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List of Figures

Page
Figure 1 : SWOT Analysis of Omnicane Ltd 4
Figure 2 : Euro Exchange Rate Trend 5
Figure 3 : Yearly Refined Sugar Production Trend 8
Figure 4 : Product Life Cycle 9
Figure 5 : Trend of Price of Sugar per Metric Ton 9
Figure 6 : Ansoff Matrix for Omnicane Ltd 12
Figure 7 : Marketing Cost Trend 13
Figure 8 : Marketing Cost Forecast 14
Figure 9 : Distribution Channel for Refined Sugar 15
Figure 10 : BCG Matrix of Omnicane Ltd 18
Figure 11 : Types of Customer Markets 19

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Executive Summary

Omnicane Ltd, incorporated in 1926 and forming part of the Stock Exchange of
Mauritius is a leader in the sugarcane industry with its flexi factory complex. Its main
activities include cultivation of sugarcane, plantation white sugar, refined sugar,
thermal energy and electricity and bioethanol. Omnicane Ltd has a unique systemic
ability to carry out those productions in integration, with resulting optimal efficiency
and minimal waste.

The vision of Omnicane Ltd is “to be an inspiration for sustainable development in


our operations” and the mission is “we strive to make the utmost sustainable use of
the natural resources at our disposal, for benefit of all”. The broad objectives of
Omnicane Ltd include expertise and vision, innovation and know-how, research and
enterprise as business operator together with being transparent and openness in the
organisation’s dealings with all stakeholders. The objectives for the selling of the
product under review, i.e. the refined sugar are to supply a free flowing refined sugar
of the best quality and safe for direct consumption.

Omnicane Ltd has set specific strategies for the marketing of the refined sugars.
The refined sugar is sold in containers of 25 ton to customers in Europe with quality
satisfying the guidelines of the British Retail Consortium. The strategies are so
defined that the objectives of the organisation are met. However there are some
reformulations to be done since in 2017 the contract for selling of refined sugar will
be over. Therefore recommendation are the setup of a new marketing plan,
investigation of production and selling of special sugars, finding new markets for
refined sugar and adequate implementation and control of the action programmes
which will amount to approximately Rs 3.5 Million.

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1. Introduction

The sugar industry around the world is at its most competitive peak for the last few
decades with a continuous fall in sugar prices and rapid growth of low-cost high
volume producers such as Brazil. Together with these problems and the proposal of
the European Commission in 2006 to allow unrestricted and duty free access to
products such as sugar, Mauritius is facing a reduction of 36% in the price of its
sugar (MAAS, 2006:1).

Therefore, the Mauritian sugar industry has to be viable, economical and sustainable
in the long run. For this to be effective, all sugar factories in the South closed and
centralised towards one entity called Omnicane Ltd, incorporated in 1926. The
primary activity of the group is the production of plantation white sugar, refined
sugar, thermal electricity and bioethanol. As from 2009, the company is selling its
refined sugar on the international market since the guaranteed quota system from
the European Union was abolished.

Therefore a marketing plan has been devised by the management of Omnicane Ltd
for the selling of its refined sugar. The refined sugar is produced in a newly built
refinery of 600Tons per day capacity with the latest technology which required an
investment of $40 Million. It is sold directly to Europe via a contract with a German
firm called Suedzucker AG (MSS, 2013:18). In 2012 further investment was made to
increase the refinery capacity to 800 tons per day and a target of 210,000 tons of
refined sugar should be process and exported to Europe.

Therefore this report will lay emphasis on the refined sugar marketing and assess its
effectiveness and recommendations about changes to be brought about.

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2. Situational Analysis

Pophal (2009) defines situational analysis as the systematic collection and study of
past and present data to identify trends, forces, and conditions with the potential to
influence the performance of the business and the choice of appropriate strategies.
Therefore the broad environment in which the marketing of refined sugar of
Omnicane Ltd is done is via the Mauritius Sugar Syndicate. The syndicate acts as
the marketing department of Omnicane Ltd and aligns its objectives to that of the
company.

Omnicane Ltd has taken commitment towards its buyers of providing granulated
EEC Grade 2 sugar, one of the best quality around the world. This sugar is
delivered directly to consumers in 25 tons containers. These consumers include
Coca-Cola, Nestlé and Ferrero Rocher. Therefore the objective of Omnicane Ltd is
to provide the best quality of sugar according to international norms set by the British
Retail Consortium. This is the basis of the marketing strategy.

