Table of Contents
Executive Summary ...................................................................................................i
Introduction ...............................................................................................................1
Environmental Analysis
1
Internal ...........................................................................................................1
External ..........................................................................................................2
Customer ........................................................................................................4
SWOT Analysis .........................................................................................................5
Marketing Goals and Objective .................................................................................9
Action Plan.................................................................................................................9
Product ...........................................................................................................9
Price ...............................................................................................................10
Place ...............................................................................................................11
Promotion.......................................................................................................11
Financial Analysis ......................................................................................................14
Monitor and Control ..................................................................................................16
Contingency Plan .......................................................................................................16
Summary ....................................................................................................................16
References ..................................................................................................................18
Appendix A: PowerPoint Presentation ......................................................................1
1
EXECUTIVE SUMMARY
The AgGrow Marketing Group has developed this marketing plan as a solution
for the American Lamb Council’s (ALC) lack of strategic direction.
Through an
environmental analysis, intense research, and the development of the integrated
marketing approach, this proposal provides the ALC with the marketing objectives that
will alleviate the industry’s lack of positioning. By correlating the industry’s strengths
with its opportunities as well as minimizing its weaknesses and threats, the AgGrow
Marketing Group has created a multi-faceted marketing plan that will allow the American
lamb industry to increase the volume of lamb consumed and therefore the volume
produced.
The majority of American lamb consumers are currently located in the urban
areas of the East and West coast regions of the United States. They are upper class, older
citizens and are of Asian or Middle Eastern decent. The objectives of the marketing plan
are to transcend consumption habits from the coastal geographic regions to the central
United States by educating the consumer, creating awareness, and by developing loyal
consumers.
The action plan includes a description of product, price, place (distribution), and
promotional activities. Fresh American Lamb® is healthier than beef, pork, and dark
chicken. Consumers prefer it over Australian lamb due to the milder flavor and greater
plate coverage. Given these advantages, Fresh American Lamb® is now fabricated into
smaller, easier to cook cuts at the retail level that provide consumers with the desired
convenience attributes.
2
The pricing of Fresh American Lamb® is largely influenced at retail and packing
levels of the industry.
Current retail prices range from $2.50 to $4.95 per pound.
Further, we will maintain our current distribution relationships in this marketing plan.
A rigorous promotional campaign will be implemented to accomplish
organizational goals and objectives. In the first year, ten hotel chains, having over 2,000
nation-wide locations, will be targeted to include lamb in their restaurant menus. This
promotional activity is projected to increase lamb consumption by 3.4 million pounds,
which translates to an approximate 68,000 head of lambs demanded. The second and
third year promotional activities will involve continued focus on the hotel chains.
However, the marketing plan will more aggressively target retailers and the end
consumers. These objectives will be accomplished through the utilization of trade shows,
displays, and multiple advertising media, including magazines and newspapers. The
promotional activities will target a market of 19.1 million consumers in seven states
strategically distanced from the large packing plants in Texas and Colorado. Also during
the third year, co-branding efforts with Healthy Choice® and Earnest & Julio Gallo®
wines will be implemented. The effects of the third year promotional efforts equate to a
nearly three-fold increase in demand from the first year.
Funds for these promotional activities are acquired through the newly
implemented lamb check-off program. During the first year, assessments are estimated to
be $3.2 million dollars and increase to $4.9 million by the third year. These funds will be
allocated to the aggressive advertising activities.
Data collected through efficient consumer response and category management
will be used to aid in monitoring the effectiveness of the marketing campaign in relation
3
to the ALC goals and objectives.
If these objectives are not being satisfied, a
contingency plan will be implemented. This plan involves expediting the marketing plan
by including the East and West coast regions in the initial seven state rollout during the
third year. The primary activities in these regions will involve increasing the share of
current consumers.
4
INTRODUCTION
The AgGrow Marketing Group has been chosen by the board of the American
Lamb Council (ALC) to develop and implement a multi-faceted marketing plan targeting
current non-users of lamb products in order to increase the volume of lamb consumed and
ultimately produced, thereby shifting the demand curve for lamb meat.
ENVIRONMENTAL ANALYSIS
Internal Environment
The American Lamb Council’s (ALC) mission is to facilitate the promotion of
lamb and influence legislation to protect and aid the industry.
