Marketing plan for Miller Inc.'s southern expansion strategy

MARKETING PLAN for MILLER INC.

Marketing Management

Product or Service Idea: Bread

Is your product or service offered by:

__X__an existing company?

____a new company imagined for the assignment?

Explanation:

The company called Miller Inc. hopes to expand its operations to the southern part of the country. Previously, the operations of the company were limited to the northern part.

Who do you think is the target audience?

The target audience of this marketing plan is current and prospective investors for the company and the marketing department.

Are similar or competitive products or services available? List or briefly describe a similar product or service: (if your idea has no precedent in the marketplace, consider another idea).

There are other competitor products. Bread produced by the different companies is generally the same with the difference being majorly in pricing and packaging.

How will your product or service differ from competitors? What is your distinctive competitive advantage?

Miller Inc.'s bread products are packaged in Zip lock bags for easy opening and resealing to keep the bread fresh. Additionally, they have 200 grams products for small households consisting of 1 or 2 members. Another competitive advantage comes from the company setting low profit margins for their products which in turn result to low prices to the customers.

Table of contents

Table of contents

21.0 Executive Summary

32.0 Situation Analysis

42.1 Market Summary

42.1.1 Competitive forces.

42.1.2 Economic forces.

42.1.3 Legal and regulatory forces.

52.1.4 Technological forces.

52.1.5 Sociocultural forces.

62.2 SWOT Analysis

72.3 Competition

72.4 Product Offering

82.5 Keys to Success

82.6 Critical Issues

83.0 Marketing Strategy

83.1 Mission

93.2 Marketing Objectives

103.3 Financial Objectives

103.4 Target Markets

113.5 Positioning

123.6 Strategies

123.6.1 Target markets.

123.6.2 Marketing mix.

133.7 Marketing Mix

133.7.1 Product.

133.7.2 Price.

143.7.3 Place.

153.7.4 Promotion.

163.8 Marketing Research

164.0 Controls

174.1 Implementation

174.1.1 Creation of a sales team.

184.1.2-Month 1 to Month 12

194.1.3 Evaluation

194.2 Marketing Organization

204.2.1 Market segmentation.

214.3 Contingency Planning

215.0 Conclusion

Marketing plan for Miller Inc.

1.0 Executive Summary

Miller Inc. is a bakery with over 12 years' experience producing the highest quality bread. It was founded by American entrepreneur Mickey Miller who has an undergraduate degree in marketing and a master's in business administration. Mickey Miller has worked in the baking industry for over 25 years and has managed such large bakeries as America's freshest and Jubilee bakers before turning to start his own company thus turning from being an employee to being an entrepreneur. He has managed to keep Miller Inc. profitable ever since the company began with sales of under $500,000 per month to date where sales are currently at $10,000,000 per month.

Company sales have tripled over the last three years and Miller Inc. is committed to expanding its bakery facilities in order to reach more cities. Their Super-duper loaf brand has become the most sought after and most purchased brand. Despite stiff competition from other companies, Miller Inc. has managed to keep sales figures high and to obtain as much business as possible from the cities which they are present.

Miller Inc. operates in 45 cities across the country and currently sells over 10,000 loaves of bread per day per city which they operate. The company has bakery facilities in each city with as many as 4 bakeries in some cities. Every item that is sold, despite the production facility, is checked to be of the highest quality standards through batch testing. This makes sure that the consumer receives the same quality loaf of bread despite their location.

In terms of marketing, the company uses its company colors -- orange and white -- on all their advertising and promotional material as well as on the packaging material. This makes sure that their marketing materials are consistent with the branding of the company. Miller Inc. keeps their marketing budget at 10% of monthly sales with a larger percentage being allocated when there is a dip in sales for any month.

This is a five-year marketing plan for Miller Inc. To attempt to double the company sales over the period in order to grow the company to double its current size in terms of revenue, employees, asset base, and profits. It involves expanding the bakery facilities and opening up new bakeries in more cities and increasing the number of bakeries per city in the current cities that Miller Inc. operates.

2.3 Competition

The competition is quite strong but Miller Inc. has managed to gain enough competitive advantage to maintain a market share of a minimum of 45% in the cities which it operates. The remaining portion is divided among many other different firms. Jubilee Bakery holds the largest market share after Miller Inc. At 30% and thus is the biggest threat to Miller Inc.

Data on the annual performance for the bakery industry isn't available as a result of many of the investors in the industry being private investors who are unwilling to release information on the financial performance of their companies. However, estimates have it that the bakery industry is worth over 10 billion U.S. dollars.

