project bowl appetit three year strategic plan november 19 2001 n.
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PROJECT BOWL APPETIT Three Year Strategic Plan November 19, 2001
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  1. PROJECT BOWL APPETITThree Year Strategic PlanNovember 19, 2001 Julian Bostic Jason Kitayama Daniel Paul John Rogan Dai Shiraishi Judd Staples Marketing Strategy M/TH 1:15 – 3:30 Team 10

  2. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  3. BOWL APPETIT IS LAGGING COMPETITORS IN TOTAL SALES 2000 Sales $ (M) Source: Neilson panel data, 2000

  4. BOWL APPETIT HAS A NON-SPECIFIC FOCUS AND IS NOTCURRENTLY APPEALING TO ANY PARTICULAR MARKET Percent sales by income Percent sales by lifestyle 21% 22% 21% 25% 16% 29% 14% 15% 24% 13%

  5. MARKET PENETRATION PURCHASE STATISTICS SUGGEST GREATER LOYALTY FROM YOUTHFUL FOCUS Items purchased per trip Percent repeat buyers Youth focus Youth focus General focus General focus Source: Neilson panel data, 2000

  6. TEENS ARE A SPECIFIC DEMOGRAPHIC GROUPTHAT IS HIGH IN BUYING POWER GROWTH Buying power growth High 34-45 Teens Low 25-34 44-55 Low High Demographic growth Teen spending has increased from $75B to $130B in 5 years Source: US Census 2000

  7. MOREOVER, THE BUYING POWER OF TEENS IS PROJECTEDTO CONTINUE GROWING AT A RAPID PACE Number of teenage consumers is growing Teen access to money is increasing • Fastest growing segment of population • Teenage demographic group, currently around 31M is expected to grow to 35M by 2010 • Teens are spending money and developing into experience shoppers at increasingly younger ages • Teens receive an average of $50 a week from their parents • In 1999, teens spent approximately $153B • It is estimated that teens influence an additional $400B in family purchasing • Teens represent over 13% of all consumer spending Source: Teen Research Unlimited, American Demographics

  8. CAPTURING THE TEEN MARKET CAN TAP INTO THEVALUE OF CREATING LONG TERM CUSTOMERS “In terms of numbers, the teen market is not the largest; however, in terms of opportunity to make long-term customers, it is strategically the most important market.” “I don’t know of an industry where long term customers don’t cost less. You have to go through an initial set up charge of getting to know the customer, getting them set up on your database system, tracking them, doing a credit check, learning what they really care about, learning how to communicate most effectively. So, the longer you do business with someone, you’re amortizing that big front end fixed cost. In most businesses there’s a big acquisition expense.” “Long-term customers buy more often and buy higher priced items” Source: Teen Research Unlimited, American Demographics

  9. SUCCESSFULLY TARGETING FIRST-TIME BUYERS IS ESSENTIAL FOR LONG-TERM SUCCESS Young teen asks for product Parent purchases with coupon as first try Teen purchases from familiarity into college years Product becomes household staple • Make teens think of this product as they grow into their college years

  10. CURRENTLY, BOWL APPETIT DOES NOT HAVE AMAJOR PRESENCE IN THE TEEN DEMOGRAPHIC Percent sales to households with teens Households with teens purchase index Source: Neilson panel data, 2000

  11. THERE IS A LARGE OPPORTUNITY IN DESIGNING APRODUCT STRATEGY THAT APPEALS TO TEENS’ NEEDS • Bowl Appetit is suffering from a lack of consumer loyalty • Teens represent a loyal market segment with significant buying power • Bowl Appetit is not currently positioned to successfully compete in this market • Focus groups and in-depth interviews are necessary to determine how to best target the teen market Source: Teen Research Unlimited, American Demographics

  12. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  13. CONSUMER SURVEYS AND IN-DEPTH INTERVIEWS WEREUSED TO GUAGE THE NEEDS OF THE TEEN MARKET • 12 interviews in total • 7 boys, 5 girls • Covered a wide range of geography • Ages ranged between 15 and 18 • Depth interviews learnings • Teen attribute importance • Concept idea opinions • 34 survey responses in total • 16 boys, 18 girls • Covered a wide range of income classes • Distributed in a regional middle school • 11 Questions • 4 questions on usage patterns • 3 questions on brand awareness • 2 questions on preferences • 2 questions on demographics • Due to time and resource constraints, the survey sample population was not ideal: • All respondents from southeastern Massachusetts • All aged twelve or thirteen • Overwhelming majority Caucasian

