Business Plan For The Mead Johnson Nutritional Company Marketing Essay

Business Plan For The Mead Johnson Nutritional Company Marketing Essay An action research was sponsored by Mead Johnson in collaboration with NGO to access its efficacy in terms of increasing weight of infants of weaning age in urban slums of Dhaka city capital of Bangladesh. The findings of the study states that Infants weaned on ENFAMIL had more weight and length gained compared to control group Mothers attitude and infants acceptance of ENFAMIL was satisfactory. Storage pests (insects) were found on in one batch of weaning packets. Now Mead Johnson wants to access the acceptance of ENFAMIL in terms of its price, packaging, taste/quality among middle and lower middle class families. In the context of the current maturity of the market and the strategic options available, it is first necessary to assess whether the company is marketing the right product form the point of view of the consumers. Hence evaluation of the product is necessary. The specific objectives of the research are to assess consumer evaluation in the broad areas of: Packaging Product Price The end objective is to identify areas that need to be strengthened and also the existing strength areas that can be exploited. Start up summary Start-up costs of Mead Johnson consist of legal costs, research, Manpower, marketing/promotion product is to fund start-up expenses with Companys reserved fund, owner investments and a long-term business loan. Product Testing- ENFAMIL Research Budget Item Unit Cost Total (Taka) Sample product 818 150.00 122,700.00 Consultancy fee 2 8,500.00 17,000.00 Team leader and key members 8 8,000.00 64,000.00 Field Work Supervisor cum Data Quality Controllers 16 5,000.00 80,000.00 Data Collectors 40 3,000.00 120,000.00 Study Coordinator 2 7,000.00 14,000.00 Controller of Field Operation 4 6,000.00 24,000.00 Focus group discussion 64 300.00 19,200.00 In-depth interview 20 500.00 10,000.00 Data Analyst 2 9,000.00 18,000.00 Daily allowance 40 120.00 4,800.00 Particulars 2,000.00 2,000.00 Printing of Data Collection Instrument 5,000.00 5,000.00 Stationary 4,550.00 4,550.00 Photocopying and binding of reports 2,750.00 2,750.00 Pre-testing of Data Collection instrument 3,000.00 3,000.00 Total expenditure 511,000.00 Source of Capital : The source of capital is as follows: Funded by company 45% 270000.00 Owners investment- 20% 120000.00 Loan from Bank- 35% 210000.00 Total Capital: 600000.00 RESOURCES REQUIREMENTS FOR OPERATION: Physical resources: The physical resources of this project will be include all essentials office equipments such as, computers, phone and fax, internet connection for data transfer, data collecting equipment. The costs of the physical resources Taka 140,000.00 (  £1320.00) PHYSICAL RESOURCES UNIT TOTAL COSTS Sample product 818 122700.00 Printing of Data Collection Instrument 2 5000.00 Particular 10 2000.00 Pre-testing of Data Collection instrument 5 3000.00 Stationary 7300.00 Total 140,000.00   Human Resources: POSITIONS NUMBER OF EMPLOYEES Administrative Assistant 1 Team Leader and key members 8 Supervisors cum Quality controllers 16 Data collector 40 Study Coordinator 2 Controller of Field Operation 4 TOTAL 71 Initially there will be a Team Leader who is responsible for the operational work. One will be an administrative assistant who will deal with all the paper work and who will take care of the administration duties. The remaining people will be divided into few groups. After taking all the necessary information members of the each group will forward these information to team leader to processing the activities. Financial Resources: The funding and investments for this project will be received from the companys own fund, owners personal investment and loan from the Banks. Research budget with sample products initial expenses is taka 511,000.00 (  £4820.00) RESEARCH DESIGN The research design is essentially a concept cum usage test. The details are discussed in turn. New product development: The development of original products, product improvements, product modifications, and new brands through the firms own RD efforts. The major criteria of new development are written below with a short description: Idea generation:The systematic search for new product ideas- Idea screening:Screening new product ideas in order to spot good ideas and drop poor ones as soon as possible. Product concept:A detailed version of the