Therefore to be able to analyse if the objectives of the company and marketing


department are met a SWOT analysis is carried out which according to Kotler and
Armstrong (2012:53) will help to identify Omnicane’s main strength and weaknesses
and the main opportunities and threats facing the product, i.e. the refined sugar.

2.1 The SWOT Analysis

The analysis is mainly done in a matrix form to identify the strength, weakness,
opportunities and threats. They can further classified into internal and external
environment.

2.1.1 Internal Analysis

This section identifies the internal strengths and weaknesses of the organisation.
The main strength of Omnicane Ltd is its latest technology it uses, i.e. a state of art
sugar factory, cogeneration plant and refinery. The technical knowledge of its
employees who are high calibre with many years of experience and expertise is
strength. Furthermore Omnicane is recognised world-wide and is a trustworthy
name in the eyes of the buyers as company which is sustainable and helps protect
the environment.

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Weaknesses mainly involve mainly increase in cost of production, inefficiency of


small planters, pressure from trade unions and high cost of raw materials. The
distance between the EU consumers and Mauritius is also a weakness of Omnicane
Ltd. These shortcomings may obstruct its competitive position.

2.1.2 External Analysis

There are broadly 2 main elements of the marketing environment of the external
analysis which are macro-economics and micro economics. This will be further
discussed in the PEST analysis. External analysis mainly leads to opportunities and
threats. Opportunities for Omnicane Ltd involve mainly the production of special
sugars which is a new area for competitive advantage. Threats mainly involves
external problems such as increase in freight costs, exchange rate, together with
natural calamities such as cyclones, droughts and drops in the price of sugar world-
wide due to massive producers such as Brazil. Therefore the SWOT matrix for
Omnicane Ltd is as shown in figure 1.

Strengths Weaknesses

· High productivity in cane growing · Increasing cost of production


· High Technical efficiency in sugar · Inefficiency of small planters
production · Excessive pressure from Workers
· Access to preferential markets Union
· Support from the Government · Fewer agricultural workers
· Good marketing infrastructure · High cost of raw materials
· State of art technology · Distance problem since buyers are
· Dedicated and competent staff in Europe
· Low credit risk from debtors
· Excellent Branding

Opportunities Threats

· Expanded access to EU countries · End of contract of refined sugar


· Diversification into other sugar- with European Union in 2017
based products, e.g. ethanol · Big producers such as Brazil
· Production of special sugars for getting in competition
niche markets · Climatic conditions such as
· Exporting know-how to other cyclones, drought and floods
African countries · Loss of preferential price on
European market.

Figure 1: Swot Analysis of Omnicane Ltd

2.2 PEST Analysis

PEST analysis is a tool that helps to analyse the political, economic, socio-cultural
and technological environment in which Omnicane Ltd is operating. The following
analysis can be made concerning the 4 factors.

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2.2.1 Political Environment

Following the drop in price of sugar by 36% in 2006, the Government of Mauritius
has set up a plan called the Multi Annual Adaption Strategy Plan 2006-2015 which
helped set the production of refined sugar. This was in line with the marketing
strategy of the organisation to go for European buyers. The Government also acts
as a mediatory between the planters and the organisation to solve any conflicts and
keep a peaceful atmosphere for the benefit of every stakeholder.

2.2.2 Economic Environment

Selling the sugar on the European market does expose Omnicane Ltd to certain
risks namely the exchange rate which fluctuates due to changing economic
conditions. Figure 2 shows the evolution of the Euro currency for 1 year. A
decrease leads to a decrease in profits. Since 33% of the group turn-over is based
on sale of sugar and to mitigate the differences in currency conversion a euro loan
was taken to finance the upgrading of the refinery (Omnicane, 2013:31). This
activity acted as a natural hedging. However a controlled depreciation of the
Mauritian rupee to maintain the exchange rate of 1 Euro above Rs 40 will help
maintain the profitability of the marketing strategy for the refined sugar.

