Discuss about the Marketing & Management for Private Lavel Brand.
Planter peanut company is an organization that was founded in 1906 and a division of Kraft Foods and has completed a century in the U.S. market in this year. This organization is known for its processed nuts and the icon for the organization that is Mr. Peanut is famous. The annual revenue obtained by this organization in the year 2016 until now is $997.2 million that is lower than the private level brand, which earned $1225.5 (Statista 2016).
Figure 1: Sales of the nuts brands in the United States in 2016
(Source: Statista 2016)
However, this organization is struggling for better productivity and profitability due to their low performance and thus, the principal objective of this assignment is to diagnose the problem along with the analysis of consumer behaviour in the snack nut category so that their performance can be resolved. In addition to that, the marketing research strategy undertaken by the Kraft Foods Group that is different from the Planters Nuts Company which is followed by the Planters Nuts’ current segmentation, targeting and positioning. Lastly, the assignment wraps up with some recommended strategy regarding brand positioning of the concerned organization so that better productivity can be achieved.
This section comprises of the 5C framework that consists of the company, its customer, competitors, collaborator and context. The context can be welly described through the PEST analysis by depicting the environmental factor about the concerned organization. In addition to that, a factor in consumer behaviour will also be covered in this section along with the current segmentation, targeting and positioning.
Figure 2: 5C Framework of marketing
(Source: Yadav et al. 2013)
Moradi et al. (2013) depict that even though the organization has gained popularity for their products but they had to struggle for their low margin price. The prime reason for this low margin is the volatile price of the peanuts, which is not declining at an exponential rate but do so at a steady pace over a period. Additionally, Yadav et al. (2013) portray that organization had to struggle after introducing almonds and pistachios and thus suffered from leaky bucket problem due to which they lose customers and market share. It is also evident from the case study that a majority of people prefer almonds to other nuts, as they are a health concern.
Figure 3: Customer Perceptions towards Nuts
(Source: Planters.com 2016)
Thus, from the above statistics, it is evident that expect low-income group; every other group prefers the consumption of almonds compared to any other nuts. Another strategy due to which they are struggling is that they do not spend much on the advertisement. Planters have spent $15.million whereas their competitor Wonderful have to spend $21.4 million (Planters.com 2016).
The customers they are targeting for the consumption of the business products are health conscious people and the people who intend to purchase wholesome snacks and favor healthy nuts over processed nuts products (Ruteri and Xu 2013). The problem that they face is that they lose some revenue for almonds and pistachios, who cannot afford those costly products and the high-income group does not prefer to buy tradition peanuts products for which the organization is famous in the community. Moreover, Ngo and O’Cass (2013) portrayed that when the organization takes initiatives for boosting their sales up by manufacturing mixed nuts. The primary reason is to provide customers a chance to purchase every flavour of nuts in one packet, it was a complete failure of their business strategy, as they do not survey for the customer’s demands and thus have to lose a significant percentage of annual revenue.
Ford and Håkansson (2013) depicts that there are a number of competitors who manufactures snacks products to attract customers with their mouth-watering products. Several processed nut-manufacturing products are strong competitors of the concerned organization Planters Nut Company- Store Brand, Wonderful, Blue Diamond, Emerald and Hampton Farmers. Rothlin and McCann (2016) further demonstrated with the statistical details that the competitor nut origination Wonderful also adopts the strategy for advertising their products. It is also found that Wonderful has 65% more market shares than Planters Nuts in sales of pistachios (Planters.com 2016). Moreover, Mäkinen et al. (2013) highlight the details of Store Brand that illustrates that this organization leads market shares in every type of nuts except peanuts and mixed nuts.
Figure 4: Market share of Planters and its competitors
(Source: Planters.com 2016)
Ford and Håkansson (2013) also depicts on the target market of the competitors and it is found from his research that their primary target is especially the women who are 35years and above, secondary target market are the health conscious men and lastly, they also emphasizes on the younger men of age 25 to 34years. On the other hand, Planters only target men and health conscious people. Prahalad and Ramaswamy (2013) also illustrates that Emerald is significant competitors as their products to do business is same that of the Planters.
