Marketing Plan on Herbalife

This marketing analysis paper discusses the marketing plan for Herbalife, a US-based organization that deals in weight management, personal care, and nutrition products. It includes an executive summary, company profile, situation analysis, SWOT analysis, segmentation, targeting, positioning, marketing objectives, new product analysis, and marketing mix.

Marketing plan on Herbalife
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Executive summary
This is a marketing analysis paper written on Herbalife. It is a US based organization with strong
presence in several internal markets. It deals in weight management, personal care and nutrition
products. Obesity is a major concern in global market, which is also causing rising number of
type 2 diabetes patient, therefore company plan to launch a new health supplement that helps is
low is GI index, better insulin sensitivity and weight management for such customer base.
Product will be offered in both powder and tablet form, it will be priced at premium and sold
through distributor channel. Different promotional strategies such as social media, word of
mouth will be used for creating awareness. Finally, implementation plan include staff and budget
requirement for product launch.
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Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Company profile......................................................................................................................................4
Vision and mission statement..................................................................................................................5
Situation analysis.........................................................................................................................................5
Political...................................................................................................................................................5
Economic.................................................................................................................................................6
Social.......................................................................................................................................................6
Technological..........................................................................................................................................7
Customer issue............................................................................................................................................7
Supplier issue..............................................................................................................................................7
Competitor issue..........................................................................................................................................8
Employee issue............................................................................................................................................8
SWOT analysis............................................................................................................................................8
Segmentation...............................................................................................................................................9
Targeting...................................................................................................................................................10
Positioning.................................................................................................................................................10
Marketing objective...................................................................................................................................10
New product analysis................................................................................................................................11
Marketing mix...........................................................................................................................................11
Product..................................................................................................................................................12
Price.......................................................................................................................................................12
Place......................................................................................................................................................13
Promotion..............................................................................................................................................13
Implementation plan..................................................................................................................................14
Budget allocation...................................................................................................................................15
Staff allocation......................................................................................................................................15
Conclusion.................................................................................................................................................15
Bibliography..............................................................................................................................................16
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Introduction
Marketing is a central function as it helps in bridging the gap between company offering and
customer. It includes wide range of strategies from product evolution to sales that helps in
ensuring long run profitability and sustainability. This is a marketing analysis paper written on
Herbalife, leading global provider various health products targeted towards the youth and middle
aged customer base stressing on the importance of a healthy and fit lifestyle. It includes in-depth
analysis on its new product launch and market strategies for the same.
Company profile
Herbalife was founded in the year 1980 by Mark Hughes, with the objective of improving
individual life by providing them nutritious product. It was launched at Cayman Islands and
headquarter is in Los Angeles, USA. Founded in 1980, company started its international
operations in 1982, with Canadian market (Herbalife, 2012). In 1986 it started operating on
NASDAQ stock exchange, since 1988 it is expanding extensively in various international
markets. It sales wide range of products that include skin care, health, nutrition and weight
management items. Presently company is operating in 75 countries worldwide with a huge
network of 2.3 million distributors. It is a financially strong organization, with revenue worth
$4.3 billion, net income worth $214 million. Almost 8000 employees are working for the
organization (Schultz, 2018).
Obesity and weight management is a key problem in Australian health market. Daily supplement
segment include products on heath management, stress management, immune management and
digestive health. Further, it is planning to launch new product that is aimed towards diabetic
health management, low in GI, helps in weight and health management.
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Vision and mission statement
Company Vision is to “change people lives”. Company mission is to bring positive change in
people lives by providing them with best of nutrition and weight management products. It also
aims to provide working opportunity among individual through direct selling and multilevel
marketing. Key values of the company include highly researched scientific products, employees,
and customers, providing best to society and working ethically (Herbalife, 2012). Analysis
shows company primary objective is to impacting society and people positively through its
products.
Situation analysis
Dietary and weight management supplement industry is growing at fast pace. It was $131 billion
in year 2016. It is a baby boomer industry with strong inclination from young generation.
Environmental factor play key role in growth of any company, therefore PEST analysis has been
done below;
Political
Australia has stable political environment with three levels of government that is Federal, state
and local government. There are several international trade and pact signed such as FTA, APEC,
and TPP to enhance export, tariff exemptions and strong trade relationships. Australia business
environment is open, liberty to trade, there is very little limitation on foreign investment, and it is
above 30 percent in worldwide market in terms of investment freedom. There are low chances
of any dramatic economic policy changes, therefore positive political environment
(data.oecd.org, 2016).
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Economic
Australia has strong financial and economic system, hardly impacted by global financial
meltdown. In the year 2017 its GDP was $1.248 trillion, with 2.2 percent real growth rate.
Unemployment rate is 5.6 percent with 2 percent inflation rate (tradingeconomics.com, 2017).
Australia has competitive and strong market currency that helps in maintaining strong economic
hold. It is a major natural resource exporter worldwide, there are several tax treaties to prevent
double taxation; there is low consumption tax that helps investor in enjoying more profit.
Australia provides ease of doing business; attract investment, simple administration leads to
positive work environment.
