Marketing Planning Strategies and Process

Abstract

Under the present recessionary period, the effectiveness of organisational success mostly depends on a successful marketing plan. This marketing plan has been prepared on Danisco Sweeteners Ltd., an UK based SME having less than 10 million euro of annual and number of employees less than 250. This marketing plan has been discussed with the objectives, strategies and process of proper marketing plan of the organisation.

To analyse the macroeconomic environment PESTEL analysis has been incorporated and for industry analysis it has presented Porters 5 forces model. For further analysis, Danisco’s internal and external marketing environment has been included with SWOT analysis. The strategy development has defined with mission statement, objectives, and marketing strategy with the help of Porter’s generic forces. The tactics and implementation of marketing plan can be possible with proper identification of marketing mix, communications and research. An accurate control and evaluation system has developed with marketing budget to getting perfect recommendations for marketing plan of Danisco Sweeteners.

Introduction

Due to recessionary impact the world is now going through a very tough time when the worldwide economy is facing problems with its downscale tendency. Thus businesses become more difficult to run and cope up with these situations. Thompson, A. et al, (2007) mentioned that the dependency of business success is still dependant on the effective and efficient marketing process. Stoner, J. A. F., Freeman, R. E., & Gilbert, D. R., (2006) mentioned that to start a new business a thoughtful marketing plan is most helpful concern. Marketing plan is the specification of a business entity’s marketing purpose and goals. This marketing plan has designed to identify some key issues noted as below:

Key issues to identify in a marketing plan.
Figure 1: Key issues to identify in a marketing plan.

This marketing plan has designed for an SME firm named Danisco Sweeteners Ltd, UK. The plan would discuss about the objectives, strategies and the process to market the products of this firm.

Selected SME Company

SME

European Commission (2003) pointed out that SME stands for small & medium enterprise depending on the number of the employees or the annual turnover or the balance sheet total demonstrated as bellow –

Criteria of SME.
Figure-1: Criteria of SME.

DANISCO sweeteners as SME

Danisco Sweeteners is a SME because it has less than 250 employees. For last few years it has 230 employees. Besides from the above chart it has annual balance sheet totals less than 10 million euro for last few years. It is a public limited company as a part of Danisco. (Danisco sweeteners, 2009)

Brief Company History

Danisco Sweeteners Ltd is a subsidiary under Danisco Group UK. Danisco Sweeteners is a world class producer of food ingredients, enzymes and bio-based solution. It is a division of Danisco Group in the food ingredient sector and bio active sub sector and producing bio active food ingredients which have physiological benefits. The rising raw material costs are the barriers for the success of Danisco. But during fiscal year 2007-8, 1% organic growths while the revenue growth for sweeteners is negative. The product range of Danisco is:

Product Range of Danisco Sweeteners
Figure-3: Product Range of Danisco Sweeteners.

Danisco has the target to market its products with low or educed amount of sugars. For this, they use natural raw materials like milk sugar, sucrose and wood. Danisco apply a broad array of functions such as:

Application areas of sweeteners.
Figure-4: Application areas of sweeteners, Source: DANISCO (2009).

Environmental Analysis

PESTEL analysis

Kotler & Keller, (2006) mentioned that PESTEL analysis is a tool used to examine the macro environmental condition of a firm. The external environment can be assessed and the match between the environment and the firm’s strength can be found by the PESTEL analysis.

  • Political factors: The Danisco would be aware of the political condition of the country. To get the raw materials correctly and to ensure the proper production it must make certain to have a stable and conflict free political environment.
  • Economic factors: The global economy is now experiencing a turmoil period. Sweeteners also affected by this. Though the cost of raw materials and fuel has decreased, due to raising unemployment the overall consumption has decreased. For this reason the growth rate of revenue is not satisfactory.
  • Socio-cultural factors: Danisco are producing low sugar products. So, the society would be beneficial by using its natural resources. Thus the people of all cultures can use these food ingredients.
  • Technological factors: The technology used in the production of Danisco is unique and perfect. Danisco is continuously employing newer technology to make their products more healthy and satisfactory.
  • Environmental factors: Danisco is using natural resources like wood. So, environmental damage can be occurred. But, it uses proper techniques to prevent the environment from its operation.
  • Legal factors: There are lots of government rules and regulation in case of food related product making. Danisco must put proper concentration to maintain these logistics.