new product idea started in meaningful consumer terms. Concept testing:Testing new product concepts with group of target consumers to find out if the concepts have strong consumer appeal. Product development is a major part on marketing. The RD of any company does the mainly product development. In Bangladesh Mead Johnson havent have any RD departments. Mother company of Mead Johnson well known non-government social organization have innovated the product according to the consumer need, and analyzing the segment, culture and the other part of marketing. Study Design We have conducted a house-to-house random survey using structured questionnaires through personal interview. In our case Monadic test design as followed i.e. each respondent would tried one test product only. Prior to the main quantitative survey qualitative exploration was done through Focus Group Discussions (FGD). The opinions were collected in following sequence in the main survey: Selection of Respondents Discussion on need need gaps on weaning food Introduction to concept reactions thereof Product placement Reactions to product Reaction to price METHODOLOGY The agency proposed a house-to-house random survey to be conducted using a structured questionnaire through personal interview. In this case Monadic test design would be followed i.e. each respondent would try one test product only. Hence, we propose to place the product to the respondents for a period of 15 days after which their opinion on the product will be gathered. During this period they will use the product as suggested. Prior to doing the quantitative product test 8 Focus Group Discussion (FGD) will be conducted to have an in-depth understanding of the choice factors and to generate consumer vocabulary for the same.  ­Ã‚ ­ Measuring tools to used For rating on choice factors an 11-point scale (0-10) was used. Consumers will give mark out of ten. This scale has equality of interval properly and is reliable. This is also closest to reality because consumers are familiar with this scale and can easily rate on any factor. Sampling Universe Considering the geographic spread the Company has proposed that the following towns would be covered in the study. Dhaka( Capital city ) Chittagong Rangpur Syhlett In sum, the sampling universe for this study is all households having infants aged 4 to 10 months belonging to socio-economic classes B and C (appendix) in the selected towns. Sample Size Qualitative (FGD) Quantitative Metro: Dhaka 2 156 Large: Chittagong 2 85 Medium:Rajshahi 2 84 Small: Syhlett 2 84 Total 8 409 The allocation of sample size across the selected towns was done on the basis of sampling error ranges and also of heterogeneity of households within the town classes. For larger towns higher numbers of samples were covered to capture its diversity/ heterogeneity. In all there were a total of 8 FGDs and subsequently 409 respondents for quantitative study. Standard error ranges for different percentage estimates at the 95 % level of confidence based on simple random sample size. Sampling Technique We followed a multi stage, stratified sampling method to ensure representative samples. Within a town, households were selected by the Random Route technique (Cluster sampling). In each cluster/ area (smallest urban unit) 5 households were covered. Thus a total of 17-31 clusters/ areas were covered in each town, depending on sampling size. Target Group As mentioned, ENFAMIL targets the middle class and lower middle class consumers. Middle and lower middle class consumers are more concentrated in the urban towns than in the semi-urban towns or rural villages and hence urban target consumers are more accessible to the marketers for a new brand. Therefore, this study would be limited to urban towns only. Hence, primary target segment for ENFAMIL is all the households of the urban towns having at least one child between 5 to 10 months age and belonging to the middle and lower middle class. Time Plan for the Study Weeks Activities 1 2 3 4 5 6 Sample Survey Preparatory Work for Sample Survey Instrumental Development Field Briefing, Training Field Work For Sampling Survey Data Entry Analysis for Sample Survey Reporting Focus Group Discussion Desk Research for the program Training Module Preparatory Work Collection of Reports, documents and historical Data Reporting Draft Report Final Report Head of the household The analysis of the respondents is given center-wise and on the