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Market Circumstances and Opportunities

Question:

Discuss about the Strategic Marketing for Symbolic Value Transfer.

Analyzing the present market circumstances, it is recognized that various strong competitors are there in the New Zealand market for the Kiwi fruit. However, the Zespri is completely different and new as compared to the existing products. Zespri is good and qualitative for  for the purpose of refreshment (Bez, Headquarter & Tauranga, 2016). That is why it is assumed that Zespri will be demandable product I New Zealand market. Further, there is a good demand for kiwi fruit in the New Zealand market and the people have positive attitude towards fruit juice as compared to any other fruits as it its nutritional value is high as compared to any other fruits. Other opportunities are as follows –

  • Number of customers are increasing – looking into the current circumstances of the fruit industry and the boom of population, it can be stated that New Zealand requires more modernized and various kinds of product which can be a big opportunity for enhancing the sincere status in the mind of the consumers through increasing the number of the quality product and various other product.
  • Increasing the awareness of the customers – in the recent years the people are more aware and concerned about health and their drinks and diets. People don’t like take the drinks and foods from open and outside market. Therefore, it will be advantageous for delivering quality fruits (Lister, 2014).
  • Lower cost related to technologies – the technologies all over the world are rapidly changing for a better future. If the better technologies can be managed with lower cost, better quality goods can be provided to the students in lower price as compared to the competitors.
  • Changes in the food habits – owing to various reasons the customers of New Zealand are changing their food habits and are shifting towards the diet products like fresh fruits and moreover, the rate of shifting is growing rapidly (Black, 2015). Therefore, in the near future the company is expected to be more profitable.

Along with the opportunities, various threats are there in the market scenario that may affect the sales and growth opportunities of the product. Further, the customers always prefer the innovative products with regard to the marketing, packaging and development. Other threats for Zespri are as follows –

  • Increased competition – the fruit market in New Zealand is in maturity stage. However, many companies are still interested to enter in the market. If new entrants enter the new market, it will increase the competition for Zespri to much higher level as compared to the present condition. Therefore, Zespri will face various difficulties for sustaining in the market.
  • Pressure with regard to downward pricing – owing to strong competition, Zespri will always face the threats from the fact that the product price can be reduced through other competitors and thereafter to sustain in the market Zespri will also have to reduce the price of their product (Ward & Courtney, 2013).
  • Wide number of the indirect competitors – in the kiwi fruit sector, wide numbers of indirect competitors are there. Further, wide numbers of sellers are available for the same things that can be a major threat to Zespri.

Various marketing objectives of Zespri are as follows –

  • To increase the frequency with regard to the usage of Zespri Green and make this a daily fruit
  • Focus on the efficiency regarding all the marketing investments
  • Continuing building up the base for golden consumers and increasing the trila and awareness for the product (Nieuwenhuizen, 2015).
  • All the marketing investments are to be focussed on the enhancement of brand awareness, increasing the supporting and sales for price premium of zespri

The global marketing strategies of Zespri are to continue to increase the communications with the consumers, promoting the health benefits of the kiwi fruit along with the positive vitality and health. As part of this, the company are also planning to communicate with the key consumers like dieticians, doctors, bloggers and nutritionists. Further, the company is focussing on Gulf States apart from assessing its potential over Egypt and Iran. It established the office over there with the staffs of the company whose strategy is communicating the customers directly that will be different from other fruit traders in the area who are the commodity sellers. Further, the company runs a promotion there where the customers have a chance to win the daily prizes and shopping vouchers within the leading chain of supermarket (Ferguson, 2016).

During the year 2016 – 17, Zespri had redefined their operating segments for better reflections of their main business activities. Therefore, in future, Zespri will report their business against the four key segments –

  • Non-New Zealand supply
  • New Zealand kiwifruit
  • New cultivators
  • Others

The New Zealand kiwifruit is the core business of Zespri and it represents 90% of the global sales of the company. The segment of non-New Zealand supply which is also referred as the Zespri Global Supply generated the revenue amounted to $ 216 million and the profit before tax amounted to $ 11.9 million for the year 2016-17. The segment related to new cultivator generates the revenue through royalty streams, licensing and co-founding the new cultivar research. In total, this segment earned the revenue amounted to $ 87.5 million and the segment profit before the tax amounted to $ 70.9 million. Finally the other segment covers all the activities linked with interest income, building and land. The revenue from other segments amounted to $ 4.0 million whereas the profit before tax amounted to $ 2.2 million. The activities under this segment are expected to increase after the commencement of new head office in Mount Maunganui, New Zealand.

