functional health benefits.
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1.5 SNACK RIGHT POSITIONING: Our positioning map is based on preferred food attributes of our target
segment. We chose these attributes in order to better illustrate how Snack Right’s
current offering compares to its competitors. We first explored where snack right sits
in comparison to its rivals based on two attributes:
• Natural v Artificial Ingredients: The Modern Family segment is focused on
consuming sweet biscuits that contain only natural ingredients that is,
ingredients that are readily identifiable on the label and will avoid any
artificial ingredients (Daisy-Jones 2016).
• Allergy sensitive v not allergy sensitive: With newer generations reporting a
greater number of allergies and intolerances, it is inferred that parents of
children within the Modern Family segment will opt for products that are
allergy friendly (free from gluten, dairy, eggs and yeast) (Daisy-Jones, 2016).
Figure 1: Snack Right perceptual map (Natural ingredients v Allergy Sensitive)
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Additionally, we looked at Snack Right’s positioning relative to its
competitors two other important attributes:
• Low/ No added sugar v high/ added sugar: As stated earlier,
consumers are becoming increasingly wary of sugar
consumption avoiding high sugar products as well as products with added
sugar.
• Preservatives v no preservatives: The Modern Family segment prefers
products with no preservatives this encompasses colourings and additives
(Passport, 2017).
Figure 2: Snack Right Perceptual Map (Low/No added sugar v. No artificial
ingredients)
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1.5.1 DISCUSSION:
Snack Right falls under Arnott’s “Fruit Biscuit” category, the Snack Right brand has positioned itself as a healthier alternative for consumers who are still looking to engage in the act of eating biscuits without the guilt or indulgence. It is a “better for you” product, as it is marketed as being low fat, high fruit and made from “Australian wheat” (Hudson Institute, 2011). Additionally it is heart foundation approved. Snack right does not however, fit into the category of a health food biscuit and does not fit the “clean-label” product trend or the “free-from” trend. Current market information reflects that consumers now categorise “better for you” products to be those that are free from flavours, colours, sweeteners, preservatives and GMO’s (Schafer, 2016), some of which are still present within the Snack Right ingredient list. While each company may have a different approach to health based positioning it seems that the Snack Right brand’s approach will be problematic considering the shift in consumers perceptions of what is considered “healthy” and closer scrutiny of product labelling, a behaviour that is especially prevalent amongst the Modern Family segment (Bainbridge, 2007). Further consumers are becoming increasingly sceptical of health claims, a brand that positions itself as being healthy based on the premise of being low in fat but exceptionally high in sugar, or has compromising ingredients e.g. preservatives, will discredit the brand in the mind of the consumer (Gagliardi, 2015). In a survey we conducted (See Appendix 5 for results) with 71 participants we found that only 22% of individuals would consider Snack Right as a sweet biscuit brand that they would look towards as a healthy snack. Additionally 40% of participants stated that they would not consider sweet biscuits in general if they were trying to be healthy. Our findings uncover the following; Snack Right is in dire need of repositioning and the product recipe needs reformulation to better address consumer needs. Additionally Snack Right needs to find a way to move past the stigma associated with Sweet Biscuits not being consumed for their nutritional value. Recommendations are provided in the later stages of this report to assist in alleviating these issues.
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1.6 VALUE CREATION:
Snack Right attempts to create value for the consumer through the
provision of a healthier sweet biscuit option that is both low in fat and filled with over
fifty per cent real fruit. Based on this we have developed a value proposition
statement as follows:
Snack Right is a fruit filled biscuit for busy Modern Families, who need a quick cost effective healthy snack for both themselves and their children without the indulgence. Arnott’s has created a biscuit that is low in fat and filled with real fruit, to allow you to satisfy your sweet craving without the guilt. Unlike specialty brands such as Orgran and Go Ahead, Snack right uses over 50% real fruit, is low in fat, and meets the strict nutritional guidelines of the heart foundation.
