Postgraduate Diploma in Business Management

Course Work December 2010

Prepared By:
M. S. Kabir Sarker Student ID: 1059

Supervisor: Mr. Omar Faruk

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Topic

Marketing

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Executive Summary
This paper has been prepared on the Product named Oatmeal, a new brand of Third Generation Company Limited. The product was launched recently in the major cities of UK. This brand is all about quality & healthy product in low and affordable price. So it is differentiated from its competitors in terms of quality, uniqueness and promises. The company has launched the product with strong company objectives and goals. The new product brings a number of benefits for the company as well as the consumers. The consumers enjoy a taste of pure and healthy oatmeal. The marketing managers have carefully created different market segment for Oatmeal and among them the targeted segments had been carefully sorted out.

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Introduction
To keep in pace with the faster world todays busy people prefer to eat that kind of food which is minimal time consuming. Now a day most of the consumer buys ready to eat foods. The demand of ready to eat food is very high now a day. So to meet that demand, Third Generation Company Private Limited has introduced itself as a small company engaged in manufacturing and marketing of Oat meal cereal named Savory Oatmeal. Oatmeal Cereal is a new product in the market. It follows a low price strategy to make its own place in the market. It serves high quality oatmeal which is very helpful for health. Mission Statement We want to be the world-class food products manufacturer of oatmeal in UK by ensuring intrinsic quality products and customer services with state-of-theart technology and motivated employees. At a Glance Third Generation Company Limited has started its journey as a small company in December 2009.Within a short span of time, it has created a strong foothold in the market through its quality products and preferred services. The consistent quality of its products and services will result into customer-satisfaction and consumer-loyalty. Its R&D is focusing on developing the product. Company Overview Our Company recently launched this new brand named Savory Oatmeal with goal to obtain maximum market share in this product .The company will start with an initial investment of 900,00,000.00 of which the three founding owners in equal proportion will invest 300,00,000.00. The rest of the initial investment will be obtained through a financer.

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Product Review Ingredients Oat powder with fiber, sugar, milk powder, different flavors, food colors (if necessary), chocolate (if necessary). Procedure of making Oatmeal Cereal Our product is instant and easy to make. The consumer should only mix Savory oatmeal cereal powder with hot water to eat the delicious and healthy oatmeal. Only two simple steps are needed for making this oatmeal cereal: 1. First take 250 gm of hot water in a bowl 2. Then mix oatmeal and stir until it get mixed fully. Five different types of flavors Our company decides to give value proportion by differentiating its product for creating a superior value by introducing different tasty flavor of oatmeal. There are five tasty flavors cereal offering by our company. Chocolate flavor oat cereal This flavor is introduced for the consumers who love chocolate. They will get the flavor of dark chocolate in the Savory Chocolate Flavor Oatmeal. It will meet up the demand of chocolate as well as give the consumer a healthier and quality meal.

Strawberry flavor oat cereal: Strawberry Flavor Oatmeal has introduced because of the consumer who loves Strawberry Ice cream. It will taste like strawberry ice cream with a very sweet scent of strawberry. There will be a little amount of hygienic Moreover there will be Strawberry powder which made from fresh strawberries. Consumer can take it hot or can take it cold.

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Banana flavor oat cereal The consumer who loves fruit specially banana for those we introduce banana flavor oatmeal. There will be powder of banana which has made from fresh bananas. Na added chemicals are. There will be added little amount of natural vanilla flavor. So consumer will also enjoy a taste of vanilla. Classic oat cereal Classic Oat Cereal is followed by the normal ingredients of making oatmeal. It will give the consumers a taste of milk and oat. It is very good for health and for digest as there are no added flavor with this. Classic oat cereal (Sugar free) This type has been introduced for the diabetic patient and for the consumers who want to lose their weight. This type is completely sugar free. So it is completely safe for diabetic patient to take this type of cereal. Packaging Packaging is a very important for a product. As we are providing a food product so we are much aware to provide consumers a healthy food by quality and hygienic packaging. We are offering three types of packaging: Paper air tight container (Family size -750gm): We are offering air tight paper container for the consumers who will buy the big size of oatmeal which is family size containing, 750gm of Savory oatmeal. We package the product in our laboratory where there is a hygienic environment. We package the product without any touching of human hand. Packaging system is completely done by automatic machines in our factory. The package is completely air tight so the food is completely safe from the germs. Air tight plastic packet, cover with paper packet (Medium size-500gm) The consumers who will buy the medium size containing 500gm will enjoy an air tight plastic packet. This plastic packet is food graded. So it is completely safe for health. The consumer can use it even after opening the package
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because the package is air tight and it can be sealed and can kept for daily use. Air tight mini plastic packet (Mini pack size-50gm) This package is introduced for the instant use of oatmeal. It can be used by travelers because it takes a small place as it is in air tight mini plastic packet containing only 50gm. Consumer can carry it easily anywhere they want. Consumer can also buy it for emergency use only when there is nothing to eat at home. Low Price Strategy We follow a low price strategy than other competitors but provide a high quality and healthy food. We follow market penetration pricing by setting a low price for a new product to attract a large number of buyers and to achieve a large market share. As our product is in pure competition marketing, so we are differentiating our product by establishing a low price strategy. Our product is also an Elastic Product. According to the elastic product, price strategy should like this, the lower the price the higher the revenue. We follow the general pricing approach which is Cost based pricing (Atkinson, 2008). Expiry range The expiry range of Savory oatmeal is 1 year. After manufacturing and packaging the Savory Oatmeal Cereal is safe to eat till one year. We are very strict about the expiry change. We will not let our whole seller and retailer to sell any of our products without the proper expiry date.

