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Marketing Plan Project

MBA 437 Trimester 1 2011


Vanuatu Value Added Products

Kava Store

Group 4

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T
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Table of Content

1. Executive Summary

2. Introduction3. Market Analysis

4. Market Research

5. Segmentation

6. Buyer Behavior Analysis

7. Designing Market Strategy8. Implementation and Control the Marketing Strategy

9. Conclusion10. Annexes


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1. Executive Summary

This Marketing Plan is part of the MBA 437 student project assignment (referred to as Group

4) undertaken during trimester 1 of 2011 at Emalus Campus, University of the South Pacific

in Port Vila.

The Group decided to test the viability of Kava Store in Port Vila who specializes in adding

value to locally produce nuts and crops in Vanuatu. The promoter is Mr, Chalot Long Wah

who took a bold move in 1972 to venture into a business that was unexplored, untapped and

created a lot of mixed feelings among potential farmers that were targeted as the producer of

products that would contribute to the processing centre in Port Vila. The promoter saw the

potential business to market the local products from its subsistence farming into commercial

undertaking that has lucrative market both in domestic and international that would boast an

economic benefit for the people of Vanuatu.

The Group acknowledged that limited information would be a constraint to properly assess

the current situation of available information and data that would enable them to enable a

thorough review of their operations; they have continued their study based on the marketing

plan outline and undertaking their market research guidelines.

It is his visionary outlook that the promoter strongly believed in the value-added products and

that this could be the source of alternative income that relies heavily on copra for many years.

He predicted that while natural fruit trees grow in abundance no one is trying to promote the

rich resource that each one tries to tap into. He foresee huge potential to turn high return in

value-added that would make a good spread from the seasonal harvest that comes around

once in a years cycle.

The Group sets out a clear strategy for the way forward where marketing framework and

strategies are developed in a marketing plan format. The sequential steps in formulating the

successful marketing plan is attempted and for this reason when completed can be useful

document that serves two purposes for academic study and be of voluntary use to the

promoter of Kava Store at his discretion.


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Introduction

The purpose of this paper is to provide marketing outline for Kava Store and all the crop

and fruit locally produce turned into high quality value-added products in Vanuatu. The

promoter started his business interest to develop local products from a humble beginning

to generate interests among potential farmers in 1972 concentrating mainly on the island

of Pentecost.

At this time, Kava was not widely consumed in social setting until Mr. Long Wah started

to buy larger quantities for exports mainly to New Caledonia and Fiji. The shift from

largely traditional consumption that was strictly conducted in Nasara was slowlyovertaking customary barriers and moving towards selected groups who gather to drink

kava for leisure and enjoyment, thereby shifting away from its once customary reserve

occasion.

This once quite respected drink reservedly for customary respect mainly for men has

turned into commercially product dubbed for its explosion in the urban centres of Port

Vila and Luganville. Kava interest started to take hold and intensify consumer taste

further into larger scale consumption for commercial benefit that many experts still feel

that it destroys the cultural importance and chiefly respect that Vanuatu was renowned

for during past years. The transition from the beginning has bear fruit in turning the

bottom line approach of kava store and it is on this basis that the Group will deal with the

marketing plan for the entity.

The fruits and crop that started with kava, peanuts from the early beginning has now

grown into 30 products (as per schedule .) and it is on this basis that the Group will

deliver its marketing plan.

Mission statement

To be the producer of high quality valued-added products in Vanuatu.


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AN ANALYSIS OF THE CURRENT MARKET TREND

Brief over view of Vanuatu

Vanuatu is an archipelagic nation of about 80 islands in a Y-shaped chain, extending over

1000 kilometres in a north-south direction between the equator and the tropic of

Capricorn. It lies some 2000 kilometres to the northeast of Brisbane in the Coral Sea, at

similar latitudes to Cairns and North Queensland.

Formerly known as the New Hebrides, Vanuatu was jointly governed by both British and

French administrations before attaining independence on 30 July 1980. Its land area

comprises 83 islands, divided since 1994 into six provinces Malampa, Samma, Tafea,

Torba, Penama and Shefa.

A. External market environment

Economic overview

After negative growth in the early 2000s, the Vanuatu economy has recently experienced

strong and sustained GDP growth driven largely by tourism and construction. While

Vanuatus economic growth is starting to become more broad-based, it remains centred

on tourism. Tourism related sectors (wholesale and retail trade, hotels and restaurants,

and transport and communication) account for over two-thirds of GDP, and about 70

percent of the increase in real GDP since 2006. The economy also relies heavily on

agriculture. The majority of the population, over 70 per cent of whom reside in rural

areas, is engaged in subsistence agriculture, although most Ni-Vanuatu are also involved

in the cash economy, typically trading copra for money to pay for domestic expenses.

The tourism sector is recognized by the Government of Vanuatu as a key sector for

development. Increased tourism has had direct and indirect benefits for the services

sector, particularly the transport, communication, wholesale and retail trade, banking and

insurance and accommodation sectors.

Real estate development has seen a boom since mid-2004, although development has

largely been focused on the island of Efate, particularly the capital Port Vila.


