Essay on Associated British Foods Company

1.0 Company profile

London, England serves as the headquarters of this transnational retailing and food processing firm which operates in the food processing retail industry (Black et al., 2015). Lactose, enzymes, emulsifiers, baker’s yeast and sugar are produced in large quantities in Associated British (AB) Foods Company’s ingredients division making it the globe’s second-largest producer. Twinings, Jordans, Ryvita, Ovaltine and Mazola brands are examples of branded and private label grocery products manufactured in the grocery division of AB Foods Company. Some 384 stores of Primark, the Company’s retail division, are mainly spread across the United Kingdom (UK), Spain, Ireland, and Germany. Garfield Weston founded the company 86 years ago in 1935 originally as Food Investments Limited (Limb, 2004). Currently, Wittington Investments is the controlling shareholder with 54.5% of the Company. Under the stewardship of George Weston as the Chief Executive Officer, AB Foods Company earned a net income of £465 million as of 2020 and had an operating income of £810 million as of the same year (Sowmya & Samsai, 2020).

2.0 Marketing environment, market structure, and competition level and in the Czech Republic

Many small enterprises employing a few people and large multinational companies such as Kraft foods, Lactalis, and Nestle feature in the Czech Republic’s food industry. An increase of 48% for small enterprises with up to 10 employees was witnessed between 2014 and 2019 marking progressive development for the industry (Blažková et al., 2020). Conversely, an 8% decrease was recorded by large food companies. The small food enterprises constituted 83% of the total food processing entities in the Czech Republic in 2018 compared to 74% eight years ago which also amplified the labour demand in the industry (Dvouletý & Blažková, 2019). A 31% increase in the Gross Value Added (GVA) per person was observed in the food industry in general (Jakubowska & Radzymińska, 2019) The food processing industry in the Czech Republic is efficient despite low labour and it being small sized as suggested by its 19,000 euro GVA per person and 13.7 employees per business as compared to other European Union (EU) countries. Labour productivity and average size plummeted in neighbouring countries such as Germany in a 2018 survey (Blažková & Dvouletý, 2018).

Since 2000, promotion of regional products and encouragement of short supply chains has been part of a series of direct and indirect government interventions. Support of local action groups, support to tourism, the rural microbusiness establishment and supporting farm diversification are among the rural development programmes initiated by the government (Spicka, 2018). Publicly and privately organized farm and food festivals, private web-based initiatives, the label of food origin, the support to farmers’ markets, and government quality label and the regional label were the several national initiatives to the quality food and its visibility to consumers (Blažková & Dvouletý, 2017). The “Regional Food” labeling programme was established by the government under the Ministry of Agriculture as a platform for certifying regional products. The right to use the logo “Regional Food” for several years and a certificate of quality are up for grabs in the annual contest which pits the best products of regional origin (Reiff et al., 2018). The award for the winning products is designated to be used for four years by small and medium-sized enterprises (SMEs) which are eligible for the competition. An annual £2.7 million is sourced by the program which is now been in existence since 2007. Additionally, the company is complemented by promotional activities such as direct support to consumer lottery or food exhibitions as well as government information campaign (Velčovská & Del Chiappa, 2015).

3.0 Associated British Foods Company segmentation

The specific buying behaviour of customers is the basis for identifying segmentation according to the marketing strategy developed by AB Foods Company. Multifaceted factors influence the heterogeneity of customers’ buying behaviour, expectations and needs. These factors include but are not limited to values, lifestyle, income, gender and age (French, 2017). Groups which are specific and narrowly defined can be drawn from large, diversified target audience with the use of the segmentation technique in AB Foods Company. Groups sharing common characteristics can be created by obtaining customer-specific information from market segmentation surveys (Bernués et al., 2012). The market can be divided into small homogeneous groups by AB Foods Company following surveys that reveal the unique buying behaviour of buyers. Market division can be carried out by exploring buyers psychographic, behavioural, demographic, and geographic attributes. Development of an effective marketing strategy involves choosing the right market segments from one or more of the afore-mentioned segmentation strategies or combining all the strategies for more specific targeting by AB Food Company (Peštek et al., 2018).

3.1 AB Food Company targeting and positioning

The company’s resources and capabilities should match the target segment’s needs and expectations after dividing the larger customer market into smaller groups (Camilleri, 2018). The identified segment’s growth potential and commercial attractiveness can be used to influence targeting. According to AB Foods Company’s growth objectives, capabilities, and resources as well the target segment’s attributes, the company can choose one or more segments. Some indicators can be used to evaluate each segment’s growth potential and commercial attractiveness. These indicators include:

• Easily accessible segments.
• Additional marketing costs should not be more than the estimated profits.
• Have solid differences.
• Appropriate sizes for the identified segments (Andaleeb, 2016).

A positive image of the product offered in the mind of the buyer could be created by AB Food Company by setting a clear positioning statement after choosing the right target market and segmenting the customer market (Schlegelmilch, 2016). An effective positioning strategy can be developed by AB Foods Company using the following steps:

• Answering questions related to AB Foods Company’s positioning statement.
  • What is the company’s competitive edge?
  • What are the target markets’ wants and needs?
  • How are those needs served?
  • What is the core objective of the brand?
• A positioning statement will be developed by the answers to the above questions.
• Targeted positioning message could address some areas which could be revealed by the comparison between messaging strategy with competitors and their communication.
• The gaps that could be potentially filled with the offered product should be identified by comparing the competitors business with the company’s strengths and weaknesses.
• Evaluate the company’s position in the market while analyzing positioning of competitors.
• Collect qualitative and quantitative data to periodically test positioning test developed from different market, customer and competitor surveys.
• Brand positioning adjustments should be done using the test results (Agustim, 2011).

