Critical Review Of Building And Sustaining Customer Loyalty In The Food And Beverage Retail Industry In Malta

Background of the Retail Industry

This report presents the background statement of food and beverage retailing industry, market positioning and unique selling proposition. It also demonstrates the marketing audit such as internal and external factor outlining, the overall market attractiveness and potential for growth.  This report discusses the new marketing action to achievement gaps between company present marketing strategy and the external environment.

Background of the retail industry

The food and beverage sector is leading by a corporation that is 100% Maltese owned. It is analyzed that there is only one company, which had mixed Maltese and foreign ownership and another was a publicly listed corporation. The industry contains the different Maltese-owned corporations.  The Maltese retail distribution industry incorporates the small local shops and street vendors. But, the development of large European retailers on the island is slowly transforming the manner in which the Maltese perform their business (Goworek, McGoldrick, and McGoldrick, 2015).

The above statistic demonstrates that the annual turnover of industry related to food and beverage services activities in Malta is 406.6 million Euros in 2015 that is higher as compared to previous years.

In Greek myths, Nectar is termed as the beverage of the god that avoids dishonestyina strategy that is sharedwitha human being. This encouraged the brand of the companysince it was established in 1991. The aim of this company is to import and distribute the quality food and beverage across the Gozo and Malta. It is a highly family-owned and respected company, that takes pride in the wider range of portfolio of foodandbeverage with confectionary products. It has widely stocked in more than 3100 retail stores. It also deals in leading hotels, restaurants, bars, groceries, pharmacies, canteens, cinemas between other outlets.

Market positioning is defined as the procedure of developing the image and recognition of brand or products so that, a consumer observes it in a specific manner. The poisoning of brand or product is a strategic procedure that entails the marketing of the brand or product in a specific way for generating and developing the picture and creates the identity within the mind of customers in the target market.Market positioning of the brandmust be kept over the life of the product (Nectar, 2018). There is a needfor on-going marketing initiatives for influencing the perception of the target market towards products or brand. In addition, the food and beverage industry in Malta focuses on unique transformation. To attain continue growth in the food and beverage industry, the company focuses on flexible marketing practices that demonstrate the on-going changes in the operating atmosphere. Nectar is working with outstanding distribution operation and its activities instructed by the slogan “sustainable marketing”.

A unique selling proposition is an element that distinguishes a product from its key market players like premium quality, lower expenses and first ever product. Nectar is providing quality products to their target customers that are its unique selling proposition in the retail market. It also offers consistent and quality services to create its unique selling proposition in the market (Grewal, 2018). 

Internal factor (SWOT Analysis)

Annual Turnover of the Food and Beverage Service Activities Industry in Malta

This part of the analysisis now emphasized with respect to performing the internal assessment of Nectar. It also focuses on the strategies that are persuaded by the corporation. SWOT analysis is a key technique for assessing the performance of the company.

The SWOT analysis evaluates the strength, weakness, opportunities,and threats. Furthermore, the application of this technique in the context of Nectar is performed as follows:

Strength	Ø Nectar is an innovator and oldest corporation to initiate the contemporary retail trade model Ø Nectar has different brand loyalty patterns for its regular consumers. Ø Recognized brand name and efficient operations Ø There are certain private label brands in Nectar that are recognized between customers (Baek, and Wang, 2018).
Weaknesses	Ø Nectar has a limited international presence as compared with its competitors. Ø Rising availability of online brands that have restricted expansion (Scarborough, 2016).
Opportunities	Ø Nectar can endorse the brand via promotions, advertising,and sponsorships Ø Looking for growth via strategic acquisition and franchise model in developing nations Ø Starts new stores in newer geographical areas to boosts the business (Hutchinson, et. al., 2015).
Threats	Ø Increasing cost of raw material from both food and non-food will affect the profit margin Ø Recession in the economy can hinder the growth strategy of opening more stores Ø High rivalry from global competitors may influence the business of Nectar (Fernie, and Sparks, 2014).