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Technological environment

The arrival of completion is reducing telephone charges in Vanuatu, and although

internet charges for businesses are still among the highest in the region ( several those in

Fiji, for example) the government recently announced the issuance of three new licensesfor the provision of internet and other telecommunication services, which should lead to

better services and lower prices.

Political environment

The political situation in Vanuatu is currently unstable; 11 of the 12 coalition parties are

presently in government, resulting in an ineffective governing coalition. This has caused

inconsistency in policy and leadership direction. This situation has created uncertainty for

foreign investors and development partners.

However, there is general recognition of the need to (i) boost investor confidence; and (ii)

strengthen governance reforms in parliament, public finances, rule of law, and public

service.

Bilateral economic and trade relationship

Vanuatu remains a modest market for Australia with some growth potential, dependentlargely on economic growth and development in Vanuatu.

Australia is the major source of foreign investment in the Vanuatu economy with a focus

on agriculture, tourism, finance and construction. Two thirds of long stay tourists to

Vanuatu (some 50,000 people) and almost all cruise ship passengers are Australian.

B. Competitor analysis

The highly likely competition that is likely to have an impact to Kava Store is the high

quality product imported externally. Vanuatu trading arrangements under the MSG and

other trading arrangement that Vanuatu is committed itself continue to have an adverse

impact on the locally produced products.


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With the liberation on trade tariff, imported products under trade agreement will be very

competitive in our local market; hence retail prices are showing those imported products

are cheaper than Vanuatus locally made products.

For Vanuatu to be competitive and maintain fair shares in the local market it must revisitits overall cost in doing business and in particularly the production costs of producing

local products. Reports have indicated that Vanuatus utility costs are some of the highest

within the region hence boosting production costs to increase dramatically.

Vanuatu as a developing country should apply productive rates to product its locally

produced goods the like of Kava Store products.

C - Company analysis.

Kava Store history and reputation are intimately linked to their support of local farmers.

For more than 40 years, they have worked to provide the market with the broadest

possible selection of the highest quality produce available. The company search for that

produce begins right outside their front door in every community where they do business.

They are permanently committed to buying from local producers whose fruits and nuts

meet their high quality standards, particularly those who farm organically and are

themselves dedicated to environmentally friendly, sustainable agriculture.

In particular, it is identifying supply chains with communities, as an immediate measure

to source its local products. It is also encouraging the establishment of smallholder

plantations as the means to increase the supply. The current supply of local products

comes mostly from trees planted by our grandparents and those growing wild.

It is believed that if each farmer in Vanuatu establishes a small plantation of nuts, we can

have a viable export industry in which all members of a community can participate.

A major challenge for Kava store to remain competitive is to share the same shelf at theretail shops between imported and their locally-produced agricultural products and the

degree of reliance to be placed respectively on imports compared to expanding local

production. But what are the sources for this? Increased domestic production has spin-

offs such as rural employment, domestically-generated food security, better quality


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(fresh) foods and improved nutrition, higher rural incomes, and local control over

resources.

Kava Store should focus on fostering local industries, strengthening the domestic

capacity and determining what development meant for the country.

One another related note, one idea that has been discussed at Melanesian Spearhead

Group (MSG) meetings and other forum is the possibility of pooling the value added

local products resources of Papua New Guinea (PNG), Solomon Islands and Vanuatu to

support a viable and more consistent supply for the international export marketover three

years in order to ensure the projects are completed. Kava Store should consider this

opportunity as a way forward to strategies its efforts to increase its productions towards

entering regional markets.

SWOT:

Identification of major strength

Vanuatu is primarily agricultural; 80% of the population is engaged in agricultural

activities that range from subsistence farming to smallholder farming ofcoconuts and

othercash crops. Vanuatu is rich in natural resources and has the potential to develop its

agriculture sectors to competitive levels.

Vanuatu is the only Pacific island country eligible for funding under the US Government

funded Millennium Challenge This five-year compact program aims to benefit rural

agricultural producers by reducing transportation fees hence Kava Store regards this as a

strength as this will means farmer can be able to move their local products to main

commercial centres.

Weakness

Vanuatu faces particular disadvantages, due to its small size and large distance to major

markets. Vanuatu may face especially severe constraints, as its scattered population

reduces access to infrastructure and increases the costs of transport.

http://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Subsistence_agriculturehttp://en.wikipedia.org/wiki/Coconuthttp://en.wikipedia.org/wiki/Cash_crophttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Subsistence_agriculturehttp://en.wikipedia.org/wiki/Coconuthttp://en.wikipedia.org/wiki/Cash_crop

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The economic growth is concentrated in urban canters, areas of high agricultural

production, and areas with natural resource potential.

Another weakness is in term of international trade. For a long time only a hand full of

products were cleared for export. A major difficulty encountered by Vanuatu is the

increasingly stringent international market requirements like sanitary and phytosanitary

measures. Vanuatu products must comply with these as a first step to accessing markets.

There is also need for certain quarantine infrastructure.

Opportunity

The Secretariat of the Pacific Community (SPC) is supporting Kava Store in reviving the

value added local product industry through its European Union-funded Facilitating

Agricultural Commodity Trade (FACT) project. The aim of the FACT project is to build

capacity to increase local, regional and overseas trade in agricultural and forestry

products from SPC member countries. Kava Store has been processing and trading value

added local products as its core product locally for some time now.

