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Marketing plans for a new product launch provides the details of the marketing objectives of the organization and outlines the strategies used by the company to promote the new product, brand or service. Anderson (2012) opined that a good marketing plan is vital to the economic success of new products. The following report showcases the marketing plan for the new retail product introduced by Aldi.
Aldi is a leading global discount supermarket chain initially established in UK and presently has 9000 stores in around 18 countries. The company introduces a new product in the range of organic products. The new product introduced by Aldi is organic tomato ketchup. The company focused on introduction of this product keeping in mind the sustainability benefits of the product on the company’s image (Aldi.co.uk, 2015).
Aldi – The retail food store
Product brand name
Organic Tomato ketchup- Organic product line
New Product name
Tom Tom – the organic ketchup
To develop the taste for people who are away from taste
Features of the product
Product features: The ketchup is aimed for the health conscious segment of UK customers and promises 100% sugar free, fat free, cholesterol free and made up of fresh organic tomatoes.
Ingredients: Water, organic tomato, xylitol, sea salt, organic garlic powder, organic onion powder and organic spirit vinegar.
Benefits of the product
· Sugar free diet ketchup is beneficial for the diabetes patients
· Usage of Xylitol in place of sugar is ideal for diabetics and adds sweet taste to the ketchup
· Less than 1% fat is favorable for the health as well as teeth of the consumers.
· Guarantees taste and health for the consumers by enabling the consumers to enjoy winter barbeques and introduce something healthy to the meal.
· Presence of high Lycopene in the ketchup benefits the consumers by protecting the body cells from radical damage.
· High amount of vitamin A from the organic tomatoes ensures protection for skin, eye, teeth, and bones and mucus membranes.
Adcock (2010) stated that the product line extension is the introduction of a new product in the existing or established product brand name. Aldi uses the product line extension strategy in order to introduce a new product that is the Tom Tom organic tomato ketchup within the existing organic food products brand.
Figure 1: Brand extension strategies
(Source: Bowman, 2010, pp-86)
Strong brand name: Tom Tom is the product line extension of the already existing organic food product brands of Aldi. Aldi is famous as a discount supermarket hence the goodwill of the retail chain will provoke the sales of the new products (Clow and Baack, 2012).
Health benefits: The use of organic vegetables and condiments will ensure that the product will have a competitive advantage over the other ketchups like Heinz and Con Agra which produces ketchup with chemical ingredients.
Low pricing strategy: The retail store will adopt the penetration pricing strategy for the new organic ketchup. Aldi will price the product at around £ 1.29 which will help the company to attract a large customer segment.
Middle class target market: The retail chain has introduced the ketchup targeting around 80% of the middle class segment and hence has adopted the low pricing strategy. The Tom Tom will be an affordable product for the low income and middle income group consumers (Brooks and Simkin, 2012).
Consumption issues: The major weakness of the product is the consumption issue. Since Tom Tom is being made with fresh organic condiments and organic tomatoes hence the product has to be consumed within 3months of opening. This creates a negative feature for the product (Bly, 2009).
Storage issues: The specification on the product states that Tom Tom has to be stored in a cool dry place. However around 60% of the lower income group of consumers in UK are not able to afford refrigerators. This will reduce the demand for Tom Tom.
High production costs: Aldi has incurred high production costs due to the inclusion of the organic agricultural products as raw materials. The use of Xylitol as a substitute for sugar incurs high costs for the company.
Lack of suppliers: Aldi also faces problems from the lack of organic farmers for the supply of the sufficient organic ingredients for the preparation of Tom Tom.
Target market: Aldi is launching the organic ketchup for the first time under the organic food product segment. The company is targeting the consumers who are health conscious and particularly the consumers who are diabetic patient and fat conscious since the Ketchup is low on fat and free from sugar (Hsu, 2011).
