Avalon Ltd A Natural Candle Company

Published Date: 02 Nov 2017

Marketing Plan

http://www.stichting-corantijn.nl/_media/foto/resultaat_kaarsvet/1_vlam.jpg

Henk Limpers

IFA-B07 – Group 5

Student ID: 512663

Arnhem Business School 2013

Illumine Consultancy Group

Table of Content

Background info

In 1984 Alexandra Waite and Maria E. Waite established Avalon Ltd. a natural candle company. Avalon Ltd. is positioned at the couture end of the market. Avalon Ltd. once started in the bathtubs of family members but soon grew to be one of the biggest candle companies in the UK . already in 1989 the company moved from a rented building to a specially designed factory and warehouse in Glastonbury. In the 1990’s Avalon’s production kept improving and modernizing.

In 2002 they reached a milestone of having produced more than 1,000,000 candles.

Avalon’s current product portfolio includes 4 different candles: The Great Arcana, Camelot, The Essence of light, Caliburn. Camelot is a budget brand and the 3 others are all premium brands.

Their focus was still on producing natural candles, but the first contacts with china were made. The first shipment of bulk production arrived in 2007 from Hainan Zhongxin Chemical Co. Ltd. The quality of this shipment was very low and the first problems between the two founding sisters started to rise. At this time the company was at the end of its maturity stage and started to decline.

From 2008-2010 several shipments were refused for the lack of quality, the bad quality of their candles severely damaged Avalon Ltd. Their brand image and the relationship with their customers is in desperate need of improvement.

In 2011 the first loss was made, the sales kept dropping resulting in a 30% drop of sales in 2012, after which Alexandra left the company. Maria is now solely in control of Avalon and decided to drop all contracts with China.

Maria Desperatly tried to get a grip on her company, knowing that her idea was a good one. She just needed to find out how it got this far. Last month a white knight arrived at stage. Monmouth’s Private Equity is willing to invest money in the company to make it a success again. Before investing Monmouth’s Private Equity demands a clear and sound strategy.

We are hired to make a strategy plan for Avalon Ltd. as Maria realised that

the company was on verge of collapsing after meeting with the management team and the

supporting staff. We are here to found out where it went wrong and to design a proper new strategy.

DESTEP

Demographic

The population of the United Kingdom is 63,047,162 people and it is continuing to rise with a growth rate of 0.553%. Avalon Ltd. targets two age groups which are people between 25-54 years and 55-64 years (mostly women). The first age groups consists of 41,2 % of the total population which means that there are a lot of potential costumers. There are 22 million households in total. In the next seven years it is expected that the population will grow with 2.4 million so the population rate in general is not a threat for the company.

Economic

The United Kingdom’s economy is one of the largest in Europe. It occupies third place after Germany and France. The GDP is 2,232 trillions for 2012 but a loss of 0,1 for the last year can be seen. The Bank of England recently reported 0,50 percent rise of interest rates for the past six months. Another thing that increased for the last half a year is the inflation rate. In June 2012 it was 2,4% and in February 2013 it is 2,7%. This is lower than last year’s February though when the inflation rate was 3.4%.

Technological

Innovations in the technological world occur every day especially when it is about producing. The machines which Avalon Ltd. uses to produce candles are quite old and since then they have improved a lot. There are different type of machines for producing candles and the prices vary between 2,000$ and 7,000$. It is very important for the company use new and modern technology because this can improve the work rate and the quality of the production. It is possible that there won’t be a need for a lot of workers because usually if the machines are new they don’t need a lot of people to control them.

Environmental

The United Kingdom has a temperate climate, with a lot of rainfall throughout the year. The temperature varies between -11  ͦC and 35 ͦC. Atlantic currents warmed by the gulf stream bring mild winters, though heavy snowfall can occur. Summers are warm, the warmest in the south-east of England.

The united Kingdom is the world’s ninth-largest consumer of energy and the 15th largest producer. In 2011 19% of the energy was produced by nuclear power, all but one of these reactors will be retired by 2023. The United Kingdom is building a new generation of clean energy sources.

In the UK , the Department for Environment, Food and Rural Affairs (DEFRA) is responsible for environmental protection and sustainable development. DEFRA mission is to tackle climate change internationally and through domestic action reduce the greenhouse gas emissions, and to secure a healthy, resilient, productive and diverse natural environment.

The UK is bound to the environmental policies set by the European Union.

More and more people change their view on the environment. People start to live a friendly and ecological lifestyle. In the last couple of years ecological and biological products have seen an increase in market share. An important point is that even during the recent and still ongoing recession, consumers were still willing to pay a higher price for biological products. It seems that this is not just a trend for the moment but it is a change in the lifestyle of our consumers.