  14. On average, these teens snack 4.3 days out of a 5 day school week • We see this as a great opportunity, and an untapped market • This was confirmed with the older teens which we interviewed SURVEY RESULTS CONFIRM THAT CHILDRENOFTEN EAT AN AFTER-SCHOOL SNACK

  15. TEENS ARE INCREASINGLY INDEPENDENT IN THE KITCHEN On Average Teens Cook For Themselves 4 Times Per Week Percent of teens cooking this meal Percent of teens using appliance (%) (%) 76% of teens cook after-school snacks and the microwave is their appliance of choice

  16. DESPITE MEETING TEENS’ BASIC REQUIREMENTS,AWARENESS AND TRIAL OF BOWL APPETIT IS LOW Percent of teen awareness Percent of teen trial (%) (%)

  17. TEENS HAVE SIGNIFICANT INFLUENCE OVER THEHOUSEHOLD FOOD PURCHASING DECISIONS Attribute rankings Percent of teens influencing food purchases • The rankings were somewhat as expected, with taste and convenience being seen as most important. • Taste • Ease in preparation • Nutrition • Portion size • Price • We believe that the low ranking for price is a function of the fact that it is often the parents that pay for these products

  18. TEENS VIEW CHEF BOYARDEE AS TARGETED TOWARD KIDSDespite Its Popularity, It Does Not Resonate With Teens Percent of teens believing Chef Boyardee targets this age group Tremendous opportunity to position our product as “more grown up” than Chef Boyardee

  19. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  20. A FAST AND EFFECTIVE STRATEGY FOR INCREASING MARKET PENETRATION IS INCREASING USAGE FREQUENCY Market penetration strategies Strategies to increasing purchase frequency and quantity • Increase number of users by attracting from competitors • Broaden customer base by converting non-users to users • Increasing frequency of purchase among present users • Increasing average quantity purchased per transaction • More effectively promote present uses • Identify and promote new uses • Promote more varied uses • Promote product usage at different times of the day, different places, and on different occasions Source: Contemporary Perspectives on Strategic Market Planning

  21. OUR NEW PRODUCT CONCEPT IS TO FOCUS ON THETEEN MARKET FOR BETWEEN-MEAL SNACKS Strategy Focus on microwavable between meal snacks Leverage GM competency in single serve shelf-stable “Enough with the kid’s stuff” Selling Proposition Teen market “The snack the cool kids eat” A snack designed specifically for teens’ needs Positioning Convenience provides independence from parents Growing up and need a more mature product Switching Logic Teen endorsements promote social acceptance

  22. THE SNAK PAX BRAND FOLLOWS OUR TARGET STRATEGYWHILE COMPLIMENTING THE GM BRAND PORTFOLIO • Develop brand specifically focused on teens • Currently few existing “pure teen” food brands in market • Minimize cannibalization of existing GM brands • Develop product line to specifically target after-school snacking • Current product offering in this category are not marketed as “after-school snacks” • Placement with current after-school snack substitutes • Separate product from existing Bowl Appetit products • Leverage current capabilities of GM • Shelf-stable products • Existing distribution network • Endorsement branding (Old El Paso) to enhance quality image of new brand “Simply, grab it off the shelf, and heat it in the microwave. SNAK PAX are ready when you are!”

  23. OUR INTERVIEWS RESULTED IN A MEANS-END LADDER THAT ILLUSTRATES THE LINK BETWEEN CONVENIENCE AND IMAGE Why must product be convenient? Why not ask for assistance? Why is independence important? Why is maturity important? So teens do not need to ask for parental assistance Preparation without assistance denotes a sense of independence to friends Teen independence suggests maturity Maturity is promotes an image of being older and “cool”

  24. PRODUCT DESIGNED TO TASTE AND IMAGE WANTS OF TEENS LEVERAGING THE ENDORSEMENT BRAND OF “OLD EL PASO” REPRESENTS FAMILIAR TASTE AND QUALITY X-Treem Spiralz ‘n Cheez Rotini pasta in a spicy cheese sauce Ingredients: Dry rotini and powdered cheese Package: Standard Bowl Appetit configuration Design: Bright yellow box with crazy fonts and colors Food: Vibrant yellow color with red and green pepper flakes Preparation: add water to fill-line, stir, and microwave

