A Model Marketing Plan

Market Situation:
Currently South Africa is producing 12.7% of the total global Macadamia Nut production, and Green Farms’ production accounts for approximately 20% of this figure. Last year foreign market growth amounted to 86.67% indicating the market is still in the growth phase. Local markets are more saturated, and only experienced a growth rate of 15%. Further growth in both local and foreign markets is expected in the forthcoming years. SA’s largest market base is in Europe and the USA, of which SA produces 34.5% of the total consumption in these areas. Foreign markets are also accessible in Asia and Australia, where SA’s market share amounts to roughly 6% of the market. Strong domestic competition is faced in Australia though.

Supply side clients are generally private farmers, between the ages of 25 and 60. Qualities demanded by them include: best prices, quality service, quick payment, technical backup, integrity, good information flow, and credit facilities.
Demand side clients are comprised of large retail wholesalers in both foreign and domestic markets. Long term stable service, consistent quality and supply, low prices, trusted brand name, money back guarantee regarding quality, good information flow, customer requests (bar coded products, sell-by dates), discounts for sustained buying, credit lines, proof of good agricultural practice (labour relations, safe production methods) are all qualities demanded by these clients.

Source: Green Farms Nut Company
Units: Kernel tons
The decrease in SA share of industry sales is due to the alternative bearing nature of the Macadamia Nut trees. This refers to the fact that the trees produce good/poor crops on an alternative season basis, which resulted in poor 2000 crop performance. Production in 2001 is estimated to increase due to alternative bearing as well as favorable climatic conditions.

Competitive Situation:
Supply Side: The Royal Macadamia Nut Factory is the main local competitor for Green Farms with regards to acquisition of unprocessed nuts. Competition is fought on price and marketing security (ability to sell supplier’s products) aspects. One advantage Royal has over Green Farms is that offers superior production methods and is ISO 2000 compliant.
Demand Side: Due to the low global market share SA has, local Macadamia Nut marketing competitors efforts are insignificant, however on a global scale USA (Hawaii) had a 15% increase in market share, and Australia a 17% increase. Brazil is also major competitors. These countries have a major hold on the current global market, but are however hindered by high input costs.

Generally Green Farms’ international promotion is done through SAMAC, a SA Macadamia Nut production board, which has its own promotion agenda for SA marketers and producers.

Distribution Situation:
Green Farms sells 7% of its product to domestic wholesalers, and 93% to exporters.
Green Farms Distribution Process:

Macroeconomic Situation: Due to the fact that Green Farms hasn’t reached a level where it distributes products directly to end users, an in-depth analysis of the wholesalers is more important. End users are seen to be middle to upper class, health conscious people. Approximately 70% of the world’s population consumes nuts.

Opportunity and Threat Analysis:

Opportunities: – The product is in the growth phase of its product life cycle.
– Nuts are seen to have health benefits
– The devaluation of the Rand makes SA products more attractive to foreign markets.
– There has been an increase in the use of Macadamia Nuts in other products (sweets & cereals)
– Rapid population growth.
– Bio-technological developments resulting in improved plant species and hybrids (improved quality and disease resistance)
– A largely un-penetrated Asian market.
Threats: – Large capital base in foreign competition
– Strict production control in foreign super-markets
– Importation of machinery is expensive due to devaluation of the Rand
– Recent strength of trade unions raising labour costs, which result in increased prices
– High transportation costs to foreign markets raises prices
Strengths: – High quality product is produced according to world standards
– Established domestic supply resulting in an established supply by Green Farms to retailers
– Good reputation among local suppliers
Weaknesses: – Lack of extensive capital base
– Firm has no R&D programs, nor official market research program.
– Green Farms does not produce under the ISO 2000 production method qualification
– Production is dependant on suppliers and farming output due to climatic changes, and alternative bearing of Macadamia Nut trees
– No website providing potential clients access to Green Farms

Issue Analysis: – Should Green Farms consider the production and marketing of other forms of nuts
– Should attempts be made to enter the possibly lucrative Australian market, although it has established local producers.
– Current land claims on many Macadamia Nut farms, which if realized could result in decreased supply.
– Should Green Farms consider vertical and horizontal integration

Financial Objectives:

Financial objectives could not be realistically formulated as Green Farms kept these figures for the previous year confidential, due to fears it could affect perceptions held by its supply base. However increases in profit were realistically determined, due to the fact that production levels are expected to increase by 50% due to favourable climatic conditions, and market demand is expected to increase by 25%. A profit increase of 20% and a turnover increase of 40% is also expected.

Marketing Objectives:

– Achieve sales volume of 680 tons, up from from 477 tons. Thus a 44% market growth
– Bypass importers and increase marketing directly to wholesalers by 5%
– Attempt to be made to market and produce Malawian nuts by Green Farms, thus obtaining a larger supply base, and establishing a constant supply as the Malawian season produces at a different time to the SA season
– Keep prices stable at US$ 6,3

Marketing Strategy:

Target Market: Foreign market importers and wholesalers involved in supplying good to supermarkets. Emphasis to be shifted to wholesalers, thereby shortening the distribution chain.
Positioning: The aim is to position Green Farms as a supplier of high quality Macadamia Nuts at competitive price.
Product Line: It consists of a generic Macadamia Nut

Distribution Outlet: Wholesalers
Sales Force: An additional marketing manager will be hired to oversee the Asian market which is seen as a high growth area. The nature of the product (high volume sales, few customers) implies that a small sales force is required.
Service: Highly flexible service is required where specific demand specifications are met.
Sales Promotion: The hired marketing manager aims to improve sales promotion. Green Farms’ reputation is aimed to be improved through improved product quality. All sales will take place through personal selling. Product price, quality, and stable supply will be emphasized.

Advertising: A member of Green Farms is currently at the May 2001 International Nut Conference in Spain.
R & D: This is primarily done through SAMAC for the benefit of all SA Macadamia Nut producers and suppliers. This is due to a limited capital base Green Farms has.

Marketing Research: Due to the low number of clients, marketing research is done on a small scale, however marketing managers are expected to know the needs of demand and supply side clients on a personal basis.

Action Programs:

– For June: The employment of a marketing manager based in Asia will facilitate Green Farms’ market growth in this area.
– For May: A member of the board is currently attending the International Nut Conference in Spain.
– An extention of the Tzaneen factory is planned, which will increase production by 40%
– A marketing manager will be sent to Malawi to establish contacts regarding the processing of Malawian grown nuts, as there exists no processing facilities in Malawi.
– An increase in the supply of Macadamia Nuts is planned through the running of seminars on improved farming methods for farmers. This will also improve social ties with suppliers.

Controls:

Preliminary controls are done through the marketing board, whereas more important controls and problems will be overseen by the Board of Directors, who meet on a quarterly basis. All managers are expected to report their progress to the board on a monthly basis.

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