Company Mexicali – Marketing Plan Essay Example

will venture with a distributor to get the products sold to retailers, wholesalers and catering. In order to gain bigger brand awareness it would be desirable for the beer brand to be sold additionally in off-license stores as well. However there is no real off-license store chain in England or the United Kingdom. That is why the company should sell its beer at the biggest two online liquor stores. To reach the target group Mexicali will make use of promotion tools that reach a wide audience. Accordingly, a media mix, onsisting of internet, TV, print media and billboard advertisement was drawn.

Furthermore, Mexicali will undertake trade promotion, for example trade shows and promotional packages, to promote Mexicali beer to the distributor and sales promotion through additional gifts as well as discounts to promote the beer to customers. The promotional budget is set at 40% of the yearly revenue for the first two years of operation. In the third year the budget will be decreased to 30% of the revenues. The financial analyses indicate that the introduction of Mexicali beer to the UK market is profitable and feasible.

INTRODUCTION

Mexicali is a Mexican beer brand with a long history, which dates back to the year 1923 when it started producing and serving beer to local customers and tourists. However, fifty years later the brewery closed its doors. Nowadays the company has reopened and is ready to serve worldwide the original, Mexican lime flavored beer, called Cerveza Mexicali Pilsner, with the traditional formula and logo. We, as a marketing firm, are hired by Mexicali to introduce Mexicali beer to the beer market of the United Kingdom.

In the United Kingdom, a

lot of traditional British beers with their own rich histories are available, alongside with imported beer. Men usually have their own preferences regarding beer, e. g. bitter and ale, depending on the region. Women, on the other side, prefer wine and normal strength beer, cider and lager. Since the beer market for men is rather saturated, because of the abundance of imported beers next to the popular traditional beers, women aged between 18 and 35 years old will be targeted. It is planned to mainly distribute the beer to areas in England to reach a relatively high number of customers within a small radius.

After determining the marketing strategy, including target group and demand estimations, the marketing mix will provide the relevant information regarding product, distribution, promotion and pricing of Mexicali beer. Finally, financial statements will be drawn, in order to conclude the profitability of this marketing plan.

METHODOLOGY

The purpose of this report is to develop a feasible, competitive and profitable marketing plan for Mexicali Company in order to introduce “Mexicali” beer successfully to the UK market. Sources used for the marketing plan have to be reliable, valid and up-to-date.

The information given was gathered through primary and secondary research. Effective group work is the most important element to develop a successful report. Therefore group rules have been developed and fixed group meetings have been set at the beginning. Moreover the work has been divided, so that it was possible to work also at home. Nevertheless it was of great importance to meet with the whole group at least twice a week to develop ideas, agree on specific strategies, make important decisions and to have an insight

into what had already been done and what was still missing.

First of all it was necessary to collect as much information as possible about the target country, the United Kingdom. Therefore a cultural, economical as well as a market and competitive analysis have been drawn, in order to get enough background information and to be able to understand the UK market. Based on this information it was possible to determine the potential target customers for “Mexicali” beer and to decide on the target group that would be most effective to attract. The next step was to develop a successful marketing strategy and to choose on the right marketing mix matching “Mexicali” beer? target group, including decisions on price, distribution, promotion and price.

Primary research includes information obtained through field research and expert interviews. In order to get professional advice for the distribution of “Mexicali” beer, the management director of a distribution company, Rick Wright, has been contacted. Secondary research consist of information obtained through the Internet and topic related textbooks for marketing and international marketing in order to get facts and actual information about the UK market and related information concerning the target group and the marketing mix.

During group meetings everyone brought in creative ideas and knowledge. Moreover everyone was supporting the other group members and tried to help them out, in case they were not able to find the right information. Furthermore, deadlines were set to control the group work process and during meeting the finished work has been reviewed together, so that everyone was familiar with the whole content of the report.

MARKETING OBJECTIVES

As a new beer brand to enter UK market, it

is essential for Mexicali to successfully establish the brand name and image among the local customers.

