NWP Marketing Natural Way Products: Alternative Advertising and Diversification for Greater Market

Penetration

Demographic Data

Natural Way Products is already a leader in the natural products market in New Zealand's North Island due to the quality and effectiveness of its products, which are hand-crafted in a way which is respectful of nature and better for the consumer, using the best ingredients. They want to expand their market share to include all of New Zealand, to go from their current share of 10% to 15% in the next five years, and expand to Australia. The way they should do this is by expanding and increasing their advertising, to raise awareness of their products, opening up new markets and increasing their visibility (Demers, 2010).

2.

SWOT Analysis. Through breaking down Natural Way Products into these four essential elements, it is possible to gain more insight into the strength and stability of the company, as well as its potential for expansion, by contrasting the strengths and opportunities with the weaknesses and threats.

a.

Strengths.

Natural Way Products has obviously shown that its products have an audience. To have captured 10% of New Zealand's market share in these kinds of products is significant. This means that the products have value and have garnered customer loyalty, which should be capitalized on.

The company's products are appealing and obviously are high-quality. Their superior scent, tangible results ("feel great" and "are very effective"), and manufacturing methods are all points in their favor. Hand-made products, using all-natural and often locally-grown ingredients, appeal to the rising trend toward de-construction of society and emphasis on the environment (Lipson, 2008).

b.

Weaknesses.

The company's manufacturing methods, which are also part of their strengths, could potentially limit expansion. The type of labor and craftsmanship necessary to produce these products is not cheap. Expanding manufacturing capabilities would need to bear in mind labor laws and taxation, as well as not compromising the company's commitment to natural methods.

Small batches mean limited manufacturing capabilities. Manpower and ingredient cost could be significant upon expansion. Capital would be needed to be diverted from other areas to cover new facilities, hiring and training new personnel, and any taxes, permits, etc. Labor costs would rise, which could necessitate a rise in costs.

c.

Opportunities.

Cottage industries/handmade products are extremely popular, as discussed above, and the popularity of such items is only increasing. NWP's already-loyal customer base could be useful in galvanizing marketing in other parts of New Zealand and Australia.

Australia and New Zealand have free trade agreements which allow products that are sold in one country to be freely sold in the other, without import taxes or tariffs.

d.

Threats.

By expanding their customer base into the rest of New Zealand and Australia, NWP faces increases in prices due to transportation, storage, and advertising. This could result in a higher price point, putting the company at a disadvantage to any similar companies who are more locally-based or larger, meaning their product prices are similar or even less.

Copycat/Pirated products made with inferior ingredients for less could pose a genuine threat. Piracy of brand names, labeling/packaging, etc. has risen sharply in recent years, especially in the Southern Hemisphere, where Asian Manufacturers have flooded the market with these kinds of goods.

Action Plan: Increase customer base by additional advertising via alternative methods, to keep costs down. Explore options in streamlining manufacturing process, to potentially bring labor/manufacturing costs down, or at least not to allow them to increase significantly with increased output. Investigate methods of bringing ingredient/materials costs down, such as by agreements with growers' co-ops, local farms, hydroponics, etc.

Investigate incidences of copycat/pirated "natural" products in the region. Get quotes from transportation companies regarding shipment pricing.

3.

Ansoff Matrix Analysis. By analyzing Natural Way Products with the Ansoff Matrix, the company's product and market expansion can be charted. The Ansoff Matrix looks at the risk and reward from potential expansion by comparing current and future markets and products and services (Teo-Education. com, 2011).

Existing Products & Services

New Products & Services

New Markets

Market Development

*Increase Revenue

*Increase Visibility

Diversification

*Products appeal to wide range of consumers

*Increases profit margin

Existing Markets

Market Penetration

*Steady Growth

*Solid Customer Base

*Room for Expansion

Product Development

*Could limit growth

a.

Existing Markets and Existing Products and Services combine to produce Market Penetration. Currently, Natural Way Products has a 10% market share of their niche, which means that of every ten people in New Zealand's South Island who chooses a natural product like what NWP offers, they choose NWP. This is significant penetration for a company whose products are very labor- and quality-intensive. Market penetration is good, and bodes well for future expansion. Management is doing well to plan for future...

