Create strategic marketing plan for the organi

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A SAMPLE MARKETING PLAN

The Table of Contents provides quick access to the topics in the plan, usually organized by FIVE-YEAR MARKETING PLAN section and subsection Paradise Kitchens'P, Inc. headings.

Table of Contents

1. Executive Summary Seen by many experts as the single most important 2. Company Description element in the plan, the Executive Summary, with a Paradise Kitchens'P, Inc. was started in 1989 by cofounders maximum of two pages, Randall F Peters and Leah E. Peters to develop and market Howlin' "sells" the document to Coyote® Chili, a unique line of single-serve and microwaveable readers through its clarity Southwestern/Mexican style frozen chili products. The Howlin' and brevity. Coyote'" line of chili was introduced into the Minneapolis-St. Paul

/ / market in 1990. The line was subsequently expanded to Denver in

1992 and Phoenix in 1994.

To the Company's knowledge, Howlin' Coyote'" is the only premium-quality, authentic Southwestern/Mexican style, frozen

The Company DeSCriPtiOl41 chili sold in U.S. grocery stores. Its high quality has gained fast, highJights the recent widespread acceptance in these markets. In fact, same-store sales history and recent doubled in the last year for Wl.liChdata are available. The Company successes of the believes the Howlin' Coyote'" brand can be extended to other organization. categories of Southwestern/Mexican food products.

Paradise Kitchens believes its high-quality, high-price strategy has proven successful, This marketing plan outlines how the Company will extend its geographic coverage from 3 markets to 20 markets by the year 2003.

The Strategic Focus and 3. Strategic Focus and PlanPlan sets the strategic

direction for the entire This section covers three aspects of corporate strategy that

organization, a direction influence the marketing plan: (1) the mission, (2) goals, and

with which proposed (3) core competence/sustainable competitive advantage of

actions of the marketing Paradise Kitchens. plan must be consistent.

This section is not included MISSION in all marketing plans.

The mission and vision of Paradise Kitchens is to market lines of high-quality Southwestern/Mexican food products at premium.r!prices that satisfy consumers in this fast-growing food segment

,..———– i while providing chaUenging career opportunities for employees The Mission Statement. and above-average returns to stockholders. focuses the activities of Paradise Kitchens for the stakeholder groups to be served.

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20 CHAPTER 1 FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT

For the coming five years Paradise Kitchens seeks to achieve the following goals:

Nonfinancial goals

1. To retain its present image as the highest-quality line of Southwestern/Mexican products in the food categories in which it competes.

2. To enter 17 new metropolitan markets. 3. To achieve national distribution in two convenience

store or supermarket chains by 2001 and five by 2003. 4. To add a new product line every third year. 5. To be among the top three chili lines-regardless of

packaging (frozen, canned) in one third of the metro markets in which it competes by 2001 and two thirds by 2003.

• Financial goals 1. To obtain a real (inflation adjusted) growth in earnings

per share of 8 percent per year over time. 2. To obtain a return on equity of at least 20 percent. 3. To have a public stock offering by the year 2001.

CORE COMPETENCY AND SUSTAINABLE COMPETITIVE ADVANTAGE

In terms of core competency, Paradise Kitchens seeks to achieve a unique ability (1) to provide distinctive, high-quality chilies and related products using Southwestern/Mexican recipes that appeal to and excite contemporary tastes for these products and (2) to deliver these products to the customer's table using effective manufacturing and distribution systems that maintain the Company's quality standards.

To translate these core competencies into a sustainable competitive advantage, the Company will work closely with key suppliers and distributors to build the relationships and alliances necessary to satisfy the high taste standards of our customers.

4. Situation Analysis

This situation analysis starts with a snapshot of the current environment in which Paradise Kitchens finds itself by providing a brief SWOT (strengths, weaknesses, opportunities, threats) analysis, After this overview, the analysis probes ever-finer levels of detail: industry, competitors, company, and consumers.

