Marketing of a Product: McVitie’s Milk Chocolate Digestives
Introduction
The changes that happen in the world today largely affect the global market and the economy of many countries around the world. Many business organizations tend to become more competitive to cope with these changes, specifically in the advancement of technology and the improvement of the different forms of communication. Today, due to the emergence of many companies having the technology and the means for greater expansions in the market, other existing business organizations are forced to innovate and cope with changes, to continually serve and retain their customers.
Due to the increasing competition among companies worldwide, large business organizations adopt new technologies and information systems to provide better service to their consumers and to their workforce. They tend to come up with a variety of marketing and business strategies to stay competitive and to be able to sustain their operation and production. With the use of these strategies, the company can create a pleasant relationship with their customers and support the employment of their workforce. The company can also be successful in establishing their products and services in the market, and even establish a good reputation in the industry. With such importance, this paper evaluates and discusses the marketing of a particular product in the market, namely, the McVitie’s Milk Chocolate Digestives, in relation to the several elements and aspects of the products and its marketing.
Company’s Brief Profile: United Biscuits
The company responsible for the manufacture of the McVitie’s Milk Chocolate Digestives and other baking products is the United Biscuits Company. United Biscuits is a British multinational food manufacturer, owned by Finalrealm, which is a syndicate including Cinven (2007). The company was founded in 1948 with the merger of the businesses of two Scottish families, namely, McVitie & Price and MacFarlane Lang. The acquisition of Crawford’s Biscuits and MacDonald’s Biscuits in 1960 resulted to the addition of the two companies to its portfolio, and in the year 2000, United Biscuits was bought by Finalrealm, which is a conglomerate of investors, and relapsed to private limited company status (2007). United Biscuits’ headquarters are located in Hayes, northwest of London, and the core of its business is located in the United Kingdom, where it produces a variety of products, including biscuits, crisps and other snacks. These products are sold under a number of brand names, such as McVitie’s for biscuits, KP for nuts, Hula Hoops for snacks, McCoy’s and Phileas Fogg for crisps, and Jacob’s and Simmers for cream crackers. In 1972, it acquired Carr’s of Carlisle, including the Water Biscuits. At present, United Biscuits manufactures in different countries across Europe, including the Netherlands, France, and Belgium, and sold its southern European business back to Kraft. Its main distribution center in the United Kingdom is at Ashby-de-la-Zouch, which also has a factory manufacturing KP Snacks (2007). Aside from being a producer of snack products, United Biscuits also produces its own brand for supermarkets, and has its own radio network, which serves their factories across the United Kingdom. It has been reported that the United Biscuits Network folded in 1979, but initiated the career of the UK radio presenter and TV and radio personality ( 2007).
Being one of the major products of the company McVitie’s biscuits serve as one of the most popular biscuits in the United Kingdom and in the world, and has been enjoyed by many generations for over 100 years. It was the first digestive biscuit created by , the company’s new young employee. Its name ‘Digestive’ was derived from its high content of baking soda, being an aid to food digestion. Until now, McVitie’s Digestive still remains a solid favorite of many, and is considered the highest selling brand in the biscuit industry. In 1925, the blending of biscuit and chocolate resulted in the Homewheat Chocolate Digestive brand, known as the McVitie’s Chocolate Digestive. With this, over 71 million packages of the product are eaten each year in the United Kingdom ( 2007). Aside from Milk Chocolate-flavored Digestives, McVitie’s biscuits are also available in other varieties, including Milk Orange Digestive, Milk Chocolate Mint Digestive, seasonal White Chocolate Digestive, Milk Chocolate Caramel Digestive, and McVitie’s Fruitsters. The McVitie’s brand portfolio also includes, Minis, Classic Rich Tea, Fruit Shortcake, Ginger Nuts, Boasters and the Lights range, such as Digestives, Rich Tea, Hobnobs, and Milk Chocolate Digestives that area all 25% lower in fat than the standard variants (2007).
Key Segments and Market Size
Market segmentation is an important aspect in effectively marketing a product, as it allows the company’s sales program to focus on the sub-groups of prospects in the market, which are to purchase the company’s offerings. This would also guarantee the highest profit for the company’s marketing or sales expenses, depending on the company’s target market (2007). In relation to the United Biscuits Company and its products, particularly McVitie’s Milk Chocolate Digestives, its market segment is also considered global, which means, its market segment includes consumers from all different kinds of generations, be it the youth, the adult, and the older generation. This is because, although the products of the company include a range of snacks and sweets, its target market is not age, gender, occupation, race, or culture specific. Its products can be consumed by anyone in the market, anywhere in the world.
