Youngs Seafood, based in Grimsby, is the UK’s leading fish brand and one of the most renowned names in seafood with returns of more than £300m a year and a tradition that spans more than 200 years. Part of the Foodvest group, a £1.1bn European seafood and frozen food business, Youngs is a top 25 grocery brand and benefits from a sales growth of around 20% a year. (Young’s Seafood, 2009)
To begin, do not confuse marketing with sales. It’s a common error for any business to place sales together with marketing under the assumption that the two units are different parts of the same department. This is because policies can be related.
Marketing starts long before a company has a product. Marketing is the homework that managers undertake to assess needs, measure their extent and intensity and determine whether a profitable opportunity exists. (Kotler, Armstrong 2001, page 6)
Marketing will guide a business to understand who the potential customers are, locate and price the product compared to the competition and place the business in the market place. Marketing will also help a business identify the potential prospects for self promotion.
This report will begin with a brief description on the 3 business analytical tools PEST, SWOT and Porters 5 Forces, followed by examples of how these methods are used within the Youngs Seafood business.
The Marketing Mix will be explained in chapter 2 with instances pertaining to the marketing strategy of the exampled business above.
In the third and final chapter, the author will describe the marketing approaches used by the Public, Private and Voluntary sectors and the relationships with the customers.
PEST analysis (Figure 1) is a means for understanding market growth or decline and the position, potential and direction for a business.
PEST is an acronym for Political, Economic, Social and Technological factors, which can be used to measure the market for a company or organisational division. PEST analysis can be used as a support for reviewing a position and can, like SWOT (Strengths, Weaknesses, Opportunities, Threats analysis) analysis and Porter’s five forces model be beneficial to a company to review a situation or policy. PEST is regarded as a research tool of external factors within a business such as the market against the internal factors primarily examined within business used by SWOT. (Rushton et al 2006, page 105)
The SWOT (Strengths, Weaknesses, Opportunities, and Threats) framework is a valuable step for a business analysis and is frequently seen within a business marketing plans. Assessing an industries strengths, weaknesses, market opportunities, and threats through a SWOT analysis (Figure 2) is a process that can offer a powerful insight into the potential and vital issues affecting a project.
SWOT analysis begins by conducting an account of internal strengths and weaknesses in a business venture. The purpose of SWOT analysis is to identify positive or negative factors within a project, allowing an objective look at a idea. A SWOT analysis can identify which of the factors represent the organisations strengths and weaknesses as part of the internal environment and which of the factors represent opportunities and threats. (Masterson and Pickton 2004, page 360)
Porters Five Forces
The model of the Five Competitive Forces was devised by Michael Porter in his book” Competitive Strategy: Techniques for Analysing Industries and Competitors” in 1980.
These forces can help a business to analyse everything from the strength of the competition to the prosperity and attractiveness of an industry.
Porters 5 forces analysis helps firms to analyse the strength of competitive threats and is particular useful to a firm considering entering a new market. (Masterson and Pickton 2004, page 77)
Political factors: The seafood industry is subject to policies regulated by the EU. The policy on fishing quotas is designed to balance the amount of fish caught within the European waters. This policy restricts fishing vessels and forces the seafood industry to reach out to the global market to sustain production.
Sustainable fishing is an environmental issue within the seafood industry. This policy affects fish stocks and other marine life. Sustainable fishing guarantees that fish are not removed faster than they can naturally be replaced and is also about ensuring that fishing wont negatively impact marine life and its habitats. The major supermarkets are promoting this policy within their businesses and compel their suppliers to prove products supplied are sustainable.
In order to meet our target of selling only 100% sustainable sourced fish, we have taken threatened species such as North Sea Cod off our fresh fish counters, and replaced them with more sustainable options. (Asda website, 2010)
Focus should be to captivate both EU and global markets to achieve the following:
Supply and demand
Potential to substitute
Economic factors: The economic recession has influenced the Industry to be more focused on reducing costs in manufacturing. The cost of living, skill levels and salaries are all linked to the recession. As the introduction of flexible, external temporary staff is introduced, pressure on the full time employees becomes apparent and the skilled labour reduced. As inflation increased with the cost of living, salary increases are held back or reduced. Temporary staffing is seen as unskilled, inflexible and unreliable.
Introduce Efficiency Officers whose primary role is to reduce production costs, wastes and increase production efficiencies.
Maximise on consignment stocks of materials to reduce holding costs and aid the release of capital.