Marketing Objectives and Strategies

The target customers will be the the customers from all over New Zealand who have the demand for fresh and organic fruits and the retailers who directly sales the product to the customers. Zespri will continue providing their services to the existing customers of the producers those produces juices from fresh kiwis. Further, all the fruit shops all over New Zealand will also be under the target customer list of Zespri. However, the company will use internet as the main channel for marketing its product (Hill et al., 2014).

The long-term strategies of Zespri are to provide the leading portfolio with regard to the kiwifruit throughout the year. In addition to growth, the company is committed towards preserving the leading position through providing the products of high quality and are committed towards branded and premium strategy. The fruit industry has created the most recognisable global brands for fruit through Zespri. Further, as the supply with regard to non-NZ is significantly growing, it is assisting the position of Zespri in market throughout the year and it contributes towards the returns of the shareholders in future (Berti, Pizzi & Ancarani, 2013).

Branding the fresh products was an important part for guaranteeing the quality and creating loyalty of the customers. Further, within high brand awareness and trade for Zespri the customers are able to understand the correlation among product quality and brand (Scrimgeour, Hughes & Kumar, 2017). Moreover, the development of strong relations with the retailers assists them to create value as these retailers have considerable power and the strong equity of brand among their consumer base. Apart from this, the repositioning and redesigning the supply chain realised the customers value at the minimum possible price.

As can be seen from the above discussion, that the demand for kiwifruit has been increasing in the recent times, in global scenario and the demand is subjected to increase even more in the near future. Much of this hike in the demand for this otherwise unconventional fruit can be attributed to the change in the income and preference structure of the consumer base, addition of new types of clientele, more awareness regarding better health and the good effects kiwi has on the same. The same also depends on the more globalized and interconnected markets which facilitates export and import of goods and services extensively (Zespri.com, 2017).

Keeping this in consideration, it is of utmost importance for the company to allocate its limited resources, both labor as well as capital ones, in such a way that their revenue and profit is maximized, cost is minimized and the company moves towards a path of long run sustainability (Grant, 2016). Zespri, in this context, has designed their resource allocation framework in such a way that it keeps that it can increase its production of kiwifruit extensively and can also improve its global efficiency such that it helps in exporting more of their products in the international markets, especially those of high value (Bodie, 2013).

Zespri's Operating Segments

The company targets to allocate, an additional land resource of 1800 hectares, along with the existing hectares of land. The land expected to be acquired by the company is with the license of European SunGold kiwifruit in the coming years, with the objective to double the production of the same in the long run, as this variety is the most demanded and one of the best selling products of the concerned company.

Zespri Kiwifruit targets to allocate significant part of the proposed investment, through the partners of the company, which includes the four suppliers in Italy, namely, the Salvi Unacoa, Apofruit, Alegra-Intesa and the Spreafico. These suppliers have been in partnership with the company for the last seventeen years. The current working and of the company in Italy, especially for the SunGold variety is 800 hectares and there remains another 850 hectares of licensed land which is expected to be fully operational in the coming years. With the additional investment on and, the production of the company is expected to be 15 million trays in the coming years.

Apart from investing massively on the productive lands, the company has also invested strongly on the continually improving and upgraded technology, which may help them in facilitating dissemination of effective technical advice to the growers who are working with the company. The company also invests in building up of effective growing techniques, research and development and also on the Psa learning, which has helped to increase the profitability of the firm in the recent periods.

Zespri is expected to acquire the 1800 hectares additional land in the next three years. Of this total acquisition, 1200 hectares of land is expected to be in Italy while the remaining is still not allocated. This is a huge investment on part of the company and the notion behind this huge dynamics in the resource allocation, as has been stated by the company itself, is to extend the operational base of the company, which will in turn increase the revenue and prospects of the company in the long run.

The demand for kiwifruit has been continually increasing in the past few years and there remains a year round demand for the same around the world, especially in the high valued markets like those in Japan and other parts of Asia. Keeping this in mind the company is ready to make this huge investment to secure a twelve-month supply of their products as well as to increase the production to around 90 million trays within the time span of next five years (Rumelt, 2012).

Target Customers

Apart from investment strategies, the company also emphasizes on a set of potential strategies, which can prove to be beneficial for the firm in the long run. These strategies include the following:

  • The company targets to expand their clientele by targeting the existing markets along with the continually increasing scopes in the newly emerging markets. In this context, the company also focuses to venture in the high valued ones which includes Japan, China and other Asian countries, where the consumers are getting aware of this fruit.
  • The company also targets to strengthen their supply chain and also targets to improve the relation with the existing players in the different supply side aspects, including the retailers, distributors and also aims in establishing new contacts in this supply chain.
  • The cultivators are an integral part of this industry and therefore one of the potential strategies on part of the company is to improve their relationship with the primary cultivators as well as with the shareholders who have invested in the business (Ferguson, 2014).
  • Another potential plan of the company, which if implemented appropriately, may prove to be highly beneficial for the company in the long run, is that of investing in other sectors like those of transportation, water and others, which have direct or indirect linkages with the production and cost effectiveness in production of the company.