A SAMPLE MARKETING PLAN 21

The SWOT Analysis –

SWOT ANALYSIS c identifies strengths, Vweaknesses, opportunities,

1/ Figure 1 shows the internal and external factors affecting the

and threats to provide a; market opportunities for Paradise Kitchens. Stated briefly, this solid foundation as a / SWOT analysis highlights the great strides taken by the Company

~!;~+" .~••

.springboard to identify in the eight years since its products first appeared on grocers' I subsequent actions in the shelves. In the Company's favor internally are its strengths of an marketing plan. experienced management team and board of directors, excellent

acceptance of its lines in the three metropolitan markets in which it competes, and a strong manufacturing and distribution system to serve these limited markets. Favorable external factors (opportunities) include the increasing appeal of Southwestern/Mexican foods, the strength of the upscale market for the Company's products, and food-processing technological iI breakthroughs that make it easier for smaller food producers to 1 compete.

/ Figure 1. SWOTAnalysis for Paradise Kitchens

Internal Factor Strengths Weaknesses7eme", Experienced and Smallsize can IIentrepreneurial restrict options Each long table, graph, or management photo is given a figure and board

number and title. It then /Offerings Unique, high-quality, Manylower-quality, appears as soon as possible II high-price lower-priceafter the first reference in products competitors the text, accommodating II Marketing Distribution in 3 No national

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necessary page breaks. This markets with awareness or Iexcellent acceptance distribution also avoids breaking long

Personnel Good workforce, Biggap if key. tables like this ont:. in the / though small; employee leaves

middle. Short tables or little turnover I'graphs that are less than

Finance Excellent growth in Limited resources 1)2 inches are often inserted sales revenues may restrict growth in the text without figure opportunities when numbers because they compared to giant don't cause serious competitors problems with page breaks. Manufacturing Sole supplier ensures Lack economies of

high quality scale of huge competitors

R&D Continuing efforts to ensure quality in delivered products

""",,",",,~~'·Mr •.••..•• –

22 CHAPTER 1 FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT

Figure 1. SWOTAnalysis for Paradise Kitchens (continued)

External Factors Opportunities Threats

Consumer/Social Upscalemarket,likely Premiumprice may to be stable; limit access to Southwestern/Mexi- mass markets can food category is fast-growingsegment

Competitive Distinctivename and Not patentable; packagingin competitors can its markets attempt to duplicate

product Technological Technicalbreak-

throughs enable smallerfood produ- cers to achieve many economies availableto large competitors

Economic Consumer income is Manyhouseholds high;convenience im- "eatingout,"and portant to U.S. bringing prepared households take-outinto home

Legal/Regulatory High U.S.Food & Drug Admin.standards eliminatefly-by-night competitors

Among unfavorable factors, the main weakness is the limited size of Paradise Kitchens relative to its competitors in terms of the depth of the management team, available financial resources, and national awareness and distribution of product lines. Threats include the danger that the Company's premium prices may limit access to mass markets and competition from the "eating-out" and "take-out" markets.

INDUSTRY ANALYSIS: TRENDS IN SPICY AND MEXICAN FOODS

Total spice consumption increased 50 percent from 1985 to 1995, and consumption of spices jumped from an annual average of 2 pounds per American in 1988 to 2.7 pounds in 1994. Currently, Mexican food and ingredients are used in 64 percent of American households. Burritos, enchiladas, and taco dinner kits, which had insignificant numbers in 1981, reached between 4 percent and 11 percent of American households in 1996. Age Wave, Inc.'s 1998 Boomer Report also stated that Baby Boomers consumed 84 percent more Mexican food in 1995 than they did in 1986.

ASAMPLEMARKETINGPLAN 23

According to Grocery Marketing, as the general population I becomes more accustomed to different ethnic cuisines and styles :

of eating, spicy foods and unusual flavors are turning up on the dinner tables of middle America and the aisles of supermarkets, as well. As Baby Boomers grow older, their taste buds will become less sensitive, and they will want stronger-tasting foods. In addition ! to age, growth in population, incomes, and tastes in the American ! diet should continue to fuel the trend for spicy foods in the United States. Retail sales of fiery food could top $l.8 billion in the year 2000, according to Packaged Facts, up from $1 billion in 1994.

These trends reflect a generally more favorable attitude toward spicy foods on the part of Americans. The Southwestern/Mexican market includes the foods shown in Figure 2.

