Hard to write a BLOG when there’s other things to write
Stupid School~
Over the past eigth weeks I’ve been enrolled in a Marketing class. Between the class, work, and life, I had not the time to write. My hat is always off to those that have real lives, families, and jobs, and still have time for there hobbies. Not that I don’t have a life, which I may not have, but I really did not have time to write anything about cooking for all these weeks.
What follows is my where my writing energies has been consumed over the past few weeks.
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Marketing Plan for Mama Bruno’s Spicy Olive Oil & Vinegar
MRKT 310 – Marketing Principles and Organization
University of Maryland
March 10, 2008
Table of Contents
Cover Page
Table of Contents
1. Executive Summary
2. Situation Analysis
3. Company
3.1. The Company’s Product
3.2. Company Objectives
3.4. Opportunity analysis
3.5. Ethics and social responsibility
4. Customer analysis – Target Market
5. Competitive market analysis
6. External market environment
6.1. Economic
6.2. Technological
6.3. Legal
6.4. Political
6.5. Social & Cultural
6.6. SWOT
6.6.1. Strengths
6.6.2. Weaknesses
6.6.3. Threats
6.6.4. Opportunities
7. Marketing plan objectives
8. Differentiation and Positioning
9. Market strategy – The Four P’s
10. Implementation and control
References
Appendix – A
Cost for production for Spicy Olive Oil in British Pounds
Appendix – B
Primary Observational Research
1. Executive Summary
Mama Bruno’s Mediterranean Condiment Company is a new firm that plans to offer two Flagship Products: Mama Bruno’s Spicy Olive Oil & Mama Bruno’s Spicy Vinegar. The firm’s resources are one employee, owner and operator: Anthony Bruno. There are enough capital resources sufficient to satisfy all legal, licensing, raw material acquisition, production requirements and costs for two years. The time frame for this plan shall cover the next six months – March to September 2008.
Opportunities are to create desirable products appealing to well traveled high-end customers. This target market segment enjoys cooking and may find Mama Bruno’s condiments a healthful, spicy way, to enhance taste and appearance of their home cooked meals.
Informal product testing and research has shown three things. One is that when these products are made available (on my dinner table), guests make good use of them. Be it on salads, grilled meats, pasta, or just in an empty bowl for bread dipping – these condiments prove desirable. Two, primary research in specialty shops shows there is a lack of flavored Olive Oil and Vinegar in practical quantities. And three, generic competing products lean more toward specialty gift items supplied in unpractical quantities and packaging, i.e. – small artsy-fartsy jars with high prices.
Before producing or distributing any product, compliance with legal requirements pertaining to company structure, taxes, liabilities, food safety regulations, and labeling must be satisfied. Accomplishing those tasks, supply contracts can be negotiated enabling acquisition of raw materials. With the legalities and supply of raw materials sorted, the production phase of Mama Bruno’s Spicy Olive Oil & Vinegar shall start.
With production in motion and inventory created, Mama Bruno’s Mediterranean Condiment sales force of one will beat the streets promoting these two products targeting gourmet shops. Mama Bruno’s Spicy Olive Oil & and Vinegar shall compete with those specialty gift items mentioned above on quality, flavor, multiple uses, and practical everyday usable quantities.
2. Situation Analysis
Mama Bruno’s Mediterranean Condiment Company has many challenges before it. From complying with legalities such as food safety regulations, product and tax liabilities, to creating product distribution chains for incoming raw materials and outgoing finish product. The following examination will discuss these challenges and summarize the findings in an S.W.O.T analysis.
2.1. Company
Mama Bruno’s Mediterranean Condiment Company is a small-scale cottage industry with low overhead costs. The firm plans to produce two quality niche items as its flagship products. Mama Bruno’s mission statement is to:
“Produce and supply customers with high quality, tasty, and healthful condiments based upon Mediterranean dietary concepts and style in a way that offers value to customers, and profit for the company”
2.2. The Company’s Product
Products: Mama Bruno’s Spicy Olive Oil & Vinegar. These two items fall into the Consumer Product group as a Good, and are homogenous products by their nature; olive oil & vinegar are just something that goes on salads for most people. However, with the addition of fresh peppers, and an informational promotion campaign, these two basic products (Olive Oil and Vinegar) shall become specialty products.