Sources and cost of all materials In Savory Oatmeal Cereal, we need oat powder, milk powder, sugar, different flavors like vanilla, strawberry. Natural food colors are also used. To make oat powder the company use machines in its factory to turn the fresh oats in oat powder. Fresh oats are taken from companys private farm. Sugar, milk powder, different flavors and food colors are bought from local whole seller.
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The company has its own factory in the London, capital of England. In starting company need 500 assembly line workers. Assembly line workers wage is companys variable cost. The company has also to pay one production manager, one quality managers, factory supervisor under production department. There are also nine officers in different department for whom company has to pay salaries as fixed cost. Company holds a unit as a single batch. In a single batch the company produce 3mini packs, 2 medium sizes, and 1 family sizes which means in a single unit the company can produce 1900 gm which costs total 5.13. This cost consists of variable cost of 1.90 and fixed cost is 3.23. Here companys contribution margin is 3.80 per batch. Company wants to profit 10% and it sells a single batch in 5.70 by making a profit of only 0.57. Identify the training and development of staff required As our product is new so it is necessary to give proper training to the staffs. Especially research and development department need proper training. Quality manager should also need to be trained to continuously develop the product. Marketing manager and market research manager should also be trained for making more progress in this department to compete with the competitors. The supervisor should train the assembly line workers to make them more productive and more experienced. The store manager and procurement officers should also keep them update to be aware of the problems with the customers. (Little, Quintas and Ray, 2001)

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Management Hierarchy of the Company The company is mainly a product oriented company. As it is not a service oriented company, the management is giving much concern in production and in total quality management.

Current Market Situation Over the past 32 years, consumption of oatmeal has been increasing. It has been increased because of its healthy aspects. The breakfast cereals market grew by 15.7% in value terms between 2004 and 2008. Strong growth has been seen in 2007. The companies which sales ready-to eats cereals undertook a great development and did a lot of activities in 2006 and 2007. RTE cereals dominate the UK breakfast cereals market, accounting for 91.2% of sales by value in 2008, compared with 92% in 2004. The sales decreased a little because of the consumer shifts to the hot cereals. There are three main companies- Kellog, Weetabix and Cereal Partners (an alliance between Nestle and General Mills) are dominating the UK market for many years. These companies are able to reach success because they are devoting huge resources to marketing, building brands and developing new products. Smaller companies have had considerable success in targeting niche markets, and, in some cases, have pioneered new areas of the industry, such as cereal bars.
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In UK there are many also many oatmeal brands like Cap'n Crunch, Quaker Oatmeal, Life cereal, Quisp, Mother's Natural Foods, Avena, Mornflake are serving oat meal to the buyers. As there are many competitors for this company the competition is very high for the savory oatmeal. Market Segmentation We have designed, developed and marketed our brand for suitable market segment. Our brand has the right kind of taste, nutrition, brand image, price to create customer satisfaction within its segments. We are offering different distribution channel for each segment. There is different marketing mix and advertisement for each segment. For that elaborate marketing research is needed to be done carefully. Bases for Market Segmentation There are two bases in market segmentation for Savory Oatmeal Cereal. They are Consumer Market and Business Market. Consumer Market Segmentation In consumer market there are geographic segmentation, Demographic Segmentation and Behavioral Segmentation. In Geographic Segmentation we consider four categories like country region, consumer density, climate and super markets. Our product mainly sold in the countries of England and Great Britain in UK such as London, Liverpool, and Manchester. These three cities have so many population and they also lead a very fast life so the demand of ready to eat food is very high in these countries. Moreover, the climate of the England is suited for production of oat. London is mainly a cold country so the demand for hot oatmeal cereal is very high here. There are also many super markets and departmental stores in these cities which is main target of selling our product.

