This report provides an overview of the current market situation of Uncle Tobys breakfast cereals. It includes analysis of the product life cycle, BCG matrix analysis, consumer perception map analysis, macro environmental forces analysis, and competitive environment analysis.
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Running head: MARKETING Strategic Marketing and Matrix Name of the Student: Name of the University: Author Note:
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1MANAGEMENT Executive Summary: The objective of the report is to provide an overview of the current market situation of one of the products of Uncle Tobys. The product chosen here is breakfast cereals. Uncle Tobys refers to an Australian brand known for its breakfast cereals and other food products for breakfast including snacks and oats. The brand has a reputable history and is known to be a subsidiary of Nestle, Australia. The key manufacturing unit of the company is located in Wahgunyah located in the North East Victoria. The report commences with the analysis of the brand by focusing on the lifecycle of the product, BCG matrix analysis and two dimensional analysis of consumer perception map along with critical reflections. The report also projects an analysis of macro environmental forces and an analysis of competitive environment.
2MANAGEMENT Table of Contents 1. Analysis of the Product/ Brand:...................................................................................................3 (i) Product Life Cycle Analysis...................................................................................................3 (ii) BCG Matrix Analysis.............................................................................................................5 (iii) Two-Dimensional Consumer Perception Map Analysis:......................................................7 2. Analysis of the Macro Environmental Forces.............................................................................8 1. Demographic Factors:..............................................................................................................8 2. EconomicFactors.....................................................................................................................9 3. Social and CulturalFactors:.....................................................................................................9 4. TechnologicalFactors:...........................................................................................................10 5. Political and the Factors:........................................................................................................10 3. Analysis of Competitive Environment:.....................................................................................10 Porter’s Five Forces Analysis....................................................................................................10 References:....................................................................................................................................15
3MANAGEMENT 1. Analysis of the Product/ Brand: TheproductunderanalysisisthebreakfastcerealrangeofUncleTobys (uncletobys.com.au, 2019). These cereals are available in wide variety of ranges. (i) Product Life Cycle Analysis The product life cycle (PLC) refers to the time period during which a product is developed, introduced to the market and gradually removed from it (Wang, Wangn & Zhao 2015). There are four key stages of the cycle that include introduction, growth, maturity and the decline (Doha, Das & Pagell, 2013). The breakfast cereals gained popularity immediately after its launch which implied a rise in the cereal market in a matter of two years. This has been marked as ‘introduction’ or the launchphaseand also represents the expensive stage of product cycle. As size of market has been small so product sales had been comparatively low. However, the cost associated with consumer testing, research and development and marketing has been higher. Besides, there has been newer product development marked by entire range of breakfast cereals varying in taste and flavor. This is marked by the ‘growth’ stage.Nonetheless, the competitors weaken the market positioning of cerealswhich is identified as the ‘maturity’ stage.Influx of the newer players along with the aspect of undercutting by the competitors has been marked by the ‘saturation’ phase in the life cycle of the product. The last stage known as the ‘decline’stage is marked by rapid growth in sales and brand positioning of the product.
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4MANAGEMENT Figure 1: Diagrammatic Representation of Product Life Cycle Source: (Wang, Wangn & Zhao, 2015) At this juncture, Uncle Tobys breakfast cereals needed to make key decisions whether to discard the product or to continue extending its life by using newer strategies and business tools.
