COLLEGE OF BUSINESS SECOND SEMESTER 2009/2010 SESSION BPMM 2023 MARKETING MANAGEMENT
MARKETING PLAN : Gardenia Bakeries (KL) Sdn. Bhd. PREPARED FOR : DR. NURSIHA ALIAS
PREPARED BY : KONG PEI LING
126800
CHEAH KAH WAI
128794
NG LAY HONG
128803
LIM PEI SIAN
128807
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SUBMISSION DATE: 15th MARCH 2010
NO. 1.0 2.0 2.1
2.2
2.3 2.4 2.5 2.6 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7
TITLES Executive Summary Situation Analysis Market Summary Target Markets 2.1.1 Market Demographics Demographics Environment Economic Environment Natural Environment Technological Environment Political Environment 2.1.2 Market Needs Price Quality 2.1.3 Market Trends 2.1.4 Market Growth SWOT Analysis 2.2.1 Strengths 2.2.2 Weaknessess 2.2.3 Opportunities 2.2.4 Threats Competition Product Offering Keys to Success Critical Issues Marketing Strategy Mission Marketing Objectives Financial Objectives Target Markets Positioning Strategies Marketing Mix 3.7.1 Product
PAGES 4 7 7 8
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12 13 14 14 15 16 18 19 22 23 23 24 25 25 25 26 26 27 28 28
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3.8 4.0 4.1 4.2 4.3 5.0 5.1 5.2 5.3 5.4
3.7.2 Pricing 3.7.3 Promotion 3.7.4 Place Marketing Research Financials Break-Even Analysis Sales Forecast Expenses Forecast Marketing Control Contingency Plan Recommendation Conclusion Appendix and References
30 31 33 35 35 36 38 40 41 43 44 45 46
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1.0 Executive Summary Gardenia is a strong brand in Malaysia. Gardenia has produced a lot of kinds of breads such as the latest one-Butterscotch, Breakthru, Delicia, Twiggies and many others. In order to satisfied different level of customer, every Gardenia product has its own special features. For example, Gardenia Breakthru breads is not only bread, but consumers have the perception that it is a healthy food. It contains 38% less carbohydrates, 7.3x more dietary fibre, 15% less calories, 59% more proteins, low gylcaemic index (42), low gylcaemic load (6.5), prebiotic properties, low fat, no trans fat and no added sugar. The price of Gardenia breads is low and almost the same as others competitors. In fact, the pricing of Gardenia bread is controlled by the government. This is because of the ingredient of the bread, flour, which is one of the products that are under the control of the government in Malaysia. Gardenia makes widespread distribution either in urban or rural area to make sure everyone can have their breads. As all of us know, Gardenia baked products are well known by everyone. Gardenia has over 20000 outlets throughout Peninsular Malaysia. Their wide varieties of products are available in almost all hypermarkets, supermarkets and even neighbourhoods stores. Here, Gardenia seeks for market share through intensive distribution, a strategy in which they stock their products in as many outlets as possible. Their breads and cakes can be 4
conveniently obtained by consumers wherever and whenever consumers want them. Gardenia implements mass promotions. For instance, it uses mass media such as television to promote its products and to introduce new products to the customers while ensuring customers to remember about their existing products. Gardenia has used advertising strategies to promote its products. Among the various alternatives media, television advertising and newspaper are mostly used by Gardenia. In short, major advertisement of Gardenia’s bread have established Gardenia slogans as part of its popular culture, such as “It’s fresh! It’s good! So good…you can even eat it on its own! ”.
Brief History In 1969, an American named Horatio Sye Slocumm was sent by International Executive Service Corporation (IESC) to East Malaysia to start a bakery. Mr. Slocumm brought with him 35 years of baking experience with one of America’s leading chain of bakeries. Gardenia was born. Gardenia Bakeries (KL) Sdn Bhd rolled the first loaf of bread off its line in 1986. Within a short period of four years, it became the bread market leader with an astounding 99 percent brand recall rate and 80 percent top-of-mind recall. Gardenia’s range of products grew and evolved through the years, becoming better and better with each step. Leveraging on its brand strength, Gardenia produces variety of baked products to satisfy consumer’s demands.
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Gardenia has four factories which locate at Shah Alam, Subang, Puchong and another one. The factory at Puchong is specified in producing new products. Gardenia has over 20,000 outlets throughout Malaysia, excluding Sabah and Sarawak. It does not have any outlets at Sabah and Sarawak. In addition, Gardenia owns more than 500 delivery vans in Peninsular Malaysia. Lastly, these are the details for Gardenia Bakeries. •
Toll-free line: 1800-88-3228.
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Address: Lot 3, Jalan Pelabur 23/1, 40300 Shah Alam, Selangor Darul Ehsan, Malaysia.
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Phone number: 03-55423228
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Fax number: 03-55423213
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Email address:
[email protected]
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Website: http://www.gardenia.com.my/
Achievement 2001: Best supplier 2001 (Category: Bread), Dairy Farm Giant Retail 2002: Quality Management Systems ISO 9001, SIRIM QAS International Sdn Bhd 6
2002, 2003/2004, 2005: Superbrands Awards for 3 consecutive terms, Superbrands Malaysia 2006: Superbrands Consumers’Choice Award, Superbrands Malaysia 2004: National Award for Creativity and Innovative, Malaysian design Technology centre 2005: MS 1480: 1999- Food Safety according to Hazard Analysis and Critical Control Point (HACCP) System, SIRIM QAS International Sdn Bhd 2005: Universal Integrated System- ISI2020, Research Institute of Standards in Islam 2006, 2007: Low Glycaemic Diabetic-Friendly, Diet friendly Seal, Glycemic Research Institute, Washington D.C. 2007: Highly Commended Product Award, Malaysian Institute of Food Technology (MIFT)
2.0 Situation Analysis Gardenia Bakeries (KL) Sdn.Bhd rolled the first loaf of bread off its line in 1986. Within four short year, it become the bread market leader. Gardenia has for many years been at the forefront of producing fresh, tasty and yet nutritious bread. Gardenia’s flagship bread has improved through the years, becoming better and better each step of the way. Today ,it is known as Original Classic and is enriched with 14 vitamins and minerals. To meet the changing expectation of today’s customers, Gardenia is constantly adopting industry innovations, new baking
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techniques and product development.