The construction on the MCC-funded road project is aimed to provide access to better

roads, will assist famers to transport their products to commercial centers the like of kava

stores. Major industries such as tourism and agriculture are expected to benefit from

improved roads, more reliable shipping services and more efficient wharves.

Threat

A major hurdle in getting this industry off the ground, however, is the limited supply.

There is not enough value added local product to meet the current demands, and therefore

overseas buyers are not willing to develop the market for the product. Attempts were

made by Kava Store to export value added local products, but these faced the same

problem: the supply was not great enough to meet the local market in Port Vila, let alone

overseas demands. Consistency is still Kava Stores major limitation and it need to find

ways to overcome this hurdle.

Another threat is the cost of doing business in Vanuatu affects primary production as it

does other sectors. The sectors are constrained by often unreliable and high costs of land,

air and sea transport. A wide variety of taxes, policies and regulations, including high


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trade taxes and utilities have also seriously hindered development of this sector. Finally

there is the challenge of natural disasters; cyclones can pose serious threats to agriculture

production and food security.

MARKET RESEARCH

Marketing Research is important for many reasons; the first is to identify the target

market for a product or service. Instead of throwing away millions carrying out massive

advertising and promotional campaigns aimed at the greater public, marketing research

can help identify sub groups who could not only afford the product but also have demand

or needs.

For this small business, Kava Store to consider using the following grid to show the two

sources of data and the three important areas of research when undertaking his market

research.

Another reason why customer needs have to be discovered is the fact that taste not only

differs but that people have a different perception of quality.

Kava Store would need to gather information from and about his customers so that he can

focus his marketing efforts, maintain and improve customer service, and to guide his

efforts in developing new products.

Information gathered about the competition will assist Kava Store in determining what

works and what hasn't worked and provide ideas for improving the products and provide

insight into how to increase or shift its (Kava Store) share of the market.

The environment section of the Market Research Grid refers to those economic, social,

and political forces that shape business. Gathering information about the environment

allows Kava Store to stay abreast of and respond to particular trends or events that impact

the business. Whether it's a predicted drop in interest rates, or the closure of a local mill,


customer competition environment

secondary

primary

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Kava Store need to be aware of it and evaluate the current effect on the business, be it for

good or bad.

The secondary data sources in this market research would be data that's already been

collected by someone else. KS could refer to government publications, and sources such

as the Department of Statistics, Melanesian Spearhead Group and the Ministry of Trade

and Commerce, trade journals, and surveys conducted by other companies are all

examples of information that's already been gathered that the Kava Store can use to get

an idea on what his customers want, what the competition has done, and what the

environment is like.

Generally, the more detailed and specific the information gathered in its (Kava store)

market research, the more useful it will be for making a decision.

When attempting the market research, some of the things kava store would bear in mind

are the following;

1. Kava Stores information will only be as good as its market research sample.

Kava store will need to be cautious when selecting its market research sample group to

question. To get useful market research data, the sample group needs to be relevant to

and representative of kava stores target population, for example, moving away from

asking customers in the store to questioning randomly selected members of its targeted

population. Asking people in the store isn't good enough, as some of them will say "Yes"

just because they like the owner or don't want to offend him. Informal market research is

always tainted to a degree by the relationships of the people involved.

2. Design the survey or market research questionnaire carefully.

Kava store to ensure that its questions are focused specifically on the information it needs

to know, and to not include any questions that may offend anyone. Many people are put

off by questions that ask them how much money they earn, for instance. If you offend or

confuse them, they won't bother to fill out your market research survey.

3. Kava store to ensure survey or market research questionnaire are short.

If possible, keep market research survey or questionnaire short and simple and should all

fit on one page. Many people are intimidated by long forms; others see multiple page

forms as just too much of an imposition on their time.


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4. To always provide some opportunity for detailed answers.

It is envisaged that not everyone will take advantage of it, but some will, and sometimes

these written-in comments are the most valuable of all.

5. Work out your market research recording techniques first.

In the case of Kava Store, oral interview is the most practical method via questionnaires

which will be recorded and notes taken. The purpose of market research is to gather and

analyze the data, so you've got to have a system of recording the data worked out in

advance.

6. Kava store to ensure to set the criteria for the information beforehand.

Prior to asking its customers, Kava store will need to have a market research process

clearly defined and in place. How many customers would have to express an interest in

the product to make it worth the stores while to continue researching the possibility?

Position the market research criteria beforehand, as in, "at least 50 percent of customers

need to show an interest in the valued added products or there's no point in moving to the

next stage the market research".

The sum of market research carried out will be limited by Kava Stores time (doing it

himself) and budget (if Kava Store decides to hire someone else to do it). On the other if

one is to succeed in business, market research is necessary at all stages of a business's

life. Only market research can truly keep Kava Store in touch with what's most important

- its customers, and their needs and desires. Researching your market is perhaps your

easiest way to conquer the market. Market research does not have to be costly, nor does it

have to be a complex process. Market research can be as simple and as easy as surveying

a cross-section of your consumers (focus group) to get their opinions about the invention

that you will be offering, or conducting a telephone or mail survey.


