1. Marketing Plan Project
“Karums”
Prof. Agnes Nairn
Prepared by Team2 (Greenwich):
Ahmed Sadawi
Faris Jafar
Francesca Mifsud
Hubertus Lorenz
Marta Uva
Roberta Rudukaite
Tagaris Cheikh Ali
HULT InternationalBusinessSchool London Campus
3. i
Table of Contents
Executive Summary..............................................................................................................................................................iii
1. Background..........................................................................................................................................................................1
a. Parent Company...........................................................................................................................................................1
b. Product............................................................................................................................................................................1
2. Secondary Market Research..........................................................................................................................................1
a. Current UK statistics....................................................................................................................................................2
b. Size, growth and trends of UK dairy product market......................................................................................2
c. Size, growth and trends of UK confectionery market......................................................................................2
d. Competition...................................................................................................................................................................3
3. Primary Research Insights..............................................................................................................................................4
a. Descriptive statistics.................................................................................................................................................4
b. Correlations ..................................................................................................................................................................4
c. K-Means Cluster Analysis & Segmentation......................................................................................................5
4. SWOT Analysis....................................................................................................................................................................5
a. Strengths.........................................................................................................................................................................5
b. Weaknesses....................................................................................................................................................................5
c. Opportunities.................................................................................................................................................................5
d. Threats.............................................................................................................................................................................6
5. Marketing Strategy...........................................................................................................................................................6
a. Customer Value.............................................................................................................................................................6
b. Positioning......................................................................................................................................................................7
c. Target market................................................................................................................................................................7
6. Marketing Mix....................................................................................................................................................................7
a. Product............................................................................................................................................................................7
b. Price..................................................................................................................................................................................8
c. Place..................................................................................................................................................................................8
d. Promotion.......................................................................................................................................................................8
7. Launch................................................................................................................................................................................10
a. Launch Material.........................................................................................................................................................10
b. Launch Budget............................................................................................................................................................10
c. Contingency plan......................................................................................................................................................10
Appendices............................................................................................................................................................................12
Bibliography..........................................................................................................................................................................21
4. ii
List of Exhibits
Exhibit 1: Eating habit trends 2008-2011 Base: Internet users aged 16+...............................................12
Exhibit 2: How UK retails sales of Fairtrade confectionery have grown (£m)......................................12
Exhibit 3: Main Competitors ........................................................................................................................................12
Exhibit 4: Price positioning compared to competitors.....................................................................................13
Exhibit 5: Questionnaire ................................................................................................................................................14
Exhibit 6: Descriptive Statistics..................................................................................................................................15
Exhibit 7: Pearson Correlation table ........................................................................................................................16
Exhibit 8: K-Means cluster analysis output...........................................................................................................16
Exhibit 9: S.W.O.T. analysis...........................................................................................................................................17
Exhibit 10: Budgets for the 5 year period ..............................................................................................................17
Exhibit 11: Karums Active campaign advertisement ........................................................................................18
Exhibit 12: Advertisement costs break down.......................................................................................................18
Exhibit 14: Karums informational advertisement..............................................................................................19
Exhibit 13: Karums advertisement targeting parents ......................................................................................19
Exhibit 16: Outdoor advertisement ..........................................................................................................................20
Exhibit 15: Karums advertisement ...........................................................................................................................20
5. iii
Executive Summary
The aim of thismarketingplanisto introduce the new product,Karums,intothe UK market.The idea
of ourbusinessistooffera healthy,guilt-free,tastysnackforthe childrenandparentssegments.The
followingpaperincludesanintroductiontothe companyandthe productin question.The product is
new for this market and has no direct competitors, whereas we base our initial assumption that
there is a profitable niche in the dairy market. Therefore, in this marketing plan we analyse the
marketsituationintermsof demographics,needs,growth,andfuture trends.Inordertoidentifyour
target market we have used the survey method and analysed the data gathered in order to
distinguish which of the market segments to target. The survey was also intended to gather
quantitative data to identify and capture needs of our target market. We have found that demand
for healthiersnacksexist,whichisreplacing the classiconesthathave negativeeffects.Based on the
secondaryandprimarymarketresearchwe have developedaSWOT analysistograspa betterlookat
where the product would stand in terms of the market and how we aim to use the strengths and
opportunities to cast a shade on our threats and weaknesses. In our marketing strategy and
marketing mix we explain in detail the actions we wish to take in order to make this product a
success. The marketing mix is also intended to explain the product and its unique selling points
clearly. By being the first mover in the UK we will penetrate the market in building strong brand
awarenessandexpecttobreakevenina five-year period. We plan to have a two phase operational
plan,phase one includesthe simple importingof the productfromLatviaand storing it in our special
refrigerated warehouse and then distributing it using our own refrigerated trucks to authorized
retailers. The second phase is dependent on the success of phase one and it constitutes the
productionof Karumslocally.Local productionwouldallowformore capacityanda variousselection
of products and flavours as opposed to the one flavour we wish to focus on in phase one. Towards
the endof the reportis a descriptionof the productlaunchandall the strategic preparations we will
take before and during the actual launch of Karums in the market. Also included is a budgetary
breakdownof all the operational expenses and launch components including advertising materials.
Last but not least is a contingency plan divided into two parts depending on the obstacles of each
phase.
6. 1
1. Background
a. Parent Company
SIA Rigas Piensaimnieks is a leading company in the dairy market in Latvia. It was founded in 1993 in
Riga; however, the company originates from Rigas Piena Central which was founded back in 19281
.
(Karums: 2011a) Company firstly produced only curd snacks, later started to produce other products.
