University of Hertfordshire Business School

MBSP0194 Evaluating Strategic Marketing Assignment No. 2

Strategic Marketing Plan Briefing Note: an investigation into the benefits and costs of reengineering the product delivery process associated with a new analytical product concept.

Authors Student Number Hand In Date Course Tutor Word Count

Fabio Oliveira 06132095 13th January 2007 MSc Strategic Marketing Chris Brown 2282

Table of Contents
Section Title Page

Introduction . 3 1.0 Internal resource and market analysis .. 4 2.0 Product Concept and Challenges for the Organisation . 6 3.0 Implementation plan for new business processes and resources.. 7

4.0 Descriptive summary of the Strategic Marketing Plan . 11 Bibliography ..... 15 List of Figures
Figure Title Page

Fig.1.0 Market and Business Drivers for New Analytical Product Concept Fig.2.0 Fig.3.0 Fig.4.0 Fig.5.0 Fig.6.0 Fig.7.0 Product concept and key challenges.. EFQM Excellence model .. Application of the EFQM model in the Knnor 100% organic products . Path to Growth Communication Plan The KPIs for the Unilever case. The consecutive knowledge phases of innovations... 5 6 8 8 11 13 15

Oliveira, Fabio MSc Strategic Marketing

Introduction In the competitive market environment, companies should adopt product and process innovations, in order to maintain their products and brands strong in the marketplace. According to Kanter (2006) innovation goes in or out of fashion as a strategic driver of corporate growth. Today, more than ever, the innovation process is determinant to the company success and profitability. Customers behavior changes are leading companies to work on innovations and searching for new ways to conduct innovations and process into the company, in order to provide better products to customers. After to search new product development process for Unilever, the author suggests an exploration of a promissory market segment : The Organic food. According to Keynote, the organic market food had been growing in higher rates since 2000. The value of the organic foods market grew by 55.1% between April 1999 and April 2000, 32.6% by April 2001, and 14.7% by April 2002, although growth has fallen to 10.3% in the year ending April 2003. The market is currently valued at 1.02bn. However, this reduced growth still compares very favourably with a 6% figure for traditional foods growth in 2002/2003. However, organic foods represents ust 1.1% by value of total foods sales, allowing strong growth potential but with a large part, over half by value, represented by imports. In recent article, The Guardian states that Organic food sales have doubled over the past six years and shoppers' rising demand for healthier foods means fast growth should continue, a report out today says. Around 1.6bn was spent on organic goods last year, up from 800m in 2000, according to Datamonitor. The market analysts said concerns over safety and health were some of the main reasons why people go pesticide-

Oliveira, Fabio MSc Strategic Marketing

free. As awareness of health and environmental issues gathers steam, Datamonitor predicts the UK market will hit 2.7bn by 2010. The internal impact of this market and line extension product development on Unilever case, is focused on three principal driving issues: NPD, procurement relationship, marketing and Legal Department. According to Cravens (1998) market orientation focuses the entire organization on the market as the fundamental basis for business strategy development. The figure 1.0 shows the major impacts into the organization and the external factors that will influences the new product development process. 1.0 Internal resource and market analysis The organic food global market is forecasted by KeyNote and DataMonitor in approximately 74.41 billion in 2007. The concentration of plantation and lands are in Europe and South America, fact that represents a good logistical opportunity to Unilever, as the company has well structured distribution bases in these regions. The most promissory market is located in North America, as showed in figure 1.0 column 1. To explore this opportunity Unilever has to establish new partnership with organic plantation suppliers. Another important issue to solve is about negotiating the regulations and certifications together with the mainly suppliers, in order to guarantee the legality of the plantations. There is a high level of competition in the marketplace with more than ten great players and several small players operating in the market. Although, none of the competitors has a well established position and tradition in the customer mind. Unilever has the advantage to have a profitable product portfolio. Moreover, Unilever has been reengineering her processes around the company, outsourcing several activities and becoming a low cost company operation. To focus on stronger product innovations, strengthening marketing efforts, building a world-class supply chain, and simplifying business processes. These factors give to Unilever good opportunities to develop a new product concept.
Oliveira, Fabio MSc Strategic Marketing

