MKT501 Products and Managing Product Portfolio Help

Introduction

The product portfolio analysis helps the organization to manage more than one product in their organization. Most organization sales number of products and managing product portfolio help them to ensure all products should be in a different phase of their life cycle. Analysis of elements of organization’s product mix is performed to identify the optimum allocation of its resources. Internal and external marketing environment analysis helps the organization to understand its internal and external capabilities which help them to compete in a market and fulfil customer expectations. The marketing mix is one of the tools which helps the organization to achieve its goal by marketing its products to right target audience. This paper discusses the product portfolio and application of marketing for Australian Brand Arnott’s. This brand introduced a variety of products and more than a food enterprise it isa piece of history and a national icon for Australians(Akar & Topçu, 2011).

Analysis of Target Audience

The target market analysis is performed by an organization to analyse its customer base, to analyse its loyal customers andthe further company builds marketing strategies according to it. In the competitive business environment and the business like snacks and biscuits, it’s crucial to gain loyal customer base because customers are likely to switch their choices with new substitutes in the market. But, Arnott’s is an old and very trusted brand, and hence, this threat is somewhat law in Arnott’s case. However, the company constantly searches for innovations in its flavours and growing its business in other fields like snacks and crackers.

The biscuits and snake organization’s main customer base is small children, they like and very fond of snacks and chips and sweets. The preferable target audience of the company is children between 6 to 12 years old. The marketing department of the company has different strategies to attract this target audience towards the brand. They focuses on introducing new flavours with attractive packaging, the sweet and snacks are packed witha different kind of box design, due to its good designed boxes with different flavoured biscuits children get attracted towards every Arnott’s product, and they are willing to taste every flavour of every product. This strategy works for children,and it is plus point for the company. It is important to collect data on company’s strategies and this data help company to build the promotional and marketing strategies. The potential target audience of the company is children,and hence, it’s significant to have a good, innovative and creative advertisement to influence this target audience(Hankinson, 2012).

However, company marketing team knows that children have a lot of choices and substitutes for every product is available, and hence, the company also focuses on different kind of advertisement techniques and innovative advertisement ideas to grab the attention of this most vital target audience. Arnott’s not just focused on grabbing the attention of children and selling their products, but it also concernedabout health and hence, manufacturing team has reduced level of Trans Fatty Acids from their biscuits, and it has been replaced by partially hydrogenated animal fats with vegetable oil (Sevin, 2014). This strategy helps the company to provide healthy and tasty food and beverage to children.

Another important target audience of the company is ayoung male. Not only children but young male and teenagers are also big customer base of biscuits and snakes. These target audience is most probably living away from their families andwants the tasty, healthy and quick substitute to reduce their hunger. The advertisement targeting this audiencereflects their life facing the truth. They make an environment which targets the reason behind guys’ dream of stopping their track and work leaving etc. things. The advertisement targeting young male indicate or advise them to reduce their stress and daily workload by going back to their relaxing childhood, and it will happen while they try Arnott’s  product

Brand Position in Market

The brands working under the name of Arnott’s are Tim Tam, Good Time, NyamNyam and Jatz. These are the brands having an extension from Arnott’s and serving to Australian customers. Arnott’s is one of the oldest brands in the country, and with these extensions, it has achieved 60% share in the Australian market and has become the first choice of the customer in the country(Khan, 2014).

The different brands provide different flavoured products. For example, Tim Tam and Tiny Teddy extension of Arnott’s provide savoury and sweet flavours of Arnott’s. These products of the company also have good demand in the foreign country, and hence, they are exported across the world, and exportation amount is increasing over the years. The company operates its business in 40 countries, and the countries in which products are shipped are the USA, New Zealand, the UK and Indonesia, etc.(Erdo?mu? & Cicek, 2012). Campbell’s has shown interest towards Arnott’s brand and aligned strategy of expanding business in Asian market which is a huge and potential market for the company. The market position of the brand has become stronger under Campbell because the brand entered into snack foods market and it was started in 1996, and in the same year, it has purchased one company, Kettle Chip in AUD 20 million. This alliance has started a new era for the brand because through this alliance company entered in the fields other than biscuits like snacks, crackers, etc.