Figure 2. Some Foods Included in the Southwestern/ Mexican Product Category 1996

This summary of sales in a

the Southwestern/Mexican Item Percentage of Sales Sales in Millions

,~ro.du~t category sho,":s it 1 Salsa 39 $624 IS.slgnifl.S;tDtand t?~ovides 'i Cheese/bean dips 13 208 variety of future opportun- ,

Refried beans 9 144

ities for paradise Kitchens. Seasoning mix 8 128 Chilies 7 112

to

Taco shells 7 112 Dinner kits 5 80 Taco sauce 3 48 Enchilada sauce 2 32 Other 7 112 Total 100 $1,600

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As with the Industry — COMPETITORSIN SOUTHWESTERN/MEXICANMARKET ~alysis;the ComJ.J~titor The chili market represents $495 million in annual sales. The Ahalysis demonstnites' that products fall primarily into two groups: canned chili (62 percent the company has a realistic of sales) and dry chili (16 percent of sales). The remaining 22 understanding of who its" percent of sales go to frozen chili products. Besides Howlin' II major competitors are and Coyotef", Stouffers and Marie Callender's offer frozen chilies as I:what their marketing part of their broad lines of frozen dinners and entrees. Major strategies are. Again, a

.'f canned chili brands include Harmel, Wolf, Dennison, Stagg, Chili

realistic assessment gives Man, Chili Magic, and Castleberry's. Their retail prices range from confidence to re~gyrs that

i $.99 to $l.79.

~subsequent marketing ,,1' Bluntly put, the major disadvantage of the segment'sactions in the plan rest on

ei dominant product, canned chili, is that it does not taste very good. a solid foundation.

A taste test described in the October 1990 issue of Consumer [1 Reports magazine ranked 26 canned chili products "poor" to "fair" Ii in overall sensory quality. The study concluded, "Chili doesn't have I, to be hot to be good. But really good chili, hot or mild, doesn't come out of a can."

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24 CHAPTER 1 FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT

Dry mix brands include such familiar spice brands as Lawry's, McCormick, French's, and Durkee, along with smaller offerings

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such as Wick Fowler's and Carroll Shelby's. Their retail prices range from $.99 to $1.99. The Consumer Reports study was more favorable about dry chili mixes, ranking them from "fair" to "very good." The magazine recommended, "If you want good chili, make it with fresh ingredients and one of the seasoning mixes we tested." A major drawback of dry mixes is that they require the preparers to add their own meat, beans, and tomatoes and take more preparation time than canned or frozen chilies.

The Consumer Reports study did not include the frozen chili entrees from Stouffer's or Marie Callender's (Bowlin' Coyotef was not yet on the market at the time of the test). However, it is fair to say that these products-consisting of ground beef, chili beans, and tomato sauce-are of average quality. Furthermore, they are not singled out for special marketing or promotional programs by their manufacturers. Marie Callender's (including cornbread) retails for $3.09, and Stouffer's retails for $2.99.

v c…. COMPANY ANALYSIS 1 The Company Analysis

./" provides details of the company's strengths and marketing strategies that will enable it to achieve the

The husband-and-wife team that cofounded Paradise Kitchens'", Inc. in 1989 has 44 years of experience between them in the food-processing business. Both have played key roles in the management of the Pillsbury Company. They are being advised by

mission and goals identified earlier>

a highly seasoned group extensive understanding

of business professionals who have of the requirements for new product

development.

Currently, Howlin' Coyote'f products compete in the chili and Mexican frozen entree segments of the Southwestern/Mexican food market. While the chili obviously competes as a stand-alone product, its exceptional quality means it can complement such dishes as burritos, nachos, and enchiladas and can be readily used as a smothering sauce for pasta, rice, or potatoes. This flexibility of use is relatively rare in the prepared food marketplace. With Howlin' Coyore'", Paradise Kitchens is broadening the position of frozen chili in a way that can lead to impressive market share for the new product category.

25 A SAMPLE MARKETING PLAN

This" introductory over- view" sentence tells the reader the topics covered in the section-in this case customer characteristics and health and nutrition concerns. While this sentence may be omitted in short memos or plans, it helps readers see where the text is leading. These The Company now uses a single outside producer with which sentences are used it works closely to maintain the consistently high quality required in throughout this plan. ~ its products. The greater volume has increased production

efficiencies, resulting in a steady decrease in the cost of goods sold. "'"