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MARKET SEGMENTATION

In segmenting the product markets, Kava Store had to analyze, assess and divide such

markets into groups of consumers or segments with distinct needs and wants. With this

background Kava Store would have a fair understanding of the consumer behavior to be

able to develop the best marketing plans that it can use and understand that would make

each segment unique and different.

Market segmentation consists of a group of customers who share a similar set of needs

and wants (Kotler, p.224). In the case of Kava Store where 33 products are promoted and

the minimum scale of their availability on the market, we rule out mass marketing as that

would mean plunging into unknown world that may not pay off. We draw on selected

segments that are trial in taste and popularity that would assist in to identify market

needs. In selecting targeting markets, Kava Store is able to segment and identify group

potential buyers, group products sold in categories, develop market-grid and estimate size

of markets, take marketing actions to reach target markets

With the unique and different set of target markets, we can draw a line to say that not

everyone want the same products or services so perhaps Kava Store could develop a

flexible market offering that customers could make decisions based on discretionary

options that some segment members value. Kava Store may have also opted for different

market segments; homogeneous preferences may exist when all consumers have roughly

the same preferences; or on the other extreme, consumers may opt for diffused

preferences where their preferences vary greatly. If several brands or products are in the

market as the case of Kava Store, then clustered preferences come into play when natural

market segments emerge from groups of customers with shared preferences.

Whilst Kava Store has localized its products mainly within the Vanuatu market, the target

market is tailored to the needs and wants of local customers groups in trading areas,

neighborhoods, and even individual stores. It identified its market needs that include

product features that have the attraction on packages that breathes quality, less expense


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and easy to obtain in the main store at Anabrou or selected shops that is easy to find due

to easy access and centrally located within CBD of Port Vila.

The bases for segmenting consumer markets are used in broad groups of variables to

segment descriptive characteristics in geographic, demographic, psychographic and

behavioural.

According to Kotler, (i) Geographic segmentation calls for dividing the market into

different geographical units such as countries, states, regions, cities or neighbourhoods.

(ii) Demographic segmentation divides the market into groups on the basis of variables

such as age, family size, family life cycle, gender, income, occupation, education,

religion, race, generation, nationality and social class. (iii) Psychographic segmentation isthe science of using psychology and demographics to better understand consumers.

Buyers are divided into different groups on the basis of psychological/personality traits,

lifestyle or values and (iv) Behavioural segmentation, marketers divide buyers into

groups on the basis of their knowledge of. Attitude towards use of or response to a

product.

In marketing mix tactics, Kava Store execute a marketing program although at low key

through selected advertising medium with the 4 Ps. Product maintain their unique taste

to reflect the local content and minimum imported ingredients. Place maintain the bulk

in the main shop location and put on sale in key supermarket within CBD locations.

Promotion publicity predominantly on radio, word of mouth and selected new products

that enter market for the first time on TV. Price maintain premium added with packaged

specials and price within reasonable means. New products are free tasting on offer to

allow spread in taste


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ANALYZE THE BUYER BEHAVIOUR

Abraham Maslow hierarchy of needs theory sets out to explain what motivated

individuals in life to achieve. He set out his answer in a form of a hierarchy. He suggestsindividuals aim to meet basic psychological needs of hunger and thirst. When this has

been met they then move up to the next stage of the hierarchy, safety needs, where the

priority lay with job security and the knowing that an income will be available to them

regularly. Self-actualization the realization that an individual has reached their potential

in life. The point of self-actualization is down to the individual, when do you know you

have reached your point of self-fulfillment? But how does this concept assist Kava Store

in trying to market its products?

One of the most important marketing tactics that an organization can use to get ahead is

to know their potential customers better than anyone else - what marketers call Buyer

Behavior. Buyer Behavior is simply the study of how people buy, what they buy, when

they buy and why they buy. However, before you can start figuring out your Buyers'

Behavior, you must determine which market segments you will be focusing on.

With a crisply defined segment it is now possible to start the research. It must be done

segment by segment - trying to conduct an analysis across a random set of companies

won't work. We have found that within a particular market segment the buying habits and

characteristics are very similar across all firms within that segment.

The next step would be for Kava Store to identify a representative sample of potential

buyers in the target segment. These should be various types of buyers including financial,

technical and people who would be impacted by the products the store may purchase. The

big challenge is to actually connect real-time with the targeted individuals. This should be

done on a peer-to-peer basis to ask them what internal processes they would go through

in order to buy the value added products from Kava store. Kava Store should ask about

the needs/wants/problems they have as well as other issues that it (Kava Store) would

want to address.

It is important to note that these are not surveys but rather guided conversations that

cover the range of issues of interest to Kava Store. This process can also be used to


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complete a 'lost sales' analysis. If we find we are getting the same answers from our

sample (four or five different companies), then we are confident we are getting the right

story. With experience in conducting these guided conversations Kava Store should be

able to understand whether or not the responses received can be extrapolated across the

entire segment or if further research is needed.

Information gained through Buyer Behavior analysis is tremendously useful in

developing market positions, customer engagement models, promotional activity, feature

sets and pricing plans.

