Zest O Corporation

ni

Marketing Plan

Submitted by: Ang, Susan Qua, Ivy Guiaco, Deborah Ang, Charles Adrian Sy, Ritz Alvin Tolentino, Kenrich

Submitted to: Ms. Chan Maribel

Table of Content I.

Executive Summary………………………………………..

II.

Current Product/Brand Situation……………………….... 1 A. Industry Study…………………………………………..

1 1

B. Current Product/ Brand Situation…………………….. 3 C. Competitive Situation…………………………………... 6 III.

SWOT Analysis…………………………………………….. 7

IV.

Goals and Objectives………………………………………. 8

V.

Marketing Mix Strategies and Program………………….. 8 A. Market Targeting……………………………………...... 8 B. Product Development/ Innovation Program………....... 8 C. Pricing Program…………………………………………. 12 D. Sales and Distribution Program………………………... 14 E. Marketing Communication Program………………….. 14

VI.

Investment Plans……………………………………………. 16

VII.

Evaluation of Result………………………………………… 16

VIII.

Appendix……………………………………………………... 17

I. Executive Summary Zest-o, on its 26 years of existence penetrated the local juice drink manufactured in 1981 by contract of licensing. They are now the number one juice in the industry capturing 80% of the market share nationwide. The primary targets of Zest-o are children aging five to twelve years old. They are the main and frequent consumer of the product while the secondary targets are the parents and who consume less than the primary target. We recommended one new product for Zest-o Corporation, “ZESTEA”. Zestea is proposed to target those who love to drink iced tea in a more affordable way. And it also adds new variety to consumer’s choice. Due to the in demand approach of consumer to iced tea flavor, we make it easy for them to have this iced tea instant drink that can be bought anywhere, anytime at its low cost and may enjoy the refreshing taste that suits for all at the same time. Zesto Corporation will try to keep hold of their lead as the number one juice dink in the upcoming years. They will try to increase their sales by distributing their products more and come up with new strategies. Through this they would be able to gain more customers and attract new ones. II. Current Marketing Situation Analysis A. Industry Study: Fruit Juices The juice industry (those using natural or artificial fruit flavors) posted dramatic growth in the past five years. With the consumers becoming more health and budget conscious as well as improved distribution to the rural areas, the demand increased. The market has four product types: the ready-to-drink (RTD), canned, powdered and concentrates. The powdered juice segment comprises about 60% of the total juice market. Ready-to-drink types such as the doy and tetra packs are around 35% and the remaining 5% are canned and concentrates. Product Usage: Snacks (baon) Party Outing 1 STRUCTURE OF JUICE DEMAND, 2000

Item

Quantity (‘000 liters)

Share (%)

Powdered Ready-to-drink Doy pack Tetra pack Canned Concentrates

522,000 304,500 217,500 87,000 26,100 17,400

60 35 25 10 3 2

TOTAL Category

870,000 100 KEY PLAYERS IN THE JUICE INDUSTRY Company Brand

Powdered Juice

Liquid Concentrate

Ready-to-drink (doy pack)

Ready-to-drink (tetra pack)

Canned Juices

Sugarland Multifoods Inc. (a) Kraft General Foods Inc. La Tondeña Distillers Inc (a) Selecta Dairy Products Phil. Health Foods Mfg. Procter & Gamble Phils. Foodworld Manufacturing Corp. MV Food Industry Marina Sales Nutrilicious Food Inds., Inc. Zesto Corporation

Eight O’Clock, Ponkana, Cold Mix Tang, Kool Aid Fresh N’ Ripe Sunkist Cetrin Nutri Delight Sunny Orange Ritchie Sunquick Nutrilicious

La Tondeña Distillers Inc.(a) Taiyu Food Products Inc.

Zest-O, Sunglo, Sunburst, Big 250, Plus Fun Chum Fruit-C, Jumbo

La Tondeña Distillers Inc. (a)

Magnolia, Zip

Selecta Dairy Products. Coca Cola Bottlers Phils. (a) Hunts-Universal Robina Corp.

Sunkist Hi-C Knott’s Berry Farm Fruit Shakes

Del Monte Philippines Dole Philippines Inc. Cenmaco, Inc. Harman Foods, Inc.

