Marketing Plan

From a preliminary perspective

This document will provide research on a particular company from a marketing perspective.

I. SITUATION ANALYSIS

(SWOT) Analysis

Strengths:

Lewis Road Creameries milk is made with the highest standards with ‘Whittaker’s 5 Roll Refined Creamy

Milk Chocolate’ as a merged acquisition partnership with ‘Lewis Road Creamery’. It is also organic, non-

homogenised, (PKE) ‘Palm Kernel Expeller’ free, and permeate free. The Creamery has plenty of

testimonials, reviews, and multi awards reinforcing the good reputation (Euromonitor, 2014).

Weaknesses: The Creamery is not multinational and is only available on New Zealand’s North

Island. According to research, scarcity of the product and the rate of demand has outweighed the

supply in past operations (Euromonitor, 2014). Although they are not the monopoly mass market

leaders of the industry such as Fonterra Brands (NZ) Ltd, they do have a major stake in the quality and

reputation of the organic market through their offered premiums.

Opportunities: An opportunity to export to New Zealand’s South Island and possibly Australia, while further

expanding product mix; cost reduction, further innovation, increase value-added and continual improvement is

a current opportunity (Euromonitor, 2014). Examples could be to either start to export or continue to

add products such as cheese, yoghurt, custard, ice cream and other milks. Trading and improving

products need to be separated as individual goals because Lewis Road Creamery is still developing.

Threats: The environment affects the production and livelihood of the livestock, along with expenses

and liabilities. The off season can also decrease efficiency in the supply chain because of climate

change and an increasing demand burden (Euromonitor, 2014). The economic rates and fluctuations

are a factor that impacts the stocks and shares of the agricultural market (Grewal, Levy, Matthews,

Harrigan, Bucic, 2015). The technology is important to develop the rate of production whilst

minimizing waste (Grewal, et al, 2015). According to a press release on Peter Cullinanes (founder)

Lewis Road Creameries; almost 50% of the total organic farms has dropped, since 2013 (Scoop

Independent News, 2015).

The Ansoff matrix, published in the Harvard Business Review 1957, named after an American Russian

Economist Igor Ansoff, includes 4 growth strategies:

1: Market penetration;

2: Market development;

3: Product development;

4: Diversification.

The Ansoff matrix clarifies the dimensions in the market and the brand position that best fits the appropriate

strategy, which are mentioned above (Pringle, Field, 2008). Ansoff’s focus is on tangibles of products and

services, rather than intangibles and brands. (Pringle, Field, 2008).

For Lewis Road Creamery, the penetration dimension and

parts of the development dimensions are both viable. To

outsource further by sending products to the south island and

Australia will need further research and development. If

other products are to be produced, such as multiple

flavoured milks and yoghurts, then the incorporating

requires further research. After the market and product have

been developed, there is a need to penetrate the consumers’

wants.

Fig 1

CDSTEP:

Cultural factors: New Zealand has a great country culture; with quality of livestock and environment.

New Zealand is definitely a green market; and does not require green washing (Grewal, et al, 2015).

New Zealand is one of the cleanest countries in the world, and has a great level of corporate social

responsibility. They have been described as carers of their environment and rightly so (Euromonitor,

2014).

Demographic factors: The demographics are mixed aged; more adults; mixed incomes; mixed

genders and races mainly in North Island, with less in south island but more Māori (NZ.NET, 2012,

para. 2).

Social factors: According to statistics, 64.8% of NZ was reported obese in 08-09, and in 06-07,

29.2% of children were reported obese (Marketline, 2014).

Technological: The technological advances include further production of milk efficiency and RFID

of commodities (Grewal, et al, 2015).

Economic factors: New Zealand has a higher dollar than Australia, with more debt share of GDP

than Australia; but larger population density for area (Euromonitor, 2014). (Refer to appendices for

more economic data).

Political factors: New Zealand has a single parliamentary democracy with a Constitutional Monarchy

(Euromonitor, 2014).

Fig 2 Fig 3

II. MARKETING GOAL

According to Lewis Road Creamery, “We are on a mission, to create the best dairy produce right here in

New Zealand” (Lewis Road Creamery, 2015).

