- Summary of the Case study
- SWOT analysis
- Problem facing the company
- Marketing theories
- Advantages and Disadvantages of Solution 1: “Do nothing”
- Advantages and Disadvantages of Solution 2: Shift focus to Supermarkets
- Advantages and Disadvantages of Solution 3: Relocating sales force
- The Best Solution- Shift focus to Supermarkets
- Conclusions
- References
Summary of the Case study
- The Blue Mountain Herbal Teas was established in mid 1980s by Bart Wilcox and Fred Easton.
- Its main distributing channel has been the Health food stores.
- However, the grocery supermarkets entered into its distribution channel recently.
- The above was necessary for the company because there was poorperformance of the health food stores.
- Besides, the company needed to expand its services.
SWOT analysis
- Strengths:
- Products are positioned well;
- High demand for its products;
- A total of15 brands (variety);
- it is well known to the public (image) due to health food stores in the distribution channel.
- Weaknesses:
- The company deals with only one line of product (herbal teas).
- Lack of adequate marketing.
- Depending a lot on the health food stores.
- Conflict between supermarkets and food stores.
- Opportunities:
- Supermarkets have improved the distribution channel.
- The company has a wide opportunity of branding its products.
- Adequate source of raw materials that can be easily imported.
- Large market demand for herbal teas.
- Threats:
- Increasing competition from other companies such as Celestial Seasonings Herbal Teas.
- Conflict in the channel of distribution is likely to interfere with marketing of herbal teas.
- Reduced sales especially if the health food stores will not buy products from the company.
- Meeting the changing tastes and preferences of customers on a regular basis.
Problem facing the company
- The health food retailers have objected the entry of supermarkets into the distribution channel.
- They have threatened to stop buying from the company if the supermarkets will take the right of distributing herbal teas on behalf of the Blue Mountain Company.
- Gary Penfold, who is the current director of marketing is in a dilemma on the best step of action to take.
- To begin with, it is profound to note that marketing is both an art and science that revolves around elements such as promotions, public relations, and advertising.
- The information generated from marketplace data as it is the case with the Blue Mountain herbal Teas is indeed vital in making relevant decisions (Khatri & Nanyang 2000, p.93).
- However, it is obvious that most firms often make several guesses on how to apply the information generated from marketing activities.
- Hence, the purpose of this report is to explore the marketing theories and options that the management at Blue Mountain company can make use of in order to come up with the best business decisions.
Marketing theories
Marketing revolves around data gathering, storage, analysis and retrieval so that the process of selling can be made smooth (Khatri & Nanyang 2000, p.92).
In other words, marketing enhances selling of goods and services (Fama1998, p.300).
Hence, information obtained from the marketing analysis of a particular product or brand can assist business enterprises to introduce new products into the market, boost the brand image of the product portfolio, make decision on the most effective channels of distribution or change the existing products in the marketplace with competitive brands (Grier & Brumbaugh 1999, p. 93).
The aforementioned benefits of marketing data are indeed vital for the Blue Mountain Herbal Teas bearing in mind that Gary Penfold is currently at a dilemma on which distributional channel to use in the distribution of 15 blends of herbal tea (Ang, Leong & Kotler 2000, p.98).
Marketing Positioning strategy
Market positioning is one of the dominant theories used in evaluating the marketing strength of specific brands and products (Bjorkman, Fey & Park 2007, p. 440).
According to this theory, sales can only be optimized if the producer strategically positions the products at the point of sale in the most appealing and attractive way. Hence, product positioning will ensure that the target audiences are directly reached and the latter is also fully persuaded that the given products are beneficial (Ghauri & Gronhaug 2005, p.84).
As such, market positioning is largely similar to building the brand or image of a product so that consumers can settle for it.
For instance, car manufacturers often use phrases such as affordable or safe when positioning their automobiles (Pearce & Michael 1997, p.310). In the case of the Blue Mountain Herbal Teas, it is vivid that the company has managed to position its products in the market as healthy, herbal and natural tea blends compared to other competitors who sell regular tea or coffee products (Kotler & Armstrong 2006, p.85).