Now its products include ice lollies, curd snacks, dairy products, jam, cheese, mayonnaise, milk and
otherproducts.The company sellsitsproductstoretailers,restaurants,hotels,officesandcafeterias.In
1994 SIA Rigas Piensaimnieks introduced the Karums brand, which is now one of the most favourite
curd snacks in Latvia. (Karums: 2011a) Besides the Karums brand, the Company also has other brands
such as Dzintars, Zilonitis, Fabio and others. The company was very successful in its local market (in
2010 it covered90% of local dairyproduct market(AAAOE:2011)), thusinorder to expandtheirmarket
share it started to export products to other countries such as Baltic States, European Union countries,
and North America. (William Reed Business Media SAS: 2004)
b. Product
Karums is a curd snack which is approximately five centimetres long, made from milled and pressed
curd2
, and glazed with chocolate. A standard curd snack has vanilla flavour; however, SIA Rigas
Piensaimnieks has 15 different flavours such as strawberry, chocolate, apple jam, coconuts, etc. Curd
snack isveryrich innatural nutrients and calcium, which is useful
and healthyforthe individual.Asitwasmentionedbefore Karums
was introduced to market in 1994. (Karums: 2011a) In 2005 this
brand won three prizes at the Riga Food exhibition, which was a
record since the beginning of the exhibition. In 2009 SIA Rigas
Piensaimnieksintroduced the whole spectrum of products under
the Karums brand. Product line included various curd desserts,
curd snacks, milk, etc. (Karums: 2011a)
In theirlocal market, Latvia, the company advertise their product
via TV ads and billboards. Nevertheless, while entering new
marketsthe Companyemphasisesitsmarketingstrategyatthe sellingpoints,meaning that customer’s
attentionisgrabbedinthe supermarketsduringthe shoppingprocess.The customerstaste the product
at the supermarketand buy it right away; this was one of the most successful promotions. Due to the
fact, thatthis productwas locallyknownsince the 1940’s the Company’s marketing strategy was more
basedon word-of-mouth,thanactuallyusinglotsof adsinthe media.In addition to that, the Company
first of all entered the market only with the main curd snack product. Different flavours were
introduced later when consumers already got to know the product.
2. Secondary Market Research
In orderto introduce the curdsnack Karums inthe UnitedKingdomwe have analysed the market. First
of all, we have analysed current UK population and break down by age groups. Further on, dairy
industry researchshowed that there is no such product in the UK market yet, meaning that we have a
1 Latvia experienced milk consumption boom at that time (Karums: 2011a)
2 Curd is formed when sour milk clots.
Figure1: Karums curd snack (Source:
Karums: 2011b)
7. 2
niche. We have alsoanalysed confectionery marketaswe notify that main competitors are going to be
from this market and it is necessary to capture all the trends.
a. Current UK statistics
Based on the recent data there are 63 million (July 2011 est.) people in the United Kingdom. (Central
IntelligenceAgency:2011) Population growth rate is estimated to be 0.557%. As to the break-down of
the populationintoage groupswe have 17.3% for childrenagesbetween0-14years old almost equally
splitbetween male and female, 66.2% of the population is between the ages of 15-64 years old again
almost equally split between male and female, finally there is the age bracket between 65 years and
older of 16.5 % split, males 4,564,375 and females 5,777,253. The UK is a highly urbanized country as
80% of the population is living in the major cities. (Central Intelligence Agency: 2011)
b. Size, growth and trends of UK dairy product market
Our productKarums shouldbe placed inthe dairyproductmarket. The concept of a curd based product
is new to the UK market which places us at an advantage as first movers. However, the lack of direct
substitutes, many other forms of diary product and glucose based snacks act as substitutes for the
Karums. The dairy market in the UK mainly comprises of milk, yogurt, cheese, butter, whole milk
powder,condensedmilkandskimmedmilkpowderproducts.Basedonthe latestdataprovided,the UK
produces approximately 13bn litres of milk each year, which is then made into a wide range of dairy
products. 50% of the milk is processed into liquid milk, other 50% are basically used in cheese, milk
powdersandbutterproduction.(DairyUK:2011) Basedonthe researchmade in 2010 it wasfound that
yoghurtisthe thirdmost profitable indairyindustryandisthe fastestgrowingsector,pushing milk and
cheese sectorsbehind.The increase invalue wasapproximately 7% in 2010, which was driven by price
rise and interestin healthy eating. (Nieburg: 2010) Research shows that dairy industry has a potential
for growth in the future due to the constant increase in healthy eating trends. Moreover, in the
research it is stated that health image has market potential among parents as 82% of the surveyed
consider dairy products good for children. (Nieburg: 2010)
Analysisof the dairyindustryshowsthatourproduct couldhave a huge potential in the market as curd
is a healthy snack, which has natural nutrients and calcium. In addition to that, this product is made
without any preservatives and has natural flavours. Nevertheless, it is also important to analyse the
confectionery market as our main competitors are going to be from this industry.
c. Size, growth and trends of UK confectionery market
While analysingconfectionerymarket,firstandforemost,ourresearchshowsthatinspite of the recent
economic slowdown, the confectionery market has managed to keep a strong position. (Key Note:
2011) Over the 5-year period spanning 2006 to 2010, the UK market for sugar and chocolate
confectionerygrewby14%to £5.03bn in value.Chocolate isstillbyfarthe largestsectorof thismarket,
having its sales rise by approximately 17% over the 2006-2010 period, while the sugar confectionery
market only grew by a mere 6.3% over the same period of time. Additionally, the chocolate sweets
account fora 65% share of the overall confectionerymarket; sugar represents around 30%. (Key Note:
2011) Thiseffectcanbe attributedtothe continued popularity of chocolate products and the fact that
a chocolate treatis perceived as an affordable treat and displays a strong level of market penetration
despite recession effects. In order to better illustrate customers’ perception and the level of market
penetration, a line chart is provided in appendices Exhibit 1. (Perkins: 2011)
8. 3
Recentyearshave alsoseenanincreasedpublic perception of a need to be ethical when sourcing and
producingconfectioneryproducts.Thiseffectively resulted in a new trend and thus, companies in the
UK have startedusingfairtrade and organicingredientsmore widely.Globalfairtrade cocoadoubledin
sales in 2010 to an estimated amount of 30,000 metric tonnes. In addition, in 2010 fair trade sales
accounted for 10% of the UK chocolate confectionery sales with an approximate value of £343m, as
seeninappendices Exhibit2.(Fairtrade Foundation:2011b) The fairtrade trendhas not beenwitnessed
in this sector only, but rather in many others ranging from tea & coffee to cosmetic products that
involve fairtrade ingredients.The Fairtrade Foundationannouncedthat,“Fairtrade products soared by
40% in 2010 to an estimated retail value of £1.17bn compared with £836m in 2009. UK shoppers are
continuingtoembrace Fairtrade,showing no downturn on ethical values despite the tough economic
times.”(2011a) Well-knownbrands,suchasNestle andCadbury,have capitalizedonthis trend from its
early stages: for instance, Nestle has promised to use only sustainable palm oil in its products by the
year 2015. Furthermore, due to the increased perception of a need for a healthier lifestyle,
confectioneryproductsare continuouslybeingchanged,withproducersreplacingartificialcontentsand
flavourings with natural alternatives in an attempt to provide the market with a healthier profile.
