Community Friendly National Development

Published Date: 02 Nov 2017

Contents

1.0 Introduction

The background of this report is about the Cargills Company, and throughout the assignment it is provided the theoretical aspect of marketing process.

Under marketing process the following sub groups are covered which environmental analysis, segmentation, targeting, positioning, marketing mix and ultimately monitoring and controlling.

Afterwards it is asked to evaluate the benefits and cost to the business in using the market orientation method, so advantages and disadvantages are discuss through the company prospective.

When scrolling through the assignment the first to find is the marketing mix used on a selected product described for each elements within. This way it gathered a wider aspect about the product, the price set, where it is sold in the market and finally the promotional methods used to advertise the product and on the other hand it is requested to use the 4Ps plus the extended 3Ps on a newly product launched by Cargills.

Finally the last 2 topics discussed are about the Business to Business context, the facts that a business has to consider when they are involved in B2B and as a last topic it is analyzed what sort of information and method is needed to cater info of an International market than a Domestic.

Recommendation and conclusions are provided below and effective judgment is made.

2.0 Background of the Organization

2.1 History

In 1844, William Miller and David Sime Cargill commenced a general warehouse, import and wholesale business in Colombo, Fort. The establishment was named the 'House of Cargills'. A successful bid by Sir Chittampalam A. Gardiner saw the House of Cargills being incorporated as a Public Limited Liability Company on 1 March 1946.

In 1981 Ceylon Theatres acquired controlling interest of the Company and Mr. Albert A. Page was appointed the Managing Director. Mr. Albert Page went on to become the Chairman of Cargills on 26 November 1982.

Under the new management, Cargills explored the potential of innovating on its trading legacy. As a result, in 1983 Cargills established the first supermarket chain in Sri Lanka with the opening of its first outlet at Staple Street.

Cargills ventured into the production of processed meats in 1993 when the Company invested in its first manufacturing facility Cargills Quality Foods, in Mattakkuliya. In 1996 Cargills acquired the franchise license for KFC and innovated on its secret recipe to deliver products that suited the local palate.

Cargills began sourcing fruits and vegetables directly from farmers in 1999 when it established its first collection centre in Hanguranketha. In 2002 it invested in a dairy processing plant and thereby expanded its outgrower network to include dairy farmers. Cargills Magic ice cream was the outcome of this endeavor. In the same year Cargills diversified into agri-processing with Cargills Kist which created further market opportunities for farmers.

2.1Vision

To be a Global Corporate Role model in Community Friendly National Development.

2.2Mission

Serve the Rural Community, our Customers and all other stakeholders through our core business – food with love – and other related businesses, based on our three main principles of

Reducing the cost of living

Enhancing youth skills

Bridging regional disparities

By enhancing local and global market

2.4 Goals and Objectives

2.4.1Goals

Expanding market share

Maximizing sales

Maximizing the market price of a share

Survival

Innovation

Employee welfare

Growth of Cargills company

2.4.2 Objectives

To reach our 2015 goals of zero fatalities we’re implementing new process for identifying and mitigating precursor conditions.

Strategic intent 2015, these investments will reflect Cargill’s resolve to operate globally with a balance, diverse and resilient portfolio.

For example, in both trading and processing, physical and intellectual property, domestic and export facilities, and mature and emerging markets.

2.5 Products

Cargills Retail

Food City

Express

Book City

Private Labels

Cargills Store Locator

Cargills Quality Foods

Magic

Kotmale

Milca

Cargills Lanka Milk

Kist

Kist Knuckles

Kist Biscuits

Cargills Supremo

Cargills Finest

Millers Limited

KFC Restaurant

Agri Business

3.0 Marketing Process and Marketing Oriented Approach

3.1 Marketing Process

A marketing plan is a describable blueprint which outlines an organization’s overall marketing efforts.