The herbal tea is perceived by consumers as safe and healthy.
Pricing
The expected profit margin and the costs incurred in the process of production are not the only factors that are worth considering when setting the price of products. According to the marketing theory of the perceived value, there is a general tendency among consumers to believe that products that are highly priced are more superior to those that are relatively cheap in the market.
Advantages and Disadvantages of Solution 1: “Do nothing”
- Advantages:
- The conflict will eventually end because consumers will still have to buy herbal teas from the health food stores.
- The company has to expand its operations and hence should not be bothered by the small scale retailers.
- Any other undertaking will lead to costly expenses.
- Disadvantages:
- Reduced volume of sales if the health food retailers will decline to buy products from the company.
- The image of the company will be degraded.
- Lack of adequate market acceptance for new products unveiled by the company.
Advantages and Disadvantages of Solution 2: Shift focus to Supermarkets
- Advantages:
- Guarantees large volume of sales.
- Rapid channel of distribution.
- More appealing to long term customers.
- Quick expansion.
- Disadvantages:
- Lacks personal appeal.
- May be cumbersome to attract new customers.
- Selling at lower prices to the supermarkets than health food stores.
Advantages and Disadvantages of Solution 3: Relocating sales force
- Advantages:
- Adequate handling of each line of distribution.
- Immediate feedback in case of any queries.
- Increases the level of distribution due to the additional workforce.
- Disadvantages:
- Costly undertaking because additional workforce will have to be hired.
- Will lead to additional cost of selling.
- May not guarantee satisfaction due to inefficiencies during distribution.
The Best Solution- Shift focus to Supermarkets
- Supermarkets will guarantee larger volume of sales than the food stores.
- A wider network of distribution channel because supermarkets reach large number customers (Kotler & Armstrong 2006, p.143).
- Supermarkets sell at lower prices than health food stores. Hence, they will attract many customers.
- Selling to supermarkets will shorten the chain of distribution and the benefits passed to consumers.
- Health food stores will eventually stock the herbal health teas because it is still one of their best brands in store.
Conclusions
To recap it all, it is vital to reiterate that the distribution channel conflict noted in the above case study was caused by the entry of supermarkets in the distribution channel of the Blue Mountain Herbal Teas.
Secondly, the health food stores may not necessarily reserve the right to distribute on behalf of the company since the grocery supermarkets also play significant part in boosting the sales volume of the herbal tea products.
References
Ang, S. H., Leong, S. M. & Kotler, P. 2000, “The Asian Apocalypse: Crisis Marketing for Consumer and Business”. Long Range Planning, vol. 33, no.4, pp. 97-119.
Bjorkman, I., Fey, C. F. & Park, H.J 2007, “Institutional theory and MNE subsidiary HRM practices: evidence from a three-country study”. Journal of International Business Studies, vol. 38 no. 3, pp. 430-446.
Fama, E.F1998. “Market Efficiency, Long-Term Returns, and Behavioral Finance”,Journal of Financial Economics, vol. 49, no. 3, pp. 283-306.
Ghauri P. N. & Gronhaug K 2005. Research Methods in Business Studies: A Practical Guide, Prentice Hall, New York.
Grier, S. A. & Brumbaugh, A. M 1999, “Noticing Cultural Differences: Ad Meanings Created by Target and N on-Target Markets”. Journal of Advertising, vol. 28 no.1, pp. 79-93.
Khatri, N. & Nanyang, O.P.N 2000, “Managing human resources in a global era”. Management Research News, vol. 23, nos. 2-4, pp. 81-96.
Kotler, P. & Armstrong, G 2006, Principles of Marketing, 11th ed., Pearson-Prentice Hall, Englewood.
Pearce, J.A. & Michael, S.C 1997, “Marketing Strategies that Make Entrepreneurial Firms Recession Resistant”. Journal of Business Venturing, vol. 12 no. 2, pp. 301-314.