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4.1 Market Industry Review 124.2 Competitive Review 13
4.2.1 Threats of New Entrants/Exits 134.2.2 Bargaining Power of Buyers 134.2.3 Pressure from Substitutes 134.2.4 Category Capacity 13
4.2.5 Current Category Rivalry 134.2.6 Distribution Channels 14
4.3 Customers 144.4 Business to Business (B2B) Customer Buying Behaviour 154.5 Business to Customer (B2C) Buying Behaviour 154.6 Summary – Industry Analysis 164.7 Sales 164.8 Seasonality 184.9 Profits 18
Strategic Marketing Plan: Green Eggs - October 2005 Page 2 of 29
Executive Summary
(i) Context
“Green Eggs” is a niche free-range egg-producing business conceived by Shelley and AlanGreen of Pine Ridge farm. They have been producing free range eggs for five years; however the GreenEggs brand has only been established for three years. The Greens purchased Pine Ridge, located at thefoothills of the Grampians in Ararat, Victoria, in 1984. The Greens now wish to achieve their marketinggoals of growing the business and adding value to their free range eggs. Their vision also entailsmanaging an environmentally and economically sustainable farming enterprise on their property.
(ii) Marketing Problem
The purpose of this Strategic Marketing Plan is to assess both the internal organisationalcapabilities, as well as external environmental factors that are likely to impact on the Greens free rangeegg business currently, and in the future. Green Eggs’ marketing problem is essentially the ability to sell
value-added eggs profitably. They also want to be able to provide a product offering that is unique,differentiated, and superior in the market, thus providing a competitive advantage for their business.Their problem at present is that their brand is relatively unknown in the market, and they don’t have awide-spread distribution network in place to grow their business.
(iii) General Industry Information
The broader Australian egg industry (comprising caged eggs, barn-laid eggs, and free range) is ata mature stage, with moderate profits, and virtually no growth has been experienced in the market inrecent times. The Free range egg industry, however, is at a growth stage, and representative of 20% ofthe total industry. The authors have identified trends such as the increase in consumer popularity forOmega 3, vegetarian, and organic eggs. Free range eggs are proving to be increasingly popular withenvironmentally conscious and health-concerned consumers, and those who enjoy premium quality eggs.Price-sensitivity is not as prevalent within this industry compared to the caged-egg industry.
Consequently the purchase decision appears to be less price related and more life-style related.
(iv) Free Range Egg Industry
This niche industry is becoming more concentrated with several large free-range egg producersoccupying this segment. A substantial number of market players are located in regional Victoria, NewSouth Wales and Queensland (Eastern seaboard states). Green Eggs are one of the largest in theirindustry, and their main competitors identified are Pace Farms and Country Range Farming. Two maincustomer categories have been identified: Business to Business (B2B) customers, and Business toCustomer or end users (B2C). B2B consists of food manufacturers and wholesalers and distributors.B2C comprises direct farm-gate sales, farmer’s markets, and sales to local restaurants and cafés.
(v) Strategic Marketing Objectives
Measurable, realistic Marketing Objectives have been developed to provide Green Eggs with adirection forward. Some of these objectives include: “Sustain and improve existing gross profit marginsthrough the generation of new business in profitable markets”, “Add value through differentiation ofexisting product range and future products introduced,” “Increase sales by 25% for the 12 months 2005-2006 from $856,207 to $1,070,259 through employment of a sales manager.” These objectives havebeen tied in with Green Eggs corporate level financial objectives.
Strategic Marketing Plan: Green Eggs - October 2005 Page 3 of 29
(vi) Marketing Strategies
Based on the objectives defined, Marketing strategies have been devised for the two broadergroups (B2B and B2C), with emphasis placed on the development of new markets, through establishing anetwork of distributors Australia-wide. Part of this strategy entails employing a sales manager to focus oncreating, managing and controlling this network of distributors. Again with careful consideration of thecorporate level objectives, the authors have ascertained a 25% sales increase will also increase profitmargins for Green Eggs. It is important for Green Eggs to have an identity in their local community, sosales through the farmer’s markets and farm gate direct sales will be important for their profile. This
below-the-line marketing increases brand identity with the end consumer, and is also quite a profitablesegment for Green Eggs. However, a balance needs to be achieved through maintaining high profitlevels, and also ensuring distributors within the territory are not disadvantaged. The Marketing Budgetallocated is 2% of sales turnover, or $17,124 per annum. The promotional mix comprises theimprovement of their website, participation in two trade shows, as well as direct marketing campaigns.
(vii) Implementation, Evaluation & Control
Responsibilities have been assigned to specific members of the Green Eggs business. Thesetasks need to be completed within the specified timelines to ensure a smooth, timely implementationprocess. Regular evaluation and monitoring of the components of the marketing plan will be important, toensure effectiveness and efficiencies are gained within the business and the plan integrates into their
business structure. Proceeding implementation, regular reviews will be an integral part of the evaluation,primarily to ensure the plan is still relevant and continues to “fit” into their business.
Strategic Marketing Plan: Green Eggs - October 2005 Page 4 of 29
1.0 Introduction
“Green Eggs” is a niche free-range egg-producing business conceived by Shelley and AlanGreen of Pine Ridge farm. Free Range eggs have been produced on the farm for the last five years, andthe Green Eggs trading name has been established for 3 years. The Greens purchased Pine Ridge,
located at the foothills of the Grampians in Ararat, Victoria, in 1984. The company initially focused onsheep farming on the property. Considerable time and resources were poured into improving the rundown, dilapidated condition of the farm, and after working to a Whole Farm Plan, the Greens managed toaddress some of the main problems with the farm and improve it considerably.
Following significant evaluation, planning and capital improvement, the grazing and woolproduction of the business continued to increase whilst the quality of the land, plant and equipment wasgradually improved to a high standard. The decision was made that further diversification was required tomake the farm large enough for the owners to work full time on the property, which until now had notbeen possible. It was identified at this stage that an opportunity existed to enter the market for free-rangeegg production.