There are 04 marketing processes such as,

Environmental Analysis

Segmentation, targeting and positioning

Marketing Mix strategy

Monitoring and control

3.1.1Environment Analysis

The marketing environment surrounds and impact upon the organization. The factors and forces outside marketing’s direct control that affect marketing management’s ability to develop and maintain successful transactions with its target customers. We can divided environment into two main categories, internal environment and external environment.

Internal Environment

Consist of conditions and forces within the organization

EX: Top Managements, Finance, Purchasing, manufacturing

External Environment

The external environment is the factors related to the surround of an organization that influence its activities. The external environment divides into two categories.

Macro Environment

Micro Environment

Macro Environment

The major external and uncontrollable factors that influence and organization’s decision making, and affects its performance and strategies. There are number of approaches to analyze the macro environment.

Political Factors

This may manifest in government influence on tax policies, or government involvement in trading agreements. These are inevitably entwined with legal factors such as national employment laws, international trade regulations and restrictions, monopolies and mergers’ rules and consumer protection.

Economics Factors

These represent the wider economy so may include economic growth rates, level of employment and unemployment, cost of raw materials such as energy, petrol and steel, interest rate and monetary policies, exchange rates and inflation rates.

Sociological Factors

These represent the culture of the society that an organization operates within. They may include demographics, age distribution, population growth rate, level of education, distribution of wealth and social classes, living conditions and lifestyle.

Technological Factors

Technology is a huge advantage to the business process to improve its competence. New technologies create new products and new process. Technology always improves efficiency, reduce the cost and gain the quality of the product. This includes such as competing technology development, innovation potential, manufacturing maturity, capacity, information and communication.

Legal Factors

This includes consumer laws, employment laws, competition laws and health and safety legislation. This may change from country to another country. These factors can influence how a company operates, its cost and demand for its product or services.

Environmental Factors

This refers to ecological environmental facts such as climate change and weather. The organization must consider this matter because these factors are directly effect to the business. Organization must vary to these situations to gain the marketing advantage.

Micro Environment

Micro environment factors are factors close to a business that have a direct impact on its business operations and success. This typically consists of the following elements.

Competitors

Every business has lots of competitors. The competitors are the main fact to a development of a business. Firm must gain a strategic over competitors by positioning their offering to be successful in the market place.

Suppliers

They are the fundamentally important to a firm’s ability to achieve competitive advantages. If suppliers are non-cooperative they can make it financially and physically impossible to satisfy customer’s needs. They could be the suppliers of all the materials and utilities to the market to make its value product to the market.

Customers

The ultimate determining factor in whether or not a particular business succeeds or fails. Although hard to figure out, customers are frequently not a primary consideration in the formulation of corporate strategies. They can be individual or organizations.

Intermediaries

Marketing intermediaries are help to the business to promote sell and distribute its product to customers or final buyers. This can be including resellers, physical distribution firms, marketing service agencies and financial intermediaries.

Publics

Is the group that has an actual or potential impact on an organization’s ability to arrive at its objectives. Financial publics, local publics, media publics, government publics and general public’s are the parts of this factor.

3.1.2 Segmentation, Targeting and Positioning

Segmentation

Market segmentation is the process of breaking large heterogeneous market into small homogeneous markets for the ease of satisfying the needs of those people’s quite effectively.

Level of Market Segmentation

Mass marketing

An attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media. Also called undifferentiated marketing.

Segment marketing

the activity of separating a market for a product into subgroups based on existing relationships within them.

Niche Marketing

Focuses on subgroups within a segment. Narrowly defined group.

Segmenting Consumer Markets

• Geographic e.g.- nations, states, regions or cities

• Demographic e.g.- age gender, family, size and life cycle.

• Psychographic e.g.- social classes, lifestyle, or personality.

• Behavioral e.g.- occasions, benefits, user status, usage rate, loyalty.

Targeting

Target of marketing is a specific group of potential customers which you have identified who have needs or problems which your products or services can fulfill.

Positioning

The perception of a product or organization in the consumer’s minds relative to their perception of others offerings in the same category.

