Integrated Strategic Marketing Plan

ByShahzeb Jafri

Title Slide Executive Summary 3Industry Analysis 4-5Competitor Analysis 6-8Perceptual Map 9Value Chain 10Customer Analysis 11-12Company Analysis 13Company – Distribution Strategy 14Company – Positioning 15Marketing Mix – Butterfinger 16Company – Core Competencies 17Butterfinger – Expanded SWOT Analysis 18 - 19Balanced Scorecard 20Recommendations 21Updated Customer Pyramid 22Updated Value Chain 23Marketing Mix – Butterfinger Spreads 24Marketing Mix – Butterfinger Stores 25Implementation Plan 26Profit and Loss Statement 27Contingency Plan 28Appendix 29-33

Table of Contents

• The Spreads market being $1.5 billion1 in worth with a CAGR of 7.9% in 20131.

• Spreads industry to grow by 1.6% for next 5 years1.

• Nestle’s success story as the world’s largest food company can be credited to the nutrition based positioning, accurate communication and extensive research and development measures taken by the company.

• An example of Nestle’s success is Butterfinger that in 2 years was able to capture 17% market share of the peanut butter cups category, giving tough competition to Reeses, the industry leader1.

• Butterfinger should target consumer segments falling between 18 – 60 years, particularly families with at least one child and average income of above $40,000.

• Provided its success as a peanut butter based product, Butterfinger should: Launch the next generation in the form of Butterfinger peanut butter spreads Provide the most unique experience by opening Butterfinger stores

• By adopting these strategies, Butterfinger spreads can achieve greater than the industry growth of 10% in the three years to follow.

• Financial targets for the implementation of these strategies would be: Net Revenue for 2017: $ 144 million Net Income for 2017: $ 17 million

Executive Summary

Industry Analysis

Industry Definition: The Spreads Industry include nut-based, chocolate and sweet spreads. Sales of the industry reached $3.9 billion in 2014, growth from 2009-2014 was 31% and from 2014-2019 would be another 10% Moreover, the industry is expected to grow an additional 10 % from 2014-2019. Nut-based spreads generate 71% revenue, while chocolate spreads have had a growth of 20% in 20141.

Industry Characteristics:• The category is continuing to grow

every year• Competitors are innovating constantly

for differentiation• Consumer base is one that is health

conscious• Provision of original ingredients in

Peanut Butter category to drive growth

• Variety to drive growth in chocolate spread category

Industry at a glance:• U.S Sales: $3.9 billion1.

• Annual Growth (2009-2014): 31%1

• Expected Future Growth (2015-2019): 10%1

• Key Players: J.M Smucker & Co., Hormel Foods, ConAgra Foods1

Industry Analysis

• Innovation

• Social Media

• Engaging retail advertising

• Generation of electronic data

Technological Issues:

• Product Recalls

• Law Suits

• Ingredient Acquisition

• Product Safety

Legal/ Regulatory Issues:

Company J.M Smuckers Ferraro USA Inc. Hormel Foods Inc. ConAgra Foods Inc.

Type of Product

Jam/ Jellies/ PeanutButter

Chocolate Hazelnut Spread

Peanut Butter Chocolate Spread

Core Products

Jif, Goober, Smucker’s, Adam’s, Laura Scudder’s

Nutella Skippy Peter Pan

Sales 2014 $1863m1 $206m1 $337m1 $192m2

StrengthsMarket leader, Product variety, innovative, vast

production facilities

Strong awareness, Loyal customer base

2nd largest brand, Brand Awareness,

Strong financial backing, Existing strong markets

Well known brand, market penetration,

strong retail landscape

WeaknessesJam jellies declining sales,

easy product substitutability

Consumersbecoming health

conscious

Skippy being a Unilever brand,

Newlu bought so needs efforts

Salmonella issue ledto recalls

Competitor Landscape

Company Trader Joe’s Safeway Kroger’s

Type of ProductJams, jellies and peanut butter Jam and peanut butter Jam and peanut butter

