1. Marketing Plan
1.1 Description of the Company
Wimm-Bill-Dann is the is the largest producer in dairy products and one of the leader children’s food in Russia. WBD has more than 35 production facilities in Russia, Ukraine and Central Asia. The Company distribution network covers 100% of the Russian territory and also includes the CIS. Serving needs more than 280 mln. consumers1.
More than 17,000 people work at WBD’s production facilities and trading affiliates.
Wimm-Bill-Dann is the one of the first Russian company who start to produce packaged juice products. Before WBD, no one in Russia produce packaged juice. Imported juice products in modern packaging were virtually non-existent2.
The most recognized brands include: Domik v Derevne (Little House in the Village), Chudo (Wonder), Vesely Molochnik (Happy Milkman), Imunele and Lamber. We also have Russia’s best-known juice brand, J7. Another less popular brands are Lyubimy Sad (Favorite Garden), Chudo-Yagoda (Wonder-Berry), and Essentuki. The most recognized baby-food brand in Russia is the trademark Agusha3.
The Company's revenue has grown from $ 1,189.3 million for 2004 to $ 2,181 million for 2009 (IFRS). Revenues for 2009 decreased by 22% compared to 2008.
The mission of the company is to help the entire family live healthier lives by enjoying the nutritious and delicious food and beverage products every day throughout their lives.
Highlights for the first quarter 20104.
Group revenue increased 19.1% year-on-year to US$615.3 million driven by solid volume growth across all segments and helped by a stronger ruble
Group gross profit increased 2.3% year-on-year to US$172.0 million
Group gross margin declined to 28.0% from 32.5% compared to prior year as a result of sharp increases in raw milk costs in the first quarter of 2010
Group net income almost tripled to US$33.7 million from US$12.6 million a year ago
Net income as a percentage of sales increased to 5.5% in the first quarter of 2010 from 2.4% in the same period last year.
1.2 Products and Services
The principal dairy products include:
Traditional products, such as sterilized milk, cream and butter, as well as traditional sour-milk products such as kefir, cottage cheese, soft cottage cheese and sour cream.
Yogurts and dairy desserts, such as drinking yogurt, mousse, fruit-flavored milk and kefir, puddings and flavored cottage cheese.
Cheese products, including hard and processed cheese.
The beverage products include:
juice and nectars produced from juice concentrate,
enriched juice-based drinks,
traditional berry-juice-based drinks,
mineral water.
The baby food products include:
Liquid dairy products for infants under the age of three;
Juices for infants under the age of three;
Meat, fish, chicken, fruit and dairy purees for infants under the age of three;
Products for pregnant women and nursing mothers.
1.3 SWOT analysis
A SWOT analysis is a tool, used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, Opportunities and Threats for our company.
This is a summary of the business’s most important strengths, weaknesses, opportunities and threats.
Strengths
Good management skills (will run business)
Deep knowledge and understanding of both Russian market and foreign benchmarks.
Effective organizational structure – efficient and fast decision making.
Excellent quality product (adds to reputation)
Weakness
The struggle to build brand equity
Opportunities
More offerings in economy segment
More price segmentation
Expanding market share
Threats
High price (Price is the major threat. If the price goes certain beyond the exact price at the market it will affects the consumption of the juice. Because when the price goes higher customers go for the substitute).
Consumers become more prudent
Increasing supplier prices (resulting in reduced profitability)
Effective cost management is crucial to survival
Tougher monetary environment, many companies forced to cut advertising, headcount, salaries
More stringent financial and borrowing environment
Competitors could harm by getting aggressive in their promotional activities.
1.4 PEST Analysis
Political analysis
Government is becoming really conscious about the healthy nation and healthy food
Economical analysis
Economic factors are the main factors in any industry who affect to the industry in many ways
Inflation impacts highly negative
Social analysis
Social programs
WBD sponsors various socially significant projects, donates funds to orphanages, hostels, churches and cultural establishments.
