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TABLE OF CONTENT

SR.NO

PARTICULARS

PAGE NO.

 

EXECUTIVE SUMMARY

3

1.

INTRODUCTION

4-5

2.

SITUATION ANALYSIS

Internal analysis

6-7

PEST analysis

8-9

Micro analysis

10-13

SWOT analysis

14-16

3.

OBJECTIVES

17

4.

JUSTIFICATION OF PRODUCT LAUNCH

18-20

5.

TARGET MARKET SEGMENT AND POSTIONING

21-22

6.

DEMAND ESTIMATE

23-24

7.

MARKETING MIX STRATEGY

25-27

CONCLUSION

28

BIBLIOGRAPHY

29-31

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EXECUTIVE SUMMARY

This report analyses the company Wrigley’s limited and also considers new business opportunities which they can explore. The report states the opportunities which Wrigley’s can explore in NRT Smoking Cessation Aids, by developing a new product. The report analysis most of the elements of the Marketing plan.

This report begins with the information about the core business of Wrigley’s ltd their product and sales trends in Australia. The report also considers various social, economical, technological and political factors which are important to analyse before the product launch. The report also analyses the trends, the consumers and competitors that are present in the NRT Smoking Cessation Aids and where the current market opportunities lie for Wrigley’s. The later part of the report explains the justification of the product launch and various objectives which would be helpful to achieve targets, and finally it concludes with the sales forecast and the Marketing Mix.

The purpose of the report is to show that a brand like Wrigley’s with a high brand image and with success and history stretching more than a century feels the need to give something back to the community, showing their social responsibility. In Australia, the single largest reason for death is due to smoking which is a matter of concern and it is important for people to understand and quit the habit in order to have a healthy and a smoke free environment. In order to fight the cause Wrigley’s will be introducing a new product in the market ‘NICOGUM’ which is a Nicotine Replacement Theory (NRT) Smoking Cessation Aids with herbal extracts which is a natural remedy and not a drug-based one.

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1. INTRODUCTION

The Wm. Wrigley Jr. Company is the world's largest manufacturer of chewing and bubble gum and home to some of the best-known brands in the world. In Australia, everyone is familiar with sub-brands such as Juicy fruit, Extra, Eclipse and many more. ‘Wrigley’s products are a part of everyday life in more than 180 countries around the world’. (Wrigley.com.au) ‘Wrigley owes its success to a commitment to quality stretching back 110 years, and the spirit of innovation that continues to this day. For all its success worldwide, Wrigley's values has not changed, they believe in treating everyone - consumers, employees, partners, distributors, retailers and the community at large - with trust, dignity, and respect, and conducting their business with the highest ethical standards’.(Wrigley.com.au)

‘Wrigley’s is a recognized leader in confectionery with a wide range of product offerings including gum, mints, hard and chewy candies, lollipops and chocolate. The Company has global sales of $5.4 billion and distributes its world-famous brands in more than 180 countries’. (Wrigley’s Annual Report 2007) Three of these brands – ‘Wrigley's Spearmint, Juicy Fruit and Altoids – have heritages stretching back for more than a century’.(Reuters.com)

Its range of products includes a number of brands that offer consumers breathe freshening and tooth whitening. The Company’s principal business is manufacturing and marketing chewing gum and other confectionery products worldwide. (Wrigley’s Annual Report 2007)

Wrigley’s has more than doubled their sales since 2000 which is one of the indications of their progress. ‘Over that same time period, they have strategically expanded the scope of global product portfolio and production capabilities, fostered a more dynamic, innovative culture and developed a talented, high-performance internal team. They are not only the largest gum company but also the fourth largest confectionery company in the world’. (Wrigley’s Annual Report 2007)

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Wrigley’s has developed a portfolio of products which has helped them to achieve their position as the market leader. Wrigley's leading market position and brand name facilitate strong product recognition and customer loyalty. (Datamonitor 2008)

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2.1 Internal Analysis

Core Business

Wrigley’s was founded in 1891 and started its operation in USA, the headquarters is at Chicago, Illinois. The company has grown at a notable speed and as of today they are one of the world's largest manufacturers of chewing gum and other confectionary products. ‘Wrigley commands 65% of the US chewing gum market, more than twice the share of its closest competitor. In addition, Wrigley is the leading non-chocolate confectionary company in the US and the third globally, behind Cadbury and Hershey’. (Datamonitor 2008) In Australia Wrigley’s has a very strong hold with more than 97% share in the gum segment over the past three years and the leaders in the mint segment with 26.8% market share.(Retail World Australasian 2008)

