Hardbite Chips Langara College School of Management MARK 1115 Introduction to Marketing D. Hill 23 November 2009 Executive Summary This report provides an analysis of Hardbite Chips and the Snack Food Industry and offers recommendations for Hardbite Chips to develop an effective marketing plan. Hardbite Chips is an environmentally sustainable business that provides healthy, good-tasting, and quality potato chips. The target market we have selected for Hardbite Chips is health conscious consumers, particularly those with children.
It is our belief that the consumers will be attracted by the healthy features of our product and will be willing to pay slightly more for these benefits. It is our objective to significantly increase awareness of our product among these consumers. As our funds for promotional activities are limited and our target market can be hard to reach our marketing mix focuses heavily on sales promotion. Advertising and public relations will help us promote the features of our product and position it as a high quality brand in the minds of consumers. We hope to use personal selling to increase the number of retailers that carry our product.
We believe Hardbite Chips has the ability to obtain satisfactory profits and grow the business. This will allow the company to better compete against the numerous competitors in the industry and increase sales. As the business grows, more funds can be spent on promotional activities enabling the company to expand its target market and appeal to more retailers. Table of Contents Current Marketing Strategy…. ……………………………………………………………………………….. 1 Company Mission Statement.. ……………………………………………………………………………….. 1 Internal and External Analysis PEST Analysis……………………………………………………………………………………………… 2 SWOT Analysis…………. …………………………………………………………………………….. 3 Competitive Analysis……………………………………………………………………………………………… 4 Target Market……………………………………………………………………………………………………….. 5 Marketing Objectives and Issues……………………………………………………………………………. 6 Marketing Research………………………………………………………………………………………………. 7 Product Strategy……………………………………………………………………………………………………. 8 Pricing Strategy……………………………………………………………………………………………………… 9 Distribution Strategy……………………………………………………………………………………………… 10 Integrated Marketing Strategy………………………………………………………………………………. 10 Conclusion……………………………………………………………………………………………………………… 12

Appendix I………………………………………………………………………………………………………………. 13 Endnotes…………………………………………………………………………………………………………………. 14 Bibliography…………………………………………………………………………………………………………… 15 Current Marketing Situation The Canadian snack food market presents a lucrative opportunity for new and existing companies in the industry. In 2008, Canadians ate an average of 3. 2 kg of potato chips. 1 Food stores capture the majority of snack food purchases in 2001 at approximately 67% and supermarkets accounted for approximately two-thirds of this. Convenience stores took the third largest share of the market at around 13%.
Mass merchandisers and wholesale club stores have increased their market share in recent years, passing convenience stores, as more of these types of locations have opened in Canada. However, this change has not yet significantly affected food stores. 2 In 2007, Canadian retail grocery stores sold over $1. 8 billion worth of snack food, with potato chips accounting for approximately $550 million. This continues the recent trend of 6% growth in annual retail sales of potato chips. 3 This growth has encouraged companies to expand into niche markets by offering unique flavours and organic products.
The Canadian snack food industry has seen an increase in new entrants in recent years despite the presence of big corporations. These big corporations have economies of scale which give them a significant competitive advantage in terms of cost. Furthermore, these corporations benefit from massive advertising budgets that allow them to hold on to their majority market share. Frito-Lays, a division of PepsiCo. , is the leader in the Canadian snack food industry with multiple SBUs that offer many different products, including different varieties of chips in various flavours. However, the opportunity exists for smaller companies to come in nd target niche markets. In fact, “in 2006, 106 Canadian snack food manufactures shipped $1. 6 billion of product”. 4 However, big corporations are beginning to see the potential of these markets and are beginning to expand into them. A good example of this is Frito-Lays and the introduction of their Wasabi flavoured chips5. Company Mission Statement Hardbite Chips is dedicated to providing our customers with a healthy, good-tasting, and quality potato chip. In doing so, we are committed to be an environmentally sustainable company with strong ties to the community. Internal and External Analysis PEST Analysis: Hardbite Chips | |Political Environment |Economical Environment | |Mandatory nutrition labeling |Economic recession | |Provincial Government policy bans junk food sales in elementary and |Tough to get capital | |high schools |People are less likely to spend money on unknown premium brands | |Social Cultural Environment |Technological Environment | |Trend away from unhealthy snacks |Equipment needed to expand production is expensive | |Potato chips blamed for contributing to obesity | | |Recent discovery of acrylamide, a possible carcinogen, found in | | |carbohydrates cooked at high temperatures | | |People looking to buy environmentally friendly products | | |Competitive Environment |Demographic Environment | |Heavy competition in industry |Many consumers more interested in environmentally friendly products | |Low brand loyalty among consumers in industry |Many people are concerned about health | |Large corporations have majority of market share | | SWOT Analysis: Hardbite Chips | |Strengths |Weaknesses | |Product is hand-cooked |Limited cash-flow makes it difficult to grow | |Potatoes are grown locally |Brand is fairly unknown | |Focus on quality |Small production facility compared to major competitors | |Unique flavours | | |Growing brand awareness | | |Sold in many health stores and on many campuses in BC.