This is their current marketing goal; however, a benchmark goal could be to increase market share by 5-10%

more points in the commodity sector.

III. MARKETING STRATEGY

The target market is families of all ages but mainly mothers, fathers and teenagers (Marketline,

2014). Children are direct consumers but are not the customers. The mothers are the customers that

purchase the premium product for their children’s lunch boxes at school. Teenagers work and do

choirs to purchase the chocolate milk and so do the fathers, however the mothers would buy in bulk

on a regular basis, making them the target customers.

Fig 1

Segmentation profile:

Sample segments;

Geographic;

North Island New Zealand;

Demographic;

Between 25-50, mothers; any income.

Psychographic;

City slickers and farmers;

Benefits;

Taste, and quality;

Behavioural.

Customer loyalty.

Figure 1 displays

the

segmentation

profile of the

particular firm.

Fig 1.2

Oak

Dare

Breaka

Lewis Road Creamery;

Horizon;

Nature’s Valley

Chocolate Milk

Butter;

Organic Chocolate milk.

Value proposition: Target customers will want the product because of the quality and reputation.

Positioning statement: The frame of reference for the customer needs is the satiety of the milk, the

taste, the nutrients, and the hydration. The competitive offerings are the other brands such as Oak

and Dare which are multinational conglomerates. The primary reason for the choice of Fresh Road

Creamery Chocolate Milk is the taste. The secondary benefits are the environmental contribution; the

extended quality, the accessibility and convenience, and the cost benefit. A non-comparative

statement for Lewis Road Creamery is that Lewis Road Creamery is the best chocolate milk for

people of all ages because of its quality and process. Comparatively; Lewis Road Creamery is a

better product of milk, chocolate milk, and butter, than other mass marketed products such as Oak

and Dare because it is organic. It is additionally a safer alternative with the plastic manufacturing

than the traditional glass bottles. This further contributes to the recycling processes which benefits

the environment, promotes the industry standards and ensures health safety policies. Lewis Road

Creameries products are undifferentiated for the mass market. However the premium chocolate milk

is a concentrated target strategy (Grewal, et al, 2015).

Less natural Healthy

Light taste

Sweet Taste As depicted in figure 2,

competitors and products have a

commonality. The circles

represent the market size and the

dimensions represent the quality.

Competitor offering

Company offering

Customer needs and

wants

Fig 1.3 (Circles for a successful value proposition)

Fig 1.4

Figure 1.3 shows that the best situation is when a firm’s product offering overlaps with customer

needs and wants. It must not overlap with the competitor’s offerings (Grewal, et al, 2015).

The value proposition indicates the chasm between the firm and the customers. There are also certain

patents and copyrights that prevent customers from deceptively marketing the proposition. Only

Monopolistic competitors can sustainably maintain their propositions longevity (Grewal, et al, 2015).

As can be depicted in figure 1.4 above, there are 7 spaces that are inclusive of the positioning

strategy between the focal firm, the firm, and the needs of the customers (Grewal, et al, 2015).

Competitor benefits

Firm benefits

Customer needs

The value

proposition

#1

#2 #3

4#

#5 #6

#7

#1: Value proposition: Quality chocolate milk.

#2: Customers’ unmet needs (marketing opportunity): Expand to

New Zealand South Island and Australia to ensure optimal

augmentation.

#3: Firm’s benefits that are not required – educate customer or

redesign product: Educate children and families informing them

of dairy processes and operations.

#4: Key benefits that both the firm and competitor provide that

customers require-carefully monitor performance relative to

competitor on these benefits: Great tasting products.

#5: Competitor’s value proposition-monitor and imitate if

needed: Exports and mass market.

#6: Benefits both firms provide that customers do not appear to

need: None;

#7: Competitor benefits that are not required: Invest and

educate further about the need and benefit of organic products

to promote and advertise further.

Professor Ronald Goodstein from

Georgetown University developed the

circles of success marketing metrics

(Goodstein, 2013).