The Table of Geographic Segmentation

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Country Region Density Climate Super Market

The largest country in UK is England. In England, the countries like London, Liverpool and Manchester is the main target. These cities have huge population. So market opportunity of our product is very good. Tropical climate of UK is suited for our product. Climate is suitable for producing oats. Super markets are the best venue of selling our product. There is large number of super markets in these cities. Local general stores

Demographic Segmentation Age Junior citizens (7-25) Oats contains a wide amount of vitamins & minerals and antioxidants and its a good source of protein, complex carbohydrates and iron, which is essential for growth of teenagers. Senior citizens( 25+) Oats contains a big amount of soluble fibre that helps to reduce bad cholesterol, control blood glucose levels, and blood pressure level of our body and improve the quality of our life.

Income, education and socio economic

Families with moderate income, highly educated, higher class, higher middle and middle class and working people.

Behavioral Segmentation
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Benefit Sought

1. Diabetic Patient 2. High cholesterol patient 3. High Blood Pressure 4. Lose weight

Variety Seeking

Those who are innovators and early adopters in trying new foods recipes are our potential market segments. We will promote the following features of oat meal cereal to them : 1. Different flavours 2. Instant breakfast cereal 3. Substitute of other cereals 4. Can be use in baking recipes 5. Can be use as sweet dishes like pudding, custard etc.

We can divide behavioral segmentation of this product into two subclasses like- Benefit Sought and Variety Seeking. There are many benefit sought of Savory Oatmeal Cereal. According to online resource of BBC, there are 1.72 million people in England are suffering from Diabetes. Among them 75% are suffering from type 2 diabetes. So, the people should control diabetes. As for this we can say that diabetic patients will be a ready to buy consumer segment for our product. Plain oat is a worldwide popular and establish diet for diabetic patient. Our advantage is that we added a new sugar free oat cereal for them specially. So this segment will be very profitable for us. It is very good for diabetic patient as there is Classic Oat Cereal which is completely sugar free. The sugar free product is specially made for the diabetic patient and for the consumers who want to lose their weight. It is also good for the patient who has heart disease as there are no cholesterols in our product. The patient who has high blood pressure also can
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take our Savory oatmeal as there is no fat. Though there is no fat and no high calorie, it is very healthy for health. The soluble fiber in oats helps to remove bad cholesterol by maintaining the good cholesterol that our body needs and with low fat diet it also reduce the chance of heart diseases. A big part of our Englands population suffers from high blood pressure. Soluble fiber helps to reduce high blood pressure and as oat contains more soluble fiber then rice, wheat and corn. So oat serial can be a good healthy food for high blood pressure people. http://www.researchandmarkets.com/reports/687225 Business Segments We divide the business segment into Whole Sellers and retailers. They are very important segment for any company because many retailers and whole sellers buy our product and resale them. It can be said that they are our major clients. Basically they buy the product from us and will supply our product to the market and will potentially expand our consumer market. Requirement for attractive Segment For an effective market segments there are some requirements like measurable, substantial, accessible, and differentiable. Our segment is measurable because we are aware of consumers size, purchase power, and also their profile can be measured. Our market segments are large or profitable enough to serve because we are offering high benefits in lower price. All segments can be effectively reached because we are offering low price with high quality and special product for diabetic patient. Our product also has features compare to competitors because we are offering five types of tasty flavors and we have also specialized our product for diabetic people and health conscious people.

Target Marketing

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Savory Oatmeal Cereal has targeted its market as Junior Citizens, Senior Citizens and Diabetic Patients. Junior citizens age group is 6-22. Their need is that they want to eat which is tasty and nutritious. According to their demand we have introduced delicious oatmeal with chocolate flavor, strawberry flavor and more on to fulfill both their demand of tasty and nutritious food. Senior citizens age group is more than 22 years. Their need is that they want nutritious food as well as low cholesterol food which will help them to reduce blood pressure and to lose their weight. Our product contains lots of nutrient items like soluble fiber, minerals and vitamins etc. that will prevent them from high cholesterol, and high blood pressure. Our next target market is Diabetic patients. They need a healthy sugar free food which will help them to control their sugar level. We use sucrose instead of sugar in our sugar free Classic Oatmeal for the diabetic patient. Table of Target Marketing Target Market Customer Need Corresponding Feature (benefit)

