This section will discuss Tagpreneur's marketing programs and the marketing strategies to communicate Tagpreneur's intention to the target customer. Tagpreneur will further discuss the Porter five forces analysis and SWOT analysis in this section on behaves of the marketing perspective.
5.1 Market Overview
Mobile tagging services consider as a novel services in the Value Added Services (VAS) sector by offering mobile Value Added Services in genetic modified food tagging services. Value added services emphasize the characteristic as not a form of basic service but rather adds value total service offering. Value Added Services can be an add-on to basic service and may be sold at a premium price. In order to design successful marketing programs, Tagpreneur has to analyze the market according to Porter's five forces model. According to Porter's five forces developed by Michael E. Porter (1979), the five forces that listed under this framework are able to determine the competitive intensity and attractiveness of an industry or business strategy.
5.2 Porter's Five Forces Model
The model focuses on the relationships and bargaining power between a company and its suppliers, buyers and competitors. It also examines the potential threat from new entrants and substitute products or services. The model provides a framework for classifying and analyzing the features of an industry that determine the intensity of competition and the level of profitability in that industry.
For the following Forces Competitive Model, Tagpreneur will classify and analyze the features of Genetic Modified Food Mobile Tagging Services that determine the intensity of competition and the level of profitability in genetic modified (GM) crops/food and agriculture industry.
5.2.1 Structural Features Determining the Strength of Competitive Forces
18.104.22.168 Threat of Entry (Barriers to Entry & Reaction of Existing Competitors)
Due to this services is newly introduce to the food labeling market, hence, there is some factors remain unknown until a proper market research is completed. Based on the current market situation, the factors listed under this framework are economies of scale and economies of experience, absolute cost advantage, capital requirements, product/service differentiation, switching costs for customers to change supplier, access to distribution channels, legal or regulatory barriers, and degree of expected retaliation from existing competitors. Malaysia is an agriculture base developing country. Agriculture sector contribute a big portion in local GDP and GDI of Malaysia economy. This service has a great economy of scale in the mobile services market. Food tagging is still considered as a new mobile service that has no widely implement in food label industry yet. The core technology of this service is use 2-Dimensional code to tag the food instead of by using traditional food nutrition label to get more information about the product. The services can contribute a great improvement in cost, efficiencies, and benefit to the consumer. Hence, a brand loyalty can be built on target consumer since food producers responsible for their products and producers do not want an adverse label put on their food. With the loyalty behavior, the services can lock-in the consumer. Thus, the services can raise prices to a certain point without fear of losing customers because the additional effects of lock-in (time, effort, trustworthy) prevent the customer from switching. The process of packing and labeling will slightly difference. The 2-Dimensional code will tag on the product on the packing stage. The distribution channels will remain the same as product will sell by the retailer. The government, legal or regulatory barriers is on positive side for this service. It is because the government had approved an Act to enforce the action to label Genetic Modified product in the market. The current market is using the traditional food label to describe the food nutrition. By early entry into the genetic modified product tagging sector can make this service as a market leader to minimize the degree of expected retaliation from existing competitors (current food label industry).
22.214.171.124 Threat of Substitutes (Products and Services)
The threat of substitutes force under Porter's five forces framework, the factors are buyer propensity to buy substitute products or services, relative price performance of substitutes, quality of substitute product or service, and switching costs. In year 2009, there is no sign of GM food tagging services in the Malaysia market yet. Thus, there are no observable threats of substitutes of the services yet.
126.96.36.199 Bargaining Power of Buyers or Suppliers
The factors listed under the bargaining power of buyer or supplier are percentage of total buyer companies costs, product / service differentiation, competition between buyers for resource, size and concentration of buyer group versus supplier group buyers switching costs, buyers information, and the threat of backward integration by buyer or forward integration by supplier. Initially, this service result in low percentage of total buyer companies costs and high service differentiation. There is low competition between buyers for genetic modified product, it is because the biotechnology is heading the direction to produce more crops to handle world food crisis. The size and concentration of buyer group is increasing compare to the supplier group. This phenomenon is due to the lack of food supply globally. The main propose of this service is to increase the buyer power with full demand and price information for consumer.
188.8.131.52 Intensity of Rivalry Among Existing Firms
The diversity of competitors may come from the traditional food labeling industry such as those companies leading online supplying source for custom stickers and labels printing in food industry in Malaysia. There is less concentration for the GM product labeling industry in Malaysia because no firm is domain the GM tagging market yet. In coming years, there is an expectation of fast growth in biotechnology especially in agriculture sector. Indirectly, this technology will bring a new trend in food industry as well. This service is required low fixed costs but high technology skill needed to generate the unique 2-Dimension code. This service is not common food labeling services. This service easily differentiates (high differentiation) by the 2-Dimensional code tagged on the product. Low fixed cost for this service lead to low exit barriers and courage excess capacity from leaving.