This strategy provides reasons as to why the product is desirable, and it also helps to blueprint further

promotion and advertising ideas (Grewal, et al, 2015).

Depicted below in the exhibit is the hierarchy of needs model. This model was developed by

Abraham Maslow more than 30 years ago, and it is beneficial for consumer decision processes and

psychological factors that a product can influence.

Fig 1.6

Adapted by (Maslow and

Fraser, 1987)

Figure 1.6 shows the value from the

product by its price and benefit

(Grewal, et al, 2015).

IV. MARKETING TACTICS

There is more to a product than its physical characteristics or its basic service function (Grewal, et al, 2015).

Fig 1.7 indicates that the core customer value defines the problem- solving benefits that consumers are

seeking (Grewal, et al, 2015). E.g. When Lewis Road Creamery makes their organic milk, the consumers are

sceptical about the taste, but the taste is less artificial and still creates market value. “Marketers convert core

customer value into an actual product” (Grewal, et al, 2015). According to Lewis Road Creamery, “It all

started with a desire to create the world’s best butter. We set up our little Dutch churn in a converted shipping

container at Lewis Road, Bay of Plenty, New Zealand” (Lewis Road Creamery, 2012). The quality of the

product is substantial, and the packaging is clear plastic bottles with coloured caps on the plain milks. The

associated services also referred to as the augmented product, include the non-physical and intangibleness of

the product (Grewal, et al, 2015). Lewis Road Creamery has a Facebook, instagram, and twitter account. This

can be utilized for reviewing and rating the quality of the product which can also be an associated service.

Perishable items can be faulty or distributed unequally which should not occur. When it does the customer is

entitled to a refund or a replacement under consumer laws. Consumers are the ideal supporters of the product

through the social media campaigns and activities (Grewal, et al, 2015).

Actual Product

Brand name Packaging

Quality level Features/ design

Core Customer Value

Associated services

Financing

Product warranty

Product support

Product support

Fig 1.7

The product mix and line of Lewis Road Creamery is not a mass market, because the products are

premium and exclusive. There is a five cents difference in the price of organic full cream and light 750

ml milk bottles (Euromonitor, 2014). The cream has more competitors in the market with the same

300 ml for $1.45 cheaper because they aren’t organic (Euromonitor, 2014).

“Firms often add new product lines to capture new or evolving markets and increase sales” (Grewal,

et al, pg. 244, 2015). Product lines are increased or decreased in depth depending on consumer behaviours

(Grewal, et al, 2015). E.g. the firm can make other dairy products, or eliminate products; however there is no

reason to decrease the depth of the products. Some of the organic products are seasonal, such as the cream.

The supply of certain products depends on the climate patterns (Grewal, et al, 2015). A firm can use its own

corporate name to brand all its products (Grewal, et al, 2015). Lewis Road Creameries chocolate milk is a

family brand (Grewal, et al, 2015). It is also co-branded with Whittaker's 5 Roll Refined Creamy Milk

Chocolate.

Brand repositioning through advertising could be an effective product branding change. The logo could also

be designed differently to attract and create awareness, perceptibility, and relativity.

Through innovation, firms often create a broader portfolio of products, which help them diversify

their risk and enhance firm value better than a single product can (Desai and Keller, 2002). This

reference reinforces the need for more than chocolate milk, which the firm has done. If the premium

milk does not sell as well as the organic milk, the firm can still maintain profitability amongst

changing consumer preferences and competition (Grewal, et al, 2015).

The diffusion of innovation is “the process by which the use of an innovation, whether a product, a service or

a process spreads throughout a market group, over time and across various categories of adopters”, this is

referred to as the diffusion of innovation (Grewal, et al, pg. 276, 2015). The theory helps marketers

understand the rate which consumers are likely to adopt the new product while also giving them a means to

Milks Butter Creams

Chocolate Milk Artisan Pure organic single cream

Premium non-homogenized Premium Seasonal organic double

cream

Homogenized

Light

Calcium enriched low fat

Permeate free

Product Line Fig 1.8

find potential markets for the new products and to predict their potential sales, even before the innovation is

introduced (Grewal, et al, 2015). Tremendous value is added to firms when they introduce new to the world

products that create new markets (Chandy, Prabhu, and Antia, 2003), such as the chocolate milk and the

artisan butters of Lewis Road Creamery. Studies have found that market share is greater through first mover

advantage products (Oakley, Duhachek, Balachander and Sriram, 2008).

