Essay:

Essay details:

  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

Text preview of this essay:

This page is a preview - download the full version of this essay above.

Executive Summary

Greggs is a well-established brand in the UK, with outlets all over the country. Considering their existing strategy which dictates to be a healthier and a youth centric brand, this report considers newer avenues which may benefit the business, the authors of this report have suggested a product that achieves both objectives, which will be an addition to the existing product range that Greggs offers. The product that is both healthy, full of essential nutrition and focused towards the youth. After primary and secondary research, which both highlight that today's youth value health and convenience above all other factors. In addition to a health and nutrition focus, the authors of the report have suggested a new channel of distribution; expanding Greggs' reach to its customers exponentially, enabling the organization to position itself towards setting the standard of future FotG service quality. 

Contents

1. Introduction 1

2. Environmental Scanning 1

2.1. Market Dynamics 1

     2.1.1 Young Adults Eating Habits 5

    2.2. Competitors in the Market 9

3.  Alternative Future 10

4. Segmentation, Targets and Position in the Market 11

    4.1 Greggs Segmentation and Consumer Typologies 12

    4.2 Targeting 14

    4.3 Positioning 14

5. Marketing strategy 16

  5.1. Business Model 16

  5.2. Target Markets 17

  5.3. Differentiation & Competitive Advantage 17

6. Recommendations 18

6.1. Product Portfolio 18

    6.1.1. Product 18

    6.1.2. Price 19

    6.1.3. Process 19

   6.2. Shopper Experience 20

    6.2.1. Place 20

    6.2.2. Physical evidence 21

    6.2.3. People    21

   6.3. Brand communication    22

    6.3.1. Promotion    22

7. Conclusions & Limitations    23

8. Bibliography     24

9. Appendices      I   

 1. Introduction

Greggs is a leading bakery shop that has a wide presence in the UK with over 1700 shops in the country, employing over 20,000 people; catering to more than 6 million. It is a vital part of the FOTG market, offering a large variety of products, ranging from traditional baked foods to contemporary sandwiches. Greggs is well established brand, being part of the British food industry for more than 75 years.

Despite this, due to the ever-changing nature of the market, it is imperative for Greggs to come up with relevant marketing and business strategies to improve its position in the industry.

This report will analyse the contemporary business environment, market dynamics, and consumer habits to recommend new marketing strategy for Greggs.

2. Environmental Scanning

2.1 Market Dynamics:

The following table [Fig.1] shows a PEST analysis of UK; the business environment that GREGGS operates in. This analysis takes into consideration the post Brexit conditions as well as policy changes that occurred in 2016.

 [Fig.1]

The core strengths of Greggs, as illustrated in Fig.2 are its strong brand, due to it being established as the go to brand for eating traditional baked foods, coupled with its extensive coverage - both widespread across the nation and concentrated within city-centres. Additionally, its bonafide position as a bakery means that it has strong core products integral to its brand image. Conversely these strong core products can also be perceived by younger demographics as unexciting, as Greggs appears to undergo little in the way of new product development in terms of adding depth to their existing product lines; its core products are traditional, and therefore, unchanging; choosing instead to prioritise developing their product category width by adding new product lines aimed at expanding the reach of the Greggs brand. As Greggs is operating in an ever-changing industry it pertains that there are numerous opportunities to capitalize on, namely the increased spending of young adults on the FOTG market as well as this demographic being more health conscious.

Therefore, Greggs should capitalize on this through adding healthier options to existing product lines and focusing on young adults in their communications. However, the industry and UK market also poses threats, such as economic instability resulting in young people having less economic independence. Furthermore, as the industry has low barriers to entry, new competitors are constantly entering the market; with a substantially differentiated product or an exciting innovation they have potential to rapidly grow market share at the expense of the more traditional brands such as Greggs.

 [Fig.2]

Porter's five forces model [Fig.3]:

2.1.1. Young Adults eating habits

This segment will show the main tendencies in the FotG market concerning the “Young Adults” (16-24 years old), which we identified as the most important target to focus on.

Firstly, consideration of the venues visited for FotG, it is evident that supermarkets such as Tesco and Sainsbury's are still the favourite places chosen by young adults (Figure 4).

Figure 4: Venues visited for lunch out of home, Source: Mintel, Attitudes Towards Lunchtime Foods - UK - October 2015

This consumers' group tends to spend more money on ready-to-eat meals and snacks than the other categories: as we can see from Figure 5, the most consistent monthly expense for students, apart from paying rent and bills, is food.

Figure 5: Monthly term time expenditure (mean spend). Source: Mintel, Student Lifestyles - UK - June 2014

Even if students claim that they consider their diet generally healthy (Table 1), the government's main goal in the nutrition area is to reverse the growth of obesity by 2020, since 67% men and 57% women in the UK are overweight or obese (Boseley, 2014). Efforts have been made to underline the importance of eating healthy and practicing physical activity (Mintel, Student Lifestyles - UK, June 2014).