Social

The UK is home to people from numerous countries, mostly Caucasian(92%), the ethnic minority groups are dominated by those from Indian, Chinese, Caribbean and African origin. The UK is rapidly aging.

The major religion in the United Kingdom is Christianity, which covers about 71%.

Standard of living in the UK is high, the GDP per capita at purchasing power parity is high at $35,900. Poverty still exists though the UK has successfully been trying to limit the inequality. On the Gini coefficient which ranges from 1 to 0, 0 being perfect equality, they scored a 0.34. This means that the income is equally divided in the UK. Meaning that everyone has the same income in proportion.

The government estimated in 2010 that almost one out of five people lived in poverty, nearly 13 million people. Over 3.8 million children live in poverty.

The literacy rate in the UK is 99%. The state is constantly trying to improve the educational system in The UK, the total amount spent in 2010 on education was around $150 billion and this was expected to rise to $156 billion in 2012.

Political

The system of governance in the UK changed over the course of years from a monarchy into a democratic parliamentary system or also called the Westminster system. The executive authority is the parliament which is led by the prime minister. The prime minister at the moment is David Cameron, he has been the prime minister since 2010. The monarch in the UK has the right to be consulted, the right to encourage and the right to warn. The current monarch is Elizabeth II. The monarch has no political responsibility and her position is largely ceremonial, the queen has given all the power to the parliament and the prime minister. Parliament can change or pass any law they want, if done with a majority of the votes. In the Westminster system the UK has three big parties. The labour party, the conservative party and the liberal democrats.

The United Kingdom is one of the most influential nations worldwide and has a large role on the international stage.The UK is one of the five permanent members of the UN security council, one of the founding members of NATO, member of the G8 and member of the EU.

In 2011 the UK vetoed a new EU treaty on economic and monetary union. This undermined the UK-EU relation which may lead to a more diminishing role for the UK as far as future EU policy. This already started with the introduction of the Euro which the UK did not want to use. Several issues have risen concerning Scottish independence.

Competitors Analysis

As any other product on the market Avalon also has competition, which means that they have to provide their customers with advantages that are not offered by their competitors. In order to create awareness and demand which will eventually lead to brand loyalty Avalon needs a strong competitive advantage. The following 5 companies are the main competitors of the flame of Avalon:

•Colony Gift Corporation Ltd.

Colony Gift Corporation Ltd. is the UK’s leading quality candle manufacturer. They have re-launched their name under their popular Wax Lyrical brand. Wax Lyrical was established in 1980. They design and manufacture luxury scented candles, reed diffusers and private label collections .

Colony Gift has a lot of customers throughout the UK and overseas. They supply their fragranced products and collections to garden centres, supermarket chains, department stores and independent gift retailers. They also have a webpage where consumers can buy their product. 45% of their production is for export.

The company offers different sorts of candles: Candle jars, gift boxed candles, bourbon candles, pillar candles, church and dinner candles, candle tins, tea lights and mini candles. However, they do not confine only with candles. They also have the following products: diffusers, room mist, Pot pourri, refresher oils, scented sachets, scented drawer liners, home fragrance and accessories.

Strengths of Colony Gift’s are as followed: special offers, high quality and years of experience. The have achieved accreditation by BRC Global Standards, who are leading global product safety certification programme. Furthermore, they are also members of the British Candle makers Federation. Membership assures that their products are set the highest standards which are set by the European Union and the UK candle industry. Moreover, they also have full control of their quality and production because they are responsible for the creating, testing , designing, manufacturing and marketing of the products. And finally, every UK order over £40 comes with free delivery.

Website: http://www.wax-lyrical.com/collections/colony.html

• Price’s Patent Candles Company Ltd.

Price's Patent Candles Ltd. Was established in 1830. The company produces candles and related accessories. It offers a wide range of candles for all occasions. Prices offers products from the following categories: celebrations dining, every day, for the home, garden, gifts, odor eliminators.

They state that in today’s market 80% of candle sales are purely decorative which is why they focus on perfumed, essential oil candles and aromatherapy products. Like all other companies, they also have a webpage where consumers are able to buy their products. The prices for their Tea- lights range from £1,06 (pack of 10 candles) - £12,50 (bag of 50 candles). The pack of 10 candles is indeed cheap but they don’t have much variation.

Strengths of Prices Ltd. : they have a strong and good reputation; a royal status, which means they supply for many Royal State occasions; worldwide well-known brand; free UK delivery on orders over £40; achievement of inexpensive stearin candles that burn almost as well as expensive beeswax candles.