2.1 Market Summary Gardenia possesses good information about the market and knows a great deal about the common attributes of the most prized customer. This information will be leveraged to better understand who is served, what is their specific needs are, and how Gardenia can better communicate with them.
Target Market The target markets of Gardenia Bakeries Sdn. Bhd are customer market, reseller market, and also government market. The customer market consists of individual and household while reseller market consists of retailer, supermarket (Carrefour & Tesco), and convenience stores (7-Eleven and stores at petrol station) and finally the government market which includes the hospitals.
2.1.1 Market Demographics The profile of the typical Gardenia customer consists of the following : demographic
environment,
economic
environment,
natural
environment,
technological environment, political environment.
Demographics Environment
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Demography is the study of human populations in terms of age, density, gender,
location,
occupation,
race,
size
and
other
statistics.
Basically,
demographic environment has major implications for business. This is because the demographic environment involves people, who play an important role in making up the markets. Generally, populations are becoming more educated. The rising number of educated people will increase the demand for quality products especially when health is highly concerned nowadays. Therefore, Gardenia has come out with Gardenia Breakthru, a health-conscious product. Gardenia Breakthru is formulated with beta-glucan that can help to lower cholesterol levels and stabilize blood glucose levels.
Economic Environment The economic environment consists of factors that affect consumer purchasing power and spending patterns. Consumers at different income levels will have different spending patterns. For upper-class and middle-class consumers, they have a better standard of living. They are willing to go for the good quality products. Consequently, although food, such as bread, is just daily basic needs, they tend to select more sophisticated products. For instance, consumers with higher income will choose more expensive bread with special features such as Toastem. On the other hand, the underclass consumers usually make further consideration before buying to reduce their expenses when purchasing. So, they may possibly buy normal white bread as their daily meal. Thus, the economic forces will also affect a company’s marketing plans.
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Natural Environment The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Nowadays, the world environmental pollutions have reached an alarming level. Hence, marketers should be aware of several trends in the natural environment especially the deteriorating pollution. For example, manufacturing company like Gardenia commonly produce toxics gases and chemical wastes during their daily production. They also use non-biodegradable plastic bags as packaging materials. All activities leads to the pollution of the environment. So, to be environmentally responsible, the company should develop better solutions to reduce pollutions. However, it needs vast fund to do so causing the company to face financial burdens and indirectly posing threat to the company.
Technological Environment Technological environment consists of the forces that create new technologies, new products and marketing opportunities. The recent technology boom has created a new digital age. For example, the explosive growth in computer, telecommunications and information has had a major impact on the ways companies deliver value to their customers. For Gardenia, they apply computer systems to manage its operation such as tracking inventories, recording
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accounting transactions, and storing customer’s profiles. The usage of information technology has smoothened and fastens the process of the commercial activities. This enables the company to become more competitive as well. Thus, in this contemporary, if manufacturing company such as Gardenia ignores latest technologies, their business may decline.
Political Environment The political environment composed of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Basically, marketing decisions are strongly affected by the developments in the political and legal environment. The increasing emphasis on ethics and socially responsible actions encourages for-profit organizations to implement their social obligations. For instance, Gardenia has made positive response and they take this responsibility by supplying bread free of charge to old folk homes, disabled people centres and other charitable organizations. By doing so, a better public image of the company can be built. Indirectly, this also help the company to gain exposure to more marketing opportunities.
2.1.2 Market Needs Gardenia has produced a lot of kinds of breads such as the latest oneButterscotch, Breakthru, Delicia, Twiggies and many others. Every product has its
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own special features.
Price The price of Gardenia breads is low and almost the same as others competitors. One of the examples is the white breads of Gardenia (jumbo size) which have more slices but at a cheaper price.
Quality For the company’s designing marketing plans, marketing management takes other company groups into account. For example, Gardenia Bakeries Sdn. Bhd makes Research and Development to be the top of Malaysia’s favourite bread, and also innovators. Gardenia invests heavily in R&D. Its latest product, Gardenia Breakthru, demonstrates its commitment to giving only the very best to their customers. Gardenia Breakthru passed extensive clinical tests at the Glycemic Research Institute in Washington D.C. and are certified Diabetic-Friendly and DietFriendly. This latest result reaffirms Gardenia Breakthru’s extraordinary qualities.
2.1.3 Market Trends Nowadays consumers are generally health conscious and prefer 12
bread with nutrients and less sweet.Gardenia Malaysian believes strongly in ensuring that our consumers enjoy the finest quality and freshest bread daily. We take our Gardenia Assurance very seriously and consumers of Gardenia products are aware of our commitment to the highest quality, food safety and freshness. To cater to Malaysians' changing demands and lifestyle needs, Gardenia's marketing and R&D teams are constantly researching and exploring new product innovations. For example, we were the first in Malaysia to identify an unmet demand in the market for low glycemic index bread to meet the special dietary needs of diabetics as well as for weight management. Even though awareness of glycemic index and its correlation to our blood sugar level (low glycemic index foods result in slow release of sugar in the blood and is hence diabetic-friendly) is still in the infancy and as such, low glycemic products are still considered a niche market, figures show that diabetes in Singapore is unfortunately on the upward trend and this is a group of people whose needs are not sufficiently addressed. For example, for Gardenia Breakthru breads, it is not only a bread, but consumers have the perception that it is a healthy food. It is consists with Beta Glucan which helps to lower cholesterol, this has been clinically tested and certified Diet Friendly by the Gylcemic Research Institute, Washington D.C because it has Low Adipose Tissue Fat-Storing Capacity and will assist our body in having better control over obesity. It is also certified as Diabetic Friendly which helps to maintain stable blood sugar level that typically follows a meal. It is also 13
have 38% less carbohydrates, 7.3x more dietary fibre, 15% less calories, 59% more proteins, low gylcaemic index (42), low gylcaemic load (6.5), prebiotic properties, low fat, no trans fat and no added sugar too. The market trend are showing continued growth in all direction of healthy lifestyle.
