Arnott’s Biscuits: Second Biggest Snacks Item Supplier In Australia

Case background

Discuss about the Second Biggest Suppliers Of Snacks Items.

Arnott’s Biscuits is the biggest biscuit manufacturing company in Australia and second biggest suppliers of snacks items. Apart from the signature biscuit, the company has diversified its business into producing many of snacks items, such as, shortbread, breads, custard creams, desserts, crackers, syrup, coconut rings, fruit roll, tarts, and many more (Arnott’s Australia, 2018). The company has been recently facing some threats and challenges from various factors, such as, strong competitors in the biscuit making industry, such as, Kraft Foods Ltd, Griffins Foods Ltd, and Goodman Fielder Ltd, entry of international biscuit companies, and competition from the less expensive products, that have the potential to replace the more expensive products and reduce the profitability of the company. The purpose of this report is to present a marketing plan for Arnott’s Biscuits. With the situational analysis, internal analysis of the business, the report will present the marketing goals and objectives, marketing strategy, implementation strategy, monitoring and controlling strategy. This plan will highlight the limitations and scope of the company too while implementing the plan.

Arnott’s Biscuits has been ruling the biscuit and snacks market in Australia for more than 150 years. With these long years of history, the company is not only a mere food company, but it has also become one of the national icons of Australia. The portfolio of the company includes many household names, such as, Tiny Teddy, Iced VoVo, Tim Tam, SAO, Shapes, Vita-Weat, and Salada. Not only in Australia, but the company is one of the biggest food companies in the Asia Pacific region also (Bigliardi & Galati, 2013). With the support of the Campbell Soup Company’s business portfolio and investment, Arnott’s Biscuits has expanded its business into multiple brands and varieties under the same umbrella.

The company has been a major source of employment in the nation. Currently, around 2400 Australians work with Arnott’s Biscuits. It makes its product from the ingredients sourced from the national productions and contributes around $250 million in the economy to source its ingredients. It has also invested a significant amount, $400 million in developing the biscuit making facilities that includes $40 million for making a fully automated packing facility at the Virginia Bakery (Arnott’s Australia, 2018). This is one of the world’s biggest robotic installations of its type. The company has expanded its exports into various other countries.

Situation analysis

The mission statement of the Arnott’s Foundation says that it believes in creating positive environments for the families in building, maintaining and enjoying a better quality life by working together (Arnott’s Australia, 2018). To fulfill this mission, the company supports many projects for the benefit of the society.

Marketing environment is comprised of internal and external environment in which the company operates. Situation analysis is conducted to get a picture of the business operations of the company and impact of the external and internal business environment on the operations (Jobber & Ellis-Chadwick, 2012).

External environment refers to the exogenous factors that affect the operations of a company. Hence, external analysis refers to analysis of those exogenous factors. Those include the political, economic, social, technological, environmental and legal (Yüksel, 2012). PESTLE analysis tool is the most appropriate tools for this analysis. As discussed in the previous assignment on external environmental analysis, it is found that, there is no major political obstacle in the country; rather it provides encouragement for business growth. There is also no economic obstacle and the country has been experiencing longest running economic growth, which is beneficial for any business. On the social front, there is adequate supply of labor. However, the changing dynamics of the consumer preferences is a challenging factor Arnott’s Biscuits. On the technological front, the company has been investing huge amount of capital in developing and installing the latest technologies for business, which increases productivity and performance of the company. There is no environmental threat to Arnott’s Biscuits and it is also trying to reduce its environmental footprint by implementing various effective technologies and investing in CSR. Lastly, the company is free from any legal obligations, helping in the expanding the business. Thus, it can be said that the company has favorable external market environment, which promotes business growth.

The opportunities and threats have also been identified in the previous assignment. It says that the company has the opportunity of expanding in the breakfast and beverage section, in the international market, and for using more advanced technologies for compensating the labor deficit. On the other hand, it faces strong competitions from less costly products, and renowned competitors as well as from international competitors.

This environment refers to the target market and factors affecting the purchasing behavior of the consumers. Arnott’s Biscuits has targeted people of all ages, from 4 years and above and all types of tastes. Hence, over time, they have introduced numerous different types of biscuits in the market. They have been also producing various different snacks item, which would capture the attention of the target market. The prices of the products are reasonable and affordable for all.

Comprehension of marketing planning theory and concepts

According to the annual report of 2017 of Arnott’s Biscuits, it is seen that the net sales was $7,890 and gross profit was $3,059 in 2017. The net earnings in 2017 were $887 million (Arnott’s Australia, 2018). Apart from production, it spends $250 million to procure the raw materials and agricultural supplies for production every year, which amounts to $3 billion in the past decade. It invests in technology development. The data from the annual report is attached in the appendix.

Marketing theories and concepts describe the factors and conditions that are applied in the marketing planning and strategies. The marketing mix is one of the most commonly used theories in making marketing strategies. It helps to understand what a product or service can offer and how to plan for that. 4Ps of marketing mix is a tool that represents product, place, price and promotional strategies for a product or service (Baker, 2014).

