This is a Market Research Report Assignment Help in which we discuss marketing strategy, concept and research report of specific market.
Biscuits evolved from being just tea-time snacks to snacks that can be eaten at any time of day. With consumers in Australia, leading increasingly busy lifestyles, there has been a disintegration of proper meal times and most consumers now consume several small meals throughout the day rather than three square meals, as was the case a generation ago. As a result, snacking products in general, and biscuits in particular, see growing demand. The introduction of biscuits in smaller pack sizes and pouch-like packs also encouraged out-of-home consumption. In general, biscuits are perceived to be nourishing and healthier than other snack products such as chocolate confectionery, ice cream and sweet and savory snacks, leading to double-digit growth in both volume and value terms in current period. (Perry & Alam, 2005).
According to IBMA, the biscuit industry in Australia witnessed annual growth as 15% in 2003-04, 14% in 2004-05 and 2005-06, 13% in 2006-07, 15% in 2007-08 and 17% in 2008-09 (1st quarter). Pepsi Co has been one of the major players in the snack and drinks market structure in Australia. However it has not launched any product in the baked biscuit segments as yet. The report talks about the launch of a new baked biscuit in Australian market by the name of Twisties. (Bucknell, 2008).
- Broader product line and outstanding reputation
- Mergers of Quaker Oats produced Synergy across the board and provides expertise in different segments
- A Market Share of around 45% of the Salty Snack and Chips market makes them the market leader of this segment.
- Lack of capital constraints (availability of large free cash flows) gives them room to implement the innovation and ideas. It can comfortably out price its competitors and bear losses.
- Excellent distribution network: – Pepsi Co has an unmatched distribution strength vis-à-vis most other players in the. Pre defined distribution channels give them superior geographical coverage with efficient service and a big opportunity to reduce cost
- High economies of scale: – Pepsi Co enjoys considerable access to the main source of raw materials, farmers producing pulses, wheat and rice because of the company’s social commitment.
- Product offerings of Pepsi Co are diversified. With Twisties they want to foray in Biscuit and Savory Crackers segment. Even they do not have any sweet offerings in their product portfolio. (Sparks et al, 2008).
- Improper segmentation: – For Twisties, Pepsi Co is targeting especially the young Australian women. By doing this they are narrowing their segment. They should identify other segments too, with more potential than the present one.
- Cultural resistance: – Australian consumers’ especially old people still have a strong bias towards home made snacks foods. Overcoming this perception is a big challenge.
- Pricing: Twisties has been priced higher than other similar brands in the market.
- Low awareness – This is a big problem area. Many people are not aware about new products available. Also there is very little awareness about uniqueness of the product (Twisties)
- Expected huge growth of food division domestically and internationally. Urbanization and Australia’s growing youth population provides Pepsi Co with a huge avenue to create a niche for its new product.
- Focus on most important customer trend “convenience”: – There is a growing class of people who are always on-the-move, are not staying at home or college goers. Pepsi Co can project Twisties among them as something very convenient and healthy snack (As it is not fried but baked).
- Positioning opportunities: – There is no brand in the in the snack and savory crackers market today that offers wheat and lentil based baked snack. So Pepsi Co should position it as something unique.
- Portfolio Transformation: Launching of the Twisties is not only Pepsi Co’s attempt to capitalize on the growing salty snacks but it is also a part of the portfolio transformation strategy of the company.
- Maturity of the market: While there are avenues of growth in the snack segment, this segment is already preoccupied by 300 big and small players.
- Popularity of Substitutes: Twisties has to grapple with popularity of other snacks in the confectionary market.
- Threat of competitors: Domestic brands are established names in the Food business in Australia. Pepsi Co with this product has to compete with them who rule the market and have great customer loyalty.
- Brunt of being big: As Pepsi Co is quite big in size (both volume and value), the company will demand a varied marketing research programs subjected to social, cultural, economic, political and governmental constraints.
The segmentation scheme for the biscuit consumers has been done in various categories. The different segmentation categories used are:
Region wise: North, south, west, east, central, north east.
Category: Tier I, Tier II cities in Australia.
Age: 6-11, 12-19, 20-34, 35-50, >50
Gender: Men and Women.
Income: High income, upper middle, middle, lower middle
Features: Taste, value for money, calorie content
Attitudes to social change: Conservatives; up-market, college/office going youth seeking change; fun-seeking individuals, low self-control
Occasions: Regular use, Special occasions like parties, birthdays, housewarming etc.
User status: Non-user, ex-user, potential user, first-time user, regular user
Usage rate: Heavy, medium, light, occasional consumption
Loyalty status: Hardcore loyalist, split loyals, shifting loyals and switchers.