Core ProductsTraderr Joe’s Jelly, Trader Joe’s Peanut Butter and Trader Joe’s

Jam

Safeway Creamy peanut andSafeway Jams

Kroger Jam, Kroger Crunchy Peanut Butter

StrengthsMarket presence as a retail store, chance for complementary gifting

to regular customers

Marketing efforts of big brands make category

awareness, zero in-store advertising cost

Existing retail set up, awareness amongst

shoppers, known for organic products

WeaknessesLack of consumer trust in store brands, difficulty of using other

retail stores

Difficult to secure loyal consumer base

Consumer doubts regarding private label brands

Total Private Label Sales ending November 2014: $435m

Competitor Landscape – Private Labels

Competitor Landscape – Private Labels

• J.M Smuckers is the market leader in the spreads industry with a market share of 40%.

• It has a 33% share in peanut butter category.

• Hormel Foods is the next biggest company in the market

• Private labels are penetrating the market with a share of 18%

Source: Topper, Amanda. Nut-based Spreads and Sweet Spreads . Industry Report, Passport, Euro Monitor, 2015.

Natural Ingredient

Nutrition

High

Low

Low

High

Competitive Analysis – Perceptual Map

Having Nestle’s reputation over health, there is a potential chance for Butterfinger to become the most nutritious peanut butter brand

Offer a wide variety of food and beverage products that enrich the very experience of life itselfOffer a wide variety of food and beverage products that enrich the very experience of life itself

Positioning Statement: Offer a wide variety of food and beverage products that enrich the very experience of life itself

Supplier

Value Chain - Industry

CustomerRetailerDistributorManufacturer

Customer Analysis

Health Consciousness:₋ Stress on natural ingredients₋ Consciousness regarding sugar content ₋ Protein content plays an important role

Preference for taste amongst consumers

₋ Special texture for peanut butter preferred (Creamy)₋ Hesitation towards any artificial taste

General Consumer Trends:₋ 90 – 92% households consumer peanut butter and jelly in US2

₋ 67% household consumer peanut butter regularly in US2

₋ Approx. 20% consumers eat more than what is recommended in US2

₋ 60% (12 to 17 years) to 80% (6 to 11 years) kids consume peanut butter3

₋ 84% households prefer creamy peanut butter in US3

Customer Segments:₋ End Consumer:

a). The Two + 1sb). The Snackers

₋ Retail Partners: Walmart, Costco, Ralphs etc

Platinum

Gold

Iron

Lead

Households having an income of $55,000+, at least one tween child, parent age 28+, health conscious,

almost daily consumers

Retail chains specific to regions, generate moderate amounts of sales through breakfast foodstuffs and provide mixed shelf spacing to

Butterfinger spreads

Households having an income of $40,000, health conscious, have

kids in tweenage or teenage, consumption of 4 times per week

College students who work part time making $500 - $800 per week, cover meal

cost with nutritious and filling snacks, consume often but individual consumption

Individuals that occasionally consume peanut butter or chocolate/peanut butter. Rarely make

purchases. Consume at a friend’s place

National Grocery chains that generate large sales revenues from breakfast foodstuffs and provide ideal shelf spacing to Butterfinger spreads

Breakfast and Dessert stores that buy Butterfinger spreads for usage in their products. Butterfinger should try and

acquire advertising in menu cards

Restaurants that rarely purchase peanut butter since the ingredient is used in a

limited number of their products

Customer Pyramid - Industry

• In 1867, Henri Nestle developed an infant cereal which led to the formal formation of Nestle in Vevey, Switzerland.1

• Over the decades, the organization has given birth to a vast array of brands and has become the world’s largest company with a focus on Nutrition, health and wellness.

• The mission statement of the company is “to enhance the quality of consumers lives every day, everywhere by offering tastier and healthier food and beverage choices and encouraging a healthy lifestyle”.

Key Stats about Nestle (As of May 2015):

• Market Capitalization: $247.3 billion1

• Sales: $100.08 billion2

• No. of Employees: 339,0001

• Headquarters: Vevey, Switzerland

Key Brands:

• Cerelac, Nestle Pure Life, Nesquik, Nescafe, Milo, Butterfinger etc.