Porters 5 Forces Model

Porter M. E., (2004) pointed out that the five important factors those affect the firm’s industrial aspects with five forces that shape the competition within the industry and has been demonstrated as bellow-

Porter’s 5 forces model.
Figure-5: Porter’s 5 forces model.
  • Potential entrants: There are a lot of food ingredient producers in the market like Danisco. Besides, the customer demand driven low sugar products of Danisco are also work as a barrier to entry for new entrants.
  • Buyers: The customers are almost loyal as because Danisco is targeting the mostly available market segment. Besides, the production is fully based on customer demand.
  • Substitutes: There are almost no substitutes for the low sugar products. So, the customer are depends fully on Danisco.
  • Suppliers: Danisco has a close relationship with its suppliers which are ongoing for at least 25 years. For these, the product quality is remaining standard from the beginning. Though the costs of raw materials have increased, the relationship does not hamper.
  • Competitive rivalry: Danisco has competitors but the relation with the competitors is not rivalry. Sometimes, Danisco get help from its competitors while some time it helped them.

SWOT analysis

Skinner, S. J., & Ivancevich, J. M. (2003) mentioned that the SWOT analysis is a tool which is largely used for an identification of the firm’s strength, opportunities, weakness and threat. It can examine the external and internal marketing environment of the firm.

Strength

  • Loyal customers: The customers are so loyal that it is almost impossible to attain them.
  • Good relationship with suppliers: Sweeteners have a good relationship of many years with the customers.
  • Demand driven production: Danisco produces products according to the demand of the market.
  • Highest technological use: Danisco ensure highest level of technological use in their operations.
  • Use of natural resources: Danisco uses natural resources which are available in low or almost no cost.
  • High brand awareness: As a part of Danisco Group, Danisco has the brand preferences and privileges in the market.
  • Good revenue of the Danisco group as a whole: The Danisco group as a company with many division has a very good revenue and profit margins. Sweeteners can use a portion of this revenue.
  • Lack of substitute products: There are almost no substitute products of Sweeteners. So, customer has to buy it.
  • Lack of competitive rivalry: As because there are almost no competitors of Danisco, the rivalry is non existent for sweeteners.
  • Strong contribution to SME sector: In the local SME sector, Danisco has a good contribution.

Weakness

  • Cause environmental harm by using natural resources like wood: As because Danisco is using woods and other natural resources, it causes some environmental problems.
  • Financial instability of recent year: Because of the economic turmoil in recent years, Danisco experienced a downturn in their economic stability.
  • Small number of customers: Though the customers are loyal, their number is quite few.
  • Lack of affective and proper promotional work: Danisco does not take any attractive and attacking promotional activity.
  • Lack of proper projections for future demand: Danisco always failed to project the future demand for their products.

Opportunities

  • Attracting new marketing segments: Danisco can introduce new products and attract new market segment.
  • Expansion of business: Danisco have the opportunity to expand its business in many sectors.
  • Introducing new low sugar food ingredients: Besides the existing products, Danisco can introduce new sugar free food ingredients.
  • Constant favorable organic growth: Danisco can have the Constant favorable organic growth
  • Have good profit margins: By expanding business, targeting new market and introducing new products, sweeteners can have a good profit margin.
  • High market share: Danisco can increase its market share by its operation and expansion.

Threats

  • Increase of cost of raw materials: The present increase in cost of raw materials can be a threat.
  • Increase of oil price thus increase the transportation cost: The increasing transportation cost will decrease the profit margins.
  • Present global turmoil: The present global turmoil decreases the profit potential.
  • Government rules and regulations: Government can impose any regulations which can be harmful for Sweeteners.

Strategy Development

Danisco is following a business level strategy as it is targeting the development of its core product competencies to gain competitive advantages. Its actions and commitments are aiming to achieve a good market share.

Mission statement

To serve the health conscious customers to have a good health by producing low sugar food ingredients through using natural resources and avoiding harmful and man made ingredients to give the customers the competitiveness with innovative, sustainable and bio-based food ingredients triggered by the demand of the customer and to maximise the profit.

