(MAP 151) Marketing assignment extending summary solution for Tia’s Muesli major problems

Question

Task: What is the major problem to be solved in this marketing assignment Can you determine the major topics around which the analysis is to be undertaken with reference to Tia’s Muesli

Answer

Introduction to the case
Building up a marketing plan is definitely a daunting task and that explains despite several research, only few of the experts are available in the industry. The case study considered in this marketing assignmentis Tia’s Muesli case study regarding South Africa and challenges in the external environment of the business which out threat on the Tia’s Muesli to main sustainability. In this case a small company struggles in Africa's supermarket sales. The objective of this marketing assignmentis to come up with a new marketing plan by evaluating the actions taken by the company to increase their performance. The outcome of this marketing assignmentis to understand different external factors and its impact on internal company operations and their performance.

Clear and concise definition of problemsin the marketing assignment
The problem that had been found is that Tia’s Muesli difficulties to enter into the market. Although at the end of the case study it had been found that Tia’s Muesli had been selected by one of the big competitors in the market but this can not determine sustainability for the company. The main issue mentioned in the marketing assignmentthat the company had faced was the excessive charges that they had to pay before selling to common customers. These changes are mainly listing changes to show their product on big retailers, supermarkets, distribution cost and finally quality assurance cost. According to Kotler & Armstrong (2010), the big challenge that event companies face during the entry process is to create an impression. While some companies do tremendous expenditure during launching a new product, that equation does not fit for this marketing assignment.

The company started on focusing on cost-leadership or simply they are operating on the blue-ocean market. The characteristics of the market, as defined by Morgunova&Bolkina(2021) in their marketing assignment, business under blue ocean market are in continuous pressure to build strategy and even slight price increment can swing the competitive position of the business. Additionally, in terms of products, business competing based on cost leadership does not have much differentiation which makes it only to reduce cost so that customers can uniquely identify them from other competitors. However it does not mean criticising cost leadership is necessary in the marketing assignmentbecause many business owners who have limited funds adopt this strategy to enter in the market (Pulkamet al., 2021). Generally such businesses operate in a small local area due to low profit margin and in such cases adopting a differentiation strategy might be a problem. When a company adopted differentiation strategy it also requires extra resources for market promotion to let customers be aware of their products. Hence, to summarise the problems addressed in the marketing assignment, the Tia Muesli entertained the market based on cost leadership without analysing market conditions and limited resources with low profit margin. As a result throughout the case study in multiple situations the company almost went bankrupt.

Identification and analysis of the major issuesin the marketing assignment
As per the overall marketing assignmentanalysis the majority of the problem have been found from the external perspective. Hence, to analyse the problem in a more efficient and accurately defined marketing analysis tools can be usable, such as PESTLE, Porter five force, SWOT, Ansoff matrix, VRIO analysis.

As per the PESTLE analysis it can be seen that because politically it is marginally stable and people are in poor category they require jobs. As a marketing assignmentsubmitted by Ghicajanu (2019), highlights the big company influence on South Africa on their policy development. As a result the similar situation can also be seen for the case study regarding company struggle to convince the big four supermarkets retailers.

The porter five force was designed to example the external factor in the market like PESTLE. But while pestle focus on overall industry, five forces take only a single area like retail, pharmaceutical and others. Five force analysis in the marketing assignmentindicates that the African retail industry is extremely competitive and dominated by big businesses (Pauliukeviien&Stankeviien, 2021). Hence for a small company in order to enter into the market either they must have financial resources to meet big marketer characteristics or focus on local businesses only. As not the bargaining power of suppliers it has been found that the majority of merchandise and big businesses are focusing on getting a fixed amount of profit irrespective of an overall company’s performance. According to the marketing assignment this can cause bankruptcy for the company.