(Fletcher: 2006)
Accordingto KeyNote (2011) statistics, almost 9 out of 10 adults buy chocolate or related products on
a regular/semi-regular basis. This appears to work in the advantage of relevant businesses; however
analystsargue that the sheer size of the market, the dominant presence of world-famous brands (i.e.
Nestle,Kraft-Foods,MarsInc.) and the great diversityof products translate into a limited potential for
growth. (Key Note: 2011)
Confectionerymarketanalysisshowsusthatthe same trends are noticedasindairy industry.Society is
movingtothe healthierlifestyle andsearchesforhealthyproducts. Even confectionery market shifted
to “fairtrade”products.Both of the markets, confectionery and dairy, are growing and has a potential
to grow in the future. This leads us to believe that our product would capture the trends both in the
market and societies perceptions. In order to capture customer needs we have performed primary
research.
d. Competition
Thisproduct,for beingsounique,doesnothave anydirectcompetitors.Byenteringthe UK,we are the
pioneers in this market, although we do have indirect competitors. One can classify the main
competitors into different segments. Our main competitors are from the dairy industry, whereas
indirect competitors are from the confectionery and cereal markets (See appendices Exhibit 3).
Firstly, we have dairy products, which are cheese snacks and yoghurts. These can be Karums
competitors, although Karums has a competitive advantage over them (Karums is more practical to
have on “the go” and contains curd ingredient). Main competitors from the dairy industry are Muller,
Ambrosia,andLaughingCow. Secondly,there are sweet candies and cookies (which also include dairy
ingredients).Inthissection we identified mainly cookie snacks and chocolate snacks; these would be
Happy Hippo,Caxton’swafers,Fox’scow biscuits. Thirdly,we canalsoconsidercereal andprotein bars.
Although these are usually bigger, more consistent, more energetic, and usually not milky products
they can still substitute as energetic snacks. Our product Karums is healthy, which is why we are
considering this segment as well. Main competitors from this segment are Kellogs and Oh yeah!
9. 4
As forthe price positioningamong the competitors we have analysed where our product would lay in
terms of the competitors. Assuming that distributors would put a maximum mark up of 50%, price of
our productshouldbe approximately£0.63. Thusfor comparisonwith competitors we have estimated
product prices per 100gr. One can see from the appendices Exhibit 4 that Karums compared to the
dairy products and cookies on the left side in the graph is twice or three times more expensive,
whereascomparedtothe cereal bars ourprice islower. This positioning is very important considering
our promotional campaign, which is discussed in the further sections.
3. Primary ResearchInsights
The basis for this primary research is a comprehensive questionnaire (see Exhibit 5), which has been
filledoutby134 respondents.Mostof ourrespondentscompletedthe survey online, while about 25%
of themwere surveyed in person. The questionnaire is intended to find out the respondents’ needs,
preferences and opinions on current snacks and our new suggested product. Based on analysis of
consumer needs and by applying K-Means Cluster Analysis with SPSS, the market will be segmented
intodifferentgroupstoget deeper insights about whom to target and how to position Karums on the
market.Inaddition,evaluatingcorrelationresults and descriptive statistics will help us to get a better
understandingof potential consumers.Besidesnominalmeasurable data, e.g. gender, we used a scale
with a range from 1 – 4 for ordinal measurable data.
a. Descriptive statistics
Descriptive statistics (seeExhibit6) give clearevidence that the awareness of consuming healthy food
ingeneral isquite high (mean: 3.04), but slightly lower in terms of consuming snacks, bars and similar
products (mean: 2.61). Furthermore, the results show that on average parents are more concerned
abouttheirchildren’shealthydietingeneral(3.19) andabout theirchildren’ssnackconsumption(2.82)
than abouttheirowneatingbehaviour.Itseemsasif consumersare still tending to consume healthier
snacks,but compromisingabitbyacceptingthe unhealthy nature of snacks. We state that the generic
needforsnacks(almost90% of all respondentsconsumesnacks) is currently mostly satisfied by rather
unhealthy products (chocolate & crackers). This insight shows us that in contradiction to our results
regardingthe healthawareness,consumersbuyunhealthysnacks,althoughthey actually would rather
tend to buy healthier ones. This indicates that there is no product on the market, which can fulfil
consumer’s requirements at the moment. With our Karums product we want to attract exactly those
customerswhofeel astrongdesire forbothtasty and healthysnacks.One of the biggest issues to face,
and which will be further discussed in following sections, is to sharpen the awareness for curd in
general:While only17.2%of all respondentshave ever tried curd, almost 60% do not even know what
curd is. Nevertheless, 79.9% of all participants said they would try Karums, which points out the high
potential demand for such a product.
b. Correlations
The results from executing a bivariate Pearson correlation (see Exhibit 7) clearly indicate a strong
positive correlationbetweenbothownandparental health awareness and type of snack consumption
at a significance level of 0.01.In addition,whetherornotto try Karums correlatespositively significant
with both health awareness and type of snack consumption. Having in mind the results from our
secondary research regarding the increasing health awareness, we are confident to meet consumer
needs with our healthy snack now and in the future.