Junior * want to eat which is tasty and *Different flavours of citizens(6-22) nutritious. our oatmeal cereal will (consumer attract them and market) different minerals and vitamins are good for their health. Senior * need a nutritious food which will *Our product contains citizens low their cholesterol and blood lots of nutrient items (consumer pressure level and also help to like soluble fibre, market) reduce their weight. minerals and vitamins etc. that will prevent them from high cholesterol, and high blood pressure. Diabetic * need sugar free, and a healthy *We are using sucrose Patients food that can help them to control instead of sugar in our (consumer sugar level. oatmeal for the diabetic market) patients. sugar free oatmeal will help them to control their sugar level Market Positioning
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We place our product in a position with consumers important attributes relative to competing products. We are providing a quick and easy process of ready-to-eat food which will give the consumer not only a healthy food but also a tasty food in only one minute. Our product reduces cholesterol which helps to control the high blood pressure and glucose level. We are differentiating our product by selling this at a very low price then the competitors and also providing a high quality food. We are using strong distribution channel to promote our product. Our product is different because we are offering five types of different mouthwatering flavors. Our main focus is customer awareness in the local community. We direct all our tactics and programs toward the goal of explaining who are we and what all are about. Positioning Statement For busy working class people who do not have much time to take care about their own health. Oat meal cereal will give you a healthy heart and fit body because oat has a cholesterol reducing power. With this oat meal cereal people can have a health oriented food in a short time. Consumers just have to mix the cereal with hot water and can prepare the healthy and delicious oatmeal within a short time. Competitive Advantage A product cannot stay in the market for long unless it has a competitive advantage over its competitors. As a ready to eat Oatmeal cereal we do not have any direct competitors that can compete with our low price strategy. But in England there are Kellogs, Quaker white Oats, AVENA oats, Mornflake which are our strong competitors. Competitive advantages are worth establishing to the extent that it satisfies the following criteria: Important We provide healthy and nutritious food. Distinctive No other competitors offer instant oatmeal cereal at a low price. Superior
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We are superior because we offer oatmeal in mouthwatering flavor like chocolate, Strawberry etc. Communicable Our consumer will be able to identify our uniqueness and specialist easily in contrast to our competitors. Preemptive Our competitors will not be able to copy and provide with our products and service easily. Affordable After providing our exclusive and quality products to our buyers, our buyers will be willing to afford to pay the difference. Profitable We offer a special Oatmeal cereal for diabetic patient. With this we can introduce the difference profitability. Marketing Mix (4ps) Product Strategy The major focus is on the type of the product and product attributes. Our Product is different from competitors products in respect to varieties, taste, packaging and price. As our product is a food item so taste is one of the major factors that we have taken into account and we are very particular about our ingredients that we use to make our product tasty. We have different flavors for the people who want different tastes. (Little, Quintas and Ray, 2001) Pricing Pricing strategies are very important to prevail in the competitive market. It is one of the main factors that influence customers purchase. Savory oatmeal cereal will follow a mixture of cost based, competitor based and consumer based pricing strategy. In order to achieve customer satisfaction we will offer a relatively lower price than the competitor but this lower price will not affect in our product quality. The product will be introduced in different weight, size and
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price will be based on flavor and target customer need. All flavors will be in fair price and we will try to reduce our price to sustain current customer and grow our market share. (Little, Quintas and Ray, 2001) Packaging and Pricing Packaging Packing is another main factor that we have to focus on. It plays a vital role to present the first impression of our product. Our company believes packing promote itself We are using different attractive pack to satisfy our customer and to protect our product from damaging because of moisture. Packet Size Family size -750gm Medium size 500gm Mini pack -50gm Size Savory Oatmeal Cereal Company focuses on different customer segments and produces the size accordingly. This makes it economical to consumers especially to the middle class and thus can reach to a wide sector of consumer market. Cost volume Profit Analysis Selling price Variable cost Cont. margin Fixed cost Profit 5.70 (1.90) 3.80 (3.23) 0.57 90045180 (30015060) 60030120 (51000000) 9030120 Price 2.25 1.50 0.15

Rational Batch Pricing

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Packet size Mini pack Medium size Family size

Sales ratio 3 2 1 Total-

Rational size 150 1000 750 1900

Rational prize 0.45 3.00 2.25 5.70

In a single batch we want to sell 3 mini packs, 2 medium sizes and 1 family size. So in a single batch there will be total of 1900gm which will be in a price of 5.70. Break Even Analysis

Distribution Strategy

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The Channel strategy is to use the companys distribution channel through the whole country of England and Great Britain. During the first year, it will cover in all London market. We will build six distribution centers in the two countries of England and Great Britain which are in cities of London, Manchester, Liverpool, Edinburgh, Cambridge and Scotland. From these distribution centers, the whole sellers will supply the package to different retail distributors (super store and market). The small distribution traders will purchase products directly from the distribution centers. Finally the retailer will deliver the products to the final consumers.