Objectives

The primary objective is to serve the health conscious people with food ingredients made of natural resources like milk and wood and provide reduced sugar food ingredients to them.

The secondary objectives are:

  • To obtain a good market share.
  • Achieve loyalty of the customers through meeting the customer demands.
  • Have competitive advantages through product quality.

Marketing Strategy

Mishra, S., (2007) defined that the Boston consulting group (BCG) growth share matrix: Danisco should classify all its SBU’s according to this matrix:

BCG growth share matrix.
Figure 6: BCG growth share matrix.

According to BCG matrix, Stars are the high growth and high share oriented firms which frequently need high investments. Cash cows are the low growth and high share business that need low investments to remain in a good share position. These firms originated good cash flow and support its SBUs. Question marks are high growth and low shared firms which need cash to uphold their present market share. Dogs are the firms with low growth and low share of market. These firms need high cash which they don’t have and with this cash they can not be able to grab good market share.

The marketing strategy of Danisco is thus of cash cows. It has high market shares but not enough growth for last years.

Porter’s Generic Forces

Kotler, P., (2006) & Griffin, R. W. (2006) explained that according to Michael Porter’s generic forces model, there are three strategies to get good market share and growth. These are:

  • Overall cost leadership: trying to get good market share and growth by offering the lowest price to the customers.
  • Differentiation: Achieve the highest market share and growth by differentiation of product than that of the competitors.
  • Focus: Achieve high market share and growth by focusing on one or more market segments.

Danisco is now using differentiation strategy as its products are different from the competitors.

Tactics and Implementation

Marketing Mix

Perreault, W. D. & McCarthy, E. J., (2002) addressed that marketing mix is the collection of all marketing activities which goal is to obtain the objectives of the organisation. Marketing mix means the tools a firm uses to pursue its objectives. (Kotler & Keller, 2006)

  • Product: The products of Danisco have designed according to the demand of the target customers. Thus the acceptance of the product is high to the customers. Danisco should continuously improve the quality of the products and to add new features to existing products keep the customer demand in mind.
  • Price: As sweeteners have almost no substitute products, Danisco can be maintain a rigid pricing policy. The customers are not too much price sensitive, it should price its products in a manner that will give a good profit and also satisfy the customers.
  • Place: The brand Danisco has a high awareness and value. The placement of sweeteners is also benefited by this. Thus, Danisco should target to get strong place over customers mind.
  • Promotion: Danisco should use effective promotional tools like television advertisement, billboard presentation, sponsorships and other types of promotional programs.

Marketing Communications

Marketing communication mix consists of six type of communication system. These are:

  • Advertising: Danisco can do TV, radio or other media to communicate with customers.
  • Sales Promotion: Short term discount or sale off can be used to attract new customers.
  • Events and Experience: Danisco can aware the target customers through different types of events.
  • Public Relations and Publicity: Danisco can promote their products through sponsoring some public events.
  • Direct Marketing: Danisco can communicate directly with the customers by telephoning, interviewing and so many direct activities.
  • Personal Selling: Door to door selling of products can be a communication option

Marketing Research

Kotler, P., Armstrong, G. (2006) defined that the marketing research is a process of identifying problems and solutions to help the marketing managers. The marketing research can help to give proper idea about the product, customers and the competitors.

  • The products: Research says that the present reduced sugar food ingredients of Danisco have accepted firmly by the customers. The diabetic patients and health conscious people are depending largely on these products. Lack of competition on case of sugar less food ingredients, the products has almost no substitutes.
  • The products of Danisco are better than the competitors because Danisco are using natural sources for their products. For his the effects of man made sources on human body are less in sweeteners products than in the competitors. Another important thing is Danisco try to design their products according to the demands of the customers. Thus, customers feel satisfaction.
  • The customers: Research suggests that the targeted customers have been achieved fully. The customers are mainly aged person having diabetic diseases and people who are health conscious.
  • The competitors: It has found that the competitors are trying to design reduced sugar food ingredients in lower cost than sweeteners. Thus, Danisco should modify its products to remain as the market leader.

Control and Evaluation

Danisco must establish a proper and effective control and evaluation system, which will help it to ensure the quality of product, maximum use of minimum resource, efficient production system, and ethical representation of the production, monitoring and rewarding the employees and ensure highest weight to corporate social responsibility. These will bring the ultimate customer satisfaction and customer loyalty.