The consumers of bakery products are usually looking for new products which make the common and boring breads a little bit more interesting. Therefore, when a company comes up with a new product, the others have to try as hard as possible to develop a similar product in order to keep up with competition. A good example of this was when Jubilee bakery came up with sweet bread which led to Miller Inc. having to do some dirty tricks in order to regain competitive advantage through developing their own sweet bread products.

2.4 Product Offering

The product on offer is bread which is a bakery product. The company packages breads in 800, 400 and 200 grams which range from white, brown and sweet breads. While other competitors offer similar products, none has the 200 grams product which is mostly for households with one or two members. This 200 grams product was developed after a survey showed that a lot of bread goes to waste as a result of individuals not being able to eat a full loaf of 400 grams. This is what led to Miller Inc. developing the 200 grams product. The 400 grams product is for larger households with between 4-6 members while the 800 grams product is for families with 7-10 members.

All these breads come in three different designs. There is the round or barrel bread which is popular for restaurants and hotels for appetizers. Second is block bread for individuals who want to slice the bread themselves and finally there is sliced bread for those who want bread in slices. Sliced bread can also be used to make sandwiches.

2.5 Keys to Success

One important thing to note about the consumers of bread is that they are always looking to enjoy their favorite products without having to overspend. Therefore, the incorporation of feedback from the consumers into the products of Miller Inc. is extremely important. Additionally, the company needs to decentralize its activities in order to allow more specialized decision making.

2.6 Critical Issues

Miller Inc. anticipates that operations in the bakery industry will continue being profitable for the foreseeable future. The company has no plans to exit this market. The company plans to increase its presence in the market as per this marketing plan. With the expansion into the new market segments, there is a need for the company to merge other small companies in order to reduce the number of competitors and also gain competitive advantage. Therefore, as the company continues to expand, they will need to do mergers and acquisitions with the smaller companies in order for them to reduce the competition and also gain competitive advantage in the new market segments.

3.0 Marketing Strategy

3.1 Mission

The mission of Miller Inc. is to be the leading provider of bread products in all markets in the U.S. Miller Inc. wants to inspire people to literally fall in love with bread and to enjoy it more often both in and outdoors. Miller Inc. also has a mission to give investors a good return on their investment and it intends to build the necessary competencies in order to be able to do this.

3.2 Marketing Objectives

1. Spend $1,500,000 monthly for advertisement in terms of billboards, television advertisements, radio advertisements and others. This amount represents 10% of the current sales of Miller Inc. And per the budget policy of Miller Inc., 10% of its monthly revenue which currently stands at $10,000,000 is spent on advertising.

2. Spend $500,000 in promotions, competitions and other promotional services.

3. Design catchy radio jingles and television advertisements to promote consumer awareness.

4. Sponsor events such as sports tournaments and others so as to promote brand recognition, consumer awareness and hence drive sales.

5. Sell 100,000 units of Miller Inc.'s bread products per month in the new markets for the first month with an increase of 10% units every month.

6. Generate well over $4,000,000 in sales from the new markets by the end of the first year.

7. Increase sales of Miller Inc.'s bread products by 100% by the end of year 2.

8. Maintain revenue stream from Miller Inc.'s bread products in the new markets at a minimum of $10,000,000 per year from year 3 with an increment of $5,000,000 per subsequent year.

9. Return investor capital and debt financing by the end of year 3.

10. To increase brand recognition and strength by increasing market share by 3% over the next 12 months.

3.3 Financial Objectives

Miller Inc. has enjoyed a steady increase in its sales for the last 12 years that it has been in operation. With the introduction of sweet bread three years ago, the company has been able to double its revenue and profits. With the timeline for expansion of its bakery facilities into the Southern parts of the country, the company will be able to increase their revenue by about 10% per year.

The company is currently debt free except for mortgages on their bakery facilities. About 80% of the accounts receivable are billed during the last three months of the calendar year. Seasonal billing of accounts in addition to the additional travel of their accounts and sales staff during the peak season of summer usually pose a huge challenge to the company in terms of making sure books of accounts are in order.

The company currently needs cash to fund its expansion and this makes it inevitable for the company to borrow significant amounts of money to cover for its expansion activities. However, these loans are expected to be paid back within 2 years. The company also hopes to increase its revenue and profits by approximately 10% each year as a result of the expansion in market segments.