3.1.3 Marketing Mix Strategy

Marketing mix is a strategy that has been formulated after taking into consideration the 4p’s of marketing: Product, Price, Place and Promotion. Organization has to use a combination of these P’s to steer their firms towards success.

Product

A product is something that fulfills the needs of consumer and provides customer satisfaction. A product is tangible when it’s good and intangible when it’s a service.

Price

which is defined as the amount of money a customer invests to buy a product or service. The price is one of an important fact that affect for the profit of the business.

Place

Distribution is the process of delivering goods and services from producers to the customers.

Promotion

Promotion is about getting the message to the customer to that the customer reacts by buying the product.

3.1.4 Monitoring and Controlling

Monitoring is an essential part in a business day to day life, it helps to achieve economies of scale and it cut down wastages and duplication works.

Controlling is a major part in a company as well in each hierarchal level, supervisors are set for each level to provide coordination on how the work need to be fulfilled, in this way with the aid of guidelines it saves a lot of time.

3.2 Marketing Oriented Approach

Business can develop new products based on marketing oriented approach. Marketing oriented approach is a business reacts to what customers want. The decisions takes are based around information about customers’ needs and wants, rather than what the business thinks is right for the customer. Most successful businesses take a market oriented approach.

3.2.1 Benefits and Cost of Marketing oriented Approach in Cargill’s

Disadvantages

Risk of underestimating the market

Data collected cannot be exactly accurate as it involves a systematic approach. Working with wrong data is often worse than working with no data, missing the mark in process creates the company using ineffective data in order to reach the customer.

Rapid changes in consumer taste

Due to high competition in the market, consumer changes vary rapidly as many competitors offers different product and taste of consumer change time to time. Because of this data collected can be turnout to be outdated if not implemented immediately. (I.e. biggest competitor of Cargills ice cream is Elephant House)

Time consuming and costly

When customer orientation method is implemented it requires time to fully analyze the market and at the same time it’s an expense for the company.

Advantages

Possibility to achieve customer satisfaction

Since the product is made fit to customer desire, there will be less dissatisfaction feedback from the customer, so this lead the organization to gain customer satisfaction.

Creating good brand loyalty

When customers are been satisfied, they will have positive perception towards the Cargills organization, this establishes a good brand image within the consumer market.

Less chance of failure of a product but not to eliminate

Market orientation refers to making research on the consumer market, so this helps the organization to make a perfect product which suits for demand of the customer. In this way the chance of failure is less compared to a product done through product orientation.

4.0 Marketing Mix Strategies

4.1 Selected Product

Cargills Supremo: Cargills supremo sausages are full of goodness & great taste only the freshest and highest quality meats and spices are used in the making of cargills supremo products. This is prepared according to an age-old German recipe.

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4.2 Product Strategy

Product Attributes

Cargills sausages are made from the finest prime cuts of meat and poultry with a special blend flavor and spices that is both wholesome and delicious. Cargills supremo sausages are always consistent in quality, taste and texture.

Branding

The brand logo should be visible on the package in an eye-catching way in order to help the customer to recognize the product immediately among other rival products.

Packaging

Packaging materials meet the strict safety and quality standards to ensure the freshness and quality of the product.

Labeling

Labeling is the printed details appear within the package. This is a part of packaging. Cargills supremos mainly use labels to serve to capture the attention of buyers. They mainly include,

Information related with the product

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Standards

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Manufacturing date and expiry date

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Price

Weight

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Universal product code

Ingredients

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These make the customer secure on what they are consuming and have a deep understanding regarding the product.

Product support service

Cargills doesn’t support product support service, but for any customer complains, cargills happy to try and resolve the problems that customer has over the phone and provide their feedbacks, incentives are given to console the customer for any sort of convenience happened.

4.3 Pricing strategy

The main factor that determines the price of cargills supremo in status was the price of main competing brands, as well as cargills own cost base. Since cargills faces a major threat from its competitor Keells sausages. So naturally the pricing is done keeping in view the increasing rivalry with Keells sausages. Price can be changed for some economy changes and political laws and regulations.