The strength of Nectar is that it is the market leader in the food and beverage retail industry of Malta and its leadership position further improves the competency of the corporation. This helps to use the market potential via its strong resources such as human resources good presence across Malta and technological resources. The larger use of its resources is partially influenced by external atmosphere circumstances which help to decline its footprint of carbon and addressing the cost-efficient ways in declining the packaging and attaining the zero food waste by 2015 (Kasemsap, 2018).

The weakness of Nectar is associated with its growth strategy. This is mainly impacted by the external atmosphere and dominating the food and beverage retail industry. The Malta government has restricted the Nectar to use the higher rate for its products. Hence, it may slow down the growth of the business (Varley, and Rafiq, 2014).

The food and beverage retail industry in across Malta indicates the good growth potential and the factors like advances in the supply chain, computerization, and changes in consumer lifestyle. These factors influenced the competency of retailers and offered the good opportunity for growing the business. Nectar is favorably looking for implementing this option by applying the approach multi-option retailing. It will enable Nectar to influence the changing preference of the customer (Yu, Ramanathan, and Nath, 2014).

The threat to the Malta retail industry is largely from the higher extent of competition in the industry. Furthermore, Nectar faces rivalry with different key market players. The intervention of government is another significant factor, which may affect the growth of Nectar in particularly within the food and beverage of Malta retail industry (Hingley, Lindgreen, and Grant, 2015).

This section of assessment is focusedonperforming the critical assessment of external environmental circumstances of Nectar and it is analyzed via the consideration of PESTLEand Porter’s five force model technique:

This is an essentialanalyzing technique for evaluating the external industry environmental conditions that may affect the performance of Nectar. The use of PESTLE analytical technique helps to evaluate the food and beverage retail industry performance. It is described as given below:

P	In Malta, there is the legislative democratic system. The top of the stateis known as presidents, who are appointed by the House of representative and whose accountability is mainly traditional (Malta Government, 2018).
E	In Malta, there is the lowest tax rate, highly skilled people and effective regulation along with the availability of affordable employees is high. It may have a favorable impact on Nectar to expand their business in Malta. Furthermore, Real GDP of Malta is approximately 12.54 billion US dollars in 2017. Moreover, GDP per capita PPP is 36513.32 US dollars in 2017. These data are favorable with respect to enlarging the business of Nectar in Malta nation (Varley, 2014). The population of Malta is 432,089 in the year of 2018 along with, 4.4% unemployment rate in 2018. This indicates that Nectar can obtain potential market growth in Malta by hiring the low rate employees and producing large supply (McIntyre, Melewar, and Dennis, 2016).
S	In Malta, English the first language and Italian is widely spoken as,the company will hire the employees who have an understanding of both languages in order to influence the customers. This could be beneficial to increase the demand of customers (Chernev, 2018).
T	International connections have considerably expanded via satellite technology along with high-capacity fiber-optic cable link the Malta with Europe region. There are about 70% of households who access the internet at home. Hence, the company can get a favorable outcome by promoting their products and services through digital media (Teller, Alexander, and Floh, 2016).
L	There are certain protection policies made by European government for protecting the Unfair Commercial Practices, Unfair Treatment, and Unfair Contracts. It could also favorably affect the company because the company will use these regulations in their business strategy (Schaltegger, Burritt, and Petersen, 2017).
E	As per the environmental law in Malta, if norms of Pollution would be exceeded then, sanctions must be imposed such as the imposition of high penalties and criminal action. The development and environmental planning act provide the competent authority such as the power to grant or refuse the grant of license (Richey, and Skinner, 2015).

The political situation may influence the food and beverage retail industry of Maltaand also the productivity of Nectar to the higher extent. For example, Government in Malta has recently introduced the competition policy that prevents from competitors like Francis Busuttil& Sons, Spar,andMizzi. The rising market governance trends in larger retailers may create an issue for small retailers to deal with the industry (Markus, Teller, And Floh, 2018).  