2.1.4 Market Growth The increases in the cost of raw materials and energy have been remarkable this year. What strategy did Gardenia International utilize to reduce the impacts of these costs on profitability? How successful have you been in implementing such measures? Have you had to increase the prices of your products this year? Over the past two years, there have been continual upward price pressures especially for flour and fuel, which we have tried to absorb initially. This has led to a great increase in the costs of operations and therefore a review of the pricing of the products. As the market leader in the bread category however, Gardenia is mindful of the fact that many Malaysian depend on us for their daily bread and as such, we have tried to contain the price increase to so as to minimize the impact of the rising inflationary costs amongst our fellow Malaysian. 14
2.2 SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company and describes the opportunities and threats facing Gardenia.
2.2.1 Strengths The strengths of Gardenia in Malaysia are that it has brand strength in marketing. Gardenia has built up a very strong brand in Malaysia, it almost generic to the product categories. Since Malaysian is mind-set, when they think about bread, they think about Gardenia. As we can seen its product is being sell in whole Malaysia, which is nationwide. Everyone can get it easily from grocery shop, minimarket, supermarket and hypermarket. Besides that, Gardenia also has the strength in product innovation, as we can seen that it continuously introducing new product and keep bringing more choices to the customers. Moreover, Gardenia, in their move to develop health bread has teamed up with a group of a researchers attached to a medical faculty from a local university, to formulate bread using special functional ingredients. On the other hand, Gardenia is involved in social work. Every day, it deliver complimentary fresh bread to over 45 charitable organizations like old folks home, orphanages and centers for the disabled, eight of which have been on Gardenia’s delivering list since 1991.
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To continue maintain this strength, Gardenia should do more promotion through media such as newspaper, radio and television. The advertisement should contain creative and funny element so it could easily attract more customer. To make the product fully nationwide, Gardenia should increase more and more retailer in the future in order to reach its product to every Malaysian.
2.2.2 Weaknesses The weakness of Gardenia is about its packing. Until now, the baked products that produce by Gardenia are still weak in its packing, which is not enough attractive. Conversely, the packing of High 5 Bread is more attractive if compare with Gardenia. Here are some sample and comparison between Gardenia and High 5 according to the packing.
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By looking to the pictures above, it is obviously that the packing of High 5 are more attractive than Gardenia. The packing of High 5 is more attractive with its colorful plastic bag and the vivid design. To overcome this problem, Gardenia should put more effort on the packing. For example, Gardenia can distribute survey form to the public by asking them what kind of packing could more attractive. After that, Gardenia could hire some designer to design the packing that they desired. Why packing is so important? It is because for first buyers who never know about the product, they will buy the product based on the packing. That is why Gardenia should improve its packing in order to gain competitive advantage.
2.2.3 Opportunities
Increase awareness of health and fitness Nowadays, the number of Malaysian suffer from diabetes are increasing day
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by day. Gardenia is working closely with the National Diabetes Institute (NADI) on the “Fight Against Diabetes” programme, a major educational drive to bring public awareness on the prevention and management of diabetes. And now Malaysian has more knowledge in nutrient and they are emphasize the nutrient contains in food and the calories of food. Before they going to buy the food in package they will look at the label of contains nutrient in the package to help them choose food which is more wisely. They will watch for these key terms and know what they mean. •
"Free" has the least amount of a nutrient.
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"Very Low" and "Low" have a little more.
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"Reduced" or "Less" always means the food has 25 percent less of that nutrient than the reference (or standard) version of the food.
Malaysian people are more concern to the calories, fat, cholesterol and so forth they taking in the food daily. For example, they try to eat food less salt, sugar and oil to keep them healthy. Thus, Gardenia will keep working hard to produce more healthy bread in order to fulfill consumer’s need.
Increase number of working youth Increasing numbers of working youth in Malaysia cause an increasing demand in convenience for everything for life. For example incensement for demand for
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fast-food (KFC, Pizza Hut and Mc Donald) instant drink( soft drink, Milo, Soya and so on), online shopping and so on. This is because they are too busy in working. For this reason, Gardenia hopes to bring a convenient and healthy meal for these busy groups. No matter how busy is the life, craving for healthy food is a need. While busy with life, Gardenia is always standby to provide a convenient and healthy meal.
2.2.4 Threats Threats that facing by Gardenia is:
Future
/
potential
competition
from
an
already
established market participant There are few bakeries companies which compete with each other in Malaysia. Besides the strong competitor, High 5, Gardenia is compete with some smaller bakeries which is family owned, structured and are usually started as a single shop before extending to more outlets. These family bakeries however, do not only emphasize on the bread products, but also produce higher margin delicacies such as cakes and cookies. These bakeries operate in the city where the flow of people is high and most importantly, where the more affordable working group is. Among the few local confectionary retail chain shops are the King’s
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Confectionary, which started in 1973 in Kuala Lumpur and now with 49 retail outlets, the Season’s Confectionary and Bakery, the Angel Cake House etc..