5MANAGEMENT StageIntroductionGrowthMaturityDecline ProductPut forward the basic product Ensure product warranty, extensions and service Diversification of the models and brands Phasing out the weaker items PriceInitiate changes in cost Determine price for market penetration Determine a price that match the competitors Reduce the price DiversificationEnsure selective distribution Ensure intensive distribution Building intense diversification Phasing out non profitable customers and outlets. AdvertisingEnsure product awareness amongst the dealers and the early adopters. Building interest and awareness within mass market Focus on the benefits and the differences of the brand Ensure the return of the hardcore loyal customers Sales PromotionEnsure heavier sales promotion for enticing trials. Keeping control and taking advantage of the higher consumer demand Ensure brand switching through increased promotion Reducing to the minimum level Figure 2: Tabular Representation of the PLC strategies to be incorporated Source: (Sharma, 2013) (ii) BCG Matrix Analysis This a matrix put forward by the Boston Consulting Group for the evaluation of strategic positioning of business brand portfolio and their potential (Mohajan, 2017). The framework helps in classifying portfolio in four different categories based on the attractiveness of the industry and the competitive positioning. The four components of the matrix includes Question mark, Stars, Cash Cow and Dogs.
6MANAGEMENT Figure 2: Diagrammatic Representation of BCG Matrix Source: (Zakharova et al., 2015) Question Mark:It represents those segments that operate in higher growth industry having lower market share. Kellogg’s one of the competitors of Uncle Tobys breakfast cereals falls in this category. In Australia, Kellogg’s had a market share of close to 40 percent for breakfast cereals that reduced to about 27 percent. Stars:They represent the segments that have lower industrial growth rate and a higher market share.In Australia, Uncle Tobys breakfast cereal is incorporated in this category in comparison to Kellogg’s. Thus, Uncle Tobys which is a subsidiary of Nestle holds 21 percent of the share value in the breakfast cereals during 2017.
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7MANAGEMENT Cash Cows:These segments are represented by lower sales growth rate and a higher market share. Products that represent market leaders within the specific industry fall where the industry does experience futuristic growth fall in this category. In Australia, Uncle Tobys breakfast cereal falls in this category and acts as revenue churners for company and has lower investment for sustaining profitability and leadership within market. Kellogg’s should adopt market diversification and product development strategy in order to generate increasing level of revenue. Dogs:This segment represent the products that are perceived having a higher growth potential but somehow failed in creating the magic due to the slower rate of market growth.In Australia, the Kellogg’s company falls into this particular category of matrix. (iii) Two-Dimensional Consumer Perception Map Analysis: The two-dimensional mapping represented a diagrammatic technique put to use by the marketers for visually displaying perceptions or the potential of the customers (Vidal et al., 2016). It is to be noted here that the positioning of the brand is usually influenced by the consumer perception. The figure below represents the positioning of the Uncle Tobys brand of cereal breakfast in comparison to the competitors, Kellogg's and Sanitarium
8MANAGEMENT Higher Nutritional value Great Taste Poor Taste Lower Nutritional value Sanitarium Kellogg’s Uncle Tobys Figure 3: Diagrammatic Representation of Consumer Perpetual Map Source:(Ares et al., 2013) 2. Analysis of the Macro Environmental Forces The macro environmental forces that affect the marketing practice and competitive environment of Uncle Tobys products include (De Castro, Khavul & Bruton, 2014): 1. Demographic Factors: Age acts as one of the most prominent demographic variables for the chosen Uncle Tobys product which is the breakfast cereal. The product target specific segments that look forward
9MANAGEMENT towards the consumption of the healthier food products. Cereal being one of the healthier options for breakfast focuses more on the children between 3 to 12years of age and the senior adults who are over 65 years of age. Nowadays, increasing number of people is becoming health conscious and so the people in the middle aged brackets who are mostly the office goers opt for the product. The demographic aspect is vital as the company uses mix of geographic, demographic andpsychographicsegmentationformarketingitsproductsacrossAustraliaandgain competitive advantage. Besides, Uncle Tobys makes use of the product/benefit based on the positioning strategies for highlighting benefits of the products to customers. 2. EconomicFactors The cereal industry of Australia experiences growth due to the higher usage of the cereals at the affordable prices. This will aid the marketing practices of Uncle Toby and help it in gaining a competitive advantage. However, it has been found that cereals as breakfast menu requires some complimentary requirements likes fresh fruits, milk, sugar and honey. Therefore, the demand for the cereal depends on the price of the additional goods. 3. Social and CulturalFactors: In recent times, ready-to-eat cereal has become an effective means of sufficing the breakfast needs of the consumers having a busy lifestyle. The cereals are also gaining popularity through the portrayal of health benefitsto the customers. However, some of the macro environmental factors that affect the marketing practices of Uncle Tobys product are its varying range of taste preference across the various regions within Australia. People might have preference for other breakfast options like the traditional ones.
