Marketing Analysis of Veggie World Company

Marketing Analysis of Veggie World Company

Executive Summary

The primary objective of the discussion is to carry out marketing analysis of a vegan company in the UK. The company selected for this purpose is “Veggie World”. The company is a wholesaler and retailer of vegetarian and vegan food in the UK. Currently, the company is planning to enter the Chinese market. For its new expansion, the report will highlight the macro-environmental factors persisting in China along with competitor analysis of the company. The different kinds of opportunities and threats present in the Chinese market will also be focussed on along with the marketing objectives of the company. The last section will stress on the market entry strategies, STP strategies and Marketing mix of the company for entering the Chinese market.

Macro-environment

Political

1. Plans for a reduction in meat consumption by 50% as implemented by the Chinese government.
2. The Chinese economy is hazardous towards political risks like confiscation, expropriation, and currency inconvertibility (Liu, 2017, May).
3. The level of foreign business activity has dropped down sharply in the current years after a wide massacre in the economy.

Economic

1. With the rise in global meat consumption, developing countries like China are relying on plant-heavy diets.
2. Increase in Global consumption has led to soaring demand for vegan products having a similar texture and taste like meat (Galarza Villalba et al. 2020).
3. The vegan industry in China is likely to grow by 17% in the upcoming years.

Socio-cultural

1. Over the past few years, a typical Chinese diet included a lot of meat and other animal products.
2. Though the current generation of the population is getting inclined towards health organic diets, still it is difficult for them to compromise on taste (Khairullina, 2019).

Technological

1. The biggest factor is the internet usage of Chinese customers.
2. 450 million Chinese people are internet users and their purchasing patterns can be tracked easily (Gabechava, 2020).
3. The strong inclination of customers towards physical shopping in the country
4. Lack of a stable online payment method with negligible credit card penetration.

From the analysis of the political, economic, socio-cultural and technological factors, it can be stated that China is a lucrative market for the vegan companies and the vegan business is predicted to rise steadily in the upcoming years in China. Considering the political factors, it can be observed that the regulations imposed by the government towards meat reduction can serve as an opportunity for Veggie World Company, while restrictions in foreign business can be negative factors for the company (Crimarco et al. 2019). Economic factors of the Chinese market are favourable for the vegan business and the demand and consumption for veg products are increasing in the country.

The socio-cultural products are moderately favourable for the vegan business of the company. This is because a substantial number of Chinese families still have preferences for meat over organic substitutes. However, health-conscious customers are likely to get attracted to vegan products owing to their tastes and nutrition (Mičulková, 2018). The technological factors are quite promising in the country and the new businesses can easily track the purchasing trends of the customers through their high internet activities. New vegan businesses in the country would require the opening of retail shops and it can be advantageous as most of the Chinese customers prefer physical shopping over the online platform.

Competitor analysis

Direct competitors

• Whole Perfect Food – The company is based in Shenzen, Hong Kong. The company offers a premium range of vegan products with zero MSG, preservatives and artificial colouring. The prices of the products are quite competitive in the Chinese market. The price of a regular vegan mushroom and vegetable seasoning has a regular price of $13 (Janssen et al. 2016). The company is a global player and has both online and offline platforms in many parts of China. The company has an active marketing team in the online social networking sites like Pinterest, Twitter, Facebook and Instagram. This is the primary promotional technique used by the company for promoting its products.
• Zhenmeat Company – This is a popular plant-based meat substitute start-up in China. The main product of the company is plant-based mince meat which is made primarily from pea protein. The product has both pork and beef flavours thinking about the taste-buds of the customers (Blythe and Martin, 2019). The prices of the products are comparatively low in the market as the company is a new entrant of the market. The company sells its products mainly through physical stores and outlets of the supermarket. Promotional techniques used by the company are physical methods consisting of banners, hoardings and other similar methods.