A declining economic market condition in across Malta has influenced the performance of Nectar. There has been declining economic activity in the marketplace of Malta. In spite of diminishing condition, the economic indicator likes fluctuation in the exchange rate of currency and weakening Malta currency has negatively impacted the food and beverage retail sector of Malta (Zhang, 2015).

Background of Company

The social factor is influencing the Malta food and beverage retail industry in the way that Nectar operating for attaining the development ofsocial and community development. In Malta, the consumer chooses the organization that prefers highly socially responsibility and organizes community initiatives. In this way, it may favorablyimpact Nectar in terms of obtaining the potential market growth as it focuses on the societal development program (Usui, 2017).

The role of technological factor may affect the food and beverage retail sector. In Malta, the advanced technology used by companies. Hence, it could adversely impact on the Nectar due to using traditional technology at the workplace. It is analyzed that competitors of this company use green refrigeration technology through which perishable good could be stored for the longer time period. Thus, it may negatively impact onthe performance of Nectar in terms of sustaining in the market (Flint, Lusch, and Vargo, 2014).

The environmental factor may not only affect the productivity of Nectar but also, affected the whole retail sector of Malta.There are certain environmental protected policies that need to strictly follow in the company such as carbon emission policy, and pollution norms. These environmental conditions may ruin the business performance if the company will avoid it (So, et. al., 2016).    

The legal element in the form of carbon tax is executed across Malta. It may affect the food and beverage retail industry. An evaluation of Nectar demonstrates that the regulation introduced by the European government is in the favor of the consumer. As per the Malta competition and consumer commission, the company has a responsibility to use fair and equal trade practices at the workplace as, it may affect the operation of the business (Abosag, et. al., 2017).

The analytical tool ofthe Porters five forces model evaluates the present situation of Food and beverage retail industry. This techniquewill also assess theindustry performance conditions. This technique contains different factors that are described as below:

Bargaining power of consumer with regard toMalta Food and beverage retail industry is considerably higher as there are several superstores and wholesale stores which provides basic products to customers.Furthermore, there isa large number of options available for the consumers to select the products which significantly increases their bargaining power (Baker, and Saren, 2016).

In Malta Food and beverage retail industry, several big competitors have the majority of shares in this industry. In this industry, bargaining power of supplier is moderate because of certain reasons such as the low population of suppliers, less competition among suppliers, and the low availability of supply (Larke, Kilgour, and John, 2016).   

In Malta Food and beverage retail industry, threats of new entrants would be lower due to the highercost of doing business. It made very difficult for a new competitor to penetrate as per this condition of the industry. Along with this, there would be a needfor higher cost for developing the brand(Baker, and Saren, 2016).  

It is analyzed that the threat of rivalry among existing competitors ishigher due to the presence of major competitors named Francis Busuttil& Sons, Spar and Mizzi. These competitors compete with each other to sustain in the marketplace for a longer period(So, et. al., 2016).    

Market Positioning

 In the food retail industry, the availability of substitute is low because Nectar produces differentiated products, delivers added value to customers and strong brand loyalty. Hence, It has no threat from substitutes because the customer will consume Nectar products rather than other alternatives(Abosag, et. al., 2017).  

With respect to the above discussion of Porter’sfive force model, it is analyzed that Nectar can launch their new products in Malta due to thehigher possibilities of success. Thus, it is also evaluated that external environmental factor could not affect the organization.