10. 5
c. K-Means Cluster Analysis & Segmentation
Followingthe needs-basedmarketsegmentationapproach,we identifiedthreesegmentsafter running
a K-Means Cluster Analysis with relevant variables (see Exhibit 8). As our target markets we selected
Cluster1, whichrepresentsthe youngergenerationwith a high health awareness and Cluster 2, which
representsmiddle-agedparentswithahighhealth awarenessandanevenhigherhealth-awareness for
their children, while choosing a selective specialization strategy in line with suggested by Kotler and
Keller (2008). In addition, both segments rate favourably on the five key criteria for useful market
segmentsastheyare:1) Measurable:Please,see section2andabove,2) Substantial:Segmentsaccount
for 43% and 41% of the total market,3) Accessible:Distributionviasupermarketsandgrocerystores, 4)
Differentiable:Youngergenerationwithno childrenonthe one handand middle-aged generation with
children on the other hand, 5) Actionable: Several different programs will be presented in following
sections.
4. SWOT Analysis
One of the ways to analyse the success of the product is to use the S.W.O.T. analysis approach. This
analysislooksintoexternal and internal factors by analysing its strengths, weaknesses, opportunities
and threats.Itprovides a good framework for reviewing strategy, position and direction of a product.
Analysisisbasedonoursecondaryand primaryresearches.Nevertheless, one has to bear in mind that
our productis justinthe stage of ideageneration so the more proper analysis could be provided after
the establishment of the Company (S.W.O.T. analysis summary is in appendices Exhibit 9).
a. Strengths
Currently in the UK there is no other snack or treat made from curd. The brand we are bringing in
Karums isa snack made from the curd.The Karums brandthat we will be importing is well established
and solid.We will be launching initially with only one of the product categories, however, as demand
growswe may considerlaunchingnewtypesof products (Karums has an extensive product portfolio).
Since there isnoother productmade fromcurd we feel that we have a first mover’s advantage, which
we can use to our benefit. Our product is going to be sold as a healthier snack. The UK market is
adaptinga healthconscioustrend, which is supported by the government. So as one can see from our
marketanalysisourproducthas strengthincapturingmost recenttrends:healthy,noartificial flavours,
and affordable tastytreat.Inaddition, Karums comes in small sizes which are easy to fit into bags and
school cases(ideal forchildren). Finally,since we are importingthe productandnotproducing it locally
(would require a high initial investment), we can invest more into advertising to develop the brand.
b. Weaknesses
Unfortunatelyforus, our product Karums has no brand name existence and no brand value in the UK.
Also not everyone may know what the ingredient curd is, so we must explain this to the public and
educate them about curd’s health benefits. The market for healthy, organic, lactose snacks and
products is highly competitive and brand dominated by companies and products such as Special K,
Nestle,andMulleramongst others. In addition, the switching costs from buying one snack to another
are very low, although presence in the market may be very relevant on this case.
c. Opportunities
The UK government(NHS) encouragesthe populationtolive ahealthylife (campaignssuch as 5-a-day).
Since our product is a healthy and tasty snack, the backing by the government for a healthy British
11. 6
population is certainly an opportunity. Furthermore, we are seeing this as an opportunity to create a
position in the market for our product to be a healthy, tasty snack made from curd.
d. Threats
Although there is no direct competition substitute and indirect competition is fierce and well
establishedinthe market.Thuswe needtodevelopabrandimage for Karums;thisrequireshigh initial
capital to be spent on the market. Should the ingredient curd become popular and our well -known
competitorsstartusingitwe couldbe wipedoutof the market,therefore,we need to spend capital on
marketing,brandingandcapitalizingonourfirstmover’sadvantage.Thismarketcanalsobe considered
as not havinghighentrybarriersin terms of customer loyalty. When a customer is choosing a snack or
dairyproduct,the customerdoesnotnecessarilychoose the product, the choice changes periodically.
Customer choices for snacks are not very regular or long lasting. Moreover, Karums depends on
distribution channels to be able to make sales. In the UK, Karums does not have any other way of
selling, apart from the distribution channels we are going to utilize
Based on the S.W.O.T. we have noticed a few issues which will affect our success in the market:
Ensuring the target audience understands what curd is.
Targeting the right consumers.
Generatingthe rightmarketingposition to ensure the consumers perception of the product is
correct- healthier snack, which is also tasty (contains chocolate).
Creating a well-known brand name for the product and using the right marketing strategy to
ensure the product stands out amongst the vast amount of the indirect competition.
5. Marketing Strategy
a. Customer Value
Customervalue isbeingexplainedbelow usingthree elements,whichare adaptedfromthe Price-Value
Communication Quadrants (Nagle and Hogan: 2005).
Functional benefits: The product is relatively inexpensive. The packaging is very colourful and eye-
catching.It mustbe notedthatthe brandis notwell known,therefore,whenwe are buildingthe brand,
it is important to reassure customers that Karums has a long history (60 years of expertise) of high
quality and standards.
Psychologicalbenefits:There are fewcurdproductson the market whichwe feel will benefit us. Since
the product is healthier and tastes good (contains small amount of chocolate) it allows us to call it a
guilt-free snack. When targeting parents, psychologically they feel confident that their children are
eating something that provides them with a healthy dose of calcium which growing children most
certainly need (the best thing a mother wants is a happy child).
Relative cost of search:As a consumer good that will be sold in the major supermarket chains the cost
of finding the product is relatively low.
Basedon all the benefitsof the product(thatwe believe are relative tothe targetmarket) and the ease
of searching for the product, we can deliver ‘customer value’ that matches our brand.
12. 7
b. Positioning
Currently the market is unaware of the brand Karums. It is up to us to ensure that the marketing
communications we use to launch and promote the brand position in the way we want. We need to
develop a position for the brand to ensure the target audience have the right perception about the
product. We needtocreate a positionthatwill buildourbrandandalso ensure successful introduction
and educationabout the curd ingredient, “Deciding on a position requires (1) determining a frame of
reference,(2) identifyingthe optimal pointsof parityand points-of-difference brand associations, and
(3) creating a brand mantra to summarize the positioning” (Kotler and Keller: 2008).