Readiness stage: Unaware, aware, interested, intending to buy
Attitude towards product: Positive, Indifferent, Negative
Product classification for biscuits
Crackers – (Twisties falls under this category)
Milk & Others
Market classification for biscuits
The market classification for Twisties could be anytime snacks, Energy source, Treat (guests), Self-indulgence
The biggest challenge to the biscuits market is posed by healthy eating. The need for consumers to cut back on higher-fat, higher-calorie foods, as well as a focus on other aspects, such as sugar and salt levels, point a spotlight on this market. The savoury biscuit market has enjoyed a revival as new manufacturers enter the category with products that are perceived as healthy and suitable for snacking. Snack popularity peaks among 30-44-year-olds, but in general has a much younger age bias than traditional savoury biscuits, which tends to be favoured by women aged 45+. (Urban, Hauser & Urban, 1993).
We recommend that the marketing communication should be primarily directed towards women aged between 18-45 who are health conscious, yet still enjoy consuming snacks. The current target market should comprise of the urban part of the city and fall in the middle to upper middle income bracket.
The psychographics for the target audience are the desire to be healthy and fit yet have a difficult time in completely eliminating their indulgence in snacks and other unhealthy food. They probably have a pattern of low self-control in regards to what food they consume. The target market will purchase the new product for themselves and possibly their family. The behavioural pattern includes white-knuckling through their diet which eventually results in a binge of high fat foods accompanied by a feeling of guilt for losing self-control. This product requires low involvement decision making because it is not a large purchase. Hence, it may give the target consumers a food they can indulge in without the feeling of guilt afterwards. More than likely, our target market will eat only one serving which is just enough to give them their “fix” and satisfy their cravings.
As a result of increasing popularity of snacks and other junk food among school and college-going youth, this group can be targeted as the secondary market for Twisties giving them a healthier option to snack on.
Based on market research, healthy eating has been found to be a key factor in the food market as a whole. The positioning of Twisties should address the growing consumer focus on wellness and ingredient.
It is a healthy snack since it is baked and has the following Ingredients: Wheat flour, Vegetable oil, Sugar , Milk Solids, Spices (Chilli powder, Pepper, Fenugreek, Garlic & Onion powder, Cumin, Clove, Capsicum, Cinnamon, Ginger & Coriander Powder), Leavening agents, Salt, Emulsifiers & Stabilisers, Wheat Fibres’ and Dough Conditioner. It also has necessary enzymes and Acidity Regulators. It is a baked product and contains no artificial flavours or colours and has zero transfat. Twisties is a step in PepsiCo’s journey of portfolio transformation towards providing healthier and tasty snacking options in line with the local consumers’ needs. Besides being a healthy food with ingredients like wheat and pulses, PepsiCo is also positioning Twisties as a baked cracker in the category between biscuits and salty snacks.
The company should focus on positioning Twisties as a completely new product category in the Australian market with the unique combination of authentic flavours with wheat and pulses.”
To conduct the market research, an online questionnaire was created to which around 200 people responded. The respondents were asked a few questions, the questionnaire of which is provided in the annexure. The findings of the market research are as follows:
- Firstly, when asked about the snack that they prefer the most, 80 people (40%) of the respondents said that they preferred chips, followed by crackers at 65 (32.5%), Biscuits (Salty) at 21% , Biscuits (Sweet) at 14.5% and others just 2%. This shows that people prefer chips and crackers over biscuit which is a good sign for Twisties as it is trying to create a new baked savoury cracker segment.
- Secondly, when asked after primary factor for purchase of any snack, 45 % of the respondents i.e. (90 people) said taste was their main factor for purchase of a snack followed by brand, cost and impulse at 20%, 15% and 9% respectively. Only 7% said they considered the nutritional value of the snack whereas 4% said they considered other factors while primarily purchasing any snacks.
- The third question posed to the respondents was the type of biscuits that they would prefer. Here no particular biscuit type emerged as the clear favourite with 55 people (27.5%) saying they would like to go for cream biscuits. Another 48 people opted for cream biscuits, 44 for crackers, 40 for Glucose and 13 for others.
- The fourth question gauged the respondent’s motivating reason for purchase of biscuit. The results that came out were as follows: 43% of respondents said that the motivating reason for their purchase of biscuit was that it could be had as anytime snack. 60 respondents (30%) said because it complemented the tea, they purchased biscuits. 15 % said the motivating factor was self indulgence and 7.5% said biscuit being an energy source, motivated them to purchase it. The figure for the others stood at 4.5%
- The next question dealt with purchase decision maker of the product. As expected, 80% of the respondents said the purchase decision was made entirely by them. Only 10% said the purchase decision was made along with family members jointly. 7.5% of the respondents said they considered the shopkeeper’s suggestion while purchasing the product if they had no clue about the product or were purchasing it for the first time. Only 5 respondents (2.5%) said the purchase decision was taken by others (not mentioned in the options)
- Lastly, the respondents were asked as to when they make the purchase decision. 95 respondents said they made the purchase decision on the spot which shows that consumers may be vulnerable and choose a product based on impulse. But, at the same time 80 other respondents said they decided to purchase a product beforehand. Only 20 people said they remained indifferent. (Kelly et al, 2008).