Threat matrix
Probability of occurrence High
Low
Competitors develop
Decrease Malaysian people
superior new product line.
eating bread.
Major prolonged economic depression. Higher cost
Legislation to reduce foreign product.
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High
Seriousness Low
2.3 Competition
Strong Competition Two national local bakeries, which cater to various regions, namely Gardenia and Stanson Bakeris, were dominated the Malaysian bread industry at present. These two companies hold approximately 76% of the retail market in 2002. They compete between themselves through prices, product characteristic, distribution choices, and even communication. Investment in advertising in incredibly high and the market segmentation never ended. Stanson Bakeries ( High 5 Bread) Stanson Bakeries and its marketing unit are subsidiary companies of the Stanson Group under the Silver Bird Group Bhd. The Stanson Bakeries
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manufactures the European variety of breads, namely High 5. The group, which started in 1999, is currently contributing about RM46 million, close to 90% of Silver Bird’s turnover in year 2004. The Stanson Bakeries, has 250 trucks plying the peninsula’s North-South expressway 24hours a day, to reach their outlets overnight, on a daily basis. Their strong distribution network has enabled the company to supply more than 8000 retail outlets throughout the country in the year 2004. High 5 breads are made from the finest selected ingredients and baked to a unique European recipe, High 5 has the balance of 5 main nutrients with no artificial preservatives that our body needs that give us the energy, growth and good health to live a full life. Wholesome, well-balanced and nutritious, that's the secret recipe of High 5 bread. High 5 bread is freshly baked everyday from stateof-the-art single largest stand-alone bakery line in ASEAN using a unique European Recipe that makes your favorite bread softer, tastier and healthier. It contains all of the five essential nutrients from each of the five important nutritional groups - carbohydrates, protein, calcium, vitamins and irons. It also has folic acid, which is recommended for vitality and growth of our body, especially for expecting mothers and babies; and is cholesterol and bromated free for good health. The High 5 Promise - Soft & Tasty high quality bread which emphasizes good health and nutrition. High 5 bread is produced by integrating state-of-the-art food processing technologies with professional management techniques. High 5 cares to give you the best in bread, beginning with our Unique European Recipe, so from
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taste to texture, consumer can tell the difference in every bite. That's why every High 5 bread has essential nutrients that contribute to a healthy, well-balanced and nutritious diet for the whole family A bread museum called the High 5 Bread Town is built by The Silver Group in their RM100 million new plant premises. It present the history of bread making that spans more than 500 years ago, from Ancient Egypt, through the Iron Age, the Roman and Viking periods, right through the industrial revolution of the present day. It uses colorful murals and interactive displays with sound to give lively handson experience to visitors. It is claimed to be is the first of its kind in the world. It even portrays bread in futuristic years, in the form of pallets and pills to be taken during a spaceship expedition. It is fascinating with ideas being so well transformed for educational purposes. In October 2004, Stanson Bakeries announced their official acquisition of licensee for the manufacture and distribution of Roman Meal breads from The Roman Meal Company in the US (best known globally for their nutritional and health bread over the century). The following is the list of the product by Stanson Bakeries :
High 5 Cream Roll ( flavors : chocolate, vanilla and corn) High 5 Double Cream Roll ( flavors : chocolate & vanilla, espresso & cream, Blueberry & cream, apple & cream) High 5 Fruit Roll (flavors : raisin & cherry, raisin,apricot & walnut)
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High 5 Filled Bun ( flavors : ikan bilis, spicy tuna, classic sardine, coconut, red bean, kaya and chocolate) High 5 High Grain High 5 Roti Kok
2.4 Product offering The first loaf of bread was rolled by Gardenia in 1986.Through the years, Gardenia leveraged on its product strength and until now, it produces a variety of baked products to satisfy customer’s demand. The following are the products that produce by Gardenia: Gardenia Twiggies ( flavors : cream dream and choc-a-lot) Gardenia Toast’em (flavors : raisin oatmeal and apricot raisin wheatgrain) Gardenia Summerset Cottage Wholegrain Fibremeal Gardenia Squiggles (flavors : funky strawberry and choco-malto) Gardenia Quick Bites (flavors : double chocolate and banana) Gardenia Classic and Classic Jumbo Gardenia Muffin Cip Coklat Gardenia Frankfurter Rolls Gardenia Delicia Soft Roll ( flavors : milky chocolate, coffee cinnamon, butter toffee and black sesame) Gardenia Delicia Sambal Bilis Gardenia Delicia Pandan Butterscotch Bread Gardenia Delicia Hazelnut Choco Spread
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Gardenia Delicia Cream Roll ( flavors : vanilla, kaya,jagung and chocolate) Gardenia Delicia Coffee Caramel Bread Gardenia Delicia Chocolate Spread Gardenia Delicia Choco chip Raisin Gardenia Delicia Butterscotch Gardenia Breakthru Formula Mutliwholegrain Fibremeal Gardenia Bonanza Big Saver & Big Value
2.5 Keys to Success “So good you can even eat it on its own.” The phrase is synonymous with Gardenia. Gardenia moved with their demands as consumers getting more conscious about nutrition over the years. It started manufacturing loaves with no trans fat, no cholesterol and chockfull of vitamins. More than that, they make that extra healthy choice plan to see on its nutrition labels. As an understanding manufacturer, Gardenia is continuously to fulfill customer’s need.