Website: http://www.prices-candles.co.uk/

•Yankee Candle Co. (Europe) Ltd.

The company was founded in 1973 and is based in Bristol, the United Kingdom. Yankee Candle provides scented candles and home fragrance scents. They are positioned as premium-quality, gift worthy candles for the purpose of home fragrance. Yankee Candle offers products from the following categories: Arts, gifts & crafts, beauty & health, home, house & garden, jewelry, clocks & watches, lighting.

Yankee Candle Co. offers house warmer candles, candles for aromatherapy spa and pure radiance. These include tea lights, pillars, vase candles and many more. They also offer oils, beans wax, as well as accessories. The company's products are used various places like homes, cars, wardrobes, caravans, and yachts. It offers its products through distributors in Europe. The prices of different types of candles vary between £8.39 and £24.99, depending on size and distinctive features. Their tea lights are priced around the £6.95.

Yankee Candle’s strengths are as followed: They have developed a personal relationship with their customers, they have numerous fragrances and special offers like: valentine’s special 25% off, win gift vouchers and etc. Plus, they are international company which supplies to UK, US and other countries. Moreover, they have a huge product types variety.

Website: http://www.yankeecandle.co.uk/

Bolsius (UK) Ltd.

Bolsius Ltd is owned by NLD Bolsius International BV. It’s one of Europe's leading maker and supplier of candles. In 1870, the Bolsius brothers laid the foundation of the present company. Over the years exports grew to over 50 countries, among which are Europe, North Africa, Middle East, America and Australia.

Bolsius have several different products, including filled glasses, votives, pillars and reed diffusers. Bolsius's core product sales includes tealight candles, pillar candles, rustic, candles, scented candles, memorial candles, filled glasses, a citronella line and a full catering range. Pubs, restaurants and hotels for example use our special product line for the catering business. 25% of sales are to religious institutions and 35% to the catering trade.

Like all other competitors, Bolsius also has its strengths: trend watching, they keep a close eye on trends in fashion and lifestyle and follow designers which enables their assortment to be trendsetting and ‘up to date’. High quality standards. Bolsius packaging features the RAL logo which is a proof of quality assurance. Each year they introduce a large amount of new articles. Diversity in varieties: they offer a large range in sizes, shapes and a wide range of colours.

Website: http://www.bolsius.com/site?uk=home

• Johnson Wax.

The SC Johnson & Son Inc. company started as a parquet flooring company in 1886, but developed into an important player in household goods products, like household cleaning agents and polishes. Besides the cleaning agents and polishes, they also offer air care under the brand name Glade.

Their product line for air care looks as followed: Aerosol Sprays, Candles, Car Scented Oil, Carpet & Room, Glass Scents, PlugIns, PlugIns Scented Oil, Press'n Fresh, Secrets and Wisp. The candles they offer consist of the following: 2 in 1 candles, jar candles and scented oil candles.

Johnson Wax used to sell their products to their customers with direct shipments from the company’s manufacturing plants, but they changed this into a regional distribution center strategy. They started shipments to certain large customers including Kmart and Wal-Mart. Their products are also available on their webpage, the products however are sent from their retailers like soap and amazon.

Strengths of Johnson Wax: Well-known and have a good reputation for their household cleaning and polishing products, environmentally conscious: have lots of projects going on.

Website: http://www.scjohnson.com/en/home.aspx

SWOT

In order to make an appropriate strategic plan, a SWOT analysis was done. A SWOT analysis lists all the strengths, weaknesses, opportunities and threats of a company; in this case Avalon Ltd. This analysis gives a good summary of the company’s current situation and will be very helpful when looking at implementing a new business strategy for Avalon Ltd.

Strengths

The Essence of Light

Henry de Sully

Fair Trade Certificate

Natural waxes

Weaknesses

Trunk Sales

No HR Department

No structure in Sales

Damaged Brand Image

Opportunities

Fair Trade Market - Eco House

Monmouth’s Private Equity

Export Market

Threats

Luxury Items

China Production

Alternatives taking over

Strengths

First of all we will analyze the strengths of Avalon Ltd. Avalon Ltd. has 3 premium brands of which the Essence of Light is the most important one. The Essence of Light accounts for 45% of the sales of Avalon. Therefore this brand is one of the strengths of Avalon. After the Essence of Light there come Camelot the budget brand with a sales percentage of 34% but a much smaller profit margin. The Essence of light also gives Avalon the second highest profit margin. Another big strength of this company is Henry de Sully, who takes full responsibility for the research and development department. Henry de Sully worked in the candle industry for almost 37 years. For Avalon Ltd. he is one of the greatest assets they have thanks to his knowledge and experience. Although the R&D department is too small at the moment it is one of the strengths for Avalon Ltd. Henry is under constant pressure, there needs to be a continuous flow of new fragrances and new candles.