Social
Customers are primary business establisher, good company; good product cannot earn profit
without social acceptance. Australia offer a cosmopolitan environment with presence of various
ethnicities such as English, Australian, Irish, Scottish, Italian, German, Chinese, Indian etc. total
population of the region is 23,470,145 in the year 2018. Various languages are used but English
is the primary mode of communication. In terms of population distribution, there is 17.75 percent
population between ages 0 to 4, 12.62 percent population aged between 15 to 24 years of age,
41.35 population lies between 25 to 54 years of age, 11.84 percent between 55 to 64 years of age
and remaining 16.44 percent is 65 years and above (www.euromonitor.com, 2016). Majority of
population is middle age, which requires health supplements, weight management and healthy
lifestyle with slow population growth. There is high literacy rate with majority of population as
fluent speaker in European or Asian languages.
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Technological
Australia is among most advanced countries in world, huge research and development occur on
continuous basis. Almost 88.2 percent of population uses internet, high literacy helps in keeping
customer informed. Key issues encountered by company include need for continuous innovation
of new products. It is equally easy to spread negative feedback through online media, therefore
in case of dispute technology advancement might cause trouble.
Customer issue
Market analysis shows several complain against products, there is use of chemicals in products
which are causing side effects among few customers. Complaints include problem of often cold
and cough, liver issues due to product consumption, but nothing is proved yet. As multilevel
marketing selling approach, all sellers are not company full time employees, therefore poor
behavior of few associates is impacting company image adversely (consumeraffairs.com, 2019).
Supplier issue
Suppliers can work as full time or part time. Company uses single enterprise resource planning
software to manage its global operations. It aims to implement Quintiq’s Master Production
Scheduling software to reduce lead time and enhance production efficiency. Company provides
motivational and educational services to all suppliers and distributors. Major concern is several
legal issues encountered by company due to product composition in various markets; such as, in
year 2008 the Fraud Discovery Institute states that certain banned chemicals under proposition
65 are being used by company. Such issues causes’ interest clash, lack of trust and impact brand
image adversely.
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Competitor issue
Key competitors of the company include Amway Corporation, Nu skin enterprise and GNC. In
terms of market comparison Herbalife is performing better than its competitors as there is
revenue increase by 8.53 percent in the year 2018. It sales growth rate is 6.27 percent above its
competitors and 4.12 percent higher profitability (csimarket.com, 2018). However, different
markets have different demands and different type of competition, therefore no single strategy
works to mitigate competitor’s risk.
Employee issue
Information through various employee review sites states problem in work life balance with
company employees, as there are continuous legal issues employees have strong fear of job
insecurity. This also causes high employee turnover. There is danger of scam in multilevel
marketing process; it might cause high income to initial players and loss to followers.
SWOT analysis
Below is the SWOT analysis for new product of the company.
Strengths include unique service offering of the product to special need customer segment.
Established brand image and marketing network will also help management in product expansion
and information exchange easily. Company is present in diverse market; therefore product
expansion will be smooth. New product invention is backed by data and past customer need
analysis.
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Weaknesses include inability to cater mass market, it will be available for specifically people
with diabetes or aim to reduce weight to control type 2 diabetes problem. There might be
skepticism in customer mind due to past legal issues encountered by the company. Product might
be little sour in taste due to leaves used in product making. Another weakness is price for
product.
Opportunities include wide network availability for market expansion. There is rising problem of
type2 diabetes and weight gain in global market, lading to high demand for such products.
Threats include several government regulations imposed on company by government. Intense
market competition also impact product demand. Customer might opt for traditional allopath
medicines to control the problem, instead of opting for Herbalife (LOUABBOTT, 2008).
Segmentation
Every customer is different with different demand; it is difficult for company to make products
according to individual demands. Therefore segmentation technique is used to divide
heterogeneous market into small homogenous groups, which have similar needs and wants. It
helps in using single product and strategy to cater one particular segment. In terms of geographic
boundaries, Herbalife products are widely present in 95 countries. It aims to target youth
population between 21 to 45 years of age. However, for new product customer will be more of
mid to elderly people suffering from diabetes, it include age between 35 to 60 years. Behavioral
segmentation for new product will be weight conscious people, who are suffering from diabetes
problem. One aims to maintain a healthy and balance life style through proper eating.
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Targeting
Further in terms of targeting it has two key targets, the sellers and the customers.
In terms of sellers it targets individuals with strong network, good communication skill and one
looking for business opportunities.
Customer includes individuals who aim to lead a balanced and healthy lifestyle, however have
lack of time but ready to make healthy lifestyle changes to gain benefit.
Positioning
It has positioned itself as a high quality health supplement selling company at medium price.
Positioning is the way company has portrayed itself in customer perception and mind. It is being
considered as best health supplements providing company, it cater different type of customer
demand at reasonable pricing and wide availability through its sales network. This new product
is positioned as one stop solution for people suffering with weight management and diabetes
problems.
Marketing objective
Key marketing objectives include
 Creating and sustaining positive brand image of the company as best health supplement
providing organization at reasonable price.
 Targeting new customer segment for new product
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 Creating marketing awareness about new offering, though Herbalife has products for heat
control but diabetes is the new segment in which company plan to enter, therefore
awareness among present and new customer about new product is required.