2.1.1 Products and Sales Trends in the Australian Market

The chewing gum segments in Australia has grown over time, the total grocery value in 2006 was $ 109.4m (Retail World Australasian 2006) $ 110m in 2007 (Retail World Australasian 2007) and $123.5m in 2008 (Retail World Australasian 2008) but the past 1 year has seen a significant 12% growth in the industry value, which was driven by consumers upgrading to bigger pack sizes, which was brought about by Wrigley bottle and Envelope innovation. (Retail World Australasian 2008)

Wrigley’s in Australia are the market leaders and the single dominant player in the Chewing Gum segment, where their Corporate market share being 97.6% in 2008 (Retail World Australasian 2008), 99.4% in 2007(Retail World Australasian 2007) and 99% in 2006 (Retail World Australasian 2006).

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Table 1. Chewing Gum Value and Market share of Wrigley’s(Australia)

 

2006

2007

2008

Grocery Value

A$109.4m

A$110m

A$123.5m

Wrigley’s Value

99.0%

99.4%

97.6%

Sales Of Wrigley’s

A$108.3m

A$109.3m

A$120.54m

Source: (Retail World Australasian 2006, 2007, 2008)

The success factor for the company are their strong brands which are the major players in the market, with Extra leading the way, followed by Eclipse, P.K, Hubba Bubba which accounts for the remaining share in the market.

Table 2. Brand % Shares (GUM)

Brand Name

2006

2007

2008

Extra ( Wrigley’s)

68.5%

68.2%

67.2%

Eclipse (Wrigley’s)

4.8%

10.7%

9.4%

PK (Wrigley’s)

10.1%

10.0%

9.3%

Hubba Bubba (Wrigley’s)

5.5%

5.7%

5.0%

Juicy Fruit (Wrigley’s)

5.4%

4.6%

4.7%

Airwaves (Wrigley’s)

4.1%

-----

1.9%

Source (Retail World Australasian 2006, 2007, 2008)

In Australia, Wrigley’s is not only the market leader in the Gum segment but also in the mint segment with 26.8% share followed by Nestle 25.3% and Ferrero 18.3% in 2008 (Retail World Australasian 2008). Compared to the previous year the mint segment has seen an impressive growth of 25% with Eclipse mint leading the way with 80% value growth and is now the largest brand in the segment after launching only two years ago.(Retail World Australasian 2008)

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2.2 Macro Environmental (PEST) analysis

Political Factors

Wrigley’s is a global enterprise and it is important for a multi-national company like Wrigley’s to maintain good relationship with the government. Australia has an effective political system that makes it a strong investment destination for both local and foreign investors(ABS). The Australian GDP is growing at 4.3% annually.(CIA Fact book) The government of Australia is been promoting NRT products and also been campaigning strongly to reach the people and encourage them to quit smoking. The Australian government has imposed ban on smoking in all enclosed areas which has encouraged people to cut down on smoking (Euromonitor International 2008). With strong regulations and promotion by the government will enhance the sale of NRT products in Australia which is an opportunity for Wrigley’s.

Economical Factors

The recent global financial crisis has been a cause of concern for all major economies over the world. Interest rates are falling to bring about stability in the market. The interest rate in Australia has also fallen down from 7% to 6% in the first week of October’08,(RBA) thus falling interest rate makes borrowing cheaper. In the recent crisis situation Wrigley’s could take advantage of the situation by borrowing at lower interest rate as the cost of capital will be low and will increase their profitability.

The producer price index increased by 2.0% in the September quarter 2008 and 5.6% through the year to September quarter 2008.(ABS 2008). The labour price index rose by 1% in the June quarter 2008 and 4.1% for the year.(ABS 2008) Thus rise in producer price index and labour price index makes the cost of raw material and cost of labour more expensive for Wrigley’s.

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Social Factors.