2.6 Critical Issues In year 2008, there was a critical issue that rose between QAF Limited and LB (Lian Bee) Confectionery Sdn. Bhd., pursuant to section 45 and 46 of the Trade Marks Act 1976 for an order that the Trade Mark Registration No: 01005742 for “Squiggles” in Class 30 in the name of QAF Limited be expunged and removed 25
from the Register of Trade Marks Malaysia would be success or not. Before this, QAF Limited and Gardenia entered into a Licensing Agreement dated 12.9.1996 whereby QAF Ltd granted Gardenia Bakeries the right to use trade marks on bread and bakery products produced using the Gardenia Bakery System. This includes the registered trade mark “Squiggles”. In this case, the court held that LB (Lian Bee) Confectionery Sdn.Bhd. is dismissed with costs and the application by the company is failed. As a conclusion, the trade mark “Squiggles” is still belonging with Gardenia Bakeries.
3.0 Marketing Strategy The key to the marketing strategy of Gardenia is focus on satisfied consumers’ demand by introducing the different kinds of product, eating healthy life style and also the Halal status of Gardenia in Malaysia. Gardenia's range of products grew and evolved through the years, becoming better and better with each step. Leveraging on its brand strength, Gardenia now produces a variety of baked products to satisfy consumers’ demands. Gardenia also stress about the eating healthy life style by introducing the Gardenia Breakthru bread with the statement-eat well and stay well with Gardenia Breakthru, the diabetic-friendly bread that’s better for you. While for the Halal status of Gardenia bread, a special Halal Committee is formed to scrutinise every aspect of the Halal regulations and to ensure that all requirements are stringently adhered to. As an added measure to control and safeguard of Halal status, Gardenia has appointed an independent
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consultant whom Gardenia could refer to in ‘syariah’ related matters.
3.1 Mission Gardenia as a food company that manufactures a wide variety of breads has the mission of becoming "The Premier Company in the Baking Industry." Being a consumer-focused and branded food company, Gardenia is singularly driven and aligned behind delivering superior consumer value through providing consumers with superior brands. The main objective is to project that Gardenia trademark means value and it is respected all over Asia. By delivering uncompromising excellence in product quality and service, Gardenia consistently drive the market forward, setting standards for the industry to follow. At Gardenia, the science of baking an art is made.
3.2 Marketing Objectives First, to ensure the aroma and taste of the bread are consistently being maintained on the shelf. Second, while exploring new market, current customer loyalty is retained. Third, within four short years, Gardenia became the bread market leader with an astounding 99 percent brand recall rate and 80 percent topof-mind recall.
3.3 Financial Objectives First, maintain a significant research and development budget to spur future 27
product development. Secondly, continue heavy promotion to further increase the company’s profit margins.
3.4 Target Markets The target markets of Gardenia Bakeries Sdn. Bhd are customer market and reseller market. The customer market consists of individual and household. Usually the customer market will buy only in small quantity but with a large number of customers, a great sell could be achieved. While for the reseller market consists of retailer, supermarket (Carrefour & Tesco), and convenience stores (7-Eleven and stores at petrol station). The reseller market usually characterise as an assist to the customer market. They help to distributed product and make it available anytime anyway.
3.5 Positioning Competitors are those who serve the target market with similar products and services against whom a company must gain strategic advantage. Now, Gardenia Bakeries Sdn. Bhd. has 70% share market in the bread’s industrial and it is a leader in this industry. This is because Gardenia has positioned their offerings strongly against competitor’s offerings in the minds of the consumers. For example, it has its own song to make consumers remember its bread which is “So good...You can even eat it on its own”. As we know, the demographic environment
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involves people, who play an important role in making up the markets. Generally, populations are becoming more educated. The rising number of educated people will increase the demand for quality products especially when health is highly concerned nowadays. Therefore, Gardenia also comes out with Gardenia Breakthru, a health-conscious product that strongly positioned in the markets. Gardenia Breakthru is formulated with beta-glucan that can help to lower cholesterol levels and stabilize blood glucose levels.
3.6 Strategies There are a few strategies that have been use by Gardenia to penetrating its own bread market. Generally, Gardenia focuses on three aspects to delivery its product value to the customer where as marketing intermediaries, suppliers and public. Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. There are a lot of marketing intermediaries like reseller, the physical distribution firms and the marketing service agencies. Gardenia uses intermediaries’ distributions and also direct selling method to offer its product to the final buyers. The company uses the resellers to distribute its products in order to make sure that their products can be delivered to the customers. Its start its bread delivering operation at 4 a.m. every working day so that customers are able to get its breads early in the morning. The customer can get the products easily in any retails without going to the main warehouse. Gardenia also uses the physical
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distribution firms to help them to stock and move goods from their main warehouse to final buyers, wholesalers and retailers. For supplier’s aspect, Gardenia knows that suppliers form an important link in the company’s overall customer value delivery system. They provide the resources required by the company to produce its goods and services. So that Gardenia put an important insight to the supplied resources. For example, due to the short-lasting validity of flour, Gardenia prefers to purchase its resources from the local suppliers to ensure that the resources received are fresh. While for publics, a public is any group of people that has an actual or potential interest in or impact on an organization’s ability to achieve its objective. In order to achieve its objective, Gardenia is using different public media for different motive. For example it uses television to promote and also to ensure consumers remember about Gardenia’s products, be it new products or existing products. Gardenia also encourage to having a factory visit where Gardenia called it ‘Bread Time Story Tour’. The free factory visit has attracted over 25,000 visitors annually since 1991. More specifically, Gardenia even owns a theme song that we familiar heard from the broadcasting of advertisement.
3.7 Marketing Mix Gardenia marketing mix consists of the following approaches to product, pricing, distribution, and promotion.