Points of differentiation between Snack Right and its competitors is based on the
comparably lower fat content within their biscuits as well as being one of the only
brands that is approved by the Heart Foundation.
However it is important to note that value is relative to consumer perceptions (Kotler
& Keller, 2009). As we established in the earlier sections of this report, Snack Right’s
ingredient list and focus on fat content alone as being a primary motivator for
purchase is out of touch with the target segment, Modern Families, needs.
These consumers look for products that are low in sugar or added sugar, preservative
and additive free as well as providing them with options for allergy sensitivities.
Snack Right does not address these issues, however based on our competitor analysis
a number of Snack Right’s competitors are already addressing consumers needs.
Further this segment exhibits particular efficacy in being able to read and evaluate
ingredient lists and nutritional content, meaning the Heart Foundation tick Snack
Right touts on their packaging may play a very minor factor in motivation for
purchase.
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1.7 MARKETING MIX ANALYSIS:
Table 3: Marketing Mix Analysis of Snack Right
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Discussion:
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1.8 SWOT ANALYSIS:
Our research has revealed the following as strengths, weaknesses, opportunities and
threats for the Snack Right brand.
Table 4: SWOT Analysis of Snack Right
Strengths Weaknesses • Reputable brand name, Arnott’s is
well known in the Australian
market and trusted by consumers.
• Large scale supplier network
• Ability to better bargain with
suppliers and buyers than their
competitors due to company size.
• Snack Right meets the heart
foundations strict nutritional
guidelines
• Real fruit content within the
product appeals to consumers
needs and current health trends
• Affordably priced
• Non-existent promotional strategy
• Poor product positioning
• Poor assessment of consumer
needs leading to an inferior
product relative to competitors
• High sugar content
• Poor product placement (relative
to shelf units)
• Limited product availability (only
available at Woolworths
Supermarkets)
Opportunities Threats • Changing consumer tastes and the
desire for healthier snack/sweet
biscuit has opened a window of
opportunity for new products to
be developed meet needs.
• Functional health benefits in
sweet biscuits are a relatively
niche and new area of product
development, less competition.
• Extend segment not only to
“Modern Families” but also to
other health and convenience
concerned consumers who were
identified as “Health Seekers” and
“Young Professionals”.
• Decline in the Sweet Biscuit
industry, heavily saturated
difficult to capture more of the
market
• Stigma surrounding sweet biscuits
and their impact on consumer
health
• Intensity of rivalry between
existing competitors and a
question of legitimacy if Arnott’s
was to launch a product that caters
to a niche segment.
• Decreased barriers to entry in the
biscuit market leading to greater
level of competition.
• High substitutability of sweet
biscuits for other snack foods.
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2.0 RECOMMENDATIONS:
Based on our situation analysis we have identified numerous issues that Snack Right
brand needs to overcome in order to harness success within the sweet biscuit market.
Our main recommendation is that Snack Right implements a repositioning strategy in
order to change the existing perceptions consumers have of the brand and fruit
biscuits in general. Customers need to move beyond the inertia of believing that sweet
biscuits are a food to be avoided in order to lead a healthy lifestyle. Therefore Snack
Right must position itself as healthy snack that offers consumers that is nutritionally
balanced and contains functional health benefits. This can be done through changes to
the product itself and through consistent promotional messaging. Additionally Snack
Right needs to address the target segments desire for convenience through the
creation of individual/lunch box sized packaging.
We believe that in repositioning the brand we can better cater to the target segments
needs as well as attract new consumers from the other segments identified in our
market segmentation analysis, primarily Young Professionals and Health Seekers
creating a more sustainable target segment for the brand.
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2.1 PRODUCT STRATEGY: Our main focus in relation to product strategy was on improving the Snack Right
biscuit recipe that is currently failing to meet the target segments changing needs.
Additionally we believe that the Snack Right brand would benefit from having their
dated packaging refreshed visually appeal to current and prospective consumers.