1) Competitive frame of reference: this would include brands that sell dairy products and dairy
snacks(yoghurtsfromMullerand Alpro-Soya).We alsocompete withbrands that sell crackers,
cereal bars and chocolates, as these are also snack options.
2) Pointsof parity and Points-of-difference:Pointsof Parity:healthy,natural ingredients, calcium,
snack size. Pointsof difference:curd,genuine healthyimage thatgivesyouandchildrenenergy,
“healthy and tasty” a term not often seen together.
3) Brand mantra: the productline we are launchingistargetedto children. It is our aim to ensure
the childrenlookatour productand know it isgood forthemand helpsthemgrow (the calcium
in the product is healthy for their bones) more importantly it is a colourful product that looks
fun and is tasty since it includes chocolate. We must also ensure the parents understand the
health benefits of the product made with natural ingredients.
The above three points are usedto helpdefinethe brandposition.The positionwill be highlightedwith
the use of one of PortersGenerisStrategies,the differentiationstrategy.Ourmarketingcommunication
will be aimedtoshowthe productis unique butspeakstoour target audience.We want the product to
initially target children and parents; however, if the market grows successfully, Karums have other
product lines that can be used to target adults (curd desserts, curd, milk, etc.).
c. Target market
We believe thatall those whoare healthconsciouswillsee the attractivenessof ourproduct. However,
initially we are specifically targeting the market for children. We will communicate the product to
children through fun and colourful marketing communications. Whilst children are usually the
influencers in the purchasing decision, the parents are the deciders. Therefore, we must also target
them. The parents need to be educated about the product and its health benefits.
6. Marketing Mix
a. Product
Karums is a 45-gram snack made of curd, a product of sour milk and lactic acid, natural vanilla
flavouring and a glaze cover of chocolate. We have chosen to go with only one product of various
selectionsof flavoursanddifferentgoodsthatthe manufacturingcompanyproducesaspart of our first
phase of marketpenetration.The productwill be packedinitsoriginal orange packagesastonot invest
any capital inchangingthe colouringorthe packaging and focus more on the marketing strategies and
tools we wish to implement to penetrate the market successfully. Once the product has shown its
successand the marketisdeemedfitformore flavours,Karums will introduce phase twoof thisproject
which includes manufacturing of the curd snacks with different flavours in the UK. There have been
discussions about customizing the product to better suit the trends of the UK market upon the local
13. 8
manufacturing, perhaps a different package colour and more targeted at other segments. Some of
those segments include the health conscious, the flavour oriented, and the busy metropolitan city
inhabitants.
However, as far the first phase of operations goes, the customization of the product will remain to a
minimum, which is changing the writing on the package to English. Moreover, the real customization
occurs inthe promotional campaign(see promotion part) that we wish to execute. Each tool used has
been especially customized to fit the UK’s trends.
b. Price
Enteringa newmarketwill require Karumstouse amarketing-penetrationpricingscheme. Karums will
be charged at a competitive price of £0.42 perunitto our distributors.We will limitthe maximum price
our distributors can charge by allowing them to sell the product at a maximum premium of 50%. This
will be ourMSRP (Manufacture SuggestedRetail Price) price forourretailers to prevent over pricing of
the product. We determined the price of our product by evaluating the unit cost of our product and
projecting a target price. We projected the target price of our product at a 40% return based on a 2,1
millionpoundinitialinvestment. In order for our product to succeed in the UK market we will need to
focuson highervolume of sales.We believe thatourproductiscompetitivelypricedinawayto achieve
our projectedsalesvolume of 5millionunitsinthe firstyear of operations (we have considered target
market population). The price is considerably low because of the limited shelf life and the need to
increase turnover due to its perishable content.
Our productcomparedto our competitorsisunique,thus Karums does not have a direct competitor in
the UK market. However, Karums does have indirect competitors that sell products in the healthy
category.The price of Karums comparedtocompetitorswill be sold approx. 20% lower than any of our
indirectcompetitors(Kelloggs,etc.).Asmentionedbefore,we are estimating high volume sales of our
product in the first year.
c. Place
In firstphase of our operationswe plan to import the product straight from the manufacturing facility
in Latvia, a little less than a two-hour flight, to our 2.500 sq ft warehouse in the South East London,
strategically chosen due to low cost and proximity to distributors. The warehouse is of course
refrigerated to suit our fragile product contents. From the warehouse the products are then
transportedusingourrefrigeratedtruckstoourauthorized retailers around the UK. Those distributors
include mainstream supermarkets such as Sainsbury’s, Waitrose, and Tesco. Distributors will also
include school cafeterias and school catering companies to make the product available for our target
marketeasilyandconveniently.We have chosen this distribution scheme to best suit our operational
plans,once the productis well establishedinthe marketthisscheme isdue tochangestocope withour
growth.
Placing our product on the shelves of the above mentioned supermarkets and distribution centres
creates an easy access to our product whether the decision maker is the parent or the child.
d. Promotion
Communicating our product value to the customers is essential to the success in the UK market.
Karums has many benefits in addition to it being a tasty treat it also acts as a healthier substitute to
otherchocolate or glucose basedsnacks.Hence,ourpromotional campaignwill constitute of twomajor
14. 9
parts: the firstbeinganawarenesscampaignaboutwhat Karums isand whatit representsthe secondis
an educational introduction to curd.