Being very “time-poor” and of farming and midwifery backgrounds, the Greens require a strategic
plan to help them achieve their marketing goals of growing the business and adding value to their freerange eggs. Their vision also entails managing an environmentally and economically sustainable farmingenterprise on their property.
The purpose of this Strategic Marketing Plan is to assess both the internal organisationalcapabilities, as well as external environmental factors that are likely to impact on Greens free range eggbusiness currently, and in the future. Based on these capabilities, the authors will then determine thedegree of importance each identified factor bears, and present a functional, strategic assessment of theorganisation in the context of the wider market and ascertain how Green Eggs can continue to growprofitably and add value to their product offerings in the marketplace.
Limitations of the marketing plan include geographic restrictions, as the farm is located in regionalVictoria, so the authors will be required to assess the farm based on direct feedback from the client, aswell as secondary data sources.
Strategic Marketing Plan: Green Eggs - October 2005 Page 5 of 29
2.0 Business Definition & Scope
2.1 Corporate Overview
The Green Eggs niche product offering was a decision by the Greens to diversify their business,
profitably, whilst contributing a substantial revenue stream toward sustaining their property. Free rangeeggs have been produced on the farm for the last five years. These eggs adhere to stringent regulatorystandards, such as the Poultry Code of Practice on Animal Welfare, and the Poultry Industry Code ofPractice on Egg production. They have also undertaken a National Egg Quality Assurance (QA) programwhich covers all aspects of animal welfare and egg production. Shelley and Alan Green are dedicated tohumane and environmentally friendly methods of egg production, and focus on maintaining their Hazard
Analysis Critical Control Point (HACCP) Plan. They now wish to develop a marketing-orientation for theirGreen Eggs business, and establish a way to value-add their eggs. Green Eggs’ catch-cry is: ”Green Eggsare graded and delivered to you within 48 hours of being laid – you can’t get fresher than that!”
2.2 Nature of the Market
The Free Range egg market is a niche market segment, which seems to be growing at a steady
rate. However, the broader egg-producing market is reportedly at a mature stage (IBIS World, 2005, p.7).IBIS World’s poultry report released in 2005 indicates the egg industry as a whole accounted for $326.0million in revenue during 2003-2004. Industry comprised around 455 establishments that employed acombined workforce numbering approximately 3,000 persons (IBIS World, 2005, p.5). A possibleexplanation for the slowing of growth in the egg industry is suggested by IBIS as follows:
1. Evidence of new product innovation.
2. Low or declining growth in value added.3. Ongoing refinement in production technology.
The author places importance on point two above; herein is where the opportunity lies for free-rangemarket nichers. The primarily goal of niche marketers should be to hold market share for its market niche(Reed (2003, p. 104). For Green Eggs, this entails becoming the leader in their free range market segment,
and consequently first preference by wholesalers as well as end-users in this market. Demand for this typeof egg is typically driven by consumers (end-users). With an increased emphasis on Quality Assurance, anddiscussions of new labeling laws for organic and free range eggs, there is an opportunity for free range eggproducers to profitably “service” this niche segment and deliver high-quality free-range eggs to consumers.Exhibits 1 & 2 below indicate the market split between free range and other types of eggs produced, as wellas consumption per capita.
Product/Services Share
Eggs produced by battery chickens 70.00%
Eggs produced by free range chickens20.00%
Eggs produced by barn (deep litter) chickens10.00%
Strategic Marketing Plan: Green Eggs - October 2005 Page 6 of 29
Reported Consumption of Eggs & Egg Products
0
50
100
150
200
250
1 9 9 5
- 9 6
1 9 9 6
- 9 7
1 9 9 7
- 9 8
1 9 9 8
- 9 9
1 9 9 9
- 2 0 0
0
2 0 0 0
- 0 1
2 0 0 1
- 0 2
2 0 0 2
- 0 3
2 0 0 3
- 0 4
Year
U n i t s C o n s u
m e d
UNITS
UNITS /CAPITA
2.3 Products
Green Eggs product range comprises:
1. Small, under-sized eggs (less than 50g)2. Normal sized eggs (60g -80g)3. Large, over-sized eggs (80g+)
Their products can be classified as business products: A product used to manufacture other goods orservices, to facilitate an organisation’s operations or to resell to other consumers., and consumerproducts: Product bought to satisfy an individual’s personal wants (Reed, 2003, p.160).
2.4 Nature of the Competition
The authors note this niche market segment is becoming more concentrated with several largefree-range egg producers occupying this segment. A substantial number of market players are located inregional Victoria, New South Wales and Queensland (Eastern seaboard states). Green Eggs are one of thelargest in their industry, next to Pace Farms who are the largest and Country Range Farming. CountryRange Farming are a proactive Free Range egg company, and frequently appear in industry-related newsarticles and stories; renowned for their excellence in maintaining “happy hens”. It would appear CountryRange Farming (highlighted in purple below) would be Green Eggs’ main competition. Pace Farms are amulti-national company, producing barn-laid, caged eggs and free-range eggs. They would also be strongcompetitors to Green Eggs. Moore Brown Eggs and Country Style Egg producers are much smallerproducers, but still are direct competitors to Green Eggs. Many of the farms listed below are also accreditedby the Free Range Farmer’s Association, and consequently their packaging carries this endorsement label.
Some are also certified organic. There are numerous players in the broader caged-egg market, and for thepurpose of this marketing plan just the six major players who occupy the majority of this segment have beenpresented below in Exhibit 4. As market leaders in the broader egg industry, it is important to note thesecompanies also.
Exhibit 2: Reported Consumption of EggProducts in Australia
(Source: Adapted from IBIS World Report, p.6 2005).
Strategic Marketing Plan: Green Eggs - October 2005 Page 7 of 29
Exhibit 4: Caged-Egg Competitors
(Source: IBIS World, 2005).
2.5 Customers
During her visit to Swinburne University, Shelley Green identified her customer base as fallinginto two distinct groups. These are:
Business to Business (B2B) Business to Customer (B2C).