Environment
Central government is going to be seriously concerns about environmental issues
Technological analysis
Through modern equipment WBD increases efficiency of its business and can has up-to-date data about their products
1.5 Market Analysis
According to the Russian Union of Manufacturers of Juice by the end 2008 manufacture has concentrated in hands of four companies of giants5. there is a unique opportunity at the Russian market of juices. There are a lot of different players at the market, but there is no the strongly pronounced leader. The main players control 80% of the market
«Lebedyanskii» (market share 32%),
«Multun» (market share 22%),
«Nidan» (market share 17%)
«WBD» (market share 16%).
Appendix 1 shows us the structure of the market of juices in Russia.
According to the report «RosBusinessKonsulting» (Russian market of juices. RBK. Market research, 2008) the premium segment of the market is chosen by more prosperous part of consumers. In connection with growing incomes of the population the class share premium, about 2006–2008 has grown from 0,4% to 2,7%.
Drinks of an average price segment are in demand at working modern young people. The share of this segment practically has not changed in comparison with 2007 (12%). Now there is a rapid development of the bottom average and bottom price segments of the juice market. According to experts of the company in 2009 together these segments occupied more than 50% of the market.
1.6 Market Growth
According to the researchers from «RosBusinessKonsulting» (Russian market of juices. RBK. Market research, 2008) growth rate are going to be about 8% during 2009–2012.
As predicted production volume of the market of juice by the year 2012 will be 3,5 bln. liters a year. (Appendix 2)
2. Marketing Strategy
WBD will launch the highest quality of fruit juice «Seila». The strategy is to position «Seila» as a natural and healthy juice; the strategy will seek to create customer awareness regarding product.
2.1 Mission
WBD’s mission is as follows:
Quality: Our fruit juices are the highest quality, most nutritious food products…because we will accept nothing less.
Innovative: Our products have always been in the forefront of the health and nutrition wave. Innovative products, state of the art manufacturing, quality assurance and industry expertise are the bases for our past and future successes.
Integrity: Our customers depend on the quality of our juice products. Our commitment to the highest standard is the foundation of our customer's trust in WBD. Delivering freshly made juice to consumers depends on extensive cooperation and mutual reliance between supplier and retailer. We stand behind our product, our service and our word.
Reputation: Our juices have a reputation on offering the most delicious, nutritious, 100% natural with no artificial flavors, colors and preservatives.
2.2 Marketing objectives
Market Share Objectives:
To gain 40% of the market for soft drink industry by August 2011.
Profitability Objectives:
To achieve a 10% return on capital employed by January 2010.
Promotional Objectives:
To increase awareness of the product on the market.
Objectives for Survival:
To survive the current market war between competitors.
2.3 Key success factors
Key to success for «WBD» will include:
Providing the highest quality product
Competitive pricing
State of the art production and packaging technology is a must in this industry
A strong distribution network
2.4 The demographics of customers
Young professional, ages 25 – 45;
Average income of $40,000+ a year;
Involved in athletic activity;
Shop in upscale health/natural food stores.
2.5 Product
Products sold as fruit juices may be sweetened if the label states the presence of the added sugar or other wholesome, nutritive sweetening agent (saccharin is not a nutritive sweetening agent), but they should not contain added water.
Fruit juices should be manufactured only from clean, sound fruit in clean equipment. Proper preparation involves thorough washing, sorting to remove wormy or spoiled fruit, and trimming. Flies should not come in contact with the fruit or equipment.
WBD will offer a broad range of juices to suit the customer, down to the smallest detail.
The company will offer a range of innovative juices, including
100% pure carrot juice, nothing added
Carrot and celery juice
Beet and apple juice blend
A lovely combo of beet, carrot, pear and ginger
Tomato, beet and ginger
Kiwi, apple, pear and some greens
An invigorating mix of apple, pear and orange
Carrot and orange
WBD will use organic ingredients so that consumers will get even more goodness from the drinks. For a reasonably healthy person there is therefore no need for vitamin pills nor dietary supplements: a raw juice from WBD contains the richest natural source of minerals, vitamins, enzymes and other vital trace elements that will guarantee plenty of energy and vitality to help your body neutralise toxins, boost its immune system and generally help you go through your busy day.
All drinks are freshly juiced to order and to enjoy them at their best we will recommend to consume them within 8 hours after open the bottle. Remember also that by consuming organic produce, you help preserve our planet's natural balance and protect its biodiversity.