4.4 distribution strategy

Cargills supremo products are available in all the regions in Sri Lanka, and it sell through cargills food city and distribution service within Cargills Company, it provides distribution services Island wide covering provinces an districts reaching retailers directly.

Distribution channels:

Figure 4

Figure 42

Cargills distribution method of the transportation would be the road where as the supremo sausages are distributed by large Lorries to any corner of the Island. And also cargills supremo sausages exported to such as in India, United Arab Emirates and Maldives.

4.5 Promotion strategy

Cargills has adopted the channels for promotion through the TV, news papers, magazines, radio ect. A persuasive advertising is used to attract a wider range of consumers. Cargills sponsors various events on occasions like educational fields are involved.

Heavy budget are spent on advertising in order to promote the product and shine their brand image.

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4.6 Extended Marketing Mix

Getting the mix of these elements right enables the organization to meet its marketing objectives and to satisfy the requirements of customers. In addition to the traditional 4P’s it is now customary to add some more P’s to the mix to give us seven P’s.

The additional P’s have been added because today marketing is far more customer oriented than before, and because the service sector of the economy has come to dominate economic activity in the country.

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Figure 4.3

4.6.1 People

An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumer makes judgments and delivers perception of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, attitudes, and service knowledge to provide the service that consumers are paying for.

Cargills consist of a very high skilled staff where the customer will make and that can also have a positive effect on the consumer satisfaction. Further Cargills consist of an improved customer oriented staff which resembles the right attitude, appearance, skills and behavior.

4.6.2 Process

Process is referred to the procedures, mechanisms and flow of the activities by which the service is delivered. Furthermore, in a service situation customers are likely to have to queue before they can be served and the service delivery itself is likely to take a certain length of waiting time. It helps if marketers ensure that customers understand the process of acquiring a service and the acceptable delivery times.

When looking at Cargills the process of delivering the goods to the relevant locations are being carried out smoothly this would satisfy the customers. Customers are not interested in the detail of how the business runs but how the process works. So providing the services Cargills is well organized and consists of very high skilled workforce to ensure the customer satisfaction 24/7.

4.6.3 Physical Evidence

Physical evidence refers to the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service. The physical evidence of service includes all the tangible representations of service such as brochures, letterhead, business cards, reports signage, internet presence and equipment.

Cargills makes a very friendly and comfortable environment for the customer when interacting with the company. The services provided by Cargills differ according to the product purchased which there is high transparency between the customer and the company. The uncertainty of the service provided can be reduced by helping the customer to see what they buy which Cargills does in order to enhance their customer loyalty.

5.0 Segmentation for a new product

As the marketing director the decision to introduce a new product to Sri Lankan market with two different segments, our company Cargills produce a new Tea product to the Sri Lankan market which would consists of two segments. The segmentation variable would be demographic which the new tea product differentiated by age levels

Figure 5

5.1 Marketing mix on the segmented product

Segmentation 1 - Teens

Segmentation 2 – Adults

Price-The pricing strategy would be penetration pricing since Cargills have not produced tea to the market. So in order to gain a high market share and profits this strategy is used.

Price- The same pricing strategy is being selected to this segment where as the tea market is full of competitors. So in order to build customer demand the start would be in penetration pricing.

Product- This will be having a simple structure and eye catching, it will have primary and a secondary packaging to conserve the tea fresh

This comes in different flavors such as the tastes of lemon, strawberry ect.

Product- It’ll be identical for this segments also as this product symbolize green tea extract and gives regular taste. There will be different sizes and packaging remains still.

Place- The product can be bought in from any island wide supermarkets and other stores at the listed price. So distribution will done in large quantity.

Place- The product can be bought same as the other segment product in super markets and island wide stores in different selections.