4.0 Buyer behaviour analysis in AB Foods Company

The knowledge of the potential customer base by AB Food Company determines the development of effective marketing mix strategies (Misra et al., 2013). If the customers’ attitudes, expectations and needs are understood by the company then the strategies will be more effective. To conduct buyer analysis, the following steps should be followed by AB Foods Company:

• The current and potential customers should be clearly defined by AB Foods Company to begin with. Characteristics, traits and motivations of a group of buyers are used as a basis to divide them into several segments at this stage. Current buyers are easily identifiable than potential ones.
• The possible reason for the difference in expectations and needs of various groups is information that should be offered by the buyer analysis.
• The buyer groups with more growth potential and profit as well as how the product offered serves the needs of different groups should be analyzed by AB Foods Company. Customer personas and profile will be developed with the help of this information by the company (Scott et al., 2017).

When developing the buyer profiles, the following factors can be considered by AB Foods Company:

• Small measurable segments could be the unit of division for current and potential customers as the company identifies the total market size in the customer analysis.
• Some observable differences should be seen in the profiles of the buyers.
• To identify psychographic profiles behavioural analysis should be conducted by the company. Factors considered during buying criteria and their relative importance are identified and weighed during this analysis. Price, quality, convenience and prestige are the common buying criteria. Buyer personas should be developed by AB Foods Company. For customer personas to be developed, the following aspects should be included:
• Difficulties endured due to unaccomplished needs and desired solutions.
• Possible influencers.
• Favoured communication channels.
• Location, age, family, gender and other demographic information (Awunyo-Vitor et al., 2013).

Development of segmentation and customer analysis should run concurrently. Strategies of segmentation, targeting and positioning can be developed by AB Foods Company with the help of the information obtained from the customer analysis.

5.0 Marketing communication strategy

A comprehensive market analysis is required for the development of a marketing communication strategy for AB Foods Company. The customer market could be assessed qualitatively and quantitatively to facilitate this analysis. Exposure of potential threats and identification of emerging opportunities are the benefits that accrue to AB Foods Company as a result of the information collected from the surveys in the market (Filieri, 2013).

5.1 AB Foods Company development of marketing communication strategy from market size analysis

To determine the size, the market potential and volume should be evaluated by AB Foods Company. Upper demand limit consideration and potential customers are included in the market potential. Total turnover, realized sales and other indicators are included in the market volume. Trade association data, published industry reports, customer surveys, government data, and financial data of industry’s major players can be used by AB Foods Company to accurately determine the market size (Ngamsutti, 2018).

5.2 AB Foods Company development of marketing communication strategy from market trends analysis

Especially when there is high environmental turbulence it is imperative to analyze the market trends which are emerging. Customer analysis, choice modeling, risk analysis, and marketing mix modeling are some of the various trend analysis techniques that can be utilized by AB Foods Company for analyzing emerging market trends. Market trends are also shaped by environmental forces such as economic, social, regulatory, legal and political changes and these too should be monitored by AB Foods Company (Murray et al., 2011).

5.3 AB Foods Company development of marketing communication strategy from market growth analysis

The market growth rate can be determined through extrapolation of historical data by AB Foods Company. The current lifecycle phase of the industry can be determined by the company using this information (Luxton et al., 2015).

5.4 AB Foods Company development of marketing communication strategy from market profitability analysis

Market profitability can be determined by using Porter’s five force framework by AB Foods Company. Market profitability will be negatively affected by the high customer power demonstrating the options available for customers of AB Foods Company. During the negotiation process with suppliers, AB Foods Company holds a strong position if there is low supplier power which favourably impacts profitability. The market will see less new entrants if the barriers of entry are high. The attractiveness and market profitability of AB Foods Company would decrease when there is high competitive rivalry and high substitute threat (Palepu et al., 2020).

6.0 Marketing mix elements in new market

6.1 Product

Customers’ needs solution is reflected by this element of marketing strategy. In order to gain a competitive edge, unique features, name and product design should be developed by AB Foods Company. Augmented services, brand name, packaging, features, variety and quality should be the aspects considered when product strategy is being developed (Išoraitė, 2016).

6.2 Pricing

Products’ value for targeted buyers needs to be evaluated in this element of marketing strategy. Setting discounts, payment period, credit terms, and price list will be the focus of AB Foods Company’s pricing strategy. The prices of the products of AB Foods Company will be lower than those of the competitors as a price penetration strategy. On the basis of the discounted prices, some market share will be ceded to the company. Nonetheless, a price war may ensue among competitors as a retaliatory measure (Huang & Sarigöllü, 2014).

6.3 Distribution

When developing its distribution plan, some important decisions have to be made by AB Foods Company in this element of marketing strategy. The company should elect:

• Whether to use a distribution partner or use its own means in order for their products to reach targeted customer segments.
• Whether it will use direct or indirect distribution.
• Whether it would combine the online and traditional brick and mortar distribution network or it will use the networks separately (Singh, 2012).

Conclusion

In order to have an edge over rivals, a differentiation basis needs to be set clear by AB Foods Company in the increasingly competitive market for survival. Identification of unique selling propositions (USPs) should be the focus of the marketing strategy of AB Foods Company. Uniqueness of idea, lowest cost or highest quality are examples of USPs.

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