Marketing Plan
mollymonster
EarthSack---Midterm.docxTeam Company Name: Earth Sack
II. Situation Analysis
A. The Internal Environment
Review of marketing goals and objectives
As a company that provides algae-based shopping bags, which are biodegradable but as strong as plastic bags, Earth Sack has a primary goal of providing pollution free shopping. In this way, shoppers can have a guilt-free shopping experience, and supermarkets can also improve their eco-friendly brand image. This goal is especially important nowadays as consumers are becoming more aware of the ecological impact of their actions. Thus, there is a demand for a product that can clear their conscience while not disrupting the status quo of their lifestyles.
Earth Sack’s first objective is to be the pioneer supplier of eco-friendly shopping bags to supermarkets. As green bags are already being used though in generally very niche markets, our goal is specifically to be the first one to mass sell and distribute the sustainable shopping bags. Thus, we aim to make our bags the next big trend in grocery shopping.
Earth Sack’s second objective is to replace plastic and paper bags with our product. Our initial supermarket target, Whole foods, focuses on providing a natural and environmentally friendly shopping experience. Nevertheless, critics claim that this is not completely true since Whole Foods uses both plastic and paper bags which are not really good for the environment. Therefore, replacing Whole Foods’ plastic and paper bags with our product will definitely strengthen their brand image.
The third objective is to promote a culture of green shopping. By using our eco-friendly bags, shoppers will feel they are doing something good for the environment, and they will be influenced to not only shop but to live in greener ways in general. Aside from producing our products, Earth Sack will also run campaigns on preserving Mother Earth. For example, we shall have campaigns on using less resources like water or paper towels and initiatives on planting trees. Through our product and advocacy, we will instill a green culture that extends from the supermarket to the other areas of a person’s daily life.
Review of current marketing strategy and performance
As Earth Sack is a new company, we will need to prove the effectiveness of our products and supply chain to our supermarket customers. Thus, we need to take an aggressive approach to help us enter the market quickly.
At the very beginning, the main focus will be ensuring the quality of our biodegradable bags. This will entail a lot of testing. For instance, we need to make sure our product will not tear or burn easily but at the same time, maintain its biodegradable quality. Weight is another factor to be considered since a bag heavier than plastic will definitely be less attractive. In addition, product consistency will be very important thus the first or the thousandth Earth Sack produced should be equally strong.
In regards to pricing, Earth Sack will do its best to not put any additional cost on shoppers. Thus, it is imperative to achieve production economies of scale as soon as possible. This can be done through an optimized supply chain that minimizes waste. In addition, sealing our contract with Whole Foods is key to our success since the scale of their company will provide enough revenue to keep our company going.
Another strategy in boosting our brand is to try to get sponsorship from a green organization. Our product is an environmentally friendly one that will definitely see eye to eye with organizations that aim to protect the environment and decrease the pollution. The American environmental organization Sierra Club would be a good option as their mission of nature preservation are in line with our company. We specifically would like to connect with their programs on “environmental law” and “responsible trade”. Through our alliance with this organization, we hope to see our an increase in our brand value and awareness from the public’s eyes.
Our marketing and sales department has the role of convincing supermarkets to switch to our products. We will emphasize that our product will appease the public’s need for a eco-product without the additional costs. Therefore, the goal is to sell an easy switch at no additional costs essentially a win-win situation.
In regards to our company’s current position, we are currently a start-up. Thus, initial expenses are high, revenue has not yet arrived and brand value is low. Nevertheless, our aggressive strategies will be a key catalyst in pushing our company forward.
Review of current and anticipated organizational resources
To get the company running, Earth Sack will try to get funding from venture capital. Since the company is doing something good for the environment and society, investors will see a bright future in us. The potential of our company and the changing environmental mindset of the public should be good levers in getting investors to trust in our company.