Henceforth it has been found in this marketing assignmentthat because the company has no differentiation and lack of business planning is reducing their resources. However in the case study it has been highlighted that after rejection from big companies and lack of resources to maintain or afford merchandisers and get a certified benchmark of the quality of their product the company was almost about to close. Due to two ex-employees of pick and pay the company got a chance to distribute their whole product with 20% cost including merchandise and distribution cost. Hence it is possible that in future they can increase their cost and if the company does not increase their profit margin then they will not be able to maintain with the growth of their distributor and merchandiser. Although the company has 15% of profit margin as per the facts of marketing assignment, it is relatively low with 70% of cost in distribution and merchandising of those products.

The purpose of VRIO Analysis in the marketing assignmentis to examine a company’s competitive performance based on their resources. Hence this analysis is part of understanding the competitiveness of the company's resources against their competitor (Hasbiet al., 2021). Definitely based on the products defined under case study those are definitely not valuable because it is not a new product. Because similar products already exist in the market, hence it can be stated as rare.

However due to excessive low-cost it can be stated that partially the company’s resources are immutable currently. In terms of organising several times the company had almost gone bankrupt and the owner of the company sold personal house and took out a bank loan without understanding or figuring out the consequences. Therefore it can be said in this marketing assignment that definitely there is no backup plan available for the company which tells that the company is definitely not organised.

Evaluation of the alternative solutions
In order to develop a marketing strategy in the marketing assignmentthat can define sustainable competitive advantage and three primary areas need to be kept under focus. Initially there must be some amount of differentiation in terms of product or marketing that can help a company to uniquely identify themselves to the customers. Secondly there must be a storyline with the product aligning that can convey the importance of the company's product to the customers (Akpoviroro&Owotutu, 2018). Finally it can be said in the marketing assignment, there must be a business plan for the company in terms of cost reduction and financial management.

This is the two possible profit amount tables that have been drawn based on given information from the case study. I want a profit written here is a gross profit not net profit meaning the total amount of net profit would be reduced more days the gross profit. The profit amount calculated in this marketing assignmentis the profit after distribution and franchisee cost. Other costs such as operational cost, employee salary, maintenance cost or some of the cost which will also be deducted from profit amount. Because the company operates on an excessively low profit margin hence despite selling 3000 KG every month the company is just making 450R amount of profit. In the best case scenario of the marketing assignmentit has been assumed that in every month the total volume sold by the company will increase by a thousand KG while in the other case based on the companies information a random number between 3000 KG and 8000 KG has been used to calculate the total amount of gross profit. Hence based on the marketing assignmentit is clear that the company definitely requires a backup plan because even with this profit and operating for over the years the company will still not be able to go to the large distributors or supermarket sellers with their upfront cost.

The company can deal with the situation in two ways: one introducing a new flavour in their product or creating a differentiation in the market and second increasing the cost of the product. However, suddenly increasing the cost of the product will increase bargaining power of customers which will impact on the sales volume. Hence, marketing assignment advises the company to create a new product in a local market and analyse the response from the local market before launching it in the global market. Additionally during this time because the company will sell their regular product hence some amount of business recognition will be available to the company from customers meaning the company will require minimum marketing cost while launching their product beyond the local market. Additionally because it will be a new product the company can set a new product price and have higher flexibility on obtaining a larger amount of profit margin.

Recommendationsin marketing assignment
Change profit margin
Based on the calculation on the projection of companies performance with 15% of profit margin it is only advisable that the company require immediate business strategy. Entering in the market and gaining competitive advantage only based on cost leadership is definitely not helpful for the retail market as per the marketing assignment. Retail market is already congested with a higher number of sellers and retailers and they are all focusing on the same approach. The way to gain competitive advantage is by introducing a different product like a new flavour in their product or changing the appearance of the packaging.

Focus on local market as per the data of marketing assignment
The company needs to focus on the local market to build a strong backup so that even though large scale retailers or current merchandisers refuse to collaborate with the company the company will still have a local market to continuously gain revenue. This will help the company to save from bankruptcy and because operating in a local market is less congested meaning the company will adequately lower operating cost, delivery charges to reach the target customers.

References
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