MARKETING STRATEGY

Marketing strategy occurs in the after the following activities have been undertaken.

1. Situation analysis (survey the marketing environment as in the use of a SWOTAnalysis

2. Conducting Marketing research and forecasting demand

3. Segmentation. This involves two (2) steps - (a) Analyze consumer markets (b)

Analyse the business markets

4. Marketing Strategy

Marketing strategy involves the following 4 Ps processes:

1. Product of service strategy

2. Pricing strategy

3. Place or positioning strategy

4. Promotion strategy

Since 1970, The Kava Store (KS) has maintained a unique stance on processing value-

added Vanuatu primary products. It has grown from strength to strength by engaging in

all the Ps of the marketing processes, above by processing most of Vanuatus local fruits

and nuts including kava. Kava Store has also acquired fame in the Pacific in its unique

techniques of processing, drying, storage, preservation, packaging and labelling of all its


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local products. Training programs are also undertaken by KS to local entrepreneurs

engaged in processing and marketing of Vanuatus primary products. Planned trainings

have occurred at the Vanuatu Agricultural College in Santo and other regional countries

by KS.

The main focus or strategy that KS will engage in from 2011 onwards will be in the

following areas:

1. Continue to seek funding from Vanuatu Government through Donor Partners to

engage laboratories and regional universities to do more research in the improving

and advancing of value adding of local fruit and nuts. To adhere to international

bio-security issues for all its products and align itself to the international foodsafety regulations.

2. Continue in its current work on drying, processing, preservation, storage,

packaging and labelling of its products for its domestic market.

3. Training of local farmers in the processing, preserving, packaging, labelling and

marketing of local fruit and nuts domestically.

4. Encourage Tamarind farming, processing, and storage, packaging and sales to ourdomestic market. A new trend in local Vanuatu sweets with plans to exporting in

future.

The owner, Mr Charlot Longwah, has confirmed that despite a lack of a formal marketing

plan in place since its inception in 1970, KS has successfully engaged in processing and

marketing of its products locally.

The latest focus is in the farming, processing, packaging and sales of Tamarind fruit.

Tamarin seedlings have been distributed to farmers throughout Vanuatu.


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What is a Product

When we think of a product, we visualize a tangible object with physical properties. A

product is composed of intangible benefits as well as tangible characteristics. As a result,

a product is defined as a bundle of attributes and benefits designed to satisfy customer

needs. The fact that customers seek different benefits means that they will see products

differently. Therefore, a product is not a uniform well-defined entity. The benefits of the

product are those characteristics consumers see as potentially meeting their needs.

FIG 2.1

Core Products Benefits determine whether the consumer buys it.

Tangible Products Marketers must turn the desired benefits into productattributes. Product attributes identify the tangible products, e.g. the Vanuatu

Governments desire to promote value-adding of its fruits and nuts and the work

by Kava Store


Augmented

Product

Tangible

Product

Core Product

Benefits

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Augmented Product The Kava Store products has the potential for industrial

marketing where terms of the sale includes elements other that the tangible

product. The classic case was Kava Stores exports of Vanuatu sugar coated

peanuts in 1973 to New Caledonia. One of the elements of this products was its

purchase was its delivery and credit terms to the French company. This posed

cash-flow problems for KS because funds for the exports were received almost a

year later.

KS processed the following local Vanuatu value-added fruits and nuts including

kava :

Tamarind

Nangai

Navele

Natapoa

Chilli

Pepper

Pawpaw

Mango

Kava

KS currently sells its products domestically in grocery stores in Port Vila and Santo. Au

Bon Marche is the major distributor for these products.

3.0 Product Classification

Products are classified by the degree to which they represent tangible physical

characteristics. See Fig. 3.1


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Classifying products by degree of tangibility

FIG 3.1

Durable goods Non-durable goods packaged Non-durable goods non-packaged Services

In the case of products from KS, the value-added products would be considered as

Convenience goods because they are goods that consumers purchase frequently with

little deliberation or effort. They are generally packaged goods such as packaged Nangai,

Tamarind, Navele, Natapoa, Kava, etc.

4.0 Current product life cycle stage

There are four (4) points to consider in the current product life cycle stage for the Kava

Store brand. To have a product life cycle is to ascertain 4 issues.

1. Products have a limited life

2. Product sales pass through distinct stages, each posing different challenges,

opportunities and problems to the seller

3. Profits rise and fall at different stages of the product life cycle

4. Products require different marketing, financial, manufacturing, purchasing and

human resource strategies in each life-cycle stage.

The Kava Store has always processed and sold their products for the domestic market.

Production to meet local demand is not sufficient. There was only one major export in

1973 to Noumea, New Caledonia of Vanuatu sugar coated nuts. Kava Store sold Vt.1

million vatu worth of sugar coated nuts. The venture did not continue due to the French


Most tangible Least

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company in New Caledonia paying their debtors 7-12 months after each sales. This

posed a major cash flow problem for the Kava Store.

5.0 New product development requirements

The Kava Store has now ventured into Tamarind sweets production. This is a lucrative

business and proves promising for the Kava Store and Vanuatu as a whole in the coming

years. Plans to purchase twenty (20) solar dryers to facilitate the drying of the Tamarind

fruit is now underway. This will cost millions of vatu and KS is looking at the Vanuatu

Government to assist as this is a policy initiative in its PLAS plans.