It is a goal of the
organization to represent the producer and seasonally promote the lamb products they
produce. However, these goals are not consistent with recent changes in the economy
and the meat industry. The evolution of the customer profile over the past 20 years has
proven convenience and value-added items are in demand. Customers have also shown
greater demand for healthier foods.
The current performance of the industry’s marketing efforts is behind other close
competitors for several key reasons.
First, the ALC and other lamb and sheep
organizations have flawed marketing strategies for the products. In addition, there is a
lack of industry support for marketing objectives because of the usual expense related to
effective marketing and advertising. Finally, the marketing plans that have been used in
the past were unsuccessful because of the ALC’s inability to effectively implement,
monitor, and control the plan.
The American Sheep Industry Association (ASI), the parent company of the ALC,
in cooperation with the United States Department of Agriculture (USDA), has recently
5
implemented a check-off program that will aid in the promotion of lamb. Assessments
for the program will begin in July of 2002. Producers will be charged $0.03 per pound of
lambs sold on the hoof, and packers will be charged $0.30 per head slaughtered (Source
ASI). It is expected the lamb industry will receive $3.2 million in the first year for
marketing efforts (Source Paul Rogers, ALC). With this additional funding a large scale
marketing plan will be enacted with the intent to increase consumer awareness, facilitate
more relationships with food retailers and ultimately increase the demand for lamb.
Therefore the industry will need to aggressively focus on the needs of the lamb consumer
to accomplish marketing objectives.
External Environment
The lamb industry faces fierce competition with many different meat products.
The largest and most similar competitor is the beef industry. Since beef is a red meat,
close association between lamb and beef sometimes occur.
In addition, beef has
effectively implemented a rigorous marketing campaign that has increased the per capita
consumption of beef products. Pork is another competitor of lamb that experienced
increases in per capita consumption of pork after the inception of the industry’s
marketing plan. Poultry is also a competitor because it is less expensive and is assumed
to be leaner than lamb. It is the high price of lamb that makes total budget competitors a
major concern for the ALC.
Per Capita Lamb Consumption Trends
in the United States
Lbs. per Year
1.2
1.0
Lamb
0.8
0.6
1985
1990
1995
2000
Year
Figure 1 (foodservice.com)
Figure 2
6
Lbs. per year
Per Capita Consumption Trends in
Competing Industries in the United
States
80.0
70.0
Fresh Meat Consumption
in 2002
Beef
60.0
50.0
Pork
40.0
30.0
1985
35.89%
37.06%
Poultry
1990
1995
2000
Year
Beef
Pork
Lamb
Chicken
.46%
26.58%
Figure 3 (foodservice.com)
Figure 4 (foodservice.com)
As can be seen in Figure 1, there has been a steady decline in the amount of lamb
consumed since 1985. This trend also correlates with the decreased production trends,
which are illustrated in Figure 2. Meanwhile, poultry, beef, and pork have experienced
steady, or increasing growth as demonstrated by Figure 3. It is important to note that
beef, pork, and poultry all have roughly one-third of the market share of fresh meat, while
lamb, has less than one-half of one percent as evidenced in Figure 4.
Fortunately, the United States has experienced a very strong economy over the
past 20 years. Despite some economic downturns, food products continue to see growth
in demand. Consumers are showing greater buying power through increased disposable
incomes yet have experienced little inflation. Because of this, consumers are more
willing to purchase processed food products instead of raw products that would require
more preparation at home. Increased incomes, more women in the workforce, increased
single member households, and more dual income families have demonstrated the trend
for less food being eaten at home.
7
It is important to note that foreign competition has been of little relevance over
the past three years since the implementation of a Tariff Rate Quota on foreign lamb.
The International Trade Commission (ITC) responded to dumping allegations made by
U.S. producers towards Australian and New Zealand lamb producers. President Bill
Clinton signed Petition 201 into law in 1998. However, Petition 201 will end in 2002,
and therefore foreign competition will again be a major threat to the industry. During the
three years of Petition 201’s effectiveness, ALC and lamb processors have taken
advantage of technological trends and should be able to compete with foreign lamb, as
packers have added fabrication facilities to their plants.
Customer Environment1
Current customer profiles include specific ethnic groups on the east and west
coast regions of the United States. These ethnic groups include: Greek, Hispanic,
Middle Eastern, and American Indian to name a few.
