Description of the industry and the company
The agricultural industry is one of the major pillars of the Australian economy, for example, the current total agricultural production is estimated to be at $80 billion and export to be at $65 billion (PWC, 2011). The major agricultural products of Australia include sugar, wool, cotton, horticultural products, beef, and grains. Agriculture constitutes 21% of the total Australia’s exports and contributes to 3% of the county’s GDP because it offers employment to many people. The company that has been selected is the Cooperative Bulk Handling (CBH) Group, which is a local company that engages in bulk handling of grains in Western Australia (CBH Group, 2009). CBH Group is made up of 4, 800 members who are growers of grains. Since it was established, the company has emerged to be the leading agribusiness company in Australia.
Vision: “Our core purpose is to link growers to customers in a uniquely valuable way, and we have a vision to be the stand-out choice in grain for the world.”
Mission: “We aim to give our growers more control of their product from the farm gate to the marketplace and, in the process, create and capture more value for them.”
- The strength of many to succeed
- The commitment to perform
- The courage to change
Orientation towards market
CBH’s orientation towards the market is based on the Product concept, which argues that consumers prefer high-quality products without taking much consideration to the prices. This is because the success of a company depends hugely on the quality of products or services that it offers (Mahajan & Mahajan, 2015). In this regard, the company has dedicated itself to delivering high-quality and healthy whole grain products to satisfy the needs of consumers.
Description of the products offered by the company
The clients of the CBH Group are producers and consumers of grain products, therefore, it offers both products and services. It offers to consumers products such as wheat, barley, canola, and oats. On the other hand, it offers various services to producers of grains. The services include handling and storing of grain products, management of the quality of grain products, marketing of grain products and processing of grains product before making them available for consumers in the market.
Role of the brand on marketing strategy
The CBH Group is a local and a global brand in the grain industry, therefore, the brand has a major role in the company’s marketing strategy by reinforcing the position of CBH in the market. CBH’s brand plays a major role in boosting the company’s marketing efforts because it influences the attitudes and beliefs of the clients (consumers and producers of grains) across the globe. The company’s brand determined the marketing strategy used by this company, for example, the high-quality products from the company has shaped its pricing in the markets.
Issue 2: 5Cs of the company
Company: SWOT Analysis
- It has a large number of suppliers, for instance, 4, 800 from local and international levels,
- Supplies consumers with high-quality and safe whole grain products,
- Is the number one exporter of grains in Australia,
- It enjoys a competitive edge related to large-scale operation,
- It has a diversified product portfolio,
- Has a highly qualified, experienced, and talented management team, marketing, and sales team,
- Has unmatched access to customers, information, competitors, and foreign exchange rates,
- Have a huge and stable financial base.
- CBH faces external and internal problems such as complexity in communication that have limited its ability to expand,
- CBH has not fully adopted modern technology in its operations,
- It is dependent on climate patterns (POWER, 2010),
- Relies hugely on rail and road to access the markets.
- The global grain markets has not been fully exploited in emerging countries; hence CBH can venture into these markets,
- There is an increase in the percentage of whole grain consumers for CBH to serve across the globe (Doherty, Steel, & Parrish, 2012),
- There is a change in the taste and preference of the whole grain consumers to safe, healthy and high-quality whole grain products,
- As an innovative company, CBH can take advantage of the emerging modern technology in agriculture.
- CBH Group faces stiff competition from other grain handlers like Bartlett Grains and Best Worldwide that limits its market share,
- Changes in choices of consumers may negatively impact its sales volume,
- Changes in technology leads to obsolescence of its equipment,
- Climate change has negative impacts on grain production (Ceddia, Heikkilä, & Peltola, 2008),
- The global economy is volatile and is vulnerable to economic depression and changes in prices.
The CBH Group possess an estimated 40% of the Australian whole grain market share (CBH Group, 2012). This is because of the large number of suppliers, contractors, and consumers that it serves. The company has segmented its markets based on the four major whole grain products that it supplies. For example, it has segmented its markets to wheat consumers, Barley consumers, Oats consumers, and Canola consumers. The market is further segmented on the basis of income level, for example, the high-end consumers who pay high prices for high-quality products and services and low-end consumers who are provided with products and services at lower prices (Kumar & Reinartz, 2012). Today’s consumer of whole grain products prefer to consume high-quality products that are safe. According to Mahajan and Mahajan (2015), today’s consumers are very willing to pay high prices for high-quality products and services and do are the consumers of CBH group products. The consumers’ purchase patterns are motivated the nutritional value of the whole grain products offered by CBH Group (Warwick-booth, Cross, & Lowcock, 2012). Despite the final consumers purchasing in small quantitate, clients like wholesalers and retailers do so in large volumes.
Successful operation in the agricultural industry is dependent on collaboration with other partners from within and outside the industry. In this regard, CBH Group collaborates with suppliers to acquire the products from producers and distributers to deliver the products to end consumers. The suppliers include farmers who produce wheat, oats, and barley (Aisbett & Kragt, 2010). On the other hand, the company works together with distributors such as supermarkets, hypermarkets and small retailers in markets and shopping malls. The company uses roads, rail, and water for transport purposes. To ensure that the products are delivered to their silos or are distributed to the markets, CBH works in has contracted companies in the freight and logistics industries, including, THE Heavy Haulage Service, Tigers Logistics, and WA Freights in Western Australia.