2.3. Company Objectives
Short-term objectives for the company are to comply with all legal requirements to manage and operate a Specialty Food Company in the United Kingdom.
Medium-term objectives, once legalities met and raw materials available, is to start production. After production starts, and inventory available, promotion begins and channels of distribution created to reach retailers. Target retailers are gourmet and farm shops in the introductory stage of the product life cycle. As the cycle gets under way, depending upon product success, supermarket chains move into target as possible sales outlets.
Long-term objectives are to make the production process and channels of distribution, from raw material acquisition to end-product delivery, more efficient and modify product and packaging as necessary to enhance customer value and equity. After that, the next step is to plan for the coming stages in the product life cycle.
2.4. Company Resources
Human resources are the lone owner, operator, employee, Me – Anthony Bruno, and capital resources of 12,000 pounds. Those resources can produce 678 one-liter units of Spicy Olive Oil and 678 half-liter units of vinegar in the first six months of production, leaving over two and a half thousand pounds for administration and miscellaneous costs .
2.5. Opportunity analysisPrimary research has provided valuable information concerning these two flagship products in the current market. Personal visits to Weeton’s, Farrah’s of Harrogate, and other food specialty shops has noticed a lack of practical use flavored oils and vinegars. Available products in this category are in small portions and fancy bottles, placing them more into a gift category rather than a condiment category. The opportunity is to market Mama Bruno’s flagship products as practical, everyday use flavor enhancers for todays at home healthy eating lifestyles.
2.6. Ethics and social responsibilityMama Bruno’s Mediterranean Condiment Company shall build its reputation on honesty and integrity to create wholesome products. It shall also be socially responsible by means of providing products promoting good health, and utilizing packaging, i.e. reusable/recyclable bottles, which has a minimum impact to our natural environment.
2.7. Customer analysis – Target Market
The target market are late twenty to mid fifty something’s that 1) still are developing food tastes, are adventurous in food choices, and 2) older folks that have a propensity for fine foods.
Visiting gourmet shops in Harrogate, I easily noticed the above customer types, with wicker basket in hand, browsing the shelves for something new, different, and tasty. Two stereotypical customer groups stand out. There is the Prime of life Diane & David group (Late 20s to mid 30s); whom enjoy cooking, try new products & like spicy heat; and then the Sophisticated Sue & Sam group (Late 30s to mid 50s); whom enjoy eating healthy foods with new and exciting warm flavors.
As per the latest United Kingdom census, (National Office for Statistics, 2001) Harrogate district has 47,151 residents that fit this age group AND have jobs. Gross disposable household income in North Yorkshire per head, in 2005, is 13,762 pounds (Marais & Schuster, 2007). These two statistics suggest there is a large enough customer base that may both be interested in, and have the disposable income for Mama Bruno’s products.
2.8. Competitive market analysisCompetitors in the Generic condiment market are mustards, ketchup; HP brown 25 sauce; malt vinegars; plain olive olives; and hot sauces. In the product market, the competition seems to be unflavored olive oils and vinegars. Other competitors produce gift type flavored oils and vinegars that are more for display than for daily consumption. primary research shows Farrah’s Of Harrogate and Weetons stock limited amounts and varieties of flavored oils and vinegars, stocked items lean more toward the display/gift items.
3. External market environment
3.1. Economic
Fears of recession, rising housing costs, and tightening of consumer credit (MacDonald & Whitehouse, 2008, p.A.1) may mean reduced discretionary spending for luxury items such as Spicy Olive Oil & Vinegar.