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3.7.1 Product Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need while service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Products that are marketed are divided into two, which are consumer products (convenience product, shopping product, specialty product and unsought product) and industrial products (materials and parts, capital items and supplies and services). Gardenia has produced a lot of kinds of breads such as the latest oneButterscotch, Breakthru, Delicia, Twiggies and many others. Every product has its own special features. This is because of the customer buying behaviour; customers who make frequent purchase, little planning, little comparison and low shopping effort before make purchasing. Price; the price of Gardenia breads is low and almost the same as others competitors. One of the examples is the white breads of Gardenia (jumbo size) which have more slices but at a cheaper price. Distribution; Gardenia make widespread distribution either in urban or rural area to make sure everyone can have their breads, and also promotions; Gardenia implements mass promotions. For instance, it uses Mass Media such as television to promote its products and to introduce new products to the customers while ensuring customers to remember about their existing products by using radios.. Referring to the product level, the core benefit represents what the buyer is really buying. The core benefit provided by Gardenia Bakeries is to make their
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consumers have the feeling that what they are consuming is not only bread, but the experience. For example, for Gardenia Breakthru breads, it is not only a bread, but consumers have the perception that it is a healthy food. It is consists with Beta Glucan which helps to lower cholesterol, this has been clinically tested and certified Diet Friendly by the Gylcemic Research Institute, Washington D.C because it has Low Adipose Tissue Fat-Storing Capacity and will assist our body in having better control over obesity. It is also certified as Diabetic Friendly which helps to maintain stable blood sugar level that typically follows a meal. It is also have 38% less carbohydrates, 7.3x more dietary fibre, 15% less calories, 59% more proteins, low gylcaemic index (42), low gylcaemic load (6.5), prebiotic properties, low fat, no trans fat and no added sugar too. The actual product represents the design, brand name, and packaging that deliver the core benefit to the customer. For this company, the actual products are all kinds of Gardenia breads.
3.7.2
Pricing
Price refers to the amount of money charge for a product or service. It is the sum of all the value that consumers give in order to gain the benefits of having or using the product and services. Price has been the major factor that influences buyer choice and it remains as one of the most important element that determine a firm’s market share and profitability. Besides, price is the only element in the marketing mix that produces revenue and it is also a part of a company’s overall
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proposition. More importantly, it plays a key role in creating customer value and building customer relationships. Theoretically, price competition is the number one problem faced by many marketing executives. Yet, we get to know in our interview that Gardenia did not compete by using their price, they make customer feel worth by providing bread with high quality. It also focused on the product differentiation, such as creating new products in order to attract customers. In fact, the pricing of Gardenia bread is controlled by the government. This is because of the ingredient of the bread, flour, which is one of the products that are under the control of the government in Malaysia. The producers are unable to change the price as they like and they must follow the price fixed by government. Despite of this limitation, Gardenia will also consider several major aspects when setting the price. The first aspect that is taken into consideration is the product cost. They will ensure that the price set is able to give profit to the company and at the same time, maximizing customer satisfaction. Gardenia will also consider about the overall marketing strategy and market demand. The price for Gardenia bread must be reasonable and affordable by everyone and it must also the same regardless of what location the bread is sold in Malaysia.
3.7.3
Promotion
Promotion is one of the four key aspects of the marketing mix. Gardenia realizes that a good promotion is vitally important to create growth for the
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company. In the early years, a lot of efforts have been put into the promotion of the bread, but once consumers have accepted it they will be loyalty to the product. Promotion includes advertising, sales promotion, personal selling, publicity and public relation. Advertising consists of paid personal communication through various media with the purpose of promoting the products and is used by marketers to reach target markets with messages designed to appeal to business firms, profit organizations, or ultimate consumers. Gardenia has used advertising strategies to promote its products. Among the various alternatives media, radio commercial, television and newspaper are mostly used by Gardenia. Radio is the most common medium used to remind existing customers about Gardenia products while television advertising is usually used to promote new products. The advantage of television advertising is that marketers are able to reach local and national markets. Television advertising offers the advantages of mass coverage, powerful impact on viewers, repetition of messages, flexibility and prestige. That is all the reason why Gardenia chooses television to advertise their products. Newspapers act as an effective way to countdown new product for Gardenia because it can reach specific target market. In short, major advertisement of Gardenia’s bread have established Gardenia slogans as part of its popular culture, such as “It’s fresh! It’s good!”. Besides that, sales promotion is one of the ways Gardenia use in promotion. In October 2003, a marketing drive was launched to promote an existing product of Gardenia. Consumers were required to collect four empty packaging of the Gardenia bread to redeem one free loaf Gardenia bread. The 34
campaigns were successful in recreating awareness for these products and have lead to significantly increased sales. In addition, Gardenia is also using publicity and public relation. It has been actively involved in charitable causes. For example, Gardenia delivers complimentary fresh bread to over 45 charitable organizations like old folk’s homes, orphanages and centres for the disabled each day and these charitable organizations have been on Gardenia’s delivery list since 1991 while the Twiggies Wagon has been dispensing free Twiggies to schoolchildren during special events and functions since 2002. Moreover, as a responsible corporate citizen, Gardenia also helps in fighting the obesity epidemic in Malaysia. It is working closely with the National Diabetes Institute (NADI) on the “Fight Against Diabetes” programme, a major educational drive to bring public awareness on the prevention and management of diabetes. Another example is that Gardenia has opened their factory doors to the public in order for them to share their journey, aspirations and progress with customers since 1991. Now, they welcome over 25,000 visitors annually and take them on a personal tour of Gardenia bread factory absolutely free of charge. The visitors will be given free sample of bread during the factory tour.