Firstly, to introduce the product we plan to set tasting stations placed in various supermarkets,
shoppingmalls,and parks spread across the UK. This gives us a chance to see how the people react to
the product in termsof the quality,the brand, and the idea behind it. Simultaneously with our tasting
stationswe wish to target our clients by using print advertising in magazines targeted at mothers and
healthorientedpeople,examplesof the printadvertisementsare includedinAppendices (see Exhibits
13 - 16). In addition to print advertising we plan to execute the use of outdoor advertising such as
mobile banners and billboards (see Exhibit 16). This would most definitely increase our coverage of
various areas and implement the “everywhere” strategy. Being a new product the public should be
constantly reminded of Karums. Thus we do not fear the disadvantages of using mass advertising to
deliver our message. Another media vehicle we wish to use to communicate our message to our
customerswouldbe radioadvertising.Placingadvertisementsonthe radioduring peak hours, morning
and late afternoon as those would be the times when children will be heading to school and heading
back home, would allow us a massive range of coverage to reach the maximum amount of customers
possible within a short period of time. One of the radio advertisements is part of a series of songs by
Rock n’ Roll legends the Beatles, we have chosen to go with the Beatles to show our dedication to
customizing our product and business to British terms. We have based our radio advertising on being
short and concise. (Please listen to attached file)
Moreover,we are suggestingusing a brand ambassador to help launch our product. We suggest Jamie
OliveraBritishchef whoiswell knownandcertainlywellloved.Jamie haslaunchedJamie Oliver’sFood
Revolution;amotionto goaround schoolsinthe UK and the US to promote healthiereatingtochildren
inschools.Jamie isa successful chef andalsoa publicfigure whois respected for his fight against child
obesity as well as to encourage a healthier Britain. Since our product is a healthier snack, which is
targetedtochildrenandtheirparents,usingabrand ambassadorlike Jamie would ensure that parents
associate the productwitha healthylife-style.AlsoJamieisaresponsibleandrespectedchef andpublic
figure with a stable family of his own. We feel confident about associating his image with our brand
image.
The other part of our promotional campaignwillincludethe same mediatools but instead of the mere
education of what curd and Karums are, this will focus more on the benefits of Karums, and the
possibilityof itbeingahealthiersubstitutetootherclassicsnacks.Thiscampaignwill be launched right
before the introduction of the product to the market and after the public has a better idea of what
Karums is. This campaign will concentrate more on active healthy words such as “health, happy, guilt
free,andtasty.”With sucha campaignwe believethatwe will be able to penetrate the market in such
a way as to surely enter the market, create the demand, and create a new trend. The new trend of
treating oneself to guilt free, tasty, and fulfilling snack at the end of a long day or not worrying about
one’schildrenmunchingontoomany snacks,whichcouldcause anydangeroushealthrelatedillnesses
(see appendices Exhibit 13 and 15).
As part of our launchcampaign,we planto start a new children’sjuniorfootballcompetitionto be held
annually.Thiscompetition will be called “Karums Active” (see appendices Exhibit 12) and it will be in
associationwiththe departmentof educationandthe ADCS(The Association of Directors of Children’s
ServicesLtd). Karums Activeisa chance for children of different ages to come together and have a fair
competition,we hope thatthiswouldteachthe childrenlessonsin teamwork, get them to be active in
15. 10
the society, and give them an incentive to lead a healthier life style. This campaign will also shows
Karums’s commitment to the UK market, the concern we have for the leaders of tomorrow, and help
establish a health-centred image in the public’s eyes.
7. Launch
a. Launch Material
The launch of a product isan essential partindeterminingitssuccessrate.Byutilizing the promotional
campaigns and tools mentioned above (Marketing Mix) we believe we can achieve great results by
creating a niche market, educating and generating awareness, and establishing a brand image in the
public.Some of the magazine andprintadvertisingmaterial is included in the appendices please refer
to appendices Exhibits 11 - 16.
Launch date is very important if one wants to capture large proportion of share at once. Thus we will
launch Karums at the time of the UK’s Children’s Day on the 20th
of November 2012. The promotional
campaign will begin in September, two months before, and this would generate the education and
curiosity that would aid in achieving the sales results and success of Karums.
b. Launch Budget
As mentionedearlierthe promotional campaign,we are utilizingforthe launchof Karums, isone that is
essential for the product’s success by using a range of print, outdoor, and radio advertisements in a
balanced accord to deliver Karums message out to the public. The budget is based on the initial
investment of 2.1 million pounds. Forecast of the sales are based on population in the targeted
segments. Based on the budget we plan to break even in the Year 5 see appendices Exhibit 10. After
deducingthe fixedandvariablecostssuchas the warehouse,the purchase of the transportationtrucks,
office space etc.the remaindercanbe comfortablyusedtoinvest in advertising. Since we plan to start
the campaigntwo monthsbefore the launchall the expensesshowninExhibit 11 show the break down
between the radio, magazine, and outdoor advertisements for the span of three months.
c. Contingency plan
Phase One: Asmentionedearlier,phase one constitutes the direct importing of Karums from Latvia to
the UK. This minimizesthe initial capital investmentandreducesmanyrisksincase the productwere to
fail for any reason it would be easy to discontinue operations and cancel orders. In the case of
campaign failure with a full warehouse the company will adopt a damage control policy where the
products will be sold at a lower price (£0.27) and distributed at lower standard off license stores, in
order to minimize losses.
Phase Two: Upon the success of phase one, the company plans on starting the production of Karums
witha variousselectionof flavours locally in the UK. The implementation of the second phase means
that the product proved successful in phase one which also means that the brand has already been
established and Karums has a generous piece of the market share. In case of failure in phase two the
companyplanson pursuinganumberof strategies.The firstbeing focusing back on manufacturing the
original vanilla flavoured snack that has already proved successful and returning to make a more
detailed market research on what flavours would work best for the market. Another strategy to be
studiedandputintoaction isthe concentrationonmarketsnearbysuchas Irelandor Scotland.There is
16. 11
great potential to be met in these markets given the close distance and the common language;
transportation and labelling are not be unfeasible issues.