Table 1: Cooking and eating habit, by gender and age. Source: Mintel, Student Lifestyles - UK, June 2014.

Further studies show even though 70% of the demographic are aware of the fact that eating fewer snacks contributes towards a healthier lifestyle, 80% find snacking is enjoyable. Further inclination towards intent for healthy lifestyles appears to be growing; 70% wishes manufacturers to lessen the amount of sugar used; 60% that nutritional information on packaging aid in product choice; and 54% would be interested in trying healthier versions of existing snacks (Figure 6). Increasing desire for healthier options is further evidenced within figure 7.

Figure 6: Attitudes towards snacking. Source: Mintel, Consumer Snacking - UK, March 2016

   Figure 7: Attitudes towards healthy eating initiatives.  Source: Mintel, Attitudes towards Healthy Eating - UK, February 2016

                     

Figure 8 indicates primary factors appreciated by customers seeking healthy foods: low fat, sugar, and salt

Figure 8: Factors deemed important when looking for healthy food. Source:  Mintel, Attitudes towards Healthy Eating - UK, February 2016

These attributes sought by consumers must be considered against price however; people are reluctant to pay more for these traits (Figure 9).

Figure 9, Attributes worth paying more for when buying snacks. Source: Mintel, Consumer Snacking - UK, March 2016

2.2 Competitors in the market

Fig.10 shows the GREGGS\' competition within the FotG market. Based on the above research, 2 factors important to consumer's desires and purchase intention were identified as a means of arranging them to their target segments: healthiness and price. Most of the competition that GREGGS has lays in the area between unhealthy and economic options, like McDonald's, but it also competes with superstore chains like Tesco and Sainsbury's. In terms of coffee shops, which are Greggs' competitors as well, Starbucks and Costa are considered being more premium. On the other hand, Subway and Waitrose are competing in an entirely different area of the market.

Fig.10: Positioning Map of FotG Market

3. Alternative Future

Is not easy to define a clear and precise perspective for the future of the food-on-the-go market, because of the high number of variables to which the sector is subject. The main reasons that make the vision still uncertain are factors such as the development of new retails, e-commerce, political changes, trends and new consumers' attitudes, elements that can always vary in an unpredictable way.

However, we identified three possible development directions that the market could experience in the next few years.

1. Further development: the British High Street market is mainly funded by the government itself, so political changes could be fundamental for the future of the sector. This year the government has provided £6.7 billion to support the growth of the market and it could supply even more aid in the following years (Percy and Department for Communities and Local Government, 2016). Another important element lies in the growth of the population and the consequential advantage for the market in terms of the growth in the number possible customers (The World Bank, 2016).

2. Decline: the process of decentralization could be the main reason, on the other hand, for a negative development of the sector. The fact that the city centres are losing their importance, together with a growth of out of town departments, could lead to a stop in the development of the high street market (Portas 2011). In addition, the boom of e-commerce can be another decisive factor (Mintel, Online Retailing - UK, July 2016).

3. Transformation: according to other sources, instead, there could be a rise in the sector, brought by changes in its structure. The main factors are the growth of convenience stores, that could become the main form of high street shops (Mintel, Convenience Stores - UK, April 2016), and the change in the lifestyle of the consumer, that will favour the click-and-collect service (Mintel, Click-and-Collect - UK - September 2014)

To summarize [Fig.11]:

Fig.11: UK Highsteet Alternate Futures

4. Segmentation, targets and position in the market

Consumers attitude towards purchase is subject to different variables, such as cultural (individual culture, subculture and social class), social (reference groups and roles), personal (age, occupation, economic status and lifestyle) and psychological factors (motivation, beliefs and values). This allows to identify different categories of consumers that should be carefully considered by every company in the market. Thanks to the creation of different consumer typologies, every firm can better analyse the behaviour, the background, the interest and the attitude of its customers, being able to decide which category needs more attention and which should be monitored (Kotler and Armstrong, 2015).

4.1 Greggs segmentation and consumers' typologies

The market segmentation model [Fig.12] summarizes the variables mentioned above as follows:

Fig.12: Market Segmentation Bases

In particular, the list of Greggs consumers' typologies [Fig.13] has been created following the above mentioned characteristics: gender, age, income, lifestyle and needs or preferences.