2 years ago Avalon finally received their Fair Trade Certificate from the Fair-trade Labeling Organizations International. Avalon is now licensed to carry the Fair-Trade logo on their products.

Natural waxes continue to grow in popularity, Avalon Ltd. is already making use of natural ingredient in their products and this is a big strength.

Weaknesses

Currently Avalon Ltd. is not doing so well. They have gone through a lot of problems lately concerning their bulk production from china which lacked the desired quality. Some of these candles even caused health risks. After some time of complains and retailers who did not wanted to pay the full price because of all the complaints they got Avalon’s Camelot budget brand got a severely damaged brand image. other customers started to order less and Avalon Ltd. decided to stop producing in China. Currently the brand image is still damaged because of this China story. In Avalon Ltd. there is no HR department, and so there is no recruiting strategy or selection. The absence of no recruiting selection raised the average age and the general education level is quite low. In peak production up to 12 temps are hired, these temps lack the required knowledge and attitude therefore waste levels peak at 30%.

Avalon Ltd. makes no use of sales structure. They use trunk selling in UK because this is the only method to sell candles to the desired target group. Although this method is not the cheapest nor the fastest we will still need this method. Although it must be improved, currently they make no use of any structure. All sales persons go to whatever area they like, thus decreasing the efficiency of trunk sales.

Opportunities

In 2009 Avalon Ltd. started to produce small quantities of fair trade candles, this fair trade market seems promising for Avalon Ltd. these markets are completely ignored by the big boys and Avalon already received its certificate to put fair-trade logos on their products. In 2 years’ time their certificate needs to be renewed. The EU export market is a big opportunity for Avalon Ltd. The size of the EU market is 1.1 Billion pounds. Also there is a big consumption in several countries in the EU for instance The Netherlands, Sweden and Finland were consumption is 20x higher than in the UK. A lot of opportunities are to be found in the export market. There is a continuous interest in new pillar candles, scented candles have become more popular in 2012 compared to 2008 an increase of 5%, also glass filled candles have seen a rapid increase in market share. Monmouth’s Private Equity is willing to invest in Avalon Ltd. if a proper strategic plan is made.

Threats

A major threat to Avalon Ltd. is the China production, at the beginning of the millennium immense competition arrived from China, very cheap candles were dumped and the European market for many traditional European candle producers was destroyed. At a certain point candles from China had a market share of 30%. Since these candles are low quality we will have to make sure that our candles keep the high standard, to beat our competitors.

Another threat is that we are dealing with luxury items, the economic crisis is still going on today. Candles are not a necessary item in modern day households. As soon as people have less money to spend they will no longer buy any decorative products such as candles. This is something we have to keep in mind while pricing our products.

Alternatives to scented candles are also a threat to Avalon Ltd. Candles have faced stiff competition from instant fragrancing for example oils, room sprays and diffusers.

Typical UK Customer

The case states that the typical UK customer for candles is female and in the age range between 25 and 70 years. Statistics from the year 2011 show that the consumption per person (in grams) in the UK is very low with 150 grams.

In the UK, the candles are seen as a decorative object and are not burned most of the time.

Mostly candles with a fragrance are bought and some customers only buy one candle a year but the average price easily exceeds £10.

Target Market

It is essential for a company to make a thorough target market analysis in order to

successfully sell their products.

Current Situation

Currently, Avalon Ltd. has four regular customers and a lot of irregular ones. These

customers don’t buy that often and if they buy, it is in various quantities.

To the regular customers in the UK belong the supermarket chain "Sainsbury",

department store "Mark and Spencer", supermarket chain "Martin McColl" and

alternative retailers like "Eco-House" (this customer though is bankrupt).

Besides these, Avalon Ltd. sells to various retailers (e.g. department stores and

variety stores) throughout the UK and exports its products quite randomly to

countries in Europe, to the USA and the Far East.

The candles sold via the supermarkets are low-budget candles with low quality and a

low price. For all the premium brands, Avalon Ltd. targets the department and variety

stores.

The customers for the export market are mainly met on fairs that are held at different

places in Europe, whilst the customers in the UK are found through personal selling

as well as on fairs within the UK.

