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Business Analysis & Marketing Plan: It's Crunch Time For Crisps
Business Analysis & Marketing Plan: It's Crunch Time For Crisps
CERTIFICATE
Place: Mumbai
------------------------------
Prof. Kazi
In the United Kingdom however, crisps have a strong foothold in the lives of consumers. A
variety of crisps are consumed between meals. They also serve as tasteful accompaniments to
meals. Walkers Crisps dominate this savoury snack market by far.
Broadly, the sweet and savoury industry environment in the UK can be analysed with the help of
the PEST model.
1. Political environment:
Ethnic group
All Groups
White: British
White: Irish
White: Other White
Mixed: White and Black Caribbean
Mixed: White and Black African
Mixed: White and Asian
Mixed: Other Mixed
Asian or Asian British: Indian
Asian or Asian British: Pakistani
Asian or Asian British: Bangladeshi
Asian or Asian British: Other Asian
Black or Black British: Black Caribbean
Black or Black British: Black African
Black or Black British: Other Black
Chinese or Other Ethnic Group: Chinese
Mid-2006
population
50,762.9
42,737.7
581.3
1,699.1
274.5
107.7
246.4
200.9
1,264.2
861.0
338.3
323.1
594.7
694.5
113.8
374.2
Mid-2007
population
51,092.0
42,736.0
570.5
1,776.3
282.9
114.3
260.9
212.0
1,316.0
905.7
353.9
339.2
599.7
730.6
117.6
400.3
4. Technological environment:
The market for crisps and snacks is highly dynamic. High penetration in the market and
intense competition facilitates new product development. The technological environment
of this industry would involve various factors like sourcing the ingredients required for
The sweet and savoury market was not bogged down by global economic recession.
The results were a striking contrast to the recession. The UK snack and savoury market
grew by 9% in value terms. This growth can be attributed to changing tastes and
preferences of consumers. The companies are in tune with this change and have each
time delivered new flavours to keep the crisps and snack market between growth and
maturity rather than decline stage of product life cycle.
The growing concern for obesity is an important factor in new product development or
product improvement. Consumers are concerned about the content of the food they
consume. With hectic lifestyles, they seek complete transparency from companies on
the ingredients used to make the products. Therefore the companies have adopted a
two-fold strategy to combat the fear of decline in sales. Increasingly, the companies are
improving products to project the nutritional value of their goods as suiting the needs of
consumers. High obesity rates are a major threat to companies. Therefore, most of the
companies are trying to cash in by indulging consumers in different and off beat flavours.
Crisps and other snacks have always attracted children as they can nibble on tasteful
options. However, the industry is facing an image problem since crisps are seen as
unhealthy and junk food. The consumer behaviour has changed towards impulse foods.
Ofcom, the independent regulator and competition authority for the UK communications
industries, has proposed a ban on the advertising of junk food to children. This ban is
mainly related to advertisements that are aired on television during childrens shows.
The UK Government has been heavily campaigning on the 5- a-day requirement and on
nutrition-rich meals. This nation-wide campaign has laid more emphasis on healthy
eating. In this category, the nuts and fruits snacks are flourishing.
Study shows that 84% of lunchboxes contain fruits and a staggering 5.5 billion
lunchboxes are prepared every year. This has facilitated the growth of packed fruit
snacks. Moreover, there has also been a significant increase in the number of working
Crisps and snacks have always been perceived as products satisfying nibbling habits,
products that act as fillers between meals and the like. Most appropriately they can be
termed entertainment products. The house entertainment industry is steadily growing.
Consumers have started to perceive the accompaniments to their entertainment as
healthy treats rather than junk food. There is thus a need to introduce and improve the
ingredients of the products to boost sales. In this category, popcorn is an ideal
entertainment snack as it is perceived as a relatively healthy and convenient snack. The
crisp makers have to concentrate on easy packaging and quirky flavours to provide
alternatives to popcorns.
Consumers are seeking health and indulgence at the same time. There is high popularity
of high fibre, low fat, low salt products. Consumers seek to indulge in their crisps and
snacks. However, they refrain from doing so due to the unhealthy aspects of such
impulse foods. This trait of consumers can be cashed in by the companies by improving
their products and close the gap between indulgence and health (Euromonitor, 2009).