2.6 Price
Different price in different seasons
Summer is a good season for fresh juices in Russia. The average temperature in Moscow during the summer is 24–28C. (The summer of 2010 is extremely hot it’s about 30–34C). The company can change their product prices according to the season. So in winter the prices might be slightly less than in summer.
Price Level
Maintain price level in all segments at 15% higher than competitors to reinforce the quality image.
2.7 Place
Distribute direct to the client where possible.
Distribution channels
Direct channels
Selling the products in the different departmental stores by using own transport. In this case the company will have more profit margin.
Indirect channels
Selling the products through whole sellers and agencies to cover all area.
Intensive distribution:
Retail outlets, Hyper Mall, Supermarkets
Small shops
Entertainment zone: Restaurants, Cinemas, Parks, Theaters
Petrol station
Newsagents
Schools
Sports, Health clubs, Gym
Entertainment venues
Getting shelves
In order to display products more clearly and attractive for the customers in the big departmental stores – the company should get central shelves – in eye-catching positions. Normally we should keep our products freezers near the entrance of the stores.
2.8 Promotion
WBD will promote products in several ways.
WBD will do sponsorships with different exhibitions, presentations, shows and events.
Examples:
Festivals and shows: «Seila» commissions and facilitates cutting edge artists, musicians, designers, film-makers, etc to curate and create events and happenings. During any event a mix of multimedia: music, video, advanced technologies in entertainment and show, should be present. «Seila» Entertainment element by no means should be limited to laser shows and trendy DJs. (the sample of advertisement see Appendix 3).
Interactive entertainment with content creation by consumers: Like in Web 2.0. and 3.0, «Seila» enables consumers to input into entertainment and show by sharing/creating content. For example, screens with live puzzle of pictures made from consumers’ content (images, videos, photographs), or music and light shows made of consumers’ content (voices, music, ringtones, etc); interactive 3D games and simulations.
Purposeful technologies for entertaining and educating: «Seila» stations with content transmission, powered by QR codes, Bluetooth, etc. Content can be various, e.g. music, useful instant information, videos, pictures and photos.
Word-of-mouth
Creating awareness among consumers: the main objective for this phase is to create awareness about the product among consumers who will turn into potential customers. The word-of-mouth effect is the goal here – it will give a kick to boost initial sales.
World Wide Web
The web site will be tool to get closer our customers and understand them better and will serve an utility value.
Online Advertising:
Internet Advertising
Affiliate Program
Radio & Television Advertising:
Comcast Spotlight
Commercial Radio
TV commercial
Promotional Campaigns:
Club Events
Billboards and holdings
Print Advertising:
Print media
Advertise monthly in magazines that are specifically targeted to production managers in the automotive, marine and heavy industrial segments.
Advertise monthly in magazines that are aimed at production managers in the general industry.
Advertise quarterly in magazines that are aimed at purchasing officers.
Newspapers
Sunday Advertisements
PR:
PR release to be initiated each month to various trade journals and magazines.
Lost Customers
Contact monthly all past customers that have not re-ordered to ask why not and see whether we can win back their business.
Existing Customers
Follow up all new customers two weeks after they purchase to ensure they are satisfied with the product.
Send quarterly newsletter to existing customers to keep them informed of our other products.
Try and up-sell all enquiries for our standard range to our premium range.
3. Control of Performance
The purpose of WBD' marketing plan is to serve as a guide for the company. The following areas will be monitored to gauge performance:
Sales: quarterly and annual.
Production Costs: quarterly and annual.
Customer satisfaction.
Market share analysis.
Competitor profile – Keep updated competitor profile.
Marketing information system – Document on every enquiry «How did you hear about us?»
Produce monthly sales reports by product, by market segment, by territory and sales representative.
4. Strategy and Implementation Summary
Large soft drinks companies advertise direct to consumers, sponsor sporting events, concerts, radio programs, etc. Competing with such large campaigns is obviously unrealistic for a small soft drinks producer. A branded product will benefit from publicity rather than advertising. This is easier to achieve if the product is unusual.
The strategy of «WBD» is to focus on our niche market which is health/natural food stores that serve the young active professional.