Tobacco smoking is the single largest cause of death in Australia. Almost 16000 people die every year cause of smoking related diseases.(Begg,S,et.al 2007)The Australian government has been promoting social awareness about smoking and how harmful it is to the environment and the community. High promotion by the government has increased the demand for NRT Smoking Cessation Aids. (EuroMonitor International 2008) There are more ex smokers than present smokers, with rising awareness among the people and government banning smoking at enclosed place all over the country will motivate people to quit, Wrigley’s Nicogum would benefit from that. Quit Australia and the tobacco control unit are continuously running programs across the country encouraging smokers to quit. (Health.gov.au)

Technological Factors

Environment consciousness is one of the prime responsibilities of every organisation that operates in the business world. It is also important to reduce cost by using better technology and also keeping the environment issues in mind. kWrigley’s has been working on automated solution to keep both the issues intact. In response Wrigley’s has been investing heavily in new facilities and design in the plant in Sydney which serves the pacific region(ABB Australia). The rising trend in energy cost is Australia is another factor which would increase the cot of production. The energy cost has risen by 8.5% over the past year. (Energy Australia) An alternative means like usage of solar energy can bring down operating cost for Wrigley’s.

2.3 Micro analysis

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It is important for Wrigley’s to analyse the trends in the NRT (Nicotine Replacement Theory) Smoking Cessation Aids before entering the segment with their new product ‘Nicogum’.

2.3.1 The consumer

The Australian government has been campaigning aggressively promoting and advertising the ill effects of smoking which has resulted in one third of smokers deciding to quit, and has also contributed to the good performance of NRT Smoking Cessation Aids. Sales figures are likely to go up in the future with the governments’ imposition of stricter controls on smoking, as the government attempts to discourage the habit.(EuroMonitor International July 2008) ‘There are variety of products offered in the market, The Australian government has been promoting tobacco campaign and also stressing impact of tobacco advertising on young consumers through the use of internet. New cigarette formats advertising and movies that promote smoking have a negative impact on consumer behaviour with regard to quitting smoking’. (EuroMonitor International July 2008)

Herbal remedies to help consumers to quit smoking over the period has had an impact on sales, but are less likely to emerge as a significant threat to standard NRT Smoking Cessation Aids, which can be attributed to lack of awareness of these products among consumers.(EuroMonitor International July 2008)

The Australian Government’s decision to make NRT Smoking Cessation Aids available to grocery retailers has both positive and negative impact on their use. ‘The positive impact was that there is wider distribution and on the other hand experts(Euromonitor International July 2008) state that such products produce better results when used under supervision where the user receives support and counselling’. (Euromonitor International July 2008)

2.3.2 Market Trends

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Sales of NRT Aids experienced significant positive growth in 2007 but the increase was much less than the one experienced in 2006. ‘Australian’s usage of NRT Smoking Cessation Aids rose strongly in 2006 due to efforts by both the government and the manufacturers to encourage smokers to quit’.(EuroMonitor International July

2008)

In the beginning of 2007, the rising concern of health and brand knowledge continued to drive smokers to quit, which enabled them to try NRT Smoking Cessation Aids products available to them in the market. The government’s decision to ban smoking in bars and clubs in Victoria showed a positive result, smokers were either cutting back or quitting the habit. Bans on smoking were also extended to enclosed public areas in more states by the end of 2007. The government also attempted to widen the availability of NRT aids to grocery retailers which increased consumer’s knowledge about the products. The pharmaceutical association opposed strongly claiming that NRT products need to be carefully selected for different consumers and advice on their use was required. Of the brands available in the NRT Aid, only GlaxoSmithKline Australia Pty ltd’s Nicabate brand is available in supermarkets, with distribution expanded to the channel in 2006. Chemists/Pharmacies value share of NRT smoking cessation aids saw a decline in 2007, which can be attributed to availability of the products to grocery retailers, such as supermarkets in 2006. The rising concern of people’s health and the environment, smoking ban is becoming increasingly common worldwide,(Euromonitor International, July 2008) ‘value sales growth of smoking cessation aids is set to continue to rise and is one of the fastest growing areas in consumer healthcare’.(EuroMonitor International, July 2008)

Table 3 Sales of Smoking Cessation Aids by Subsector: Value

10

A $ million

2005

2006

2007

NRT Smoking Cessation aids

97.6m

111.6m

122.8m

NRT gum

31.3m

33.5m

37.5m

NRT patches

50.5m

56.4m

60.9m

NRT lozenges

12.0m

18.0m

20.7m

(Source: Euromonitor International July 2008)