2.5.1 Business to Business Customers (B2B)
The wholesalers within their B2B segment, to whom Green Eggs sell their eggs unbranded,sell their eggs in the market under a name owned by the wholesaler rather than the GreenEggs name. This also includes any eggs sold to food manufacturers to be made into othertypes of food stuff i.e. packet cake or muffin mix.
Ardmona FreeRan e Poultr
Hens in Clover
Free Ranger F R
E s
Marslyn F R Eggs Windy Hill F R
E s
NATIONAL FREE-RANGE EGG COMPETITORS:
Donnybrook F RE s
Free As A Bird F RE s
Colisa Farm F RE s
Golden Yolk F RE s
Rutherford Bros FR E s
Bartter Enterprises
AUSTRALIAN MAJOR MARKET PLAYERS:CAGED EGG COMPETITORS
Strategic Marketing Plan: Green Eggs - October 2005 Page 8 of 29
2.5.2 Business to Customer (B2C)
The B2C segment consists of three main customer types. These are: Direct Sales - Eggs purchased directly at the farm gate Direct sales to consumers at Farmer’s Markets (usually once a month) Direct sales to Local restaurants and Café’s are also part of the business to customer
group.
This segment represents approximately 12% of the sales and around 33% of the profit. As theproduct being sold in this market segment is branded with the Green Eggs name, it is an excellent brandbuilding exercise. However, volume sales and concentrated market-penetration will be achieved throughtheir B2B customers. Section 8.1 discusses the target market in detail.
2.6 Scope of the Strategic Marketing Plan
The Strategic Marketing Plan will predominantly focus on the next twelve month’s activities;however the plan will also address the marketing activities in the context of corporate level objectives, forthe subsequent three years.
Strategic Marketing Plan: Green Eggs - October 2005 Page 9 of 29
3.0 Macro Environment Analysis
There are five major macro (external) environment forces that will impact on an organisation orstrategic business unit (SBU). These are: Political/Legal, Economic, Socio-Cultural, Technological andthe Natural Environment (Reed, 2003, pp. 57-68). These factors can be ranked according to the levels ofsignificance each factor bears on the business, as well as a rating of probability of occurrence.
Rating Scale of Significance
Exhibit 6: 5-Point Rating Scale: Level of Significance
(Source: Adapted from Reed, 2003, p 56).
Rating Scale of Probability of Occurrence
Exhibit 7: 5-Point Rating Scale: Probability of Occurrence
(Source: Adapted from Reed, 2003, p 56).
3.1 Political Factors
There are a number of legislative regulations and process that will have a direct impact on GreenEggs’ business. There is a huge amount of movement in the area of Food Safety laws, with the mediaregularly reporting food poisonings, salmonella outbreaks, and exposing establishments who don’t
comply with Food Safety laws.
Food Safety Traceability Standards:
Victorian Food Safety laws are particularly tough on food service businesses, with theGovernment currently training new inspectors to visit food outlets – including retail as well as productionfacilities. A recent outbreak of food poisonings, resulting in deaths, has gained momentum in the mediaand those operating in this sector must ensure their compliance to rigid HACCP (Hazard Analysis CriticalControl Point) Food Safety standards. New South Wales Food Safety laws are also quite tough, butVictoria leads the way and laws passed in this state are being observed, with interest, by the other states.South Australia will be enforcing new Food Safety laws toward the end of 2006, where all premisesclassified as Class 1 will have to comply to HACCP laws like Victoria. (Class 1 refers to Hospital Foodpremises, Aged Care premises & Child Care establishments). Restaurants will also be classified underClass 1 in some states.
Implications:
Eggs that are not transported and stored at correct temperatures, can shorten the shelf-life of thegoods, and consequently contaminated products may be consumed by the end-user. Suppliers ofperishable goods, such as eggs, must be HACCP accredited and achieve 100% compliance during foodsafety inspections. Non-compliance and a serious food poisoning or salmonella outbreak could see legalaction taken against the company.
Level of Significance: 5 Probability of Occurrence: 3
1 = Not very 2 = Reasonably 3 = Significant 4 = Quite to highly 5 = Extremely Significant Significant Significant Significant
1 = Not likely to 2 = Possibility 3 = Likely to 4 = Highly likely 5 = Extremely likely Occur of Occurrence Occur to Occur to Occur
Strategic Marketing Plan: Green Eggs - October 2005 Page 10 of 29
3.2 Economic Factors
Overall Egg Industry Decline:
A year of growth is predicted for 2006, with experts holding that egg production will continue togrow over the next year. A substantial reduction in feed prices will also assist poultry farmers. However,in the incidence of drought and poor weather conditions, industry will slow and the overall industry growthwill decline.
Implications:
If the industry overall does in fact decline, free range egg farmers will also experience thiseconomical downfall. Particularly with free range hens exposed to weather conditions and moresusceptible to disease, these factors could prove to be an enormous hindrance to the Green Eggsbusiness.
Level of Significance: 4 Probability of Occurrence: 3
3.3 Socio-Cultural Factors
Socio-cultural factors such as changing social values and lifestyles of consumers may affect thedemand for the Green Eggs product.
Changes in Consumer Preferences
IBIS World reports that changing lifestyles may have an impact on consumer preferences foreggs (whether free range or caged). As eggs were once a traditional part of Australian breakfast, thesedays people have busier lifestyles and have less time to prepare a cooked breakfast (IBIS World, 2005,p.6). However, on the flipside, people are eating out more often, and this can often encompass eating“brunch”, a combination of breakfast and lunch that often includes bacon and eggs. So the absence ofcooked breakfasts at home can be possibly “balanced out” by the increase in people frequentingrestaurants.
Implications:
The author doesn’t rate this factor as being serious, and significance level has been rated as1 = not very significant. Also there has been an increase in business travel, and most hotels commonlyserve cooked breakfasts encompassing eggs, plus people are tending to buy more convenience-orientedfoods, such as pastas and noodles, all of which contain eggs.