Figure 2: Euro Exchange Rate Trend

Omnicane Ltd financed projects through commercial banks and equity but due to
historically low rate of interest prevailing in Mauritius the organisation opted for a
bond issue on the local market. Rs3 Billion Medium-term Multi-currency bond issue
program was setup at an interest rate of 5.70% (Omnicane, 2013:32). These loans

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help in achieving the objectives of the organisation in completing the flexi-factory


concept by the setting up of a distillery which will be in operation in October 2013.
This is a highly recommended initiative as it helps to capitalise on the low interest
rate of the moment.

The effective tax rate also decreased from 15% in 2011 to 12% in 2012 mainly due
to a decrease in deferred tax charge for the sugar entities. This is beneficial for the
group turnover together with a low labour cost due to high labour availability. The
increase number of unemployed persons in Mauritius gives rise to a cheap labour
force.

2.2.3 Social Factors

The analysis of short-term and long-term economic pattern is important. This is


easily identifiable with demographic change which influences on demand of the
product and this provides reliable data (Wilson and Gilligan, 2005). The sugar
produced by Omnicane Ltd is of high quality and purity and produced for consumers
of high end products such as chocolate and beverages. On the short term,
Omnicane Ltd secured a contract up to 2017 (MSS, 2013:37) but on the long run
there must be a strong marketing plan to secure a market share after the year 2017.

2.2.4 Technological Environment

Following the reform of the sugar sector in Mauritius in 2007 (MAAS, 2006), there
has been a technology change whereby small factories closed down and centralised
into a sugar cluster comprised of a raw factory, refinery, power-plant and distillery.
Thus a start of art refinery was constructed for production of refined sugar. This was
highly beneficial both at corporate and national level since the economy’s growth
rate are influenced by these investments.

However Omnicane Ltd performs careful technological monitoring to ensure that


emerging opportunities are not missed. The organisation adopted a market oriented
research rather than a product oriented one. As Wilson and Gilligan (2005) stated,
this way of proceeding creates a greater awareness of negative impacts of any
innovation.

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2.3 Objectives of Omnicane Ltd

The objective of Omnicane Ltd involves mainly the production of a high quality
refined sugar for the European market. Since the start of the refinery in 2010, there
has been a continuous increase in production except for the year 2012 whereby new
equipment were installed to eliminate the sugar lump formation in containers.
Therefore with the technological advancement, the management of Omnicane Ltd
has set a smart objective which is an increase in production of refined sugar by 58%,
i.e. 191, 500 tons (Omnicane, 2013:27).

This is measurable by the amount of containers exported and achievable since the
capacity of the refinery was increased from 600 ton per day to 800 ton per day with a
new silo of 2500 ton capacity and a start of art Gaufrin filter. The 58% increase may
be perceived to be a huge figure but it is realistic since all employees are now fully
trained and empowered, process have been optimised with negligible mechanical
breakdown and experienced and dedicated staff who are committed to achieve the
said target. This target is time bound for the year 2013, i.e. till the end of December
2013.

2.4 Objectives of the Marketing Department

The marketing department aligned itself with the objectives of the management by
securing a long term agreement with Suedzucker AG for the sale of the refined
sugar. The marketing department has also helped the refinery to set up a fully
operational food safety management system on BRC standards. This measure
ensures a good quality of sugar which is safe for direct consumption.

Finally to be in line with the objectives of producing 191,500 ton of sugar as shown in
figure 3 and selling it, the marketing department also identified suppliers of raw sugar
from Brazil for the refining process since production of raw sugar locally arises to a
maximum of 140,000 tons. Therefore the marketing department is taking all
necessary actions to achieve the target set by the top management.

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Yearly Production of Refined Sugar


250,000

Refined Sugar/ton 200,000

150,000

100,000

50,000

-
2010 2011 2012 2013
Production 104,483 147,980 120,915 191,500

Figure 3: Yearly Refined Sugar Production Trend

2.5 Assessment of Objectives with Marketing Strategies

The marketing department has taken a combination of marketing decision variables


that are being used to market the refined sugar. Since Omnicane Ltd is dealing in
tangible products the marketing mix is grouped under 4 elements, namely product,
price, place and promotion (Rhonda, 2000). Omnicane Ltd is concentrating on
building a strong relationship with its customers and there are several factors that
influence the development of this relationship namely the “4Ps” which Goi (2009)
defines as a way of translating marketing strategies into practice.