Also sold | | |across BC in well known stores such as London Drugs, Shoppers Drug | | |Mart, Overwaitea, and IGA Marketplace locations | | |Opportunities |Threats | |Expanding market |Provincial Government policy bans junk food sales in elementary and | |Many consumers are becoming more interested in environmentally |high schools |friendly products |Larger competition may enter market | |Many consumers are concerned about health |Economic recession | |Opportunity to target niche ethnic markets |Tough to get capital | | |People are less likely to spend money on unknown premium brands | | |Low brand loyalty among consumers in industry | Competitive Analysis We wish to position Hardbite Chips as a top quality potato chip brand in the minds of consumers. It is our desire to utilize the frequent consumer assumption that quality and price are related. [pic] We believe Hardbite Chips has the potential to develop a niche competitive advantage. Our primary focus is on serving health conscious consumers.
Thus, our most important unique selling proposition is to focus on the healthy qualities of our product. By producing an all natural potato chip that is free of trans-fats, we believe we will appeal to health conscious consumers. Also, Hardbite Chips was an early entrant into the expanding healthy potato chip market and the company has expanded its distribution points from originally selling in health food stores. It is our belief that this has created brand recognition among the early adopters of healthy snacks. As the number of consumers purchasing healthy snacks increases, we think these early adopters will recommend the product to consumers helping the brand grow.
Furthermore, with the discovery of acrylamide, a possible carcinogen, in baked and fried carbohydrates cooked at high temperatures, including many of the existing potato chips on the market, we have an advantage over many of our competitors as our product is not cooked at high enough temperatures to produce acrylamide. Hardbite Chips also uses unique ingredients such as Himalayan salt which provides more nutrients while keeping sodium levels low. This can be particularly appealing to health conscious consumers, especially to those with high blood pressure. Another unique selling proposition Hardbite Chips can use is to appeal to environmentally conscious consumers. Our company is committed to be an environmentally friendly company.
Our potatoes and spices are supplied by local growers and our packaging is supplied by a local manufacturer. By highlighting these facts we believe we can convince environmentally conscious consumers that our company operates with similar values. As the “green” movement grows larger, we think we are situated to capture a large portion of this growing market. Another advertising appeal that we could use as a unique selling proposition is our unique flavours which may appeal to particular ethnic groups. While we attempt to make flavours that we think will appeal to everyone, we realize that certain ethnic groups may find some of our flavours appealing as they are familiar with them.
For instance, our creamy coconut and curry flavoured chips may have a special appeal to Thai people as coconut milk is often added to curry in many Thai recipes. Although we currently offer only a few unique flavours, it is our desire to develop more. By looking for inspiration in traditional ethnic foods we believe we can find flavours that appeal to Canada’s diverse ethnic communities as well as more traditional consumers of potato chips. Target Market In examining the potato chip market, we have decided to segment the market based on a psychographic segmentation. Our key considerations are the consumers’ motives, personality, lifestyle, and geodemographics.
Since, there is normally just one person who does the grocery shopping for an entire family, most likely a parent, it is our desire to target this person. In particular, we are interested in targeting working parents who are raising children in an urban environment. In terms of personality and lifestyle we would segment these people by looking at the type and amount of activities they do. We are looking to target people who have full, active schedules and are looking for healthy food options but do not have time to compare products on their own. For motives, we are looking for parents that are concerned about providing healthy snacks their children will actually eat.