An important trend that provides opportunities for the snack companies is the growing
ethnic population in the UK. The retail value of ethnic cuisine in 2008 was in excess of
1.3 billion GBP. There is a growing popularity among consumers for Chinese and Indian
cuisine (Mintel, 2009) (2).
Year
2,386
2,303
2,268
2,322
2,407
2,533
1,926
1,936
1,949
1,953
2,140
2,225
1,081
1,092
1,110
1,149
1,184
1,212
328
340
333
329
344
355
232
254
275
297
309
320
205
230
250
270
287
313
6.2
15.5
12.1
8.2
37.9
52.7
13.9
5.5
7.9
7.7
15.9
9.1
The retail sale value of crisps and snacks has declined, but is showing quick recovery
signs. Companies are making new flavoured chips, moving away from the standard
crisps, in order to suit adults tastes.
The immediate competitor to crisps and snack is chocolate. The popularity of chocolate
can be attributed to availability of good quality and premium products. Moreover, the
chocolate confectionery companies have come out with an array of organic and probiotic
products, which provide various health supplements.
Changing consumer patterns to healthy eating has led to a soar in nuts and seeds
popularity as well. They are seen as a healthy alternative to other packed bags of crisps
and snacks (Mintel, 2009) (1)
With regards to company market shares in the crisps and snacks field, Walkers Snack Food has
maintained its dominant position.
2006
m
Walkers
2007
%
1,279
2008 (est)
%
% change
%
2006-08
55 1,308
54
1,358
54
6.2
390
17
410
17
452
18
15.9
155
160
169
Kettle
43
53
67
55.8
Tayto
35
40
47
34.3
Other
170
168
153
-10
Own-label
250
11
269
11
287
11
14.8
2,533 100
9.1
Total
Market
Low
Walkers sensation
Walkers Wotsits
Walkers sensations
Oriental Crackers
Walkers Monster munch
Walkers Quavers
Walkers grilled bacon
Walkers Ham & cheese
Walkers Max
Walkers Doritos
Walkers Cheese & onion
Walkers Salt & Vinegar
Walkers Heinz tomato
ketchup
Walkers ready salted
Walkers Square
Walkers Salt & Shake
Walkers Lite
High
Growth
Low
Market Share
Yellow Quadrant indicates Stars
Blue Quadrant indicates Question Marks
Green indicates Cash Cows
Red indicates Dogs
The cash cows can be utilised for new product development. Instead of investing money in
products like Walkers Salt and Shake that is not doing well in the market and has been
identified as dogs, funds can be diverted to Hot & Healthy.
Hot and Healthy should be a significant addition to this wide portfolio. The consumers who
want new flavours should be attracted to it. Moreover, health aspect is also highlighted in this
product which should b a significant attraction to crisps connoisseurs who are health conscious.
Start
End
Marketing research
February 08
July 08
Technology development
August 08
July 09
Product Design
August 09
November09
December 08
October 09
Table 5: Start and end dates for each new product development stage
52
30
29
23
24
21
12
7
7
6
53
31
29
24
23
21
11
8
6
7
52
32
30
25
24
20
10
8
6
6
+2
+1
+2
-1
-2
+1
-1
-
As far as the target group is concerned, a lot of manufacturers have started targeting other
areas of the population. Some manufacturers specifically targeted younger males; most notably
Walkers with its Nobbys brand.
The above research states that ethnic cuisine is very much in demand in the UK and thus, we
plan to launch new ethnic flavours of Walkers which will be cooked in Safflower Oil, which is
healthier than the current oil being used to fry the crisps.
3.2.1 Idea Screening
Walkers are primarily made of British Potatoes, a local favourite our desired target market.
Introducing more flavours is found to be a potential prospect. Moreover, the exotic flavours of
Walkers Sensations have been well accepted by the consumers.
Table 6 suggests Indian and Chinese as top favourite cuisines in UK. The idea would be to
introduce hot and spicy flavours. Considerations for introducing more flavours are:
Chinese
Indian
Mexican
Caribbean
Chicken Tikka, an Indian flavour, is a good prospect as it has a high recall value and is popular
in demand. Chinese Beef Chilly will be second in line as a strong prospect. Mexican and
Caribbean are lower in the rung and will therefore not be launched initially.