Since 1996 the number of people diagnosed with diabetes in UK has increased from 1.4 million to 2.9 million and by 2025 it is estimated that around 5 million people of k will suffer from this disease. Hence Aldi’s strategy to target this niche segment of customers will succeed in quick acceptance of the product. Moreover the reports of WHO states that around 80% of the people in UK of all ages are affected by obesity problems. Hence the introduction of low fat ketchup will produce a high demand for the product especially within the teenager groups (Lindgreen and Finn, 2010)
Competitor analysis: The UK ketchup industry is largely dominated by global brands like Heinz, Del Monte and Con Agra. Apart from these global brands other retail super market chains like Tesco has also introduced the concept of organic ketchup. Hence Tom Tom will face stiff completion in the market from the existing brands and the diverse range of ketchups. Con Agra specializes in production of salt free ketchup and Heinz offers bottled packaging which can be stored without refrigerator (LaPlaca, 2009). Hence Aldi will have to focus on low pricing strategy and sugar free factor as competitive advantage over the others.
Figure 2: UK ketchup market share
(Source: Lindgreen, 2012, pp-95)
· Aldi is a German based retail company hence it has to acquire the trading permissions in UK.
· UK government gives the opportunity to the retail sector to employ locally based, highly skilled labor at low wage rates. This is beneficial factor for product development (Mohan and rasad, 2012).
· High unemployment rate of UK adversely affects the purchasing power of the majority of the UK population which decreases the demand for items like ketchup and food snacks and increases the demand for necessary food items.
· Since the ketchup preparation requires freshly grown agricultural products hence the economic variations in the agriculture can cause some crisis for Aldi’s Tom Tom.
· Moreover the increased fuel prices increases the distribution costs of ketchup to other companies and supermarket stores (Madichie, 2009).
· With the increase in the number of growing population in UK the social demand of the country is shifting towards health conscious products.
· The changes in the food and taste behavior of the individuals may differ with the changes in the age, culture and generations. Hence it is essential for Aldi to make innovations to Tom Tom with the passage of time (Schindler, 2012).
· Aldi needs to avail e commerce techniques to make the products available at the doorstep of the consumers.
· The use of Electronic Point of sale and Electronic Funds Transfer system will help Aldi to make the distribution process effective.
· The company should manufacture and sell the products by abiding to the regulations of the consumer laws.
· In this regard Aldi needs to state the ingredients on the bottle cover and also mention any allergens used within the ketchup.
· Aldi needs to abide by the rules of the Organic systems and standards in farming for production, processing, packaging, labeling and importing of organic raw materials required for the preparation of Tom Tom (Spiller and Bergner, 2011).
· Moreover the company should have to get the ketchup certified as organic ketchup by the Organic Certification System so that the ethical and environmental obligations are maintained.
Threat of new entrants: The possibility of new entrants is low. The presence of many global as well as local brands for the product makes the industry unattractive for a new company. Moreover the adoption of the low pricing strategies makes the ketchup a non profitable product for a new company. Hence only the company’s like Aldi which are focused on expansion of product line may enter into this industry (Yim Yiu and Xu, 2012).
Industry rivalry: The rivalry within the ketchup industry is low. The ketchup industry is operating under oligopoly economy. Westwood (2013) stated that the recipes of ketchup and the indigents used to make it are usually same with diversities in sugar, salt and fat content. Hence all the Ketchup’s experience the same demand or market share. Aldi faces competition from ketchups of Del Monte, Tesco, Con Agra, Heinz and Hunt.
Bargaining power of supplier: The bargaining powers of suppliers are very high in this industry. The use of organic raw materials requires the companies to source raw materials from the farmers and the agricultural producers directly. Since there is a dearth of fresh agricultural lands in UK hence the companies like Tesco and Aldi sources products from USA and Asian countries. In order to get smooth and quick delivery of raw tomatoes the companies agree to the prices set by the suppliers (Makgosa, 2012).
Bargaining power of buyers: The bargaining power of buyers is high. The presence of the various ketchup brands with the similar taste ketchups and almost similar prices induces the consumers to act as the price takers. The customers have the opportunity to shift to any of the brands in case of unfavorable prices.