Sociological factors: The UK seafood market is composed mostly of the working class population. Healthy eating is a major importance to these consumers. Therefore, among other things, fish and fish products are some of the products they normally buy to maintain their health. Today, the media and the health sector are campaigning for the importance of certain Omega proteins which are extremely important for health and are found mostly in fish (Seafish Organisation, 2009).
Engage a national advertising campaign to educate consumers of the healthy benefits of the Omega 3 oils within fish products.
Review product recipes with the plan to produce healthier products e.g. reduced salt and saturated fats.
Technological factors: Technology is changing and advancing almost on a daily basis. A strong IT (Information Technology) network can strengthen a business against the competition giving visibility and accuracy of a business. It can drive a business forward and quickly assist in the day to day operations of production requirements. Marketing has also changed significantly as many people are turning to the internet to make their purchases (Euromonitor, 2006).
Introduce software upgrades to view sales, planned orders, MRP (materials requirement plan) and build a long term sales strategy plan.
Review automation processes with the potential for a system to be introduced both in Marketing, Sales and the production areas.
Maximise on location values (road and sea routes) by increasing productivity through transferring operations from the smaller subsidiaries of the UK businesses and centralise within the Grimsby sites. (Reduced distribution costs)
Continue to further educate management staff in labour/technological areas to remain a high quality department.
Implement a CIG (continuous improvement group) with employees and management to improve relationships within the two departments.
Evaluate the opportunities of exporting goods into Western/Central Europe. Calculate costs of UK production and distribution against the costs of outsourcing to European businesses.
Continue with focus on marketing polls and community trends towards changes in the public tastes and expectations of products.
Initiate a multi-skill training program of staff to reduce the effects of leavers and non-attendance within the Key Operatives department. Increased Key operatives will give added support to production lines and minimise disruption to output.
Evaluate 3PL (third party logistics) suppliers over the adverse weather conditions in winter months with the potential to order/deliver production materials on day 1, for usage on day 3 against the current plan of day 1, for day 2 usage. This action has the potential to reduce late or non delivery of materials due to extreme weather conditions.
Porter 5 Forces Analysis of the Youngs Seafood
Threat of new entrants/ competitors: The seafood industry in the UK is growing at a very fast rate and this trend is attracting more traders into the market (Euromonitor, 2006). Current competitors in the seafood market include Icelandic UK as main rival who currently produce many of the same products as Youngs. However, loyalty to the brand from customers and pricing strategies support this company over Icelandic. A new threat to the business is the Birds Eye group who recently returned to the seafood industry to accompany the fish finger operations with frozen fish sales. Birds Eye is seen as a possible threat to the Youngs group, history of the 2 groups indicate a possible price war to capture segments of the market.
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Bargaining power of suppliers: There are many suppliers of seafood and fish products in the UK and they all have their on unique ways of targeting their consumers (Seafish Organisation, 2009). Globalisation of materials has aided the Youngs business. With the world market open, suppliers of seafood materials have given the business more control and the opportunity to develop large numbers of suppliers and give more control in both availability and costs. With the added benefit to substitute these materials, Youngs has the benefit of negotiating with suppliers for reduced costs and bulk buying. Threat of substitute products: The entrance of new competitors also brings with it the threat of substitute products into the market (IBISWorld Market Report, 2010). This threat is quite high. Consumers are prone to substitute products based on prices if the quality of this product is not compromised. With the global market, the transportation of frozen materials over large distances can be quickly achieved indicating a strong continuity of supply and availability.
Bargaining power of buyers: The changing economic environment and the increasing range of available seafood products have led to a higher bargaining power among buyers. Everyone is looking for the cheapest supplier of seafood and fish products (Euromonitor, 2006). Imported goods are commonly available in supermarkets. This may force Young’s Seafood to reconsider its pricing strategy to remain competitive in the market.
Competitive rivalry: Competitive rivalry is extensive in the UK seafood and fish industry. Although Young’s enjoys a 40% market share, it has to work very hard not to loose its customers to the local and international seafood companies in the country (Euromonitor, 2006). The entrant of new players in the industry and substitute products as well as the increased bargaining power of both suppliers and buyers has only increased this competitive rivalry.
The Marketing Mix
The marketing mix is the method that a business can deliver benefits to their target customers to generate a profit. The 4 Ps as they are known, are a set of marketing tools that a business can mix and manage to achieve the best possible response. (Figure 4)
Figure 4. The Marketing Mix
Product – the product and service offered to the market place.