The result is that six different customers' categories can be created from the market segmentation model (Graham and Knowles, 2015):

TYPOLOGY DEMOGRAPHIC SOCIO-

ECONOMIC PSYCHO-GRAPHIC GREGGS INTENT

Young Free & Social Male and female 16-24; male 25-34 ABC1C2; BC1C2 Interested in trends, good price-quality relation, convenience, health/diet food Protect and grow

Work/Life Balancers Male 25-54, 35-54, 35-44; Female 35-54 A, BC1, C2; BC1 Interested in quality and balanced food, open to new flavours Protect and retain

Weight and Wellness Female 25-44, 25-34 A, BC1 Interested in health, high quality food, more nutritional information Protect and grow

Family Valuers Male 45-54; Female 16-54, 45-54 C2; C2, A Interested in price, convenience, food options for the entire family Drive relevance and value

Mature Quality Seekers Male and Female 55+ ABC1C2 Interested in good quality-price relation, traditional flavours, free-from options Protect and retain

Make Do & Spend Male and Female 16+ DE Interested in low price, trends, mainstream flavours, not open to risk Protect and retain

Fig.13: Greggs Consumer Typologies

The table indicates the main categories that Greggs wants to focus on are Young, Free & Social and Weight & Wellness. These typologies also share psychographic features; in fact, they are both interested in good quality food and healthier options, always considering relevant the relation with the price.

4.2. Targeting

From the mentioned typologies (Graham and Knowles, 2015), we can deduce Greggs' targeting strategy, which shows us that even though the necessity is to “protect” every one of their target markets, it still remain fundamental to expand and capture more of the two typologies, Young, Free & Social and Weight & Wellness. The consumers that have been identified as part of these categories, in fact, spend significantly more in food-on-the-go than the other customers (respectively £477 pa and £410 pa, Graham and Knowles 2015), but only the 29% and 21% of this expenditure is referred to Greggs, whilst the average expenditure of the other typologies is £293 pa, 36% of which goes to Greggs. It is clear therefore, that the two typologies above are the most likely to spend a considerable amount of money on food, and these makes them interesting for the company, but at the same time is still necessary to capture their attention with a new market strategy, in order to increase the percentage of money they spend in Greggs' shops.

4.3. Positioning

To be successful on a highly competitive market, such as the FOTG one, companies should consider to differentiate their products even more, in order to keep possible competitors and substitutes away. First of all, the company should identify the consumer targets, the competition in the market of interest and how to differentiate its products (Kotler and Armstrong, 2015).

Fig.14: Positioning to Target Typologies

As can be seen in Fig.14, Greggs needs to focus on two consumers' typologies that have in common the interest for health and wellness. This means that a new strategy could consider to increase the amount of healthier options in the product portfolio, so that it realizes the needs of its customers, without neglecting other customers.   

Fig15: Proposed new Market Position

As can be seen from the proposed market positioning map [Fig.15], new Greggs' position in the market would experience a shift towards a more premium and healthier area, where the closest competitors, purely in terms of its market positioning, would be Subway and Waitrose, and premium coffee chains. It also indicates that Greggs would go from competing with Pret-a-manger on prices to, primarily, competing specific health benefits of its products.

5. Marketing strategy

5.1 Business model

Greggs\' marketing strategy is based on the value of reputation and heritage within the UK bakery market. Greggs focuses on freshness, taste and convenience and in addition focuses on customer services and great quality products in the market to compete with the rivals in the UK supermarkets, coffee shop and fast food operators. According to Greggs (2016) marketing strategy claims it has a new position in the food-on-the-go industry with fast expanding rivals to satisfy its customers\' needs in the competitive market.

5.2 Target markets  

Jobber (2013) recommends to divide the strategy in ‘undifferentiated marketing', differentiated marketing, focused marketing and customized marketing'. In this sense, Greggs applies the above mentioned strategy of target marketing by using product differentiation to meet the consumer's needs. For many years Greggs has retained its leading position in the UK traditional bakery market, however recently following consumer's preferences, Greggs are increasingly focused towards being a contemporary FotG brand. The firm\'s objective is to provide a new direction for the business: this change comes through product improvements, increasing focus on shopper experience, increasing quality of ingredients, serving convenience seekers better, and refining its value proposition: offering healthier choices and communicating this effectively. As a result, a bigger platform is provided as a basis to enhance brand communication and build Greggs brand value in balanced choices, focusing on customer typologies (Young, Free & Social and Weight & Wellness) in order to achieve higher customer satisfaction.  

  5.3 Differentiation & competitive advantage

Greggs\' differentiation centres on baking fresh food in the store every day, offering an \"Always Fresh. Always Tasty\" proposition to its customers (Greggs, 2016). Moreover, Greggs creates seasonal offerings, improves recipes, products and promotions to increase sales growth in order to gain and retain loyal customers, to understand the essential factors and to provide high quality products and service. According to Greggs (2014), the firm will continuously focus on developing new recipes and developing the consumer's favourites in order to improve products and services, making them different and unique. Greggs claims that the business strategy also focuses on growing ‘like-for-like' sales to improve the food quality and to make operations more simple and efficient.  