Threat of substitutes: The threat from substitutes is medium. Several tastier and healthier options are available namely salsa, sun dried tomato hummus, low sodium barbecue sauce etc. However the threat is not so high because the consumers are used to consume ketchup along with snacks hence for the new items to make their place in the taste behaviors of the consumers will require time (Miranda, 2009).
Figure 3: Porter’s Five force for Aldi’s new product
(Source: Aldi.co.uk, 2015)
Tom Tom ketchup is Aldi’s new introduction to the existing organic food product line. The UK condiments market recorded a volume growth of 1% and a value growth of 5% in 2013. However the reports of The Guardian shows that ketchup and brown sauce sales fell by 7% in the year 2014. According to the consumer market research three important emerging trends are responsible for the reduction in the sales level.
However with the innovations in the ketchup recipes by companies like Heinz, Tesco and Con Agra the following demand is forecasted for the ketchup products.
Projected demand (in Tons)
· Sugar free and fat free ketchup will attract the demand for health conscious customers.
· Low pricing strategy and targeting the middle class segment
· Strong brand name
· Consumption and storage problems
· High production costs
· Threats from existing brands like Heinz, Tesco, Con Agra and Del Monte
· Consistent reduction in the availability of agricultural lands for the organic raw materials.
· Lack of availability of productive employees due to low wage rates of labors in UK.
· Aldi has the opportunity of selling the product internationally in all Aldi super market chains
· The company can focus on distribution of the ketchup in restaurant chains like Mc Donald’s, KFCs, Dominos, Burger Kings etc (Luan and Sudhir, 2010).
Aldi’s use of consumer market research for the purpose of Tom Tom demand forecast will include the following initiatives:
Product development: With the help of concept testing, blind test and consumer surveys Aldi will try to determine the features, benefits and requirements of the target segments in terms of ketchup (Leekha and Sharma, 2014). With the help of the pilot survey the management at Aldi was able to analyze the influential factors for the demand of ketchup in UK.
Marketing communications and influence: The retail chain also measured the brand awareness of the product in order to determine the effectiveness of each medium in reaching the targeted audience and stimulating the desired response.
Customer satisfaction survey: With the help of structured questionnaire Aldi tried to gain insight knowledge about the customer requirements with respect to the consumption of condiments (Levy, 2012).
Market segmentation is the process of dividing the entire target market into different subsets of consumers according to their common needs and priorities. Kotler and Keller (2012) opined that with the help of segmentation the marketer will be able to develop different promotional strategies for the different customer segments. Aldi segments the target market into geographical, demographical, psycho graphical and behavioral segments.
Aldi originally has its store in Germany however the retail supermarket chain operates in around 18 countries including Australia, France, Poland, Hungary, Portugal, Spain, UK and USA. The retail chain plans to introduce Tom Tom in UK customer market targeting the health conscious middle income group of customers (Guiltinan, 2010). However the retail chain has plans of expanding the product base into international markets of USA, Spain and France where the ketchup consumption is high after making certain innovations within the product ingredients. Finally the retail chain will introduce the product in home market of Germany. In UK the company will target the urban retail stores and food chains in promoting the product initially.
Due to added organic value Tom Tom targets consumers within the age group of 5 to 60 years
· Male and female both
· Majorly the female housewives within the age group of 26 to 50 years
Occupation and income
· Tom Tom is low priced product targeted for customers having income within £ 10,000 to 40,000
· Middle income and lower income group of customers( Hiebing et al.2012).
The WHO reports suggests that around 80% of the UK citizens are addicted towards consumption of fast food snacks. Hence Aldi has targeted the lower and the middle income group of customers so that it can reach out to the new customer segment which is still not targeted by the other ketchup brands of UK.
The primary target segment for Aldi’s organic ketchup will be the habitual buyers from the lower and middle income group. However the low pricing strategy and the seasonal discounts will also target the seasonal buyers. Tom Tom is majorly made for the health conscious and taste conscious consumer segment.