2.5.1 Product

Product refers to a physical product for which a consumer is ready to pay and at
Omnicane the tangible good is the refined sugar. The product is the key element of
the marketing mix together with the product life cycle.

2.5.1.1 Product Life Cycle

The cycle denotes the different stages through which the sales of the refined sugar
changes over a time period. There are normally 4 stages which are introduction,
growth, maturity and decline stage. This is illustrated in figure 4. The refined sugar
is still in the growth stage and shown in figure 4 since there is still increase in sales
and profits. Competitors in this sector such as African countries are now joining the
market. In this stage the marketing cost is decreasing together with the cost of
production.
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Figure 4: Product Life Cycle

2.5.2 Price

Singh (2012:40-45) states that the price is the amount the consumer must exchange
to receive the product and in the marketing mix this is the only element that
generates revenue. The price of the refined sugar is closely related with the
European Union market price which is highly volatile as shown in figure 5.

2.5.2.1 Pricing Strategy

Due to the nature of the industry and the product produced, the pricing is indexed by
the European Union since it is in an open market and regulated by the European
Commission. If competitors such as Brazil increase their production of sugar the
world wide price falls as shown in figure 5 during the year 2010.

Figure 5: Trend of Price of Sugar per Metric Ton

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There are several pricing strategy namely price skimming, price penetration,
competitor based pricing, cost plus pricing, marginal pricing, price discrimination and
psychological pricing. Omnicane Ltd has adopted the competitor based pricing
whereby there is close monitoring of strategies adopted by competitors to reduce the
cost of production accordingly. This strategy is beneficial since Omnicane Ltd is
dealing with international trade.

2.5.3 Promotion

Culliton (1948) states that promotion is one of the most powerful elements in the
marketing mix. Promotion activities involve sales promotion, advertising, personal
selling, public relations and direct marketing. Omnicane Ltd has adopted the public
relations strategy since it has a long term strategy for the selling of sugar. Through
the rebranding of the organisation in 2007, it has become the brand image of the
refined sugar. In this process even the consumers have become a stake holder with
long term commitment. The marketing department has also worked a lot on the
image of the refined sugar in the market by boasting on its quality.

2.5.4 Place

This includes distribution channels, warehousing facilities, mode of transportation


and is a mechanism through which the refined sugar is moved from Omnicane Ltd to
the consumer. According to Singh (2012:40-45), distribution channel has a huge
effect on the profitability of a firm and should have excellent supply chain and
logistics management plan. Omnicane Ltd and its marketing department have opted
for a short channel whereby the refined sugar is produced and sold directly to
consumers.

The refined sugar is packed in 25 ton container in a conditioned liner to prevent


access of microbes or outside air to the sugar. This type of package protects the
free flowing aspect of the sugar and can be used directly by the consumer. This is
convenient for the consumer and also reduces the freight cost when sent in 25 ton
containers. This strategy also gives the upper hand on competitors who are close to
Europe. Therefore for the same volume more sugar can be delivered. Furthermore
to prevent the sugar to be exposed to climatic conditions at sea, it is sent directly to

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the consumers and to ensure quality throughout the transit chips give the exact
location and moisture content of the sugar in the container for close monitoring.

2.6 Strategic Marketing Management

The strategic marketing management is made up of 3 elements namely,


segmentation of the market, selection of target market and positioning and these are
elaborated as follows:

2.6.1 Segmentation of the Market

Tanner and Raymond (2011:97) states that market segmentation helps a firm to
enlarge its customer base and adjust components of the product which are mainly
the offering itself, the price and how to market it. Omnicane Ltd has segmented its
market accordingly and chose refined sugar in relation to the demands from the
European market.

Analysis of each segment:

· Plantation White Sugars – Several competitors such as Brazil producing 34


million tons (Global Post, 2013) and Africa. Price of plantation white is also
much less that refined sugar.
· Special Sugars – High added value and higher price that refined sugar but
requires considerable investment. Furthermore other sugar factories in
Mauritius have already secured niche market’s quotas.
· Liquid Sugars – High value and new product still under development. Export
to other countries will be difficult due to perishable nature of the sugar.
· Refined Sugars – High value added and higher price than plantation white
sugar. High demand of this high quality sugar in Europe. Initial investment
high with payback within 7 years and continuous profitability with only
maintenance investment required.