Because McVitie’s Milk Chocolate Digestives are considered a universal product, its market size should be huge, for its target market includes a wide range of consumers belonging to any country worldwide, especially to its home market, the United Kingdom. It has been reported that the UK biscuit market, both sweet and non-sweet, is dominated by United Biscuits, with its well-known household brands, including McVitie’s and Jacob’s ( 2002). From this, it can be understood that the market segment of the product include the youth of the younger generations, the adults or parents and the older generation. This can be shown through the production of products, which are healthier and better, as the McVitie’s brand are now mostly free of hydrogenated vegetable oil, thus, are effective free of trans fat (2006). Because the products are even healthier and better, anybody in the market will be able to purchase them, including the older generations.
Due to the fact that McVitie’s Milk Chocolate Digestive is a cookie or a biscuit, children would want them for their snacks, be it in the school or at home. Aside from enjoying the treat, they will be able to also obtain essential nutrients and vitamins, which are crucial for their growth and development. This just means that the primary market segment of McVitie’s is the youth or the younger generations in the British market and other countries. This can be shown through the production of a wide range of flavors and varieties, such as the Milk Orange Digestive, Milk Chocolate Mint Digestive, seasonal White Chocolate Digestive, Milk Chocolate Caramel Digestive, McVitie’s Fruitsters, Minis, Classic Rich Tea, Fruit Shortcake, Ginger Nuts, Boasters and the Hobnobs ( 2007). From this, the packaging is also improved to be able to attract its primary market through different colors and appearance.
In addition, adults can purchase and consume the product, for like the youth, they can also obtain essential vitamins and minerals for their maintenance and sustenance. Because McVitie’s has a high content of baking soda, which aids food digestion, adults will be able to hasten their digestion and contribute to a healthy lifestyle. Same goes for older generations, consuming the product would also speed up their digestion and ease bowel movement. In addition, because the product is free from hydrogenated vegetable oil, it is therefore trans fat-free, and would not contribute to additional sources of cholesterols and fats. The wide range of flavors and variants of the McVitie’s Chocolate Digestives, including its essential nutrient contents, make consuming the product healthier and even more enjoyable.
Company Management Philosophy
In the company’s objective to meet the standards, demands and needs of its consumers, it must be able to have an efficient and effective management standard that would enable and ensure the company to gain control over its operations. In addition, management standards and philosophies are important for a company to implement necessary regulations and strategies, which would support and sustain its further growth and development.
United Biscuits focuses on profitable branded growth through investment in priority brands and key markets, and with this, the business is accumulating an unrivalled range of leading biscuit and snacks brands that will foster a series of exhilarating growth opportunities through maximizing the company’s natural advantage in scale, innovation, and market research (2007). The company also perceives growth opportunities in consumer trends for convenience foods, such as biscuits and snack products, which offer better variety, healthier options and more convenient and practical packaging. The company also supplies the wide range of their products through convenience and effective distribution channels (2007). With this in mind, the company implements and drives efficiencies through benefits from pan-European production processes, sharing manufacturing expertise across the continent, and the use of new technologies in delivering savings, such as in e-sourcing technology ( 2007).
Moreover, the company also works with customers to distribute a cost effective supply chain ( 2007). This is being done through initiating and supporting partnerships that can achieve beneficial change for and within the company’s communities, such as charitable institutions, educational establishments, local, national, and international partnerships, and environmental improvements (2007). Furthermore, teamwork in the company is given adequate importance and significance, for teamwork enables the workforce of the company to evaluate and implement changes in the company’s management processes and strategy capabilities (2007), which would guarantee and ensure the company’s effective and efficient coping and accommodation with the changes that happen in the industry. Most importantly, the development and improvement of teamwork has also led to the improvement of the company’s communication, which enhances internal and external relationships.
In line with the development of teamwork in the accomplishment of important tasks and responsibilities in the company, it was also able to adopt the concept of systems thinking, which is an interdisciplinary area of study, based on the assumption that everything is part of a larger, interdependent arrangement ( 1997). For this to be implemented in an organization such as the United Biscuit, the interrelated elements of the corporation as a system, which is composed of various sub-systems, means that the workforce and its teams must depend on each other and must work together. With this, the company employs organizational participation and empowerment, as the company’s commitment to the development and learning of its workforce. In addition, with organizational learning and empowerment, its workforce is able to adapt, change, develop and transform, in relation to the changes that happen in the company in terms of its management practices. It has been reported that in McVitie’s, because the company has moved to empowering its employees, it realizes that its old style of management is not anymore applicable, as they were asked to ‘leave their brains at the door and only pick them up as they left’, and this style has been eradicated to further improve and develop the company as a whole ( 1997).