Avid lamb consumers are
characteristically in the 55-64 age bracket as well as retired persons in the 65+ age
bracket. The largest amount of lamb consumption is found in urban areas amongst those
consumers in the top 20% income bracket.
Potential customers for the lamb industry include food service institutions,
middle-income families, and consumers located in the central and southern United States.
The lack of position in these consumers’ minds make them the optimum consumers to
target because they are least likely to have tried lamb before but should be more willing
to consume it once they become aware of the product.
Lamb is currently purchased at grocery stores, a few restaurants, and specialty
shops that cater to specific ethnicities. Seasons also influence the consumption of lamb
8
as most consumption occurs during Ramadan and the Orthodox Easter as well as
Christmas and Christian Easter.
The reasons for not purchasing lamb include: unawareness of the product, being
uneducated about the product’s health benefits, lack of purchasing power, little
availability in retail outlets in the United States, and lack of convenience. The associated
marketing plan will address all of these issues in the action plan and ultimately increase
the demand for lamb.
SWOT ANALYSIS
Strengths
1. Absence of negative media
Unlike the beef industry’s problem with the Mad Cow Disease scare, lamb
has not found itself faced with seriously negative publicity.
This
inherently gives the lamb industry an advantage, as people may think of it
as safer than other meat products such as beef.
2. Lamb is leaner and healthier than beef.
Using tactics much like the
Nutritional Meat Facts
pork industry did in its “The
Calor
ies
Total
Fat
Sat.
Fat
Cholest
erol
Lamb Leg
160
7g
2g
76mg
Pork (Fresh
ham)
Beef Round
179
8g
3g
80mg
164
7g
2g
69mg
boasts more health benefits as
Chicken
(dark)
Chicken
(light)
174
8g
2g
79mg
can be seen in Figure 5.
147
4g
1g
72mg
Other White Meat” marketing
campaign, the lamb industry
Figure 5
1
Assumptions based on TAMRC Report and ASI information
9
3. Lamb producers are able to respond to changes in demand quicker than other
producers.
Due to the shorter gestation periods and higher prolificacy in sheep, lamb
producers are able to increase and decrease the supply in order to respond
to demand easier and quicker than beef producers.
4. The lamb industry has access to the monetary resources it needs.
The lamb industry may receive funds from the government as part of the
2002 Farm Bill. Also, a check-off program will give the industry the
continued funds needed to strengthen its strategies.
Weaknesses
1. No positioning
Lamb has little to no place in the minds of most Americans. People do not
consume much lamb relative to other meat products due to a lack of
knowledge and accessibility. Further, many potential consumers fail to
realize lamb is a possible alternative for fresh meat.
2. No use of brand or product image
There is currently no unifying entity that promotes lamb products, which
means that advertising for lamb has been extremely limited.
3. Limited retail shelf space
Lamb products exhibit a minute presence in grocery stores due to the lack
of interest in consumption of lamb. In fact, grocery stores average less
than three foot of shelf space for lamb products (Source personal research
at H.E.B.).
10
4. Little to no unity in the industry along with a lack of strategic direction.
Producers and meat packers in the United States have a heavy interest in
the lamb industry, yet they have been unsuccessful at unifying their
marketing efforts.
Opportunities
1. Cooperation of firms, such as restaurants and hotels.
Hotels and restaurants have formed alliances with other groups, such as
pecan growers, in which both parties benefit. Such opportunities could
also be achieved in the lamb industry.
2. Higher disposable incomes
As the United States moves out of a slight recession, Americans are more
willing as well as more able to spend money. Having more money to
spend gives lamb a greater chance of being purchased.
3. Convenience items are in demand
In a time of technological advances and change, Americans are looking for
every possible convenience item that is available. Lamb meat can be
added to various convenience products and can be fabricated to be faster
cooking.
4. Room to make a position in the minds of consumers
Negative attitudes toward lamb are nonexistent due to the lack of a
position in the minds of consumers.
This leaves room for the lamb
11
industry to start off on the right tract with their potential consumers and
gain customer loyalty.
Threats
1. The end of Petition 201
Petition 201 is a tariff-rate quota that had been placed on Australian and
New Zealand lamb being imported to the U.S. It was put in place in order
to protect the American lamb industry.