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10MANAGEMENT 4. TechnologicalFactors: Technology has been increasingly used for harvesting wheat that helps in the production of the cereals. Uncle Tobys being a breakfast cereal manufacturer has been no different. Nowadays, it has been found that the cereals emerge out of the advanced and computerized industry that seeks newer advancements for reducing the carbon footprints. This would provide an edge in the marketing practice undertaken by the company thereby helping it in gaining competitive advantage over its competitors. 5. Political and the Factors: As a part of the political factor, it is necessary for Uncle Tobys to adhere to the exportation and the importation of boards under the Australian New Zealand Food Standards codefor undertakinganappropriatecerealmanufacturing.Besides, thecompanyisalso constrained by the food and the packaging laws of various nations put across by the governing bodies. This would not only aid marketing practices of the company but will also help it in earning a competitive advantage. 3. Analysis of Competitive Environment: Porter’s Five Forces Analysis
11MANAGEMENT Figure 3: Diagrammatic Representation of Porter’s Five Forces Source: (E. Dobbs, 2014) Porter’s Five Force represents a strategic framework that focuses on how Uncle Tobys would be able to build a competitive advantage in the processed and the packaged goods industry (Takata, 2016). Managers at the company can use this framework for not only developing strategic position but also in exploring profitable opportunities in the entire consumer goods sector. The fives forces that needs to be taken into account are as follows: 1. Threat of New Entrants: According to Lüttgens & Diener (2016), newer entrants in the Processed & Packaged Goods results in innovation, newer ways of getting things done andput pressure on the Uncle Tobys to lower its price, reduce cost andput across newer value propositions to customers . Uncle Tobys can manage all the challenges and build the effective barriers for safeguarding the competitive edge
12MANAGEMENT Strength 1. Help in building economies of scale such that it is able to lower fixed cost for every unit 2. Help in building capacity and spend more money on the research and the development. c 1. Put pressure on lower price 2. Put across newer value propositions to the customers. Opportunities 1. Newer products brings in newer customer 2. The older customers also get a vision to buy the products from the company. Threats 1. Promotes newer means of doing things 2. Promotes Innovation. 2. Bargaining Power of Suppliers: Most companies within the Processed and Packaged Goods industry buy raw materials from the various suppliers (Ma et al., 2015). Suppliers in the dominant position can reduce margins of the Uncle Tobys products in the market. Powerful suppliers apply negotiating power in extracting higher prices from such firms. The higher bargaining power of suppliers lowers the profitability of the company. Strength 1. Helps in building effective supply chain with various suppliers 2. `Allows experimenting with newer product designs so that the company can make an easier shift. Weakness 1. Reduces the margins of the company 2. Reduces the profitability of the company Opportunities 1. Aids in the development of the dedicated suppliers whose business remains dependent on the firm. Threats 1. Results in extraction of higher prices from the companies
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13MANAGEMENT 3. Bargaining Power of the Buyers Often buyers are found to demand a lot as they expect to purchase best offerings put forward by the company at the minimum possible price. This might exert pressure on the long term profitability of the firm under discussion (Heimeshoff & Klein, 2014). A smaller and powerful customer base results in higher bargaining power of customers and higher ability of seeking offers and discounts. Strength 1. Helps in building larger customer base 2. `Allows fast innovation of the newer products Weakness 1. Power to force the company in increasing the offers and discounts. 2. Reduces the profitability of the company in the long run Opportunities 1. Introduction of newer products will prevent the defection of the customers. Threats 1. Higher bargaining power of the buyers will force the company to sell their products at the minimum price. 4. Threat of the Substitute Products or Services: A new product that is able to meet the similar needs of customers but in different ways will make the profitability of the industry suffer (Porter & Heppelmann, 2014). The threat of the substitute product is higher in case it puts across a value proposition that is different from the one offered by Uncle Tobys. StrengthWeakness