Moreover, in line with the improvement of the company’s operational standards and efficiency, it continuously adopts new technologies to hasten its production and meet the increasing demands of its consumers. With this in mind, the company invested in a new equipment, called the Dipix 3D vision system from APV Baker, which increased the company’s plant efficiency by 2.5% ( 2007) before oven controll depended on operator experience, but with this new system operations are now accomplished through a real-time automatic closed-loop system, which depends on the information provided from the Dipix vision system. United Biscuits is using the system to determine the variations in the process that would always be present within the production process of the biscuits and reduce its effects. Using the new system is a significant step in their philosophy of achieving automatic control of the line ( 2007).
Finance Data: Market Turnover, Market Share and Main Competitors
(2007) reports that in 2005, the total West European Bakery Products Market amounted to a total of 88.9 billion euros, with the supply of the Top-10 West European companies, of 24.5% of the market. This market is said to grow at an average annual real 0.87% during the 2005 – 2010 period ( 2007). One of these European companies includes the United Biscuits, with its success in introducing McVitie’s Digestives in the market. With this success, it has been able to increase its total market share, surpass its competitors and effectively increase its market turnover.
Market turnover refers to the number of times a company completely exhausts and replenishes its inventory within its business cycle (2007), and from this, it can be understood that the market turnover of the United Biscuits Company, specifically the McVitie’s Milk Chocolate Digestive in the market is characterized as being efficient. Due to the increase in the demand and consumption of the product in the market, the company continuously manufactures and improves its products to meet the continuously increasing demands of its consumers. It has been reported that with $1.8 billion in annual revenue, United Biscuits is the world’s third-largest biscuit and snack company, producing popular brands, such as Skips and Hula Hoops, KP, Digestive, Jaffa Cakes, Penguin and Le BN through its McVitie’s units (2007). In addition, the company recorded revenues of 1,331.6 million euros during the end of the fiscal year in December 2003, equivalent to an increase of 1.8% over 2002, which was attributed to the increase in sales in both Northern and Southern Europe (2007). Moreover, the annual sales of chocolate digestives, specifically McVitie’s Milk Chocolate Digestives total about 35 million euros, about 71 million packages or 52 biscuits per second, yearly (2007). With this, United Biscuits significantly reinforced its leadership position in the biscuit industry, following its acquisition of Jacob’s Biscuits from Danone for 240 million euros in 2004, and said to control about 23% and almost a quarter of all biscuit sales (2002). Because of this, the company is now regarded as United Kingdom’s biggest biscuit maker, with a share of around 20% of the branded market, plus an additional 6% of market share from the acquisition of Jacob’ Bakery from Danone. This will lead to significant improvements in profitability, with 40%, thus, further increasing the pressure on other companies, such as Northern, whose market share is around 7% only (2006). In addition, United Biscuit also dominates the non-sweet biscuit market in the United Kingdom, with a market share of about 40% ( 2002).
In relation to the market share of McVitie’s products, it has maintained a constant product development, which resulted to its growth by 15% in the Irish market, and sales of over 170 million Euros (2001). The product has taken extensive consumer research in Ireland to distinguish how the biscuit category is seen in eight segments in the biscuit sector, namely, everyday biscuits, everyday treats, special treats, Christmas variety tins, savory biscuits and crackers, chocolate biscuit bars, and children’s and health, and results suggest that consumers purchase products from these different segments each week (‘ 2001). Moreover, the market share of United Biscuits, specifically of McVitie’s dominates the European market, as shown in the results of surveys. In Finland, the market share of United Biscuits is 45-55%, with main competitors of Kantolan, having 10-20%, Tasanko, having 10-20%, and other retailer labels, having 20-30% ( 2000). In Norway, United Biscuits has a market share of 30-40%, while its competitors, namely, Saetre, Kavli, and other retailer labels, have 30-40%, 0-10%, and 10-20% respectively (2000). In Sweden, United Biscuits had a market share of 45-55%, while its main competitors, namely, Bahlsen, Danone, and other retailer labels, all had 0-10% market shares correspondingly (2000).
In the United Kingdom, United Biscuits had a market share of 20-30%, compared to its competitors, namely, Northern, Nestle, Danone, Burton’s, Mars, and other retailer labels, having 0-10% (Northern, Nestle, Danone, Burton’s, and Mars) and 40-50% respectively ( 2000). Recently, United Biscuits main competitors, namely, Burton’s Foods, Nestle, and Northern Foods, accounted for about 58% of sweet biscuit sales, and Quaker and Ryvita ( 2002), while United Biscuits accounted for the total of 85% of market share in British households with regular purchase of products (2007). This helped the company occupy the No.1 and the No.2 spot market position in over 100 countries worldwide ( 2007).