Therefore, short-term, medium-term and long-term goals have been developed.  Introduce Mexicali beer successfully on the UK market. Position Mexicali beer next to the primary competitors according to the positioning strategy. By the end of first year, Mexicali estimates to gain respectively 1 percent of UK’s beer market and additionally 0. 5% of the female wine consumers. The brand awareness of Mexicali beer is expected to reach 25% of the target group’s population due to the promotion strategy.

POLITICAL FACTORS

The United Kingdom has a Constitutional Monarchy and Commonwealth Realm. The political system is headed by a hereditary monarchy, which is a more or less ceremonial position, currently held by Queen Elizabeth II. The three arms of the state are the executive, judicative and legislative. The executive is lead by the Prime Minister, David Cameron, and the cabinet of Ministers. The judicative consists of the Supreme Court of the UK, The Senior Courts of England and Wales, The Court of Judicature, Scotland’s Court of Seniors and he High Court of the Justiciary.

ECONOMICAL FACTORS

The economical crisis had a strong impact on the United Kingdom; the GDP has been declining by 5% during the 2 3 4 period 2008/2009 and is just starting to recover while inflation rates and unemployment are still up . Furthermore, the UK has to account the biggest fall in alcohol consumption in 60 years.

This 5 negative effect is additionally supported by the remaining high taxes on beer. Even though the British economy might now find its way out of recession, the number of closing pubs is still historically

on the highest 6 level, causing thousands of lost workplaces.

SOCIAL FACTORS

The United Kingdom has about 62 million inhabitants , whereas the age group 45- 59 years is considerably the 8 9 largest, closely followed by the age class 35-44 years. The population growth rate is at 0. 3% in the year 2010. With regard to the gender distribution, women significantly outweigh men; however the latter recently catch 10 up.

TECHNOLOGICAL FACTORS

The internet became the biggest advertising platform to reach potential customers. It is now a huge market for companies to easily find and inform buyers from all over the world. More than 75% of the British inhabitants 11 have access and also use the internet.

THE INDUSTRY

The brewing industry of the United Kingdom is worth ? 52. 2 billion; selling more than 133 billion litres of beer 12 13 per year and earning global revenue of ? 147. 7 billion in 2006. In 2010 approximately 770 British breweries are producing beer in the UK.

However, the British beer market has been changing the last few years. The trend goes towards an international market with about 50% foreign control and higher concentrated industry with mass production. Nowadays, there are only a few big players on the British beer market such as Scottish & Newcastle PLC, Coors Brewers Ltd. , InBev UK Ltd, Carlsberg UK Ltd, Diageo PLC, Anheuser-Busch Europe Ltd, 14 Greene King PLC, Heineken UK Ltd, Marston's PLC and Wells & Young's.

MARKET TRENDS

Several trends have a significant impact on the development of the beer industry. First of all, the continued 15 demand for healthier lifestyle and wellness leads to higher sales in

the “light-beer” sections. Furthermore new beer styles such as beer cocktails or for instance coriander/orange flavours affect the market and change the overall taste and flavour preferences of the customers. Hence there is an increasing request for experimental beer types, such as sour beer, extreme beers, with up to 30% alcohol or hybrid styles which are brewed together with fruits or whiskey.

Despite that, the trend goes forward local craft beer brands, a higher 16 awareness for locally produced products and creative labelling. On the other side US-brands are now heavily penetrating the British market, for example with hop-heavy beers, that fill the gaps that British brewers failed 17 to fill.

MARKET DEVELOPMENTS

Number of Breweries Number of Breweries (UK) 8000 6000 4000 2000 0 Graph 1: Number of breweries in UK Major market developments are the general declining beer consumption in the UK, especially by youngsters.

However, many trends such as the increasing sales in Northern Ireland, the rising numbers of breweries and 19 women drinking alcohol show an opposite effect. Additionally, the British might not be Europe’s heaviest alcohol drinking country; however, they are more likely 20 to drink large quantities at once. The government reacted to the bad image and implied new changes for licensing alcohol in pubs, in order to prevent anti-social behaviour and binge drinking. Now, the pubs suffer 21 from higher costs to get their licensees as well as more red tape. Furthermore in 2005 new licensing laws came into action.