Tom Tom is targeted for a business to consumer market segment where the nature of the buying transaction is forecasted to be tender. However in case of sale of Tom Tom products to the UK food chains will involve high degree of business to business sells. Aldi is planning for bulk sales in case of B2B sales (Guo, 2013). However for stocking of the retail store shelves Aldi will follow the just in time approach so that situations of stock out and stock overload can be avoided.
Aldi has selected the health conscious middle and lower income group of customers as the potential target market because it is a new emerging target market. Other Ketchup brands like Tesco, Heinz, Del Monte prices products for the higher and taste conscious income group, hence Aldi with its low pricing strategy is planning to win over the middle class and break the stranglehold of other ketchup brands. Moreover the use of organic raw materials and making of a sugar free ketchup is a new concept to the UK customers hence geographically UK is a favorable customer segment (Meng and Chatwin, 2012).
Figure 4: Marketing strategy
(Source: Munro, 2009, pp-105)
Aldi uses the niche marketing strategy in order to develop Tom Tom for the health conscious group of customers. By using this strategy Aldi is able to make a distinction in its new product from the other ketchups in the UK market. Initially Aldi is using the niche strategy for capturing of the UK target market however along with international expansion The Company will adopt the differentiated strategy and use the customer requirements to innovate Tom Tom in a country specific manner.
Aldi will use the sustainability product packaging strategies for the packaging of Tom Tom. The retail chain will use squeezable, recyclable and upside down bottles for packaging of Tom Tom. The company will use plastic less than 120 microns so that the used plastic bottle can be recycled and don’t affect the environment. Blythe (2009) opined that the use of upside down bottles will help in easy storage and clean ketchup convenience.
Moreover the company will design the bottle labels with the ingredients and contents of the ketchup, the allergens used and the certification of the organic food department. in this regard Aldi will abide by the rules of the Food regulation labeling 1999 and include
Aldi will also have to abide by the Food additives legislation to ensure the health issues are maintained within the new product. in this respect Aldi will have to abide by the Sweeteners in Food Regulations 1995, Colors in Food regulation 1995 and Miscellaneous Food activities 1995.
Figure 5: Total product concept of Tom Tom
(Source: Created by author)
Aldi is introducing Tom Tom as a product line extension of the already established organic food products line. Hence for positioning of the new product the retail chain will use the following methods namely
With the help of perceptual mapping Aldi will be able to track the perceptions of customers and potential customers about the product brand in comparison to the competitors. The perceptual mapping shows that Aldi’s products are considered to be in the low cost segment hence Aldi will price its ketchup accordingly (Beamish and Ashford, 2012).
Figure 6: Perceptual mapping of Aldi products
(Source: Beamish and Ashford, 2012, pp-76)
Positioning to specific segments
The niche marketing strategy of Aldi will help the retail chain to position the product for the sub target market. The positioning strategy for Tom Tom will aim to position the product for health conscious customers majorly the customers suffering from diabetics and obesity. These customers have a addiction for taste but are medically vulnerable to consume the product hence Aldi will target their unmet demand.
Moreover Aldi will have to obtain a brand license on Tom Tom‘s recipe. According to Funk and Levis (2009) obtaining a trademark of brand license makes the product unique and secure from getting copied by other brand names.
Aldi is famous as a discounted retail market hence the company will use a low pricing strategy for pricing of its new product Tom Tom. The product cost for Tom Tom is fixed at £1.29 which is highly affordable for the middle and the lower customer segments. With the low and discounted pricing strategy Aldi is planning to capture a market share of around 30% in the initial stages of new product development.
Heinz organic ketchup
According to Blythe (2009) two types of pricing strategies may be used by business in pricing the product namely the cost based pricing and the value based pricing. In case the company is focusing on pricing the products based on the benefit that the product is offering then the value based pricing may be adopted. However Aldi here adopts the cost based pricing because of the stiff competition and the bulk supply of goods by the company. Again in case of the pricing strategy adoption Aldi will adopt the market penetration strategy and will launch the new product with the goal of securing market share.