Marketing Strategy
«WBD» will introduce its products at 20% off regular price during the first month. In addition, «WBD» will co-sponsor local athletic charitable events to raise the visibility of the brand name.
Sales Strategy
The sales strategy is to build customer loyalty in the new markets. «WBD» will increase its sales force to focus on the new markets.
5. Individual Critical Reflection on Learning Outcomes
• The specific sources of value offered by my chosen company Evaluation the extent to which my advertisement has contributed to the value offered by the company to its customers.
Wimm-Bill-Dann has some specific sources of value for its customers. The first one is quality. Its fruit juices are the highest quality, most nutritious food products…because it will accept nothing less. The second one is innovations. Its products have always been in the forefront of the health and nutrition wave. Innovative products, state of the art manufacturing, quality assurance and industry expertise are the bases for Wimm-Bill-Dann past and future successes. The third one is integrity. Its customers depend on the quality of its juice products. Its commitment to the highest standard is the foundation of its customer's trust in WBD. Delivering freshly made juice to consumers depends on extensive cooperation and mutual reliance between supplier and retailer. Wimm-Bill-Dann stands behind its product, its service and its word.
• The reflection of my achievement of up to three of the module learning outcomes
I think the most important learning outcome I gained from the making marketing plan is putting together its different parts. I went through all the stages of composing a plan for Wimm-Bill-Dann, from market analysis to revenue/cost spreadsheet calculations. This experience is of the practical use for me. With this knowledge it will be easier for me to start my own business and to feel more comfortable in developing other marketing plans. Especially useful was making market analysis, which involves a lot of efforts and which helps to understand the process of building the business step by step.
The next important learning outcome I gained is absolute necessity to find a way of effective communication with customers. I am sure that the role of communication in marketing strategy is absolutely necessary. It provides transferring information, ideas, and plans among multiple customers. It is a vascular system of any marketing strategy. Communication process is inevitable for marketing process and defines how a product or services would exist. All possible marketing functions and roles such as product placement, promotion could not be properly performed without effective marketing communication.
Another good learning outcome worth mentioning I’ve learned from the process of making marketing plan is identifying which marketing ideas have real commercial potential.
There are three very good tools that can help to make a successful marketing plan. The first one is to create exceptional utility – to identify where and how the new product or service will change the lives of its customers. The second one is setting a marketing strategic price – it must not only attract customers in large numbers but also help to retain them. And the third tool is building a profitable business model – a good business model is itself a powerful defense against imitation.
• My expectations at the start of the module
At the start of the module I expected that there are three options to fight the rivals: attack, coexist, or become low-cost players. None of these options is easy, but the right marketing plan can help learn which strategy is most likely to work. It is recommended not to launch the price war with your competitors. Instead companies should increase the differentiation of their products by using a combination of tactics, intensify differentiation by offering more benefits to consumers.
• The experience I bring to the module in the context of the learning outcomes
In the context of the learning outcomes I brought to the module a lot of experiences. First of all, breakthrough pricing strategy can destroy competitors and shake up industries. By offering lower prices and better services than its rivals Wimm-Bill-Dann simply took their customers away. The invention and deployment of new ways of doing work enabled Wimm-Bill-Dann to build customer loyalty.
Wimm-Bill-Dann faced a number of operational challenges from the first days of its creation, but it overcame each of them one by one. By using the models of the most successful Internet retailers of that time, they identified characteristics that are mostly appealing to customers: value, convenience and selection. These three characteristics are the main pillars that create a stable base for the company.
The initial pricing model that Wimm-Bill-Dann deployed was similar to that offered by traditional drinks producers – charging for a movie, shipping costs and extended rental fees. But facing a frustration from their early customers regarding the prices Wimm-Bill-Dann shifted to its popular organic drinks, which became Wimm-Bill-Dann’s key insight value.
Soon after that Wimm-Bill-Dann adjusted its pricing system it helped to significantly simplify the program and made it easier to explain the program. This compelling market proposition added a new group of fans for whom drinks were a regular part of their daily life.
In order to better balance customer demand, Wimm-Bill-Dann developed a proprietary recommendation system that increased the utilization of Wimm-Bill-Dann’s product line by satisfying customers.