Del Monte, Today’s Dole, Season Gina Zest-O 2

B. Current Product/Brand Situation

Mission: Our mission is to be the leading manufacturer and distributor of juices, dairy and related food products that best satisfy the growing needs of the consumers. This, for use, is the means by which we can effectively participate in the social and economic development of the communities we serve, promote professional growth and well-being of our employees, maintain mutually profitable relationship with our trade partners and achieve growth level equal to or better than the norms of the food industry. History: Zest-O Corporation was established as privately owned Family Corporation in May 1981 to engage in the manufacture and distribution of food products in the Philippines. Established as SEMEXCO MARKETING CORPORATION, the company adopted the name of its flagship brand in 1995 taking pride in the phenomenal success of Zest-O, the No. 1 Juice Drink in the Philippines. It started operation with a clear vision to be the leading food and beverage Filipino company competing with the multination companies. It has always kept with the ideals of providing quality products at a reasonable price to its clients. The company pioneered the first ready-to-drink juice drink in flexible foil pouch (Doy Pack System) with its flair for innovation, Zest-O juice drinks won the consumers’ patronage and wide acceptance. Over the past 20 years, Zest-O has earned itself a place in the Filipino culture. Zest-O Corporation has posted enormous growth over the years. With total assets of only Php 10.0 Mi. when it started, it continued to grow reaching annual gross sales of Php 280.0 Mi. in 1987 after 6 ½ years of operation. As the company continued to venture into different products, sales continued to post double digit grown reaching total annual gross sales of Php 2.9 B for the year 2000 with a total asset of 850M. Aside from Zest-O Juice Drink, the company also markets Sunglo Juice Drink in the innovative “sexy pouch” and Big 250 fruit drinks. Its latest acquisition of Plus! Juice Drinks solidify the market leadership of Zest-O Corporation to 80% of the total market ready to drink juices.

3 Guided by the company’s philosophy of producing quality products at an affordable price and making it available to the most number of consumers, the

company has successfully diversified into other products. With its vision in mind, Zest-O Corporation has ventured in different product categories over the years. It has successfully entered each product segment both in terms of sales volume and patronage. Bringing its innovative fervor every time, the company has always breath new life into each segment it enters. It has entered in the instant noodles segment with the Quick Chow, Quickie and Magic brands. Capturing a significant share of the market, it has captured the third spot in the ranking with its unique product lines. It introduced unique products such as instant rice noodles. It has also ventured in the carbonated drinks market. Producing standard classics comparable to the leading brands at the same time introducing new age drinks using indigenous raw materials. The company has also positioned itself in the highly competitive soft drinks market using aluminum cans and PET (nonreturnable plastic) under the brand name of Zest-O Cola, Rootbeer, Squiz, Twist and Calamansi Soda w/ honey. Other products being marketed by Zest-O Corporation includes, fruit juice powder concentrate, tea drinks, canned nectar drinks, and tropical purees. Zest-O Corporation handles directly nationwide distribution of its products with its 13 branches nationwide, strategically located all over the country. It also maintains a strong Sales force divided into Booking, Ex-truck and Wet Market salesmen. Its client base is in the thousands, directly servicing 80-90% of the total number of outlets nationwide. At present, the company operates four manufacturing plants located in Bulacan, Metro Manila and Cagayan De Oro City. The next 20 years is a big challenge for Zest-O Corporation to keep up with the changing market environment and to compete in the global economy. The company is preparing not only for the local market but also making itself competitive internationally.

4 The distribution channel of Zest-O orange juice drink Harman Foods Corporation (Producer)

| Zest-O Corporation (Wholesaler) | Supermarkets, Grocery Stores, Convenience Stores, Local Distributors (Bulk breaker) | Sari-sari stores, School canteens (Retailer) | Consumer (Final Consumer)

Composition/Size/Market Segment Funchum 6%

Others 2%

Sunkist 12%

Zest-O 80%

Target Market (Primary and Secondary) Primary

Secondary

1. Children ages 5-12 years old

1. mothers with kids

The group focused on four out of the six demographics segment because these four segments which include age, sex, income and location are enough to determine the target market of the product. The group thinks that the Zest-O orange juice drinks are for ages 5 and above since the product is a food and belongs to the convenience goods. But it has been observed by the group that the main focus of the Zest-O orange juice drinks are for ages 5-12. Most mothers buy these orange juice drinks for the “baon” of their kids. 5 C. Competitive Situation Zest-O

Funchum

Sunkist

Product

Price

Place

Promotion

Flavor: Orange, mango, apple, grapes, strawberry, pineapple, guyabano, dalandan, calamansi, mango-orange, mangocalamasi and mangolemon-lime. Size: 200mL P5.40 – mango The rest P4.75 per juice drink (in Supermarket) it ranges from P5 to P7 (In retail stores) Supermarket, convenience store, canteen, grocery contests, trade shows, instore displays, samples, premiums, discounts, print ads, TV advertisements