The curve shows the innovators i.e. (buyers who want it first), early adopters i.e. (reviewers), early majority

i.e. (approximately 34% of consumers, less risk taking), late majority i.e. (34% also, being the last group,

waiting for a movie to be rentable), and the laggards i.e. (similar to an unsought product) (Grewal, et al,

2015).

The product life cycle defines the stages that products move through as they enter and progress through the

marketplace. The stages indicate market place trends like a healthy lifestyle variable within an organic product

stage being within a growth level (Grewal, et al, 2015). The four Ps can also be adapted through the product

life cycle model (Grewal, et al, 2015). The diffusion of innovation can be used also as consumers within the

product life cycle, e.g., innovators at the introduction stage.

Fig 1.9

None of Lewis Road Creameries products are at a decline stage; however, with the seasonal demand of the

organic products such as the milk, it can decline over time but resurrect each season. The firm’s products

would not exit the market due to lack of demand because they are positioned effectively.

The (five Cs) of pricing formulate good pricing policies that have significant contribution and strategy.

(Dolan, 2000)

The company objectives are similar to the marketing goal. They can be either profit orientation, sales

orientation, competitor oriented, or customer oriented (Grewal, et al, 2015). Examples of costs could be profit

as a margin of revenue minus expenses. Sale prices should be as low as possible for the premium less

expensive products, and if profits suffer from the premium products, the organic specialty products can cover

an undesired loss. Competitors such as the larger conglomerates that don’t provide organic ranges can’t enter

the market because of their positioning and targets. The customer oriented dimension is the most suitable for

Lewis Road Creameries organic range because it targets specific customers at the premium price level.

Value

Costs

Company Objectives

Customers

Competition

Channel Members

Fig 2.0

Fig 2.1

P2

P1

A demand curve graphically indicates units of production matched with units demanded, which differs during

periods (Grewal, et al, 2015). The laws of supply and demand are economically measured on a curve graph as

depicted in the graph figure 2.2 below.

Price elasticity is a measurement that finds the difference between price and demand changes, which equals

quantity divided by price (Grewal, et al, 2015). It is inelastic when a 1% margin is changed both ways.

The cost factor in the pricing strategy model expands on the customers dimension with the total, variable, and

fixed costs (Grewal, et al, 2015). The variable costs for a firm like Lewis Road Creamery would involve

expenses of the distribution throughout the year, such as the operations and electricity expenses, and any other

pre-paid costs that are to change monthly or yearly. The fixed costs would be the rent or smaller expenses

such as agreed insurance payments. Total costs include both variables and any other costs, such as animal

food, machinery, water, and maintenance. The break even analysis is also a measure of cost that finds the

breakeven point between profits and losses that help calculate decisions based on figures (Grewal, et al, 2015).

(Refer to appendices for calculations).

Demand increases as price

decreases

$P

50

40

30

20

10

5

5 10 15 20 Q Demanded

The supply of the premium

products can be hard to reach

equilibrium with the rate of

demand throughout the

production rates of each season.

Fig 2.2

Competition as the 4th strategy has a profound impact on pricing strategy and how consumers react to those

strategies (Bolton and Shankar). There are four levels of competition in marketing, and they are monopoly i.e.

(dominated control, less threats), monopolistic competition i.e. (many firms, differentiated, differing prices),

oligopoly i.e. (handful of firms controlling the market with more price competition), and pure competition i.e.

(many firms selling commodities at same price), (Bolton and Shankar). The firm offers its milk in 750 ml

bottles which differentiates them from others (Euromonitor, 2014).

Less price competition

Monopoly

Monopolistic competition

More price competition

Oligopoly

Pure competition

Fewer

firms

Many

firms

Fig 2.3

Fig 2.4

Channel members are manufacturers, wholesalers, and retailers (Grewal, et al, 2015). Lewis Road Creamery

bypasses wholesalers by distributing from the manufacturer, direct to the consumer retailer stockists.