2.6.2 Target Market

Kotler, Wong, Saunders and Armstrong (2005:391) states that market targeting
involves evaluation each market segment’s attractiveness and selecting one or more
of the market segments to enter. Following the different segments which were
available to Omnicane Ltd, refined sugar was chosen for the European market and
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mainly for consumers such as Coca Cola, Nestlé and Ferrero Rocher. They required
a sugar which is safe for direct consumption of high quality of EEC grade 2. Due to
distance between Europe and Mauritius the sugar are bagged in 25 ton to facilitate
transportation.

2.6.3 Positioning strategy

According to Kotler et al. (2005:391), market positioning is setting the competitive


positioning for the product and creating a detailed marketing mix. This is important
since competitors such as Brazil and Africa are also on the market. Therefore
Omnicane Ltd refined sugar should stand out of the competition.

2.6.4 Ansoff Matrix


The Ansoff matrix also known as the product/market expansion grid shows the four
ways in which a business can grow and this is applied to Omnicane Ltd to study the
marketing strategy and is divided into diversification, market development, market
penetration and product development (Mindtools, 2013). The matrix for Omnicane
Ltd is illustrated in figure 6.

Figure 6: Ansoff Matrix for Omnicane Ltd

The marketing strategy of Omnicane Ltd revolves around the market penetration
scenario with increasing production and sale of refined sugar to the EU market.
Product development and market development are the next step to which Omnicane
Ltd must move for new markets of refined sugar and development of special sugars.

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3. Market Strategy Reformulation

Following the situation analysis carried out, there are several reformulation strategies
that can be adopted and therefore a critical in depth review of the marketing cost,
market channel, sales, product-service and customer analysis are as follows:

3.1 Marketing Cost Analysis

Cost benefit analysis is important for every business and it allows the management
to carefully weigh the various options based on how much expenses are being done
and benefits gained. In recent years Omnicane Ltd has seen a steady climb in the
overall cost of marketing and advertising expenses. Therefore it is important that the
organisation evaluate the various marketing platform available.

According to the marketing plan of Omnicane Ltd, marketing of refined sugar is


directly related to the brand of the organisation “Omnicane”. Therefore during the
rebranding period of the organisation from Suds to Omnicane Ltd there was a costly
marketing campaign carried out in 2009. From this rebranding the refined sugar was
closely related to the brand of the organisation and this was the selling criteria which
involved the organisation image, expertise, professionalism and quality product.

3.1.1 Trend Analysis

This marketing option


provides long term benefits as
it helped to establish a clear
presence of Omnicane Ltd in
targeted sugar markets. This
way of establishing a
recognisable brand and
product aided in driving sales
thus turning short term costs
into long term benefits. Figure 7: Marketing Cost Trend

Figure 7 shows the trend of marketing costs since the rebranding in 2009 up to 2013.
As it can be seen, marketing cost drastically increased in 2009 due to the rebranding
of the organisation. As from year 2010 onwards marketing cost remained constant

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with mainly the fixed costs which include administrative costs, marketing expenses
and other related finance cost. However according to Omnicane (2013:138) the
rebranding cost incurred in 2009 have already been capitalised and now included as
an intangible asset. Furthermore, a similar study carried out by Solcansky and
Simberova (2010:755-759) also got a similar trend with an increase in fixed cost in
marketing after the surge due to increase administrative costs and others.

3.1.2 Marketing Cost Forecast

According to the current marketing plan, it is valid up to the year 2017, after which
Omnicane will no longer be guaranteed a market share in the European Union for its
refined sugar. Thereafter the marketing department will need to restructure itself to
find new markets and this will cause an increase in the marketing cost. Figure 8
shows a forecasted increase in marketing cost up to the year 2018. The increase is
sought to appear as from year 2014 since new markets and opportunities need to be
identified.

Marketing Cost Forecast


Cost Variation

2013 2014 2015 2016 2017 2018

Figure 8: Marketing Cost Forecast

Therefore following the change in the marketing structure in year 2017, it is


recommended that Omnicane Ltd starts the preparation of a new marketing plan with
adequate resources to meet the objectives in the year 2017.