Orange, apple, pineapple, mango

Orange, apple, mango, grapes, Tutti Frutti, Lemonade, dalandan, lycheeapple

Size: 200mL

Size: 250mL

P5.80 – mango The rest flavor is P5.20

P12.00 – mango P 11.25 – grape P 10.25 – orange

Supermarket, convenience store, canteen, grocery T.V advertising, magazine ad, in-store displays

Supermarket, convenience store, canteen, grocery Print ads, billboard, instore displays,

6 III. SWOT Analysis Strengths

Implications

1. Positive image and Strong brand name 2. Financially stable 3. Low price 4. Availability Weaknesses 1. Packaging 2. Advertisement 3. Raw materials 4. Indirect selling Opportunities 1. High population growth rate 2. Rapid technological change

3. High barriers to entry 4. internet selling 5.competitors Threats 1. Presence of substitute products 2. Economic crisis 3. Wage increase 4. arrival of new product 5. increase taxes

1.it will increased the patronage and loyalty of the customer 2. It will be easier for the company to make some changes in their products for further improvement. 3. more people will choose to buy zest-o because they are more affordable 4.we can increase sales because of more convenience to customers Implications 1. Less attractive 2.people may not be reminded about the product 3. the price might increase 4. it might affect in building a strong relationship with the consumers Implications 1. They can expand their market shares 2. Because of more advanced technology, the company will be able to improve their products and they can also produce their product faster. 3. Less competitors 4. More chances for the company to increase their sales and obtain more customers 5. challenges the company to make a better product Implications 1. The sale of Zest-O juice drink might get affected and decrease. 2. people will tend to buy cheaper products 3. the price might get affected 4. Customer will have more alternatives to choose 5. the price might get increase

7 IV. Goals and Objectives Goals

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to maintain strong brand name

•

to always provide a best quality products to meets the specific needs of consumer

•

to maintain customer loyalty

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Short-term objectives (for the next fiscal year)

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To expand the target market by 5%

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To increase the market share by 5%

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To increase consumer awareness on Zest-O product by 10%

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Medium-term objectives (For the next 2 to 3 years)

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to increase the market share by 10% in year 2009

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to increase 10% customer loyalty by 2010

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Long-term objectives (for the next 3 to 5 years)

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to increase target market by 15% in 2011

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to increase 20% customer loyalty 2012

V. Marketing Mix Strategies and Programs A. Market Targeting We are now targeting those people who are health conscious and those who had kids aged 5-12. For those who are health conscious they can get vitamins from fruit juices. For those who had kids and busy in their work, they don’t need to mix up the powder juice when it comes to “baon” B. Product Development/ Innovation Program Unique Selling Proposition For all individuals, Zest-O is the most affordable ready to drink juice that offers high quality and gives you the vitamin A and C.

8 Product Positioning

There are a lot of brands in the fruit juice industry, but Zest-O seems to be the most powerful among the other brands. It is because of its high quality and its affordable price and also its availability. Zest-O orange juice drinks are bought routinely because it is a consumer convenient good. It can be found almost anywhere and these include sari-sari stores, grocery stores, supermarkets and shopping malls. Product Features The Vitamin C and Vitamin A are found in this refreshing drink. Vitamin C helps the body fight infection like colds and flu and is essential for tissue repair as well as wound and bone healing. It’s also been proven that a glass of orange juice each day results in a 25% reduced risk for ischemic stroke. It is also known to assist the mother’s body in absorbing iron and can help the unborn baby develop strong bones and teeth. While Vitamin A helps you maintain good eyesight. Regular: Zest-o Juice Nutrition Facts

New Product: Zestea Nutrition Facts

Serving Size: 200ml Serving Per Container: 1 Amount per Serving Calories 100 % Daily Values Total Fats 0g 0% Sodium 0mg 0% Total Carbohydrates 25g 8% Sugar 25g Protein 0g 0% Vitamin A 10% Vitamin C 33%

Serving Size: 200ml Amount per Serving Calories 100 % Daily Values Total Fats 0g 0% Saturated Fat 0% Sodium 10mg 0% Total Carbohydrate 25g 8% Dietary Fiber 0g Sugar 25g Protein 0g 0% Vitamin C 100%