By using geodemographics, we will be able to slightly modify our advertisements for certain ethnic neighbourhoods. We have chosen to target this segment because our product is capable of meeting their needs and should easily appeal to them. Also, as this segment purchases most of the food for their family, our product will be exposed to their children as well. This will help grow brand recognition and will help increase the sales of our product among other segments. The primary challenge we foresee in targeting this segment of the market is our ability to find an appropriate and effective media to communicate to them. These people balance work and family obligations which can take up a substantial amount of their time.
For a convenience product such as snack food, these people may not pay attention to ads for different brands. Also, these people often have other things on their mind so they may be distracted when presented with our ads. Marketing Objectives and Issues Our objective is to increase consumer awareness of our product by 30% in the next year. Since our product is still fairly unknown and the company has been focussed on expanding production facilities, we believe now is a good time to increase promotional expenditures and raise awareness of our product. We are most concerned with increasing the awareness of our product benefits and decreasing customer resistance to buying our product.
To measure the success of our objective, we will use monthly surveys to determine the approximate number of consumers aware of our product. When increasing awareness of our product, we wish to focus on the benefits that our product offers to consumers. These benefits would include the healthy aspects and quality of our potato chips. We believe consumers will perceive our all-natural, hand-cooked products as highly compatible with their lifestyles. Thus, as consumers become aware of our product, sales should increase. Also, by increasing awareness of our product we hope to decrease consumer resistance to buying our product. In recent years, potato chips have come under attack for contributing to obesity and related health problems.
Additionally, carbohydrates cooked at high temperatures have been found to contain acrylamide, a possible carcinogen. Our product addresses these concerns and by informing consumers of this, we believe they will decide to choose our product over our competitors leading to an increase in our sales. In order to measure the effectiveness of our strategy, it is important to receive continuous feedback from consumers. Therefore we will survey consumers throughout the year to measure changes in awareness of our product and the change in the number of people buying our product. We will also ask consumers how they view our product compared to those offered by other snack food manufacturers and how they perceive our product in terms of health.
Challenges in meeting our marketing objectives will include selecting an effective channel through which to educate consumers about our product. Also, as more companies are entering into the market we will be competing with them to make customers aware of our products. Another challenge that may present itself is the large companies in the industry may also become aware of our product and choose to emulate some characteristics of our product reducing our competitive advantage and making it harder to convince consumers are products are differentiated enough to be material. To overcome these challenges we will attempt to communicate with consumers as close as possible to the point of purchase.
Our integrated marketing communication strategy will be the key to providing us the opportunity to meet our marketing objectives. Marketing Research Our research thus far has only included secondary sources of information. However, this information has given us a basic understanding of the market, changes occurring in the market, and our competitors in the industry. Statistics Canada has provided us with detailed information on the total sales of snack food in Canada as well as how large a portion potato chips make up of these sales. Agriculture and Agri-Food Canada and the USDA’s Foreign Agriculture Services have helped us to determine where the majority of snack foods are purchased by consumers in Canada.
Industry Canada and Agriculture and Agri-Food Canada have also supplied us with detailed information about the size of the industry as well as general performance information for the industry. Despite the high cost of primary data, it is our belief that it would benefit the company to conduct such research. This would allow us to better define the exact size and distribution of our target market, the growth of this segment, and the rate at which this segment’s beliefs and attitudes are changing. Primary data will also allow us to develop new flavours that are customers would enjoy. To gather this information we would recommend the company use internet surveys with screened internet samples and to design the questionnaire to provide data on all of these areas so as to keep costs as minimal as possible.
We have chosen screened internet samples because they can provide real-time reports and can be personalized for individual respondents. Also, since the segment we have chosen to target is quite active and busy, internet sampling will allow us to reach these consumers and hopefully receive a high rate of responses. Additionally, primary data is needed to assess the company’s ability to meet the marketing objectives. For this we would recommend the company conduct internet surveys with recruited internet samples each month. This will allow us to determine the effectiveness of our promotions. We have included a sample survey that the company may use for this purpose (see Appendix I). We have chosen the internet sample method because of its relatively low cost.