Level of Significance: 1 Probability of Occurrence: 2
3.4 Technological Factors
In today’s turbulent external environment, technological developments and innovations candrastically improve an organisation’s operations, and bring enormous benefits to business in terms of
creating new efficiencies and streamlined processes.
Advancements in Production Equipment
Green Eggs have a leading edge over other free range market nichers, with their implementationof the new Australian-designed “Eco-Shelter”, as well as the “Free Range Harvester” – another Australian
–designed product. A government grant of $93,000 was received for this technology. Being the first inthe industry to adopt these new technologies, Green Eggs are in an enviable position in the market.However, with any new technology, the product soon moves from being unique to becoming an industrystandard, and new technology can quickly becomes obsolete. There is also an opportunity to bar-code
Strategic Marketing Plan: Green Eggs - October 2005 Page 11 of 29
the product, for food traceability purposes. This is being used in the beef industry, and it would be anopportunity to be first to embrace this technology in the egg industry.
Implications:
The threat to the business will be if other free range egg producers also adopt the newtechnology and hence introduce the same efficiencies within their businesses as Green Eggs. Then theirpoint of difference will become an industry standard, and not unique to their business. Their challengewill to continue their improved levels of production, and sustain a competitive advantage (i.e. focus ontaking away competitors’ market share).
Level of Significance: 5 Probability of Occurrence: 4
3.5 Natural Environment Factors
All primary producers are governed significantly by the environment. Factors such as extreme climatechanges can have detrimental implications.
Extreme climate changes:
These changes range from drought and famine to floods and hurricanes. Areas affected vary in eachoccasion, and as such the implications for these primary producers vary.
Implications:
The repercussions of these can result in feed shortages, reduced chicken production and thus supply ofchickens to Green Eggs. Consequently this will result in fewer eggs produced. The probability ofoccurrence is relatively high as climate fluctuations are becoming increasingly common, the impact ofwhich can be diluted depending on the severity, location and range.
Level of Significance: 2 Probability of Occurrence: 4
3.6 Summary of Macro Environment Analysis
Implication: Level of Significance Probability of Occurrence
Strategic Marketing Plan: Green Eggs - October 2005 Page 12 of 29
Exhibit 8: Egg Industry ProductLife Cycle (PLC)
(Source: Adapted from Reed,2005, p.90).
4.0 Industry Analysis
4.1 Market Industry Review
Looking at the Egg Industry Product Life Cycle (PLC) model below, the broader caged eggindustry has reached a mature stage of the PLC, whereas the organic and free-range egg industries areyoung in comparative terms and can be classified as being in a growth phase. The authors note free-range eggs together with other niche egg segments, like vegetarian or omega 3 eggs are becomingincreasingly popular with consumers. There is an opportunity for Green Eggs to extend the life of theiregg product offering in future, with the introduction of certified organic eggs, hence the label in the life-cycle extension phase.
Strategic Marketing Plan: Green Eggs - October 2005 Page 13 of 29
4.2 Competitive Review
Porter’s Five Forces Modeldepicts the forces that drive industrycompetition in a dynamic businessenvironment. The factors containedin this model have been outlinedbelow.
4.2.1 Threats of NewEntrants/Exits
The 70% of the market notcurrently adhering to ‘organic’ eggproduction could use their sizeableresources to make a significantimpression on this category.Without even a legal definition ofwhat actually constitutes “free range”, there is an enormous threat for existing “genuine” free range eggproducers to profitably maintain their market share, with little or no regulation restricting the entrance ofnew players into the market.
4.2.2 Bargaining Power of Buyers
Producers operating within the Primary Industries sector are very much reliant on cost-effectivesupplies of raw materials. The livelihood of their business depends greatly on the costs of these materials(i.e. feed prices, packaging), in order to sell their product at a price that covers these costs and providesthe necessary profit margins to survive long-term. Their ability to remain price-competitive in the marketis governed by the prices they can obtain from their suppliers.
4.2.3 Pressure from Substitutes
Since de-regulation of the Australian egg industry in 1994, there has been hot debate of thecontentious issue of egg labeling. As noted above in 4.2.1, at present there isn’t actually a “legal”definition of what actually constitutes “free range”. Consequently, industry experts suggest the number ofcaged eggs being passed off as free range eggs could constitute as much as half of the eggs sold withinthe Australian marketplace (Thomas, H., 2005, p.7).
4.2.4 Category Capacity
According to IBIS World, (2005, p.6) the five year period preceding June 2004 saw the marketremain fairly stagnant. However the free range egg industry is experiencing growth, and consequentlythere are many companies operating in this industry. With people enjoying eating out socially more andmore, and consumers becoming health and lifestyle conscious, the category is likely to continue growingfor some time.
4.2.5 Current Category Rivalry
The major caged egg competitors have been listed in section two. However, Green Eggs don’tcompete directly with these players. Their primary competition stems from rival free range and organicegg producers. These major players have also been highlighted in Section two, Exhibit 3.
Strategic Marketing Plan: Green Eggs - October 2005 Page 14 of 29
4.2.6 Distribution Channels
Green Eggs currently distribute direct to the customer, or through a distributor or foodmanufacturer. The distribution channels to market have been outlined below:
Green Eggs must review their existing distribution intensity, and potential to increase this intensity
as they have only lightly penetrated the market. Utilising their latest government grant for $93,000 fortheir eco-shelter, their capacity to house their poultry effectively, and automatically collect eggs with thenew egg-collecting system, the Greens should certainly be in a position to provide large volumes ofproduct to the market. An opportunity exists for Green Eggs to become more commercially-oriented withinthe free range egg industry, by setting up a network of distributors across Australia at key locations.
This could prove to be a huge strategic step forward, and lead the business into a new growthstage. The authors suggest Green Eggs employ a Sales Manager to roll out this plan, and manage,evaluate and control these distributors. They may even consider exclusive distribution within keyterritories, and work closely with the distributor in each state to build their business. This has beendiscussed in more detail within the Distribution Strategy section.