The sales of NRT products has seen a steady growth of 25.81% over the past 3 years, the fastest growth was recorded by NRT lozenges with 15% value growth and has received a positive feedback from the users saying that lozenges are more convenient and that an oral format is more effective. The sales of NRT patches is still higher than any other aid and that is because of consumers being more familiar with these products as they have been available in the market for longer time than NRT gum or NRT lozenges.(EuroMonitor International July 2008)

2.3.3 Competitors

‘Nicabate owned by GlaxoSmithKline Australia Pty ltd, is the leading brand in NRT Smoking Cessation Aids, with 49% of total value sales in 2007. Nicorette, from Johnson & Johnson Pacific Pty Ltd is second in line with 35% in value sales’. (Euromonitor International July 2008) Consumers perceive these brands to be most effective. Heavy promotion and advertisement by the manufacturers and the government has largely contributed to their strong positions. GlaxoSmithKline saw a steady rise in its value share in 2007, with a rise of two percentage points. Johnson & Johnson Pacific Pty Ltd and Alphapharn saw a decline in value share which was because of strong competition from GlaxoSmithKline and also from Novartis. (EuroMonitor International July2008). ‘Novartis’s reintroduction of Nicotinell has seen its value share increase from a negligible level in 2006 to 2% in 2007’. (Euromonitor International July2008).

Table 4 Smoking Cessation Aids Company share by value

11

%

retail value rsp

 

2005

2006

2007

GlaxoSmithKline Australia Pty ltd

42.1

46.8

48.8

Johnson & Johnson Pacific Pty ltd

-----

37.0

35.3

Alphaphram Pty Ltd

 

15.8

13.8

12.0

Novartis

Consumer

Health

Australasia

----

0.1

1.7

Pty Ltd

Pfizer ESP Pty Ltd

 

39.8

------

-----

Pharmacia Australia Pty Ltd

 

------

-----

-----

Private Label

 

2.4

2.4

2.2

(Source: Euromonitor International July 2008) Under the Nicorette brand Pfizer ESP Pty Ltd manufactured and distributed various NRT products in Australia but Johnson& Johnson had proposed to acquire Pfizer Inc’s consumer health business. ‘Johnson &Johnson is a global manufacturer of health care products and related services for the consumer, pharmaceutical, medical devices and diagnostics industries. Pfizer discovers, develops, manufactures and markets pharmaceutical, animal and consumer healthcare products’(ACCC). On 25 June 2006, Johnson &Johnson proposed to acquire from Pfizer, on a global basis, its worldwide consumer healthcare business.(ACCC) Table 5 Smoking Cessation Aids Brand Share by Value

%

retail value

Company

2005

2006

2007

Nicabate

GlaxoSmithKline Australia Pty Ltd

42.1

46.8

48.8

Nicorette

Johnson & Johnson Pacific Pty Ltd

-----

37.0

35.3

Quitx

Alphapharm Pty Ltd

15.8

13.8

12.0

Nicotinell

Novartis Consumer Health Australasia Pty Ltd

------

0.1

1.7

Nicorette

Pfizer ESP Pty Ltd

39.8

------

-----

Nicorette

Pharmacia Australia Pty Ltd

------

-----

-----

Private Label

 

2.4

2.4

2.2

(Source: Euromonitor International July 2008)

2.4 SWOT analysis

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Wrigley’s is one of the world’s largest manufacturer of chewing gum and other confectionery products. Wrigley’s commands the market leader position, which is attributed to their brand name, strong product recognition and customer loyalty. (Datamonitor 2008) It is important for Wrigley’s to analyse the Strengths, weaknesses in the internal environment and the opportunities and threats in the external environment.

STRENGTHS Building brands for generation Market leader position Strong revenue growth

WEAKNESSES High cost of R&D Lack of experience in Pharmaceutical industry.