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3.2 Market Channel Analysis

From an economic point of view, decisions made on marketing channels are


considered to be very important since the chosen channel directly influence all other
marketing decisions. According to Kotler et al. (2005:239) channels imply relatively
long term responsibilities to other companies. The share of cost of market channels
in the final selling price of a product can account from 30 to 50% (Stern and Weitz,
1997:823-829).

Therefore Omnicane Ltd needed a well-defined market channel to lower the final
price of the refined sugar. The management opted to export the refined sugar in
containers of 25 tons instead of bagged sugar of 50kg or 1ton. With the 25 tons
container more sugar could be exported for the same freight price. The channel is
made without intermediates, i.e. directly from the producer to the end consumer.

To transport the sugar from the refinery to the port for shipment is done via trucks.
In the first year of operation this task was contracted out. However in 2011
Omnicane Ltd started a subsidiary company, Omnicane Logistics Ltd and in 2012,
the organisation transported some 144,338 tons of refined sugar. This measure
ensured that wealth remains for the group itself. The container then remains in the
dock areas for some weeks before being shipped to consumers. The process is
illustrated in figure 9.

Figure 9: Distribution Channel for Refined Sugar

However the only problem faced by Omnicane Ltd is the long delay of containers in
the port area. With the hot weather temperature during the day and cold

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temperature at night, there is a tendency for the sugar to cake and this is rejected by
the consumers. Therefore this problem should be solved and measures would be:

· The marketing department should ensure that production is matched with the
availability of cargo ships going to Europe.
· Different potential consumers in other countries should be identified so that
the stocks in the port are continuously shipped via other maritime routes.

With these measures there will be a minimum stock in the port area and less sugar
will have the tendency to cake thereby ensuring the free flowing characteristics of the
sugar.

3.3 Sales Analysis

Sales analysis involves analysing the sales volume or the total sales of the company.
For Omnicane Ltd it includes mainly the total sales of the company product category.
The organisation derives major part of its revenue from the sales of plantation white
sugar, refined sugar and electricity. At Omnicane Ltd the sales analysis resumes
mainly to currency risk and credit risk since there are practically no cash sales taking
place.

3.3.1 Currency Risk

Doole and Lowe (2008:15) states that that in international marketing transactions
invariably take place between countries, so exchange rates and currency
movements are an important aspect of the international economic environment.
Omnicane Ltd deals mainly in the Dollar and Euro currency and revenues from sales
in Euro. Therefore any time there is an unpredictable change on the world currency
movement it affects the revenue of the organisation. To counter this problem, loans
in Euro are taken and its payback acts as a natural hedging. Finally converting all
the revenues in Mauritian Rupee is very important and at 31st December 2012 there
were 5% weakening against the Dollar and strengthening against the Euro
(Omnicane, 2013:146).

3.3.2 Credit Risk

Credit risk is the financial loss to the organisation if a customer or counterparty to a


financial instrument fails to meet its contractual obligations, and arises principally

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from the group’s trade. Omnicane Ltd main debtors are the refined sugar buyers of
the EU market under an agreement from Suedzucker AG and the Central Electricity
Board. The credit risk is highly mitigated at Omnicane Ltd since the debtors, Central
Electricity board is guaranteed by the Government of Mauritius and refined sugar
buyers guaranteed by the European Commission.

3.4 Product – Service Mix Analysis

One of the most important decisions for Omnicane Ltd was the setting up of a
refinery and production of refined sugar. It is the most optimal product mix and
encompasses the following:

· utilising resources in their most efficient and productive manner


· providing favorable cash flows
· satisfying “attractiveness” constraints of buyers
· maximizing profits in the short and long run
· satisfying current demand trends and preventing oversupply situation

To further analyse the product mix and its competitiveness portfolio management
tools such as the Boston Consulting Group Matrix or BCG matrix is used and
comparison of different strategic business units of Omnicane Ltd will be done.

3.4.1 Strategic Business Units of Omnicane Ltd

Kotler et al. (2005:60) defines a strategic business unit as a company division, a


product line or sometimes a single product. The main units that will be analysed in
the BCG matrix are the raw sugar factory, the refinery, the power-plant and the
newly launched distillery. These business units will be classified in the BCG matrix.

3.4.2 The Boston Consulting Group Matrix

The BCG product portfolio matrix classifies products according to two measures,
market growth and relative market share. According to their position on the matrix,
products are known as problem children, stars, cash cows or dogs.