4.3 Customers
Green Eggs’ customer base has been classified under the two broad headings of B2B and B2Cgroups. Within the B2C analysis, buyer behaviour of the end consumer has been analysed, which willprovide an insight into the reasoning behind the customer’s purchase decision. To become more market-oriented, it is important for Green Eggs to have sufficient knowledge of their end-user customerbehaviours and attitudes, as well as an understanding of the motives behind their customer’s purchasedecisions (Reed, 2003, p.65).
A simple chart below has been supplied that essentially addresses the 5 W’s of customers, namely: Who,Where, What, When and Why within the context of the purchase decision.
4.4 Business to Business (B2B) Customer Buying Behaviour
Strategic Marketing Plan: Green Eggs - October 2005 Page 15 of 29
CRITERIA DISTRIBUTOR FOOD MANUFACTURER
Who is involved in thebuying? Proprietor, Purchasing Officer
Quality Assurance Manager,Business Development Manager,Purchasing Officer. Individually orcollectively involved in the purchasedecision.
Where do they buy? Place orders for egg products directlywith Shelley and Alan Green at GreenEggs. They don’t purchase throughintermediaries.
Place orders for egg products directlywith Shelley and Alan Green atGreen Eggs. They don’t purchasethrough intermediaries.
What do they buy? Bulk eggs unbranded. Either packed indozens (more for the distributor) or 15dozen outers
Undersized eggs
Why do they buy? Want a quality branded free range eggproduct to take to market.
Want to make the eggs into otherfood products
When do they buy? Purchases are frequent as thesecustomers are regularly turning stock.Purchases approximately 3 times week
Regular purchases also – at leastthree times per week.
4.5 Business to Customer (B2C) Buying Behaviour
CRITERIA: FARM GATE SALES &FARMER’S MARKETS
LOCAL BUSINESSES – CAFÉS &RESTAURANTS
Who is involved in thebuying?
The person who does the shoppingor the person who intends to offerthe eggs for consumption to familyand friends.
Local business purchasing is usuallyconducted by the manager or owner of theoutlet, or the Head Chef in the case of acafé or restaurant.
Where do they buy? The consumer will purchase theproduct either from the farmersmarket stalls, directly from the farmgate or via the local produce store,café, supermarket or delicatessen.
The local business will purchase fromGreen Eggs direct.
What do they buy? Purchase eggs branded with the
Green Eggs label. Usually in smaller quantities. All the members of this channel
buy in dozens or half dozens.
Occasionally some local business cafes etc
will bulk-buy in 15 dozen cartons.
Why do they buy? The decision to purchase for thischannel is usually attributed to afeeling or belief
Purchase Decision based oncriteria such as health ratedissues.
Consumers make the decisionbased on concerns for thetreatment of the birds producingthe eggs, and also what they are
fed. Personal preference based onlifestyle and cultural upbringing is akey influencing factor in thedecision process.
Image of their restaurant and café – like toencourage lifestyle-conscious patrons, alsopremium image
Like to support the community support forlocal producers of products
When do they buy? The end consumer will purchase atleast once a week.
Overall industry –reached maturestage. FreeRange Eggs –Growth stage
Main Competitors Country Range
Farming
Pace Farms Country Style Egg
Producers
Moore Brown
EggsCustomers Farmer’s Markets Wholesalers Local Businesses
(Cafés &Restaurants
Manufacturers
Distribution Channels Direct to Customer To Customer viaDistributor
To customer viaFood Manufacturer
4.7 Sales
Budgeted sales are estimated to occur with a reasonable amount of consistency over the courseof the 2005-2006 year, based on current financial year sales. Anticipated peak sales occur in August with44,816 dozen, October 43,153 dozen and December 42,896 dozen. June is projected to have the lowestsales with 19,326 dozen sold. For the purposes of this marketing plan, we are making the assumption
that sales of free range eggs for the egg farming industry are reflective of the sales of the Green Eggsproduct. The following graphs below depicts the egg sales produced by the three sheds, then currentegg sales (dollar sales) as well as projected egg sales. Please also refer to Appendix 1.
Egg Sales x Shed
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
J ul y
A u g u s t
S e p t em b er
O c t o b er
N ov em b er
D e c em b er
J an u ar y
F e b r u ar y
M ar ch
A pr i l
M a y
J un e
Month
$ S
a l e s
( D o z )
Shed 1
Shed 2
Shed 3
Exhibit 10: Unit Egg Sales x Shed
Source: Adapted from financial data provided by S. Green
Strategic Marketing Plan: Green Eggs - October 2005 Page 18 of 29
Egg sales do not seem to be a particularly seasonal market. Sales occur consistently during eachof the four seasons. Peaks appear in sales charts throughout the year and the two lowest months forsales are January and June, which are 5 months apart. It therefore appears that no correlation existsbetween seasonality and product sales. January is often a quite month for sales across many industries,as it is an annual holiday period. June can also be quiet with firms preoccupied with end of financial yearactivities.
4.9 Profits
Profits in the egg farming industry are moderate. Sales of eggs direct to market for businessessimilar to Green Eggs can be very profitable although they do incur added costs like staffing andpackaging; most eggs sold direct from the farm gate are packaged in dozens therefore lifting packagingcosts. Without the ‘middle’ man all of the profit from these sales go back directly to the farm. Whilst salesvia a wholesaler are much more significant in size, they also provide economies of scale in terms ofdistribution, where packaging costs can be amortized, to a degree, by the higher volumes of stockproduced utilising the same resources and overhead costs. As wholesalers generally take stock in 15dozen outers and provide more efficient turnover of stock. The authors have calculated Green Eggs’current profit margins (which appear to be at an acceptable level for their industry) based on their fixedand variable costs, as well as sales income. There is an opportunity to increase their Gross Profit
through increasing sales by establishing new markets and creating a mix of business through differentchannels. (Please refer to Appendices 2 , 3 & 4).