Now, pubs and clubs can apply for a 24-hour-licence. The former closing time at 11 o’clock is 22 thereby abrogated. Future actions of the British government could be a raise on

the VAT on beer up to 20%, 23 which would increase the price of a pint of beer by 6 pence.

SECONDARY COMPETITORS

Secondary competitors offer replaceable products, such as wine, cider and lager. They differentiate by their regular customers, their product offer and concepts. The best selling lager in the UK is Carling, which is owned by the American/Canadian brewery Molson Coors Brewing Company. Second best selling lager is Foster’s by the biggest domestic brewery Scottish & Newcastle. 9 The best selling cider is Strongbow, produced by Bulmers with a market share of 63% of the UK cider market , followed by the cider Blackthorn, made by the Gaymer Cider Company.

DEMOGRAPHICAL

In the UK alcohol drinking is equally divided among adults of all age classes from 24 to 64 years . However, one can detect an increase of drinking among middle- and older-age groups as well as very young adolescents. On 38 the other side, drinking among 16-to24-year-olds has slightly been decreasing in the last years.

GENDER

With regard to gender preferences, men drink more and more often than women, e. g. en consume on 39 average 16 units of alcohol per week, while women only drink 6. 5 units. However, the behaviour of alcohol drinking females has clearly been changing over the last years, with growth rates of up to 15%. Accordingly, a 40 significant trend towards higher alcohol consumption among women is detectable.

PERSONAL FACTORS

Age Mexicali aims its attention at female customers in between 18-35 years, which is supported by recent trends, 51 such as increased alcohol consumption among middle and very young females.

Besides, Mexicali could basically attract this group of women with

a single marketing strategy rather than with multiple, when including other age groups as well. Occupation Mexicali’s centre of attention is from semi and unskilled manual women up to females with higher managerial, administrative or professional occupations. Lifestyle Mexicali’s target consumers show interest in healthy food, fashion and music. Furthermore, they perform activities such as sports and shopping, or they like to socialize with people.

Personality and self-concept A “brand personality” is a helpful tool to allocate human traits to a brand, so that customers can easily identify themselves with it. Mexicali’s target consumers are “down-to-earth women”, in principle the average happy woman that likes partying with friends, who enjoys fashion and music on an ordinary level, or exercises on a healthy base. These customers are likely to choose a brand with similar character traits that match their own; accordingly Mexicali wants to display an image of “Sincerity”, which is attributed with words such as “down-toearth”, “honest”, “wholesome” and “cheerful” .

PSYCHOLOGICAL

Perception Beer is a rather masculine beverage, since the majority of consumers are men and the beer industry concentrates its promotion efforts mostly on them. The traditional image of beer consumption, drinking pints in pubs does not appeal to women that much. They are normally moderate drinkers, since misbehaving in public is less accepted for them in contrast to men. According to this, pints are too large in volume, moreover women are physically not able to consume as much as men. From a woman’s point of view the industry orientates too much on men’s preferences.

Thereby, women are deterred by the overall masculine appearance of traditional beers. Attitude Besides, many women do not like the smell and

aftertaste of traditional beers. They consider them to be too strong or bitter. Women demand a rather sweet, healthier and less alcohol-rich product, that does not contain too much carbohydrates or calories. Furthermore they favor different flavors, for example enriched with fruits, fresh tastes, for instance “Shandy”, and natural ingredients. In addition women seek for style and elegance by preferring a drink in a glass rather than in a bottle.

Thus Mexicali tailors its marketing strategy on women only; it will be able to attract a small proportion of cider and wine drinkers besides the general beer drinking women. Even though, British women clearly favour wine, which is perceived as an “unisex” drink, over beer, with its masculine image.

The following chart shows Mexicali’s position in the British beer market in comparison to its primary competitors “Corona”, “Sol” and “Dos Equis”. The x-axis measures the appearance of the brand between “masculine” and a “feminine “. The y-axis describes a “high” or “low” price per bottle. Mexicali offers a fresh beer for females for a medium price; accordingly the brand is charted in the first quadrant. In comparison to its competitors Mexicali’s unique selling point is its feminine image, which makes it attractive to female demands.