3.7.4 Place Currently, Gardenia Bakeries (KL) Sdn Bhd has covered the domestic markets
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all around the Peninsular Malaysia. However, Gardenia’s baked products are only available in Peninsular Malaysia. This is because the delivering process to East Malaysia is time-consuming and the products are no longer fresh. Hence, East Malaysia which includes Sabah and Sarawak are not within Gardenia Bakeries’ distributed areas. As all of us know, Gardenia baked products are well known by everyone. Gardenia has over 20000 outlets throughout Peninsular Malaysia. Their wide varieties of products are available in almost all hypermarkets, supermarkets and even neighborhood stores. Here, as we can notice, Gardenia seeks for market share through intensive distribution, a strategy in which they stock their products in as many outlets as possible. Their breads and cakes can be conveniently obtained by consumers wherever and whenever consumers want them. Actually, their success in manufacturing products and making them available to final customers requires building and managing a continuously evolving value delivery network. What is value delivery network? It is a network that made up of the company, suppliers, distributors, and ultimately customers who collaborate with each other to improve the performance of the entire system. This network consists of both ‘upstream’ and ‘downstream’ partners. Upstream partners are the set of firms that supply the raw materials, components, parts, information, finances, and expertise in order to create a product. On the other hand, the downstream marketing channels or distribution channels partners are made up of such as wholesalers and retailers. For Gardenia Bakeries, they work closely with their upstream partners such as 36
flour suppliers to avoid problem of shortage of raw materials, which will critically affect their daily production. Normally, to maintain good relationship, a win-win situation must be created. For instance, Gardenia will always make payments to their suppliers on time. Besides that, Gardenia also forges marketing channels, especially retailers, such as hypermarkets, supermarkets and convenience stores, to act as intermediaries to help distributing their baked products available for consumption by the final consumers. In a final word, all firms are unable to deliver value to customers by themselves. Instead, they must cooperate with other firms in a larger value delivery network. Of course, by doing so, they will be able to attain the goal of creating superior customer value.
3.8 Marketing Research Gardenia prides itself in being the leader in its field by introducing several firsts in the bread industry. Gardenia is the first in the country to use a unique automated G-lock on the packaging to seal its bread products and retain freshness. This plastic clip is placed on the "neck" of the bread package with the "Best Before" date and retail price printed on it. Gardenia breads also packed in colourful and informative packaging displayed in an upright fashion unlike the conventional flat display. With this new marketing research, Gardenia will achieve the market penetrating status. In addition, adhering to the international policy of
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keeping only fresh stocks on the store shelves, Gardenia deliver freshly-baked breads to the stores on the same day they are produced. With an extensive distribution network, Gardenia delivers everyday, seven days a week. For the unsold breads, it will be pulled out from store shelves and replaced with only newly baked ones during every day of delivery.
4.0 Financials This section will offer the financial overview of Gardenia Company related to marketing activities. Gardenia will address break-even analysis, sales forecasts, expanse forecast, and indicates how these activities link to the marketing strategy. The marketing plan is built in these truths: 1. The marketing budget is based on a percentage of sales value, currently the value is set at 25%. 2. Building a strong brand and brand loyalty is a critical to the success of Gardenia Company. 3. The understanding of the need for strong branding and emphasis on marketing gives us a competitive edge over others bread market.
4.1
Break-Even Analysis
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Year
2006
Revenue (RM) Variable Cost(RM) Fixed Cost(RM) Total Cost(RM)
330,662,232 218,680,453 46,803,668 265,484,121
2007 383,411,553 257,605,123 50,615,867 308,220,990
2008 472,896,480 324,577,200 60,134,777 384,711,977
Average 395,656,755 266,954,259 52,518,104 319,472,363
We use the three years average consideration to estimate the Gardenia break-even point:
= 161,445,140
Assumed that Gardenia Company has average 100 million of unit sales,
= RM1.29 per unit
= 40,711,709
Table: Break-even Analysis 39
-------------------------------------------------------------------------------------------------Break-even Analysis: Average Yearly Units Break-even Average Yearly Revenue Break-even
RM
40,711,709 161,445,140
Assumption: -------------------------------------------------------------------------------------------------Average Per-Unit Revenue RM 3.96 Average Per-Unit Variable Cost RM 2.67 Estimated Monthly Fixed Cost RM 52,518,104
Gardenia Company is capable of supporting high gross margins. Variable costs in relationship to per-unit revenues are low. Fixed costs to produce Gardenia products equal almost RM52, 518,104. Fixed cost include payment of debt, facilities lease cost, and other costs that Gardenia must maintain on a monthly basis. These costs are fixed and aren’t impacted by an increase or a decrease in sales.
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Based on the graph above, we can notice that the break-even analysis for these three years indicates that RM161, 445,140 with 40,711,709 unit sales will be required in yearly sales revenue to reach the break-even point. Gardenia will make profit if the company reach above the break-even point or loss money when below the break-even point. Such break-even analysis helps Gardenia by showing the unit volume needed to cover the costs. If production capacity cannot attain this level of output, then Gardenia should not launch this product. However, the unit break-even volume is well within Gardenia’s capacity.
4.2 Sales Forecast Gardenia feels that the sales forecast figures are conservative. Based on the past trend views, the revenue of sales had almost 16% growth rate from RM331 million to RM383 million in year 2007. It continues increase by 23.34% to RM473 million in year 2008. We have an idea sales will growth from year to year. Thus, we can predict a growth rate of 25% in sales for the next four years which is year 2012. It will steadily increase sales if the advertising budget allows.
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Based on the Gardenia’s income statement from year 2006 to 2008, the overall performance of Gardenia Company is quiet good that shows the increases of the net income especially in year 2008 which had increased by 28.23% compare with the year 2007. Cost of goods sold was increasing within years 2006 to 2008 which increased by 17.8% in year 2007 and 26% in year 2008. As a result, the gross profit of Gardenia was declining based on its sales of each year that gives 33.87% in year 2006 to 31.36% in year 2008 but the company still having the increasing of gross profit. The gross profit was increasing in year 2007 by 12.35% and 17.89% in year 2008. Operating profit was increasing by 15.41% in year 2007 and 28.09% in year 2008. However, the company should more concern about the proportion of the net income gained by its sales which had declined from 7.77% to
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7.21%. It may be caused by the increases of marketing and distribution expense in these three years that had contributed the largest percentage in company expenses especially in year 2007 which is almost 24% of the its sales. Therefore, Gardenia should control the expenses of the company to earn more profit for the future years, 2012.