Eggs delivered to customer within 48 Hours Adhere to Poultry Industry Code on Animal Welfare Adhere to Poultry Industry Code on Egg Production Undertaken a National Egg Quality Assurance
program Eco Shelter - Australian product, Green Eggs the first
to adopt this new technology and received $93K
government grant. Free Range Harvester - Australian product, Green
Eggs the first to adopt this new technology. Hasincreased production levels. Was given governmentgrant of $93,000 for this technology.
Production figures have reportedly exceeded those ofcaged birds, which would allow for greater pricecompetitiveness
Lacking market presence Lacking network of wholesaler customers around
Australia Customer base limited to Farmers Markets and one
major wholesaler. (Shouldn’t have all your eggs in onebasket!!)
Need to become listed with more industry associations
to build the marketing communications Lack of differentiation in the marketplace – packagingfor free range eggs needs to be quite different fromcaged eggs
Become certified organic Set up a distribution network of wholesale customers
across Australia at key locations, thus channeling highvolumes of eggs through centralized customer base
Participate in more industry events to build andstrengthen the brand image of Green Eggs – i.e. apull-through marketing approach, that is, instill ademand for the product in the end-users who willcreate a demand the product from further up the chain.
Sub-category of large eggs and small eggs can beniche-marketed to specific customers
Differentiate packaging for standard eggs, as well as
unique packaging for the large and under-sized eggsto appeal to these niche segments Utilize technology temperature recording devices to
prove the eggs are stored, carried and delivered topremium standards (as opposed to relying ontraditional HACCP hand-written documents which canbe disputed).
Provide training and support to their distributor network – an opportunity exists to “out-service” theircompetitors.
Bar-code product for food traceability purposes.Currently being conducted in the beef and fishindustries; opportunity to be the first in the market toadopt this new technology.
Free-Range Farmers who are also certified organic Disease, weather conditions Competition from traditional cage-egg producers Growth in barn-laid egg producing market segment Demand exceeding supply – cash flow may become
a hindrance, as well as keeping up with productionlevels.
Administrative procedures – as the business grows,systems and procedures must be firmly in place, orGreen Eggs will be playing continual “catch up.”
Working in the business, and no time to work on thebusiness.
Food poisoning – Strict Victorian Food Safetystandards don’t allow any opportunity fornegligence. Green Eggs must ensure accountabilityfrom other parties in the chain. i.e. transportcompanies, wholesalers, freight-forwarders etc.Food poisoning and outbreaks from the restaurantwill always fall back on the weakest link (i.e.whoever doesn’t have technology or systems inplace to prove their part in the process wasmaintained in accordance to the standards will loseout).
Drought Significant drop in prices from caged-eggs, would
drive free-range prices down also Overseas Exporters of organic and free range eggs
Strategic Marketing Plan: Green Eggs - October 2005 Page 20 of 29
6.0 Marketing-Related Critical Success Factors
6.1 Critical Success Factors
6.2 Problems & Opportunities Statement
X = Green Eggs have the capability to achieve the CSF
* = Green Eggs will require assistance to achieve the CSF
CSF: RATIONALE:
1. Differentiate Product Offering Green Eggs’ brand has to be marketed as a uniqueoffering, and not become a “me too” type product.
SWOT analysis identified ways to achieve this maybe to create unique packaging.
Management of Green Eggs may want to investigatethis more deeply
Conduct a consumer feedback study locally - theirfarmer’s markets would be an ideal situation.
2. Increase production capacity Through utilising their state of the art technologyand ensure it’s running close to full capacity. Themore units produced, the more units that can besold.
3. Market share to be Increased Target new Market Segments to grow the business
4. Profitability Maintain profitability levels through containingoverheads (fixed costs) proportionate to salesgrowth.
5. Brand awareness Very low levels exist within the industry. With thenew sales manager to assist, and through thedevelopment of a targeted marketing strategy.
6. Economies of Scale Opportunities to contain or reduce production coststhrough maximizing their technology.
7. Quality Assurance Maintain their HACCP plan, ensure storage anddelivery of goods by partners in their supply chaincontinues to adhere to their QA program.
CSF CapabilityYes/No
Green Eggs’ Organisational Capabilities
1. Differentiate Product OfferingX S.Green has identified their large and undersized eggs could
have potential within niche market segments.2. Increase production capacity
X Land resources are available. S. Green stated they have theland resources to “build additional sheds”
3. Market share to be Increased*
The author suggests the assistance of an experienced SalesManager will be required to move the business to the nextstage.
4. Profitability*
Currently profitable business – have the capacity to maintainand increase with assistance.
5. Brand awareness*
New sales manager will focus on driving distributors, and alsobe involved with marketing support activities.
6. Economies of ScaleX Will be achieved through overall growth.
7. Quality AssuranceX
Currently have sound QA and HACCP system in place.
1. Sustain and improve existing gross profit margins through the generation of new business inprofitable markets, whilst utilising existing resources and keeping overhead costs to a minimum.
2. Increase brand awareness in free range egg market through allocating 2% of annual sale resourcesinto advertising and promotions. Develop the marketing mix to effectively promote the Green Eggs
brand.
3. Add Value Through Differentiation of existing product range and future products introduced, createdistinct packaging, and enhance overall Green Eggs brand image. Unique Larger carton system couldbe implemented for the large egg range.
4. Increase sales by 25% for the 12 months 2005-2006 from $856,207 to $1,070,259 throughemployment of sales manager.
5. Establish the position of Sales Manager in the next financial year and fill the position with a dynamiccandidate who is capable of generating new sales, managing distribution channels and forwardplanning.
6. Change Consumer Egg Consumption Behaviour in regard to methods of consumption. Establisheggs as a preferred snack food, not just a commodity product. Add point of sale recipe cards into eggcartons.