~CUSTOMER ANALYSIS

The higher-level "A ~./' "'" In terms of customer analysis, this section describes (1) the heading" of Customer "" characteristics of customers expected to buy Howlin' Coyote'" [I ~alysis has a more do~~- "'" products and (2) health and nutrition concerns of Americans inant typeface and position KOday. than the lower-level "B heading" of Customer Customer Characteristics. Demographically, chili products in Characteristics. These general are purchased by consumers representing a broad range headings introduce the of socioeconomic backgrounds. Howlin' Coyote'P chili is reader to the sequence and purchased chiefly by consumers who have achieved higher levels level of topics covered. of education and whose income is $30,000 and higher. These

/ consumers represent 57 percent of canned and dry mix chili .r I/ users . .—~–~—————v

/ The household buying Howlin' Coyote'f has one to threeSatisfying customers and people in it. Among married couples, Howlin' Coyote'f is Iproviding genuine value to predominantly bought by households in which both spouses thein is why organizations work. While women are a majority of the buyers, single menexist in a market economy. represent a significant segment. Anecdotally, Howlin' Coyote® has This section addresses the heard from fathers of teenaged boys who say they keep a freezer question of "Who are the stocked with the chili because the boys devour it. customers for Paradise

Kitchens' products?" Because the chili offers a quick way to make a tasty meal, the product'S biggest users tend to be those most pressed for time. Howlin' Coyote'P's premium pricing also means that its purchasers are skewed toward the higher end of the income range. Buyers range in age from 25 to 55. Because consumers in the western United States have adopted spicy foods more readily than the rest of the country, Howlin' Coyotev's initial marketing expansion efforts will be concentrated in that region.

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26 CHAPTER 1 FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT

Health and Nutrition Concerns. Coverage of food issues in the U.S. media is often erratic and occasionally alarmist. Because Americans are concerned about their diets, studies from organizations of widely varying credibility frequently receive significant attention from the major news organizations. For instance, a study of fat levels of movie popcorn was reported in all the major media. Similarly, studies on the healthfulness of Mexican food have received prominent "play" in print and broadcast reports. The high caloric levels of much Mexican and Southwestern-style food had been widely reported and often exaggerated.

Less certain is the link between these reports and consumer buying behavior. Most indications are that while Americans are well-versed in dietary matters, they are not significantly changing their eating patterns. The experience of other food manufacturers is that Americans expect certain foods to be high in calories and are not drawn to those that claim to be low-calorie versions. Low- fat frozen pizza was a flop. Therefore, while Howlin' Coyote" is already lower in calories, fat, and sodium than its competitors, those qualities are not being stressed in its promotions. Instead, in the space and time available for promotions, Howlin' Coyote'P's taste, convenience, and flexibility are stressed.

5. Product-Market Focus

This section describes the five-year marketing and product objectives for Paradise Kitchens and the target markets, points of difference, and positioning of its lines of Howlin' Coyote'" chilies.

MARKETING AND PRODUCT OBJECTIVES

Howlin' Coyote'P's marketing intent is to take full advantage of its brand potential while building a base from which other revenue sources can be mined-both in and out of the retail grocery business. These are detailed in four areas below:

• Current markets. Current markets will be grown by expanding brand and flavor distribution at the retail level. In addition, same-store sales will be grown by increasing consumer awareness and repeat purchases. With this increase in same-store sales, the more desirable broker/warehouse distribution channel will become available, increasing efficiency and saving costs.

27 A SAMPLE MARKETING PLAN

o New markets. By the end of Year 5, the chili and salsa '1 business will be expanded to a total of 20 metropolitan areas. This will represent 72 percent of U.S. food store sales.

o Food service. Food service sales will include chili products and smothering sauces. Sales are expected to reach $693,000 by the end of Year 3 and $l.5 million by the end of Year 5.

o New products. Howlin' Coyote'P's brand presence will be expanded at the retail level through the addition of new products in the frozen-foods section. This will be accomplished through new product concept screening in Year 1 to identify new potential products. These products will be brought to market in Years 2 and 3. Additionally, the brand may be licensed in select categories.

This section ideiitifiesthe TARGET MARKETS specific niches or target ® markets toward which the The primary target market for Howlin' Coyote R products is c<:>Il1pany'sprodttcts are.. _ – '-"households with one to three people, where often both adults directed. When appropriate work, with household income typically above $30,000 per year. and when space permits, These households contain more experienced, adventurous this section often includes consumers of Southwestern/Mexican food and want premium a product-market matrix. quality products.