Packaging Old Product

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The packaging of the Zest-O orange juice drinks provides promotion of the products through the labels found on it. These labels include the brand name, the logo, the image of the oranges (tells what flavor the juice drink is), the manufacturer, the expiration date and the bar code (speeds up the transaction process). The text, “Twenty five years Masarap Kasama”, is printed in the upper left side of the package where it informs the buyers, even the whole market about its success in surviving the competition in the market. The vitamins present and natural orange juice content (With Vitamin A&C, contains natural orange juice!) boldly printed in the pack of the juice gets the attention of buyers, specifically parents for their children to benefit from it. The chart of nutrition facts can be read at the back of the Zest-O orange juice foil pack that notifies consumers about the content of the juice. The package also serves as protection for the Zest-O orange juice drink. When these orange juices are shipped, they are placed in a rectangular box (10 pieces per 1 box). The boxes protects the Zest-O orange juice foil packs during shipment, furthermore the boxes make it easier for storing the product in bundles. Figure y shows the shipping package of the Zest-O orange juice drinks. With regards to the packaging of a single Zest-O orange juice drink, the foil pack or doy pack preserves the flavor of the juice thus prevents it from spoiling. This type of packaging also prevents the juice from leaking out from the package. The foil pack is very adaptable to every movement that it doesn’t break easily because it is flexible yet strong enough. The enhancements added to the product by the packaging are 1) its recyclable feature (both the foil pack and the rectangular box), 2) its quality check, 3) its flexibility which allows the orange drink to be easily squeezed out from the package when drinking, 4)the non-toxicity of the foil and 5) its ready-to-drink feature. Like other products, the Zest-O orange juice drinks are packaged into 4 types: primary, secondary, shipping and label packaging. The primary package of the Zest-O orange juice drink is the foil inside the doy pack since it is the package that immediately envelopes the orange juice drink. The foil inside is non-absorbent so the orange juice drink does not spill out. The foil also prevents the orange juice from losing its flavor and from spoiling. Figure z shows the primary package of the Zest-O orange juice drinks. 10

The secondary package of the Zest-O orange juice drinks is the doy pack or foil pack itself which is the outer covering into which the primary package and the orange drink is placed. The secondary package (the foil packs) serves as physical protection of the product. The shipping package of the Zest-O orange juice drinks is the rectangular box in which 10 pieces of the Zest-O orange juice drinks are placed. Without this rectangular box, it would be difficult to ship and store these orange juice drinks. The rectangular box also makes it easier to store the products and it also serves as additional protection of the foil packs. As seen in both figure y and z, both packages contain similar labels. The labels consist of the product design, color, weight, contents, product usage, logo of the brand name, the name of the manufacturer, the expiration date and other details about the product (ingredients, nutritional information and etc). Figure xx shows the labeling of the Zest-O orange juice drinks. The product design refers to the overall appearance and shape of the package. The product design of the Zest-O orange juice drinks is innovative due to the use of doy packs or foil packs. It is shaped like two slanted parallelograms joined together with an oval-shaped base. An image of the fruit that represents the flavor of the juice drink also makes the appearance of the product more attractive. The foil pack contains two distinct colors: the front side is colored blue and the back side is colored silver. The brand name, brand logo, the ingredients, the bar code and the product features (natural orange juice and with vitamins A and C) are located at the front side of the package. Also, the weight of the package which is 200 ml can be found at lower left corner of the package. The manufacturer, brand name, brand logo, the expiration date, the nutritional facts and other product features (recyclable, quality check) are located at the back side of the package. New Product

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The new packaging of Zestea will still be in doy pack form, but it will be more comfortable to use by the customers, because of its aluminum foil like in tetra pack which in the inserted part of the package, and it also will be more eye-catching to the people due to its attractive color C. Pricing Program The first type of cost is the fixed cost. This is a kind of cost that does not vary in the production and sales level. Fixed Cost: Salaries and Wages General and Administrative Expenses Selling expenses Gasoline and Oil Repair and Maintenance Transportation Representation and Entertainment Miscellaneous Expenses Office Supplies Communication SSS Contribution Pag-Ibig Fund Contribution Depreciation Expenses Power, Light and Water Security Services Repack and Packaging Rent Expenses Advertising and Promotion

P 17002959.74 26287832.23 3542461.74 2515067.62 496938.67 2204748.91 3468144.36 3096557.47 2592916.82 2213968.98 648210.66 2300103.42 6575623.76 1954710.53 44929091.07 2702670.24 29843472.68

Total Fixed Cost: P 148,907,334.50 The second kind of cost is the VARIABLE COST. This is a type of cost that varies directly with the level of production. Total Variable Cost

P 1,130,761,714

The third type of cost is the TOTAL COST. This is the sum of variable and fixed cost for any given level of production Fixed Cost Variable Cost

P 148,907,334.50 1,130,761,714.00

Total Cost

P 1,279,669,049.50 12

Computation of Selling Price Regular Zest-o Juice Variable Cost = Cost of good sold/Sales = 1,130,761,714/1,366,372,002 = 0.8275 or 82.75% Fixed Cost = Total Expense/ Sales = 148,907,334.50/ 1,366,372,002 = 0.1090 or 10.90% Variables Cost Fixed Cost Profit