· Problem Child - This is the newly launched distillery of Omnicane Ltd for the
production of bio-ethanol. This unit requires a lot of investment and support

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and since it is in an early phase of the life cycle the bio-ethanol has a low
market share.
· Star – Kotler et al. (2005:61) defines this category as a high growth, high
share business that requires heavy investment to finance its rapid growth.
This is the case of the sugar refinery whereby investments have been made
to increase its capacity.
· Cash Cow - Kotler et al. (2005:61) states those cash cows are low growth,
established and successful units that generate cash. This is the case of the
Omnicane power-plant that generates electricity sold to the Central Electricity
Board. Production of electricity has always been higher than expected for the
past three years, averaged at 700GWH per year. Profit generated from this
entity is used to finance other projects within Omnicane Ltd.
· Dogs – These are low growth, low shared businesses that generate enough
cash to maintain themselves (Kotler et al., 2005:61). The raw sugar factory is
in this position and produces plantation white sugar which is a raw material for
the sugar refinery. There is no worth in investing money in this entity.

From this analysis, the BCG matrix for Omnicane Ltd will be as shown in figure 10.

Figure 10: BCG Matrix of Omnicane Ltd

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From the BCG matrix in figure 10 we can clearly see that the star of Omnicane Ltd is
the sugar refinery. The refined sugar has a high market growth but investment is still
being done. Due to this the organisation may face cash flow problem. Therefore
the marketing strategy for the refined sugar must be optimised to further enhance
revenue for the sugar refinery.

This can be done by searching other markets for the refined sugar such as in the
USA or encouraging top management to invest in special sugars which has a higher
revenue and niche market. A market study on special sugars is highly recommended
as from year 2014/2015.

3.5 Customer Analysis

Customer markets should be closed followed and Kotler et al. (2005:89) states that
there are six types of markets and these are illustrated in figure 11.

Figure 11: Types of Customer Markets

Omnicane Ltd falls in the international market category with its customers being
mainly in the European Union. Refined sugar has been exported from Mauritius to
the EU market under the market access arrangements between the EU Commission
and ACP countries signatory to the Economic Partnership Agreements (EPAs).
However it must be noted that the refined sugar produced in Mauritius is supplied to
the EU market exclusively under a commercial partnership agreement, implemented
since the 2009 crop, with the German group Suedzucker AG.

It must be noted that there has been a change in profile of customer as from 2009.
Before 2009 the sugar sold was plantation white sugar, an inferior type compared to
refined sugar via the ACP/EU Sugar Protocol which guaranteed a fixed price for the
sugar. With the actual customers, the price varies according to the international

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market price. On a demographics point of view, the customers of refined sugar are
mainly big entities such as Coca Cola and are geographically situated in European
countries.

Wilson and Gilligan (2005) pointed out that for industrial markets such as the refined
sugar, the criteria employed in the buying process, the purchasing policies and
constraints that exist in the form of delivery date and quality of products are
important. As for Omnicane Ltd, the quality of the sugar which should be to the BRC
standard set by the customer is an important criterion that must be fulfilled.

Finally from the customer analysis, it is seen that Omnicane Ltd has set a long term
relationship and has been guaranteed a higher price for the sugar of 723 Euro per
ton compared to the international market which varies around 500 Euro per ton
(MSS, 2013:18). However this relationship will last up to 2017 and therefore the
marketing department should start searching for other markets for the refined sugar.

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4. Action Programmes and Plans

According to Kotler et al. (2005:72) marketing strategies become specific action


programmes that answer the following questions: What will be done? When will it be
done? Who is responsible for doing it? How much will it cost? Thus it will be a 4
dimension action plan covering when activities will start and completed together with
an associated budget.

The method of budgeting can be very complex and in our scenario a marketing cost
has been allocated following simple rules of thumb. Therefore the action programme
identifies crucial tasks and decisions needed to implement the marketing plan,
assigns them to specific people and establishes a timetable. The following table
shows the proposed action programme for Omnicane Ltd following the marketing
strategy.