3.4 Target Markets

By placing focus on the commitment to service and quality, Miller Inc. has effectively managed to implement a successful differentiation strategy in a marketplace that is quite diverse. The ability for the company to differentiate its product has contributed greatly to superior returns for the company. The company's target market consists of individual consumers and institutions such as schools, hotels, restaurants, etc. Miller Inc. has a good distributor network to make sure that they are able to supply their products far and wide. In terms of individuals, the active consumer of Miller Inc.'s products is between the ages of 7-45 years of age. These are people who enjoy eating bread. The target market is not affected by household income in any way since it is a low priced product with very low profit margins in order to keep the final price low.

In terms of geographical distribution, Miller Inc. current has foothold in the Northern part of the U.S. And this marketing strategy is for the construction of bakeries to supply their products to the Southern states. The plan is to start with the Southwestern states while heading to Southeastern states.

Miller Inc. has managed to maintain long-term relationships with their current and former employees and this has enabled the company to add to their capabilities in terms of networking. Their staff focuses majorly on further development and optimization of their facilities and production processes in order to reduce the cost for the company and to be able to pass the cost savings to the end consumer by reducing the retail price of the product.

3.5 Positioning

Miller Inc. desires to position its bread products as the most widely used bread products across the United States. The company does not target any particular income group or age group. The positioning of the products is on a general basis for all individual customers.

3.6 Strategies

3.6.1 Target markets.

Miller Inc. plans to keep its target markets as per the other cities it operates. These are the institutional customers such as colleges, universities, schools, hotels and restaurants and individual customers.

3.6.2 Marketing mix.

Products -- Miller Inc. offers tangible products to its customers that meet or exceed customer expectations in a consistent manner. Therefore, the company needs to respond quickly to the demands of the clients and to anticipate new customer needs. Thus the company needs to have a customer survey that would help guide the company in terms of what they can do to bring in new products that satisfy the customers completely and also that are difficult for its competitors to copy.

Price -- despite the high quality of the products that Miller Inc. provides to its customers, the company offers the lowest prices in the industry. The value of the products of Miller Inc. is not represented in premium pricing. Rather, it is reflected in the affordable price as compared to the high quality that the clients are getting. Miller Inc. needs to be sensitive towards the elasticity of its product pricing and overall demand by customers.

Place -- Miller Inc. needs to open satellite offices that will work as evaluation points for its distributors and retailers and also customer relationship centers to handle complaints and suggestions from customers. This will also help to decentralize the activities of Miller Inc. that are currently centralized.

Promotion -- Miller Inc. should focus its promotional activities on promoting brand awareness in the new market segments in order to popularize their products. This should be coupled with a penetration pricing policy in order for Miller Inc. To gain a competitive advantage over the more established companies.

3.7 Marketing Mix

3.7.1 Product.

The product is that item which satisfies the needs and wants of a consumer Vignali ()

. It can either be an intangible service or a tangible good Wichern and Jones ()

. For Miller Inc., since it is a bakery business, its product is a tangible Pa -- a and Shugan ()

. It is the bread which it supplies to its customers.

The products of Miller Inc. need to be mixed up creatively. One is by allowing sharing of ideas between their customers and the company so that the final bread product can meet the needs of the customer completely. This involves Miller Inc. conducting customer surveys regularly on a monthly or even fortnight basis in order to be able to incorporate the views of the clients into the final design of the bread products.

3.7.2 Price.

Price refers to the amount which the customer pays to Miller Inc. For their bread products. Price is extremely important in determining whether Miller Inc. makes a profit or a loss and thus the survival of Miller Inc. Adjusting the price has a huge impact on the marketing strategy of the company and this depends on the elasticity of the price of Miller Inc.'s products. This in turn affects the demand and the sales of the company Mullins and Walker ()

. The price that is set needs to complement other elements of the marketing mix.

Price is affected by the cost which the company incurs to produce the bread as well as the pricing structure of the company. For the competitors of Miller Inc., they use a flexible pricing structure which is cost plus a percentage mark up of 25%. However, Miller Inc. uses a percentage mark-up of 15% thus the company is able to keep their pricing low. The pricing structure used by Miller Inc. is better because it helps to keep cost savings for customers since bread is an everyday product for many individuals. Therefore this pricing strategy helps to draw in more customers and to retain the current ones.

Pricing is a huge factor to consider in Miller Inc.'s marketing strategy. The pricing strategy of Miller Inc. needs to be kept the same because if the company was to increase the mark up, it would mean the customers would have to pay more to purchase the products which would lead to several customers shying away from buying products of Miller Inc. And instead purchasing products of competitors.