Figure 7: Pricing strategies of Aldi
(Source: Funk and Levis, 2009, pp-98)
Aldi will also take up the short term adjustment strategies in order to boost up sales namely
Tom Tom will be made available un not only the local Aldi stores but also in Fast food restaurant chains of UK like KFC, Mc Donald’s, Burger King, Nandos. For the purpose of the distribution of Tom Tom Aldi uses the extensive distribution channel which enables the retail chain to utilize multiple delivery channels and make use of a high distribution volume to reach the potential target customers quickly. Aldi also will use the online distribution channels like Aldi’s online purchase website, Amazon, Top Shop, First Choice etc. Initially for the distribution of Tom Tom Aldi will concentrate on geographical target market of UK (Danaher and Johnston, 2009). However after estimating the success of the product in UK Aldi will focus on international distribution of Tom Tom.
While designing the logistics network Aldi issues certain supplier guidelines which should be abided by the domestic, international suppliers, joint venture partners and co packers to ensure the safety of the organic products. The retail chain also abides by the UK labor laws and environmental laws to protect the safety and health of workers and environment.
Further for the production of the tomatoes Aldi uses the non hybrid and a freshly grown tomato seed which requires less water, remain ripe for a longer period of time, resistant to diseases and produce higher yield. By increasing the number of items in each truck Aldi also aims to reduce the number of trucks required for carriage of the ketchups. This will reduce the carbon emission by great extent (Klang and Hacklin, 2013).
Aldi will use extensive promotional strategies including web marketing, word of mouth marketing, media marketing and test marketing to promote its new product Tom Tom.
Web marketing: Aldi will use the social networking sites like Face book, twitter and Aldi’s home page in order to promote the new product along with its features and benefits. The creation of a Face book community and fan page on the organic product segment and promoting the product in that particular page will enable to generate awareness among the customers specially the teenagers and the housewives who are extensive users of Social networking sites (Hundekar, 2010). Moreover creation of Tom Tom account on twitter will encourage the consumers to voice their opinions relating to new flavors and changes in the product.
Word of mouth marketing: The distribution of free samples along with other purchases of Aldi will give the customers an opportunity to taste the product and make a mindset about purchasing it. This will also generate a word of mouth promotion as the consumers will be able to recommend the same to others.
Media marketing: Aldi will also adopt the traditional media marketing strategy of distributing brochures with Tom Tom details, produce billboards and hoardings and display them on public localities like outside restaurant chains, busy flyovers, airports, cafes and all Aldi retail stores. The retail company will also use the print media by publishing ads about the new product along with discounts and benefits in the local UK news papers.
- Print advertisement
- Face book promotion
- Twitter promotion
- Aldi website promotion
Aldi in introducing the new product will adopt the product line modification strategy. Hence following this strategy Aldi has aimed in introducing a new product in the existing product line for a new segment of customers. The organic product line of Aldi already serves the needs of the health conscious consumers. Aldi further introduces the organic ketchup in order to target the diabetic and obesity patients within the target group.
Contingency plans are devised by the company in order to management the risks if a preferred outcome is not obtained (Keegan, 2012). Aldi in this respect will keep a contingency plan if the new product fails in the target market. The company will initially produce low tons of Tom Tom and market the product in the retail stores only. Then following the growth trend of Tom Tom Aldi will increase the production and accordingly increase the number of Tom Tom display bottles. This will prevent the company from huge losses if the product s not acceptable by the UK retail market.
The marketing plan of organic ketchup outlines the 4P’s of marketing namely the pricing strategy, promotional techniques, distribution channels and product features of organic ketchup adopted by Aldi for the new product development. Since the product has a lot of competitors hence Aldi will focus on low pricing strategy, geographic distribution, majorly web marketing and use of product modification strategies to make the product acceptable in the UK consumer market. Finally competitive advantages of organic ketchup might be helpful for the product to succeed in the market.
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