Since our company is new, building a factory from scratch will not be the wisest thing. Instead, Earth Sack will outsource our production to a factory that has the assets and expertise in producing products similar to ours. Our selected location is in Ohio, which is part of the US Rust Belt. Manufacturing has gone down in this region and with it, the jobs of many factory workers. Placing our production here will definitely be a welcoming sight for the community, and outsourcing will lower our production risks and costs. Our choice is not exactly unique as some Chinese companies have already set up new production operations in Ohio thus reviving the area and maximizing the capabilities of people who were laid off. To protect specific critical recipes and processes, two of our engineers will work with the outsourced production facility. Overall, our move to outsource will allow us to utilize the manufacturing and operations prowess of experts which in turn will free up our capacity to do other vital tasks.
For our office staff, there will be ten individuals who will be responsible for the marketing & sales, finance and logistical operations. Since Earth Sack is still a small company, our organization can run with a lean roster. What is essential though is that we choose reputable and reliable partners to outsource our other processes to. For instance, we may have a logistics coordinator, but our actual trucking and deliveries will be done by a third party. Another example is information technology or I.T. Instead of creating our systems from scratch, we can purchase business solutions from I.T. companies.
As the company grows, we will eventually need to make decisions whether we continue to outsource processes or bring them back under our internal umbrella. Do we continue outsourcing to a third-party factory, or do we build our own facilities? We will weigh the costs and benefits of each option and then decide where these processes will stay during our yearly business review. What is certain though is growth will lead to more people working for our brands whether as employees or business partners, and we will need to expand the scope of our managerial work.
Review of current and anticipated cultural and structural issues
Earth Sack is a company that focuses on providing a new and better shopping option, that is why the company itself has a culture which talks about a “Change for the Better.” This culture can be explained in two different aspects. The first one is about self-improvement. Here, the company seeks to keep growing aggressively as business. Therefore, a fast pace that involves change and the new ideas will be promoted. The second aspect is about providing a better product for society. Here, we talk about abandoning old polluting habits and shifting towards an eco-friendly lifestyle.
The concept of change goes very well with our company’s long-term mindset. We believe that we need to do our part now because whatever we do today will affect our future. For us, inaction today as a company or inhabitant of the Earth will lead to our extinction. Therefore, our company will push hard in promoting our product not just for the business but also for the good of society.
In regards to work satisfaction, our employees will feel proud and positive. First, they know that their work is helping the environment. They will feel that they are making a difference unlike some other jobs. In terms of the organizational structure, our company will have specific departments but will not involve too much hierarchy. People from different departments are encouraged to have open conversations, and new hires will be given the same respect as senior members. Although employees will need to consult with each other, each member is empowered to make decisions within their expertise. Unnecessary approvals that pass through too many hands will not be encouraged. Lastly, the pace of work will be fast. Thus, employees can expect a workplace that is both exciting and dynamic.
However, since our company is new and small, our employees may feel a lack of confidence especially since we will be dealing with big clients and competing against established industries. Nevertheless, it is essential for management to provide strong moral support especially in the early stages. As the company expands though, so will the confidence of the staff.
B. The Customer Environment
Who are the firm's current and potential customers?
Earth Sack’s current direct customers are supermarkets, with the huge need for bags. Among them, Whole Foods will be the first target. Whole Foods focuses on providing organic products for the customer and strengthens its brand by selling unrefined and unprocessed products. However, using plastic and paper bags seems ironic and makes its brand image questionable. Our primary focus is Whole Foods because selling them environmentally friendly bags does not degrade user experience and in fact improves their reputation. In addition, Whole Foods is generally expensive for a supermarket, and there could be plans for more price reduction after the purchase by Amazon. Nevertheless, informing customers that they have switched to an eco-friendly bag could be a strategy by the supermarket chain to cancel their plans of price reduction. Psychologically, maintenance of a certain price seems less painful than an increase in one. Thus, Whole Foods switching to our Earth Sacks will be painless to the customers as they will get the impression that “Whole Foods is using an eco-friendly packaging at no extra cost!”
Our indirect customers are the shoppers. These shoppers may care about the environment and feel good while using our light yet biodegrade bags. Choosing our company, would be a great tactic for Whole Foods to increase their base of green customers. Other shoppers may not really care about the environment but still use our bags because they enjoy shopping at Whole Foods. Given the strength of our bags, these shoppers will see no functional disadvantage in doing their groceries with our product.