Features, Design and Quality
Twisties are a baked snack made with lentils and wheat. It borrows ingredients and textures from biscuits and flavors from other salt based products.
Twisties has no artificial flavors or colors and zero trans fat making it a healthy snack option. It has a circularly triangular look thereby differentiating from other biscuits or snacks which are available in circular or rectangular shape.
Twisties comes in attractive packaging with packages in vibrant colors such as orange, yellow and white and splashes of green. For a product like a snack or biscuits to sell attractive packaging is essential as many times it is seen that consumers may buy the product on impulse and the one which catches their eyesight instantly is purchased.
Twisties has been launched in packs of 60 grams each and the introductory price has been kept at AUD 5 and the actual price is AUD 4. Twisties price may not be an advantage as its competitors charge much lower prices. For Twisties to be sold in the market the customers would have to be convinced of the good quality of Twisties’ product and the high prices would have to be justified.
As mentioned earlier, Twisties is targeted at young adults in the 30 plus category (especially women), who like to munch on snacks and at the same time are health conscious.
The marketing communications and promotion efforts would therefore be directed towards young adult women in particular and all the other consumers in general. The 360 degree marketing campaign would involve mass media and extensive ground level activation at Point of Sale (PoS) around large residential areas. An advertisement budget of AUD 5 Million has been earmarked by the company to penetrate in the market. Since, the competition in the market is very intensive, Twisties would have to be aggressive in its product advertisements and marketing. (Graham, 2008).
Pepsi Co has a good distributor channel to market and sell its product and Twisties can take the advantage of the same. The company has the option of using the traditional channel of distributors, wholesalers and retailers as well as alternative channels which include direct selling. Twisties will be introduced in three phases across the country. (Doyle, 2000).
- Phase I: It would include marketing in the top 10 cities in Australia namely Sydney, Melbourne, Canberra etc., with use of modern retail chains
- Phase II: It would include the next 20 Tier 1 cities.
- Phase III: The third phase would cover 70 tier 2 and 3 cities.
Since Pepsi Co’s products are found across all the market segments, it would not be difficult for Twisties to penetrate in the urban markets as well as the rural markets because of good distribution network that Pepsi Co has.
The biggest challenge that Twisties would face, is to compete with these small homemade savoury snacks and shift the consumer choice from these products to Twisties as their choice for snacks. Twisties may have to focus more on direct selling to the consumers so as to gain a larger share of the market. (Leonard‐Barton, 1992).
Manner of Implementation
Twisties should be introduced in the market in a phased manner. This strategy has been chosen after evaluating all other options and after considering the vast consumer survey which was done by the Twisties team. The main advantages of going in phased manner are
- Twisties marketing team can get the actual market reaction towards the product which is slated to capture good part of Australian snacks market with a focused approach.
- Any fault in the campaign can be restricted to a small level and can be rectified for the campaign at larger level.
In first phase the product was launched in 10 major metros in Australia. This phase was continued for 2 months. During first phase, no endorsement was done of any celebrity. This was due to the fact that the marketing team intended to learn the basic reaction to the product and to protect itself from any possible threat to its image, in case the product gives poor results. (Hiebing & Cooper, 2000).
In the second phase, the product is being launched in 20 more cities. Other than this , the company has endorsed famous models and celebrities as the brand ambassadors of Twisties.
In this phase the product will be taken to a greater mass with the product to be launched in 70 more Tier II and Tier III cities. Total Advertising Budget- AUD 5 Million has been allotted for the advertising campaign of Twisties
The snack market after the launch of Twisties will be totally revolutionized as this product is the first of its kind. Customer and people in Australia have never before tasted such a snack that is going to be launched in the Australian market. Due to the hectic and unforgiving lifestyles of people these days it is essential that people should have healthy food habits. Other competitive biscuits have large sugar content and are fried as well. The baked biscuits will thus offer a healthy snack option to the people in Australia. The market implementation will happen in a phased manner so that any glitches can be improved before the next phase launch. (Delforce at al 2005).
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Kelly, B., Bochynska, K., Kornman, K., & Chapman, K. 2008. Internet food marketing on popular children’s websites and food product websites in Australia. Public health nutrition, 11(11), 1180-1187.’
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