Danisco can achieve the control over its operation in a systematic way. At first it sets a goal or objective. Then, it gives its employees the scope to work effectively and efficiently. After that, they can measure the performance of each employee or team according to a scale established previously. If the result is not suitable enough, sweeteners can call for asking questions to the employees for their poor performance help them according to the cause of their failure and give the proper training if necessary.

The evaluation must be accurate. The primary and secondary objectives are used as the measurement scale. That is in the performance measurement stage, it is assessed whether these objectives are achieved or not. Another way is to look for the increase in sales level. If efforts of the employees increase sales, it can be evaluated as a good performance.

Recommendation

  • Sweeteners should use new natural resources and also can explore some other sources because to use natural sources cost will be lower than man made sources.
  • Sweeteners can introduce new sugar free food ingredients and target new market segments to expand its business and profit margins and thus achieve high market share.
  • It must take an effective projection technique to have an idea about the future demand.
  • It must start attacking and attractive promotional programs to create more awareness. This advertising will help to promote the quality of the products of Sweeteners and give it the competitive advantages.

Conclusion

Danisco Sweeteners Ltd is a sister concern of Danisco Group, which can not be gathered its success for the increasing rate of raw materials in market. By doing a proper marketing plan, it could be benefited where the objectives, strategies, process of market like SWOT analysis, PESTEL analysis, Porter’s five forces model have been developed to achieve its mission and vision of the company.

References

Danisco, 2008, Annual Report 2008 of Danisco. Web.

Danisco, 2009, Sweeteners. Web.

European Commission, 2003, The new SME definition User guide and model declaration, Enterprise And Industry Publications. Web.

Kotler, P. & Keller, K. L., 2006. Marketing management, 12th Edition, New Jersey: Pearson Prentice Hall, ISBN: 0-13-0336297.

Kotler, P., Armstrong, G. 2006, Principles of Marketing, 11th Edition, Prentice-Hall of India Private Limited, New Delhi, ISBN: 81-203-2825-6.

Perreault, W. D. & McCarthy, E. J., 2002, Basic Marketing: A global Managerial Approach, 14th Edition, McGraw-Hill, Irwin, ISBN- 0-07-240947-9.

Porter, M. E., 2004, Competitive Strategy, Export Edition, New York: The Free Press, ISBN-10: 0743260880.

Griffin, R. W. 2006, Management, 8th Edition, Houghton Mifflin Company, Boston New York, ISBN: 0-618-35459x.

Mishra, S., 2007, Strategic Case Analysis: Business Concepts, Strategy Frameworks, and Solved Cases As Socratic Dialogues, London: Booksurge Llc, ISBN-10: 0979835402.

Skinner, S. J., & Ivancevich, J. M. 2003, Business for the 21st Century, Homewood, Boston, ISBN: 0-256-09222-2.

Stoner, J. A. F., Freeman, R. E., & Gilbert, D. R., 2006, Management, 6th Edition, Prentice-Hall of India Private Limited, ISBN: 81-203-0981-2.

Thompson, A. et al, 2007, Strategic Management, 13th edition, Tata McGraw- Hill Publishing Company limited, New Delhi, India.

Bibliography:

Danisco, 2005, Danisco in brief. Web.

Danisco A/S 2004, Danisco Sustainability Report 2004. Web.

Drummond, G., Ensor, J. & Ashford, R., 2001, Strategic Marketing: Planning and Control, 2nd edition, Oxford: Butterworth-Heinemann.

Williamson, D., Cooke, P., Jenkins, W. & Moreton, K. M., 2003, Strategic Management and Business Analysis, 3rd edition, London: A Butterworth-Heinemann, ISBN-10: 0750642955.

Appendix

Marketing Budget

Here a forecasted marketing budget is proposed for sweeteners. This budget is done by percentage of sales method that is the amounts are percentage of sales and the total sales is assumed to be 100%.

Table: Proposed Marketing Budget for Sweeteners.

Marketing Items Annual budget (% of sales)
Advertisement 10%
Catalogs 1%
Websites 4%
Promotions 2%
Shows 2%
Literature 0.5%
Seminars 0.5%
Total 20%

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