17. 12
Appendices
Exhibit 1: Eating habit trends 2008-2011 Base: Internet users aged 16+
Source: Perkins:2011
Exhibit 2: How UK retails sales of Fairtrade confectionery have grown (£m)
Source: FairtradeFoundation: 2011b
Exhibit 3: Main Competitors
Segment Brand Product Description
Dairy Muller Yoghurt Yoghurt
Dairy Ambrosia Devon Custard Custard dairy pot, similar to yoghurt
Dairy Laughing Cow Triangle Cheese Cheese in a triangleformat
18. 13
Dairy Laughing Cow Cheez Dippers
Snack with cracker stickers to dip in
the cheese
Candy Kinder Happy Hippo
Candy/cookiemade of wafer biscuit
outsidewith milk flavoured icing
inside
Cookie Caxton Pink and White
Candy/snack made of wafers with
pink and white marshmallowinside
Cookie Fox's Biscuits Cow Malted milk biscuits
Cereals Kellogs Mini Breaks Cereal Snack
Cereals Kellogs Bars Cereal Bar
Cereals
(protein)
Oh Yeah! Protein Bars
Protein bars all natural with peanut
butter, honey and nuts or peanut
butter chocolatechip
Source: made by authors
Exhibit 4: Price positioningcompared to competitors
Source: made by authors
£0.35 £0.33
£0.66
£0.91 £0.97
£0.53 £0.44
£1.26
£1.83
£1.39
£2.35
Comparison with competitors (price per 100gr)
Cereal bars
Candies/Cookies
19. 14
Consent: I understand that the research I am taking part in is for an assignment completed by MIB Participants
at Hult International Business School. I understand that I will not be personally identifiable in the research and
that any personal details I give will be shared only with the student project group and the academic staff at Hult
International Business School for the purposes of assessment. I am happy to participate in this project and
understand that I am free to leave at any point during the research. (compulsory question)
Yes
<18 18 - 25 26 - 35 36 - 50 >50
2 Please select your gender. (compulsory question)
Male Female
3 Do you have children? If you don't, please skip to question 6. (compulsory question)
Yes No
4 If you do have children, how strongly do you take care of a healthy, balanced diet of your children in
general? (1=low; 4=high)
1 2 3 4
5 If you do have children, would you rather say that you accept your children’s snacks,bars etc. being
unhealthy (tick 1) or do you feel a strong desire for buying healthier snacks,bars etc. (tick 4)?
1 2 3 4
6 How strongly do you take care of a healthy, balanced diet for yourself in general? (1=low; 4=high)
(compulsory question)
1 2 3 4
7 Would you rather say that you accept snacks,bars etc. being unhealthy (tick 1) or do you feel a strong desire
for buying healthier snacks, bars etc. (tick 4)? (compulsory question)
1 2 3 4
8 Do you often eat or buy snacks? (like crackers,chocolates, yoghurt, fruit, bars) (compulsory question)
Not at all Yes,often (from 2 to 5 per week)
Sometimes (up to 1 per week) Yes,very often (more than 5 per week)
9 What kind of snacks do you prefer? (compulsory question)
I do not eat/buy snacks Yoghurt Chocolates
1 Which category below includes your age? (compulsory question)
Questionnaire
Exhibit 5: Questionnaire
20. 15
Crackers Fruit CerealBars
10 Do you know what curd is? (compulsory question)
Yes No
11 Have you ever tried curd before? (compulsory question)
Yes No I am not sure
12 Our product is a curd snack which is approximately five centimeters long, made from milled and pressed
curd, and glazed with chocolate. This curd snack is very rich in natural nutrients and calcium, which is
useful and healthy for the individual. Would you be interested in our product? (compulsory question)
Yes No
Thank you for your participation!
Source: made by authors
Exhibit 6: Descriptive Statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Age 134 1 5 2,73 1,287