CBH group faces direct and indirect competition from companies that offer similar products to consumers and services to grain farmers. For instance, companies like Bartlett Grains and Best Worldwide present stiff competition and reduces CBH’s market share. Indirect competition comes from substitute products, for example, cereals companies like Weetabix and Kelloggs. The major strengths of Kelloggs and Weetabix are their possession of strong financial base (CBH Group, 2012). These companies also have a large market share not only in Australia but across the globe. They also have a talented team of managers, marketers and sales personnel that is superior to that of CBH Group. However, their major weaknesses are quality of the products that they offer as compared to whole grain products from CBH.
The Australian political environment is very stable, hence, facilitating the operations of CBH Group. The government of Australia has well-established policies that support the growth and development of agriculture and other related industries, and this has favored CBH Group (Zizlavsky, 2014). In addition the European region where CBH operates within is also politically stable, and this boosts the company’s business. The economy of Australia is doing well and hence, and the company is not negatively impacted by the issues of high pricing. The social environment within which CBH operates is favorable for the business (Henry & Summers, 2010). The social status of the target consumers is steadily rising. Besides, the taste and preferences of the consumers are also changing, and people are consuming more and more whole grain products. The current technology growth has also boosted the performance of this company, for example, the emergence of modern automated machines has increased the volume of production, enhanced storage for longer periods, and ensured faster distribution of products (Mazzola & Kellermanns, 2010).
How the firm collects information about the 5Cs
These are activities that an organization employs to collect information regarding the events that are taking place in the industry, the issues that are emerging, activities of competitors, and that of consumers (Bryman & Bell, 2007). CBH utilizes three different types of market intelligence to get information regarding their 5Cs. CBH employs three techniques of market intelligence to gather data, namely; observation and examination of external data, social media, and internal data. CBH examines external data such as reports by analysts, financial reports of competitors, researching databases and websites, monitoring of social media and press reports. This has enabled the company to gain insight on market trends and consumer behavior
This refers to the collection of vital primary and secondary information by organizations through qualitative and quantitative research techniques (Piercy & Evans, 2015). CBH engages in market research to collect primary through strategies such as interviews, questionnaires, and focus groups. The company carries out market research by interviewing their members, their consumers, and suppliers to get primary information and feedback to improve their performance.
To know what customers want, CBH employs market intelligence by examining the comments and feedbacks given by consumers over the social media. They also use market research techniques such as questionnaires and interviews to learn the needs of consumers. To learn the needs of competitors, CBH examines the press releases and financial report of competitors. The company also utilizes market intelligence; examining of external reports and monitoring the trends in the market to identify the changes in the business context.
Issue 4: Recommendation and justification of a marketing strategy
A choice of target market
Based on its product portfolio, the most appropriate target market for CBH Group is whole grain consumers who are aged between 15 and 30 years in Australia. This is the appropriate target market because of the following reasons.
Firstly, there has been an increase in the number of consumers of whole grain products in Australia, particularly wheat products. Secondly, whole grain products are becoming more popular with current Australian population, particularly among teenagers and young adults. In this regard, CBH Group should focus on serving both male and female consumers who fall within the age group of 15 and 30 years. The selected market segment is appropriate for the success of this company because the majority of Australians who are in the middle-income class fall within this age. This population is also increasingly becoming more conscious about their diet, and hence, they consume healthy and safe food products (Goss, et al., 2013). As a result, they changed their taste and preference to whole grain products. The selected target market is composed of a majority of working class; hence, they have surplus income and a high purchase power (Pride & Ferrell, 2012).
A value proposition for the target market
The consumers of CBH Group products will enjoy a package of health benefits. This is because the CBH products contain fiber and bran that help in starch digestion and conversion to glucose to ensure a steady sugar levels in the body (Cho et al., 2013). The fiber also reduces cholesterol in the blood and eliminates blood clot, hence, preventing strokes and cardiovascular arrest.
Positioning statement for the target market
CBH aims at offering high-quality and safe whole grain products that are high in fiber to teenagers and young adults at a lower cost.
Issue 5: Recommendation and justification for a marketing mix (4-7Ps) for the above marketing strategy
Due to the increased demand for healthy diet across the globe, CBH Group should offer high-quality whole grain products (wheat, barley, and oats) to consumers. The company should also provide large modern, safe and secure storage facilities for the producers of whole grains.
Based on the above marketing strategy, CBH group should implement a skimming strategy of pricing. This is because the production of whole grain products takes place in seasons, therefore, this pricing strategy will enable CBH to maximize its profits during harvest seasons. The company can also make use of seasonal pricing strategy. According to Chon (2012), the implementation of the seasonal strategy of pricing helps a company to do business effectively even during off-seasons like the 2009 global recession. CBH needs to utilize flexible pricing strategies and price discrimination. These strategies will help the company to move its products based on the economic status or the geographical location of the consumers, hence, maximizing its profits accordingly.
CBH Group needs to place its products in major retail outlets including supermarkets, hypermarkets, and small retail outlets. This will enable the consumers to gain easy access to their products. To serve the producers of whole grains, the company should establish its silos near whole grain farms across in Australia.
Based on the selected identified target market, CBH Group should use advertising over the print, electronic, and social media. This is because the young adults find a lot of commercials from newspapers and television (Pride & Ferrell, 2012). In addition, the majority of teenagers and young adults use social media such as youtube and facebook, hence, they will find the commercials there. Sales promotion such as discounts should be used because they attract more clients. In addition, the use of a public relation team will enhance the image of CBH group in Australia and across the globe.
To ensure successful business, CBH should work together with partners such as grain millers, to ensure that their products are ground and refined before they reach consumers. They should also collaborate with the government to implement appropriate policies to facilitate the business. The freight and logistics industry players, to ensure efficient transport services.
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