Present marketing strategy	External environment	Gaps	New marketing action
No activestrategy to reduce carbon footprints.	Increasing environmental pollution and extreme need for environmental conservation	The organization not putting sufficient steps to conserve the environment	It should implement a disposal, hygiene and recycling programme, and also makes a plan to reduce the carbon footprints.
No discount offers	High Bargaining power of buyer	Unable to fulfillthe demand of buyers	It should offer a sales promotion strategy to influence a large number of customers
Outdated technology is being used	The advanced technology used by competitors	No recent upgrade in technology	It should use upgraded technology to gain competitive advantages.
No differentiation strategy adopted	The high number of key market participants	High competition	It should identify the customer’s needs and wants by market research
It focuses on providing frozen food that is easy to cook.	Customer switching to a healthy lifestyle	Unable to provide Healthy food	It has a need to offer healthy products to retain the customers at long-term.
Premium prices strategy adopted	Increasing inflation and decreasing disposable income	Customers unable to afford products by the organization	It should use affordable pricing strategy that can increase the sales of the company.
Traditional promotion strategies adopted	Increasing use of social media and digital marketing	Difficulty in reaching out to customers effectively	It should use social media and digital marketing that helps to attract more customers.

 Implement a disposal, hygiene and recycling programme

In Nectar, there is no active strategy to reduce carbon footprints. Furthermore, environmental pollution is increasing and needs of high environmental conservation. For this, Nectar is not putting sufficient steps to conserve the environment. Hence, there is a needforthe company to implement a disposal, hygiene and recycling programme, and also makes a plan to reduce the carbon footprints. In this way, the company can re-use the packaging for several purposes and apply the hygiene to enhance the cleanliness of the atmosphere. This could also lead to enhancing the picture of a company in the customers andgenerates more exposure(Zhang, 2015).

Nectar does not provide any kind of discount to its customer. Hence, it may decline the performance of the company. Furthermore, in the food and beverage retail industry, there is high bargaining power of the buyer. There is a gap between present marketing strategy and external environment factor is that organization unable to attain the demand of buyers. Hence, the company should provide the sales promotion strategy to persuade the high amount of buyer(Larke, Kilgour, and John, 2016).  

In Nectar, outdated technology is being used while the advanced technology used by its key market players. Hence, there is a gap that no recent upgrade in the technology of the company. Thus, it can be suggested that Nectar should implement the upgraded technology to increase the competitive benefits(Baker, and Saren, 2016).   

In Nectar, there is no differentiation strategy adopted in the current marketing strategy. There is a larger number of competitors and also high competition. Hence, it should address the needs and wants of customers through market research(Markus, Teller, And Floh, 2018).  

In Nectar, the company focuses on offering the frozen food that is easy to cook whereas in the external environment, customer switching to a healthy lifestyle. Hence, there is a gap between present marketing strategy and external environmental factor such as company unable to offer healthy food. Due to this, it can be recommended that the company should offer the healthy products for retaining the customers in the long-term. It can be also suggested that the company should perform continuous innovation and this factor should be involved as a key element of its strategy.  Since, social trends and preference of customer are dynamic so, Nectar should adopt the strategy that provides a higherlevel of growth to the business(Zhang, 2015).

In Nectar, a premium pricing strategy is adopted due to offering the quality and innovative products to their customers. But, at the same time, it was analyzed that inflation is increasing and disposable income is decreasing in the food and beverage retail industry. Hence, there is a gap between the present marketing strategy and the external environment is that customers are unable to afford the products and services of the company. In this way, it can be recommended that the company should practice the affordable pricing strategy that can gain the sales of the corporation. It is also suggested that Nectar should frame the consistent strategy match with the political condition. It should aim to adopt the strategy regarding a fair price for its customers(Larke, Kilgour, and John, 2016).  

Unique Selling Proposition

In Nectar, traditional promotion strategies are used by an organization. On the other side, the use of social media and digital marketing is increasing in the external environment. There is a gap between present market strategies and external atmosphere such as company face difficulty to reach out the customer effectively. Thus, it can be recommended that the company should use social media and digital marketing for attracting more customers(Markus, Teller, And Floh, 2018).  

Conclusion

From the above discussion, it can be concluded that food and beverage retailing industry is one of leading industry in Malta. It is also evaluated that Nectar creates their market positioning by providing unique quality products atan affordable price. It can be summarised that Nectar offers a wider range of quality services that creates its unique selling proposition. It can be summarised that external and internal factor used to audit the market, the potential for growth as well as market attractiveness.   

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