Exhibit 14: Green Eggs Financial Objectives Table Source: Adapted from financial data provided by
Strategic Marketing Plan: Green Eggs - October 2005 Page 22 of 29
8.0 Marketing Mix Strategies
8.1 Target Market Selection & Segments
Green Eggs’ market segments have been classified into two major groups: B2B and B2C. Thegeneral B2C category can be broken down into four separate segments, and each market has beensegmented according to lifestyle, demographic and socioeconomic characteristics. These customershave also been segmented based on benefits, such as health conscious (or lifestyle conscious), andquality seeking (Reed, 2003, p.128).
î Lifestyle Conscious o Enjoy eating healthily o Want to eat fresh, naturally produced foods o Enjoy eggs as part of a Sunday “all day” relaxed breakfast.
î Working Professionals o “Yuppies” who enjoy eating out and breakfast is a social occasion.o Will pay premium for high quality, free range eggs.o Eggs benedict and hollandaise eggs are popular meals with this
group.o Appears to be trendy to enjoy all day breakfasts with this group
too. o Frequent patrons of boutique and café style outlets who serve free
range eggs î Environmentally Concerned
Nature Lovers
o Concerned about the natural preservation of the environment o Importance placed on best practice and sustainable
environments.o Quite often purchase free range eggs at markets as well as their
local supermarket. î Concerned for Animal Welfare o Concerned for the welfare of the birds
o Dedicated to the humane treatment of all animals o Careful about what products they purchase depending on the
rearing and treatment of the animals.o Buy eggs from farm gate or markets
There is also an opportunity to service the Medical/Pharmaceutical Research market segment, asthis segment uses eggs to carry out laboratory testing and culture-growing. This could be an excellentoutlet for Green Eggs undersized eggs.
The B2B target market, including the wholesalers and distributors, are seeking a value for moneyproduct that is fresh, high quality, and will be delivered to them with as much shelf-life of the productpreserved as possible as they are on-selling the product. Segmentation of this market will largely bebased on geographic location, as the distributor network will on-sell the Green Eggs’ product and willrequire service and support in each location. Food manufacturers are generally concerned with thepremium quality of the eggs, as these eggs go into other food stuff items and must adhere to their highstandards. Complete QA validation and evidence of HACCP compliance throughout the supply chain isimperative.
8.2 Product Strategy
When a company is considering product strategies, they need to consider factors such asmodifications that may be required to existing products, or what new products may need to be added totheir portfolio (Reed, 2003, p.136).Throughout this marketing plan so far, the authors have discussed thelack of market presence and brand awareness of the Green Eggs brand. Within the TOWS analysisconducted, an opportunity exists to differentiate packaging for their standard eggs, as well as specialpackaging for their large and under-sized eggs to appeal to these niche segments.
Strategic Marketing Plan: Green Eggs - October 2005 Page 23 of 29
The authors suggest two simple, straight-forward strategies that tie in with the strategic marketingobjectives (highlighted in yellow in the below matrix):
1. Market Penetration strategy: the aim is to increase market share for the Green Eggs existingproducts.
2. Market Development strategy: Develop new markets (with existing products). Expand throughdistributor network in each state.
8.3 Pricing Strategy
Pricing needs to be reviewed at least quarterly, as competitor activity and market trends are
external variables that will impact upon their business. Decisions on whether to increase prices should bebased on information obtained through a comprehensive market review.
This review should:
Analyse the market trends Assess competitors Review economic data Assess outside influences Review internal profits and capabilities Assess cost increases likely to be incurred throughout the supply chain
8.3.1 B2C Pricing Strategy
Current average price per dozen is $3.40. (Green Eggs brand). The authors suggest a 10 centincrease to assist bottom line profit margin. Also, consumers of free range eggs value the taste andfreshness of the product highly and as such are willing to pay a premium for the high quality. Green Eggshave positioned their prices lower than their competitors, and research conducted by the authors revealedretail (supermarket) pricing for dozen packs of free range eggs selling for as much as $6.83 (Pace Farmorganic EcoEggs 12pk – Coles Box Hill. Appendix 6 ). Standard being Coles free range eggs at $4.69, soin fact by lifting the prices, this may assist in creating a high-quality, premium perception in the mind ofthe consumer.
Strategic Marketing Plan: Green Eggs - October 2005 Page 24 of 29
8.3.2 B2B Pricing Strategy
Sell to wholesalers for $2.00 per dozen (10c increase), sell to manufacturing industry for 60c/ kg(20c increase). To achieve the corporate financial objectives of 25% sales growth and increase in profit,the authors suggest an incentive scheme for their wholesale customers. This has been delineated in thetable below.
Incentive Scheme
Volume (doz) Price ($ per doz)
0-150,000 $2.10
150,001 - 250,000 $1.95
2500,001 - 350,000 $1.80
350,001+ by negotiation
8.4 Distribution Strategy
The distribution strategy comprises the use of distributors, who will on-sell the product to themarket, which will quickly assist Green Eggs product to infiltrate the market. A more selective distributionstrategy will be employed, where Green Eggs will work with key (perhaps exclusive) distributors inlocations around Australia. Necessary customer service support will also need to be considered whensetting up the national distributor network. The new sales manager would ultimately handle this, as wellas focus on relationship development and support for the new distributors. As an integral part of thedistribution strategy is the necessity to maximise their state-of the art resources, and increase productionwith their range harvester and eco-shelter. Bar-coding food traceability technology was identified in the
TOWS analysis – this is the way of the future for primary industry producers, where large multinationalsupermarkets and food manufacturers want to trace the food from the “farm to the fork.”
8.5 Integrated Marketing Communication (IMC) Strategy
It is important for Green Eggs to have an identity in their local community. Sales via the farmermarkets and farm gate direct are not only very profitable, but build the Green Eggs brand and generatemuch-needed awareness. However, these sales should be developed with a very low key approach asthe sales through this segment do not want to conflict with local business sales or retailers who stock thebrand and have purchased from the distributor. This is more sales for tourists and passing trade, althoughthey also help keep the Green Eggs company image strong within the local community, which isimportant in their industry. The IMC strategy will target the end user audiences (identified in 8.1), as wellas participation in trade shows to support the intermediaries (B2B customers). These activities will
ultimately be implemented to stimulate purchasing across all target audiences.