 

Figure 1: 4P’s of marketing mix

(Source: Baker, 2014)

Product	· Product name and type · Quality of the product · Unique feature or USP · Brand segmentation
Price	It is determined on the basis of: · combination of the manufacturing and other costing · Market condition · Inflation rate · Profitability of the company · Competition
Place	It refers to the distribution channels · Supermarket and grocery stores · Convenience stores · Online retail channels
Promotions	This represents the integrated marketing communications for promoting the product or services. · Advertisements · Creating brand awareness through new brand promotions for new product or recall promotions for existing products · Segmentation, targeting and positioning

Table 1: 4P’s of marketing mix

Maslow has presented the hierarchy of needs theory to represent the motivational aspects for human beings. The factors are presented in a pyramidal structure and the motivations increase only when the needs are fulfilled following the pyramidal structure (Robertson, 2016).

 

Figure 2: Maslow’s motivational theory

(Source: Robertson, 2016)

The marketers use these concepts and theories to make the marketing plans for any product or service. They create segmentation in the market to identify the target market and analyze the factors, like, the tastes and preferences of the consumers, income, social status, age, gender etc. to design the marketing strategies, which includes the marketing mix. The main purpose of marketing is to satisfy the needs and wants of the target market, for which internal and external analyses of the company are made.

Internal environment of a company refers to the internal factors that affect the business operations. Internal factors refer to the organizational elements, such as, employees, management, culture, budget, events, and business conditions that influence the activities and performance of a business (Armstrong et al., 2015). The best tool to analyze the internal environment is the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

A SWOT analysis will be performed for identifying the strengths and weakness of the Arnott’s Biscuits Company to develop a relevant marketing plan.

Strengths	· More than a century of experience in the biscuit industry · Hugely diversified products · One of the largest biscuit and snacks manufacturers in Australia and Asia Pacific region · Exports to more than 40 countries in the world and hence, a strong foothold in the international market
Weaknesses	· Use of only locally purchased and locally grown products · Small market share outside Australia · Some of the products are expensive
Opportunities	· Expansion in the international market · Increase fortified food products · Expansion in breakfast cereal, cookies and beverage segment
Threats	· Strong competition from various local and international competitors, like, Kraft Foods Ltd, Griffins Food Ltd, and Goodman Fielder Ltd · Less expensive substitute products in the market

Table 2: SWOT analysis for Arnott’s Biscuits

From the SWOT analyses, it can be inferred that, Arnott’s Biscuits faces challenges from less expensive substitutes and strong competitors. The usage of only locally grown products can sometimes lead to degradation of the product quality, if the quality of the local ingredients is poor. Hence, the marketing plan for Arnott’s Biscuits should develop strategies for tackling these above mentioned challenges.

Marketing objectives are the short-term achievements that help in achieving the long-term goals. The objectives and goals of marketing should be aligned with the business goals and objectives of a company. Marketing goals describe the general business accomplishments while the objectives provide specific and measurable benchmarks to achieve that (Hartley & Claycomb, 2013). The business goal of Arnott’s Biscuits is to become the best quality food providing company that makes everyday moments more delicious with good food (Arnott’s Australia, 2018). Hence, the marketing goal should be following the business goal. The marketing objectives of Arnott’s Biscuits will be developed on the basis of the situational and SWOT analyses.

Marketing goal	To achieve a strong foothold in the international market by venturing into new countries and increasing popularity in the existing market, and to increase the market share in Australian market
Objective 1	Increase the number of less expensive products to reduce competition
Objective 2	Local and global market expansion

Table 3: Marketing goals and objectives of Arnott’s Biscuits

Marketing strategy refers to the plan of providing the value proposition to the target markets on the basis of the analysis of the best market opportunities. In other words, marketing strategy is the plan to achieve marketing goals and objectives of a company, given the resources, market opportunities and policies (Babin & Zikmund, 2015). For Arnott’s Biscuits, the marketing strategy is developed on the basis of the marketing goal and objectives. The strategy contains the integrated marketing communications, price and the service for the target market.

Market segmentation is the process to create different groups in the market based on the characteristics of the consumers and to meet their needs more accurately. Segmentation helps in defining the unique features and making precise targeting strategies for a particular target group (Kotler, 2015). Arnott’s Biscuits segments the target market on the basis of geographical position, demographical factors, psychographic factors and behavioral factors.

Category	Variable	Target group characteristics
Geographical	· Country of residence · Population density	· Citizens of Australia · Citizens of other countries in the international market · Rural and urban population
Demographical	· Age · Gender · Income	· 4 and older · Men and women · Any income group
Psychographic	· Lifestyle · Personality · Motives · Values and attitude	· Enjoy varieties in food habit · Active, competitive · Satisfying hunger and snack needs or desires while staying healthy · Value for money
Behavioral	· Benefits sought · Product usage · Price sensitivity · Situations	· Quality, reliability · Heavy consumption · Low price sensitivity · Anytime for satisfying hunger or munching

Table 4: Market segmentation and targeting for Arnott’s Biscuits

Arnott’s Biscuits will apply the segmentation strategy for both the local and global market for business expansions and retaining the target market.