Tamarind sweets processed by Longwah

Sales Assumptions Current by KS.

Tamarind Sales Projection

Year 2011 2012 2013 2014 2015

Sales

1,820,00

0

2,002,00

0

2,020,20

0

2,022,02

0

2,022,20

2

Cost Price 728,000 837,200 853,580 856,037 830,724

Profit

1,092,00

0

1,164,80

0

1,166,62

0

1,165,98

3

1,191,47

8

Assume :10% sales increase per

year

15% cost increase per year

Production at rate of 10% per year

Sold only to 7 shops over 52 weeks


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6.0 Product liability, safety & social responsibilities considerations

The major concern by KS is the acceptance of its products, its value-added fruit and nuts

to meet international food standards. Due to stringent international food security

regulations, currently, KS only supplies to its domestic markets but still its production

volume is unable to meet domestic demands.

To maximize production at 100 percent level to meet demand in its domestic markets

which ultimately increases its bottom line, KS has an advantage. The urban population

has increased by 43% from 1999 Population Census to 2009 Population Census in FIG

6.1. All domestic sales for KS occur in Vanuatus 2 urban areas of Port Vila and

Luganville grocery shops.

The social responsibility that KS has is twofold.

1. KS provides employment at the rate higher than the minimum wage scale

of Vanuatu which is Vt.148 per hour. KS employees are employed at a rate of

Vt.1, 000 per hour. These workers crack the canarium nuts on an 8 hour day

work schedule. Other KS workers are paid Vt.300 per hour.

2. KS assists farmers in improving their production by proper care to their

plants through the technical assistance provided by the Department of Agriculture

and Rural Development.


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FIG 6.1

2009 Pop Census 1999 Pop Census

Total Urban

Population Total Urban Population

Port Vila

44,03

9 Port Vila 29,356

Luganville

13,15

6 Luganville 10,738

Total Urban

57,19

5 Total Urban 40,094

7.0 Specification of core physical good and/or service

Labeling of products by KS has been done in accordance with international food

regulations. Products are properly labeled on their outside labels before being sold to the

domestic market.

8.0 Supporting customer service(s) need

To improve on its products and customer service, KS has invested millions of funds in

the initial set-up of this value-adding products by engaging research work on finding the

best processing, preservation, storage and packaging of it products.

9.0 Warranty - what is covered, time, who will support it

KS has managed to improve on its packaging of its products. Hence, the products sold

on the domestic market have clearly defined product information on its packaging.

Information on each product package/label has the following: product name, product

photo, processing specification and expiry date.


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11.0 Packaging

Above are examples of packaging and labeling of the KS products. It is done

professionally and in accordance with international packaging requirements.

12.0 Cultural sensitivity of product

Promotion needs

There are no restrictions or cultural sensitivity to most of KS products. The minorproduct that has a slight reaction is the kava product. Womens and Church group

have rallied that it causes social problems - spending problems for low income

earners whose partners consume kava excessively. This problem is a widespread

social issue and not aimed specifically at KS. The KS counter-acts this by

employing more women in cracking its canarium nuts at Vt.1, 000 per hour. Others

are employed in preparing and drying fruits and nuts are paid Vt.300 per hour,

Vt.152 more than the minimum wage rate for Vanuatu.

Protection needs

Protection of the Vanuatu value-added products are required to safe-guard its brand,

packaging and labeling techniques. This will make it unique and easily marketable

as an export. Research and plans are still on-going. Vanuatu, being part of a wide

Melanesian Spearhead Group (MSG) country, most primary products are similar to


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that found in other MSG countries such as Papua New Guinea, Solomon Islands,

New Caledonia and Fiji.

13.0 Fit with line product

Place / positioning

The KS products are well placed in Vanuatu domestic market as meeting standard

international requirements of processing, packaging and labeling. KS is the only

company processing Vanuatu primary value-added products with recognition in the

Pacific region and Europe. Japanese citizens are now buying the Vanuatu nangae

(canarium nuts) for cakes and biscuits. KS is still unable to meet its domestic

demand for its value-added products. Production by local farmers will need to beincreased to meet this demand. The current positioning of the KS products is well

placed, in that,

Objectives

The objective of KS is to promote Vanuatus value-added products for domestic

consumption and surplus to be sold as exports. Currently, domestic demand is

higher than KS production levels. Local farmers are encouraged to plant more

priced commodities by distributing seedlings.

Major message themes for integrated marketing communications

Eat more locally produced value-added products increases employment

opportunities and returns to local farmers.

Promotion

Having no major rival competitor, the KS has not engage in major advertising

projects. Unable to meet domestic demand at current production levels, advertising

is not an option.

Promotion blend

The KS brand is unique because of its long history of perfecting value-added

Vanuatu products.


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Price

KS prices its value-added products at a reasonable and affordable price for its

domestic consumers. Unable to meet its domestic demand, pricing is not a major

issue for KS. Customers are willing to pay what is produced.

