Assignment Sample on Principles of Marketing
1. Introduction
The Spice Kitchen in the UK that is run by the mother-son duo has been a prominent figure in the spice industry in the last few years. The company focuses on enhancing the experience of cooking through a perfect blend of spices. Located at West Midlands, England, the company has employee strength of 43 and an estimated turnover of 1.6 million. The company also has a range of drink options that includes tea and gin to name a few. The report aims to analyze the current condition of the spice industry along with an evaluation of the internal strengths and weaknesses of the Spice Kitchen. The marketing strategies have seen a huge change over the years and the report aims to identify whether the company has followed that path of change or not.
2. External PESTEL Analysis
The UK is considered as one of the largest importers of spices and herbs and in the last five years the sales have gone higher. The COVID-19 pandemic further promoted sales as the immunity aspect of using spices such as ginger, garlic and curcuma increased. This sudden spurt of growth was also attributed to the promotion done about it on social media. The following PESTLE Analysis gives a better insight about the industry.
Political
Most of the industry efforts in the UK are driven by political reasons. Getting a commitment from top authoritative figures gives an incentive to perform better by adopting new and better practices. The government of the UK pets in effort to improve the industrial output in the Spice industry. There exists a segregation of the political responsibilities between different government agencies that aim to reduce the risk of being overwhelmed by pressure as it manages different agencies. However it also runs the risk of increased costs and time for receiving clearances. The spice industry in the UK is not taxed and therefore VAT free. The UK also is invested with other countries through various treaties that help in the growth of the Spice industry, like the trade treaty with India. However, the investment made by the UK towards its own Spice sector is relatively low as most of it goes towards their countries GDP (Office for National Statistics, 2021).
Economical
Brexit has caused huge fluctuations in the foreign exchange rate in relation to the Spice industry. The pound has started slumping over the euro, with the Euro priced at 1.1498 against the pound (BBC, 2021).
There has also been a decrease in the purchasing power parity of the UK citizens which has led to reduction in the demands in the spice market. The country has also been facing recession due to the current pandemic and the inflation rate has slowed down to 0.7% which was an increase from 0.4 % the previous month, thereby having a negative effect on its industry (BBC, 2021).
Social
The UK has a very diverse environment with people residing there from all over the world, with over 13% people who are not white (O’Neill, 2021). This is a huge positive factor when it comes to the spice industry which sells spices from all over the world.
Figure 3: Ethnic Diversity in the UK
(Source: Inspired by O’Neill, 2021)
The country also boasts a positive lifestyle attitude towards having a healthy and fit life. In order to do those, the customers look for healthy alternatives that the industry can provide
Technological
There has been a steady increase in the usage of online services in the last few years where huge orders are placed online to be delivered at the doorstep of the consumers. The advent of digitization has had a positive effect on the industry. The need for having Intellectual Property Rights towards the product has also increased with huge data thefts which can lead to losses.
Environmental
The industry can use cost-effective measures that will help in reducing the pressure on the environment and help in preserving it. Reduction in the bottlenecks on shipping issues by focusing on the climate change factor and working accordingly.
Legal
The UK government makes use of legal practices to motivate the industry to make use of sustainable methods to navigate through the daily procedures. This can be attributed to the imposition of tax on sugar and on food and beverages to minimize its use. The use of laws on Data Protection are also being used strictly when it comes to protecting the industry from outside forces, for example the Data Protection Act of 2018 (GOV.UK, 2021).
3. SWOT Analysis
The Spice Kitchen after its beginning in 2014 has never slowed down. They have gone on to use their knowledge of making fine spice blends to create a business that today is sold over various online platforms as well as in supermarkets. The following SWOT analysis gives a better insight about the company.
Strengths
The company has made a huge name for itself which has led to increasing demands from customers all over the world. Their special gift sets that have a variety of teas, spices and gins and wrapped in a special hand-made cloth are a hit with the customers. The assurance of quality by the company, as the products are made right in their home gives the customers a sense of stability and satisfaction knowing that they are not being conned. The company being a family business also gives it a homely feeling that makes customers feel like they too belong in the family. The company also uses hand grinders which do not produce heat thereby adding to the environmental aspect.