Distribution Strategy Chain Manufacturer

Distributor

Retailer Final Consumer

Promotion Promotion is very important for this company. We will establish our own website .So the customers can get their needed information there and can post their comments or queries in the website message board. They can also call us through toll free telephone number. The retail shops will be decorated with attractive Posters of the availability and the benefits of our product consumption. Leaflets will be distributed to the consumers through the national daily newspapers. As the company targets the working people, it will launch radio advertisements and word-of-mouth communication. We will sponsor different social and cultural programs to make place in the targeted consumers mind. We will also telecast attractive advertisement on the

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television. We also can give free samples in different locations especially in front of commercial offices, diabetic hospital or in front of schools. (Kovacic, 1994) SWOT Analysis Strengths

1. Third Generation Company private Ltd. has a strong distribution

capacity. 2. Sugar free oatmeal for diabetic patient 3. The product is in a convenient shape and weight. 4. Differentiation in product types. 5. Good quality product in low price. 6. Availability of resources. 7. Good packaging. 8. Strong advertisement of the product. 9. Our product is instant make and that will save the time of busy peoples. Weakness 1. Lack of brand awareness and image. 2. Limited investment in short runs. Opportunities 1. Creating strong brand image and brand awareness. 2. New taste for the customers. 3. We are introducing our product in different pack sizes to attract the market. 4. We are planning to increase our advertisement campaign to increase market share. 5. We will increase our product line in future like oat cake, oat biscuits etc. 6. People will adopt this new type of food habit. 7. We can also export our product in foreign countries.

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Threats 1. Higher competition to gain higher market share. 2. Imposition of sales tax/vat on the product category. 3. People are not habituated with oats yet Integrated Marketing Communication As we are targeting working class, senior citizens and also the junior citizens and we are segmenting our product in big cities of England so advertising is our main source of communication. We will use sales promotion and public relation for creating a long term relation with our target customer. Well create commercial advertisements on radio and TV. We will also distribute flyers and free samples in introductory stage, so that we can make our target customer aware about our product. To get customer response we will create our own website where customer can make suggestions about our product and also can complain if they have any. Analysis of Buying Behavior People have less time in morning for which they sometimes cannot even eat their breakfast because preparing breakfast is time consuming. Savory Oatmeal Cereal is ready-to-eat. So consumers will definitely try this. When they will become aware of the product their buying decision behavior will be variety seeking. Our product requires low consumer involvement. As there are differences between other brands so our consumers buying Behavior will be variety seeking. So after testing our product consumer wont feel bad and they will think about buying this new oatmeal cereal. (Kovacic, 1994)

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Conclusion
From the learning and experience point of view we can say that we really enjoy this time preparing report at Savory Oatmeal Cereal Company. We are confident that this project will definitely help us to realize our further carrier in Job market. This paper highlights a good number of aspects regarding business marketing process. This paper shows that by establishing a sound communication policy and a proper analyzing on customer, supplier, distributor and competitors can made a manufacture company successful if it is practiced fairly and consistently. Few loyal committed customer bases, lack of modern and effective technology or facilities, not enough skilled employees in some sector are some drawbacks of this project. The company should try to improve their production level in every term. The company should try to capture more market share by analyzing more on product quality, product variety and on distribution strategy.

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References: Atkinson R L et al. (2008), Low price Strategy (6th edition), Kotler Armstrong & Cunninghum Canada: Pearson Education. BBC News (2005) Current Market Situation <online>: http://news.bbc.co.uk/2/hi/health/4253500.stm Breakfast Cereal Report (2009) Behavioral segmentation <online >: http://www.researchandmarkets.com/reports/687225 Avgerou, C (2003), Information Systems and Global Diversity, Oxford University Press, UK. Kovacic, B (1994), New Approaches to Organizational Communication, State University of New York Press. Little S, Quintas, P and Ray, T (2001), Managing Knowledge: An Essential Reader, Sage Publications. McKenzie, J and Van, Winkelen C (2003), Understanding the Knowledgeable Organisation, Thomson Learning.

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