Marketing Case2 Biofoam Not Just Peanuts!

Marketing is case 6 Biofoam: just peanuts?

Thomas Tallberg E4 Kristian Sällström E4 Christian Westermark E4

Biofoam: Not Just Peanuts! 1. Outline Biofoam’s current marketing strategy. Which elements of the marketing mix are most important for Biofoam to focus on? Product: Quality -The Biofoam sorghum peanuts do as good a job as the best foam peanuts Features -They hold no electrostatic charge -Environmentally friendly and easy to dispose Promotion: Advertising -Choosing the right retailers and providing the potential customers with pamphlet explaining the advantages of the Biofoam peanut. -Targeting heavy users of Styrofoam peanuts, e.g. sign two major accounts – the Fuller Brush Company and computer reseller MicroAge. -Immediate, reliable, just-in-time delivery combined with on-site service and a fiveyear price guarantee with no intermediaries involved. -Never run out of packaging and avoid the expense of stockpiling materials Price List Price -Trying to keep the same price or cheaper than the polysterene peanuts by reducing the delivery cost to a minimum Place Locations -Willing to install machines on the customer´s premises to produce peanuts inhouse. Transport

-Immediate, reliable, Just-in-time delivery

We think that the most important element is to focus on the product because if the potential consumer can’t notice the advantages with using the Biofoam compared to the other available foams, the product will not succeed on the market. One other key element is also the placement. They need to convince the potential customers of the possible profit and advantages, which they will receive from allowing Biofoam to be produced at their premises. If this wouldn’t be possible the product price would increase significantly. 2. What is the nature of demand in the loose-fill packaging industry? What factors shape that demand? The packaging must be lightweight, inexpensive and resilient. They have to conform to any shape, protect superbly, resist shifting in transit, and leave no dusty residue on the goods they protect. A reason why the loose-fill products must be lightweight is that they don´t increase the package weight. They also have to be cheap so that they don´t affect the actual products price. Another aspect is that the peanuts must be resilient so that they can form into any necessary shape.

3. If you were a buyer of packing materials, would you agree to Biofoam’s offer to machines inside your plant? If not, how could Biofoam overcome your objections? We believe that it depends greatly on what kind of product/service we produce. There are also factors like available space and what kind of smell, noise and heat the machinery produces. All these variables have to be weighed against the profitability we get out of changing foam. Like all obstacles there are ways of eliminating them. Biofoam could for instance contribute with the possible installation or operation costs. If the heat, noise or smell would be a noteworthy factor they could perhaps reduce them somehow. 4. What environmental and organizational factors are likely to affect the loose-fill packaging industry? How will these factors affect Biofoam? From the environmental view the demand on a friendlier manufacturing way is rapidly increasing. The consumers are getting more aware of the surrounding nature and are demanding more environmentally friendly products, which can be easily disposed or recycled. From an organizational view point the pressure of reducing cost is always a hot issue. By concentrating the subcontractors closer to your premises the company

would not only benefit financially but also secure the availability of packaging materials. This would affect Biofoam positively because their product has the ability of satisfying both of these demands. 5. Is Alfke right? Is this a good deal? Would you have bought into the firm? Why or why not? We think that he was right and bold trying to convince the consumers in 1995 that they need to start thinking of the environment. In those days the majority of companies didn’t care much about environmental issues. Approaching the market with a product like this where you offer the same qualities as the existing one and adding the feature of easy disposability was an excellent idea. In 1995 we would probably not have invested in this firm. Considering how vital these issues are know-a-days it would surely have been a lucrative deal.