This trade barrier will be
eliminated in 2002 allowing Australia and New Zealand to increase their
lamb exports to the United States.
2. Reactive pressures from other commodities
The lamb industry must face competition from other commodities, such as
beef and pork, which have already found benefits in uniting their
respective industries.
The lamb industry must face the risk of these
commodities taking a firm stand and trying to upgrade their marketing
techniques in order to counter-act the effects of the lamb promotion.
3. Continued declining market share
The lamb industry is faced with a continuous decline in market share as
the amount of retail shelf space continues to diminish. Since consumers
currently are not interested in purchasing lamb, retailers have no reason to
supply it.
Synergies
Weaknesses and Threats to Strengths
12
The fact that lamb has no position in the minds of consumers gives the lamb
industry the benefit of making a good first impression as well as a lasting one. By
making a good impression, consumers will have the desire to purchase a greater amount
of lamb, which will cause retailers to increase their amount of shelf space. This should
also influence food service institutions to include more lamb dishes on their menus.
Strengths to Opportunities
By using the healthiness factors of lamb, the lamb industry could better influence
supporting firms to purchase their products. This can also be used to aid in persuading
firms to incorporate lamb into convenience food items that are intended to be healthy.
MARKETING GOALS AND OBJECTIVES
The
marketing
objectives
that
have
been
P
D1
D2
established for the ALC are to increase the demand for
lamb by educating the consumer, creating awareness, and
by developing loyal consumers. Figure 6 illustrates the
increase in demand after the implementation of the
Q
Figure 6
marketing plan. The long-term strategic goal is to execute a national marketing campaign
by the end of the fifth year.
ACTION PLAN
Product
Lamb in general is a more nutritious alternative for other meat sources. It has
fewer calories than beef, pork, and dark chicken as well as less total fat and saturated fat.
Lamb is also very comparable in the area of cholesterol (Source lambchef.com).
13
Fresh American Lamb® is preferred over New Zealand and Australian lamb due
to having a milder flavor as well as greater plate coverage, which is primarily due to the
fact that American lamb is grain fed while Australian lamb is grass fed.
The use of fabrication technology allows packers to supply higher margin, more
value-added products.
Fabricators and packers have begun cutting lamb into more
convenient cuts rather than only selling a whole leg of lamb.
Currently lamb is in the
decline stage of the product life
cycle, which is evidenced by
the yellow dot in Figure 7. By
reintroducing Fresh American
Figure 7
Lamb® as essentially a new
product that offers convenience and health benefits, the product should move to the red
dot in Figure 7, which is in the introduction stage. It is important to note that many of the
marketing ideas for Fresh American Lamb® are still in the development stage of the
product life cycle, but by the end of our promotion calendar lamb should move into the
introduction stage.
Price
The ALC and producers have very little influence on prices themselves because
lamb is a commodity. The oligopoly structure of the packers, allows them to greatly
influence the prices received by the producers as well as the cost to the end consumers.
Retailers and other food institutions capitalize on setting the final price to the consumer,
14
and therefore usually receive the largest margin of the food-marketing bill for lamb
products. Currently, retail prices range from $2.50 to $4.95 per pound (Source ASI).
Place (Distribution)
The largest meat packers are located in Texas, California, and Colorado. Packers
and fabricators ship FOB destination to distribution hubs and major retailers. Current
methods of distribution will continue to be used in order to supply lamb to the increased
number of retailers and other food service institutions.
Promotion
Push
Various methods will be used to push Fresh American Lamb® through to
both retailers and other food service institutions throughout the time of the promotional
calendar. Print advertisements in both retail and food service magazines will be used in
order to increase the awareness of lamb in these areas.
Also, personal selling to
executive chefs at hotels and restaurants as well as the retail level will be relied on
heavily. Finally, the ALC will make its presence and the presence of its products known
by participating in various trade shows throughout the target areas.
Pull
In order to appeal to the end consumer, print advertisements in magazines
such as Southern Living and Women’s Day will be used. Eventually, Fresh American
Lamb® print advertisements will be seen in prestigious national publications such as the
15
Wall Street Journal. In-store samples as well as point-of-sale displays will also be used
to persuade end consumers to purchase Fresh American Lamb®.