Positioning refers to placing the product or service in the minds of the consumers so that they choose it over the other competitor products (Solomon et al., 2014). This is an important step in marketing plan. The positioning strategy for Arnott’s Biscuits is shown in the image below.

The marketing strategy to achieve the marketing goals and objectives can be achieved through positioning the product by the attribute of more extensive personalized service, given the fact that people already consider the products of this company as high quality ones, compared to the other companies’ products (Armstrong et al., 2015)

Marketing mix categories	Strategies
Product strategy	· Product differentiation in terms of taste, considering the difference in tastes and preferences in different regions of the world. · Introducing various pack sizes, small to family packs
Price strategy	· Competitive pricing, that is, reduced price of the expensive products to make it cheaper compared to other cheaper substitutes · Pricing according to standards in different countries
Place strategy	· Wholesale dealers · Supermarkets and grocery stores · Convenience stores · Hypermarkets · Institutional organizations, like, hotels, airlines, railways · Online retailers
Promotion strategy	· Frequent change of packaging · Umbrella branding · Catchy taglines focusing on delivering high quality of life through the products · Using print and digital media and platform like YouTube · Celebrity endorsements

Table 5: Marketing mix strategies for Arnott’s Biscuits

It can be inferred from the above table that the company will have to focus on expanding into new international market and on increasing the market share in the existing local and global market by emphasizing on competitive product pricing and product differentiation.

As stated by Kotler (2015), effective marketing strategy implementation helps in creating a competitive advantage. It is as important as making marketing strategies. Marketing strategies can only be effective when it is implemented efficiently. The marketing strategies for Arnott’s Biscuits will be implemented majorly through promotions. Integrated marketing communications will be applied to implement the strategies. The internal department for marketing will be entitled for the promotional strategies in the existing markets. They will create new tactics and promotional strategies for according to the specific characteristics of the different markets and different consumer groups. The marketing team will utilize the social media and other digital media for promotions. Celebrity endorsements will be launched. Packaging will be changed frequently. For entering new market, the market research team will be entitled for conducting appropriate market research. Based on the findings, the expansion strategies will be made, specific to each market. Budget will be allocated accordingly to implement different strategies.

The implementation of marketing strategies should be evaluated, monitored and controlled efficiently in a regular basis. This is an important step in the marketing plan for a company. Unregulated monitoring and controlling can lead to various problems, such as, misallocation of resources, misutilization of funds, and ineffective strategies (Fifield, 2012). Hence, a system for monitoring and controlling should be implemented to regulate the marketing strategy implementation. The outcomes are monitored and measured to check the fulfillment of the marketing goals and objectives.

The company will use formal and informal controls for tracking the performance of the marketing plan against the expected outcomes, in the case where strategic changes should be made. Marketing audits will take place since expansion of business in the new and existing international markets is one of the goals. It will also be monitored whether the legal obligations are met or not while implementing the marketing strategies.

Conclusion

The report discusses the marketing plan for Arnott’s Biscuits in Australia. It can be seen that, despite facing challenges from various local and global competitors, the company was successful in establishing a good position over more than 150 years. Over time, to retain the market and expand its business, the company has diversified its product ranges and became a household name for biscuits and snacks. However, from the internal and external analysis of the company, it is seen that, the company has a small share of the market in the markets outside Australia and it faces competitions from some global and local competitors. Along with that, there are some expensive products of the company that face competition from low priced substitutes. The marketing plan of Arnott’s Biscuits consists of the strategies for promotion in the international and domestic market for increasing the market share with cheaper and newer products. It also draws plan for implementation, monitoring and controlling the strategies. The purpose of the report is to present a marketing plan that would effectively increase the market share of Arnott’s Biscuits in the domestic and international market.

References 

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Arnott’s Australia. (2018). About Arnott’s | Arnott’s Australia. [online] Available at: https://www.arnotts.com.au/about-arnotts/ [Accessed 25 Mar. 2018].

Babin, B. J., & Zikmund, W. G. (2015). Exploring marketing research. Cengage Learning.

Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.

Bigliardi, B., & Galati, F. (2013). Innovation trends in the food industry: the case of functional foods. Trends in Food Science & Technology, 31(2), 118-129.

Fifield, P. (2012). Marketing strategy. Routledge.

Hartley, R. F., & Claycomb, C. (2013). Marketing mistakes and successes. Wiley.

Jobber, D., & Ellis-Chadwick, F. (2012). Principles and practice of marketing (No. 7th). McGraw-Hill Higher Education.

Kotler, P. (2015). Framework for marketing management. Pearson Education India.

Robertson, F. (2016). Maslow’s hierarchy of needs. In Gower Handbook of Internal Communication (pp. 143-148). Routledge.

Solomon, M. R., Dahl, D. W., White, K., Zaichkowsky, J. L., & Polegato, R. (2014). Consumer behavior: Buying, having, and being (Vol. 10). Pearson.

Yüksel, ?. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.