Sitex Moist is a patent moist toilet tissue brand made from renewable and environmentally friendly materials with two-ply and the surface of one ply contains micro-capsules which, when broken by abrading against the skin, release a mild aqua-based solution which has appropriate cleansing & moisturising properties.
Sitex Moist is a new product and has only been introduced in China. Sitex is penetrating the UK market because it has found an opportunity of a large market for a product like Sitex Moist and with its strengths like a patent for the product the difference in design and the features, the company can gain some market share.
The competition in the UK market is fierce with competitors like Andrex and Velvet, but with a great product like Sitex Moist, the company can penetrate and compete in the market. The target market for the product is anyone from the age of two year old. The product for kids has been differentiated from that for adults. An analysis of the environment has been made to come out with the best strategies for the various elements of the marketing mix.
Revenue generated from both retailers and whole sellers of £1, 420, 000 is expected to be made in the first year and will increase by 25% in its second year. This increase will come as a result of customers recognising the product to be valuable of beneficial. The second year will attract more customers.
Expenses are expected to be £891,000 in its first year and expect to go up by 18% in its second year. This is because more will be spent on advertisement and promotion to create product awareness. By the end of the first year, the company will be making plans of introducing its other products in to the UK market.
2) Company and Product/Service Overview
Sitex is a manufacturing company Located in the South of China that produces Moist Toilet Tissues as one of its product. This medium size company was founded in 2001 and since then has taken 13% of China's market with most of its customers in the South of the country. Sitex Moist toilet tissue is one of the company's newest products in the market already being sold in the Chinese Market since its production in 2007.
Getting into the UK market is part of the company's growth strategy for the year 2009. Market penetration is model discovered by Igor Ansoff and is described by Ronald et al (2002. P.30) as targeting new customers with the same characteristics are exiting customers using existing products. Despite the huge advantage the UK market has provided, no company has succeeded in gaining a good market share for such a product. Sitex Moist is absorbent product supplied in rolls just like any standard roll paper. Sitex Moist is wholly bio-degradable two-ply product with the surface of one ply containing micro-capsules which, when broken by abrading against the skin, release a mild aqua-based solution which has appropriate cleansing & moisturising properties. The product was produced from a renewable environmental friendly material and does not cause problems with septic tanks and commercial sewage disposal. With patent on both the micro-capsule system and moistening solution, the company has a unique product.
3) Current Marketing Situation Analysis
To operate in to this new market, the company has to make some analysis of the market to help them gain a market share. These analyses include;
3.1) Environmental Review
Economic Factors - This is scanning the environment to find out customers purchasing power which depends on the customers income, credit available savings and inflation (Kotler and Keller, 2006, p. 85-86). This important because it helps in setting the price; which might be affected by the fall in the value of the Pounds and help the company know if customers are willing to pay for the product given the economy downturn.
Political Factors - This includes instability of the country, government policy to protect home based industries in the UK, political insurance and some legal issues by the government (Onkvisit and Shaw, 2004, p. 841-15).This information is helpful to know if there is a possibility to enter the UK market given Sitex is an international company.
Information/Intellectual Factors- This is about the various means of communication and information available to keep customers well informed about the product and make a choice on whether to buy it or not ( copyright 123Helpme.com, 2009). This includes the internet, magazines and television adverts.
Social-Cultural Facotors - According to Kotler and Keller (2006.page.87-89) customer's purchasing power are determined by their taste, norms and values, social the acceptance by the society. This is important for Sitex to analyse if the customers are willing to buy a foreign product of stick with their main UK producers.
Technological Factors - This deals with how new technology can be created to produce better products and be competitive in the market (Kotler and Armstrong, 2001, p. 106-107). This analysis helps the company to create a unique product for the UK market.