3.2. Technological
Technology (the internet) shall be useful for product advertising and disseminating information. As interest in the product grows, order taking will also make use of available technology. On the production side, these products require limited amounts of technology for production in the specified time frame.
3.3. Legal
Research and comply with applicable food safety and labeling laws as prescribed by the Foods Standards Agency. Concerning starting a new business, learn about consumer contract law, and adhere to regulations for starting and business as outlined on www.businesslink.gov.uk and in Croner’s Reference Book for Self Employed.
3.4. Political
England, having an advanced economy, being an established democracy, and good rule of law, translates to a stable political situation for business.
3.5. Social & Cultural
More British are traveling abroad than ever before. In 2005 UK residents took over 41 million-holiday trips abroad. Of those trips 30% went to Spain, 18% to France, and 8% to Greece (Travel and Tourism, 2005). All these destinations are Mediterranean olive oil consuming countries. As a result, a Mediterranean diet is becoming more popular in Britain due to British exposure to new foodstuffs. In addition, as discretionary income drops, there may be a trend to hobby cook at home. Jamie Oliver’s most recent book “Jamie’s Italy”, about Italian food, may be an indicator of a changing Social & Cultural environment. This change may mean a population ready for spicy olive oil and vinegar.
3.6. SWOT
3.6.1. Strengths
Mama Bruno’s Mediterranean Condiment Company is a Small firm able to move quickly with not much overhead or startup costs.
3.6.2. Weaknesses
A small firm with limited resources.
3.6.3. Threats
Threats are larger firms with production already in place and target customers lacking awareness for Mama Bruno’s products.
3.6.4. Opportunities
Promote and supply local specialty shops with Mama Bruno’s flagship products, then expanding to larger super market chains such as Sainsbury’s.
4. Marketing plan objectives
Objectives are to promote Mama Bruno’s Oil & Vinegar to gain market share from both flavored and unflavored oils, vinegars, and other condiments. To that end, a promotional campaign to differentiate and position Mama Bruno’s Oil & Vinegar, directed at the target market: shall aim to make the targets aware that Mama Bruno’s Olive Oil & Vinegar are not just for salads anymore. As Mama Bruno’s flagship products develop in the market, enhancements and improvements of existing products are shall continue as the product moves through its lifecycle. As the product matures, new uses and expanding recipe ideas will be introduced, with the aim to push back the mature stage of the products lifecycle.
5. Differentiation and PositioningDifferentiating Mama Bruno’s Spicy Oil & Vinegar from its novelty display and gift item competitors are quality, easy re-closable bottles, packaging volumes, and spicy heat flavor. In the minds of the target market, these differences will position Mama Bruno’s products as something tasty for everyday use.
Market strategy – The Four P’s
Mama Bruno’s Mediterranean Condiment Company marketing strategy will use the single target market approach to reach consumer level customers like the Diane, David’s, Sam’s & Sue’s. Desired placement of Mama Bruno’s flagship products will be in specialty gourmet shops. Displays will utilize practical, stylish, and well-positioned racks or shelf-space that accentuates Mama Bruno’s products aided with informational banners. Packaging for Mama Bruno’s flagship products will be attractive re-closeable flip-top bottles: 1-liter bottles for the oil, ½-liter bottles for the vinegar.
Promotion efforts will focus on informing the target market that Mama Bruno’s new spicy olive oil and vinegar are not just for salads. To do this, attached to each bottle will be recipe cards with a web address where more information can be found. Next to the display will reside bowls of Mama Bruno’s Oil and Vinegar with chunks of bread for tasting purposes. For the diners at Weetons and other gourmet shops, bottles of each product will be right next to the salt & pepper, attached with cards offering suggestions for use with menu items.
Success will come from Attention getting displays that offer samples. Tasting the samples will generate Interest. Interest in the warm spicy flavors and tastes will produce Desire. Finally, desire shall encourage Action to purchase Mama Bruno’s Spicy Olive Oil & Vinegar.