During this economic downturn and with the entry of new competitors, it is important for Miller Inc. To offer their clients huge discounts in order to attract new customers and to retain the current ones. For the new markets that Miller Inc. is looking to gain foothold in, they would require a penetration price which would help them gain competitive advantage from the other more established competitors.

3.7.3 Place.

Place is the location where the products offered by Miller Inc. can be purchased. It includes and physical stores and distribution points. The products should be placed at the most convenient places for customers to access them Slater and Olson ()

. In terms of place, Miller Inc. has offices in all cities in which it operates. The company should also open new offices in all cities it is expanding to. These offices should also have their own staff who are allowed to work towards the success of the new locations.

Miller Inc. should also consider designing a website for the company to showcase all the products of the company. This website would work like a public relations point where customers can give feedback, participate in surveys and also be able to get contact information for Miller Inc. It would become like a virtual location for the company.

Miller Inc. can also consider opening satellite offices in the cities where it currently operates which can act as relationship centers to boost the relationship between new and existing customers and the company. They would also be beneficial in managing the relationship between the company and its distributors and suppliers through the company being able to monitor the activities of their distributors and suppliers.

3.7.4 Promotion.

Promotion refers to the methods of communication used to provide information to new and existing customers about the products of Miller Inc. In the past, Miller Inc. has relied majorly on mass media advertising such as TV, radio, billboards, newspapers and magazines. . Though the company does engage in trade fairs and advertises in mass media, there is need for much more promotion to be done. Word-of-mouth communication is extremely effective since it does bring many new customers. For many companies,-word of mouth, it accounts for about 80% of new clients Brenkert ()

. However, the company should consider incorporating new promotion strategies to bring in new clients.

One way is to incorporate social media and internet advertising. Many companies are going with internet advertising and especially social media. Currently, as of 2010, about $32 billion U.S. dollars is spent on online advertising with roughly 5% of this being spent on social network advertising. Facebook and MySpace are the most used social networks in advertising. Facebook accounts for about 50% of the social media advertising and MySpace is at 18%. Widgets and other applications account for about 5% of the total spent on social media advertising Marshall and Johnston ()

. Looking at these figures, we can see that online advertising is a huge industry and with Miller Inc. aligning itself with this side, it will be able to remain competitive and to increase the reach of its promotion activities.

Another advantage of social media and internet advertising is that it will provide Miller Inc. with performance statistics for their advertisements and promotions. These statistics will help in getting information about the effectiveness of the advertising and marketing promotions of Miller Inc. As well as to be able to initiate media planning properly Montgomery ()

With the new locations that the company is planning to open and with the new discounts, there is a need for heavy advertising to get this information out. Miller Inc. should consider going with methods of advertising such as social media advertising, radio and TV advertising. Promotion will lead to huge publicity on Miller Inc. And its products. This will also increase traffic to the Miller Inc. website where the clients can learn more about its products.

3.8 Marketing Research

The bakery industry is one of the tightly knit industries with no marketing research information. This is as a result of many investors in the industry being private investors who are unwilling to release their financial information to the public.

4.0 Controls

4.1 Implementation

4.1.1 Creation of a sales team.

The sales team will be extremely essential for the development and growth of Miller Inc. First, the sales team will help with segmentation of the target market and targeting of the company's sales efforts for these different market segments. The segments can be divided based on gender, interests, price, location, religion, size, or income Clow and Baack ()

. The new members of the sales team can be given a particular region or market segment to analyze and deal with. The sales team also needs to be properly incentivized both through financial incentives and a pay-for-performance model which encourages the development of a high performance work environment Armstrong et al.()

The newly formed sales team will help in this since they can handle each of these segments and also help in dividing the customers into segments based on the three values above. Therefore, the account executives will have an easier time and lighter workload in terms of only having to handle the clients who are high-risk customers and they are worth retaining. Thus their efforts will be targeted at keeping these customers with the right tactics that are identified in the third value.

The sales team will be divided into inside and outside agents. Inside agents are those who will be involved in the activities of telemarketing and trying to close business deals brought in by the outside agents as well as to retain the current customers. Outside agents, on the other hand, are those who go to sell the products of the company to potential customers either at the customer's place of business or at the customer's home. A similar arrangement is envisioned in Miller Inc.

4.1.2-Month 1 to Month 12

The price will be initially set through a cost-plus approach where the profit margin is calculated to be 15%. All fixed and variable costs will be included in this calculation including costs such as transportation, production, etc.