Table 5: Product Strategy:
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2.2 PLACE STRATEGY:
Our Place-based strategies focus on broadening the current distribution network of
Snack Right as well as changing the way in which the physical product is displayed in
store.
Table 6: Place Strategy:
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2.3 PRICE STRATEGY:
We understand that alteration of marketing mix elements will have an influence on
the cost of production and sale of the Snack Right biscuits. We believe these costs can
be passed on to the consumer in the form of increased prices, while the industry is
highly competitive health biscuits and health products are generally more expensive
than regular goods; further as stated in our segment profiles (see Appendix 3) the
Modern Family segment are more willing to expend on health foods and are less price
sensitive when it comes to health based products.
Table 7: Price Strategy:
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2.4 PROMOTION STRATEGY:
The intensity of promotional efforts in the first six months of product
launch is recommended to be high in order to generate consumer
awareness of the brand and its related benefits. Promotional efforts can decrease and
be maintained steadily once initial awareness amongst target consumers has been
established.
Table 8: Promotion Strategy
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3.0 CONCLUSION:
Our situation Analysis reveals that while the sweet biscuit market is
highly competitive there are ways for companies to succeed in the
future. Arnott’s Snack Right is an opportunity for Arnott’s to reach a new health
conscious consumer group, capitalising on the market’s shift towards healthier biscuit
options.
Our recommendations focused primarily on repositioning the Snack Right brand as a
healthy sweet biscuit option that provides consumers with multiple
functional/nutritional benefits. This can be done through the effective redesign of the
product itself and the reformulation of the biscuit recipe. We also suggest Snack Right
consumers the expansion of product placement in store as well as its current
distribution network. Most importantly a promotional strategy that focuses on creating
brand awareness around the Snack Right brand is imperative to a successful
repositioning strategy, we suggest a presence both online and through traditional
advertising medium television.
We strongly believe that Arnott’s is missing a great opportunity by not investing in
the Snack Right brand as heavily as its other representative brands such as Tim Tams.
Considering changing consumer attitudes towards health and consumption of health
related foods if executed well, the Snack Right brand could very well become one of
Arnott’s most successful sweet biscuit brands.
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APPENDIX 1: MACRO ENVIRONMENTAL ANALYSIS
(PESTEL):
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APPENDIX 2: FIVE FORCES ANALYSIS OF SWEET BISCUIT
INDUSTRY
BUYER POWER: STRONG Biscuits are distributed through Supermarkets, considering the supermarket duopoly within the Australian market these retailers can dictate negotiations with biscuit manufacturers (MarketLine, 2015). Supermarkets regularly shift products that do not perform well relative to sales. The emergence of private label products from retailers Coles and Woolworths also contributes to buyer power. However it is important to note that consumers have selective favourites and are loyal to brands, working in manufacturers favour, as certain brands are able to demand shelf space e.g. Tim Tams (MarketLine, 2015).
SUPPLIER POWER: MODERATE
Biscuit manufacturers require raw materials including sugar, flour and cocoa. There are currently no substitutes for raw materials in this industry. While prices of these materials may fluctuate leaving manufacturers vulnerable, the products themselves are undifferentiated and suppliers are small in number meaning manufacturers still have a greater level of control in the relationship (MarketLine, 2015).
THREAT OF NEW ENTRANTS: MODERATE
The biscuit manufacturing industry is incurs high fixed costs and is highly automated. Specialised machinery is necessary in order to effectively compete in the market. These costs are difficult to produce for new entrants, deterring them from entering the market (MarketLine, 2015). Additionally existing players have dominated the markets for quite some time meaning they are better able to leverage economies of scale (Richardson, 2016). Additionally it would be relatively difficult for a new entrant to convince a retailer to stock their products considering the level of consumer preference for particular brands of biscuits within the market (MarketLine, 2015).