Indirect Competitors

• Fry Group Foods – The company is founded and established in South Africa and specialises in vegan meat substitutes. The range of products initially included sausages, hot dogs and burger patties. Currently, the company has expanded its product range and sells over 35 products in parts of South Africa and Australia. The prices of the products were initially low and slowly stepped up as the company flourished (Bryant et al. 2019). The company sells frozen food products through a custom-built factory in Durban. Supermarket chains and other retailers are used for selling the products in the primary markets of the company.
• Linda McCartney Foods – The British Company is specialised in vegetarian and vegan food all across the world in countries like the UK, Norway, South Africa, Ireland and Australia. The range of products includes chilled meat analogues such as burgers, meatballs, sausages and pastas, which are made purely from plant-based products. The prices are pocket-friendly from the middle class and upper-middle-class families of the selling markets (Kalamus, 2019). The food products are sold through both online and offline channels, through supermarkets and e-commerce stores. Advertisements, celebrity endorsements, online communication are the methods used by the company for promotion of the products.

Opportunities and threats

Opportunities

• The percentage of vegans are growing at a steady rate in China.
• The Chinese vegan market is estimated to grow above 17% in the next 5 years, which is the highest growth rate of a sector internationally (Wrenn, 2017).
• People are more concerned towards ethics, health and environmental factors of the country and shifting their dietary components from traditional to modern forms.

Threats

• Many Chinese people still holds the opinion that plant-based meats are signs of malnutrition and forbade themselves from eating these products (Hirth, 2019).
• The local vegan companies of China are quite prominent and popular in the country
• Many brand loyal customers might not be willing to change the brand and try out new products.

Veggie World company has equal opportunity and threat in the Chinese market, being a vegan product manufacturer and seller. The company can sell its products in the Chinese market as the demand and consumption of the vegan products are rising up owing to the increased awareness of ethics, health and environment. The Chinese market is estimated to observe the fastest growth among all other sectors in the global level (Kencana, 2019). The boom of the new veg people can help in the growth and development of the business of the company. The young Chinese people have eco-friendly and compassionate mentality, which will drive this growth. However, the company should come up with unique selling propositions to compete with the local competitors in the Chinese market.

Strength and weaknesses

Strengths

1. The company manufactures products targeting the health-conscious segments of the target market
2. Veggie world offers a premium range of products, which are purely organic, nutritious and tasty (Chacko et al. 2019).
3. The company operates both under offline and online platforms.
4. The company provides online ordering facility to the customers.
5. The company is quite famous in UK through achievement of awards and this has helped in increasing its brand equity.

Weaknesses

1. The company is currently less diversified, serving in specific locations and regions of the world.
2. The company has not segregated its menu considering the distinctive ages of the individuals (Pirog et al. 2019).
3. The company is currently offering no discounts or attractive deals to the customers.
4. Distribution channel of the company is still not very prominent.

The company offers products, which are suitable for the health-conscious customers. This can act as a strength in the Chinese market as the young group of people are becoming more concerned towards their health and diet. Though most of the customers prefer physical shops in China, still few groups prefer online channels (Yadav and Garg, 2017). Both the channels are operative in the company. The company has been awarded by many achievements due to which it is quite famous in UK. This brand name will help the company in getting fast recognition in the Chinese market. However, the company still needs to work on certain segments like discounts and deals, widening the variety of its products according to the age of the customers and improving its distribution strategies.

Marketing objectives

The various marketing objectives of the company following the SMART criteria are listed below.

1. To improve the quality and taste of the products by 10% in the next quarter of the current year.
2. To increase revenue generation by 15% after 6 months of entering the Chinese market.
3. To increase the cost of advertising and promotional techniques by 5% in the next quarter for achieving brand popularity within the Chinese customers (Düerkop and Huth, 2017).
4. To improve customer satisfaction by 10% in the first 3 months after entering the Chinese market.
5. To earn a small percentage of market share about 3% in the span of four years.

Market entry strategy

The most suitable way of entering a Chinese market can be through setting up of a joint venture. Though this technique would require both effort and time, still it is likely to produce the best yields for both the local as well as the foreign firm. Both these firms would get the optimal share of profit through this method. It has been researched that China also favours foreign joint ventures for a variety of reasons, such as foreign exchange benefits, spurring of industrial efficiency, realising import substitution and reducing unemployment. Veggie world company can also get insights about the local market of China by entering into this strategy.

Through joint venture, the company can develop shared resources, however, each firm has the right to control each of its proprietary resources. This strategic alliance is built up through processes of negotiation and coordination between the local firm and the foreign investing firm (Xi et al. 2018). Veggie world can form this joint alliance with a local Chinese firm to build on its distribution network and share the risks and costs of the business. The company will have access to new knowledge and expertise that will support growth in the upcoming years.