However, as the company grows, we would recommend the use of focus groups to help develop and test new flavours of chips and to help determine the most effective way of promoting the product to our target market. Although they are more expensive, focus groups allow us to get more detailed information from consumers which we can then use to better serve our customers. Product Strategy Potato chips are at the maturity stage in the product life cycle. Many of our competitors have been in the business longer than us and have established a hold over some share of the market. Many new entrants to the industry, including Hardbite Chips, target niche markets that have been underserved by larger, more established companies. Our product is aimed at satisfying the needs of health conscious consumers.
To meet these needs, our product provides consumers with many healthy features not included with other potato chips. By making our potato chips trans-fat and cholesterol free we provide a product that consumers can snack on without having to worry about high cholesterol and its detrimental effects on health. We also use Himalayan salt instead of table salt on our potato chips. Himalayan salt provides “84 minerals in the same ratio as healthy blood plasma” and is a lower sodium alternative to table salt. 6 We believe this will be particularly appealing to health conscious consumers, especially those with high blood pressure. Another health benefit our potato chips have over those of most others potato chips, is our unique cooking process.
During this process, temperatures do not get high enough to create acrylamide in our potato chips. Since acrylamide is has been found to be a possible carcinogen, we believe customers will see this as a significant benefit. Our product is augmented by offering our potato chips in different and unique flavours. Also, information about the healthy qualities of our product can be found on the packaging. We would like to further augment the product by increasing the number of flavours available and providing a guarantee of consumer satisfaction with our product. Our long term goal is to position the Hardbite Chips as a top quality brand in the minds of consumers. Pricing Strategy
Our pricing objective is satisfactory profits. This will enable us to compete with our competitors and continue to grow our production levels. Our competitors in the industry are numerous and many have developed economies of scale giving them the advantage of lower costs. Therefore, to achieve our objective we want to position our product at a slightly higher price than our competitors. We want to utilize the assumption of uncertain consumers that price and quality are related. However, we must be careful not to price our product to high as the market for potato chips is elastic. It is important that the company has enough sales to cover our fixed costs and provide satisfactory profits.
As we our selling a product in the maturity stage of the product lifestyle, the distribution channels we use is important to the company. Thus, it is important that we price our product at a level that appeals to wholesalers and retailers. Our pricing strategy is to focus on the market for healthy and high quality potato chips. We believe this will allow us to price our product at a price slightly above our competitors. In order to encourage customers to try our product we will offer coupons. This will allow us stimulate demand by offering a lower price temporarily. We can then discontinue the rebate once people are aware of our product. Distribution Strategy
Hardbite Chips currently distributes the potato chips it produces through numerous distributors. This strategy has helped the brand grow from being sold in mainly in health stores to being sold on many campuses across BC in addition to well known stores such as London Drugs, Shoppers Drug Mart, Overwaitea, and IGA Marketplace locations. This has allowed the company to increase demand for its products without having its own sales force. Given the proportion of snack food sales in retail grocery stores, we believe it is important that we communicate directly to these retailers to encourage them to carry our brand. We also think selling our product in convenience tores will help increase brand awareness. Retailers that we feel would immensely help increase our sales include Safeway, The Real Canadian Superstore, and 7-11. Getting our product sold in vending machines would also help increase brand awareness. Despite a provincial ban on the sales of junk food in elementary and high schools, vending machines are found in many high traffic areas. As our packaging has information on the health benefits of our product, health conscious consumers may be more inclined to buy our product given the alternatives. IMC Strategy Our primary communication objective is to convince consumers our product is a healthy choice for their snacking needs.
We would also like to communicate our commitment to the environment and our community. We feel that these messages can complement each other and work to position the company as caring and responsible in the minds of consumers. Given the size of our company and the limited amount of funds we have for promotion, we cannot afford to spend the amount we would like to on advertising. Thus, to reach our target market, we think we should advertise in magazines devoted to healthy lifestyles. The reason we have chosen magazines is they are a relativity low cost advertising option, they have a long advertising life and they have a high pass-along rate.