Weakness
However, being a start-up business the company has a very small amount of capital in its grasp against bigger corporations. This makes it difficult for them to invest money on advertisements and marketing thereby limiting their growth. Not using any kind of machinery but a hand grinder that is aged at 100 years, takes up a lot of time in making a single blend of spice. The loss of time causes a decrease in the productivity of the workers as they produce a lesser amount of goods at a much longer time. It also leads to an increase in production costs as too much spice cannot be produced in a single lot.
Opportunities
The Spice Kitchen is still a growing company and therefore has a huge scope for expansion. The company can do that by finding sponsors who can help in expanding their company. Also, being essentially a family business they should first aim at increasing their production rather than opening new offices or expanding in other cities. The company should aim to diversify their product range. Currently, their speciality is only spice blends along with selling assorted gift sets of tea, gins and hot chocolates. They should make plans to include beverages like coffee and bringing tea blends from across the world and selling them just like their spices.
Threats
The company however faces threats from bigger organizations in terms of capital, production and employees. The Spice Kitchen is still a start-up and a family business that is dependent on orders from specific customers. Therefore they cater to a very small pool of customers. Also, the company can suffer heavy losses during times of financial or economical crisis as their demand may suddenly fall and they will have nothing to cushion them from the blow.
[Referred to Appendix 2]
4. The 7P’s of Marketing
In a world where the marketing strategy is constantly changing, it is difficult to find strategies that will help a company stay relevant and help in flourishing their business. Therefore there lies an urgent need for proper structural planning that will help in achieving the business objectives. This is where the 7P’s of marketing mix comes in.
The 7P’s is considered the foundation for making an effective marketing strategy that runs across seven important factors which has been elaborated below.
Product: This is referred to anything that has a sale value. The main aim of any product is to satisfy the demand of the customers as well as the market. The product being shown to the customer should be the exact same as what is received by the customer, so as to exceed their expectations.
Place: This is where the product is going to be sold. The place can either be domestic that is within the area of production of the company or it can be across the national boundaries. In any situation, the place should be where the product is within easy reach of the customers.
Price: One of the most important components, the price should be a reflection of the true value of the product and should be in correlation with the budget of the consumer. Too high of a price might make the company lose customers, and too low of a price might lead to lower quality. Hence, a proper pricing strategy is required.
Promotion: This refers to the advertisement of the product through elements of print, digitization and word of mouth. The proper promotion will help the product reach a wider audience thereby leading to the company’s success.
Physical Evidence: This refers to assuring the customers regarding the legitimacy of the product. This can be done by having a proper logo and a name that is familiar. It also stresses on the importance of building up a brand name.
People: This consists of the employees who play a crucial role in building up a product. This can be achieved by selecting the right kind of employees who are skilled at the product which the company endorses.
Processes: One of the most important components of marketing mix, deals with the actions that are taken while delivering the product to the customers. It includes the sales of the product, the payment windows it has available and the services offered to the customers.
In the Spice Kitchen, the product is the main area of concentration. Making the proper blend of species is a difficult task and that is where the company qualities lie. The company promises to give a product that not only has a physical presence but is also a necessity for everyday usage. The company also makes use of a penetration pricing policy by offering a low price initially and then slowly increasing it. The company is situated at the home of the owners and products are sold at both the national and international markets. The company mainly follows an online promotional strategy as it has a huge online presence. Also, the word of mouth approach has worked effectively in their case. The company has a recognizable logo and a distinct packaging procedure. It has also increased the value of their brand name over time. The company has a very small employee base that is scouted locally. Lastly, the company has a distinct payment method that is both online and offline making it easier for their consumers.
5. STP Framework Analysis
The STP is a combination of the words Segmentation, Targeting and Positioning, which is a three way model that helps in examining the products and services and how they play a role in benefiting the customers, with respect to the different segments mentioned.