MARKET SEGMENTATION

In segmenting the product markets, Kava Store had to analyze, assess and divide such

markets into groups of consumers or segments with distinct needs and wants. With this

background Kava Store would have a fair understanding of the consumer behavior to be

able to develop the best marketing plans that it can use and understand that would make

each segment unique and different.

Market segmentation consists of a group of customers who share a similar set of needs

and wants (Kotler, p.224). In the case of Kava Store where 33 products are promoted and

the minimum scale of their availability on the market, we rule out mass marketing as that

would mean plunging into unknown world that may not pay off. We draw on selected

segments that are trial in taste and popularity that would assist in to identify market

needs. In selecting targeting markets, Kava Store is able to segment and identify group

potential buyers, group products sold in categories, develop market-grid and estimate size

of markets, take marketing actions to reach target markets

With the unique and different set of target markets, we can draw a line to say that not

everyone want the same products or services so perhaps Kava Store could develop a

flexible market offering that customers could make decisions based on discretionary

options that some segment members value. Kava Store may have also opted for different

market segments; homogeneous preferences may exist when all consumers have roughly


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the same preferences; or on the other extreme, consumers may opt for diffused

preferences where their preferences vary greatly. If several brands or products are in the

market as the case of Kava Store, then clustered preferences come into play when natural

market segments emerge from groups of customers with shared preferences.

Whilst Kava Store has localized its products mainly within the Vanuatu market, the target

market is tailored to the needs and wants of local customers groups in trading areas,

neighborhoods, and even individual stores. It identified its market needs that include

product features that have the attraction on packages that breathes quality, less expense

and easy to obtain in the main store at Anabrou or selected shops that is easy to find due

to easy access and centrally located within CBD of Port Vila.

The bases for segmenting consumer markets are used in broad groups of variables to

segment descriptive characteristics in geographic, demographic, psychographic and

behavioural.

According to Kotler, (i) Geographic segmentation calls for dividing the market into

different geographical units such as countries, states, regions, cities or neighbourhoods.

(ii) Demographic segmentation divides the market into groups on the basis of variables

such as age, family size, family life cycle, gender, income, occupation, education,

religion, race, generation, nationality and social class. (iii) Psychographic segmentation is

the science of using psychology and demographics to better understand consumers.

Buyers are divided into different groups on the basis of psychological/personality traits,

lifestyle or values and (iv) Behavioural segmentation, marketers divide buyers into

groups on the basis of their knowledge of. Attitude towards use of or response to a

product.

In marketing mix tactics, Kava Store execute a marketing program although at low key

through selected advertising medium with the 4 Ps. Product maintain their unique taste

to reflect the local content and minimum imported ingredients. Place maintain the bulk

in the main shop location and put on sale in key supermarket within CBD locations.

Promotion publicity predominantly on radio, word of mouth and selected new products


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that enter market for the first time on TV. Price maintain premium added with packaged

specials and price within reasonable means. New products are free tasting on offer to

allow spread in taste

IMPLEMENT AND CONTROL THE MARKETING STRATEGY

How do we implement and control the above marketing strategies?

It is very important that any company or person engaged in business implements and

controls his or her marketing strategies. It is obvious that if one does not implement and

control the business marketing strategies, the business will not grow and of course

demand and customer satisfaction will not be met. So to implement and control the

marketing strategies one would need to do the following:

1) Customer and farmer awareness of the Kava Store value added

products;

Kava store in Port Vila operates without making too much noise by advertising its

products. The main concern for Kava store is that there are not enough of the value added

products to meet the demand of the customers in the market, bearing in mind the ultimate

goal of Kava store is to maximize supply. Hence Kava Stores marketing strategies need

to be implemented and controlled.

i) Kava store needs to organize awareness to the local farmers persuade them on the

importance of the product and the potential of making a lot of money out of the product;

In fact, Kava store strategy for the next three years is to run awareness and training on

value added products not only for the local farmers but also for the farmers in the South

Pacific;

ii) Tools and equipments for producing value added products would be the next thing to

look at. Once farmers are fully aware and trained on how to make the products then the

farmers would need the tools and equipments to produce the value added product. The

farmers need to be trained on how to use the tool and be aware of the safety measures

when operating the tool.


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Above is a picture of the Solar food dryer.

Kava store used to use the natural sun to dry their product. Until recently a new

equipment was introduced which is solar food dryer.

Rural farmers will now be capable of producing value added products after the

introduction of a new solar food dryer. The solar food dryer was an initiative of the

Vanuatu Kava Store and the University of New South Wales, Australia. Its main aim is to

provide sustainable solutions in food preservation for remote communities using local

resources and solar energy.1

iii) Who would provide the tools to the farmers?

It is envisaged that Kava store will work closely with the Government and aid donors in

obtaining assistance for the farmers in their production process.

2) Develop the customer base;

Vanuatu is in short supply of the fruits, nuts and kava product. The issue now is to

maintain the current local customers and create customer base overseas.

i) Government and the Melanesian Spearhead Group.

Kava store and Farmers need to work closely with the Government and the Melanesian

Spearhead group to help create market overseas under the free trade agreement. Farmers

and Kava store will benefit from exemption of import duties.