As for the other two P’s, Productions and Price: luckily derivative products that make-up Mama Bruno’s Oil & Vinegar are commodities, sourcing and obtaining these items at a reasonable price is not a problem. Curing the peppers and bottling the component parts is a one-man job, making it possible to have 100 units of product ready within two weeks after the first delivery of derivatives. Production costing estimates show wholesale prices for Mama Bruno’s Spicy Olive Oil at 14 pounds for 1-liter bottles, and 3 pounds for a ½-liter bottle of vinegar.
Competing competitor’s price’s for the olive oil range from 4 pound 89 for 100 milliliters, to 6 pound 29 for 250 milliliters. For the vinegar, it was 8 pound 49 pence for a .5-liter bottle of herbed vinegar at Farrah’s, and Weetons, there was only one variety of herbed vinegar (.5-liter) for 3 pound 29 and no flavored olive oils.
Even adding a 50% retail mark-up to Mama Bruno’s oil still makes it cheaper than the 250 ml oil available at Farrah’s. As such, Mama Bruno’s Olive Oil and Vinegar can easily compete on price with like products at Farrah’s. At Weetons, this not so with the vinegar, but olive oil has no direct competition. By utilizing a combined pricing structure for both specialty products, any pricing structure will be profitable.
With cost not an issue with supply and the production, and as an informational promotion campaign, and customer experience, convinces the target market that Mama Bruno’s is a quality product suitable for everyday use, the pricing strategy will be profit oriented to maximize profits.
6. Implementation and control
Mama Bruno’s Mediterranean Condiment Company, as a small-scale cottage industry, can easily implement and control all facets of administration, production, and sale of its products. Government web sites such as www.food.gov.uk & www.businesslink.gov.uk provides a question tree, for potential entrepreneurs, that results in to-do checklist concerning regulations, laws and standards. Corner’s Reference Book for Self Employed (Corners, 2001, pp. F1-F49) also offers insight on contract law and consumer law. Based upon those resources, the following Implementation and Control checklist has been generated.
1. Consult with a business solicitor and become aware of business and contract law.
Complete by 1 June 2008, and consult with solicitor as necessary.
2. Register as self-employed & VAT with tax authorities.
Complete by 1 July 2008. Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
3. Registered premises as a food business, get required permits:
Complete by 1 July 2008. Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
4. Food Safety, Labeling & Bottling Requirements: Take required courses for food handling; create labels and bottling procedures with-in guidelines.
Complete by 1 July 2008.
Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
5. Create and Document food-safety management procedures and develop record keeping practices for business.
Complete by 15 July 2008.
Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
6. Once above tasks are completed, negotiate with potential suppliers as a wholesaler for derivative products.
Complete by 1 August 2008.
Stay aware of derivative prices, and seek new suppliers and negotiate as appropriate.
7. Order derivatives, when delivered – start production.
Complete by 1 September 2008.
Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
8. Produce 100 units of product.
Complete by 15 September 2008.
Task Completed? Yes___ No___
If not, document why, create action plan, and set new target date for completion.
9. With 10 units of production in inventory, start sale & Promotion efforts with local gourmet shops.
Start by 16 September 2008.
Task Completed? Yes___ No___
If not, research why, create action plan, and set new target date for completion.
10. After 16 September 2008 Has product been sold to shops?
If not, figure out why; Packaging? Too Spicy? Wrong volumes?
11. After product makes if onto shop shelves, monitor customer feed back and sales rates.
Date: Start as soon as possible after shelf space is granted. Continue indefinitely, and review weekly.