Company Analysis

Company – Distribution Strategy

Retail DistributionRestaurants and Coffee Shops

Universities

Company – Distribution Strategy

Company - Positioning

Provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

Offer a wide variety of food and beverage products that enrich the very experience of life itself.

Brand Butterfinger Bar Butterfinger PeanutButter Cups

Butterfinger Crisp Butterfinger Bites

Product Flaky, crispy peanut butter center covered with chocolate

Combination of creamy milk chocolate and smooth peanut butter in the form of cups

Layers of light and crispy wafers, butterfinger candy crème and crunchy candy bits

Classy butterfinger taste packed in bite-sized packs

SKUs Original, King Size, Giant, Fun Size, 6 pack, Minis, Snack Pack

Single, Share Pack, Minis Reclose-able Bag, Mini Share Pack

Original, 6 Pack Stand-up Bag, King Size, Concession

Place Online and grocery stores. Website has a shop locater

Online and grocery stores. Website has a shop locater

Online and grocery stores. Website has a shop locater

Online and grocery stores. Website has a shop locater

Price Industry line pricing for single bars. Prices vary according to pack sizes from $10 to $40

Industry line pricing for single bars. Prices vary according to pack sizes from $10 to $40

Industry line pricing for single bars. Prices vary according to pack sizes from $10 to $40

Industry line pricing for single bars. Prices vary according to pack sizes from $10 to $40

Promotion Television, print and digital advertising along with in-store advertising and promotions

Television, print and digital advertising along with in-store advertising and promotions

Television, print and digital advertising along with in-store advertising and promotions

Television, print and digital advertising along with in-store advertising and promotions

Company – Marketing Mix for Butterfinger

• Consumer Insights₋ Analyzing consumer psyche

₋ Understanding consumer trends

• Marketing Strategy₋ Consistent communication

• Research and development₋ Integration with consumer

insights

• Retail Network₋ Extensive

₋ Well spread out

Company Analysis – Core Competencies

Expanded SWOT Analysis

Strengths:• Strong parent company: Global company with

strong financial muscle• Brand awareness: Butterfinger’s successful

communication• High peanut butter consumption in US: 90% -

92% households consuming peanut butter1

• Strong research and development: 34 R&D facilities

Weaknesses:• Production by consumers: 10% consumers

tend to make their own peanut butter1

• Product Recall• Peanut allergies

Opportunities:• Consumers’ increased demand for spreads

with greater nutrients and protein: Nestle’sreputation for health and wellness

• Millennial’s inclination towards spread usage in foodstuffs

• International business: Peanut butter consumption rising in China

Threats:• Strong Competition: A number of big brands

already present in the industry• Private Labels: Penetration rising steadily• Government Regulations: Government keeps

revising types of ingredients that can be used

Butterfinger – Expanded SWOT Analysis

• Consistent Innovation: Constant innovations should be made to product offerings.

• Leverage on Financial Backing: Utilize parent company’s strengths in business areas.

• Introduce experimentation in the industry.

Maximizing Opportunities and Strengths

• Develop business analytics to counter competition

• International expansion • Check on government

regulations: Brand should stay aware and ensure all production regulations are met.

Minimizing Threats and Weaknesses

Future Strategies

Balanced Scorecard Metrics

Financial Perspective:• Volume Increases• Return on Investment• Return on Equity• Net Income after taxes

• Revenue per retailer• Revenue/ retail segment• Cost per retailer/trade promotion

Consumer Perspective:• Percentage loyalty• Percentage intent to switch• Share of grocery spend• Share of voice/ wallet• Repeat purchase ratio• Trial Ratio

Innovation Perspective:• Number of new products.• Return on innovation• Time to market• Time spent talking to customers• Number of consumer suggestions for

innovation• New skills learnt / employee

Operational Perspective:• Process quality.• Right first time.• Right on time.• Batch accuracy• Stock/ inventory level

Balanced Score Card

• Primary Recommendations: Enter the spreads category with peanut butter and chocolate/peanut butter

₋ Consumer demand for natural ingredients and nutrition in spreads is increasing. Butterfinger has Nestle’sreputation to leverage the opportunity.