OPPORTUNITIES Develop other NRT products International/Geographical expansion

THREATS Highly competitive market

STRENGTHS

Building brands for generation Wrigley’s has a history that stretches back for more than a century and today they are the 3 rd largest confectioneries in the world. Wrigley’s was found in 1891 in the US and now they command 65% of the US chewing gum market. (DataMonitor 2008) They are also the market leaders in the chewing gum and mint segment in Australia. Wrigley’s has build number of brands. In 1893 their first products were Juicy Fruit and Spearmint and today they have a wide range of products.( Wrigley’s Annual Report 2007)

Market leader Position In the gum segment in Australia Wrigley's is the single largest dominant player with more than 97% market share over the last three years, with Extra leading the way with 67.2% share. In the mint segment Wrigley’s have achieved the market leader position after an impressive 25% growth which was brought about by Eclipse mint which saw

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a staggering 80% value growth and is the largest brand in the segment with 26.7% value share. (Australasian Retail World2008)

Strong Revenue Growth Wrigley’s revenue has grown strongly with time but the growth from 2007 to 2008 saw a rise of 10% from A$ 109.3m to A$ 120.54m which was driven by consumers upgrading to bigger pack sizes brought about by Wrigley bottle and envelope innovation.( Australasian Retail World 2008)

WEAKNESSES

High cost of research and development Wrigley’s presently are the leaders in the mint and the gum segment, and with NICOGUM they are entering a new segment. To develop the product it would require a high research and development cost. GlaxoSmithKline is a significant contributor to total industry spent on R&D, with investments up to A$ 35million each year in Australia,(gsk.com.au) if that would be an indication Wrigley’s will have to spent a good amount on the R&D cost.

Lack of experience in Pharmaceutical industry or NRT products. NRT is a very different segment all together and from confectionery industry in which Wrigley’s specialises entering in to the Pharmaceutical industry in which they have no experience would be another problem.

OPPORTUNITIES

Develop NRT patches, inhalators, lozenges. The NRT smoking Cessation Aids has a total value of A$122.8 million out of which NRT gum is valued at A$37.5 million.(EuroMonitor International July 2008) Wrigley’s after the success of NRT gum could also develop NRT patches and NRT lozenges which is highly preferred and is also growing. NRT patches have seen a rise of 20% in the last 3years and NRT lozenges has seen a higher growth of 70% in same time period.(EuroMoitor International July 2008)

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International/Geographic Expansion. After the success of Nicogum in Australia, Wrigley’s has an opportunity for geographical expansion. A study by WHO shows that at present more than 5 million people around the world die prematurely from tobacco related diseases and the figures are likely to go up to almost 10 million by 2020 which is a rising concern. Therefore, Wrigley’s has an opportunity to expand their reach to other countries especially where the smoking population is very high. Countries like China 42% smokers, Russia 41%, India 37% (Euromonitor International 2005) to name a few.

THREAT

Highly Competitive Market For Wrigley’s competing in NRT Smoking Cessation Aids, have a big task ahead of them with GlaxoSmithKline with their sub-brand Nicabate which has almost 49% share and Johnson & Johnson with their brand Nicorette with 35.3% share are two big competitors.(Euromonitor International July 2008) Both GlaxoSmithKline and Johnson & Johnson have a strong history and are one of the most successful companies all over the world.

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Marketing objectives

3. OBJECTIVES

1. Expanding reach to the target market by regular advertising and promotion.

2. Promoting and advertising the benefits about the product through supermarket sampling before the launch or by running a road show in major cities.

3. To conduct a customer satisfaction programme by the end of first year of operation and to score 4.5 on the scale from 1 to5.

4. To change marketing strategies to meet targets by identifying consumer preferences through feedback.

Business objectives

1. To challenge competitors Nicabate (GlaxoSmithKline) and Nicorette (Johnson&Johnson) and obtain substantial market share within the first two years of operation. 15% market share in the first year of operation and 30% by end of 2011.

2. Increase portfolio in NRT Smoking Cessation Aids by introducing NRT patches and NRT lozenges in the second year of business.

3. Geographical expansion to developing countries like India, China where percentage of smokers are very high.

Financial Objectives

1. Achieve sales of A$ 10 million by the end of second year of operation and A$ 15 million by the end of 2011.

2. Reduce cost of production and increase profitability before reaching the maturity stage in the product life cycle.

(Kotler,P. Keller KL 2007)

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4. Justification of product launch The rate of smoking in Australia has declined over the past decade but it still remains the highest single factor for death and diseases.(ABS) The rising concern of the people’s health and also the environment has encouraged Wrigley’s to launch ‘Nicogum’ to help people to quit smoking and have a pollution free world.

Smoking is the largest single cause of death and disease in Australia.

Over 16,000 people die every year from tobacco smoking (Beg S,et.al 2007) - approximately 310 smokers every week.