Marketing strategy

Segmentation

Veggie World can segment the customer market in China on the basis of geographic, demographic, psychographic and behavioural variables. Through geographic class, the company can sell products in specific cities of China, where the demand would be quite high. The company should plan for developing its distribution networks in these regions. Psychographic segment would include Chinese customers who are meat averse people, but not completely vegans or vegetarians (Xi et al. 2018). Behavioural segment should take into account factors like spending habits, purchasing habits and brand interactions of the Chinese customers. As a large group of Chinese customers are meat-eaters, the most significant segment out of all would be the behavioural one.

Targeting

Generally, the three types of targeting strategies are differentiated marketing, one-to-one marketing and mass marketing strategies. In order to fetch a short-term benefit from the Chinese market, Veggie world can go for a mass marketing strategy, where the company will have taglines like going environmental, being ethical or healthy. This can drive a large chunk of customers towards plant-protein consumption. If the strategy proves successful, it can be continued till longer terms. However, another alternative strategy can be differentiated marketing, where the company would target the behavioural and demographical segment of the customers based on their preferences and demographics like age.

Positioning

Positioning is all about the perseverance of the customers regarding the products of a particular brand. The company can position its products to be healthy and tasty ones, which can be perfect for meat-loving customers who are health conscious. The products are of premium quality and hygiene is never compromised by the company. The unique selling proposition of the company can be a nutritious vegetarian food that is labelled as a fast food in the Chinese market. The company can keep its prices low for attracting the middle- and low-income groups and distribute samples in the outlets for the young generation of customers.

Positioning strategy in China as compared to Britain

In China, most of the customers had been inclined towards eating meat and beef without thinking about the health and ethical hazards (Chen et al. 2016). In contrast to this, the Britishers are quite conscious of their health and prefer plant-based proteins over the animal-based products. Therefore, the brand should be positioned in such a way that Chinese customers get the taste and health together in the same product.

Perceptual Map

A perceptual map represents the attributes of a particular brand or a product, which are recognised or appreciated by the customers. The perceptual map of a vegan business such as, Veggie World would focus on two significant attributes, that is, taste and health. This is because Chinese customers are focussed towards tasty meat products and generally have the vision that plant-based proteins do not have the taste of the traditional meat products. On the other hand, the health-conscious customers can compromise on taste but never on their health. Therefore, the company should excel in both these attributes for growing its business in the Chinese market.

Marketing mix

Product

Currently, veggie world has many kinds of vegan product offerings, which fall under the broad categories like raw fruit and vegetables, meat-substitute products, superfoods, food supplements, health products, vegan desserts, juices and smoothies. Along with these products, the company also offers other products in the area of cosmetics, fashion, households and travelling accessories. In China, the company can only concentrate on the food zone, offering vegan products like vegan grass prawn, vegan smoked ham, vegan chicken pieces, vegan bacon slice and other similar products. The company can also manufacture other kinds of products according to the local tastes and preferences of the Chinese customers.

Price

The company can use more than one pricing strategies for entering Chinese market. The first strategy of the company can be value-based pricing, where the company would consider the value of the product to the customers instead of the cost of manufacturing the product. This would help in improving the profitability of the products in the long-run after entering a new market (Chen et al. 2016). Penetration pricing can be another useful method for new entrants like Veggie World. Through this strategy, the company can keep the prices of the products very low at initial stages of penetration and can steadily rise up prices in the coming years.

Place

Veggie world can use many kinds of offline and online platforms for selling its vegan products in China. The company should focus more on the physical shops as most of the customers living in cities like Shanghai and Beijing prefer offline retail channels over other online platforms. Also, the online payment modes are not very convenient in China. Therefore, the company open up retail outlets in small shops, supermarkets as well as shopping malls. The company can also open its outlet in the name of the Chinese venture with which it is jointly associated.

Promotion

The company can opt for various promotional techniques for earning a brand prominence in the newly tapped market of China. Firstly, the company can create a marketing team for the promotion of its product (Jiang et al. 2018). The marketing team can conduct marketing campaigns with catchy and attractive slogans like “being healthy with meat products”. Along with this, the company can go for online advertisements where the products will be introduced with attractive pictures and videos. Banners, posters, hoardings are also useful ways of promoting the products offered by the company.

References

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Appendix

Perceptual Map

(Source: https://www.surveygizmo.com/resources/blog/perceptual-map/)