₋ Households with $40,000+ income with at least one child should be targeted₋ Students should be targeted so that future loyal customers can be gaines

Open Butterfinger Stores:₋ There is an increasing demand for innovation in the category, where consumers want to try

differentiated consumption.₋ Stores can provide the most unique experience. Customer engagement should be ensured and they

should be encouraged to customize their own meals.

• Financial Objectives:Revenue from Spreads: FY17: $130m, FY18: $143m, FY19: 157mStore revenue: FY17: $14m, FY18: $16m, FY19: $17mNet Revenue: FY17: $144m, FY18: $158m, FY19: $174mNet Income: FY17: $17m, FY18: $21m, FY19: $25m

Recommendations

Platinum

Gold

Iron

Households having an income of $55,000+, at least one tween child, parent age 28+, health conscious,

almost daily consumers

Retail chains specific to regions, generate moderate amounts of sales through breakfast foodstuffs and provide mixed shelf spacing to

Butterfinger spreads

Households having an income of $40,000, health conscious, have

kids in tweenage or teenage, consumption of 4 times per week

College students who work part time making $500 -$800 per week, cover meal cost with nutritious and

filling snacks, consume often but individual consumption so frequency is low

National Grocery chains that generate large sales revenues from breakfast foodstuffs and provide ideal shelf spacing to Butterfinger spreads

Breakfast and Dessert stores that buy Butterfinger spreads for usage in their products. Butterfinger should try and

acquire advertising in menu cards

Recommendations – Customer Pyramid

Recommendations – Value Chain

Distributor RetailersSupplier Manufacturer Customer

Butterfinger Stores

Procurement Marketing Research and Development

Recommendations – Value Chain

Recommendations – Marketing MixProduct Place Price Promotion

Objectives • Introduce 4 peanut butter variants (Creamy, Chunky, Old School and Diet)

• Introduce chocolate/peanutswirl

• Provide consumers with varietyof pack sizes according to differing demand trends

• Launch peanut butter variants and peanut/chocolate swirl in January 2017 (National Peanut Butter Day)

• Develop automated online retail channels

• Maintain competitivepricing with an upper and lower range of 2%.

• Remain affordable to all consumer segments

• Provision of greater nutrition for the same money.

• Leverage on Butterfinger Simpson partnership to drive sales.

• Communicate the launch through Butterfinger marketing mediums

• Create immense buzz in the market (social media, OOH)

• Engage consumers before product launch.

Strategies • Conduct large scale qualitative and quantitative consumer research to identify lifestyle, preferences and habits of different segments.

• Pack sizes: mini, regular, large and squeeze jars.

• Launch Bartman SKUs and Simpson merchandize.

• Educate sales and marketing teams about products

• Purchase Nielsen regionalspreads category retail subscription to identify most profitable retail regions for launch

• Understand shopper psyche for different consumer segments

• Develop a system that can deliver peanut butter to high frequency consumers

• Conduct pricing studies to identify consumer price sensitivity.

• Monitor competitor prices.

• Price different pack sizes according to the targeted segment

• Maintain 2% gap for adjusting peanut prices.

• Initiate ‘Bartman’s Secret’ campaign before launch to make buzz (print and social media).

• Integrate brand into Simpson new season featuring Elvis Pressley.

• Dedicate $20m for television, print media and in-store promotions

• Dedicate $5m for social media

Recommendations – Marketing Mix

Marketing Mix – Butterfinger Store

Product Place Price Promotion

Objectives • Introduce products such as peanut butter pancakes, donuts, waffles and shakes

• Provide consumersegments with a chance to make their own custom peanut butter meals.

• In-store meal preparation techniques

• Launch 3 Butterfinger stores in regions in Mid West, West and Southern U.S by April 2017.

• Busy consumer locations such as shopping malls to be targeted

• Operations to be expanded after 1 year

• Maintain a product offering that is affordable.

• Experiment new pricing strategies by introducing new products.

• Set a pricing system where consumer’s consumption determines total bill.