After gaining more awareness, Earth Sack will try to reach more companies who have the need for bags and who also want to improve their brand image. These could be other supermarkets or any retail outlet in general. As we supply more companies and industries, our brand will quickly grow and get noticed by even more people.
In order to better win the public, we will invite influencers to show that our product is as effective as paper and plastic bags yet safe for the environment. Some potential influencers are the band Maroon 5. Aside from the worldwide popularity of their music, they also have a strong advocacy of taking care of the environment. When Maroon 5 speaks about us, we will also include our supermarket customers in their message. Given the scale of our first targeted supermarket, Whole Foods, we can expect the band to agree to represent us. Thus, we can expect Maroon 5 to say “Plastic and paper bags are bad so head over to Whole Foods and use their Earth Sacks for guilt-free shopping ”. We can repeat and spread this message through social media further strengthening the positive environmental image of Earth Sack, Maroon 5 and Whole Foods.
What do customers do with the firm's products?
- Whole Foods: will use our bags instead of their current paper ones; we will put eco-friendly logos on the bags to make our brand visible
- Shoppers - use our bags when buying from Whole Foods; the more that shoppers shop in Whole Foods, the more Whole Foods will order from us
- Other supermarkets will also see the incentive to switch to our bags from a marketing and environmental perspective
Where do customers purchase the firm's product
- Supermarkets will get their Earth Sacks from us through delivery. (Business to business sale)
- Shoppers will get their Earth Sacks when shopping from Whole Foods.
When do customers purchase the firm's products?
- Our products will be used more during “shopping seasons” like Christmas and Thanksgiving
- Events where our products can be highlighted: Special eco-friendly festivals showcasing our product through Whole Foods ; World Environment Day - June 5th
Why (and how) do customers select the firm's products?
- Whole Foods needs to strengthen their brand image of “green” and “environmentally-friendly”, and our product is just the solution
- Shoppers want to protect the environment, and it will not cost them more money for their groceries
- Other supermarkets would want to stay competitive by following the new trend.
Why do potential customers not purchase the firm's products?
- Because Whole Foods is more expensive than regular groceries
- A good amount of Whole Foods packaging is not really eco-friendly (like plastic for salads, utensils made of plastic etc.)
- The technology is not very widespread or known yet
C. The External Environment
Competition ---
Our company has two major competitors, paper and plastic bag companies, which are plentiful across the USA. Some examples are Duro Bag Manufacturing, a major paper bag supplier and Multi-Pak USA, a major plastic bag supplier. In regards to the demand for shopping bags, there is definitely growth. The rapid inroad made by the retail industry in the fast moving consumer segment has led to the proliferation of retail outlets such as supermarkets, hypermarkets, and other convenience stores. The plastic bag market specifically is poised for steady forecasted growth driven by vast developments in the retail sector worldwide.
Looking at a specific paper bag company, Duro Bag Manufacturing is one of the largest in the world, and serves clients across the United States. It offers shopping bags, bottom boards, tissue inserts, poly packing solutions, assortments, gift tags, hang tags and bag labels. Duro Bag has purchased some of its larger competitors in order to expand its geographical reach and enhance the company's production capabilities. In addition, the company has over 1,800 employees working at 11 facilities across the country, with the corporate office located in Northern Kentucky.
For plastic bags, Multi-Pak USA is a supplier of custom bags to businesses around the world. Their product line includes custom poly bags, paper shopping bags and vinyl bags for industrial and promotional applications. They also offer a large variety of stock bags. Furthermore, Multi-Pak has decades of experience and state of the art plastic production machinery.
Overall, Earth Sack’s competitors have assets, experience and technology. Nevertheless, their biggest weakness are their non-sustainable products. This specific weakness is where Earth Sack can differentiate itself and compete.