They do not have any collaborators as they areis the split industry of the Kraft Food Group. They are sole company that sells confectionary nuts products for satisfying their consumer’s needs for the nuts products.
The best tools that can be used in this context are the PEST analysis that can identify their business macro-environmental factors.
Image 5: PEST Analysis
(Source: Shabanova et al. 2015)
The political issue that is faced by the organization is the new legislation from the regulating bodies that arise from War or Terror. Shabanova et al. (2015) also depict that apart from the variation in the government rule, US has a stable democratic setup that is fair and transparent with the traders and supplier. The government also emphasizes on the formulation of natural products and agriculture so it can be stated that the political factors have a favorable support.
In recent time US has its GDP of over $16.760 trillion, which is the largest economy in the world. However, Cullingworth and Caves (2013) portrays that the country is suffering from a budget deficit of $506 million that puts the economic prosperity of the country at the grave. Reeves et al. (2012) hence mentioned that these monetary risks affect the business as the cost of the products rise that is not affordable for low-income people.
As mentioned above, in the society the health consciousness has become a major concern. Bryman and Bell (2015) portrays that this leads to the lesser sale of the peanuts that is the patent products of the Planters. Moreover, the rate of aged people is increasing at an exponential rate in the US and they are recommended by a doctor not to consume must fatty products like nuts due to their health issues, which affect their annual profit by a significant amount.
According to the viewpoint of Marshall et al. (2014), the company suffers from technological advancement as in recent times organization mostly emphasizes on the information technology. Moreover, Bashan et al. (2014) depict that, their competitor’s techniques can be improved for the growth of the peanuts at a massive amount so that more profitability can be attained that the concerned organization lacks. In addition to that, Verbeke (2013) portrays that the organization also implements technology in packaging procedure that was a plastic bottle in older days and a canned package in recent times. The primary benefits of the canned package are that these products are eco-friendly and store the nuts intact in their nutrients benefits than the plastic bottle.
The Plants nuts company manufactures nuts products for their consumers. Solomon (2014) demonstrates that the price of the product influence the consumer and the low rate of peanut can be easily affordable to communities. However, the concerned organization took initiatives for selling almonds and pistachios and mixed nuts that cost much higher than the peanuts and hence lower-income group cannot afford the price.
According to Solomon et al. (2012), nuts products are rich in fats and are good in tastes; however, they do not have positive aspect always. Thus, from the case studies, it can be depicted that people who are more concern about their health do not prefer these products. Doctors also suggest child and elderly people not to consume more nutty products that may affect the sale of their products.
This context can be related to the brand equity of an organization, which signifies that it is more important to value the products and the services rather than the brand name. Planters emphasize on five brand equity measures- quality, relevance, uniqueness, popularity and familiarity. Schiffman et al. (2013) further explain that if consumers get premium quality peanuts every time they made a purchase, they will develop a tendency to buy that product compared to other nut products irrespective of the high price. Moreover, the concerned organization celebrates their 100years in 2016 and hence communities of US are well aware of the brand Planter.
Planters Nuts Company is a division of Kraft Foods Group, which is associated with the grocery products for the North American market. Later they had split to an organization named Mondelēz International that deals with the business of the international confectionery and snack brands. Verbeke (2013) illustrates that Kraft Food Group emphasizes on the customary practices like an evaluation of brand health. This approach can be achieved by taking survey directly from the customers and gather information about their brands to increase their productivity.
The organization targets their conventional consumers that are the men, who belong to 35 to 65years and the people, who understand the value of the naturally remarkable products (From of the case study). On the other hand, it is found that Planter only focuses on the sale of their products and thus the point of difference is the absence of real nourishments that enhance the consumer’s health. They also implement the strategy for selling salted and roasted nuts products that may be mouth-watering in taste but consumption of these products more will result in unnecessary fats.