14MANAGEMENT 1. Ensures fast innovation of newer products 2. Remain service oriented instead of being product oriented 1. Hampers the profitability of the company Opportunities 1. Puts forward numerous options in front of the customers. 2. Understand the needs of customers Threats 1. A different value proposition of the substitute products might drive the company to run into losses. 2. Increases switching cost for the consumers 5.Rivalry amongst Existing Competitors When rivalry amongst existing players is higher, it drives down the prices thereby leading to a decrease in profitability of the company (Adi, 2015). Uncle Tobys operate within a highly competitiveProcessed & Packaged Goods industry. The competition hardly takes any toll on the overall profitability of the firm. Strength 1. Helps in building sustainable differentiation 2. Enables building scale for better competition Weakness 1. Decrease the profitability of the firm Opportunities 1. Collaborate with the competitors for increasing market size instead of competing in smaller market. Threats 1. Presence of an immensely competitive Processed & Packaged Goods industry
15MANAGEMENT References: Adi, B. (2015). An evaluation of the Nigerian telecommunication industry competitiveness: application of porter’s five forces model.World,5(3), 15-36. Ares, G., de Saldamando, L., Vidal, L., Antúnez, L., Giménez, A., & Varela, P. (2013). Polarized projective mapping: Comparison with polarized sensory positioning approaches.Food quality and preference,28(2), 510-518. De Castro, J. O., Khavul, S., & Bruton, G. D. (2014). Shades of grey: how do informal firms navigatebetweenmacroandmesoinstitutionalenvironments?.Strategic Entrepreneurship Journal,8(1), 75-94. Doha, A., Das, A., & Pagell, M. (2013). The influence of product life cycle on the efficacy of purchasingpractices.InternationalJournalofOperations&Production Management,33(4), 470-498 E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), 32-45. Heimeshoff, U., & Klein, G. (2014). Bargaining Power and Local Heroes. Lüttgens, D., & Diener, K. (2016). Business model patterns used as a tool for creating (new) innovative business models.Journal of Business Models,4(3). Ma, J., Huang, D., Kumar, M. S., & Strijnev, A. (2015). The impact of supplier bargaining power on the advertising costs of movie sequels.Journal of Cultural Economics,39(1), 43-64.
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16MANAGEMENT Mohajan, H. (2017). An analysis on BCG Growth sharing matrix. Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition.Harvard business review,92(11), 64-88. Sharma, N. (2013). Marketing strategy on different stages PLC and its marketing implications on FMCG products.International Journal of Marketing, Financial Services & Management Research,2(3), 121-136. Takata, H. (2016). Effects of industry forces, market orientation, and marketing capabilities on business performance: An empirical analysis of Japanese manufacturers from 2009 to 2011.Journal of Business Research,69(12), 5611-5619. uncletobys.com.au , (2019). Retrieved from https://www.uncletobys.com.au/products Vidal, L., Antúnez, L., Giménez, A., Varela, P., Deliza, R., & Ares, G. (2016). Can consumer segmentation in projective mapping contribute to a better understanding of consumer perception?.Food quality and preference,47, 64-72. Wang, Q., Wang, Z., & Zhao, X. (2015). Strategicorientationsand masscustomisation capability:themoderatingeffectofproductlifecycle.InternationalJournalof Production Research,53(17), 5278-5295 Zakharova, E. N., Prokhorova, V. V., Shutilov, F. V., & Klochko, E. N. (2015). Modern tendencies of cluster development of regional economic systems.Mediterranean journal of social sciences,6(5 S3), 154.