Smoking causes a higher burden of disease than any other behavioural risk factor, presenting 9.5% of burden on men and 6% in women.( AIHW, AACR)

Smoking is a known reason of many severe diseases including cancer (in the lung, lip, tongue, mouth, throat, nose, nasal sinus, voice box, oesophagus, pancreas, stomach, kidney, bladder, urethra, cervix, and bone marrow), heart disease, stroke, emphysema, asthma and blindness. Smoking also has an adverse effect on pregnant women and also the developing foetus.(OxyGen) (DoHA 2006)

62% of deaths within the Indigenous population before the age of 65 years can be attributed to stroke, heart and vascular diseases; compared to 10% of deaths within the non Indigenous population.(OxyGen)

Table 6 Number of Smokers by Gender

 

2005

2006

2007

Total smokers (000)

3384.9

3417.5

3490.3

Male Smokers (000)

1762.0

1782.2

1801.8

Female smokers (000)

1622.9

1635.4

1688.5

Total smokers (%total Population aged 15+ yr)

21.3%

21.3%

21.5%

(Source; Euromonitor international July 2008)

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There are more ex-smokers (4.1million) than smokers (around 3.5 million) (OxyGen)which shows that NRT smoking cessation aids over the period of time has helped people to quit smoking and the market for NRT aids has improved.

Tobacco and the Environment

Smoking not only damages health of the people who smoke but the environment as well. Every time a cigarette is smoked harmful chemicals are released into the atmosphere, polluting and damaging the air. Pollution is not the only the way cigarettes damage the environment. Every year, ‘approximately 600 million trees, the same size of 3.6 million Australian Rules Football fields, are cut down to make tobacco for cigarettes’.(OxyGen)

Passive Smoking

Passive smoking is also very harmful, smoke escapes from the burning end of the cigarette and also from the smokers mouth and when people inhale that smoke it is known as passive smoking. Passive smoking can cause sore, watery eyes and respiratory problems such as pneumonia and bronchitis. (OxyGen) ‘More than a third (37%) of children aged 0-14 years live in household’s with one or more regular smokers and 10% of children 0-14 years live in households where there is at least one regular smoker who smokes indoor’.(ABS)

Herbal Remedy

Herbal remedies to help consumer to quit smoking has no influence and that is due to lack of awareness of these products among consumers, but by educating the consumer about the benefits that herbal remedies have over other drug-based products would help the consumer understand and also use the product.

Wrigley’s Nicogum contains herbal extracts, Lobelia. Herbal remedies are often preferred because they are natural and not drug-based. Herbs are preferred over drugs because herbs are not addictive, but they act as a powerful nutritional supplement. Herbs are provided in their natural forms while drugs are extracts of the derivative herb. ‘Herbs promote physical and mental well-being and are known to possess tremendous healing properties. Herbs today are the preferred source of health care for

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80% of the world’(Quit Smoking Hub). Lobelia herb is more or less the same to nicotine which actually fools the consumer making them feel that they are still smoking so there is no craving for a cigarette. Lobelia reduces craving for nicotine because it binds to the nicotine receptor in the body (Quit Smoking Hub). By creating awareness among consumers and educating the advantages of the product would bring about a change in NRT smoking cessation aids.

Threat

‘Tobacco smoking is a worldwide threat to human health. The World Health Organisation estimates that around 5 million people die prematurely from tobacco related diseases each year and the number is expected to reach 10 million by 2020. 70% of these deaths will occur among people in the developing nations’. (WHO)

Other than the social cause of the product the segment is large enough to generate profits. The NRT gum over the past 5 years has grown by more than 50% (Euromonitor International July 2008) which shows that entering these segments will be profitable for the company and will also create an emotional binding with the people as they would see the brand as the one working towards the benefit of the people and the environment.