According to Pinto and Prescott (1993) organisation are increasingly using crossfunctional teams to enhance their competitiveness. The move to cross-functional teams is due to the realization that the implementation of many organizational projects, and especially non-routine projects, requires the cooperation of individuals drawn from various functional areas. I would like to suggest the formation of a cross-functional internal teams to lead this project and conducting the necessary negotiations, alterations, new technology acquisitions and so on. The implementation of cross-functional team can increase the level of cooperation between departments and leading the company to reach more quick the objectives through the innovation process.
Market Drivers. (1)
-Consumers more aware of the connection between the foods they eat and their own health; - Market Opportunities: Just in the USA and UK the market value for 2007 will reach 32 billion. The world market is estimated in 74.41 billion. - (DataMonitor:2007)

Competitors : (2)

Geographical Split World Market Place: (3)

Principal Marketing Dynamics:(4)

Serviceable Marketing: (5)

Market opportunity for the next 03 years reaching more than 12 billion.

HJ Heinz Muller Dairies Arla Foods W Jordan Premier International

North America: 43% Grow till 2010 in Europe: 15% 40%. Asia, South America, Africa and Others: 42%

Key Business Drivers: (6)

Creating a Superior value product: (7)

Global Cultural Issue: (8)

The constant grow concern with the health alimentation related to a better quality of life.

Industry Needs: (9)

Changes in business process: (10)

Unilever needs to Existing product create a new line of have the natural healthier food to raw material. deliver reach higher Less than 10% of profitability in the next the total based 10 years exploring new products are market opportunities. organic. To extend add Unilever intend to value in her create product that products a 100% become customers life organic line more vitality. extension in Knnor brand.

To establish new To acquire new Partnership with technologies and Land owners, in machineries to order to assure increase the access to the production. organic raw material. To establish a close relationship with To obtain raw material international and producers. local licenses to sell organic To extend the product around marketing role the world. participation into the company.

Figure 1. Market and Business Drivers for New Analytical Product Concept

Oliveira, Fabio MSc Strategic Marketing

2.0 Product Concept and Challenges for the Organisation The product line extension concept is to offer to customers a line of Knnor brand products made from 100% organic raw material that will delivery to the customers more value and vitality to their lives, as stated in the Unilever mission statement. Unilevers mission is to add vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. These new product line will allow Unilever to fortify her image as a friendly company and increase their profitability through positioning this line as a premium quality line. Key to the success of this new product line extension is the acquisition of new machineries, training the operators, establish a cross-functional team to work close with farmers, in order to guarantee the certifications and necessaries licences to operate, to monitor and measuring the key performance indicators. Key product specification -Knnor organic products. Technology and Enablers Barriers Engagement Needs Participation of the local communities raw develop the

resources needs - Acquisition of new -Well structured - Local laws and machineries. manufacturing regulations. necessary material. cost Cross-functional plants. suppliers presence. -Low

- To access the and land owners to necessary training and adaptations in the plantations. A well structure cross-functional team to lead the project around the 6

teams to establish -International new partnership. with farmers

- Working together operations. to - High level of throughout the acquire licences and communication certifications. To procedures patterns.
Oliveira, Fabio MSc Strategic Marketing

develop company.

world. Figure 2. Product concept and key challenges. 3.0 Implementation plan for new business processes and resources. The implementation plan must helps the quality of all process to reach the customers satisfaction and process performance. The EFQM Excellence Model is a framework for organizational management systems, promoted by the European Foundation for Quality Management (EFQM) and designed for helping organizations in their drive towards being more competitive. The author decided to use the EFQM model, discussed by Robinson and Carrillo (2005). According to the authors, the model ensures a balance between the needs of all relevant stakeholders, and incorporates financial as well as leading indicators of future financial performance. It consist of the following key elements: A dynamic mechanism identifying the links between actions required (enablers) to achieve strategic objectives (results); Enables criteria dealing with how the various activities are undertaken; Results criteria focusing on what results are achieved; and Linkages showing the role of learning and innovation in improving enablers which in turn influences the results. Following the authors approach in the EFQM model I applied the model in a new table with the market and product concept described in the previous section of these assignment, in order to establish the key indicators necessary to succeed in this project. The figure 3.0 shows the EFQM model, and the figure 4.0 shows the application of the EFQM model to the Unilever product concept.