12. Monitor production, efficiency, and quality control. Take action as necessary. Review weekly.
References
National Office for Statistics. (2001). Area: Harrogate (local Authority). Retrieved March 3, 2008, from http://neighbourhood.statistics.gov.uk/dissemination/LeadTableView.do;jsessionid=ac1f930cce646902e558fa942a1afb9daec9066d44c.e38Qa3mPbh4Kai0LbxqNbxiSc34Ne6fznA5Pp7ftolbGmkTy?a=3&b=277071&c=harrogate&d=13&e=16&g=476095&i=1001×1003x1004&m=0&r=1&s=1204397095750&enc=1&dsFamilyId=183&bhcp=1
Marais, J., & Schuster, S. (2007, March). Regional Household Income. Retrieved March 3, 2008, from National Statistics Office Web site: http://www.statistics.gov.uk/articles/nojournal/Regional_Household_Income_article_March_2007.pdf
MacDonald, A., & Whitehouse, M. (2008, February). London Fog: Credit Crunch Pounds U.K. Economy. Wall Street Journal (Eastern Edition), (1425076641), p.A.1.
Travel and Tourism. (2005, March 22). Holidays Abroad. Retrieved from Office for National Statistics Web site: http://www.statistics.gov.uk/CCI/nugget.asp?ID=1108&Pos=4&ColRank=2&Rank=224
Corners. (2001). Section F Consumer Law (The Sale of Goods and Services). In Corner’s Reference Guide For Self Employed (pp. F1-F49).
Appendix – A
Cost for production for Spicy Olive Oil in British Pounds
Cost of 1-liter olive oil: 4.936
Cost of 50/g peppers 1.925
Cost of bottle 1.19253
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8.05
Cost estimate for
Labour, delivery &
Marketing 2.50
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10.55
Wholesale price mark-up 3.45
Spicy Olive Oil
Wholesale Price 14.00 pounds / unit = 1-liter
Cost for production for Spicy Vinegar in British Pounds
Cost of .5-liter vinegar 00.2375
Cost of 10/g peppers 00.385
Cost of bottle 1.07786
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1.70036
Cost estimate for
Labour, delivery &
Marketing 1.00
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2.20
Wholesale price mark-up. .80
Spicy Vinegar
Wholesale Price 3.00 pounds / unit = ½ liter
With those figures, it will be possible to produce 678 half-liter units of vinegar and 678- liter units of olive for 9,322.50 pounds. Leaving 2,677.50 pounds for administration and start-up costs, i.e. licensing and permits. Derivative material costs as based on prices from the following sites on March 1, 2008:
Olive Oil: http://www.thetapaslunchcompany.co.uk/products/oliveoil/GIS0501
Vinegar:http://www.wholesalepages.co.uk/ukwholesalers/Pickles_Sauces_and_Condiments-wholesale-860-0.html
Bottles: http://www.ebottles.net/showbottles.asp?familyid=30&havevat=Y
Peppers: http://www.sainsburys.com/groceries/index.jsp?bmUID=1204388188798
Appendix – B
Primary Observational Research
On Saturday February 23, I personally visited Farrah’s Toffee Shop and Weetons in Harrogate. My informal survey resulted in the following finds and observations.
At Farrah’s toffee shop, the customers were mostly tourists more interested in sweet than savory items. Nonetheless, Farrah’s does offer savory items such as pastas, meats, cheeses, oils, vinegars and other gourmet items. Items that concerned this project of course were the olive oils and vinegars. To that end, I found:
Olive Oil in decorative bottles seasoned with herbs & garlic:
250ml bottle cost 6 pound 29
100ml bottle cost 4 pound 89
Vinegar with herbs:
.5-liter bottle cost 8 pound 49
Weetons was a very different as the customers were more interested in savory food of a high quality. Customers ranged in age from very late twenties – early thirties to late fifties. A mature crowd this was. Possible competing items small jars of condiments and dressings, one variety of herbed vinegar, and no flavored olive oils.
Dressing and condiments:
50ml bottle cost 3 pound 50
Vinegar with herbs:
.5-liter bottle cost 3 pound 29
These findings show an opportunity for Mama Bruno’s Spicy Olive Oil and Vinegar to create a specialty product market for spicy Olive Oil and Vinegar in practical quantities. The customer base took their time browsing the shelves examining the varied foodstuffs, placing in their baskets various items that indicate an adventurous culinary sprite