POINTS OF DIFFERENCE

The "points of difference" -characteristics that make Howlin' Coyotef" chilies unique relative to competitors-fall into three important areas:

/0 Unique taste and convenience. No known competitor An organization cannot /' offers a high-quality, "authentic" frozen chili in a range of grow by offering only "me- V flavors. And no existing chili has the same combination of too products." The greatest ~ quick preparation and home-style taste. II s~gle fa~!or in !,new = t—- •

Taste trends. The American palate is increasingly intrigued !I product's failure is the lack ~ by hot spices, and Howlin' Coyote® brands offer more il of ..signifisant "points of ~ "kick" than most other prepared chilies. ~ ditference" that set it apart ~

Premium packaging. Howlin' Coyote'P's high-value from competitors' sub- 0 packaging graphics convey the unique, high-quality product

stitutes. This section makes contained inside and the product's nontraditional these points of difference positioning. explicit.

28 CHAPTER 1 FOUNDATIONS OF STRATEGIC MARKETING lVlANAGEMENT

POSITIONING

In the past chili products have been either convenient or tasty, but not both. Howlin' Coyote'" pairs these two desirable characteristics to obtain a positioning in consumers' minds as very high-quality "authentic Southwestern/Mexican tasting" chilies that can be prepared easily and quickly.

6. Marketing Program

The four marketing mix elements of the Howlin' Coyote'" chili marketing program are detailed below. Note that "chile" is the vegetable and "chili" is the dish.

PRODUCT STRATEGY

After first summarizing the product line, the approach to product quality and packaging is covered.

Product Line. Howlin' Coyote'P chili, retailing for $2.99 for a 10- or 11.5-ounce serving, is available in five flavors. The five are:

• Green Chile Chili: braised extra-lean pork with fire-roasted green chilies, onions, tomato chunks, bold spices, and jalapeno peppers, based on a Southwestern favorite.

• Red Chile Chili: extra-lean cubed pork, deep-red acho chilies, and sweet onions; known as the "Texas Bowl of Red."

• Beef and Black Bean Chili: lean braised beef with black beans, tomato chunks, and Howlin' Coyote'P's own blend of red chilies and authentic spicing.

• Chicken Chunk Chili: hearty chunks of tender chicken, fire- roasted green chilies, black beans, pinto beans, diced onions, and zesty spices.

• Mean Bean Chili: vegetarian, with nine distinctive bean varieties and fire-roasted green chilies, tomato chunks, onion, and a robust blend of spices and rich red chilies.

Unique Product Quality The flavoring systems of the Howlin' Coyote® chilies are proprietary. The products' tastiness is due to extra care lavished upon the ingredients during production. The ingredients used are of unusually high quality. Meats are low-fat cuts and are fresh, not frozen, to preserve cell structure and moistness. Chilies are fire-roasted for fresher taste, not the canned variety used by more mainstream products. Tomatoes and vegetables are select quality. No preservatives or artificial flavors are used.

29 A SAMPLE MARKETING PLAN

Packaging. Reflecting the "cutting edge" marketing strategy of its producers, Howlin' Coyote" bucks conventional wisdom in packaging. It avoids placing predictable photographs of the product on its containers. (Head to any grocer's freezer and you will be hard-pressed to find a product that does not feature a heavily stylized photograph of the contents.) Instead, Howlin' Coyotev's package shows a Southwestern motif that communicates the product's out-of-the-ordinary positioning. This approach signals the product's nontraditional qualities: "adventurous" eating with minimal fuss-a frozen meal for people who do not normally enjoy frozen meals.

PRICE STRATEGY

Howlin' Coyote'" Chili is, at $2.99 for a 10- to 11.5-ounce package, priced comparably to the other frozen offerings and higher than the canned and dried chili varieties. However, the significant taste advantages it has over canned chilies and the convenience advantages over dried chilies justify this pricing strategy.

PROMOTION STRATEGY

Key promotion programs feature in-store demonstrations, recipes, and cents-off coupons.

In-Store Demonstrations. In-store demonstrations will be conducted to give consumers a chance to try Howlin' Coyote'" products and learn about their unique qualities. Demos will be conducted regularly in all markets to increase awareness and trial purchases.

Recipes. Because the products' flexibility of use is a key selling point, recipes will be offered to consumers to stimulate use. The recipes will be given at all in-store demonstrations, on the back of packages, and

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