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5. Market segment targeted and Positioning

It is difficult for any company to satisfy everyone in the market place with their product, not every customer likes the same offerings. Therefore it is important for Wrigley’s to identify and profile distinct group of buyers who would prefer the product by examining demographic and behavioural differences. After examining the segments it is important to analyse which segment would present the greatest opportunity i.e. their target market. For each target market, the company has to develop an offering that is positioned in the minds of the target buyers as delivering some central benefits.(Kotler. P, Keller. KL 2007)

To reach the target market it is important for the company to first analyse the demographic variables:

Age and Life-cycle Stage:

In Australia there are high numbers of smokers aging from 15years and onwards. According to the statistics in 2007 there are 3.490 million smokers (Euromonitor International July 2008), which is 16.3% of the total population of 21.5million (ABS Oct 08) and 21.5% of total smokers aged15+ years. (Euromonitor International July 2008). The highest rates of smokers are in 20-29 years of age group about 23.5%. The lowest proportions of smokers are in 60+ age group around 9.5% and 7.3% in the 14- 19 age groups. (Australian Institute of Health and Welfare)Wrigley’s Nicogum would be targeting 14-19years of age group with a 2mg and 20-45 years of age group with 2mg and 4mg for heavy smokers.

Behavioural Segmentation

Benefits:

It is important for Wrigley’s to communicate the product benefits in the market place. The benefits of using herbal cure over drug-based cure. Consumers buy products when they see some central benefits, and with all the NRT products available in the market none of the products are herbal products so for Wrigley’s to convey their advantages would help them to reach the target market effectively.

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User status:

When the product is launched in the market the users are going to be first time users. There are many NRT Smoking Cessation Aids available in the market and is rising but on the other hand the grocery value of cigarettes is also increasing which shows the lack of knowledge about NRT products. In order to target first time users it is important for Wrigley’s to educate the users and increase their knowledge about herbal remedies.

Positioning Strategy Wrigley’s Nicogum would be positioned as Herbal cure and not a drug-based one. To create a distinct image in the mind of the target market Wrigley’s will have to educate consumers about the advantages of herbal treatment over a drug-based one. The benefits are, Herbs are provided in natural forms and are not addictive but acts as a powerful nutritional supplement. Herbs provide physical and mental well-being and are known to possess tremendous healing properties. Herbs are preferred source of health care for 80% of the world.(Quit smoking hub)

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6. Demand Estimate

NRT smoking cessation aids has seen a substantial growth by almost 26% from 2005- 2007 which shows that there has been a steady rise in the industry. The rise was mainly due to intense promotions by the government that educated the customers which helped them to give up on smoking.

Table7 Sales of Smoking cessation Aid by Subsector:% Value Growth 2005-2007

%

growth for 3 years

2005/2007 TOTAL

NRT Smoking cessation aids

25.8%

NRT gum

19.9%

NRT patches

20.8%

NRT lozenges

72.5%

(Source: Euromonitor International July 2008)

The NRT gum was valued at 37.5million in 2007, major competitors being Nicabate with 48.8% share and Nicorette with 35.3% share.(Euromonitor International July 2008) With such strong products already existing in the market it would be very difficult for Wrigley’s to initially obtain higher demand for Nicogum, but with a high brand image that they possess and the trust that people have in the brand (which can be reflected in the Gum category where they have a 97%market share over the last 3 years) heavy promotions, advertising, sampling and educating the consumers the benefits of the product might result in higher demand for Nicogum in the future.

Table 8 Forecast Sales of Smoking cessation aids (NRT Gum) Overall

A

$ Million

2008

2009

2010

2011

Growth in NRT Gum(average 6.7% per year)

40.01m

42.69m

45.5m

48.4m

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Through high promotion and advertising and with a strong brand image which stretches across an entire century Wrigley’s Nicogum can expect a substantial return at the initial stage.

Table 9 Demand Forecast for Wrigley’s Nicogum

 

2008

2009

2010

2011

Market Share(year by year)

15%

20%

25%

30%

Growth from previous year

15%

33%

25%

20%

Sales growth (A $ Million)

6.0m

8.54m

11.38m

14.52m

Therefore, if Wrigley’s Nicogum in the first year of operation achieves a 15% market share the sales revenue would rise to 6 million, and with rising demand of NRT Smoking Cessation Aids and with consumers understanding the benefits of Nicogum and remaining brand loyal would increase their sales to 14.52 million achieving a growth of more than 140% over the 4 year period and capturing 30% of the market.

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Promotion

7. Marketing Mix Strategy

To develop a sub-brand Wrigley’s will require individual promotion to position and strengthen the brand. To achieve this, Wrigley’s will need to part with broad advertising/promotion campaigns and undertake to communicate the need and benefits of the product.

It is important for Wrigley’s to communicate and educate consumers about the benefits of using herbal remedy and the health advantage of herbs over drug-based.