We believe public relations may be the most cost effective way to increase customer awareness of our product. Sponsoring community activities, like a community garden, and co-sponsoring events like eco-challenge, which receives national television coverage, will help establish us as a health conscious and environmentally friendly company. Sponsoring activities like this will also likely result in positive media coverage for the company. This media coverage will inform consumers of our product that we were unable to reach through our advertising. Sales promotion provides many appealing options and offers the easiest way to reach our target market. For these reason it will be the largest portion of our target segment.
Since potato chips are a convenience product, consumers spend a little time deciding which product to buy and they are not likely to remember advertising for a particular potato chip brand. Therefore, a point of purchase display may significantly help sway a consumer in favour of our product. This allows us to be the last promotional item they see before they make their purchase. Providing samples is another sale promotion technique that we think would work well for our product. By being able to sample our product before purchasing it, consumers will be less put off by our slightly higher price. As we discussed in our pricing strategy, we would also like to use coupons to entice customers to buy our product. By temporarily reducing our price we believe many more consumers will be willing to try our product.
As we discussed in our distribution strategy, we would like to use personal selling to encourage more retailers to carry our product. By doing this together with our other promotional elements we hope to create an effective mix of push and pull strategies that will convince more retailers to carry our product. As the company grows and more funds can be spent on promotional activities we would like to increase the amount of advertising done. We would like to use different forms of media to reach our target market. Also, as consumer awareness of our brand grows and we increase our product offerings, we would like to expand our target market and create slightly different marketing campaigns to target certain ethnic groups. Conclusion
Despite heavy competition in the snack food industry we think Hardbite Chips can produce satisfactory profits and continue to grow. Given that potato chips are in the maturity stage of the product life cycle, increasing the number of retailers that sell our product is an important part of our strategy. By increasing the number of retailers who sell our product, we will make it easier for our target market to purchase our product. We believe by increasing awareness of our product we can capture a large portion of health conscious consumers. By using our promotion mix to inform consumers of the benefits and features of our product, we can convince members of our target market segment that our brand is of high quality.
Although our price is slightly higher than most of our competitors, we believe consumers will perceive our product as worth the extra cost. Appendix I Sample Survey |1. List all brands of potato chips that you are aware of. | |______________________________________________________________________________ | |______________________________________________________________________________ | |______________________________________________________________________________ | |2.
Are you aware of the brand Hardbite Chips? (if your answer is no, skip to question 4) | |Yes ___ No___ | |3. What product features of Hardbite Chips are you aware of? | |______________________________________________________________________________ | |______________________________________________________________________________ | |4. On average, how often do you buy potato chips? |More than once a week ___ | |Once a week___ | |Once a month___ | |Once every 2-3 months___ | Endnotes 1. Statistics Canada, Canada Food Stats: Analysis, http://www. statcan. gc. ca/ads-annonces/23f0001x/hl-fs-eng. htm 2. L. B. C. Consulting, Canada: Market Development Reports: Snack Food Market in Canada, Global Agriculture Information Network Report, United States Department of Agriculture (Ottawa, Canada: Foreign Agriculture Services, 2003), 6. http://www. fas. usda. gov/gainfiles/200301/145785163. pdf 3. Agriculture and Agri-Food Canada, Retail Sales in Canadian Grocery Stores, 2007, http://www. ats-sea. agr. gc. ca/can/4714-eng. htm
Agriculture and Agri-Food Canada, Retail Sales in Canadian Grocery Stores, 2006, http://www. ats-sea. agr. gc. ca/can/4715-eng. htm 4. Agriculture and Agri-Food Canada, Canada’s Snack Food Industry, http://ats-sea. agr. gc. ca/supply/3320_e. htm 5. The Province, “From pasta to potato chips,” May 21, 2006, Canadian Newstand, ProQuest 6. Sarah Merson, “SALT — THE PROS AND THE CONS,” Foods Matter (UK), March 2009, 9, EBSCOhost Bibliography Agriculture and Agri-Food Canada. Canada’s Snack Food Industry. http://ats-sea. agr. gc. ca/supply/3320_e. htm. Agriculture and Agri-Food Canada. Retail Sales in Canadian Grocery Stores, 2006. http://www. ats-sea. agr. gc. ca/can/4715-eng. htm.

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