Life Cycle of McVitie’s Milk Chocolate Digestive
The life cycle of a product in marketing refers to the period of time during which a positive reaction to advertising is noticeable, and in advertising, this involves the introduction of the product and ends when the advertising is worn out and no longer draws out positive response from the consumers ( 2007). This concept can be applied to a brand or to a category of products, such that its duration may be as short as a few months for a fad item, or a century or more, such as gasoline. As the product progresses in its life cycle, changes happen in its marketing mix, which are required to regulate its processes in accordance to the evolving challenges and opportunities in the market ( 2006).
Introduction Stage. It has been reported that when a product is introduced, sales will generally be low until costumers become aware of the product and its benefits, and with this, advertising costs are high to increase customer awareness and distribution (2006). This stage includes the interaction of the product, price, distribution and promotion, for these four initially determine the preliminary success of the product in its market. In relation to the McVitie’s Milk Chocolate Digestives, this product is relatively new to the market at the time, thus, consumers are curious with its taste and benefits. Initially, its price is also made relatively affordable to be tried by consumers. Being a trial product, its distribution initially involves the British market, where it was manufactured. Its promotion involves improving its wrapper or package, which would surely become attractive to the young generation and the young-at-heart.
Growth Stage. This stage is a period of rapid revenue growth, where sales increase as more customers become aware of the product and its benefits, for additional market segments are targeted (2006). In this stage, the packaging of the product and its quality can be improved, its price is maintained at a high level if demand is high, and reduced to capture additional customers, its distribution becomes more intensive, and its promotion or advertising is increased to build brand preference ( 2006).
In relation to McVitie’s, its growth stage is being enhanced and improved with the production of new flavors and varieties, such as the Milk Orange Digestive, Milk Chocolate Mint Digestive, seasonal White Chocolate Digestive, Milk Chocolate Caramel Digestive, McVitie’s Fruitsters, Minis, Classic Rich Tea, Fruit Shortcake, Ginger Nuts, Boasters and the Hobnobs ( 2007). With the production of such additional products, the packaging or wrappers of individual digestives have been improved and were given more character and variety. The company also widened the distribution of its products, and included some other countries around Europe, including Netherlands. Moreover, its promotion was also improved, for the target market and market segment of the digestives not only involve the British market, but other European markets as well. Because of this, the company was able to utilize the use of different forms of media, such as radio, print ads, and the television.
Maturity Stage. This stage is the most profitable stage, where sales continue to increase because brand awareness is strong, advertising costs will be reduced, and competition may result in decreased market share and prices (2006). In this stage, the McVitie’s digestives attain its peak in terms of sales and profit. The company continues its production and obtaining profit from the sales they generate. Because of this, advertising of the product is continuous all throughout is target market.
Decline Stage. This stage involves the decline as the market becomes saturated, the product becomes technologically obsolete, or customers change their tastes ( 2006). In this stage, the company is given three options, which include maintaining the product by reducing costs and finding new uses for the product; reducing marketing support and coasting along until no more profit can be made; and discontinuing the product when no more profit can be made (2006)
The crises and problems that the company encountered in recent years have brought about a slight decline in the sales and profit in the product. The increasing number of competitors that appeared in the industry and the changing preferences of the company’s consumers brought about this decline. However, the company managed to maintain and sustain its position and reputation in the market through improving the quality of its products, focusing on the products as a healthier option, and giving effort to advertising.
Future Trends in the Market
It has been reported that biscuits are well suited to the growing consumer preference for snacking, and because of this, the company will be focusing more in the future on product innovation and reformulation to meet the changing demands of consumers. It will be rendering service to the growing interest of consumers in health and nutrition, by providing clear labeling of the ingredients in its products. The company will also be updating and will be improving its recipes by lowering saturated fat and sodium, as an answer to the consumers’ growing demand for healthier alternatives ( 2002).
In adopting a long-term approach to brand investment, the company will be pouring 3.5 million euros into a new marketing campaign for the low-fat brand, introducing a new pack design for ‘unsuccessful’ products, such as caramel and orange Crunch Bar to make way for a new range of products. In addition, McVitie’s has also promised new introductions on the coming years and remains to secured on the brand’s future position despite a certain skepticism from commentators and leading buyers (2006).