Oliveira, Fabio MSc Strategic Marketing

Figure 3.0 The EFQM Excellence Model. Enablers Acquisition of new Identification of key activities Developed new line brand with machineries. New manufacturing. Results criteria Role of Learning and Innovation Learning: in New the

Training the employees product for Knnor commercial product to operate the tools. 100% improvements quality. Organic.

partnership,

production and product

- Cross-functional teams Teams working together Establish new Key Innovation: to establish new suppliers with communities and performance Encourage the new line partnership. local farmers to acquire Indicators to reach product developments Identify and executing the the necessary licenses the sustainability of with 100% organic raw necessary modifications. and patterns. Negotiation with mainly retailers Cross-functional achieve local teams To start offer to the retailer line product . environmental activities. material. Become the Unilever brand stronger.

working worldwide to market the modified agreements.

Figure 4.0 Application of the EFQM model in the Knnor 100% organic products.

Oliveira, Fabio MSc Strategic Marketing

Three key activities are crucial to develop a new product concept to Unilever. The first one is to establish a cross-functional team to work with local communities and farmers, in order to implement new key performance indicators and maintain high levels of environmental patterns established by Unilever in the last few years. Unilever has KPIs to measure the sustainability of the all Supply Chain. For instance, the author identified the Unilevers sustainable agriculture program as a TQM system envolving all the organisation and supply chain members to deliver value to customer through a double learning and innovation way. Based on the principle that Unilevers consumers trust in the company to supply them with high-quality goods that are produced in an environmentally and socially responsible way. plantation process. The necessary control can be achieve using the actual outsourced suppliers and the integrated communication system developed by Unilever, in order to provide managers and executives with up to date and real time information. Business Objects data integration products are designed for quick installations to give organizations a jump-start on all of their data integration projects. Data Integrator has a data server that can access multiple sources and will intelligently manage and optimize the performance of Unilevers data infrastructure. Unilever is also using BusinessObjects Rapid Marts, which provides prepackaged data integration solutions that source data from customer relationship management (CRM) and supply chain management (SCM) applications. The second key activity and challenge is to work together with farmers and local governments, in order to do the necessary modifications to acquire licenses to expand the quantity of organic plantation, as the company can find some resistance from local governments. In order to achieve this objective Unilever and the local farmers should work together with local institutions, such as the main organic food trade association is the Soil Association charity, founded in 1946 by a group of farmers, scientists and nutritionists, with its major objective being to investigate the ways in which foods are produced. This is particularly in respect of the impact of the increasing use of chemical
Oliveira, Fabio MSc Strategic Marketing

Moreover, these activities would be

developed with high standard control, in order to reduce costs and loses during the

fertilizers and pesticides in the countryside, and their effects on the land and on food safety. The Association campaigns for healthy food, for the welfare of the countryside, and for a sustainable policy in organic farming. It offers comprehensive information and training facilities. It is also one of the main organic certifying bodies, operating as SA Cert Ltd (founded in 1973) and now covering around 4,000 organic food producers and processors. The Soil Associations name and logo appear on around 70% of the organic foods sold in the UK. Training is assisted through use of the Soil Associations network of 40 organic farms, used to demonstrate organic farming in the UK. The purchase of new machines for processing new Knnor products, can be considered another key point to implement the strategy. It means Unilever must hire new technicians and re training the current one, in order to achieve the necessary performance with low implementation and manufacturing costs. In relation to the role of marketing, Unilever already has been developing new communication tools, focusing on their products and higher level of communication and integration with the community, suppliers, partners and customers. The new product development process can be easily spread through the whole company, in order to help the cross-functional teams managers to gain in productivity and collaboration . The example showed in Figure 5.0 was used in the project Path to Growth during the reengineering Unilever process, can be used in and adjusted scale, in order to reach the ideal collaboration in this project.