5.2.2 Summary for Porter's Five Forces Model
Under Porter's competitive forces model, the analysis show that Genetic Modified Food Mobile Tagging Services is in low barriers to entry, high buyer power, low supplier power, low concentration of substitutes, and low rivalry displaying in the same business sector. Hence, Genetic Modified Food Mobile Tagging Services is practicable in the market.
5.3 Marketing programs
5.3.1 Situation Analysis
GM Food Mobile Tagging Services is a start-up business. The green of nature have been well received by modern consumer, and marketing is now critical to its continued success and future profitability in health food consuming. Biotechnology offers a wide range of high-quality spring field of agriculture crops. The basic market need is high-quality agriculture crops with flexibility in production for both the consumer and commercial market.
5.3.2 Market Summary
Tagpreneur possesses good information about the market and knows a great deal about the common attributes of the current genetic modified food market. Genetic Modified Food Mobile Tagging Services will leverage this information to better understand of consumer needs.
5.3.3 Target Markets
The target market of GM Food Mobile Tagging Services is individual consumer who has stable income and behaves of healthy food consuming on their diary menu. The target customer for Tagpreneur included the crops producer, middle retailer, and the advertiser who intend to market or promote their product through the services.
5.3.4 Market Segment Demographics
Tagpreneur's customer consists of the following geographic, demographic, and behavior factors.
- The immediate target is the city of Malaysia with a estimated numbers of population approximately of 27,728,700 citizens.
- The total targeted populations as potential customer for Tagpreneur are 18,852,500 citizens who are age from 15 to 64 years old.
- Personal individual.
- Ages 25-50.
- Have healthy body and normal food consumption.
- Have a household income of more than RM1, 000.
- Tend to patronize higher-quality food.
- Are cognizant about their health.
- Are willing to pay a premium for higher quality, tastier agriculture product.
- There is value attributed to the more attractive presentation of an agriculture product.
5.3.5 Market Needs
GM Food Mobile Tagging Services provides individuals and commercial usage with fast and convenient information regarding genetic modified product. Tagpreneur seeks to fulfill the following benefits that are important to the customers.
- Selection: A wide choice of different genetic modified product with the flexibility to get information about the crops.
- Accessibility: Tagpreneur will set a booth at the Farmer's Market to gain most valuable information regarding the healthy agriculture product in order to maintain an up-to-date information service provider.
- Customer service: Tagpreneur will be impressed with the level of attention to the respond from customer by setting a toll-free call center.
- Competitive pricing: The services will be priced competitive to true substitutes.
5.3.6 Market Trends
The market of genetic modified product has exploded within the last two years. Explanations for this trend are:
- Market supply: The increase of supply genetic modified crops has reinforced the demand. Within the last few years many farms that were producing general vegetables have moved to production of genetic modified crops because of the increased margins and market demand.
- Presentation/appearance: Presentation as an element of the culinary experience has taken on more value as the consumers are more willing to purchase fresh and nicer agriculture product.
- Health consciousness: Malaysian consumer has become more health conscious and mixed greens have supported this goal.
5.3.7 Market Growth
In past several years, the Malaysia government invests more funding in biotechnology to produce more crops. By directly affect, market for genetic modified products grows fast as well. Malaysian is learning to appreciate the more sophisticated taste of this health food. Therefore taste and health consciousness is what is driving this demand. This demand can be seen by the increase of more consumers willing to purchase more vegetable than meat on their diary menu.
5.4 SWOT Analysis
The following SWOT analysis captures key strengths and weaknesses and describes the threats facing by Tagpreneur.
- Flexibility in transferring the information to the consumer in fast speed.
- Low cost services by offerings that exceed competitors' offerings of price, quality, and information.
- Higher than industry margins due to production efficiencies.
- Genetic Modified Food Mobile Tagging Services lacks brand equity.
- A limited marketing budget to develop brand awareness.
- Huge and complicated data management to deal with the services.
- Growing market with a significant percentage of the target market still not aware that Genetic Modified Food Mobile Tagging Services exists.
- The ability to develop long-term commercial contracts which should lower costs associated with crops producer.
- Low level of acceptance level by consumer from urban area to update crops' information by hand phone.
- A health scare that questions the safety of genetic modified crops.
- Poor weather which will lower field yields.
There are three types of potential future threats that Tagpreneur may face:
- Supermarkets: These stores may set up and info-kiosk machine (that can interpreted the 2-Dimension code) for consumers that cause consumer would not use the SMS services.
- Local farmers: Local farmer may not accept to let third party to put a tag on their product and label their crops by their own label.
- Large distributors: The large organization may monopoly the whole market by synchronize the whole food labeling system under their control.
5.6 Keys to Success
Exceed the customer's expectations. Additionally, Tagpreneur will:
- Listen to the customer and fulfill the demand.
- Increase the flexibility to get any information regarding a specific genetic modified crop.
- Increase the trustworthy of the services as an infomediary.