• Communicate store launch from September ‘16 to January ’16.

• Communicate the launch through Butterfinger marketing mediums.

• Create immense buzz in the market through social media.

• Make consumers anticipate something unique in spreads industry

Strategies • Conduct consumer research regarding the types of experimentationsthey would prefer.

• Extract consumer data through interviews, focus groups and surveys.

• Run a pilot phase in order to test the potential success of the idea.

• Purchase Nielsen data on shopping mall traffic to identify most profitable regions for launch

• Consumer research to Identify what store aesthetics can be most successful

• Work towards expanding operations

• Monitor pricing strategies of other dessert places and price accordingly.

• Keep a minimal base price for foodstuffs (pancakes, waffles etc.) and charge for toppings.

• Make Bartman the official store ambassador for Butterfinger stores

• Initiate curiosity driven campaigns on social media to create a buzz. #ITheNextGeneration

• Private invitation videos to selected consumers by Bartman. Videos uploaded on Facebook.

Marketing Mix – Butterfinger Store

Implementation Plan

Dollar figures in millions2017 2018 2019 2020 2021

Sales

Spreads 130 143 157 172 190Butterfinger Stores 14 16 17 19 21

Total Net Revenues 144 158 174 192 211Cost of Goods Sold 33 36 40 44 48

Gross Profit 111 122 134 148 162

Operating ExpensesR&D 26 25 28 31 34

Distribution 16 14 16 17 19Marketing and Administrative 26 33 37 40 44

Store Expenses 15 15 15 15 15Trading 3 3 3 4 4

Financial 1 2 2 2 2

Total Expenses 87 93 100 109 118Taxes 7 8 9 10 11

Net Income 17 21 25 29 33

Most Likely Profit and Loss Statement

• Conduct further consumer research in making more variants and pack sizes to drive sales volume

• Profits to be reinvested in additional communication measures such as Mobile Apps and games

• Profits to be reinvested in incentivizing retail partners

• Increase store locations and invest in enhancements

• Focus more on consumer research to find out communication gaps.

• Sales data should be analyzed to identify shortfall areas

• Value chain should be revisited to improve cost structures

• Pull back money from advertising and increase consumer promotions

If objectives are exceeded If objectives are not met

Contingency Plan

Dollar figures in millions

2017 2018 2019 2020 2021

Sales

Spreads 207 228 250 276 303

Butterfinger Stores 23 25 28 31 34

Total Net Revenues 230 253 278 306 337

Cost of Goods Sold 53 58 64 70 77

Gross Profit 177 195 214 236 259

Operating Expenses

R&D 41 40 45 49 54

Distribution 25 23 25 28 30

Marketing and Administrative 41 53 58 64 71

Store Expenses 15 15 15 15 15

Trading 5 5 6 6 7

Financial 2 3 3 3 3

Total Expenses 130 139 151 165 180

Taxes 12 13 14 15 17

Net Income 36 43 49 55 62

Appendix 1 - Best Case P&L

Dollar figures in millions

2017 2018 2019 2020 2021

Sales

Spreads 77 85 94 103 113

Butterfinger Stores 9 9 10 11 13

Total Net Revenues 86 95 104 114 126

Cost of Goods Sold 20 22 24 26 29

Gross Profit 66 73 80 88 97

Operating Expenses

R&D 15 15 17 18 20

Distribution 9 9 9 10 11

Marketing and Administrative 15 20 22 24 26

Store Expenses 15 15 15 15 15

Trading 2 2 2 2 3

Financial 1 1 1 1 1

Total Expenses 58 61 66 71 77

Taxes 4 5 5 6 6

Net Income 4 7 9 11 14

Appendix 2 – Worst Case

Appendix 3 - Expanded Product List

Spreads

Creamy Peanut Butter

Crunchy Peanut Butter

Old School

Diet

Chocolate Peanut Butter Swirl

Butterfinger Store

Cookies

Waffles

Pancakes

4 varieties of bread (plain, bran, banana, milk)

Shakes

Live cooking courses

Appendix 4 – Posters and Billboards

Appendix 5 – Bartman Game