The marketing strategy Planters Nuts’ can be depicted through the marketing 4p strategy.
Figure 6: Marketing Mix Strategy
(Source: Balogun et al. 2014)
There are several products that the concerned organization is formulated under five categories- Nuts and seeds, nut mixes, culinary and limited edition products. In this scenario, also Podolyakina and Popova (2014) presented that nuts and seeds comprise of cashews, peanuts, macadamia nuts, pecans, raw nuts, sunflower seeds and nuts and pistachios. Planters also focus on the mixed nuts products that are dessert-inspired mixes, NUT-rition mixes, nuts and trail mixes (Planters.com 2016). The prime objective is to present a wide variety of nutty products to their loyal customers of every age group and income group.
The organization has their firm existence in the markets of United States; however, the parent organization Kraft Food Group, it is headquartered in Chicago and they are providing their grocery items across the globe. Balogun et al. (2014) depict that they also target the busiest streets of the US so that maximum products can access their stores. They also take initiatives for associating with the local retailer’s shops at a different location of the US so that every individual can use their products for a better experience. In addition to that, they have also innovated new products for health conscious customers like cooking oil, walnuts and have nut mixes cans as their limited edition products. Moreover, the strategy of the pricing is to be reasonable so that they can target every group of the community. Danziger et al. (2014) further add that they also follow the strategy of the competitive pricing strategy for surviving in the market. The primary objective of this approach is to provide a choice to the customers so that they can select the best products in their budget. Thus, the concerned organization not only values in their pricing strategies but they will also focus on improving the better quality of the products.
In the year 1998, Plants Nuts Company first introduces the Planters Trail Mix in a NUTmobile, which is a peanut shaped van that promotes their brands and their products. Later in the year 2004, the icon of the Planters brand earned a spot on “Madison Avenue’s Advertising Walk of Fame”. Guo et al. (2013) also adopt another promotional strategy for hosting campaigns and one such example is the “Power of the Peanut Campaign”. The primary objective for adopting the promotional strategy is to make everyone aware of their products for attaining maximum financial growth of the company. Ellickson et al. (2012) on the other hand further adds that promotions also reveals the implementation of the new products like Dessert-Inspired Mixes are introduces in the 2015 and people now enjoy this product as they came to know about this products through their digital campaign.
Sirianni et al. (2013) define that brand positioning is a procedure of positioning your brand in the customer’s perception. It is evident from the case study that Planter Nuts Company has followed their brand equity; however, adopting better branding positioning not only provide a competitive advantage but it also ensures the longevity of the organization. In this section, some brand position strategy is depicted that can be used for overcoming the drawbacks for which the organization is facing difficulty.
It is stated by Gammoh et al. (2015) that managing authorities of the concerned organization have to assess the current positioning of the organization. As the organization is a well-renowned organization, so they can implement new and modern technology for achieving their business objective in an efficient way. Moreover, they should also take initiatives for incorporating IT technology like POS devices and online facility so that customer can access their services from anywhere. In addition to that, they can also spend a significant portion of their revenue on the R&D department for formulating new ways of improving their products like make peanuts products healthier (Ng and La Blanc). In this way, more customers can purchase their products. In addition to that, implementation of ERP system can also be one of the innovative steps that can enhance the brand position of the concerned organization. This technology is used for performing all the things through digital technology for effective and efficient business procedure.
The next step is to identify the direct competitors of the organization and their positive outcome of the business strategies. The leader of Planter Nuts Company can host regular meetings and unofficial gathering where they can formulate theories for better business approach than their competitor and suggests ideas for introducing new and innovative products. Another method is to assess the drawbacks of the company’s pitfalls and trying to resolve the difficulty. Customers can get more attracted towards This can be accomplished through a regular survey to their customers about the positive and negative perspective of their products and based on which further assessment can be performed. Moreover, loyal bonus programs can also be implemented so that the customers can get more attracted towards the nut products.
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