5.7 Critical Issues
There is only a small portion from the population concern for the genetic modified crops. Some prejudice on genetic modified product should be educated since the consumers are young.
5.8 Marketing Strategy
Tagpreneur's marketing budget is limited so the strategy will be simple. Developing visibility and brand equity is first and foremost. To do so, Tagpreneur will advertise in selected local hypermarket especially at the green crops section. In addition to the advertisements which will be used to drive consumer sales, Tagpreneur will leverage a networking campaign among the local internet forum to drive commercial sales and expose the correct information to consumer.
Tagpreneur mission is to provide the highest-trustworthy information about GM crops in the market. Genetic Modified Food Mobile Tagging Services exist to attract and maintain customers to explore the beneficial of GM crops.
5.10 Marketing Objectives
- Maintain positive, steady growth each month.
- Sustain the business by increase in new customers who are turned into long-term customers.
- Generate brand equity at the local agriculture market as well as within the commercial agriculture market within Malaysia and ASEAN countries.
5.11 Target Markets
Genetic Modified Food Mobile Tagging Services has three distinct customer segments:
- Individual consumers. Modern working women, housewife, and healthy personnel, these people are typically unsophisticated or unadventurous in terms of culinary habits. This group of consumers is more likely to make their own meals instead of going out, appreciate fine dining, and generally is from a higher socio/economic class.
- Crops producer. Tagpreneur will not only limit the services offer to the genetic modified crops producer. Instead, Tagpreneur will offer the services to all crops producer who willing to promote their product through the services.
- Middle Retailer. Middle retailer acts an intermediary between consumer and the crops producer. Middle retailer plays an important role in the supply chain system. Therefore, middle retailer is one of the main incomes for Tagpreneur.
Genetic Modified Food Mobile Tagging Services will position the service as:
- High-trustworthy information provider.
- Convenience and accurate
The main objective is to position Genetic Modified Food Mobile Tagging Services as the most trust-worthy genetic modified crops information provider where offering mobile tagging services within five years in the Malaysia market. The marketing strategy will seek to first create customer awareness regarding services offered, develop the customer base, and work toward building customer loyalty.
Genetic Modified Food Mobile Tagging Services seeks to communicate the message with the local experience farmer who using genetic modified seed for farming. This message will be communicated through a variety of methods. The first method will be advertisements. Some of the advertisements will be co-branding with the Farmer's Market. Other advertisements will be solely Genetic Modified Food Mobile Tagging Services advertisements on all sorts of interactive media. The ads will be placed in both the local newspaper as well as the local food magazine.
The message will also be communicated to the different restaurants through networking with owners and managers. Not only is there a local restaurant association which is a formal group of restaurateurs, but also restaurant in neighbor country-Singapore as well.
5.14 Marketing Mix
Genetic Modified Food Mobile Tagging Services marketing mix is comprised of the following approaches to price, distribution, advertising and promotion, and customer service.
- Pricing: Genetic Modified Food Mobile Tagging Services' pricing scheme is a per SMS charge for information requested for non-member. Registered member can fully utilize the free mobile tagging services without any annual member renewal fee.
- Distribution: Consumers are able to get the information through the hand phone and direct purchase the product in the nearby hypermarket/retailer.
- Advertising and promotion: A mixture of advertisements and networking will be used to increase visibility for Genetic Modified Food Mobile Tagging Services.
- Customer service: Customer service is very important. A call center should be set up to let customer call-in to express the doubt of the replied SMS or make some suggestion to the service.
5.15 Marketing Research
During the initial phase of the marketing plan development, several focus groups were held to gain insight into prospective customers. These focus groups provided helpful insight into the decision making processes. An additional source of dynamic market research is a feedback mechanism based on a suggestion questionnaire distributed at the local selected hypermarket. The questionnaire has several statements that customers are asked to rate in terms of a given scale. There are also several open ended questions that allow the customer to freely offer constructive criticism or praise on Genetic Modified Food Mobile Tagging Services. Tagpreneur will work hard to implement reasonable suggestions in order to improve the service offerings, as well as show its commitment to the customer that their suggestions are valued.
5.16 Blue Ocean Strategy
The metaphor of Blue Ocean as the unknown market space that untainted by competition in the current business environment. Tagpreneur should eliminate the features of services that are les valued by the current market in the mean time maintain innovation in the offered services to raise and create value for the market. According to the need analysis been completed in Section 4, Tagpreneur should start the services according to the end user need. As the result of the need analysis, consumers are show more interest to adopt mobile tagging services in the following five areas;
- Location information services
- E-ticketing booking
- Travel route guide/arrangement
Although genetic modified food mobile tagging services is less welcome by the end user compares to these five areas, Tagpreneur can alter the market strategy to penetrate the market in another way. The five areas stated above are the Blue Ocean for Tagpreneur. The following five areas with deeper potential of market space to implement mobile tagging services with 2-Dimenasional Quick Respond (QR) barcode. Tagpreneur takes first mover advantage to set the bar in those areas mention above.