4.3 Expenses Forecast Based on the Gardenia’s income statement from year 2006 to 2008, the total expenses are shown as below: 2006
Administrative expense Marketing and distribution expenses Other expenses
7,438,655 82,335,562 666,333
2007
8,142,244 91,234,568 736,678
2008
Revenue
330,662, 232
Total expenses on sales (%) Marketing and distribution expenses on sales (%)
27 25
9.46
22.14
10.81
14.09
10.56
20.53
10.70
14.80
104,093,079 887,934
100,113,49 0
114,925,801
383,411,55 3 26
472,896,480
24
20072008 (%)
9,944,788
Total expenses 90,440,550
20062007 (%)
24 22
Gardenia had contributed their expanses wisely which had shown the
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decreased in the proportion of total expenses from 27% to 24% based on the sales each year. According from year 2006 to 2007, total expenses had increased by 10.7% and continue increased by 14.8% in year 2008. The marketing budget will consistently approximately around 25% of sales. One of the strongest strengths is marketing and brand building capabilities, and the aggressive marketing budget is a reflection of the importance to attribute in marketing activities.
5.0 Marketing control We must evaluate Gardenia marketing efforts continually to ensure its performance is on track against Gardenia’s objectives.
Objective 1: Produce high quality products Gardenia tends to produce the best quality products for their customer. They will maintain their quality through:
i.
JAKIM Certification All Gardenia products are certified Halal by JAKIM. Regular factory inspections are conducted by officers from JAKIM to monitor and ensure that the overall operations are following the guidelines set by them.
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ii.
PPIM Gardenia works closely with Persatuan Pengguna Islam Malaysia (PPIM) for the interest of Muslim consumers. PPIM determines Gardenia's status as a Muslim Friendly Organization(MFO).
iii.
ISI 2020 Gardenia’s close collaboration with PPIM has also resulted in significant accolades like the ISI 2020 certification by the Research Institute of Standards in Islam
(RISIS). This certification
acknowledges Gardenia’s corporate and management philosophies, principles, cultures and practices that reflect the Islamic principles which are universally accepted and profoundly outlined by RISIS in the system.
Objective 2: To build loyal customer Produce good quality products to customer and Gardenia are require a more personal relationship with customer. Every relationship takes on additional significance as the sales potential of each customer increase. Satisfied customer needs will make them rebuy Gardenia product when they are familiar with the product.
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Objective 3: Fulfill customers satisfaction Gardenia should always alert the latest the changes of the product in the market. After determine the kind of the products, they should update their product according to the market trend to attract a large number of customers.
5.1
Contingency plan
1. Decrease in Sales If the sales number decline, Gardenia must take the step send an offer product that is related to what they bought. Offer a discount for them who purchase in a big amount.
2. Ineffectiveness of promotion strategic If the promotion strategic fail to attract more customers and increase sales performance, the way that Gardenia can use is arrange all the promotion strategic. They can send out the brochures to the masses about their product. This will encourage them to buy our product
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.
3. Retaining customers Customers evaluate every aspect of the product. This includes time of purchase, product disposition, the purchase experience and so on. This results in the consumer’s satisfaction or dissatisfaction with the product and purchase decision. They must do researches about customer’s taste to get feedback from customers and putting the feedback into action.
5.2 RECOMMENDATION
Promotion Gardenia should continue their heavy promotion to further increase the company’s profit margins. It is suggested that Gardenia perform online marketing and publish their advertisement through online networking. Due to a very high demand of bread by the students in the universities, Gardenia can take this opportunity to increase its volume of sales by conducting a campaign on its products and implementing Gardenia Campus Plan. This is an innovative idea to attract more business and support from the students
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and staffs by entitling the holders to special discount on purchase. Besides that, Gardenia can introduce a new bonus-link system where every purchase are recorded into the purchasers’ account using member cards and frequent purchasers are given varieties sample of breads and other baked products for free. This encourages bread consumers to purchase Gardenia products and indirectly promote the new products of Gardenia.
Place For place, it is recommended that Gardenia expands their baked products’ markets to more places. For instance, they can consider distributing their breads and cakes to East Malaysia. To do so, Gardenia can expand their business to Sabah and Sarawak by setting up their own manufacturing factory over there. Thus, not only residents from West Malaysia but that of East Malaysia will also have the opportunities to purchase fresh baked products daily.
5.3
CONCLUSION
After investigate from Gardenia Company, we discovered that this small medium company, Gardenia, has been obtaining the excellent respond from its customers in the Gardenia’s products. With the help of a variety of
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promotion sales and effective pricing strategies, Gardenia is able to have its own market of its products in Peninsular Malaysia. Furthermore, Gardenia has a strong team work in carrying out all the activities and tasks to achieve these satisfying results. In the past few years, Gardenia has been building and maintaining its image in this selling market. Owing to the good quality of Gardenia’s bread, Gardenia obtains a strong and reliable supports from customers. Gardenia’s wide variety of products successfully captures value from customers in return. Hence, Gardenia may continue its current marketing plan.
5.4 Appendix and References
References: 1. www.silverbird.com.my 2. www.iem.org.my/AFETD/bul0503.pdf 3. www.gardenia.com.my 4. www.mahkamah.gov.my/judgment/hc/latesthc/D5_IP
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_24-94-08andD5_IP_25-7-08.pdf 5. www.halal.gov.my
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