14 Pages
3618 Words
Introduction of Distribution Strategy in the UK Market Assignment
The purpose of this assignment refers to the expansion of the product line for vegan food items by Verbena Foods, a company that specialises in promoting vegetarian foods and beverages in Johannesburg and Cape Town and Durban. The following essay is intended to address the distribution strategy of this company in the UK market alongside increasing the company's overall market value and potential promotional opportunities.
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Discussion
Question 1: Distribution strategy with competitive advantage
Distribution strategies are considered a significant step for any business organisation in order to manage the consumer market. As per the opinion of Wei and Dong (2022:986), that distribution strategy is a method that is implied to bring product goods and services to the customer or end users in order to gain repeat customers while ensuring goods and services. Business organisations use distribution strategy in terms of managing cost effective operations and reaching target audience in order to meet the organisation goals and objectives. On the other hand, competitive advantages are considered an ability of business organisations in terms of earning returns on investment consistently above the average in the specific industry (Aghazadeh et al. 2022:2039). In addition, it can also be addressed that competitive advantages provide a proper environment for the business organisations in terms of building a profitable and consistent market position. Here, by supporting the same context, Mwanza and Ingari (2019:11) have managed to address the role of various competitive advantageous factors including company resources, technological advancements and competitive strategic planning in terms of stabilising the organisational position in the market. Distribution strategies come under these strategic planning that help organisations with market globalisation and success in a fierce competitive environment (Polyakov and Aleksey, 2022:040012).
On the other hand, business corporations imply distribution strategies in terms of managing product prices and maintaining the supply chain activities in the competitive market (Mukhsin and Suryanto, 2022:818). However, owning the customers experience and the management of direct distribution associates’ organisations with their cost-effective business operations while maintaining the supply chain activities. In the present case study, the concept of veganism has become one of the mainstream trends in the food and beverage industry across the globe (Mwanza and Ingari (2019:13). The current global vegan food market is estimated to reach $31.4 billion by 2026 and the target market of this trend mostly revolves around the millennials, aged between 20 to 35 years (Globenewswire. 2023) [Refers to appendix 1]. The identified company has the almost same target market while managing their stores mostly in suburban areas. In case of the UK market, it can be observed that the vegan agenda is estimated to reach €1.1 billion by the year 2024 (Veganmarkets.co.uk, 2023) and already consists of approximately 125 high grow vegan food tech established companies such as "Beyond meat", This, Heura, Meatless Firm, Vivera, VBites, Gardein, The vegetarian butcher, Tofurky and many more (Viable.earth, 2023).
While addressing the distribution strategies of well-established vegan or vegetarian food companies, most of these companies are partnered with the group of distributors in terms of entering into new business markets. For example, "Beyond meat" has implied the same strategic planning in terms of entering into its European market from the US market, following with the Asian and Middle Eastern markets (Explainvisually.co, 2023). The company also established its partnership with big food joints and shareholders such as KFC, Starbucks, Taco bells and Subway's and McDonald's (Viable.earth, 2023). In addition, it can also be stated that the management of food supply chains by using retail companies including grocery stores and established fast-food chain restaurants is considered another significant strategic plan by the vegan companies in order to stabilise the new market and gaining competitive advantages (Pålsson and Sandberg, 2022: 50). While "Beyond meat" is considered a monopoly in order to lead the plant-based industry, the improvement of product quality and the distribution strategies help these organisations to gain competitive success in the new market (Beyondmeat, 2023). Besides, companies such as Heura also partnered with local food distributor groups in terms of managing home delivery alongside managing retail joints in order to maintain the market in Europe (Just-food, 2023). However, these ultra processed food categories are heavily dependable on taxes and shareholders' market in order to manage their own operations (Explainvisually.co, 2023). This factor might provide an opportunity for the vegan food companies in order to maintain their profit in the market with the increasing demand of vegan foods in recent times. On the other hand, "Beyond meat", uses specific places such as schools, offices or markets while having the intention of managing the target audience (Veganmarkets.co.uk, 2023). This is considered another significant context for the vegan companies to attract new customers alongside retaining old ones with proper service. Apart from this, companies such as "Beyond meat", Heura and many more are using online supply of products in terms of managing the food distribution. While "Beyond meat" associates with its fast-food shareholders joints for the online delivery (Beyondmeat, 2023), the other company has signed a distribution deal in Scandinavia in terms of managing their business in the UK market (Just-food, 2023).