Segmentation: This is the first stage of the STP model and it aims to create various certain segments for the customers that will be based on some specific criteria’s or traits. The segmentation can be divided into geographic, demographic, behavioural and psychographic. The main segmented people are 25 to 55 years old people, specially housewives, from low to middle income level group. However, the segmented people are urbanised and suburbanised people. Each of this segmentation deals with different sets of traits like geographic segmentation that deals with geographical boundaries, depicting which set of audience the company is targeting. On the other hand, the behavioral segment deals with the way a consumer might react to the product.
Targeting: This is based on the segmentation portion. After the segments are decided a specific group is selected where the company will make an effort and launch its product. All the marketing strategies and promotions will be based on this target market selected. Considerations should be given to the size of the segment and whether it has any scope for future growth. The profitability option will also have to be considered along with whether reaching this target market will be easier or not.
Positioning: The final step in this process is the strategy which helps a company defines their products so that it is different from what is offered by its competitors. This is where companies make an effort to stand out and be unique so that the consumers get attracted towards their products. The factors that set a company apart are dependent on the symbolic positioning that deals with the image of the product. The functional positioning deals with whether the product can provide customers with their required benefits. Lastly, experimental positioning helps focus and find an emotional connection with the product and its customers (Galvin-King et al. 2018).
The Spice Kitchen has made good use of the STP model when it came to their products. The company has used the segmentation method to carve out a particular region for their sale of products. The company went about selling their products both nationally and internationally thereby creating a wider range of customers. They have not chosen a specific demographic making a product that can be suitable for all age groups. Using spices in the kitchen is mandatory hence their segmentation was perfectly created. The company however didn’t select a single target market rather created a range of spices that can be used by all. Their marketing and promotions have boosted their targeting concept as products were being sold and used by people from all age groups.
Lastly, they have used the emotional connection of using spices and related it with childhood memories where mothers used it for cooking to attract customers to their products. This positioning has gained them a lot of customers who have become loyal to their products. Their unique blend of spices from different cultures and using hand grinding process has made them different from their competitors.
6. Recommendations
The Spice Kitchen can be called a successful start-up venture which can be attributed to their various accolades and the success they have received over the years. However, there still lies a lot of opportunity for the company to expand and further grow their business. The following recommendations below can help them achieve that feat.
- Create a diversified portfolio of their products by making beverages such as tea and coffee a part of their permanent sales rather than only offering them as gift sets
- Get sponsors that will help them in investing more on their marketing
- Invest in a few eco-friendly machinery that will not only boost production but also help save the environment
7. Conclusion
Thus, it can be concluded that the Spice Kitchen still has a long way to go and grow their business. The Spice industry has many bottlenecks present which might serve as a deterrent to their growth. However, being an individual start-up that still has a huge scope for the expansion; the company can reduce these issues through proper marketing strategies. The company still is in need of capital that will help them expand their business and invest more in marketing. Spice Kitchen has a very visible online presence, however to reach a wide audience the company needs to have stronger marketing strategies.
Reference List
Journals
Galvin-King, P., Haughey, S.A. and Elliott, C.T., 2018. Herb and spice fraud; the drivers, challenges and detection. Food Control, 88, pp.85-97.
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Mohammadi, H., Saghaian, S. and Alizadeh, P., 2018. Prioritization of Expanded Marketing Mix in Different Stages of the Product Life Cycle: The Case of Food Industry.
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Websites
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BBC., (2021), What is the UK’s inflation rate? Available at: https://www.bbc.com/news/business-12196322#:~:text=Inflation%20affects%20everything%20from%20mortgages,from%200.4%25%20the%20month%20before. [Accessed on 3rd May, 2021]
GOV.UK., (2021), Data protection, Available at: https://www.gov.uk/data-protection#:~:text=The%20Data%20Protection%20Act%202018,organisations%2C%20businesses%20or%20the%20government.&text=Everyone%20responsible%20for%20using%20personal,used%20fairly%2C%20lawfully%20and%20transparently [Accessed on 3rd May, 2021]
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