The customer oriented costing strategy is the most effective dimension for Lewis Road Creameries premium

and organic range; therefore, this should be used first.

The distribution channel that the firm currently uses is the indirect intermediary channel with the retailer

between the consumer and the manufacturer (Grewal, et al, 2015). The distribution of the chocolate milk in

New Zealand’s north island is amongst retailers such as New World supermarkets which is an intensive

distribution. The firm could adopt an exclusive distribution channel to some locations in New Zealand’s South

Island, such as Christchurch and Dunedin.

If the exclusive characteristic continues to thrive it could then be tuned to a selective channel distribution.

(RFID) ‘Radio Frequency Identification Device as a technological advancement for (R&D)

‘Research and Development’ helps track products and commodities such as barcodes and branding,

no matter what stage of the distribution system or production level, therefore monitoring products in

transit or trade (Friedlos, 2013). Limited assortment supermarkets that may stock only organic products

could also be an option for the firm (Grewal, et al, 2015). Conventional supermarkets will also stock organic

sections of all brands and products, whereas the firm distributes to both conventional and convenience stores.

When there is a limited range of the product and less choice, then the customer will eventually recognize the

product’s quality when it experiments substitutes.

The promotion of test results helps the firm determine strategic (IMC) ‘Integrated Marketing

Communications’ (Kahn, 2004). Exposing buyers can be through trade shows, introductory price promotions,

and trade promotions (Grewal, et al, 2015). The objective of the promotion would help to promote the

product quality further through IMC, advertising, and (PR) ‘Public Relations’. This would in turn aid

the communication process and channel the product with a greater message through the (AIDA)

model of ‘Awareness, Interest, Desire, and Action’ (Strong, 1925). Advertising rarely provides the

only means to communicate with target customers, therefore a natural connection occurs with sales

promotions (Grewal, et al, 2015). Firms use a vast array of methods to map there market

communication budgets. All the methods have limitations and benefits and are advisable not to be

used in isolation (Levy, 2012). This method will be on the objective and task method. The first step

in the ‘objective method’ is the establishment of communication objectives, the second is to

determine which media is the best to reach the target market, and the third and final step is to budget

the cost of the communications (Grewal, et al, 2015). Television, billboards, and magazines would

be most useful for this firms product development and expansion. Spending all the money on these

advertisements will promote the products and communicate to the public.

After the objective and task method has been implemented, it is necessary to measure the progress

through the rate of awareness (Halscheid, 2009). This is done through careful observation, planning,

implementation, and evaluation of the IMC and advertising (Grewal, et al, 2015). Without the

number of ‘impressions’ from the advertisement (i.e., amount of times the advertisement appears),

the (CTR) ‘Click Through Rate’ (i.e. the number of clicks divided by number of impressions) and the

(ROI) ‘Return On Investment’ (i.e. the revenue and advertising costs), the firm will not be able to

identify the marketing metrics (Grewal, et al, 2015). (Refer to appendix for full explanation). The

more clicks for the chocolate milk advertisement the better and the greater the profit percentage from

the CTR also.

Advertising through school projects and campaigns will be one option. Sponsoring and hiring athletes and

other celebrities is the second option. Communicating with larger companies is a third option for advertising

together and sharing the goals. These PR strategies will promote Lewis Road Creamery further into the market

to ultimately satisfy the consumer experience and behaviour.

Sender;

Encoding;

Channel;

Noise;

Receiver;

Decoding;

Feedback.

Advertising works through a

framework of channels and

has influence on consumer

behaviour (Vakratsas and

Ambler, 1999).

Fig 2.5

V. REFERENCES

Works Cited

New Zealand Demographics. (2012). Retrieved 05 16, 2015, from NZ.NET: http://www.new-zealand-

nz.net/new_zealand_demographics.html

Ambler, D. V. (1999). How Advertising Works: What Do We Really Know? Journal of Marketing,, 63(1), 26-

43.