MARKET PENETRATION AND COVERAGE STRATEGY

In order to decide which segment to cover in the marketing of the Mexicali beer, one needs to evaluate which coverage strategy to undertake. Mexicali is a relatively small company in comparison to its strong competitors on the British beer market. Mexicali’s resources are basically limited and hence the company cannot compete with the big brands. Accordingly, they have to consider market segments that are not covered

or barely targeted by larger companies. Furthermore, Mexicali enters the British beer market with one single brand. Therefore the products life-cycle stage also needs to be taken into consideration. Mexicali beer, as a new brand on the British market, can only appeal to the “innovators” or “early adopters”, as further explained in the promotion chapter.

To conclude, the coverage strategy “Concentrated or Niche Marketing” is the most suitable for Mexicali to enter the UK market. Mexicali wants to gain market share on the British beer market, on this account the company needs to contemplate a penetration strategy. As mentioned before, Mexicali wants to enter and introduce its beer to the Britain for the first time, thus they have no market share so far. In order to penetrate the market, Mexicali should increase promotion and distribution expenditures to create customer awareness. In the future Mexicali may drive out competitors and gain parts of their market shares. .

SLOGAN: “FRESH’N UP YOUR LIFE

“ The slogan displayed on the bottle is clearly perceivable for the consumer. The slogan is based on Mexicali’s promotion message “fresh, fun and feminine. ” The intention behind the slogan is that the consumption of Mexicali beer provides a fresh and modern way of living. The slogan is short and catchy, so that it is easy to remember for the customer. The model type is a long neck bottle. This type of bottle will give the beer a luxurious appearance. The bottle is sealed with a switch crown cap which makes it easy to open it. The standard size of the bottle is 0. 33 liters, which will be placed in supermarkets, pubs, clubs and

online liquor stores. However, according to the UK law, product information must be placed directly on the package. The bottling date of transparent, colorless liquid containers may be marked on the reverse side of the label.

The ingredients of Mexicali beer are hops and lightly sweet malt. Further aspects of the product are its light bodied nature and good carbonation, which creates a refreshing and light beer. This combination is perfectly suited for female consumers.Mexicali beer is filled in clear glass bottles and will be sold in 4-pack’s with a handle to make it more convenient for women to carry it. The carton package will be made out of economical and environmentally friendly material.

WARRANTY AND SERVICE HOTLINE

Mexicali has a quality control standard; any product of Mexicali that does not meet this standard of quality will be replaced or refunded by the company. Customers can phone the service hotline number, which will be printed on the backside of every bottle. Refunds or replacements will only be provided when customer complaints are on a rightful basis. The service hotline may also be used by consumers as an after sale service to suggest improvements, and comments on the product or to enquire information. As a result, the product may have to be adjusting to satisfy customer’s needs and wants.

DISTRIBUTION

Mexicali will make use of several transportation modes and distribution companies in order to reach the market of the United Kingdom. First of all the products will be transported via truck from Tecate to Ensenada, by “QuickTransportSolutions” , which is operating in Mexico and work with Mexican trucking companies in Baja California. Once arrived at the harbour of Ensenada, the

load will be transported via ocean carriers to Rotterdam by “Hapag Lloyd” on a CIF basis.

When the freight will reach Rotterdam and custom- and excise duties will be paid, the company “DB Schenker” will transport the goods via railway to Swanley Village in Kent, England. There, the products will be distributed by “Pierhead Purchasing LTD”, who is a specialist in distributing beer to supermarket and catering chains in England. Since Mexicali will use third parties for its distribution, the company will make use of direct export. Information on CIF and the distribution destinations will be discussed in this chapter.

Indirect export is a type of export in which a company sells to a buyer (an importer or distributor) in the home country; the buyer in turn than exports the product. In this way the exporting company will do business with an intermediary, relying on his knowledge, connections and other capabilities to distribute the product into a specific market, in exchange for a mark up. The exporter will lose some control over the product, however benefits from the knowledge and services of the distributor.

It is the most difficult and time consuming way of exporting, because it requires a great deal of commitment since the company needs to manage its own distribution channel into detail from start to finish.