Children 134 1 2 1,57 ,496
Health 134 1 4 3,04 ,779
Bars 134 1 4 2,61 ,900
ChildrenHealth 57 2 4 3,19 ,667
ChildrenBars 57 1 4 2,82 1,020
KnowCurd 134 1 2 1,59 ,494
TriedCurd 134 1 3 1,99 ,694
TryKarums 134 1 2 1,20 ,403
Valid N (listwise) 57
Source: made by authors with SPSS
WhichSnacks
Frequency Percent Valid Percent Cumulative Percent
Valid None 11 8,2 8,2 8,2
Crackers 26 19,4 19,4 27,6
Chocolate 51 38,1 38,1 65,7
Yoghurt 12 9,0 9,0 74,6
Fruit 12 9,0 9,0 83,6
Cereals 22 16,4 16,4 100,0
Total 134 100,0 100,0
Source: made by authors with SPSS
21. 16
Exhibit 7: Pearson Correlationtable
Source: made by authors
Exhibit 8: K-Means cluster analysis output
Source: made by authors with SPSS Source: made by authors with SPSS
Correlations
Age Children ChildrenHealth ChildrenBars Health Bars TryKarums
Age Pearson Correlation 1 -,533** ,562** ,532** ,122 -,013 ,004
Sig. (2-tailed) ,000 ,000 ,000 ,159 ,883 ,966
N 134 134 134 134 134 134 134
Children Pearson Correlation -,533** 1 -,965** -,904** ,080 ,133 -,132
Sig. (2-tailed) ,000 ,000 ,000 ,357 ,127 ,128
N 134 134 134 134 134 134 134
ChildrenHealth Pearson Correlation ,562** -,965** 1 ,916** ,036 -,037 ,015
Sig. (2-tailed) ,000 ,000 ,000 ,676 ,667 ,862
N 134 134 134 134 134 134 134
ChildrenBars Pearson Correlation ,532** -,904** ,916** 1 ,100 ,008 -,066
Sig. (2-tailed) ,000 ,000 ,000 ,253 ,927 ,452
N 134 134 134 134 134 134 134
Health Pearson Correlation ,122 ,080 ,036 ,100 1 ,792** -,623**
Sig. (2-tailed) ,159 ,357 ,676 ,253 ,000 ,000
N 134 134 134 134 134 134 134
Bars Pearson Correlation -,013 ,133 -,037 ,008 ,792** 1 -,529**
Sig. (2-tailed) ,883 ,127 ,667 ,927 ,000 ,000
N 134 134 134 134 134 134 134
TryKarums Pearson Correlation ,004 -,132 ,015 -,066 -,623** -,529** 1
Sig. (2-tailed) ,966 ,128 ,862 ,452 ,000 ,000
N 134 134 134 134 134 134 134
**. Correlation is significantatthe 0.01 level (2-tailed).
Final Cluster Centers
Cluster
1 2 3
Age 2 4 4
Children 2 1 2
ChildrenHealth 0 3 0
ChildrenBars 0 3 0
Health 3 3 3
Bars 3 3 3
TryKarums 1 1 1
Number of Cases in each Cluster
Cluster 1 58,000
2 55,000
3 21,000
Valid 134,000
Missing 1,000
22. 17
Exhibit 9: S.W.O.T. analysis
Strengths Weaknesses
no other snack or treat made from curd
well-established and solid company
firstmover advantage
launch a selectiverange of products
importing
products are small and can easily fit
healthy, snack with a difference- curd
Karums has no brand name in the market
it may be difficultto explain the term ‘curd’
market is highly competitive
low switchingcosts
Opportunities Threats
the government is constantly encouragingthe
UK population to eat healthily
develop a unique position in the market
lot of indirectcompetition
no customer loyalty
dependable on distributors
Source: made by authors
Exhibit 10: Budgets for the 5 year period
Budget Year 1* Year 2 Year 3 Year 4 Year 5
Revenues 1.050.000 4.200.000 8.400.000 10.080.000 12.096.000
CoS
Import costs 500.000 2.000.000 4.000.000 4.800.000 5.760.000
Additional costs 125.000 500.000 1.000.000 1.200.000 1.440.000
Gross profit 425.000 1.700.000 3.400.000 4.080.000 4.896.000
40% 40% 40% 40% 40%
Variable costs
Advertisingcosts 112.000 95.000 120.000 120.000 120.000
Other variablecosts 250.000 1.000.000 2.000.000 2.400.000 2.880.000
General expense 50.000 150.000 150.000 150.000 150.000
Salaries 133.333 430.000 430.000 430.000 430.000
Rent 4.000 12.000 12.000 12.000 12.000
Truck Expense (insurance,
licenses) 12.000 12.000 12.000 12.000 12.000
Profit/Loss -136.333 1.000 676.000 956.000 1.292.000
Notes:
Forecasted sales of units 2.500.000 10.000.000 20.000.000 24.000.000 28.800.000
Import cost/unit 0,20 0,20 0,20 0,20 0,20
Sales priceto distributors 0,42 0,42 0,42 0,42 0,42
Sales priceto end customers 0,63 0,63 0,63 0,63 0,63
*first year comprise only 4 months as launch is planned in November
Source: made by authors
23. 18
Source: made by authors
Media Vehicle Price Type Price/month
Period/
Frequency in
months
Total
Radio 200
30 second space
played 4 times a day
24.000 3 72.000
Magazine 1.000 Full page with colour 1.000 15 15.000
Mobile Billboards 2.000 Mobile Poster 2.000 25 50.000
Billboards 7.000 Large Still Billboard 7.000 10 70.000
Total 207.000
Source: made by authors
Exhibit 12: Advertisement costs break down
Exhibit 11: Karums Active campaign advertisement
24. 19
Source: made by authors Source: made by authors
Exhibit 14: Karums advertisement targeting parents Exhibit 13: Karums informational advertisement
25. 20
Source: made by authors Source: made by authors
Exhibit 15: Outdoor advertisement
Exhibit 16: Karums advertisement
26. 21
Bibliography
AAAOE(2011) Sell Sweet Curd SnackKarums. [online] Available at:
<http://www.aaaoe.com/sell/7/milk_products_6163/Sell_Sweet_Curd_Snack_Karums.html>
[Accessed:24 November,2011]
Central Intelligence Agency(2011) The World Fact Book. [online]Available at:
<https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html>[Accessed:24
November,2011]
DairyUK (2011) Milk Utilisation. [online] Availableat:< http://www.dairyuk.org/industry-data-
mainmenu-277/milk-utilisation-mainmenu-289>[Accessed:20November,2011]
Fairtrade Foundation(2011a) FairtradeSales Soarto Well Over£1bn Showing theUKStill Caresin
Tough Times [online] Available at:
<http://www.fairtrade.org.uk/press_office/press_releases_and_statements/february_2011/fairtrade
_sales_soar_to_well_over_1bn_showing_the_uk_still_cares_in_tough_times.aspx>[Accessed:17
November,2011].
Fairtrade Foundation(2011b). FairtradeFoundation Commodity Briefing:Cocoa Summary [online]
Available at:
<http://www.fairtrade.org.uk/includes/documents/cm_docs/2011/c/cs0004_cocoa_summary_down
load.pdf>[Accessed:17 November,2011].
FletcherA.(2006) UK Confectionery MarketOutlook‘Positive’ [online] Available at:
<http://www.confectionerynews.com/Formulation/UK-confectionery-market-outlook-positive>
[Accessed:17 November,2011].
Karums(2011a). History of Karums.[online]Available at:
<http://www.karums.eu/en/history/history-of-karums>[Accessed:16 November,2011]
Karums(2011b). Products. [online] Available at: <http://www.karums.eu/en/products/curd-snacks>
[Accessed:16 November,2011]
KeyNote (2011). Confectionery MarketReport [online] Availableat:
<http://www.keynote.co.uk/market-intelligence/view/product/10421/confectionery>[Accessed:17
November,2011]
KotlerP.and KellerK.L.(2008) A FrameworkforMarketing Management (FifthEditioned.).UK:
Pearson.
Nagle T.T.and Hogan J. E. (2005) The Strategy and Tactics of Pricing - A guide to Growing More
Profitably (FourthEditioned.).PearsonInternational Edition.
NieburgO.(2010) Yoghurtfastestgrowing dairy market –YouGov research.[online] Availableat:
<http://www.dairyreporter.com/Markets/Yoghurt-fastest-growing-dairy-market-YouGov-research>
[Accessed:20 November,2011]
27. 22
PerkinsB.(2011). ChocolateConfectionery [online] Available at:<http://www.mintel.com/>
[Accessed:17 November,2011]
WilliamReedBusinessMediaSAS(2004). Latvian dairy goesmulti-functional. [online] Available at:
<http://www.foodnavigator.com/Financial-Industry/Latvian-dairy-goes-multi-functional>[Accessed:
16 November,2011].