To be successful in reaching the consumers Wrigley’s will have to consider all the elements of the communication mix and will need to focus on pushing buyers through the following AIDA stages: awareness, interest, desire and action.(Vrontis D,et.al

2006)

In order to achieve this, Wrigley’s must concentrate on the following areas:

Advertising – Through television commercials, banners at cinema spots, articles and advertising in newspapers and health guides, also in teenager and adult magazines, bill boards.

Sales

leaflets\ Flyers.

promotion,

through

key

supermarket

sampling,

banners

in

supermarkets,

Public relations will also play an important role – Wrigley’s could sponsor 2-3 local sports events. For e.g. Footy is considered to be one of the favourite game for the people of Australia, sponsoring 2-3 games would help to promote the product.

Within the company, staff could receive samples and promotion cards to be handed out to relatives and friends.

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Place To reach its target market group Wrigley’s will need to offer their product in all the major supermarkets like Woolsworth, Coles, Aldi.

‘Wrigley’s has significant expertise in shopper behaviour at the front end of the store at the checkout’.(Wrigley’s Annual Report 2007) Nicogum could be placed at bill counters and front desks which could increase their sales.

Convenience stores all over Australia like Seven Eleven, City convenience stores. Most of the small/medium supermarkets. It is also important to offer the products at all stores located at petrol stations. The highest percentages of smokers are in the age group 19-29 years so to target them Nicogum should be offered at University shops. All Pharmaceutical/chemist shops. With internet users increasing day by day the product should be made available on the website too.

Product Nicogum is not like an ordinary gum so it must not be chewed constantly. To get the most out of Nicogum special chewing techniques should be used which should be mentioned on the packet. Nicogum will be offered in two flavours of mint and fresh fruit and will be available in different packets of 15 pieces, 30 pieces, 60pieces and 90 pieces. 2 mg(regular strength) for normal smokers and 4mg(extra strength) version for more dependent smokers. The packets would be convenient to carry and easy to consume. The packet would state the terms of use and quantity to be used at every dosage which would help consumers use the product without any consultation and would also help them to consume it without any advice. Of the brands in NRT Smoking Cessation Aids, only GlaxoSmithKline Australia Pty Ltd, Nicabate brand is available in supermarkets.

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Price

With a strong brand name Wrigley’s pricing strategy will need to be consistent with

its product profile and value proposition.(Vrontis,D. et.al 2006)Wrigley’s should price

their product in similar lines to that of Nicorette and Nicabate because pricing the product higher than its competitors might result in lower sales and if the product is priced lower consumers might perceive the product to be of lower quality.

A

15 piece packet of 2mg(regular strength) will be offered at a price of A$ 5.99.

30

piece packet of 2mg would be priced at A$ 10.59.

The 60 piece packet of 2mg at a price of A$ 18.99 and

90 piece packet of 2mg at a price of A$ 28.99.

The 4mg(extra strength) version would be priced at similar lines with the 2mg version.

Competitors Pricing;

Product

Nicabate(GSK)

Product

Nicorette(J&J)

Gum 2mg 12 pieces Gum 4mg 12 pieces

A $ 5.99

Gum 2mg 30 pieces

A$ 10.75

A $ 5.99

Gum 2mg 24pieces Gum 4mg 24 pieces

A $ 8.99

Gum 2mg 105 pieces

A$ 34.75

A$ 8.99

Gum 2mg 96 pieces

A $ 26.95

Gum 4mg 105 pieces

A$ 34.75

Gum 4mg 96 pieces

A $ 26.95

Gum 4mg 30 pieces

A$ 11.75

(Source; Woolsworth,Wollongong)

Conclusion

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(Source;Pulse Pharmacy)

Corporate Social Responsibility is one of the major factors towards achieving sustainability in business. Wrigley’s has shown to be more proactive towards the community by new product development which would benefit the society, and also create an opening for new business opportunities.

Wrigley’s growth can be attributed to their product innovation and quality. Consumer’s expectation rises every time their needs are satisfied and Wrigley’s has achieved this success with dedication and commitment.

Tobacco Smoking is one of the leading causes of health related problems that we face in today’s world and it also damages the environment. Millions of people all around the world are addictive to smoking and that the figures are expected to grown with time. Wrigley’s with their product Nicogum has taken a step forward to fight for a cause which would benefit the community in years to come.

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