Marketing Models to be used

 

BCG matrix:

 

This is the framework used to identify brand or product portfolio and position of a company in target market. To investigate the product portfolio this marketing model is used(Armstrong, Adam, Denize, & Kotler, 2014). This enables market researcher to identify the position of the product in competitive market environment on basis of its market share, cash generation and use of cash in market. According to this BCG matrix increase in the market share of a product can help company to achieve larger cash(Hankinson, 2012). This model also makes assumption which states that increase in product’s market share can help organization to spend more cash on its marketing activities. Increase in the marketing activities of the product result in achieving competitive advantage over its competitors. The four quadrants used in the BCG matrix to analyse the product performance is given in the following figur

 

Application of BCG Matrix on Walt Disney Company:

Cash Cows:

This is the element which indicates the high market share of a product but with shows low growth rate of the company. Walt Disney Company’s media network is considered as cash cows because of this network is earning profit and also has good profit margin but Media network has provided 1% profit margin in last one year.

Stars:

It indicates high growth in the market share and growth rate of the company is also high. Parks and Resorts of the company can be considered as Stars because they gained second highest market share along with the second highest growth producing branch for Walt Disney. This Parks and resort experienced 9% growth in a year.

Question Marks:

This element indicates product having low market share but high growth rate. Video game consoles and interactive studio are under the quadrant of question marks. This sector has been experienced 26% growth but the earning made is lower than other branches. It is continuously growing branch of Walt Disney.

 

 Dogs:

This represents product gaining low shares in market with low growth rate. In case of Walt Disney company, the consumer product come under Dogs category because it has gained lowest market share with lowest growth rate, 9%.

 

 This is widely used marketing model which illustrates the product portfolio management of an organization. Large organizations in any industry are conscious about their decisions made for an investment and they also try to bring improvement in the industry. Large organizations have large product range for which they have to align marketing strategies.  To enter in new market or to introduce new product range within organization one approach is considered before taking decision about investment and that is called as GE McKinsey model.This marketing model helps multi business organization to prioritize their investments according to their business units which further help to enhance business. This GE matrix helps in developing framework which further helps in evaluating the brand portfolio of an organization which develops the strategic priorities and implicate the investmentdone by the company

 

GE model used to screen Marks & Spencer Company:

This matrix is used to investigate product portfolio of strategic business unit (SBU)of Marks & Spencer organization. It has similar functioning with BCG grid which is used to investigate and demonstrate a portfolio of products and services of an organization. Industry attractiveness of the company is hence identified by market growth rate, market size, industry rivalry and macroeconomic factors which also been evaluated in PEST analysis. The strength of company’s business unit is determined by its market share, brand equity and profit earned by company.

M&S Company has three strategic business unit in GE matrix where financial services has a high market growth and high industry rivalry, but the company’s strength lies in its market share and profit margin which turn between medium or low.

Clothing product of M&S has high attractiveness within industry but its market share is 11% and it also achieve low profit margin as compare to its rivals.

Food products has medium industry attractiveness but the market share earned by this product in only 3.2%.

The other factors like market share, brand equity and distribution channels are classified from medium to low but brand equity is high.

Marketing Mix elements of Arnott’s

 

Marketing mix elements help business to form marketing strategies by determining the targeted group of customers. The study of marketing mix elements ensures that the company is marketing the right products to the right group of people with affordable prices and do they have a right place for marketing or not. These elements are answered and evaluated by marketing mix which also helps the company to have balanced portfolio

Product

A first significant factor to determine the competitive advantage of Arnott’s achieved by its products. The products provided by the company should be superior or different in taste by its competitors because there is various brand providing same flavours and products like chocolates, vanilla cookies, coconut rings and biscuit(Babin & Zikmund, 2015). The range of products provided under the brand name of Arnott’s are Cruskits- rectangular crisp snacks, Lemon Crisps, Jaffa cake, YoYo biscuit, Tim Tam chocolate biscuits, Honey Jumbles, Salada, etc.