Bromley, R. (2006). Class Notes. pcecon.com. pcecon.com.

Bucic, D. G. (2015). Marketing (Special ed.). Sydney: McgrawHill.

Chandy, R. K., Prabhu, J. C., & Antia, K. D. (2003). What Will the Future Bring? Dominance, Technology

Expectations, and Radical Innovation. Journal of Marketing, 67(3), 1-18.

Creamery, L. R. (2012). Our Creamery. Retrieved 05 16, 2015, from Lewsi Road Creamery New Zealand:

http://lewisroadcreamery.co.nz/ourcreamery

Dolan, R. J. (2000). Not On Marketing Strategy. Harvard Business Sxhool, 1-17.

Friedlos, D. (2013, 03 04). 'RFID Scores High at Australian Open'. RFID Journal.

Goodstein, R. C. (2013). Marketing Metrics: How Can CLE Professionals Measure the. Georgetown

University, 1-12.

Halscheid, M. S. (2009). beyond the laSt click. Journal of Integrated Marketing Communications, 43-50.

J Hall, G. S. (2006, March). The role of R&D in productivity growth: The case of agriculture in New Zealand.

MONTH, 06(01), 1-64.

Kahn. (2004). The PDMA Handbook of New Product Development. Product Development Management

Association.

Kalpesh Kaushik, D. a. (2002). The effects of ingredient branding strategies on host brand extendibility.

Journal Of Marketing, 66(1), 73-93.

Maslow, A. H., & Frager, R. (1987). Motivation and personality (3rd ed.). NY, NY, USA: Harper and Row.

Oakley, D. S. (2008). Order of entry and the moderating role of comparison brands in brand extension

evaluation. Journal of consumer research, 34(5), 706-712.

PR, D. (2015, 05 15). Lewis Road Creamery supports new organic dairy co-operative. Lewis Road Creamery

supports new organic dairy co-operative, p. 1.

Ruth N Bolton, V. S. (2003). An empirically derived taxonomy of retailer pricing and promotion strategies.

Journal of Retailing, 79(4), 213-224.

Strong, E. (1925). The psychology of selling and advertising. New York: McGraw-Hill book Company.

WEITZ, B. A. (2012). RETAILING MANAGEMENT. NY: Irwin & McGraw-Hill.

VI. APPENDICES

From the text of (Grewal, et al, 2015) the impressions are analysed with the clicks of the ad. E.g. If a sponsored link was

delivered 100 times and 10 people clicked on it, then the number of impressions is 100, the number of clicks is 10 and

the CTR would be 10%.

ROI = Sales revenue – Advertising cost/ Advertising cost.

RFID: “RFID Tags are tiny computer chips that automatically transmit to a special scanner all the information about a

container’s contents or individual products. Approximately as large as a pinhead, each of these RFID tags consist of an

antenna and a chip that contains an electronic product code that stores far more information about a product than

barcodes or UPC codes can. The tags also act as passive tracking devices, signalling their p resence over a radio

frequency when they pass within a few yards of a special scanner. The tags have long been used in high -cost

applications, such as automated highway toll systems and security identification badges. A key advantage of RFID is that

it eliminates the need to hand;e items individually by enabling distribution centres and stores to receive whole truckloads

of merchandise without having to check in each carton. Another advantage is that manufacturers and distributors are able

to reduce overall inventory thanks to greater supply chain efficiency.

(Euromonitor, 2014)

In 2014; ‘Fonterra’ had 38% market share in

the dairy industry of New Zealand. Lewis Road

Creamery is not mentioned amongst the top

25 but the private label and others category

makes up 24% of the market (Euromonitor,

2014).

As can be depicted in the graph; the stock

market index of New Zealand has increased

exponentially each year for the past 5 years

(Euromonitor, 2014).

As mentioned in the report; the economic formulas are listed here in the appendices above (Bromley, 2006).

Displayed below is an example of a SWOT analysis.

Strengths: Weaknesses

Opportunities Threats

As the graphs display below, the population density per sq km is much larger for New Zealand because it has a smaller

land mass, however, if the cities of Australia were matched accordingly, then Australia would be denser.