Oliveira, Fabio MSc Strategic Marketing

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Strategy: Path to Growth Communication Plan

Unilever Finance Conference, June 2000 a two-day event for 250 top Unilever finance managers core strategic goals of the new finance strategy.

Unilever Bestfoods The Compelling Message, May-June 2001 - to deliver the intellectual messages connected with the new brand and an inspiring video that captured more emotional brand messages.

Unilever Treasury Department - Living with Debt, April-May 2001

"Living with Debt," the campaign aimed to focus the audience on the fiscal responsibilities involved with managing a heavily leveraged balance sheet and the need to generate new cash streams.

Unilever HR Academy July 2001 - to build an Enterprise Culture. - for all its senior HR managers. - Identifying and fostering true leadership was a core theme of the Academy

Leaders must spread the strategies, culture and objectives through the whole company. Figure 5.0 Path to Growth Communication Plan 4.0 Descriptive summary of the Strategic Marketing Plan The use of KPI Key Performance Indicators are necessary to establish a well monitored path to measure the performance of key activities during the implementation of the new product development. The author has identified some important KPI. The purpose of measure, according to Robinson and Carrillo and Anumba and Al-Ghassani (2005) is to identify strengths and weaknesses , areas for improvement, in order to assess the implications for learning and knowledge management. The three relevant identified KPIs are: Market Value, Product Development Costs, benefits and risks, Strategic fit and Business value showed in the figure 6.0. The Unilever process has been changed in the last four years and the company sold all the brands considered as non-core for the company.
Oliveira, Fabio MSc Strategic Marketing

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reengineering process Unilever has outsourced several non-core activities, such as IT and Human Resource Management. These new Knnor 100% Organic line extension, can be added to this innovation process. According to Jorna (2006) innovation requires the presence of individuals who are willing to try things, who posses knowledge and skills, and crucially, who are not afraid to fail. The innovation consists of three elements. The first is change or doing things in a different way (Schumpeter 1934) and thus undertaking something new, in this case a completely 100% organic Knnor line production, working together with new partners and operating new production plants. It means to Unilever the effort to develop as close relationship and quality training as possible. Newness is the second element and is often dominated by technological approach, in this way, Jorna (2006) appoint as example of innovation when the new personnel in a company is appointed with new skills in response to customer demands for a new service or product, as showed in the Unilever case. The third element is performance improvement, measured through KPIs showed in the figure 5.0. Schumpeter links performance to economic achievement. According to this one-sided economic view, innovation creates rewards for entrepreneurs, as showed in figure 6.0 in the Business Value quantitative KPI. The Figure 7.0 shows the consecutive knowledge phases of innovation applied for Unilever case that are occurring iteratively during the innovation and implementation process.

Product Development KPIs Market Value Costs/Benefits and Risks

Strategic Fit

Business Value

Oliveira, Fabio MSc Strategic Marketing

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Quantitative

Just in the USA and UK the market value for 2007 will reach 32 billion. The world market is estimated in 74.41 billion.

Machineries acquisition and training, marketing, relationship and negotiation costs: 50

Perfect match with the companys strategy and mission.

Additional revenue and high profit margin.

To attract new To explore new investments million. market through segment. corporate Time to governance market: 24 Opportunity to analysis. months expand the Organic Increase market Concept to share in the others existent segment: 30% brands. To increase the learn and adaptation capability. Increase the Brand exposition and Brand Imagery. Increase company Brand Value.

Risk: Medium Acquisition of knowExplore a growth and new how. profitable trend. High local presence in market and local communities.

Another important KPI to comment on, is the attraction of new investments through the relationship with communities and sustainable activities that increase the Unilever brand imagery as an environmental responsible company. The adoption of a new Organic line for Knnor brand, can lead the company to establish and consolidate her position in the marketplace as an environmental friendly company. Unilever has been investing a range quantity of money to create this image. For instance, in 2001 Unilever spent 57 million euros on community projects (BBC, 2002). Unilever believes that one of the best
Oliveira, Fabio MSc Strategic Marketing

Qualitative

Figure. 6.0 The KPIs for the Unilever case.