Avalon Ltd. exclusively sells their products to retailers (Business to Business). There

is no active communication to the actual end consumer, therefore it can be said that

the company makes use of a proper push strategy.

The Standard Brand

The brand "Camelot"3(tea lights) has the lowest price and is of inferior quality

compared to the other brands. The standard Brand mainly targets women who like to burn the candles rather than to use them as decorative items. The women in this target group are between 25 and 51 years old and have a low until average income. They live in a relationship but not necessarily have children. Also women living in a single household are an important target group. They like to create a cosy and relaxing atmosphere in their homes by burning

candles. Still, they can’t spend too much money on home décor and always look to make the

best deal of price and quality.

The Premium Brands

The two brands ""Caliburn" (three-wick candles) and "The Essence of Light" (pillar

candles) are going to be sold in a price range slightly above average.

The target group includes women who enjoy scented and colored candles. They

appreciate good quality but are price conscious and not willing to pay more than £20

for candles. The women don’t necessarily burn the candles; they also make use of them as

decorative items or air refreshers. But not only do they like to buy the candles for

themselves, they also think that candles are a nice and loving present.

These women enjoy their social network and are interested in home décor and all the

things resolving around a comfortable and relaxing life. Their age range is between 25 and 70 years and they live on an average to high income.

The Luxury Brand

Avalon Ltd.’s luxury brand is "The Great Arcana", in the price category above £20.

This brand targets women who enjoy high quality scented candles. They consider a

cozy and welcoming atmosphere in their homes as very important. "My home is my

castle"; with this sentence they can identify themselves and are willing to spend

money on high quality and prestige to achieve the desired atmosphere.

The candle is mostly used as a decorative item and is not bought because of the

practical use in the first place. The targeted women also buy these candles as presents for their friends who enjoy luxury and a cozy home. For them, the candles are a prestigious and beloved present. Scents and colors are the most important features of the candles they buy.

This customer group is more fashion sensitive; therefore they demand scents, colors

and shapes, which follow the latest trend. The age range is between 25 and 70 years and the focus lies on women with an income above the average. For all the three target groups, there is to say that they consider natural ingredients in products as important. The women are environmentally conscious and are concerned about their health and therefore are willing to look for products, which are made out of natural ingredients.

Marketing objectives

1st phase:

improve our damaged brand image

increase brand awareness

Increase the Standard quality of our budget brand

Introduce an improved budget brand with a different name

Make a profit

Starting in the fair trade market

2nd phase:

Increase our export focused on the Netherlands, Finland and Sweden

Improve product, developing new candles ( R&D)

Increase profit by 7%

Increasing our market share in the fair trade market

3rd phase:

Development and introduction of new candles, jumping in on the trends of that moment.

Increase of profit by 7%

Growth Strategy Matrix

Existing product New product

Product Development Strategy

Market Penetration Strategy

Existing

market

Diversification Strategy

Development Strategy

New

market

Ansoff’s Growth strategy matrix is an effective tool to choose a growth strategy based on what a company wants to achieve. The strategy also illustrates us what we need to do in order to achieve our ambitions.

We choose the Market Development Strategy as our starting strategy in our first phase. Market development focusses on new markets with existing products. We want to address these new markets with our improved product. Because the brand image of our budget brand got damaged we will revise our budget brand. Changing the name and increasing the standard quality. After this major revision of our product Avalon Ltd will no longer consider this product their budget brand but they will see it as their standard brand. A cheap but high quality candle for every household. We will also start with the sales of fair trade candles to the relatively new fair trade market which is completely ignored by the big companies. We will introduce our existing candles to this new market because Avalon Ltd. has now achieved the fair trade mark.

In the second phase we will go on with our market development strategy and start to increase our exports in the Netherlands, Finland and Sweden. These three countries have the highest consumption of candles in Europe. Consumption means that they will need a constant flow of new candles since they use their old ones. The consumption in these three countries lies about 10-20 times as high as in the UK. Exporting to the rest of Europe is also one of our opportunities. As long as we can guarantee our high quality and give our customer a reasonable price we will be able to increase our export sales.

In the third year we will be mostly busy with improving the export and fair trade sales. When we have achieved a better brand image and stable sales we will start with the last growth strategy namely, product development. Our Research and development department will have had 2 years of starting up time in which they will have developed themselves as a fully functioning department with a proper manual on candle production. R&D will by this time need to come up with a new product with which our sales people can attract new customers. Product Development strategy is all about introducing a new product in an already existing market to increase sales. That is exactly what we want to achieve by this strategy. We want to come up with new products which allow us to keep our market share and to be a bigger competitor on the candle market.