Legal Factors - These are law mostly set by the government and show how laws can affect both imports and exports and therefore the marketing mix (Onkvisit and Shaw, 2004, p. 122). This helps the Sitex to know the barriers to entry and the legal laws concerning the environmental protection
Environmental Factor - This includes Climate change, and most important is the growing need to protect the environment on climate change (Oxford University Press, 2006). There are so many groups trying to fight against environmental protection in the UK and therefore Sitex should evaluate the laws set on environmental protection.
3.2) Market Overview
The uniqueness of this product is about its price and its one of a kind with its presentation that looks like a regular standard roll and it harmless to the septic tank. Customers go for products that and produced using and environmentally save method of production.
3.3) Market Segmentation
This could be described as an artificial grouping of customers with identical needs to help companies design their strategies (Wedel and Kamakura, 1999, p. 5; Kotler and Keller 2006, p. 240). The two most important segments for Sitex Moist are:
Geographic Segmentation - This is dividing the market in to nations, states, countries, cities and other geographic regions (Kotler and Keller, 2006. p. 247). Sitex can divide its market in to countries and continents. The company is already operating in China (Asia) and now is ready to enter its next market segment, which is the UK. This helps to know what region has the most potential for a new product
Demographic Segmentation - This divides the market in to various demographics like age income, family size, education race and others (Kotler and Keller, 2006). This product is made for any one above the age of two. Therefore anyone above this age no matter their family size, income and other demographic group they belong are fit to use the product.
3.4) Competition Analysis
The two main competitors for Sitex are:
Andrex - This is UK biggest producer on toilet tissue. Its adverts shows strength, length and softness from the puppy's eyes giving customers a strong image of the brand
Velvet - This is also one of UK top sellers. In order to get involved in the environment, they plant 3 trees for every tree that is cut down by the company
3.5) Distribution Review
The distribution of this product will be through supermarkets to retail, whole sellers and big offices for the adult Sitex Moist. Supplies will also be made to pharmacies. Sitex will be responsible for shipping the product in to the UK where it will be distributed.
3.6) competitive Advantage
A competitive advantage is as described by Kotler and Keller (2006) as the performance of a company in one or more areas other companies are not able to. The major competitive advantages of Sitex Moist are;
Packaging - The packaging of the product is a unique one that other company can not compare to. While other companies package Moist Tissues in boxes, Sitex Moist is supplied on rolls exactly as standard paper; therefore fits standard holders and is equally absorbent
Product Features - This product is a two-ply product with the surface of one ply containing micro-capsules which, when broken by abrading against the skin, release a mild aqua-based solution which has appropriate cleansing & moisturising properties. This is unique compared to other products in the UK market today
Safety to the environment - Produced from renewable and environmentally friendly materials and it is bio-degradable meaning it causes no problems for septic tanks, commercial sewage disposal systems.
3.7) Critical Success Factor Review
-Meeting marketing target in the in the first year. A success will be if the company's market share target is met in its first year for operation. This can be maintained by advertising the product
- Sales Targets are met. If the company meets sales target, this means customers recognise the product in the market.
- Product innovation. This can be carried out by continuous research to improve on the product using technology available
4) SWOT Analysis
The SWOT analysis is used by companies to compare their strength and weaknesses to their opportunities and threats (Oxford University Press, 2007).
4.1) Strengths and Weaknesses
Strengths are internal characteristics that a company builds in the present situation to create strategies (Oxford University Press, 2007). The greatest strength of Sitex is it's low cost of production and patent to its product. The cost per 100 sheets is 8.5 pence and a patent product.
Weaknesses are those internal aspects the company has to protect its self against or what they are not good at (Oxford University Press, 2007). The main weakness of Sitex is that it has not done business out of china and is not familiar with the UK market and how things operate.
4.2) Opportunities and Threats
Opportunities are external factors that a company can take advantage of, which are positive and favourable to its business (Coulter, 2003).
- There is an opportunity of a share in the UK market for Sitex
- The fall in interest rate in the UK will be a great opportunity for Sitex if they have to take a loan to finance it activities in the UK.
- Take advantage of good communication, transportation and other high technological facilities the UK has to offer
- Competition from other producers and suppliers with similar products like
- Pressure from environmental groups to make sure the company keeps up with it environmentally safe product.