Promotion Calendar—1st Year
During the first year,
personal selling promotional activities
will be utilized in order to break into
new markets. These activities will be
targeted toward executive chefs in large
food service institutions.
Hotels
Adamsmark
Club Med
Double Tree
Embassy Suites
Hilton
Mariott
Omni
Radisson
Weston
Wyndham
#of Chains
35
46
96
159
499
987
78
237
457
47
Figure 8 lists
Total
2,641
Figure 8 (Source personal
research)
chosen as the target market during the first year along with their corresponding number of
the ten luxury hotel chains that have been
locations in the United States. It is estimated that targeting these hotel chains that
consumption will increase at each location by 25 pounds per week. The calculations
show an increase in lamb consumption of 3.4 million pounds in the first year. From a
production stand point, estimating a carcass weight of 50 pounds per lamb, production
will have to increase by roughly 68,000 head to meet this new demand.
It is also important to realize that promotional activities such as specials will be
taking place within the restaurants at the hotel chains. These activities will primarily
involve having specials that include lamb as the primary entrée.
Promotion Calendar—2nd Year
16
Marketing efforts toward these hotel chains will continue throughout the
second year. Toward the end of the second year, marketing efforts will simultaneously
be focused toward both retailers and end consumers. Retailers will be reached primarily
through personal selling; however, limited print advertising in retail magazines will also
be used.
Promotion Calendar—3rd Year
During the third year,
marketing efforts will mainly focus
on the end consumer.
The target
market will consist of consumers
over the age of 25 who live in urban
areas and have an annual income of
over $25,000.
They will include
people who are stay-at-home parents
Figure 9 (U.S. Census Bureau)
or consumers who have a high demand for convenience food products.
The final
stipulation is that they are currently non-users of Fresh American Lamb® meat products.
The targeted areas will include Dallas/Fort Worth, Denver, Kansas City, Chicago,
Cincinnati, St. Louis, Houston, and Atlanta. These areas were chosen based on their
proximity to the large packing and fabrication facilities in Colorado and Texas and
because they showed to have the lowest incidents of lamb consumption. Therefore, there
will be a seven state rollout for the promotion as can be seen in Figure 9. The target
market therefore totals 19.1 million people (Source U.S. Census Bureau).
17
In order to reach this target market, aggressive print advertising will be utilized
along with in-store samples and point of sales displays. Exposure from the first and
second year’s activities should increase awareness of Fresh American Lamb®, which will
facilitate the communication objectives within the target market.
Also during the third year, the ALC will enter into co-branding relationships with
two very recognized brands. These include Healthy Choice® and Earnest &Julio Gallo®
wines. Healthy Choice® was chosen because it is owned by Con Agra® who also owns
the third largest packing plant in the United States located in Greeley, Colorado. These
ties give Healthy Choice® additional incentives to join in the co-branding efforts, as they
can use lower price cuts to increase margins for the company. The primary activity with
Healthy Choice® will be frozen dinners with lamb as the primary entrée.
Secondly, Earnest & Julio Gallo® wines was
chosen because wine and lamb are considered excellent
complements.
Point-of-sale
displays
and
print
advertisements, such as the one seen in Figure 10 will be
used to promote the co-branding efforts.
Figure 10
Pro Forma Financial Analysis
FINANCIAL ANALYSIS
The funds for the
integrated
marketing
plan
that has been proposed will
be provided solely through
the check-off program. It is
Year 1
3200
0
3200
Year 2
3900
1871
5771
Year 3
4900
1691
6591
560
95
106
0
384
0
13
73
710
100
397
876
1620
0
29
240
900
105
466
1068
2700
929
31
240
Administrative Expenses
98
108
152
Total Expenses
1329
4080
6591
Gain/loss
1871
1691
0
Check-off Reciepts (1000's)
Carryover
Total Budget
Marketing Expenses (1000's)
Sales Representatives
Executive Chef
Promotional Items
Cooperative Advertising
Print Advertising
Co-Branding
Technical Support
Trade Shows/In-store prom.
Figure 11
18
projected that check-off receipts will provide $3.2 million in the first year.
Followed by $3.9 million in the second year
and $4.9 million in the third year. As can be seen in Figure 11, the bulk of this money
will be allocated towards marketing expenses.