Channel design
From the above discussion, it can be observed that most of the vegan companies are reliable on the local distribution partnership and retail distribution channels. For example, both "Beyond meat" and Heura implied these in order to enter into the new market (UK) alongside strengthening the competitive advantages (Viable.earth, 2023). Therefore, for the identified case study of Verbena Foods from South Africa, the company is required to focus on its channel design by using retail partnership to manage its UK market. This factor includes the establishment of partnership with the UK food giants such as “Nestle, Greggs, Boparan Holdings and Arla Foods” (Juanpera Gallel et al. 2022:13165). This could help the identified brand to use the distribution channels of the above-mentioned food companies alongside using diversified product management for the new market.
Channel coverage
While addressing channel coverage, it can be addressed that distribution activities are significant in terms of managing supply chain performance of any business organisation (Siddiqui et al. 2022:8795). This factor is effective for any vegan food company in terms of maintaining contact with interconnected groups of distributors and strengthening the overall distribution network (Floto-Stammen, 2022:453). For the identified company, this factor would help in managing the receive inventories alongside delivery of goods to the customers. This also covers the activities such as order processing, physical handling of products and shipping, display and promotion of goods for the end users (Siddiqui et al. 2022:8795).
Channel management
From the above discussion, it was also observed that vegan and vegetarian food companies partnered with local companies and retail channels in terms of managing the distribution of its products and services. Most of these include making arrangements with food service business companies, licence partners and grocery channels and direct to customers markets (Floto-Stammen, 2022:455). For example, "Beyond meat" partnered with “PepsiCo” in terms of managing distribution of its products by using retailing and online delivery (Silva, 2022). The identified company could use the same in order to maintain its new market. This would also help the company to establish direct communication with customers (Guru et al. 2023: 657) and achieve its market goals in the UK.
Question 2: Offered products by the company and adding values
Value adding to the product of any company refers to the improvement of its financial values in the competitive market before offering it to the end users or customers (Pålsson and Sandberg, 2022: 51). This factor is considered to be significant for any business organisation in terms of attracting more customers which benefits in boosting the overall revenue and profit for the company. These beneficial factors refer to the quality, popularity and accessibility and convenience and longevity of any product and service (Badraddin et al. 2022:3102). These factors are considerably effective to increase the company's value without impacting the cost factors. The vegan or vegetarian food companies promote their products and services with the aim of providing a better way to feed the future (Badraddin et al. 2022:3102). This factor includes shifting from animal-based foods towards plant based food and beverages with the intention of impacting the environment, planet and climate positively. While providing several food options in order to replace the animal products, these vegan and vegetarian companies are aiming at attracting new customers without increasing any more cost (Barreda Folch, 2022:32). As the identified company primarily provides plant based vegetarian foods instead of vegan options, the company is intending to add value to its new operational market while expanding its product options in the vegan section.
Product items
In terms of addressing product items, the identified company generally offers food items such as vegetable-based burgers and schnitzel, viennas and stir fried foods, dairy products and other food and beverage items. Even though the company consists of few vegan options, this is not considerably strong in order to add value in the new market and retain customers. Therefore, the company is intending to expand its business in the vegan field. In this case, Mukhsin and Suryanto (2022:818) have managed to address the role of product lines in order to attract the customers for any organisation in terms of improving the overall profit and revenues for the competitive market. For example, "Beyond meat" added vegan food items in its menu in order to enter into the UK market, however, it also improvised those menus on nutrients levels in order to attract the health-conscious Young's in the market (Beyondmeat, 2023). This includes heart healthy soybean products and products to combat antibiotics resistance foods and low sodium contains and unsaturated fatty acid foods (Barreda Folch, 2022:36). Improvising menus with vegan options is considered another significant step followed by several vegan companies in order to retain their markets and attract customers. Therefore, the identified company could use the same strategic plan with its vegan options in order to expand the operational market and maintain profitable business.