Moreover, United Biscuits has announced improving the company’s management to organize innovative events and initiatives, in order to improve access to learning (2003). This learning road-show event will be organized over a 24-hour period, ensuring that all the staffs in the company can participate, including those working the night shifts. They will be working with their Human Resource Department to arrange courses at the company’s learning center, which involves the company’s trade union (2003). With this, the employees of the company will be able to improve their skills, for working the company’s union will enhance training, which is not only key to business success, but would also help employees become more employable, improving their prospects, and providing the opportunity for them to realize their ambitions (2003). This would further contribute to the success of the company, for the empowerment and the individual development of its employees would improve the performance of the company as a whole. With the help of the future trends that will be implemented by the United Biscuits, it will have the opportunity to further increase and improve its production and operations, thus, ensuring its expansion and success in the market.
SWOT Analysis
SWOT analysis can provide a framework for identifying and analyzing strengths, weaknesses, opportunities, and threat. This can also provide an impetus to analyze a situation and develop suitable strategies and tactics, a basis for assessing core capabilities and competences. Moreover, this can provide the evidence for, and cultural key to change and a stimulus to participation in a group experience.
STRENGTHS
WEAKNESSES
1. Wide knowledge of industry
2. High rates of business survival
3. With major existing food cluster to build upon
4. Strong financial performance
5. Dedicated and professional employees
6. Wide range of products and destinations
7. Diverse economy
8. Created a process culture
9. Cross-cultural communication
10. Pilot manufacturing plant
1. Low exploitation of the Internet and ICT
2. Lack of R&D
3. Fragmented enterprise support
4. Employment is dominated by low-productivity sectors
OPPORTUNITIES
THREATS
1. Expansion of target market
2. Healthy market environment
3. Diversification
4. Further expansion
5. Further development in technology
6. Established in the industry
7. Manufacture of new product varieties
8. Opportunities for growing tourism-related business
9. Improvements in public sector
1. Pleasing its customers
2. Intensified competition
3. Competitive marketplace
4. Additional supplementary tax charge
Advertising Philosophy
Advertising is one way to get the attention of the target market and the consumers to get to notice a specific product. Because of this, many companies are extracting all its creative juices to be able to come up with useful and creative concepts in order to attract consumers. Promotional support for McVitie’s include TV advertising and radio, including print ads, and caravan ads. It’s new advertising campaign features the line ‘Go on… Go Ahead!... Give in’, which focuses on the targeting audiences belonging to the 17 to 34 year-old ranges (2001). In addition, promotion of the product would be enhanced through promos, such as collecting fifteen wrappers of McVitie’s to receive a 5 euro music token (2001).
Print ads, such as posters and the wrapper itself, and caravan ads are also useful forms of advertising McVitie’s, for these serve to be a tangible reminder of the product, and contribute to attracting consumers. Posters can be placed and posted in different locations, such as in walls of establishments, restaurants, and other available space, where the posters can be placed. With the use of posters, more and more consumers will be able to become exposed to the product. The wrapper of the product is in itself a print ad, for the wrappers can be used to promote the product in the market, through the improvement in packaging and wrapping. The product caravan is also a successful and useful form of advertisement because the product caravan can travel from one place to another in transporting and delivering the products to the consumers, and with the use of these caravans, the biscuits will be advertised.
Advertising Plan
Radio Advertising – Radio skit featuring two men speaking to each other, where one persuades the other to eat McVitie’s Milk Chocolate Digestive by enumerating its benefits, while the other one stops himself for becoming ‘addicted’ to the product. However, in the end, the other person gives in. (The ad will end, by saying the tagline ‘Go on… Go ahead… Give in’).
TV Advertising – Use of an animated cartoon strip, featuring a McVitie’s hero or mascot that shows what the product may do to ease digestion. The McVitie’s hero or mascot can show that he or she eases the way for foodstuffs to pass the small intestines, making the consumption of the product healthy and essential.
Print Advertising – Using lovers in the print ad, the picture can show that gifts of the man, such as stuff toys, flowers, etc. are in the trash can, while the girl (kissing the man in the cheeks) receives the pack of the McVitie’s Milk Chocolate Digestive from the man.
Conclusion
From the above discussion, it can be deduced that for a specific product to be successful in a market, its manufacturer must be able to come up with appropriate marketing and business strategies, such as improvement in management, creativity in advertising, control over financial resources, focus on its market size and segments, and product development. With the use of these strategies, the marketing of the product will be surely successful, for all aspects of market entry has been explored. From these, the company would have to sustain and maintain the quality and integrity of its products, to be able to continually meet the standards, demands, and needs of its consumers. Similar with the United Biscuits, other companies must be able to do the same to ensure their business to flourish. From this, it is evident that the company serves to be a good example to the rest of the existing companies and corporations in the industry.
0 comments:
Post a Comment