These expenses include:
sales
representatives, the ALC executive chef, promotional items, cooperative advertising with
retailers, print advertising, co-branding advertising, technical support, and trade
shows/in-store promotions. The largest amounts of money will be spent towards print
advertising because it is our primary source of promotion. During the first year, eight
sales
representatives
will
be
hired
at
$70,000
per
year
in
order to accomplish our personal selling goals. During the second and third years, ten
and twelve sales representatives will be on staff making $71,000 before getting a raise to
$75,000. The executive chef is necessary for our advertising in order to develop new
recipes and prepare the food for the advertisements. Promotional items include anything
from coupons and lamb memorabilia to aiding the targeted hotel chains’ in-restaurant
specials.
In order to further encourage retailers to carry Fresh American Lamb®,
cooperative advertising efforts will be used.
During the third year, co-branding
promotional efforts will cost $929,000. In order to continue maintenance on the ALC’s
website, further technical support will be required. Finally, trade shows and in-store
promotions are a vital part of our overall promotion efforts. The funds for the check-off
program are also used to aid in the administration expenses as evidenced by Figure 11. It
is also important to note that this integrated marketing plan does not require full
utilization of the check-off receipts during the first and second years. These funds are
carried over to the second and third years respectively in order to ensure accurate and
19
efficient implementation of the plan. By the end of the third year, all monetary resources
are employed.
MONITOR AND CONTROL
Several steps will be taken to monitor the success of Fresh American Lamb®’s
promotional activities and measure the effectiveness of communications with clients and
consumers.
In cooperation with retailers and food service institutions, effective
consumer response (ECR) and category management data will be collected monthly. The
results from these reports will be compared to the ALC’s strategic goals and objectives to
determine if the promotional activities effectively accomplish our projections.
In
addition, we will continue consumer surveys and taste panel research as long as the
product is in the introduction and/or growth stages of the product life cycle.
The
information obtained from this research will not only be used to monitor communication
effectiveness, but it will essentially aid in the strategic planning of future promotion
activities.
CONTINGENCY PLAN
While the AgGrow Marketing Group is excited and confident that the proposed
marketing plan will work effectively, it is necessary to acknowledge the possibility of not
meeting sales or volume objectives. Therefore, a contingency plan has been developed.
This plan would involve expediting the original marketing plan to include the East and
West coast regions in the initial seven state rollout in the third year. Another alternative
is to further develop ways of increasing the share of the current consumers.
20
SUMMARY
The AgGrow Marketing Group has developed a multi-faceted and integrated
marketing plan based on the information derived in the environmental analysis of the
lamb industry. This plan includes a calendar of events for the upcoming three years and
involves both push and pull promotional activities. The push activities include print
advertisements, personal selling, and trade shows.
The pull activities include print
advertisements, point-of-sale displays, and in-store samples. This marketing plan will
increase the volume of lamb consumed and therefore increase sales and production, but
most importantly, it will “fatten the pocket books” of the members of the American Lamb
Council.
21
RESOURCES
American Lamb Council (ALC), www.lambchef.com, Accessed February 2, 2002
Through May 2, 2002
American Meat Institute (AMI), www.meatami.org, Accessed March 30, 2002
American Sheep Industry Association, Inc. (ASI), www.sheepusa.org, Accessed
February 2, 2002 through May 2, 2002
FoodService.com, www.foodservice.com, Accessed February 2, 2002 through May 2,
2002
H.E.B. Meat Department Manager, Brenham, Texas, Personal Interview, April 24, 2002
Nichols, et al, TAMRC Lamb Study Team, Research Report No. CM-1-91, December
1991.
Rogers, Paul, Personal Interview, American Lamb Council, (303) 771-3500, April 22,
2002
U.S. Department of Agriculture (USDA), Agriculture Marketing Service, Livestock and
Grain Marketing News.
U.S. Department of Agriculture (USDA), Foreign Agriculture Service. Circular Series,
“Livestock and Poultry: World Markets and Trade.” L&P 2-99. October 1999
U.S. Department of Agriculture (USDA), Sheep and Goats, National Agricultural
Statistics 2000.
U.S. Department of Commerce, Economics and Statistics Administration, “Statistical
Abstract of the U.S.” 118th edition.
22