  25. PRODUCT DESIGNED TO TASTE AND IMAGE WANTS OF TEENS LEVERAGING THE ENDORSEMENT BRAND OF “OLD EL PASO” REPRESENTS FAMILIAR TASTE AND QUALITY X-Treem Nachoz Tortilla chips with dipping sauce Ingredients: Salty tortilla chips, spice jalapeno cheese dipping sauce Package: Dual containers (bowl in a bowl) Design: Bright yellow box with crazy fonts and colors Food: Common typical colors Preparation: Remove middle bowl (or not) and heat. Dip chips and eat.

  26. KEY ELEMENTS OF SNAK PAX MARKETING STRATEGY

  27. SUCCESSFUL TEEN MARKETING IS ACHIEVED THROUGH THE COMBINATION OF IMAGE, ADVERTISING, AND PLACEMENT Success Image Placement Advertising

  28. THE CHALLENGE OF TEEN MARKETING LIES IN DEVELOPING THE APPROPRIATE PRODUCT IDENTITY

  29. SUCCESSFUL TEEN MARKETING RECOGNIZES THEIMPORTANCE OF SOCIAL ACCEPTANCE… • Promotion should include a give-away item to entice teens to ask for the product • CD give away • Points promotion (similar to Sprite’s campaign) • Discounts at teen-centric stores (Pac-Sun, etc…) … AND LEVERAGES THE $82B AND GROWINGTEEN SPENDING ON OTHER CONSUMER GOODS • Seeking product endorsements by teen idols will aid in the teen enticement.

  30. SUCCESSFUL ADVERTISING CONVEYS AN IMAGEOF ACCEPTANCE AND “COOLNESS” • “X-treme” cheese expresses both the taste and the image targeted to teens. • Product presentation must be in-line with the overall product image. • Wild bowl colors • Flashy external packaging • Advertising to depict teenagers performing popular activities and preparing the product without parental supervision • Skateboarding • Bicycling

  31. DIRECTED ADVERTISING AND IN-STORE PLACEMENT ARE BOTH CRITICAL SUCCESS FACTORS • 36% of teens watch > 10 hours of TV/week * • 25% of teens listen to the radio > 10 hours/week * • Placement with the Chef Boyardee and/or Kraft Macaroni and Cheese will present a seamless “trade-up” for the shopper. • Distancing the product from the original Bowl Appetit will separate the product from the more mature version. Source: Rand Youth Poll

  32. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  33. OVERVIEW OF THE COMPETITIVE LANDSCAPE AND POTENTIAL REACTIONS

  34. CHEF BOYARDEE WILL PRESENT THE GREATEST THREAT Current position Potential maneuvers • TARGET: Children • TEEN ATTRACTION: High carryover • SEGMENT VALUE: High • COMPANY STAKE: High • Broaden marketing focus to wider age range • Resize current products for larger appetites • Mimic promotional giveaways

  35. KRAFT WILL ALSO POSE A THREAT TOTHIS NEW MARKET SEGMENT Current position Potential maneuvers • TARGET: Children • TEEN ATTRACTION: High carryover • SEGMENT VALUE: High • COMPANY STAKE: Medium • Focus marketing of Easy Mac to older teens • Change presentation to individual bowl format • Mimic promotional giveaways

  36. FRITO’S REACTION WOULD REQUIRE AREFOCUS IN THEIR ADVERTISING TOWARD TEENS Current position Potential maneuvers • TARGET: None • TEEN ATTRACTION: Salty Snack • SEGMENT VALUE: Low • COMPANY STAKE: Low • Launch marketing efforts toward teens • Mimic promotional giveaways

  37. RAGU IS LESS LIKELY TO RESPOND AS THIS PRODUCTIS NOT A MAJOR COMPONENT OF THEIR PORTFOLIO Current position Potential maneuvers • TARGET: Pre-teens • TEEN ATTRACTION: Carry over • SEGMENT VALUE: Medium • COMPANY STAKE: Low • Refocus marketing efforts toward teens • Mimic promotional giveaways