basis of socio-economic classification. Standard market research classification of income is provided below. Center SEC Age of the Child (In Month) Dhaka Chittagong Rajshahi Syhlett SEC B SEC C 5-8 Months 8+ Month Total Total 156 85 84 84 188 221 218 191 409 1. Less than Tk 3000 15% 9% 13% 4% 4% 17% 12% 10% 11% 2. Tk 3001-4000 21% 20% 35% 14% 12% 30% 23% 21% 22% 3. Tk 4001-5000 18% 26% 31% 26% 20% 27% 22% 26% 24% 4. Tk 5001-6000 11% 14% 6% 19% 13% 11% 10% 15% 12% 5. Tk 6001-7000 10% 8% 6% 13% 14% 5% 9% 10% 10% 6. Tk 7001-8000 6% 5% 6% 4% 9% 2% 5% 6% 5% 7. Above Tk 8000 19% 18% 4% 20% 27% 6% 20% 11% 16% Mean Score (In Taka) 7199 6682.9 48649.4 6567.9 8422.5 4834.4 6968.5 5930.4 6483.7 Table : Monthly disposable income In majority of the market research projects we consider disposable monthly family income (DMFI). This is the amount of total earning of the family left after paying house rent, if any. This is a very good indicator of purchasing power. Needless to mention, average DMFI of the residents of Dhaka is more. And, quite obviously respondents belonging to SEC B had higher DMFI than their SEC C counterparts. However in all the centers, barring Dhaka, majority of respondents live in own houses especially at Chittagong and Syhlett (around 76-87%). In Dhaka 77% of the respondents live in rented houses paying an average house rent of Taka 574 per month. Family Size Number of Children The respondents had standard family size in most cases ranging from 4.7 to 6.2. In other words the average family size was 5.3. The following table will give an idea about the number of children the respondents have. Table: Family Size Center SEC Age of the Child (In Month) Dhaka Chittagong Rajshahi Syhlett SEC B SEC C 5-8 Months 8+ Month Total Total 156 85 84 84 188 221 218 191 409 Mean Score 4.7 5.9 5 6.2 5.6 5.1 5.4 5.3 5.3 List of Children Boy Girl List of Children Boy Girl 05 Months 16% 10% 08 Years 12% 12% 06 Months 13% 17% 09 Years 8% 7% 07 Months 12% 13% 10 Years 6% 8% 08 Months 10% 15% 11 Years 3% 6 09 Months 18% 17% 12 Years 6% 4% 10 Months 30% 28% 13 Years 2% 1% 01 Year *% *% 14 Years 1% 3% 02 Years 4% 3% 15 Years 2% 1% 03 Years 6% 9% 16 Years 1% -% 04 Years 11% 9% 17 Years -% *% 05 Years 12% 16% 18 Years *% -% 06 Years 11% 13% 07 Years 4% 6% Total 207 202 On an average the respondents have two children. Among the 409 respondents interviewed 298 had children below 8 months and 191 had children above 8 months on the basis of which they were selected. The Respondent 99% of the respondents were housewives. The respondents were primarily young and 65% of them belong to the age group of 18 to 25 years whereas rests are between 26 to 35 years. able: Occupation of the Respondent Center SEC Age of the Child (In Month) Dhaka Chittagong Rajshahi Syhlett SEC B SEC C 5-8 Months 8+ Month Total Total 156 85 84 84 188 221 218 191 409 1. Housewife 99% 100% 98% 100% 98% 100% 99% 99% 99% 2. Student -% 1% -% 2% 2% -% -% 2% 1% 3. Part time job -% 1% 2% 1% 2% *% 1% 1% 1% 4. Full time job 1% 2% 2% 2% 2% 1% 2% 1% 2% 5. Others 1% 1% 1% 1% 2% *% *% 2% 1% INFORMATION AREA CONCEPT PACKAGING PRODUCT status motive needs. overall measures -Likeability Uniqueness -Nutrition -Modernity -Overall rating -Attractiveness Attractiveness -Physical appearance (looks, granularity, etc.) -Dynamism -Intention to try -Uniqueness Pack size -Preparation convenience (easy to mix with water, does not form lump, etc.) -Friendliness -Intention to use regularly -Credibility Packshape/Graphics/Design/ color -Taste, aroma, etc -Age Information Literature/information -Storage convenience -Trustworthiness Overall acceptability Ability to preserve content -Longevity, not forming lump -Premium Usefulness of information given on the pack Insect growth, etc. -Sophisticated Credibility of information Can be mixed with milk, soup, etc. -Natural/fresh Usage Experience Majority of the respondents (61%) had consumed almost both the packets given for usage. Some 27% had consumed at least one packet in the 15 days, the time given to them to try the product. During this time phase, on average the product was given two times daily to the child mixed with only water (about average of 253ml) in most cases (69%). About 26% of the mothers had also mixed sugar or other items with ENFAMIL. Hot water was preferred most by the respondents (79%), whereas 14% used tepid water. DIAGNOSTIC OF PERFORMANCE: It is clear that the respondents had adequate product experience. Their