The strategies taken by the concerned company and those, which are expected to be undertaken by the same in the near future, as, discussed in the above section, if implemented and monitored properly, have the potential to increase the profitability of the firm in the long run, contributing to its long run sustainability.

The massive investment, which the company is expected to undertake in the coming years, though sounds to be highly ambitious, however, can prove to be effective in the long run for the company. This is because proper implementation of the investments and post investment monitoring and follow ups on part of the company can  almost double the productivity of the company and help it to capture a considerably bigger clientele (Punt et al., 2016). Along with the investment strategy, the strategies of Zespri Kiwifruits, to strengthen their relationships, both in the supply side as well as in the demand side can also prove to be beneficial for the company. This is because a strong supply chain and a loyal clientele can hugely contribute in increasing the prospects of the company and improving its long-term efficiency and cost effectiveness in production (Wheelen & Hunger, 2017).

Implementation of strategies should also be followed up with formulation of contingency plans and keeping provisions for crisis management for the company, which may include the following processes:

  1. a) Operational Control- Zespri Kiwifruit can evaluate the performances of the different production units, especially the new ones, inclusive of the new lands and cultivators make the operations smoother (Simaiakis et al., 2012).
  2. b) Strategic Control – The strategies taken by the company has to be operated in a controlled framework, with proper provisions, which can be designed as follows:
  3. Premise Control – The Company has to identify the key assumptions while implementing a strategy and with the occurrence of any change in such assumptions the company needs to assess the impacts of such changes on the implementation and outcome of that particular strategy.
  4. Surveillance – A proper monitoring framework is required to keep a vigilant eye on the operational and strategic framework of the company.
  5. Crisis Management – The Company needs to create a proper alert control which may enable the company to handle unanticipated situations which may arise in the implementation of the set of strategies (Goetsch & Davis, 2014). 

References

Berti, C., Pizzi, G., & Ancarani, F. (2013). Symbolic Value Transfer for Commodity Differentiation: New Brand Creation Versus Brand Extensions in the Context of Agricultural Products.

Bez, E., Headquarter, z. g., & Tauranga, n. z. (2016). Logistic and distribution strategies in the fresh fruit supply chain: the case of kiwiberry from New Zealand.

Black, M. (2015). Are there opportunities for a faster rate of innovation in the kiwifruit industry?.

Bodie, Z. (2013). Investments. McGraw-Hill.

Ferguson, A. R. (2014, September). Kiwifruit in the world-2014. In VIII International Symposium on Kiwifruit 1096 (pp. 33-46).

Ferguson, A. R. (2016). World Economic Importance. In The Kiwifruit Genome (pp. 37-42). Springer International Publishing.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Grant, R. M. (2016). Contemporary Strategy Analysis Text Only. John Wiley & Sons.

Hill, M. G., Connolly, P. G., Reutemann, P., & Fletcher, D. (2014). The use of data mining to assist crop protection decisions on kiwifruit in New Zealand. Computers and electronics in agriculture, 108, 250-257.

Lister, C. (2014). Fresh produce and new health claims regulations. Food New Zealand, 14(3), 18.

Nieuwenhuizen, N. (2015). Transcriptional and hormonal regulation of fruit flavour in apple and kiwifruit (Doctoral dissertation, ResearchSpace@ Auckland).

Punt, A. E., Butterworth, D. S., Moor, C. L., De Oliveira, J. A., & Haddon, M. (2016). Management strategy evaluation: best practices. Fish and Fisheries, 17(2), 303-334.

Rumelt, R. P. (2012). Good strategy/bad strategy: The difference and why it matters. Strategic Direction, 28(8).

Scrimgeour, F., Hughes, W., & Kumar, V. (2017). The Economic Contribution of Kiwifruit Industry Expansion to the Bay of Plenty, Northland and New Zealand Economies.

Simaiakis, I., Sandberg, M., Balakrishnan, H., & Hansman, R. J. (2012, May). Design, testing and evaluation of a pushback rate control strategy. In 5th International Conference on Research in Air Transportation.

Ward, C., & Courtney, D. (2013). Kiwifruit: taking its place in the global fruit bowl. Adv Food Nutr Res, 68, 1-14.

Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.

Zespri.com. (2017). Zespri to increase Italian production SunGold kiwifruit to meet rising demand. Zespri.com. Retrieved 1 November 2017, from https://www.zespri.com/companyinformation/newsroom/increaseitaliansungold

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