Economic Growth and Stability -
The plastic industry has grown slowly in line with the broader economy as increased consumer demand drives growth in industry revenue. As the economy continued to improve over the past five years until 2017, the industry experienced a much stronger boost in revenue as a result of improved consumer spending. This caused the demand for plastic bag products to increase. Not only did this demand come from consumers and food manufacturers, it also came from other downstream markets, such as construction industries which steadily continued to demand more plastic film, sheets and bag products.
For the economics of environmental products, more consumers are opening their wallets for eco-friendly items such as biodegradable containers, efficient lighting and low emission vehicles. When it comes to buying these products, consumers are often faced with a higher price tag for greener options. According to research, 35% of people are willing to spend more money on products that are better for the environment, and 56% of people are at least moderately or slightly likely to spend more. This study indicates that a majority of respondents would consider a higher price point for green products. At the same time, the number of people who would never consider paying more is dropping.
As a whole the demand for both plastic and environmental products are rising. Additionally, people are shopping more. It would then be an opportunity for Earth Sack to satisfy both demands by supplying our plastic-like but biodegradable bags therefore hitting two birds with one stone.
Political Trends
A political issue that could really affect Earth Sack and other green businesses is the US government’s plan to lessen support for the Environmental Protection Agency or EPA. With less budget for pro-environment initiatives, there will be less government push towards a cleaner environment. Consequently, there will be less control over companies with products or processes that hurt the environment thus continued or greater dominance of these companies that we hope to replace.
The US government is also providing strong support for the petroleum industry (which is often blamed as a major source of pollution). This move in turn will lead to a higher supply of petroleum which is a key ingredient in plastic production. The greater supply will mean lower plastic prices and less reason for people to find an alternative source to their plastic bags. Thus, plastic bag companies can affordably clog the shopping bag market which our brand plans to enter.
Overall, with the United States’ current administration, government support for the environment seems to not be a priority. As an effect, there will be less incentives for green companies and less restrictions on industries that hurt the environment. Whether the greener mindset of other countries can influence the US still remains to be seen.
Legal and Regulatory Issues
Despite the current administration’s disengagement from the environment, there are currently some environmental regulations on paper and plastic bags (Earth Sack’s main competitors) in certain US locations. For instance, single-use plastic bags are banned in large California retail locations. In addition, there are charges for requesting a paper bag because these are not perfectly eco-friendly as perceived to be. Specific counties in other US states also have similar initiatives. Nevertheless, a lot of places in the US still do not have such measures in place, and whether these locations maintain the status quo or choose a greener approach will greatly affect the market of Earth Sack.
Although restrictions on paper and plastic bags appear to help the environment, some lobbyists believe otherwise. For example, some people believe that a non-biodegradable plastic bag that is properly dumped in a landfill will have less ecological impact than creating a reusable bag. These lobbyists instead vouch for better waste management instead of an eco-friendlier shopping bag material. Whether lawmakers listen to these groups or not will definitely affect whether our competitors will continue to operate on a wide scale or not.
Technological Advancements
Paper bags were generally considered as a better alternative to plastic because of its biodegradable property. Nevertheless, new research reveals that paper’s environmental halo may be overstated. For instance, even in sustainable timber plantations, where wood needed for paper is collected, tree cutting and paper processing require energy and lead to emissions. In the following stage, product transportation, trucks using fuel and emitting fumes are needed in order to transport the paper bags to supermarkets. Given that paper is bulkier than plastic, more trucks are needed in transporting paper thus a higher environmental impact. With people becoming more aware of paper’s negative impact to the environment, there will be greater demand for a product such as Earth Sack that is biodegradable yet as light as plastic.
With new technology and greater environmental awareness, a wide range of plastic alternatives have appeared. One alternative is using certain kinds of flour to make utensils. These utensils are durable and will not easily melt in hot drinks or food. When a meal is done, the utensils can be thrown into a compost pit together with leftovers and easily decompose. For plastic straws, sugar cane fiber has been considered as an alternative to plastic. These straws are study and safe for human beings to use. In addition, they are made from canes that have already been processed for sugar meaning there is no need for additional crop growth. Finally, algae is a popular alternative to plastic. Thanks to its gelatinous properties, it has a very similar structure to the plastic. In addition, algae grows in water and does not need the huge tracks of land needed in growing terrestrial crops. Thus, algae is being used in the creation of green bottles and shopping bags.