views on the product therefore are meaningful. We first examine the overall performance indicators of the product. For this we shall consider three indicators- Intention to regular use, Intention to try, and overall rating. Of these three, intention to regular use is the strongest indicator as it expresses the probability of buying and using the product. Intention to try comes next. And overall rating is the third most important indicator as it signifies how much the product is liked Spontaneous Reaction On exposure to the concept the respondents were asked to express their feeling about good or bad. The major reactions are shown below: Center SEC % Reactions Dhaka Chittagong Rajshahi Syhlett SEC B SEC C TOTAL Childs health will remain good if fed along with breast milk 41 45 42 7 36 34 35 Liked the literature which states this is necessary along with breast milk 25 12 13 8 11 21 16 Child will get nutrition 29 6 6 7 13 17 15 Has Vitamin 17 12 15 8 14 14 14 Literature gives Impression that it will be a quality product 3 22 4 17 12 9 10 Balanced diet 13 7 8 4 9 10 9 Helps in rapid 10 16 6 4 9 10 9 Base: 156 85 84 84 188 221 409 At a top of mind level, childs health has registered most. It is understood that if fed along side continued breast-feeding ENFAMIL would ensure good health. It nutrition, being balanced diet, and helping in babys growth have also registered moderately. Likes and dislikes of the concept The respondents were also asked to describe what they liked and disliked of the concept. Only about 2% had any dislike while all had one or more likes of the concept. The major likings are picture of the baby (70%), literature on childs food requirement (26%), the packet (21%). MARKETING MIX Attempting to target relatively high-priced offerings to rural families on the margins of the cash economy, or to the poorest of the urban poor, is simply bad marketing. But Mead Johnson developed this new brand of ENFAMIL so that middle class families can purchase this product at a lower price but meet nutritional demands for infants. The next section will emphasize the 4Ps of ENFAMIL: Product: Nature of product: ENFAMIL milk-based, lactose-free, iron fortified infant formula for first 12 months. Product Features: The only lactose-free, milk-based formula, which includes LIPIL, a unique blend of DHA and ARA à ¢Ã¢â€š ¬Ã‚ ¢ Lactose-free and sucrose-free No sucrose (table sugar) Nutrition value: NUTRIENTS (Normal Dilution) Per 100 Calories (5 fl oz)   Protein, g 2.1   Fat, g 5.3   Carbohydrate, g 10.9   Water, g 134   Linoleic acid, mg 860 Vitamins   Ã‚  Vitamin A, IU 300   Ã‚  Vitamin D, IU 60   Ã‚  Vitamin E, IU 2   Ã‚  Vitamin K,  µg 8   Ã‚  Thiamin (Vitamin B1),  µg 80   Ã‚  Riboflavin (Vitamin B2),  µg 140   Ã‚  Vitamin B6,  µg 60   Ã‚  Vitamin B12,  µg 0.3   Ã‚  Niacin,  µg 1000   Ã‚  Folic acid (Folacin),  µg 16   Ã‚  Pantothenic acid,  µg 500   Ã‚  Biotin,  µg 3   Ã‚  Vitamin C (Ascorbic acid), mg 12   Ã‚  Choline, mg 12   Ã‚  Inositol, mg 6   Minerals   Ã‚  Calcium, mg 82   Ã‚  Phosphorus, mg 55   Ã‚  Magnesium, mg 8   Ã‚  Iron, mg 1.8   Ã‚  Zinc, mg 1   Ã‚  Manganese,  µg 15   Ã‚  Copper,  µg 75   Ã‚  Iodine,  µg 15   Ã‚  Selenium,  µg 2.8   Ã‚  Sodium, mg 30   Ã‚  Potassium, mg 110   Ã‚  Chloride, mg 67   Core value the product is giving to its customer: Enfamil the first infant formula in all over the globe, which contains the nutrients DHA (docosahexaenoic acid) and ARA (arachidonic acid). Also naturally found in breast milk, DHA and ARA have been clinically shown to support infant brain and eye development. Performance of the Pack Likes and dislikes, attribute rating, and overall rating of the pack are examined below to assess the packs acceptability. Overall rating: The rating on the pack on overall was collected on a 7.0-point scale. The ratings are as below. %all Very Poor to moderate 1 Good 2 Very Good 36 Excellent 1 Mean Score (1-7) 6.6 The pack is excellent on overall consideration. Hence it is quite obvious that it would have few dislikes. Price: Prior to exposure to the stipulated price, an effort was made to identify the price most suitable for the brand, via Psychological Monetary Demand (PMD) technique. The respondents were offered a range of price from Tk. 100 to 200 with and increment of Tk. 5, and asked above which price, and at which price or below they would not purchase the brand. The analysis provides the proportion of the target group willing to purchase ENFAMIL at