Arnott’s has a variety of product ranges and hence, balancing its product portfolio is a crucial task for the company. The company performs continuous innovation in products like reducing Trans Fatty Acids which is theunique competitive strategy adopted by Arnott and not performed by any of its competitors.Arnott’s also have built Green Team to improve waste management. The company uses recycle packaging, and since 2010, the company started use of recycling packing where 95% of recycling material has been used.

The company provides different categories of biscuits on different flavourslike plain, chocolate, cream, vanilla;fruit flavours biscuits, etc. Along with this, other productsare chips, crisp, bread, snacks, crackers, salted food, Tim Tams, Jatz, Full O’ Fruit, and Mint Sliceare perennial favourites for tea time.

Price

Arnott is following basic marketing strategy which incorporates targeting of small scale audience and keep affordable prices for its product. Which means Arnott’s does not just focus on rich people. Arnott’s tries to keep this strategy for the entire brand, but main reasons behind the increase in prices of certain brands are high transportation charges, labor expenses and increased prices of raw material(Khan, 2014). The changes or alteration in these factors automatically impact the price of the products. It is suggested that company should negotiate prices of their products according to market demand and competitors product responses in the market. To budget, the product is essential to achieve competitive advantage. This will need to focus on the target audience of the product, and the budget or price should be based on it. The price should not be very low either very high because very low price arise doubt about the quality of product while veryhigh prices reduce competitive advantage(Huang & Sarigöllü, 2014).

Place

Arnott’s is well established and leading Australian based brand which is serving in the country from 146 years. One of the most popular brands in Australia serves in different countries across the world like USA, New Zealand, Indonesia, and much more. The market stands of the company in Asian market are also growing faster, and hence, one can say that the company has a good market place in the world.

Promotion

It is the most crucial as well as the significant factor in marketing strategy, and different options for advertising and promotions are tried by Arnott’s. The company performs product advertisement, sales promotions along with direct marketing and personal selling. These promotional strategies are aligned with the company’s estimated budget for promotion. Different promotional ideas are used by the company to promote its product like arranging competition of sticker collection for kids and declaring certain price.

Internal Marketing environment analysis

SWOT Analysis

Strengths:

1.      The brand name of Arnott’s is its biggest strength,and also it also has a large number of loyal customer base having hundred per centtrusts on the company.

2.      Large product range and different brands working under Arnott’s is the second largest strength of the company. The company also entered in different fields like snacks, cakes, crackers, etc., instead of just providing biscuits.

3.      The company has increased its business internationally and has become a known brand and operates its business in 40 countries including USA, UK, New Zealand, etc.

Weaknesses:

1.      People are becoming aware of their health, and hence, they are finding healthy food alternatives in snacks and biscuits.

2.      Considering to environment issue packaging of Arnotto still, do not use 100% recycling product.

3.      Low profit margin is also one of the weaknesses of the company.

Opportunities:

1.      It has a good chance in term of expanding in internal market through acquisition

2.      It can improveperformance and enhance customers by focusing on CSR and environmental sustainability policies.

Threats:

1.      Increasing competition in the target market is the biggest threat to company’s growth. The brands creating a threat for the company are Yamazaki Baking Company Ltd., Morinaga Milk Industry Company Ltd.; Nabisco Biscuit Co. and Griffin Ltd.

2.      Arnott’s is at risk due to its switch or adoption of new food and beverage patterns like snake foods.

External Marketing Environment Analysis

An organization performs analysis of its external market environment to align its marketing strategies.The external marketing environment factors having an impact on operations of Arnott’s organization is discussed(Hassan & Craft, 2012). Different factors are there which affect the marketing strategies of the company and the significant ones are economic and demographic.