With consumers realizing that paper is not a very eco-friendly resource, there will be a greater demand for alternatives, and Earth Sack is riding this trend with our algae-based bags. The plethora of eco-friendly products though could have a positive or negative impact to our company. From a positive view, Earth Sack could add some more eco-friendly products to its portfolio thus leading to expansion. From a negative view, there will definitely be a lot of competitors in the green product industry thus Earth Sack will really need to compete to show that we are the best option.
Sociocultural Trends
Green shoppers are becoming a valuable customer group because they are willing to spend more on products that are green. For them, a few more cents or dollars is nothing compared to preserving the environment. In addition, these customers believe that green products must be good for themselves too since these items do not hurt the environment. For example, some individuals feel that a natural shopping bag will not leach harmful chemicals into their food. In addition, green shoppers also believe in a supply chain that is holistically sustainable. Thus, a company like Whole Foods will eventually need to use truly eco-friendly shopping bags if they want customers to fully buy into their sustainable image. Finally, green shoppers have higher loyalty to their brands meaning they will continually shop at a supermarket which has proven its eco-minded worth.
In regards to demographic mindset, shoppers are prioritizing sustainability as one of the criteria of the brands they choose. This trend is not limited to the younger population of Generation Z or Millennials though. Baby Boomers are also following this trend with more of them becoming more sustainability conscious each year. For all the generations, a preference for natural products and choices that do not hurt the environment is generally the main motivation. For some millennials though, image also plays a big choice in choosing sustainable products. If a millennial is seen either in public or in social media supporting a non-sustainable brand, he may get ostracized or scorned for his choice. Thus, society’s perception may actually be more important for some millennials in making a green choice than actual care of the environment.
Overall, with a greater sociocultural shift towards environmental and sustainable, Earth Sack is in a market that is ripe for entry. Furthermore, companies that desire to shift to a fully sustainable image will definitely look into Earth Sack as a supplier for their shopping bags as consumers become more demanding.
III. SWOT Analysis
Aspects: Company/Marketing/Competitive/Product property/
A. Strengths
Strength 1: The company has the technology to mass produce Eco Sack
Strength 2: Eco Sack will be the first company to supply supermarkets with green shopping bags
Strength 3: Eco Sack’s pro-environment image is definitely positive and appealing
Strength 4: We offer up to 3 different sizes bags for one customer. It’s more eco-friendly to use smaller bags when people buy less stuff.
Strength 5: One bag is dense enough to hold all the things. This helps our customers like Wholefoods cut down almost half the number of bags they use.
B. Weaknesses
Weakness 1: Our company is small and new, which makes it challenging to gain the trust of customers and the public
Weakness 2: Our bags are more expensive than traditional plastic and paper bags, thus we still need time to improve the technology and cut down costs
Weakness 3: Given that our technology is new, there is a possibility that all its negative effects have not yet been discovered
Weakness 4: Now we mainly focus on recyclable plastic bags and we don’t have any brand extensions. It’s not good for our long term development.
Weakness 5: We need a long time and a whole campaign to make people believe that our bags are actually biodegradable and different from normal plastic bags.
C. Opportunities
Opportunity 1: Getting sponsorships from environmentally friendly associations who will promote our products to the public
Opportunity 2: Opportunity to sell our products to department stores
Opportunity 3: Possibility of eventually selling other products such as eco-friendly utensils
Opportunity 4: Cooperate with influencers on social media such as Instagram and Fb to build our brand image and get support from the public
D. Threats
Threat 1: Our technology may be copied, stolen or leaked to competitors
Threat 2: Scandals that affect our supermarket customers will affect us too
Threat 3: Some politicians may not support pro-environment laws
Threat 4: Ending a cooperating relationship might cause slander on our company.
Threat 5: We may be forced to offer a very low price for some customers to get cooperation
Threat 6: We need financial support for initial investment to let premier customer like Wholefoods to make a change.