 Enhancing total product sales
New product analysis
A product offering include several benefits divided into three levels which are as follow;
Core product benefit of Herbalife new product is to offer good health and controlled diabetes and
weight. Core value is to ensure healthy lifestyle.
Actual product is supplement that helps in controlling type2 diabetes through adequate weight
management. To some customers product might seem expensive but it’s all worthy, since they
have good product, strong customer support and brand image.
Augmented value is good health helps in doing what customer want, eating them freely. It also
helps in saving them from unnecessary medication.
Marketing mix
Key objective of this section is to devise a marketing plan for the company to execute its new
product in market and achieve its marketing objectives. It includes strategies in relation to
product, price, distribution and advertisement to get maximum customer attention, awareness and
sales.
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Product
This new product is expected to be made using alpha lipoid acid that help in improving insulin
sensitivity, ability to absorb better and reduction in weight gain. It will be made available in
powder and tablet form. Powder can be mixed with milk or warm water, before food two times.
It will make using two flavors, vanilla and chocolate. This product is aimed towards helping
customer in leading healthy lifestyle, fighting problem of type 2 diabetes and ability in the
market. Obesity is a major concern in Australia and several other market, unhealthy eating, fast
lifestyle is few contributing factors. This product is entering at growth stage as it will help in
overcoming lifestyle issues.
Price
Different type of pricing strategies are used to sell product, price depends on product type and
customer strength, it aims to cater. It include product line pricing, bundle pricing, flexible pricing
and one price. Pricing can be set based on market competition (Armstrong, Harker, Kotler, &
Brennan, 2009), such as price above the competitor i.e. premium pricing, price below the
competitor and price at par with competition. Herbalife uses premium pricing strategy for its
products, this particular product aims to target niche customer segment. Different external factors
impacting price include market competition, availability of alternative products. Customer might
feel skeptical about using such product; therefore keeping medium price can help in attracting
larger customer base. Internally, perceived value of product impact their willingness to pay a
particular price; Herbalife is perceived as best health supplement brand, therefore customers are
willing to pay little premium price also. Analyzing different scenarios, it is recommended that
company should opt for skimming pricing technique, that is high price initially and lower later
on.
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Place
Key distribution strategy of the company is networking using multi-level channel. Products are
sold by chain of distributors who gets their share from profits as well as commission with down-
line distribution system. There is direct selling concept that helps in understanding individual
customer demand and offer them most suitable product (Ram, 2011). Products are also being
sold using e-commerce channel such as website, e-commerce websites such as Amazon, eBay
etc. company used C2 software to help distributors to get systematic option for transactions.
Currently, its website is present in 20 countries. Proper sales training is being provided to
distributors to clarify business process and rules. Presently, this product will be launched in
Australian market; slowly it will be launched in different geographical segments with high
diabetes problem for example, India. Product will be available through Herbalife distributors and
its website.
Promotion
Key objective of promotional strategy is to create awareness regarding new offering, increase
sales. It also aims to attract new sellers in the networking chain. Key selling strategy is through
direct selling network, as one to one selling help in providing clear information, offering
customize product. Distributor and customer testimonials are also used as promotional tool as
word of mouth is great tool. Further, different CSR activities are organized by the brand such as
health checkup camp, awareness camps, and educational camps. It also does sports and
championship sponsorship as part of PR activities (Herbalife International Inc, 2012). Its sales
plan is based on networking and multilevel channel distributorship, seller join as supervisor and
moves the ladder up with increase in total sales and number of people joins under him. Different
tools recommended for new product promotion under IMC plan include;
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Word of mouth strategy from present customers, seller needs to make customers aware regarding
new offering as positive word of mouth help in attracting customer.
Online promotion through social media sites, Facebook can be used for creating awareness about
the product directly and indirectly through campaign and different activities. Customer queries
can be answered easily (As'ad & Alhadid, 2014).
Implementation plan
This new product is expected to be launched within 3 month period, as initial research is
completed and product is decided. Therefore present implementation plan include
Before 3 month of product launch Discussion and brainstorming with product
development and marketing team
Before 2 month of product launch Preparing a product launch plan such as
preparing product photos, sales material,
booklet, website updates, and emails.
Deciding on marketing channels
Before 1 month of launch Preparing launch content
Marketing and product pitch
Before 2 weeks Announcing the launch, advertising using
different tools
On the day of launch Execute all advertisement, keep social media
page updates and keep positing through emails
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Budget allocation
Particulars Budget
Social media $10000
Sponsorship $20000
PR activities $10000
Staff allocation
Key staff allocation for the new product launch include
 1 product head
 1 product manager
 2 staff for product marketing
 2 staff for managing overall sales
Conclusion
Above analysis helps in understanding present marketing position of Herbalife and its new
product launch. Brand is operating well and profitably in market, it is offering wide range of
products to customers. However, being in medicine sector there are allegations and legal issues,
it encounter. However, company multi-level marketing strategy helped in expanding its business
in different countries and remote areas. New product launch require adequate marketing
planning, product safety and tracking to ensure long run sustainability.
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