What Who When Cost


1 New Marketing Marketing department As from year 2014 Rs1 Million
Plan and marketing and completed by
consultants Year 2016
2 Improve market Logistics officer Training starting Rs 50,000
channel with immediate
effect
3 Logistics software Logistics department Year 2014 Rs 250,000
to improve market
channel
4 Identify other Marketing department Year 2014 to 2015 Rs 200,000
markets for refined
sugar
5 Careful study of Finance department Year 2014 -
loans in Euro for
project financing
6 Development of Process and research Year 2014-2015 Rs1 Million
special sugars and development
department

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Marketing Management MBA 2013

7 Analysing markets Marketing department Year 2014 -2015 Rs 250,000


for special sugars
8 Analyse markets Marketing department Year 2014 Rs250,000
for new product of
the group, bio-
ethanol
9 Close monitoring Marketing department Immediate effect -
of quality of refined to transmit customer and on-going
sugar requirements and process
quality department to
follow up
10 Identify other Marketing department Year 2014 Rs500,000
smaller types of and production
containment of department
refined sugar for
other markets e.g.
direct customers

The action program and plans are elaborated from the year 2013 to 2017 which are
critical years for the marketing of the refined sugar produced by Omnicane Ltd.
Therefore the proposed action programme above covers this period and a basic
costing has been made in collaboration with the marketing department. The cost will
amount roughly to Rs 3,500,000 for the 5 year plan. The action programme involves
a marketing plan which will shift the production of Omnicane Ltd from refined sugar
to special sugars in the long run.

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Marketing Management MBA 2013

5. Implementation Controls

Kotler et al. (2005:72) states that marketing implementation is the process that turns
marketing strategies and plans into marketing actions to accomplish strategic
marketing objectives. Implementation involves activities on a timed period that
effectively put the marketing plan to work. Following the implementation, adequate
controls are needed to monitor the progress.

There are several types of marketing control which includes annual plan control,
profitability control, efficiency control and strategic control. According to Jaworski
and MacInnis (1989:409-419), for operational organisations the most appropriate
implementation controls are efficiency and strategic ones.

5.1 Efficiency Control

The efficiency control will be under the responsibility of the line staff management
and marketing controller. The main purpose of this control is to evaluate the impact
of marketing expenditures on the overall process. This is applicable for the
proposed action programme mainly for the modification of distribution channel. It
has been proposed to optimise this section of the marketing plan and proper control
is required to ensure the distribution channel is working as efficiently as possible.

5.2 Strategic Control

The strategic control is highly required for Omnicane Ltd since there will be a drastic
change in the marketing plan as from year 2017. This control must be led by the top
management of the organisation and marketing team and consultants. The main
purpose of the control will be to examine if Omnicane Ltd is pursuing its best
opportunities with respect to markets, the product i.e. the special sugars and refined
sugars and channels of distribution.

This is the most important implementation control since Omnicane Ltd will need to
redefine the selling of its main product in the next few years and it will be either
refined sugar or special sugar or a mix of both to new markets and niche markets.

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Marketing Management MBA 2013

6. Conclusion

This study covers the assessment of the marketing plan of Omnicane Ltd for the
refined sugar. An assessment of the marketing plan has been undertaken and
together with an in depth review of the marketing cost, market channel, sales,
product and customer analysis. From this study it has been found that the marketing
plan for refined sugar needs to be reviewed by the year 2017 since the EU
Agreement for the sale will no longer be in force. A new marketing plan needs to be
devised for new markets of the refined sugar.

A SWOT analysis was carried out on the organisation and several weaknesses have
been identified that need to be addressed. Furthermore the Ansoff matrix performed
to analyse the marketing strategy showed that there is still more avenue to market
the refined sugar in other counties other than the in the European Union, therefore a
study on new markets need to be carried out. Diversification with refined sugar in
different packaging can also be performed. The BCG matrix revealed that the
refinery is the star of the organisation and more investment is required to continue
generate more revenues.

The future marketing plan will need to cater for new markets of refined sugar
together with development of other products such as special sugars. This will
require a market analysis for the special sugars. Furthermore it was seen that there
were discrepancies in the market channel with containers of refined sugars
remaining in the port for a longer period. The marketing department will need to
address this problem together with the logistics department. Finally the proposed
action program which will cost around Rs 3.5 million and need to be carefully
implemented and controlled to ensure the survival of the industry and maintain the
corporate image of Omnicane Ltd.

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Marketing Management MBA 2013

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