Ready Salted
Beef Chilli
Chicken Tikka
Salt &
Vinegar
- most popular - makes up -beef
-forms part of -14%
of
flavour
24% of retail derivatives
other
flavours sales
accounting
for sales
account for making up 23% of
25%
of
retail
7% of retail sales
sales
sales
-existing for long
-existing
for -new ethnic -new ethnic meat -existing for
meat
flavour
long
long
flavour
Table 7: comparison of the new flavours with traditional ones
While the Cheese & Onion, Ready Salted and Salt & Vinegar flavours are incontestably the
ultimate favourite flavours, people are showing an incline towards meat flavours. Moreover, the
influence of ethnic cuisines resulted in the population being less conservative in their choice of
crisps. They are looking for somewhat spicier derivatives, opening themselves to other than the
traditional flavours that have been around ever since the beginning (Mintel, 2009) (2)
The Beef Chilly and Chicken Tikka are original flavours that do not exist in the market yet.
Lauching them under the Walkers brand constitutes an advantage for the manufacturer, who will
be making innovative flavours available thereby filling gaps in the market, and also, for the
products, which will benefit from Walkers brand value. This is because Walkers is the market
leader, and hence, a very powerful brand, and it also enjoys a good reputation.
Smoke point
510F / 266C
450F / 232C
420F / 216C
450F / 232C
455F / 235C
% Fat
Saturated Polyunsaturated
9
78
11
69
14
12
15
61
52
10
Monounsaturated
13
20
74
24
38
Safflower oil is indeed the best of the lot with an excellent proportion of good fatty acids and a
high enough smoke point.
3.4 Product Testing
The Walkers prototype is presented to the internal company employees from various
departments in order to get their reactions and feedback before the product is further developed
and improved for the market launch.
The product development stage has taken about 2 years. Marketing research began since the
beginning of 2008. The technology development stage had been developed during the second
year followed by the product design development stage until the end of 2009. The company
spent about one year testing the prototype and the new flavours.
Age Groups
Total of all groups
15-19
20-24
25-29
30-34
35-39
40-44
All Groups
51,092.0
3,354.1
3,457.9
3,357.7
3,311.6
3,830.2
3,960.7
4.3 Positioning
According to Haberberg and Alison (2008), positioning is done to create an image of the
product in the minds of consumers. Many a time, it is done on the basis of differentiation, i.e.
how this product is different from the competitors product, serving the same target market. It
must be thus done very carefully since failure may result in switching of customers to the
competitors. For our product, the name Hot and Healthy plays an important role in creating
the right image in the minds of the people.
One of the main objectives would be survival. As per Kotler and Keller (2009),
companies that face intense competition, mature market and changing consumer wants,
must adopt this as their pricing objective. This is mainly to avoid extinction. By
introducing Walkers Hot & Healthy, the company aims to provide two new flavours at
The product will be sold to the retailers at 40 pence for 50 grams and the retailers would add
their margin of an estimated 20% and sell it to the consumers at 50 pence. Since Walkers
enjoys economies of scale through standardisation and mass production, it is possible to
keep costs low. Its competitor, Kettles premium and healthy crisps, falling into the same
category of positive health image, is priced at 1.70 for 50grams pack.
4.4.3 Distribution:
Distribution channels and networks play important role in the success of any brand. Walkers
Hot and Healthy crisps will reach market via individual retailers, middlemen and supermarkets,
for example, local grocery shops in residential areas, convenience stores, and supermarkets
like Tesco, Sainsburys, Asda and Waitrose.
In order to ensure commitment of the intermediaries in the supply chain, attractive incentives
and commissions will be offered. Distribution networks will not only play an important role in
supplying crisps to the final consumers but will also be motivated for in-house promotion of
Walkers Hot and Healthy Crisps.
4.4.4 Marketing Communications (Promotion)
According to Walkers Brand Manager, Hugo Amos (2005) Promotions are what built the Brand.
Walkers is known to be doing an excellent job in terms of marketing a quite basic class of
product. Advertising is done through television, newspapers and even the internet. This effort
helps to maintain brand awareness and provides quick information on any new product that is
Base: all internet users aged 16+ who have heard of the brand
Source: Mintel, 2009
In millions
Particulars
2010 E
2011E
2012 E
1870
1935
1942
1.5
19
29
38
Amount
0.40
0.12
0.28
0.18
0.10
6.0 REFERENCES
Better Regulation Commission (2007), Spotlight on better regulation, Government Standards for School food,
[online] available from
7.0 APPENDICES
2.1.1 PEST Model