each price level and corresponding monetary demand. For a marketer profit maximization is likely to occur at the highest level of monetary demand. The analysis depicts that maximum monetary gain can be ensured if the price of ENFAMIL is at Tk. 75. Above this price proportion of buyers and monetary value of sales fall drastically. On the other hand, if the objective is to maximize number of users, one can reduce the price down to the level of Tk. 60. Beyond this, interested buyers will be fewer. Price Market price line ENFAMIL @ TK 75 TIME Figure: market penetration strategy Demand pattern According to the market dynamics, the demand for consumable products depends on the price factor along with other related factors i.e. test and preferences, nature of the product, and economic condition of the target customers. After analyzing the market pattern and relationship of price to quantity through sample survey questionnaire the following demand pattern was observed. The analysis provides the proportion of the target group willing to purchase ENFAMIL at each price level and corresponding monetary demand. For a marketer profit maximization is likely to occur at the highest level of monetary demand. Proportion of consumers Monetary Demand Price (%)willing to buy (Assuming pop=100) Tk.50 67 3337 Tk.55 76 4135 Tk.60 83 4958 Tk.65 83 5419 Tk.70 82 5716 Tk.75 82 6125 Tk.80 69 5535 Tk.85 60 5071 Tk.90 46 4137 Tk.95 42 4018 Tk.100 17 1711 Tk.105 15 1540 Tk.110 10 1103 Tk.115 9 1012 Tk.120 0 0 The analysis depicts that maximum monetary gain can be ensured if the price of ENFAMIL is at Taka 75.00 Above this price proportion of buyers and monetary value of sales fall drastically. On the other hand, if the objective is to maximize number of users, one can reduce the price down to the level of Taka. 60.00 Beyond this, interested buyers will be fewer. Thus it can be concluded that the demand for baby food ENFAMIL is elastic. Place : The nature of distribution of the product and the market accessibility also plays a major role after generating awareness of the product among the target customers. If the customers dont have the product at the right place at the right moment than there exists the possibility that those customers will switch to another brand and have bitter experience while purchasing the product . To reverse the effect of the above situation the company should use both direct marketing and indirect marketing channels to promote ENFAMIL. For distributing ENFAMIL the company should use following methods Manufacturer Wholesaler Retailers Customers Manufacturer Customers Manufacturer Pharmacy Customers 1) 2) 3) Figure: Distribution channels Promotion The range of promotional activities available to todays manufacturer or companies can be overwhelming. The promotional action plan for ENFAMIL is listed below. Advertising Newspaper, Billboard, Electronic media: Radio TV Public relation- Social activities, Sponsorship, Awareness campaign about the benefits of baby food product Direct marketing- Promoting via doctors through medical representatives ENFAMIL is very new in the market it requires specific events such as the launch of an advertising campaign or a press conference to announce the launching of the new product. In other cases promotional activities necessarily be required for the NGO to carry out in different local government and private hospitals, clinics, pharmacies and aware rural, urban middle to lower middle class families about the product. In other cases promotional activities involve putting various elements into place for the long term, such as training salespeople for directing marketing to promote this product via doctors through medical representatives. In all cases, it is important to integrate companys promotion efforts; doing so can decrease costs and increase communication effectiveness. SALES FORCAST The sales forecast has been done in three levels. First level depicts optimistic forecast if all other factors affecting sales are favorable. The second level of sales forecast is based on normal ongoing condition of the economy and the next level of forecast is done based on the pessimistic approach. YEARLY ESTIMATED DEMAND Price remains fixed as the product is price elastics Quantity demanded (units in hundreds) Economic condition Portion of Expected customer (assumption) Sales forecast (Units in hundreds ) TK 75.00 6125 Optimistic 90% 5512 TK 75.00 6125 Normal 75% 4593 TK 75.00