Strategic Marketing Plan: Green Eggs - October 2005 Page 25 of 29
9.0 Budget
9.1 Marketing Budget
The Marketing Budget for a larger organisation is usually allocated to marketing based on 3-4%
of sales turnover. The authors have taken a more conservative approach to establishing a marketingbudget for Green Eggs, due to the fact that little no marketing or advertising expenditure has taken placein the past (around $600 per annum). In order for these strategies to be successful, it will be important tohave a combination of complimentary activities occurring simultaneously, to derive as much benefit aspossible.
For example, with the Melbourne 2006 Fine Food trade show event as a suggested marketing activity,customers will search the internet before and after the event to find out more about the exhibitors.Therefore the improvements to Green Eggs website will need to commence long before this deadline.
Green Eggs current sales for financial year 04/05: $856,207
Year 1 Objective: $1,070,259Year 2 Objective: $1,337,823Year 3 Objective: $1,672,279
9.2 Gross Profit Margins
Gross profit margin for current year: $227,557
Year 1 Objective: $247,810Year 2 Objective: $360,622Year 3 Objective: $501,636
Green Eggs Gross Profit $
$501,636
$360,622
$227,557$247,810
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Current Year 1 Year 2 Year 3
Year
$ P r o f i t
Gross Profit
* Refer to Appendix 5 for more information.
Exhibit 16: Green Eggs’ Gross Profit
Source: Calculated from the financial data providedby S. Green
Marketing Budget = 2% of sales, or $17,124 per annum (current year).
9.4 Marketing & Advertising Schedule– 2006
Tool Description When Cost of Production $ TotalCosts
Website
Development
Tidy up and enhance existing site,
correct functionalities and errors, addextra information (e.g. media releasesand articles, images of the property),improve search engine listings
Commenc
e Jan-06Ongoing
4,000 $4000
Direct MailCampaign
Mail out to wholesalers and restaurantsacross Australia
Jan, April,Jul, Oct
$400 per batch of 200 $2000
Trade Show:Melbourne FineFood
The major hospitality and catering showin the Southern Hemisphere. Featuresmultinationals as well as localproducers. An excellent way to attractnew customers and distributors
Sep-06 Stand $4500 $8,000includin
gdisplay,
samples
Trade Show:Regional Foodand Produce
Shows
An excellent way to attract customersand distributors
Strategic Marketing Plan: Green Eggs - October 2005 Page 27 of 29
10 .0 Implementation
10.1 Implementation Plan
What Description When Details
WebsiteDevelopment
Tidy up and enhance existingsite, correct functionalities anderrors, add extra information(e.g. media releases and articles,images of the property), improvesearch engine listings
Commence Jan-06 Ongoing S.G to find a web designer orweb consultant
Direct MailCampaign
Mail out to wholesalers andrestaurants across Australia
Jan, April, Jul, Oct S.G/Sales Manager
Trade Show:Melbourne FineFood
The major hospitality andcatering show in the SouthernHemisphere. Featuresmultinationals as well as localproducers. An excellent way toattract new customers anddistributors
Sep-06 S.G./A.G/Sales Manager
Trade Show:Regional Food andProduce Shows
An excellent way to attractcustomers and distributors
Feb-06 S.G./A.G/Sales Manager
10.2 GANTT Chart – Marketing Activities, 2006 Calendar Year
Jan 2006 Dec 2006
TASK JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECWebsite Development
Strategic Marketing Plan: Green Eggs - October 2005 Page 28 of 29
10.0 Evaluation & Control
The authors have supplied a marketing control system to assist Green Eggs with the Evaluationand Control of their Strategic Marketing Plan, following implementation of the actual plan:
Benchmarking – identificationof an appropriate standard
Measurement of Performance
Evaluation of Performance
Corrective Action
Comparative: Current marketshare Current and potential sales levels. Quality levels
Measure market share – ascertain whyincreases, or decreases, occur
Profit Margins Sales Growth – current versus potential Achievement of customer satisfaction Production capacity proportionate to sales
turnover. i.e. supply meeting demand. Wastage
minimal/avoided. Manage growth of overall business
Performance will be measured according toefficiencies and effectiveness gained within theorganisation.
Return on Investment (ROI) must be achieved,relative to marketing expenditure.
Changes in the external environment, such as
Adaptive Control System: Continuous monitoring of the external
environment versus internal capabilities. i.e.review pricing, review staffing , production,administration, distribution channels. Essentiallyall areas outlined in the marketing plan.
Exhibit 17: Flow Chart – The Process of Evaluation & Control
2. Gilligan, 2003, Strategic Marketing Planning, Butterworth-Heinemann, Oxford, United Kingdom.
Online References:
3. IBIS World, 2005, Poultry Farming (Eggs) in Australia) Report No. A0142Website reference: http://www.ibisworld.com.au Date Accessed: August 2005
4. Komis, N., 2002, Egg Labeling Requirements , Australian Egg Corporation Limited, North Sydney,Victoria, Australia.Website reference: http://www.aecl.org Date Accessed: August 2005
5. The Age, 2005, The Egg Files, taken from Australian Egg Corporation Limited, North Sydney,Victoria, Australia.Website reference:http://www.theage.com.au/news/Epicure/The-eggfiles/2005/05/16/1116095890873.html Date Accessed: August 2005
6. Free Range Farmers Association Incorporated, 2003, Egg Production, Labertouche, Victoria, Australia.Website reference: http://www.freerangefarmers.com.au Date Accessed: August 2005
7. Victorian Farmers Federation, 2005, Production Systems, Melbourne, Victoria, Australia.Website reference: http://www.vff.org.au Date Accessed: September 2005
Radio:
8. Thomas, H., 2005, The Free Range Fiddle, ABC Radio National transcript.(Website reference: http://www.abc.net.au/rn/talks/bbing/stories/s1397934 )Date Accessed: September 2005