1(Daily Post Newspaper, December 2010)


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Manufacturing Sector

This sector continues to remain in the priority list of the government given the significant

importance it could play to enhance the country's economy. The manufacturing

manufactured products for the domestic market and for export

Industries producing consumer goods for the local market are generally small and based

in urban areas. They produce soft drinks, bread, furniture and clothing.

The involvement of Government and the Melanesian Spearhead Group in building the

customer base is more assuring than individual farmers trying to find customer overseas.

ii) Government to open more market beyond MSG countries.

The dream of Kava store is to export the value added product overseas. That can beimplemented with the help of Government opening up market overseas within the MSG

countries and beyond.

iii) Kava store to maintain current customers.

Kava store of course has customers in Vanuatu. It must maintain those customers; keep

satisfying customers with current products, improve the quality of the products that can

last over time and sell them at the reasonable costs.

iv) Competitors.

Although the competition is more at the lower scale in Vanuatu but still there is

competition with few local business persons. There are also overseas competitors selling

their products in Vanuatu. For example the Australian competitor is now selling its

products (nuts) in Vanuatu. It is something that Kava store must keep an eye on it so it

does not become a strong competitor in Vanuatu otherwise Kava store will find hard to

sell its product even in its own country.

3) Advertisements.

Advertisement would be an effective way of gaining more customers locally and

overseas. That can only be implemented when Kava store has enough supply.

Tamarin could rake in millions for farmers: Long wah


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Tamarind sweets processed by Long wah

Local expert on value added agricultural products; Charlot Long wah has revealed that

the local product tamarind has a very lucrative local market which could rake in

millions for farmers. But Long wah who has been involved with value added products

even before Independence said this can only be achieved if farmers take another step

further by processing and adding value to their product. The Kava Store owner said: I

bought farmers raw tamarind for Vt300, 000, per ton but if their product is value added it

will cost Vt2 million per ton. He said tamarind has a very high demand locally and a

very lucrative market.

Mr Long wahs comments were made during the exhibition of a newly designed solar

food dryer aimed to boost food processing and value added products.

We supply 5,000 packets of processed tamarind to seven shops per week. But there are

400 shops in Port Vila who are also interested but we are not able to meet their demand.

There is an urgent need for rural farmers to increase tamarind production and also to

make value added products. Most farmer sell around 10kg of raw Tamarind to us for

Vt300,000 per ton but with the newly introduced solar dryer it will take only one day to

process 10kg into value added and sell for Vt2 million per ton.

In 10 years time we are expecting a demand of 50,000 packets per weeks. The

production of tamarind has increased every year. Meanwhile Longwah believes that

even rural farmers can process value added products and he is proud of the solar food

dryer, a joint achievement of his and the New South Wales University.


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Thousands of tamarind seeds have been distributed to rural farmers by the Kava Store but

Long wah still predicts that in 10 years time the demand will still exceed the supply. To

encourage rural farmers he said staring July next year he will be engaged in training

farmers on how to process value added products.

The agriculture sector still need more ventures to move the country forward, he added.

There are over 100 other local products which Longwah said rural farmers can process to

become value added2. (Daily Post Newspaper, December, 2010).

The above article shows that advertisement could not even be used to implement the

strategy of selling that particular product of Tamarind as the demand well exceeds the

supply capacity. The article puts it very well that there are 400 shops in Port Vila that are

interested but Kava store can only sell or supply that particular product to only 7 shops in

Port Vila because Kava store does not have enough to supply.

4) Timing.

Timing factor is now an issue only because Kava store is in shortage of supply. After the

training strategy is met only few farmers will make money out of their products.

However, the market demand would not yet be met. It will take some years when more

people have seen the importance and the potential of making money out of the product

that more people will then be interested and engaged in producing value added product.

Until then which is some 10 years down the line (tamarind case above) the market supply

will not met the consumer demand. It would be a similar time frame for any other

product.

5) Forecasts and estimates.

Costs and sales are not an issue at present because there is not much competition in the

quality and sale of value added product in Vanuatu. For example kava as value added

product only has 1 or 2 producers (competitors) in Vanuatu.

2 Daily Post Newspaper, December 2010


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3

How do we improve on kava?

No proven analytical data available on kava so far to support its exporting prospects.

Nothing at World Health Organisation (WHO), or other major organizations. Hence,

difficult to export due to lack of proven analytical data available would cost about Vt.12

billion for research alone and bout 10-12 yrs for research loaded with lots of uncertainty

if there are future prospects for export. Kava is a very delicate product. Hence, care &

diligence required when handling & processing this product for export. 4

At present, value added product such as kava does not have good market overseas

because there is no analytical data supporting its export overseas. Until that is done and

supported by the World Health Organization the kava market overseas could not be

improved and costs and sales ratio could not be considered seriously.

3 Google.com4 Interview Charlot Longwah, Kava store owner, Port Vila, 1st April 2011.


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BIBLIOGRAPHY

1. Henry Assael, Peter Reed& Mark Patton, Marketing Principles & Strategy,

Harcourt Brace, 1995

2. Kotler, Keller & Burton, Marketing Management, Pearson, 2009

3. Vanuatu National Statistics Office, 2009, National Population & Housing Census,

Vanuatu & Statistics Bulletin, Vanuatu Governement.

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