Pricing Strategy

Avalon Ltd. Always tried to deliver the best quality to their customers. They wanted the best quality together with a price as low as possible. Avalon Ltd. contacted a Chinese producer for their budget brand Camelot so they could sell their candles with even cheaper. This resulted in a damaged brand image for Camelot and Avalon Ltd. A good option for Avalon Ltd. is to increase the standard quality of their Camelot brand this will involve either keeping the price and take a reduced profit margin or increasing the price and keeping the same profit margin. Since the brand image is already damaged the best options seems to take the reduced profit as it is for now, Avalon Ltd. first needs to focus on increasing their sales to Sainsbury again. The price of Camelot will therefore be unchanged and remain at £ 1.92. Pricing Camelot is done with the Economy Strategy, Camelot has our lowest quality or as we like to call it our standard quality. This standard quality comes with the lowest price. C16NF08

Caliburn had a price of £ 17.38, to better compete with our competitors we advise to lower the price of Caliburn. Avalons Ltd. should no longer focus on having 3 premiums brands but the brands will be distinguished in a standard brand, two medium classed brands and one high class brand. Caliburn will become one of the two medium brands thus resulting in a price around £ 15.00. Caliburn is using the the Good-value pricing strategy, Caliburn has a medium Quality and a reasonable price.

The Essence of Light is the bestselling candle of Avalon. There was no price give in the case which was handed to our consultancy group. We assumed that the price of the Essence of Light was around the £ 11.00. The Essence of Light has a profit margin of 49% and sales percentage of 45. Therefore we assume that this candle is not that expensive as most people in the UK only buy candles for decorations or only one per year. Though the average price of a candle they buy will easily exceed the £ 10.00. We concluded that customers in the UK are willing to pay £ 10.99 with this price we are slightly above average but can very well compete on the market. The Essence of Light Avalon will use the Good-value Strategy, The Essence of Light is all about giving the lowest price for the best quality.

The Great Arcana will be the most expensive candle in our product mix. The sales of the Great Arcana are the lowest of our four brands, however the profit margin is the highest with 79%. As stated we advised Avalon Ltd. to have one exclusive and more expensive brand. We choose the Great Arcana to be our high premium brand because it had such a high profit margin, high profit margins are often seen with expensive branded products. Therefore we advise to sell The Great Arcana around £ 21.00. The Great Arcana is using a premium strategy, The Great Arcana is our highest quality product it is also the most expensive candle in our product mix.

Market Positioning

Avalon Ltd. wants to position itself as a worldwide known manufacturer of high quality all natural candles. We mainly sell our candles to women aged 25-70, our candles have a superior burning time, a well-designed look and a perfect balanced fragrance throughout its entire burning. Our Candles have such a wonderful odor and are of high quality. Unlike our competitors we care about nature, therefore we sell all natural fair trade candles, to enlighten your world!

Perceptual map

Classic Products

Low variety in candles

High variety in candles

Price

Wax Lyrical

Yankee

Bolsius

Johnson Wax

Avalon Ltd.

Modern Products

In this perceptual map we positioned Avalon Ltd. and its competitors on bases of the variety in candles they each have, meaning the different shapes of candles they sell not the fragrances because all of our competitors sell as many fragrances as we do. We also based the position on the classic or modern products they sold. If a company sells diffusers, sprays and other products which are not candles but do have a fragrance then this company is considered to have modern products.

We can see that Avalon Ltd. has not got a high variety in candles neither does it sell modern products. Whereas all of our main competitors do sell diffusers, sprays and oil burners, from this perceptual map we can take that an opportunity for Avalon Ltd. lays in selling more modern day items such as reed diffusers which get more popular. Johnson Wax, Bolsius and Avalon all have a relatively low variety in their candles. Yankee, Wax lyrical and Price patent sell candles in all different shapes and sell a lot of different packaged candles.

Marketing Mix

Product

Avalon Ltd. wants to produce and deliver luxury in the shape of candles, with these four different brands of candles they are able to do this. Their candles stand for simplicity, security and genuineness in a world full of change and high complexity. These four different candles cover all the different segments of our target market and so Avalon Ltd. is able to for fill its mission of delivering and producing luxury in the shape of candles. All candles made by Avalon Ltd. are made out of only natural products. The four different brands are Camelot, Caliburn, The Essence of Light and The Great Arcana. This is the total product mix of Avalon Ltd.

Camelot

The budget brand of Avalon Ltd. the brand image of Camelot got ruined after the China affair. Camelot is good for 34% of the total sales, with a profit margin of 14%. In 2012 Avalon had sold over 1.3 million packages of Camelot tea lights.