- Laws on international trade and entry in to the UK market. These laws could be set by the UK government to protect it's consumers or home based industries
5) Objectives and Issues
- The most important objective for Sitex is to grow internally by 9% by the end of the second year. This will be obtained supplying their products in the UK market and focus on growth market share.
- The second objective of Sitex is to be the market leader in innovation. This would be achieved by continues innovation of Sitex moist and with a patent on the product.
- The third objective is to gain 9 % of the UK market share in its first year and another 4% in its second year. This would be dong by effectively carrying out the strategies in marketing mix to make it part effective
6) Marketing Strategy
6.1) Chosen Target Market
The company is using an undifferentiated approach of targeting its market; which mean there is no difference between market segments and same strategies being used (Baines et al, 2008).Every one above the age of four years old can use the product no matter their income level or sex as long as they are above two years old.
6.2) Value Proposition
Positioning comes as a result of target market so as to make products that will satisfy this target market making customers understand what value the product represents. (Baines et al, 2008). Low cost of Sitex Moist will mean low price. The low price aspect is what the company would use to position itself in the UK market. The packaging is also another strategic business unit of this company.
6.3) Positioning Strategy
This involves communicating to the target customers on how useful the product is and what benefits they will gain from consuming this product (Baines et al, 2008). Sitex Moist is a product that has been designed to be used by children above two and also by adults. This can be advertised on children's channels and also on other channels. Another strategy is to let the customer know that they are paying for a quality product at a reasonable price and also saving the environment.
6.4) Market Research
Most of the marketing research that will be done will be from secondary date from the internet and also from competitors' websites to see reviews and also what other customers thing.
- The most important research will be on what is lacking in the other Moist tissues produced by other competitors that customers long for and need. This gives the company knowledge of how to create a product that is different and meet customer's needs
- Also research on how many competitors operate in the UK market will give the company a target on how much market share they want to acquire at the end of a certain period.
- The company has to get a demographic data of the population to know the percentage of market share they control from each demographic group. This will help them to know what areas they can improve on.
6.5) Marketing Mix Decision
Marketing mix was first created by James Culliton in 1948 to show a combination of marketing variables controlled by a company to appeal to a particular target market represented as the 4Ps of marketing; product, price, place and promotion (Kotler and Armstrong 2001; Baines. et al. 2008)
6.5.1) Product Strategy
Products are those goods and services offered to customers in a target market and consist of product variety, quality, design, features, brand name and packages (Baines, P. et al 2008).
Product can be differentiated using structure, product features, quality performance, durability, style, and reliability (Baines, et al 2008). Sitex is a brand with a simple and unforgettable name. Sitex for kids and Sitex for Adults are differentiated using their packaging and size. Each roll comes in a well ceiled plastic bag. Each roll has 100 sheets with a length of 20cm and a width of 13cm for the adult rolls. While the kids roll have 50 sheets with length and width 15cm by 12cm. The style, shape and how it being used makes it a unique product. Rolls are put in packs of four, eight and sixteen. The greatest advantage its patent. This product is easier for kids to use because it looks like the normal daily roll and therefore gives them a pride of maturity. Kids packs also come in three colours; pink, blue and purple
6.5.2) Pricing Strategy
Price is one of the most important aspects of a marketing plan to be considered especially with the economy downturn.
This deal with what customer has to pay for the products and services offered; this also comprises of discount allowed, credit terms, allowances given and payment periods (Kotler and Armstrong, 2001).
The cost of producing 100 sheets is 8.5pens plus 7.3 pence cost on other expenses and transportation. There for the selling price per roll will be 24.3 pence per 100 sheets. Logistics cost to the UK could be is by Sitex. The company will also give a credit term of 30 days. Trade and credit discounts are also available to customers with a payback period of 30 days.