Product lines
The key product lines which already existed for Verbena Foods are their plant based vegetables burgers, schnitzel, viennas and stir fried foods, dairy products and other food and beverage items. However, they are aiming at including vegan food options in terms of gaining competitive advantages in the UK market. As per the statement of Martinelli and De Canio (2022:15), the usage of product line in marketing is generally implied in order to leverage brand awareness and customer loyalty. This factor also helps business organisations to penetrate markets by the use of factors such as familiarity with customers and products and brand diversification (Rini et al. 2022:306). The identified brand is already an established vegetarian food company in South Africa while targeting millennials aged between 25 to 37. The product line extension towards the vegan food and beverage options are capable of improving their market acquisition in the UK while targeting the same group of audience. The identified company could use its new vegan food and beverage items to the UK market for the same target audience by using their health awareness and concern over animal protection and environmental concerns (Han et al. 2022:591). This would associate the identified company to use its diversified product lines for the target audience to maintain the profitable business operations.
Product mix
Product mix generally associates business oriented authorities in order to maintain the analytical focus on the menu for a longer period (Martinelli and De Canio, 2022:15). From the given case study, it can be addressed that Verbena Foods has been popular in Cape Town, Johannesburg and Durban while managing its target audience of a particular age. As per the statement of International Food Information Council, that the age group between 25 to 34 are considered most health conscious (Ific, 2023) while consuming health food options (Han et al. 2022:596). It is also evident for the identified company in terms of targeting this age group in order to enter into a new market while expanding its vegan food and beverage items. Therefore, product mix in the form of keeping focus on specific vegan menu in the UK market would help the company to add value in its operation alongside managing profitable business.
In terms of addressing the legal aspects, the "Food safety Act 1990" is considered significant in the following case study as it imposes regulation on processing food for sale without ensuring their impact on human health (Acheampong & Kemp, 2022:105634). This act might impact on the Verbena Food's business operation in the UK while managing the sale of vegan items without proper labelling or ensuring the side effects of the food ingredients. Apart from these, Section 14 of the same act also associates any business organisation to manage the quality of the food products (Legislation.gov.uk, 2023a). Besides, Section 31 of the same act is capable of ensuring legal business permission and licence from the UK government for the Verbena Foods while maintaining their operation in the same market.
On the other hand, as per the previous discussion, the Verbena Foods company is required to use the local distributors and partnership with established companies in the UK in terms of managing its operation. Therefore, "Companies Act 979" is considered significant here in terms of providing the right to purchase minority shareholders (Legislation.gov.uk, 2023b) for the business organisations such as Verbena Foods to continue its operations in the new market.
Question 3: Promotion of product lines
Promotional tools are effective in terms of offering creative ways for business organisations to market the products and services (Di Vita et al. 2022). For the following company, it may use advertising tools such as “social media, email or search engine optimisation” alongside the use of digital paid online advertisements by using celebrities in terms of promoting its product line.
Advertising tools include communicational tools such as commercial advertisement, newspaper advertising, digital, Billboard radio announcement and many more in order to offer free food items to the customers (Qader et al. 2022:10). However, using social media is used by many vegan companies in order to attract its customers and manage the operational market profitably. For example, "Beyond meat" has implied social media advertisement as part of their market strategy while entering into the UK market (Aguerrevere, 2019). Besides, “PepsiCo” uses company sponsorship and celebrity endorsement while promoting its products (Di Vita et al. 2022). Similarly, in the vegan market, companies such as “beyond meat”, "Impossible meat” imply the same marketing tool in order to maintain their product promotion strategy. This could be a potential tool for the selected company for managing its promotion in the UK. Apart from that, “Chipotle” implies an email marketing tool in order to make the customers aware of new products and services (Manko, 2022:244). This can also be used by Verbena Foods for informing its target audience regarding the vegan food items and vegetarian options.
Conclusion
In terms of concluding the given essay, it can be addressed that the identified company Verbena Foods is required to manage its distribution strategic plan and competitive advantages while maintaining its supply chain activities in the UK market while expanding its vegan foods. This is followed by discussing the company’s channel design, coverage, management product mix alongside promotionals tools for the selected market to maintain profitable operations.
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