Caliburn

Caliburn is one of our premium brands. Caliburn is an all-natural block candle with 3 wicks. In 2012 more than 90.000 Caliburn candles were sold.

The Essence of Light

The essence of light is the bestselling premium brand of Avalon Ltd. with sales of over 45% of the total turnover. The Essence of Light is a cash cow for Avalon Ltd. this candle accounted for almost half of our turnover.

The Great Arcana

Avalon Ltd. most expensive candle. The Great Arcana has a profit margin of 79%, on this high profit margin we base that the Great Arcana will be the most expensive candle. The Great Arcana is an exclusive candle of high quality and there is lots of potential for this candle in the export market. Italy and Spain have high growth rates concerning candle consumption and are only willing to buy high quality candles. This is an excellent opportunity for the Great Arcana.

Product layers

There are three Product Layers: the core product, the actual product and the augmented product. With every layer, we hope to satisfy the needs and wants of our customers and in this way create value.

light

warm feeling

fragrance

Broad variety of colors

High quality candles

All natural ingredients

Fair trade Candles

Guaranteed quality

Customer services

ISO certification

BRC Global Standards (safety)

Newsletter

Warranty

All products of Avalon Ltd. can be returned if damaged or when the quality is insufficient. In this case Avalon Ltd. will refund or replace the products. This service is essential to prove reliability and elaborateness to Avalon’s customers.

Customer service

Individual customers will have the opportunity to contact Avalon Ltd. concerning products, problems and questions through a customer service contact form on our new webpage. Response will be given within three working days.

customers also have the opportunity to call our customer service during business hours. Customer service will accept orders from retailers, answer questions and give advice & information.

Newsletter

Customers will receive a monthly newsletter with updates and information regarding new products. Customers can sign up for this newsletter right after they ordered something online or with one of our sales persons. Sending newsletters to the customers regularly will ensure that customers will be reminded of Avalon Ltd. This increases the likelihood that a customer will place a new order with Avalon Ltd. when there is a need for a new product. In this newsletter special promotional actions and different other offers can be found for our retailers.

Price

Camelot tea lights 36 pieces - £ 1.92 compared to our main competitors we offer a cheap prices, we often sell as much or even more tea lights per package as our competitors. A price of £ 1.92 is a good price to compete with our competitors.

Caliburn, the Caliburn candle is a big block candle with 3 wicks, our consultancy group agreed on using the price of £14.99 for this product. With this price we can easily compete with our competitors. Most of our competitors only sell 3 wicked pillar candles and for prices far above ours.

The Essence of Light will be available for £ 10.99 this price was chosen because we wanted a medium quality candle for a reasonable price. With this price we can assure our customers that they get the best quality for the best price.

The Great Arcana will be sold for £ 21.00, the Great Arcana is our most expensive candle. We wanted to create the feeling of exclusiveness for our customers. They might have to pay a high price but they can be sure of high quality and long burning time.

Discounts

Since our target group is determined to stick to its high quality premium pricing, Avalon Ltd. will offer no discounts throughout the year. Although, it will have promotion offers to be able to obtain the product for a lower price. This only involves the Essence of Light, Caliburn and the Great Arcana which are Avalon’s premium brands. Camelot the standard brand will have discounts available if a big order is placed.

Place

Warehouse

Avalon Ltd. has a warehouse in Bournemouth and one next to their factory in Glastonbury. The warehouse in Bournemouth is only meant for export. Logistically this is a good warehouse since it is located near a port from which we ship our candles to the rest of Europe.

Retailers

The main re-seller of Avalon Ltd. is Sainsbury is the third largest chain of supermarkets in the United Kingdom with a share of the UK supermarket sector of 16.5%. About 10% of the turnover from Avalon Ltd. comes from selling candles to Sainsbury. From 2010 to 2012 the turnover has dropped by 5% because of the bad quality of candles Avalon Ltd. sold to them. Avalon mainly sells Camelot and some Caliburn to Sainsbury. Our consultancy group sees Sainsbury as an important Retailer for Avalon Ltd. and therefore we advise Avalon to increase its Quality regarding Camelot candles. To keep steady sales to Sainsbury.

Marks and Spencer plc.  is a major British retailer located in the City of Westminster it was founded in 1884 by Michael Marks and Thomas Spencer. M&S has over 700 stores in the United Kingdom and more than 350 stores spread across more than 40 countries. The turnover from M&S decreased in the period 2010-2012 this is due to the bad image Camelot got from the poor quality.