Penetration pricing policy will be used to help with entry into the market. The price of the products will be set to be lower than the industry price of competitor products. It will also help to improve efficiency of marketing and production since large sales volumes are expected to be generated Hanna and Dodge (; Phillips)

It will also help to increase product adoption at a high rate and when coupled with market analysis, it will help to know which product does well in which market segment or country and thus the experience curve is steep as the company will be able to learn very fast Ingenbleek et al.(; Wernerfelt)

Channels of distribution will be optimized to offer the best discount to suppliers and distributors Lal and Staelin ()

. A trade discount of 8% will be given for orders of more than 100,000 products and an additional quantity discount of 4% will be offered for orders above 200,000. A cash discount of 2.5% will be given for prompt payments within the first 7 days, 2% for payments done between 8-14 days and 1.5% for payments between 15-21 days.

During this month, a promotional discount of 6% will be given to distributors and supplies to encourage their participation in the promotion of Moist Toilet Tissue.

These incentives will be delivered to the distributors and supplies through company letters and flyers while for the general public, the mass media promotions will be made to be in tandem with the penetration price set.

Sales growth and trends will be closely monitored to ensure the numbers do not decline. Any reason for decline should be intensely investigated and the appropriate corrective measures taken Shankar and Bolton ()

A price cut may be used to improve sales in states or regions where competitors may have adjusted their pricing downwards to make their products more competitive Urbany and Dickson (; Noble and Gruca)

4.1.3 Evaluation

The marketing team will be involved in the evaluation of this marketing plan to make sure its objectives are achieved and that the necessary milestones are hit. Each project team is responsible for reporting their financial expenditures inclusive of salaries and other direct expenses. This will help to check that the marketing budget is adhered to strictly. The overall director of marketing will be involved in consolidating the various expense reports from the different teams and will check for overages and how these can be reduced. These expense reports will be provided on a monthly basis.

Any new product offering and market expansion will be evaluated on a monthly basis in order to determine the profitability of the product. The expenses incurred in product development and market acquisition will be distributed over a period of 2 calendar years and this will be compared to the gross income generated during this 2-year period.

4.2 Marketing Organization

As a result of Miller Inc.'s current and future products requiring extensive customization in order to match the needs of the customers, it is essential for the company to organize their marketing activities by the different groups of customers which are individual and institutional customers. This will allow the company to focus its marketing efforts on achieving the specific needs and specifications of each of the target market segments. There is a need to begin with segmentation of the market.

4.2.1 Market segmentation.

Segmentation helps greatly in customer retention and acquisition of new clientele Silk and Harvard Business School Press ()

. This is because it helps the company to tag their customers based on three distinct values. First is whether the customers are at high risk of cancelling the services they are getting from the company. One of the most common indicators of these high-risk customers is a drop in the usage of the company's service Gensch ()

. The second value is whether the customer is worth the efforts to retain them. This looks at the profits and income that this particular customer is bringing in. If the cost incurred in satisfying and retaining the customer is higher than the income or profit accrued, this relationship is not worth the effort. The last value is what the right tactics to retain the customer are Cooper ()

. These include customer discounts, freebies, individualized attention, etc.

The marketing efforts of Miller Inc. will be organized around the various market segments that are found. These are the business-to-business group and individual consumers. Each group will be headed by a sales manager who will be answerable to the director of marketing. Since both of these positions do not exist in the company, they will need to be created. Each group will be responsible for marketing the products of Miller Inc. within their specific market segment. Each group will also have full decision-making capabilities. This will also help to decentralize the activities of Miller Inc. As it represents a shift from the current hierarchy of management that is highly centralized.

4.3 Contingency Planning

Contingency planning is extremely important. In the generation of the marketing budget, an amount equivalent to 10% of the marketing budget will be set aside for contingencies. Additionally, the company will expand its supplier and distributor network to include more suppliers and distributors in order to bring about a contingency should anything happen to one or more of the suppliers or distributors.

5.0 Conclusion

Miller Inc. has been in business for over 12 years now. However, the company's operations have been concentrated in the northern part of the country and it is planning to expand its operations to the south. Miller Inc. is positioned for entry into the new markets and this marketing plan details the steps that the company will take to enter into the new markets. The company has identified its target market and set measurable objectives that are also attainable. The evaluation of the achievement of this marketing plan will be done on a regular basis in order for changes to align the company in areas of underachievement to be conducted with ease.