Demographic Factor

This factor needs to determine the characteristics of the target audience or population of the country like the large age group, income level, and standard of living and so on. It is determined that whether there are large numbers of youngsters or a large number of aged population is under the target customers of the company(Aaker, 2012).Other things can be analysed, or information can be gathered about number majority of male, female, children or young population. What are incomes and education level of the audience and theaverage size of the family can be determined?These identification and data help to form the promotional and marketing strategies to the company. If there are a lot of children as a customer’s, the company develops advertisement to influence children.

Arnott’s also has a strategy for attracting or influencing young male,and it reflects the life facing the truth of youngsters there. The company creates such environment which targets about the reason behind guys dream of stopping their track and the things like leaving home for work or study etc.(Armstrong, Adam, Denize, & Kotler, 2014).The company’s promotional campaign, therefore, develops such environment which influences or suggest youngster relax and remember their childhood days by eating company’s creamy biscuits and snacks. Arnott’s also targets the women in the age from 25 to 40, and it also targetsahigh-class niche market with performing quality and prestige.

Economic factors

Economic factors of a country in which company is operating have an aconsiderable impact on the operations and financial performance of the company. The economic factors of Australia like GDP of the country, its inflation rate, cost of living in the country,etc. have an impact on Arnott’s operations.When these economic factors of the country are weak or not doing well, then the company have to struggle for settling the business and market in the country. One of the ways to improve the economic condition of the company is to make an alliance. The company merger with Campbell’swas a good move by Arnott’s. The Arnott’s brand and Campbell both have aligned strategy of expanding the business, and for this, they have selected the Asian market which is a huge and potential market for the company. The market position of the Arnott’s has become stronger under Campbell because the brand entered into snack foods. When a company wants to enter the new market, it always investigates these external factors in that country.

Recommendation

The company we have selected to perform product portfolio is Arnott’s. It has a number of products and various brands also working under the name of Arnott’s. Hence, the company has the agreater responsibility of making a balance between its human resource and products and cash. The marketing mix elements of the company are stable and good, but still, it needs to improve or perform changes in its marketing mix element to achieve a balanced portfolio. The recommendations provided in this sector help company to improve its marketing performance and portfolio of the company.

The sustainability campaign and activities are becoming a more competitive factor, and hence, the company has to take a step to reduce the impact on the environment(Dawes & Nenycz-Thiel, 2014). The packaging used for company’s products need to be recyclable and its possible by making them with PolytheyleneTerepathalete (PET). This strategy is already adopted by Arnott’s competitor Griffins(Baker, 2014).The company can increase the use of palm oil in their products which are good for customers’ health. The company also can concentrate on using all ingredients those are safe approved by Government and regulatory authorities. The company can expand its business by aligning strategies to enter new target market, i.e. in new countries. The company is already an international one, but it’s good for company’s growth to enhance its scope in the Asian market. Asian countries are a very potential economic market for the company. High population and growing economy help company to achieve larger profit and experience higher growth in their revenues(Wang, Kim, & Malthouse, 2016). According to this management first have to initial performance analysis of potential new market which includes potential competitors and their strategies, performance in the target market, the standard of living of people, income level and other demographic and economic factors.

Promotional strategies of Arnott’s are best suited for its products, but they lack in delivering a strong message from their advertisement. Provision of strong message in advertisement affects the brand positioning and loyalty in the customer's mind. The strategies that can be adopted bythe company include sharing the making process of products on company’s websites which will help customers to know all the things about the company, and it will help the company to achieve more loyalty and trust of the customers.

You may also refer to Marketing Management Assignment

References

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Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of marketing. Pearson Australia.

Babin, B., & Zikmund, W. (2015). Exploring marketing research. Cengage Learning.

Baker, M. (2014). Marketing strategy and management. Palgrave Macmillan.

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