  38. PLOTTING ADAPTABILITY AGAINST SEGMENT VALUE IDENTIFIES THE THREAT LEVELS OF EACH COMPETITOR Threat High Unlikely reaction Adaptability (Ability of competing firm to approach the teen market) No threat Low reactive ability Segment Value to Total Organization (Value of teen segment to the total company)

  39. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  40. REVENUE PROJECTIONS • Assumptions • Market size: 31M teenagers* growing at 1.2% p.a. • % repeat buyers constant (25%) based on historic rate • # of purchases decrease due to competitive reaction • Price held constant ($1.49) Three scenario sensitivity analysis performed (5%, 10%, 15% new trial rate) *Source: Teen Research Unlimited, American Demographics

  41. REVENUE PROJECTIONS - ASSUMPTIONS

  42. REVENUE PROJECTIONS

  43. REVENUE PROJECTIONS

  44. AGENDA • Background and market situation • Characteristics of teen consumers • Product design and strategy • Competitive response • Revenue projections • Strategy implementations and next steps

  45. THE GOAL FOR YEAR ONE IS TO ESTABLISH A“TOP OF MIND” PRESENCE AMONG TEENAGERS Ubiquitous presence Develop a Snak Pax web site Sponsorship of outdoor teen events (X-games) Advertise on popular teen sites and TV programs Targeted advertising Year one Teen celebrity endorsements Free trial and distribution at teen events Grass roots marketing Prizes for getting friends to try CD and game giveaways Affinity branding “X-treem Team” club offering

  46. YEAR TWO WILL FOCUS ON EXPANDING THE FLAVORS AND OFFERINGS IN OUR EXISTING LINE OF SNACKS Existing customers Continue surveys and interviews to determine needs Develop new varieties to fill customer needs Establish rewards program for repeat purchasers Purchase frequency Year two Bundling to increase purchases per trip Expand distribution (C-stores, school vending machines) Untapped segments Healthier options to more specifically target female teens Maintain hip and trendy culture Brand building Expand placement in popular movies and TV shows

  47. IN YEAR THREE, EVALUATE SUCCESS IN THE TEEN SEGMENT AND CONSIDER EXPANSION INTO OTHER MARKETS Assess encroachment of competitors into snack space Competitive response Continue product innovations to defend market position Revise revenue forecasts and check against projections Financial assessment Year three Determine viability of continued investment Capitalize on strength of additional GM/Pillsbury brands New markets Expand throughout N. America using localized marketing Leverage scale of GM/Pillsbury to create barriers to entry Long term vision Advance recognition of after-school snack category

  48. APPENDIX A: THE SURVEY

  49. Heard of? Never Eaten 1 2 3 4 5 Chef Boyardee microwavable snacks Betty Crocker Bowl Appetit Kraft EasyMac Uncle Ben’s Frozen Rice Bowls Microwavable frozen pizza We need your help! We are a group of business school students at Duke University, and we are trying to find out a little bit of information about the eating habits of people your age. If you could take a few minutes to fill out our survey, it would really help us out! 1. How many times a week do you snack after school (before dinner)? ______ 2. How many times a week do you cook for yourself (including using the microwave)? 3. When you do cook for yourself, which of these appliances do you use? Check all that apply:        Microwave        Stovetop        Oven        I never cook for myself 4. What time of day do you cook for yourself? Check all that apply:         Breakfast         Lunch         After school snack         Dinner         After dinner snack         I never cook for myself 5. First, please tell us if you HAVE EVER HEARD OF the following products by placing an “X” in the first column. Second, If you have eaten them, please tell us on a scale of 1 to 5, with 5 being the best, how much you like the TASTE of the product by placing an “X” in the numbered column:

  50. 6. Please rank these attributes 1 through 5, with 1 being the most important and 5 being the least important in order of what is MOST IMPORTANT to you when buy any of the above items?        _____ How easy it is to prepare        _____ Nutrition        _____ Price        _____ Taste        _____ Size of the portion 7. Do you ask your parents/guardians to buy you food that you can prepare yourself?         Yes         No 8. How many times a MONTH do you eat Chef Boyardee products? ________ 9. Who do you think Chef Boyardee products are made for? Check all that apply         Young Kids (Ages 8 and under)         Pre-teens (Ages 9-12)         Teenagers (Ages 13-19)         Young Adults (Ages 20-29)         Adults (Ages 30 and over) 10. How old are you? _______ 11. What gender are you?         Male         Female