P 3.93 P 0.51 P 0.31

Selling Price

P4.75

82.75% 10.90% 6.35%

ZESTEA Mark-up Price = 4.44/ 1- .10 = P 4.9 Objectives The Zest-o committed to manufacture and to deliver a well competitive product that can provide consumer satisfaction due to its favorable taste for all. Mix Strategy Competition in food and beverage industry is rapidly growing over the years and Zest-O being the most dominating product in line make food and beverage should effectively position its product to be able to retain and defend then lead among other competitors. First way is to continue keeping the excellent and delicious taste of the product or to develop it more by suggesting and introducing more flavors in their product line based on their customers preferences although their pricing might increase a little with a nutrition given by the product, consumer will still prefer to buy these goods because they can be guaranteed that Zest-O product will attain its satisfaction. And the second way is by providing a large budget for their promotional strategy in order to introduce the old and new product swiftly and effectively. It can be through magazine.

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D. Sales and Distribution Program Policies For a reseller that has achieved its given quota within 60 days, the reseller will have his 5% discount for his next purchase. 1 week to order, 3 days before delivery, can pay either check or cash (full payment) Quota: minimum of 800 boxes within 60 days. Sales targets by target market or geographic areas The target market of the Zest-O Corporation is upper, middle and lower class of the socio-economic group and recommends it throughout the country. Extent/ Terms of Distribution Our major selling area, we recommend our product to supermarket nationwide; convenience store, sari-sari store. So people can easily find and buy the product. E. Marketing Communication Program 1. Advertising Program •

Objective - To inform the people about the new product. - To remind the people of the existence of the product. - Enhance the selling power of the company’s product.

•

Target Audience - Zest-O Corporation makes use of poster as their means of communicating with their audience, because it can view everywhere and it will inform the people about the new product and will remind the people of the existing product.

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•

Creative Approach - In our poster, we’re trying to introduce a new product, so we made its background more stylish and eye-catching colors to attract more customers. A representation of an ice tea that make it refreshing and mouth-watering. We create a new catching name “Zestea” for it to be easily remembered and combine the name of the product Zest-o and ice tea.

•

Media Planning Date

Publication

Size of Advertisement

October 15, 2007

PMC Printing Press

18” x 25”

2. Sales Promotion Program •

Objective - To capture many distributors and satisfy customers

•

Coverage - Metro Manila 15

•

Promo Schedule - For the month of December

3. Public Relations Program •

Objective - To build a better corporate image - To associate the brand name with the publics - To build more awareness of Zest-O product in the publics

•

Strategies - Zest-O comes up with an activity in order to build a strong relationship with the public. The company plan to donate money in selected charities. They will also provide juices in some charity program.

•

PR materials to be used and costing - Donating 20,000 pieces of Zestea to Bantay bata 163 on their Christmas party. - Donated 50,000 pesos to kapuso foundation. - Donating food supplies worth 30,000 php

•

Schedule - Along December 2007 - “Calamity” when needed

VI. Investment Plans Promotion and Advertisement expense GMA Donation Cost of juice donated

P 3,000,000.00 P 80,000.00 P 88,000.00

Total Cost:

P 3,168,000.00

Net income after tax

P 18,168,969.35

VII. Evaluation of Result Zestea marketer committee have decided to start the promotion of this newly introduce product primarily in NCR on October 15, 2007. so that the new product will be known by the people before the Christmas season. As a promotion of Zestea we will be using poster and displaying the new product on the entire supermarket in NCR, after six months, we will evaluate the sales of the new product (Zestea). If it clicks effectively to the market we will expand it nation wide.

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VIII. Appendices Sources: http://www.psma.com.ph/studies/studies/01.%20Analysis%20&%20Projections%20of %20Domestic%20Demand/08.%20Chapter%204.DOC Source: CFA-UA&P Estimates Source: CFA Databank http://www.expertrade.com.ph/zesto/ http://www.professorhouse.com/food-beverage/beverages/orange-juice.aspx http://www.bharatbook.com/bookdetail.asp?bookid=11010&publisher= http://www.professorhouse.com/food-beverage/beverages/orange-juice.aspx

Figure x: The doypack or foil packs used for packaging Zest-O orange juice drink.

Figure y: This rectangular box is the shipping package of the product.

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Figure z: This foil is the primary package which immediately wraps the product.

Figure xx: This image shows the labels that can be found in the package of the product.

The back and the front view of the packaging for the new product “ZESTEA” 18

Sample picture of the poster

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