E. The SWOT Matrix
|
Strengths:
•Technology for Mass Production •First to Sell to Supermarkets •Eco-friendly image •Multiple choices offered •One bag policy |
Opportunities:
•Support from Environmental Organizations •Expanding Target Market •Expanding Product Line •Social media influencers cooperation |
|
Weaknesses:
•Market’s Trust in our Brand •High Expenses in Initial Production •Undiscovered Negative Effects of the Product •Poor brand extension •Completed campaign needed |
Threats:
•Copying / Stealing of our Technology •Scandals Affecting our Customers •Anti-environment Politicians •Defame from broken relationship •Deliberate price reduction •Financial support needed |
F. Developing Competitive Advantages - Yiwei
- Product Leadership: using technology to create strong yet biodegradable bags
- Customer Intimacy: instilling the culture of caring for the environment in our customers
More and more people in this society care about the environment and our eco-friendly bags can help. Furthermore, we are using high-tech products. Some consumers will buy as many eco-friendly products as they can. These consumers have personally changed their behavior to minimize their impact on global climate change. More importantly, they are more likely to become repeat customers when they know a company is mindful of its impact on the environment and society. Investing in green technology now is a potential way out towards sustainable development and new job creation. Stimulus packages, made possible by borrowing from future generations, must be designed to prevent a further worsening of the current crisis, while creating investments that yield future benefits.
For our company, we would tell everyone that we care about the environment and we are going to try our best to protect it. Our company will establish goodwill for our brand in two ways. First, getting our entire company involved in the community. Support local charities, community initiatives, eco-friendly programs, and other community activities. Second, promote our community involvement. We will take pictures, shoot videos, and post them on social media to show our audience that our company practices what they preach. Use charitable donation incentives to encourage sales and target audience interaction. For example; for every dollar of our product that’s sold on Christmas Eve, the brand will donate 5% to a Toys for Tots. Use Facebook live video, Instagram stories, Periscope and other live social media features during community involvement events.
G. Developing a Strategic Focus -
- Our overall strategic focus would be to aggressively push this product / concept
- Our differentiator: We provide customers with a convenient product that does not destroy the environment (no trade-off in helping the environment)
Our overall strategic focus would follow direction of diversification and turnaround. Our products are high-tech and eco-friendly. We make customer more convenience without destroy our environment. This concept would be our company’s culture. Our mission and vision statements would clarify our organization’s commitment to the environment while our brand guidelines need to specify acceptable practices. Our company will dedicate an entire page of our website to discussing our responsibility as “Earthkeepers” just like Timberland.
People hate when you talk about sustainability, going green, and eco-friendly initiatives on reams of paper. It’s counterintuitive and feels dishonest. However, if you’re having trouble reaching your audience via truly digital means, or if you have a physical product that makes paperless impossible; there are a lot of options for recycled paper, or compostable packaging materials. If you’re running a truly environmentally-friendly business and want to master green marketing, just remember these simple rules: Never waste. Always recycle. Get Involved. Be authentic.
Reference
https://en.wikipedia.org/wiki/Duro_Bag_Mfg
https://www.multipakusa.com/blogs/news
https://en.wikipedia.org/wiki/Multi-pack
https://en.wikipedia.org/wiki/Biodegradable_bag
https://www.envision-creative.com/green-marketing-your-environmentally-friendly-business/
http://dailysignal.com/2017/07/18/house-republicans-lay-out-their-plan-to-rein-in-the-epa/
https://www.theguardian.com/us-news/2017/dec/12/big-oil-lobby-get-what-it-wants-epa-trump-pruitt
http://www.ncsl.org/research/environment-and-natural-resources/plastic-bag-legislation.aspx
https://www.bloomberg.com/view/articles/2017-11-08/stop-banning-plastic-bags-please
https://enviroliteracy.org/environment-society/life-cycle-analysis/paper-or-plastic/
https://www.gmaonline.org/downloads/research-and-reports/greenshopper09.pdf
http://www.pkgbranding.com/blog/5-reasons-why-visible-sustainability-matters-to-millennial-consumers