If the current customer base enjoys NWP products now, they are highly likely to want an even larger selection of products. But is it wise to expand the product line now, when expansion of the customer base is what the company wants to do? At this time, expanding product offerings would be counter-productive to the goals set by management, by diverting time, energy and funding which would be better spent elsewhere, at least for the present.
c.

New Markets and Existing Products and Services combine to become Market Development. Since NWP has a satisfied customer base, expanding that base by way of increased advertising/marketing would further develop the market for their products, generating more revenue and helping further expansion (Demers, 2010). This is a recommended course of action.

d.

Existing Markets and New Products & Services combine to produce Diversification (Demers, 2010). This is entirely possible given the wide appeal of Natural Way Products. Their customer base is currently relatively confined, but with increased marketing and advertising they can raise awareness of their product in new markets, so their market share would increase through diversification.

4.

Analysis Conclusions

Natural Way Products should concentrate their efforts on developing and implementing new advertising strategies to facilitate their expansion.

5.

Demographic Data

Natural Way Products makes and markets products which are perceived to only be attractive to a certain demographic, but this is an erroneous supposition. Evidence for diversification among other target groups include:

Over two-thirds (69%) of U.S. adult consumers buy organic products at least occasionally. Furthermore, about 28% of organic consumers (about 19% of adults) are weekly organic users. (Hartman Group (1), 2008).

The Natural Marketing Institute (NMI) reveals that consumers are increasingly incorporating organic into their lifestyles. Total household penetration across six product categories is up from 57% in 2006 to 59% in 2007. Numbers of core users of natural products has gone up from 16% in 2006 to 18% in 2007 (Nmisolutions. com, 2008).

Primary reasons given for buying organic products:

*to avoid products that rely on pesticides or other chemicals

*to avoid products that rely on antibiotics or growth hormones

*for nutritional needs

*to support the environment

*to avoid genetically modified products

*Health reasons other than allergies

*They taste better

*to support sustainable agriculture.

Over half of Australians regularly buy organic produce and/or products, and state that they will continue to buy these products in increasing number as they become available (Hartman (1), 2006).

6.

Recommendations

As Natural Way Products has been using a mainly word-of-mouth and simple advertising campaign, it is time to step things up: the company has a good product that people like, and it has a high sales potential in diverse markets. Given the propensity for those who favor natural products to also be very tech-savvy and the company's focus on environmental impact, the marketing tools used for this company should be in harmony with those points.

A.

Use of Social Media. Social networks are the way most people interact in modern society: everyone is wired-in and wireless. Utilizing Facebook, Twitter, MySpace, and other social network venues could prove immensely powerful in getting their name out. After creating the personalized company profile pages/accounts, the following actions could be taken:

Utilizing current email/contact information for customers, the marketing team should create an opt-in list to mass-mail, informing them of the new accounts on the social networks chosen. Suggestions to build followers include: free giveaways for most referrals who "like" or follow the stream or for the 1,000th person to "like" or follow.

Daily product features and promotions. Post pictures, reviews, testimonials, etc. As a daily status update, and invite followers to visit the company site for more details; direct new visitors to squeeze page for opt-in to newsletter and conversion.

Invite user reviews and suggestions and refer-a-friend programs.

B.

Internet Marketing. Natural Way Products should invest in the services of a top-notch graphics designer and web marketing firm to streamline and improve the company's website. Some techniques to consider are:

Creation of clone sites, with multiple variations of opt-in and squeeze pages to verify the effectiveness of various marketing phrases/images.

List-building: Google AdSense and other PPC advertising.

Affiliate programs with like-minded companies which aren't competitors, such as companies who produce organic food products, clothing, etc. To broaden potential customer base and earn money from their sites (NMI, 2010).

Banners, tastefully designed and placed on relevant, high-traffic sites and venues, such as environmental and organic/natural product forums and newsgroups (Demers, 2010).

C.

Television/YouTube. Although television advertisements can be costly, those on local television are relatively cost-effective. Also, usage of streaming media sites such as YouTube can cause a product or person to "go viral" in hours, expanding…