RS McColl is a Scottish newsagent company named after Robert Smyth McColl, who was a professional footballer. It was founded in 1901 by McColl and his brother Tom. It has been a prominent Scottish confectioner and newsagent and has been owned by Cadburys and the Southland Corporation of America (7-Eleven).

In 2006 TM Retail was renamed Martin McColl Limited after a management buyout. The various stores were then rebranded variously as Martin's (news and variety stores) or McColl's (convenience stores).

Martin McColl is Avalons main customer for premium brands, McColl is a large convenience chain store in UK therefore we will sell our products to them.

Eco-House is an important retailer for the fair trade candles Avalon Ltd. will produce. Currently we only sell our Fair trade candles to Eco-House since they are specialized in alternative products. This is a promising customer in the period 2010-2012 the turnover has gone up by 13%.

Avalon Ltd. sells their products to major convenience stores to be able to reach their customers. Thousands of people every day will visit these stores and will see Avalon candles on the shelves. A convenience store is also an easy way to raise brand awareness, people often walk through the entire store looking for their products and will notice any product on their way.

Transport

Avalon Ltd. is able to transport all candles within the UK for export they make use of DHL services. Avalons sales persons are constantly on the road to all their customers to show the latest models and to get their orders.

Distribution channel

We chose for distribution channel 2, we produce the products ourselves and we distribute the goods to the retailers.

Customer

Retailer

Manufacturer

Promotion

Website

We advise Avalon Ltd. to create their own website In today’s world, consumers are more and more likely to expect a company to have their own website.  In the eyes of a consumer, having a website is a measure of viability, of stability. If a company does not have a website, their customers might not take them seriously. For Avalon there are different reasons why they need a website.

Web shops have become an important retail channel for a lot of products nowadays, all of our main competitors are already using a website to sell their candles and so must we to increase our sales.

Therefor we advise to create a totally new website, this website will need to be hosted and this is going to involve money. We advise to spend a bit more on building a proper website since it is a really important factor in the eyes of the customers. The new website will represent the new image of the company, provide potential customers with information and give the opportunity to get in contact with Avalon Ltd.

The cost will also involve monthly maintenance and the cost for keeping facebook and twitter up to date.

Website creation

£ 4,000

Monthly maintenance costs Social Network and Website

£ 300

New Personal Selling Strategy

The current personal selling doesn’t work effectively, sales persons go where ever they like and everything is unstructured. This needs to change in order to be effective and to make sure every retailers is visited. The first step is to create a database with all the customers of the last years. This database will help Avalon Ltd. to stay in contact with their customers easily. With a database the newsletters can easily be send and a quick call can be made to inform important customers of our new offers.

The sales men will all have their own geographic territory, a strict division will be made to avoid double calls or forgetting to visit customers. Sales men will visit every retailers in their geographic area.

Discounts

A new discount system will be used by our sales men. Our sales men can decide on their own how much discount they need to give a customer. If more discount is needed to persuade a customer into buying then they should offer more. Avalon Ltd. will however have a maximum of 10% discount. A standard discount may be given when more quantity is ordered this will go in steps.

10 candles 1%

25 candles 2%

50 canldes 3%

75 candles 4%

100 candles 5%

Trade Shows and Fairs

At the trade shows in the UK or in the other countries it is important to make a good (first) impression. Therefore it is pivotal that Avalon Ltd. makes use of a nice stand, which represents the company’s image and sends out their message. The company should represent itself as fresh and new. The stand should be cozy and inviting to stay. Appealing information brochures or flyers have to be available.

Trade shows and Fairs

Cost

Stand and Decoration

£ 1,000

2 Organic roll-up Banners

£ 300

Various Costs for each fair

£ 400

Advertisements

We want to start an advertising campaign in home décor magazines of the UK.

Such as Elle Decoration, Furnish, House Beautiful and House & Garden.

By advertising in these magazines we can reach millions of people, mostly women in the UK.

If we look at House Beautiful, they reach more than 1.8 million people with their magazine. The costs for advertising in these magazines are rather high. They average around £ 60,000 for a half page add. Because of this it might be wiser to start advertising in magazines in the second or third year and to only advertise in small quantities. http://www.niermannweeks.com/wp-content/uploads/2010/09/HouseBeautiful_Oct2010_cover.jpg

Social Media

We will use Facebook and Twitter as our main sources. Both these media sources, can be really effective and cost-free ways of developing awareness of our product and also being able to keep in touch with our customer, if not get even more costumers. Last but not least, these media sources can be used to give away special promotions or update our customers with the latest products or modifications in stock.