• The experience has been used to achieve the learning outcome
I used this experience through the process of creating the marketing plan and realized that usually the barriers are low and there is no single competitor that controls significant market share. But at the same time environment is likely to get tougher and tougher due to raising amount of possible competitors and increasing set of features and applications with convenient and also disruptive services that can be used in order to lower the cost structure and prices accordingly. To be successful a company should increase the differentiation of their products and services.
• My comment on the views on the process
The process of making marketing plan is very challenging. On my opinion marketing strategy is must be deemed as the best one. Building marketing plan from the ground (customers’ needs) is a hard work. The process helped me to realize that Wimm-Bill-Dann marketing plan should be based on the right strategy steps and tactics, such as: a) strategy focus (delivering drinks is a service that needs to be focused on definite market demand backed by appropriate product, strongly targeted customers and becoming pricing model), b) adjusted product strategy, c) justified pricing model (to target long-term customer relationships and d) right target market.
• Assess the prior knowledge and skill the learning outcome
I had prior knowledge and skill the learning outcome how to create a practical business plan. I spent hours tailoring all the ideas and going through all the stages of composing a business plan including introduction of business idea and why it is attractive to start it, overall market appeal, customer value proposition, profit formula, key resources and processes, and financial statements. This experience was very practical for me in the future to start my own business or even to work with other people in developing their business ideas.
Another prior knowledge I had was that diversity of ways to communicate with customers can be a key driver in achieving marketing goals and targets. Through a series of cases, practical applications, presentations and interactive dialogues I understood both the importance and the power of diversity and how to communicate and manage it in real life. I developed an understanding of diversity as a competitive advantage in marketing environment.
The meaning of innovation in creating potentially interesting and useful marketing plan is another prior knowledge I had before. Innovative marketing model or idea may change any industry completely providing competitive advantages and benefits. Invention and deployment of new ways of doing work is all about marketing innovation, but managers usually ignore and uninterested innovations. It is very important to be innovative especially in our days when new ideas get shorter life period.
• My comments about the changes as a result of this learning
I understood that marketing plan is very important in order to succeed in any business. Usually the barriers are low and there is no single competitor that controls significant market share. But at the same time marketing environment is likely to get tougher and tougher due to raising amount of possible competitors and increasing set of features and applications with convenient and also disruptive services that can be used in order to lower the cost structure and prices accordingly. To be successful a company should increase the differentiation of their products and services.
• My comment about the process of learning
When I was undergoing the process of learning I felt that there are some very important marketing bases to succeed. The first one is the philosophy «Grow and divide». Such philosophy is rather beneficial. It doesn’t permit the company to become a large mechanistic structure unsuitable for fostering innovation. The next one is innovation culture and management support.
• The questions that I have been concerning the learning outcome and the actions that I am going to take to address them
Concerning the learning outcome I have the next questions. How to increase the amount of practical examples, games and cases in creating marketing plans. It provides a class additional to theory practical understanding of how to implement all those thriving marketing ideas. Inviting special guest which are able to share their experience is all very helpful for educational process. All this can be students interested in the class and attract their additional attention to practical issues.
I would also suggest increasing team working as a very practical and absolutely necessary experience in any marketing field. It also helps to build the network with other students. Working in a team helps to gain an ability to create a dialogue while communicating and improve communication skills. Possessing this skill helps to identify real problems, develop solutions, and reach common understandings. It is also important to be able to put yourself in «other’s shoes» to virtually transfer yourself to the place of your communicator in order seeing yourself from the other person’s perspective. Being a part of a team gives students a chance to share their ideas and have more opportunities in their unpredictable future.
Another concerning for improving the learning outcomes in the MBA program is creating Marketing Incubator. The purpose of this incubator is to provide the students an opportunity to put their marketing ideas in practice, to make them work in reality. It is may be organized as competition with rewarding a team with the best business plan financial funding to put this idea in practice. This would definitely encourage students to bring and develop the most practical and reliable marketing ideas.
food producer analysis customer
1 http://www.wbd.com/profile/geography/
2 http://www.wbd.com/profile/history/
3 http://www.wbd.com/profile/snapshot/Default.aspx
4 Delivers volume growth and share gains in Q1 2010. WBD
5 Russian Union of Manufacturers reports. 2009.