How does competition affect Toppits marketing plan?
Direct competition Gourmet Garden McCormick Derlea Jars Indirect competition Backyard herb gardens Competition
International brand Australia market knowledge
New company Tube product Shelf life is 3 months Preservatives used Product contains milk solids and dairy derivatives (allergens)
Gourmet Garden
Major multinational Large product base Good brand recognition Large distribution network
Tube product Shelf life is 3 months Preservatives used contains milk solids and dairy derivatives (allergens)
McCormick
Garlic imported from China so higher margin Small business so low overheads
Limited product line Small distribution network Raw material dehydrated Preservatives used Lost flavor once jar opened
Derlea Jars
Ease of use: pre-proportioned Long shelf life All natural, preservative free Kosher, no diary derivatives Toppits
Limited awareness due to bad placement of freezers
Which customer group should Toppits target?
How does this affect the marketing plan? Segment Age Group/Sex Factor for selecting product Approx number of prospects Comments Student 18-25, Male and Female Convenient and healthy Limited access to grocery stores Easy-to-use Long shelf life
5.12 Million (16%) Limited transportation Restricted budgets Condensed in tight geographical areas Jewish community Not specified Imported from Israel Kosher 0.32 million (1%) Concentrated in small metropolitan areas Trusted Israeli supplier Prefer kosher designation on the package
Women (Current) 25-54, Female Limited time to cook Healthy meals 14.4 million (45%) Fresh & Healthy Enjoy Cooking Have limited time Toppit can make its presence felt in stores close to student dense areas or open stores in those areas.
If a Warehouse store is opened close to University area then the price factor would also be resolved (71% consumers felt this was important) since students would get a price advantage of $1.46/tray .
Toppit can also make their presence felt online to make its presence felt across students.
Therefore, Toppits must concentrate on the Student Segment and continue to strengthen their position in the current segment for long term profitability. Develop a promotional strategy and budget for Toppits Change suppliers from Israel to China Compromise on quality TV Advertising on day shows like City Line Spending more on Sampling
Introduce tray in smaller packets (4/6 Cubes each) Target College students Focused promotion on selected channels Begin In store promotions
Focus on smaller packs to increase profitability, sales & penetration Initiative Actual Suggested Sampling (for promotion) 40,000 20,000 Magazines 36,000 36,000 Television advertisements 40,000 30,000 Radio 20,000 25,000 Packaging 20,000 30,000 Food festivals 10,000 10,000 Freezer placement 8,000 15,000 Website Design 15,000 10,000 Newspapers, Fliers NIL 10,000 In store promotion NIL 14,000 Total Budget Allocated
1,89,000 200,000 Advertise on University Radio Stations, Better impact Accounting for packaging of new packs 38% of the consumers who look for these could be tapped Retained as they increase awareness Hardly have an impact on sales, Distribution not set up to leverage Create recipes using Toppits and publish them in magazines With bigger see through glass, Freezer with posters To tackle pressure from retailers, Better visibility Targeted channels and shows Promotional Strategy What are the distribution options available to Toppits?
Evaluate these distribution options, both quantitatively and qualitatively Distribution Channel Markup Sales Growth Pros
Cons Grocery Stores
Distributor: 25% 1% Wide network Convenience for the consumers Single tray are also being sold Slowest sales growth Total high mark up is high Higher cost for the consumers Lesser trips by customers Stores: 40% Total 75% Warehouse Stores
20% 2% The markup is low The frequency of going to warehouse is increasing for consumers Caters to concentrated consumers Special packaging required Low penetration (only 10 warehouse store in Canada) Walmart (Mass Merchandising) 25% 5% 276 stores across Canada Expansion plan of 15-20 stores per year Dominant force in mass merchandising High growth volume potential Additional advertising expenditure 10% lower per unit sales price
Qualitative Analysis Quantitative Grocery Stores Description Units Cost Price of Toppits (per case) $ 34.00 Margin earned by Toppits (25%) $ 8.50 Cost Price of Distributor (per case) $ 42.50 Mark up by distributor (25%) $ 10.63 Cost price of Grocery Store (per case) $ 53.13 Mark up by Grocery Stores (40%) $ 21.25 Price to the consumer (per case) $ 74.38 Number of trays per case 16 Price to the consumer (per tray) $ 4.65 Warehouse Stores Description Units Cost Price of Toppits (per case) $34.00 Margin earned by Toppits (25%) $8.50 Selling Price of Toppits per case $42.50 Selling Price of Toppits per tray $2.66 Cost price to Warehouse Stores (per pack) $7.97 Markup by Wholesale Stores (20%) $1.59 Price to the consumer (per pack) $9.56 Number of trays per pack 3 Price to the consumer (per tray) $3.19 Walmart Stores Description Units Cost Price of Toppits (per case) $34.00 Margin earned by Toppits (12.5%) $4.25 Selling Price of Toppits (per case) $38.25 Markup by Walmart $ 9.56 Price to the consumer (per case) $ 47.81 Number of trays per case 16 Price to the consumer (per tray) $2.99 Walmart: Margin reduced to 12.5% - reduction in profitability Additional Advertising expenses of $50000 Cost per tray for consumer reduced to $2.99 Warehouse: Additional packaging and Freezer cost of $28000 Grocery Stores: Cost per tray to the consumer is maximum among all the distribution channels Quantitative Analysis What should Gremont do? Objectives
Maximize line profitability Promote awareness Ensure repeat purchase Distribution Strategy Expand into various channels Sourcing Strategy Change to low cost supplier Promotion Strategy Change focus of current promotional activities
Concentrate on student segment for long term profitability Strengthen warehouse store distribution channel Open warehouse stores close to universities Stop spending more on sampling; instead, focus on other means of promotion
Must not switch to Chinese suppliers Should not look into Walmart expansion plan as a long term measure Should not focus on Jewish community - tiny percentage of population