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DEGREE OF RIVALRY: STRONG
The biscuit manufacturing industry is highly concentrated with four players accounting for 83.2% of market share (MarketLine, 2015). Rivalry is further compounded by the fact that retailers switch between brands based on performance regularly. Additionally the capacity to produce a high volume of goods also intensifies rivalry.
THREAT OF SUBSTITUTES: MODERATE
Biscuits are consumed as a snack food, therefore substitutes will encompass anything that is considered to be a snack including such things as a fruit nuts and chips (Richardson, 2016) . It is important to note however that while biscuits are highly substitutable, other snack categories are considered by consumers as alternatives not replacements (MarketLine, 2016).
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APPENDIX 3: SWEET BISCUIT CONSUMER SEGMENT
PROFILES
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APPENDIX 4: SWEET BISCUIT CONSUMERS SURVEY
RESULTS
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APPENDIX 5: SNACK RIGHT SHELF PLACEMENT
Image 1: Snack Right Shelf Placement
Image 2: Tim Tam Shelf Placement
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APPENDIX 6: MEDIA ANALYSIS
Media Analysis: In order to evaluate whether the Snack Right product range has generated any sort of media engagement we observed media coverage on the brand over the last two years, the media is silent in relation to this particular brand. Interestingly the media was quite engaged with Arnott’s other brands namely Tim Tams and Shapes that could be a result of the innovative new flavours and collaborations Arnott’s introduced throughout 2016, as well as the failed shapes new and improved flavours range. Interestingly Snack Right was involved with the media in 2009 in relation to misleading claims on their fruit pillows product packaging in terms of fruit content. Based on our search efforts we can assume that media coverage on the Snack Right brand has been largely silent. Social Media Analysis: Arnott’s is active on a number of social media channels, including Facebook and Instagram. We observed the company’s social media activity from 2014-2016 to evaluate whether promotion of Snack Right was ever undertaken during the three-year period.
Facebook: Year Social media posts: other sweet
biscuit brands v snack right 2014 Total of 43 posts 28 dedicated to sweet
biscuits, 18 of which focused heavily on promoting Tim Tam range. No posts relating to snack right.
2015 24 posts about sweet biscuits range out of 58 posts in total. No posts dedicated to snack right
2016 25 posts in total, 16 dedicated to promotion of other sweet biscuit brands. No posts dedicated to snack right.
The Tim Tam brand is one of Arnott’s only sweet biscuit varieties to have their own Facebook page. We can infer that this is a result of the biscuits popularity and global following. This further emphases the fact that Arnott’s are focusing primarily on their “Cash Cow” (Tim Tams) and investing resources in ensuring that marketing and product innovations are directed towards this product.
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Followers (likes): 53,945 followers Activity Level: Slowed considerably in recent times with the page only posting content every 1-2 month, posts are centralised around new product promotions or current campaigns. Engagement Level: High level of engagement with content such as contests, videos and images obtaining thousands of likes, shares and comments. Arnott’s is highly responsive to all comments on their page encouraging fans and consumers to share and interact with their content.
Instagram: Arnott’s Instagram account is relatively new having only been created on the 8th of September 2016. Biscuits promoted: Iced VoVo, Tiny Teddies, Royals, Lemon Crisp, Kingston. No promotion of Snack Right. Followers: 681 Activity level (posts): High level of activity with posts being made each week in some instances. Engagement Level: Still relatively new media platform, difficult to judge however when compared to their Facebook page not as popular.
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APPENDIX 7: SNACK RIGHT PACKAGE REDESIGN
Image 1: Current Snack Right packaging
Image 2: Snack Right Package Redesign
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REFERENCES:
About Arnott’s. (2017). http://www.arnotts.com.au/about-arnotts/
Arnott’s Fruit Biscuits. (2017). http://www.arnotts.com.au/products/fruit-
biscuits/
Butschli, J. (2016, June 7). Package Sustainability Now an Expectation.