Promotions- Since the product is new the promotions would go in medium scale where as the following promotions would be given;

Buy two get one free

Special package at a discount rate

Promotions- The new product by Cargills must engage in promotion activities in order to gain demand. Same promotional methods could be used for this market segment also.

Table 51

6.0 Aspect of Business to Business Marketing

Business to business refers to selling the product from a company to another rather than an end user and it is known as the industrial good market.

However even B2C (Business to Consumer) products or services could also be B2B product. Few products or services will be used by consumers.

E.g.: Washing powder are typically B2C product and can be seen as B2B product is it bought in larger quantities by launderette for their work.

B2B products are purchased by companies to be used in their own manufacturing process and secondly B2B products are commonly viewed to possess higher perceived risk compared to B2C

When it is involved in B2B rather than B2C, it is required to maintain good relationship with the suppliers as it helps to receive benefits like cheap raw materials.

In B2B business the transactions are done in high scale.

Interdependency among each other is created as the action of business can affect the other business production process.

To raise brand image it is important to have contacts with reputed organizations.

7.0 International and Domestic Marketing

International marketing

When there are no boundaries for a company and its target customers overseas or in another country, it is said to be engaged in international marketing. A business will choose to market its products into overseas market in order to gain economies of scale and also to have a competitive advantage. The company will result in growth due to cheaper operations in overseas countries.

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Domestic marketing

Domestic marketing is the marketing practices within a marketer’s home country. The marketing strategies that are employed to attract and influence customers within the political boundaries of a country are known as domestic marketing. When a company caters only to local markets, even though it may be competing against foreign companies operating within the country, it is said to be involved in domestic marketing. The focus of companies is on the local customer and market only and no thought is given to overseas markets. All the product and services are produced keeping in mind local customers only.

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7.1 Differences between International and Domestic Marketing

Domestic Marketing

International Marketing

Scope- The scope of domestic marketing is limited and will eventually dry up.

Scope- International marketing has endless opportunities and wide variety of choices for a business.

Benefits- Benefits in the domestic markets are relatively low.

Benefits- There is an added incentive of foreign currency which would be important form the point of view of the home country.

Sharing of technology- The use of technology in the domestic market is very limited.

Sharing of technology- The international market consists of the most latest’s use of technology.

Political relations- Domestic marketing has nothing to do with political relations and relative freedom from government interface.

Political relations- international marketing leads to improvement in political relations between countries and also increased level of cooperation as a result.

Competitive factors- Competitors products, prices, cost and plans are usually known

Competitive factors- Many more competitors exist in the international market, but little information about their strategies.

Barriers-In domestic marketing there are no barriers.

Barriers- international marketing there are many barriers such as cross cultural differences, language, currency, traditions and customs.

Table 7

Conclusion

It is important for every company to apply market orientation, maybe costly, but it can lead to tangible and intangible benefits that financially cannot buy such as customer loyalty towards the company.

On the other hand, company must be careful when setting budget for marketing mix without compromising other company objectives.

However Cargills has good managerial level, and financially well stable so they are ready for any consequences.

Recommendation

I would like to recommend about marketing orientation that this method is not only for new product, but it can used on existing product in order to renew, first hand data is required for this case. So Cargills can use this method to enhance the other outdated product according to customer needs.

Secondly there are factors that may influence marketing mix such as, finance, for that it is better for the company to calculate the amount that need to spent, another factor is technology, assuming Internet, due to that factor it affect the selling and buying pattern, so company will have to adapt an advance way to display and deliver the products or service and lastly with the expansion of the company, constant research should continue to keep on meeting customer requirements as it varies time to time. A recommendation regarding segmentation for a new product, as in the body of the assignment it is said to use Demographic

Segmentation, but critically thinking it will cover only a part of it, I believe that applying Behavioral segmentation will give further details and certain in launching the product.

Finally I would like to mention the importance of an Agent in a specific country when engaging in the International market. It’s really essential as a local company have no idea of the situation in the market, so it is highly required to recruit an agent for better performance.