6.5.3) Promotional Strategy
This answers the question to where customers of the company's target can get access to the company's products and services and consists of public relations, special promotions offers, advertisement and personal selling (Kotler and Armstrong 2001, p. 68).
Advertisements for Sitex can be done through TV commercials and why not billboards on drive ways. Advertisements would be aired on kid's channels like CBeebies, and also other channels especially in the mornings before 9am and evenings after 6pm. These are the periods where most people turn on their TVs to watch programs therefore, making it possible for customers to discover the new product. An advertisement is the most important way of communicating this product to customers. Therefore it should give are a brief description on how different the product is in its use (like a daily standard roll and how it fits standard users), component (two-ply product and the surface of one ply contains micro-capsules) and price to let customers know they are paying less for a quality product. This TV commercial would also cover the environmental consideration and safety the company used to make this product. The cost of a TV commercial will run for 30 seconds showing the use of products by both kids and adults. The company has budgeted £120,000 on advertisement cost for the first 3 months which might change after this period (calculated from http://www.thinkbox.tv/server/show/nav.1050). Personal selling will be carried out by sales representatives from Sitex who would meet with supermarkets and other retail stores to make a deal for the supply the products.
The company is already involved in supporting environment safety in China and plan to do same in the UK. The product is produced from renewable, environmentally friendly materials. This helps in creating a good image for the company and the product.
6.5.4) Distribution Strategy
This answers the question to where customers of the company's target can get access to the company's products and services (Kotler and Armstrong 2001, p. 68).
There are so many channels the company can use to Sitex Moist available o its customers and big business working buildings. The main distribution channels would be supermarkets, pharmacies, whole sale shop. Sitex can supply this product to supermarkets like Tesco, Sainsbury, Marks & Spencer, Waitrose and Morrison. These are the top supermarkets in the UK. The supermarkets will also helping in advertising the products in the stores. Distribution is also going to be carried out in whole sale stores like COSTCO, one of UK's biggest house hold whole seller. This form of distribution is know as selective distribution where some large available outlets or catchments of distribution channels are selected for the distribution of goods (Sally Dibb et al, 2001. p. 138-39)
7) Action, Budget and Control
7.1) Action Programs/ Schedules
- The first action the company will take after coming out with marketing strategies is to get its qualified sale representatives to meet with major supermarkets and present them with our products and how we plan to help with the marketing. This will be done within the next two months.
- Once the deal has been signed with all the distributer, the company will start it's first production of Sitex Moist to be distributed in to the UK market according to the number of orders requested by distributors. This will take another two months for the production to be completed and will hit the UK market a month later
- The final action that will be taken is to lunch the product in the market and continuously advertising this product.
7.2.1) Expected Sales Revenue
In the first year of operating in the UK, the company has been estimated to make total revenue of £1,420,000. This is expected to increase in its second year by 25%. Revenue for year one is lower because the company will start it's production two months in to the financial year and secondly, the product has just been introduced in the market and customers are getting to know more about its features and benefits. The company is going to increase its distribution channels to earn more revenue.
7.2.2) Expected Expenses
Expenses in the first year of operation are going to be so high because of advertisement and hiring sales persons. Advertisements and promotions will cost a total of about £400,000. Total expenses and costs will be £891,000 in the first year and increase by 18% in its second year. The company will incur less in hiring sales representative in the second year, but they are going to invest in advertising the product and more research of the market and development of the product.
7.3) Marketing Information System
The research and development team will get information by evaluating the sales volume. They can get such information from their distributor to know how ell they are doing through their sales figure. A primary research will also be carried out asking consumers product how effective they thing the product is and how it can be improved on.
7.4) Evaluation and Controls
- Customer awareness of Sitex Moist. A survey will be carried out by the research team to find out how many people have heard of the product, how many have actually bought it and how many has used it. This will be carried out by primary research in the internet and face to face
- The second make sure the products are always displayed in stores. This can be done by making sure orders are being delivered on time to distributor
- The company will also make sure they are always ahead in innovation. The research team is always looking for new technology and low cost production.
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