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and most sustainable ways it can help to address global social and environmental concerns is through the very business of doing business in a socially aware and responsible manner.

Knowledge Creation Searching for new partners

Knowledge encoding learning new process and consumer behavior

Knowledge acquisition and storage new machines, training and new partnership.

Knowledge dispersal/sharing: Cross-functional teams working with local partners and spreading information through the company.

Knowledge Management and maintenance. Cross-functional teams integrated through a IT system.

Knowledge use Go to Market and monitoring results, learning and applying knowledge.

Bibliography

Figure 7.0 The consecutive knowledge phases of innovations. According to Fuller (1999) marketing is all about winning the competitive game by providing benefits to customer through products at profit and accomplishing this objective through the market mechanism, which allows customers to make informed choices after considering the various competitive offerings. The customers are one party to the transactions, business and stakeholders are the other party. To achieve the success and attract new investments, the author suggests to be necessary to create win-to-win outcomes. I would like to suggest that environmental responsible company, such as Unilever, can attract more investments and maintain a high innovation level. Bibliography Books CHERNATONY, L & M MACDONALD. (1998) Creating powerful brands: in consumer, service and industrial markets, 2nd ed. Oxford: Butterworth Heinemann.

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FULLER, D.A.(1999) Sustainable Marketing: Managerial-Ecological Issues. USA: Sage. JORNA, R. (2006) Sustainable Innovation The organisational, human and knowledge dimension. UK: Greenleaf. PORTER, M. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. NY: Free Press. ROOME, N. (1998) Sustainability Strategies for Industry: The Future of Corporate Practice. Washington,D.C: Island Press TROTT, P. (2005) Innovation Management and New Product Development, 3rd ed. England: Prentice Hall Journal Articles and Reports Cravens, D.W (1998) Examining the impact of market-based strategy paradigms on marketing strategy. Journal of Strategic Marketing, 6. p.p.197-208. Kanter, R.M. (2006) Innovation The Classic Traps. Harvard Business Review, November, pp.73-83. Marketing Assessment 2003 Organic Food (2003). Key Note Report. Pinto, M.P. and Pinto, J.K. and Prescott, J.E. (1993) Antecedents and consequences of Project team cross-functional cooperation. Management Science, 39 (10), p.p. 12811297. Robinson, H.S. and Carrillo, P.M. and Anumba, C.J. and Al-Ghassani, A.M. (2005) Review and implementation of performance management models in construction engineering organizations. Construction Innovation, 5. p.p. 203-217. Sites BBC. (2002) Inside the Global Giants. [Online] URL: ttp://www.bbc.co.uk/worldservice/ specials/151_globalgiants/page2.shtml [Accessed 04/11/06] Organic sales double in six years - Katie Allen The Guardian [Online]: URL: www.guardian.co.uk [accessed Friday November 3, 2006] Unilever Report (2006) Company Introduction. [Online] URL: http://www.unilever.com [Accessed 30/11/06]

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Unilever Report (2006) Environmental and Social reports. [Online] URL: http://www.unilever.com [Accessed 30/11/06] Unilever Report (2006) Unilever and sustainable agriculture. [Online] URL: http://www.unilever.com [Accessed 30/11/06] Unilever Report (2006) Notes to the annual review 2004. [Online] URL: http://www.unilever.com [Accessed 30/11/06] Unilever Company Overview (2006) An report by Data Monitor. [Online] URL: http://www.datamonitor.com [Accessed 18/12/06] Unilever company changes (2005):[Online] URL: http://www.tdwi.org/Publications/WhatWorks/display.aspx?id=7704 [accessed 17/11/2006]. Unilever Path to growth Communication Plan. [Online] URL:: www.jackmorton.com [accessed 17/11/2006]. BBC. (2002) Inside the Global Giants. [Online] URL: http://www.bbc.co.uk/worldservice/ specials/151_globalgiants/page2.shtml [Accessed 04/11/06]

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