Price – what customers pay through different pricing structures which have an impact on a business profitability levels.
Place- includes the channels of distribution, logistics and mixing the channels to optimum effect.
Promotion – The fourth P in the marketing mix is promotion and the most visible aspect of marketing. Promotion means communication with customers.
An effective marketing program blends all of the marketing mix elements into a coordinated program designed to achieve the company’s marketing objectives by delivering value to consumers. (Armstrong, Kotler 2000, page 56)
The Youngs Seafood Marketing Mix
In the UK, consumers spend more than £5 billion on seafood and fish products per year. For the fresh seafood sector, the market is mostly concentrated among the older generation and up market population. However, the opposite is true for frozen seafood. Fish snacks seem to be popular among the younger generation.
Product: Youngs Seafood products include chilled fish for various supermarkets and are the UK best seller of Scampi, Prawns, Admirals pie and the Youngs “Chip Shop” range. Other products include Fresh and chilled seafood and frozen seafood. Each of the products will carry the Youngs Seafood’s brand name. However, the products will also have their own unique sub-brand names.
Price: The Youngs prices vary from the higher costs of products such as scampi and prawns to the cheaper consumer options of ready meals and shaped fish fillets. Special offers will be given as part of the promotional strategy for products such as 2 for 1 offer, reduced prices to increase sales over seasonal trends and new products to saturate the market. The variety and pricing of the products enable the business to reach all types of consumers with a wide range of goods to attract both the younger and older generations.
Promotion: The advertising campaigns for Youngs will be more systematic than they are. The adverts are focused on the benefits of healthy eating and the 200 year heritage of the business and will be conducted on the broadcast and print media. There are also be various promotional events incorporating the Food Standards Agency “Fish for Life” campaign promoting the Omega 3 benefits of fish as well as long term sporting promotions of both the Grimsby town football and the round the world yacht race that will promote the business as a whole. However, it must be noted that promotional avenues can be unpredictable and can fail. For example, in the 2010 football world cup, Youngs promoted the entire “chip shop” range of products using David Beckham. With the poor showing and early knock out of the national team, the promotion failed with a £2 million cost to the business.
Place: The Grimsby site is the prime position of the Youngs business with 70% of all fish eaten in the UK produced and distributed here to the supermarkets. There are 5 other sites specialising in products such as smoked fish, scampi, and specialist seafoods at production sites ranging from Stornoway, in the far north of Scotland to Anchor, on the south coast of the England. For maximum ease to the consumer, Youngs have sales contracts with all the main supermarkets (Tesco, Asda, Iceland and Sainsburys) to sell both the Youngs branded and supermarket own labels products.
The Three Marketing Approaches
Marketing is split into three categories, Public, Private and Voluntary.
Public Sector – Non-commercial organisations who aim to provide education and services to people.
Private Sector – Commercial organisations who aim to make a profit from their business.
Voluntary Sector – Again non-commercial but they rely on sponsorships or membership for income.
The public sector, for example are groups that rely on financial support through government backing and is used as a tool to educate/notify the general public on topics such as new government policies, health and safety and local authority communications.
The private sector within marketing is based around industry and the prime goal is to enhance products/services to the general public with the only purpose of sales to achieve profits. The costing for this sectors marketing is totally generated though private monies within the businesses.
The voluntary sector targets marketing to serve the interests of the general public and supply a service to support and in some cases such as the Red Cross, stretch across the globe. Obviously, this sector is non-profit with a main mission to serve the public rather than make profits. The costing for marketing these business types is solely generated through donations.
The marketing tools used in these three sectors are basically similar, but the strategies used are very different. The 3 marketing models of PEST, SWOT and Porters 5 Forces as well a the marketing mix can be used to great affect in all 3 marketing strategies.
Of the 3 marketing approaches, the voluntary and private sector have the same purpose within the marketing strategy of requesting monies from the masses, with the only difference of an actual product being bought with the private sector against the voluntary sectors promotion to play on the individuals heart strings for donations.
In recent years these two marketing sectors have linked their respective businesses in a double marketing ploy. For instance, the Great North Run charity event is sponsored by private health service Bupa and Cancer Research UK “Relay for Life” events are sponsored by Network Rail. This partnership promotes both businesses with the added benefit of financial backing to the voluntary sector of marketing.
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