 According to the Daily Mail (2016), Gregg's healthy eating options create turnover of more than one million pounds per week; being the fastest growing element of the business. Additionally, Greggs has targeted the health conscious middle classes by offering boxed salads, noodles and flat white coffee to increase scope of its target consumers, and therefore sales figures. This shows Greggs emphasises understanding contemporary cultural desires and demands, investing in improving its brand and products to remain a modern, relatable company, satisfying its customers\' requirements. Specifically Greggs' competitive advantage is to produce high quality and fresh products offering them at inexpensive prices. By benefitting from differentiation strategies, Greggs could gain higher customer loyalty and satisfaction, enabling the firm to become more competitive within the FotG market.      

6. Recommendations

Resulting from primary and secondary data evaluation, this study proposes that Greggs refocus their marketing to further capture growing future markets, while still offering their core products. The recommendations on how the firm should improve and develop its existing marketing mix are presented with respect to the 7Ps (Booms & Bitner, 1981; Kotler & Armstrong 2015).  

6.1. Product Portfolio

6.1.1. Product

After extensive deliberations and finding evidences in both primary and secondary research, the authors find that the target market (Young, Free & Social and Weight & Wellness) desires and demands healthier options in their FotG and, in particular, for high-protein meals (Mintel, June 2016); we further postulate that this is a notable gap in the market, particularly within the cafe niche in which Greggs is increasingly competing. Moreover, a lack of options fulfilling this demand of high protein meals in current Greggs\' portfolio has been identified. The primary research conducted to support this paper\'s findings has underlined that respondents are more likely to buy a Greggs\' sandwich if it has high protein, low fat and balanced macro-nutrient content (Appendix # 8). This, coupled with the target markets own characteristics, shows that the main customers typologies to focus on - Young, Free & social and Weight & Wellness - are interested in healthy, high quality food.  

Thus, this paper suggests that Greggs should introduce a high protein, low carb meal box which is available in both meat and vegan option. The box will also include sources of vitamins that are necessary for absorption of protein by including vegetables (Appendix 9)

6.1.2 Price

Greggs should keep its prices competitive, constantly considering the strategy adopted by its main competitors, such as big supermarkets and FOTG retailers like Subway. In order to focus on the categories mentioned in chapter 4.1, and in particular on Young, Free & Social and Weight & Wellness, deals for students, families and workers should be protected and maintained.  

In addition to this, should also be underlined that, according to the results of our survey, more of the 36% of the respondents agree on the statement \"I am willing to spend more than usual on healthier food options available at Greggs\", and more of the 22% of them strongly agrees about that. This means that almost 60% of the customers would pay more for products with health benefits, such as low carb or high protein content, with an additional 19% that is still neutral about the topic. Having said that, Greggs could charge a slightly higher price for the NPD sandwich or include it in lunch deals to help its initial promotion.  

Our survey also shows that consumers would be willing to buy Greggs products from vending machines if the price is similar to the one charged in the stores, with 28% of them likely and 22% very likely to use this retailing method. This means that customers would be likely to use vending machines if the price is not increased compared to the one charged for in-store products.  

6.1.3. Process

In terms of the specific process for engaging with consumers, we recommend Greggs retains its current interpersonal sales service in catering to its traditional consumers – ‘Mature Quality Seekers; Make Do and Spend; Family Value; Work/Life Balancer' typologies - while developing quality Self Service Technology to better serve the needs of the time-starved, convenience prioritising, young-employed demographics. This enables Greggs to serve its traditional customer base through quality interpersonal service, which more greatly influences purchase intention in this demographic, while serving younger demographics via a Self Service Technology process, which has a greater effect on patronage intention within this demographic (Lee & Yang, 2013), in addition to providing first-mover-advantage to Greggs in expanding its point-of-sale alternatives for its customers. Furthermore this self-service process will enable Greggs to benefit from making its service process much more convenient, and specifically tailored to the needs of each group; this study finds convenience to be a major factor influencing a consumer's choice of patronising one FotG establishment over a competitor (Appendix 8) a finding congruent with existing literature (Oni & Matiza, 2014). In practice, the process will be fulfilled via a minor expansion to the firm\'s current logistics chain, and an extension of their existing app.

We further recommend this process, as it lays the foundations for Greggs to pursue further  automation and digitisation as required by the evolving UK  high street; the  Portas (2011) report proposes that increased consumer mobile-digital interaction with business will play an important role in shaping the future UK  high street. This process offers Greggs the option of integrating online-pre-payment and collection with its current trial of online-ordering and delivery; an important stage in the process of catering to increasingly convenience-seeking demographics.

6.2. Shopper Experience

6.2.1. Place

The group suggests that GREGGS should put in separate shelves in the stores for the balance choices line as this will highlight the product range and will possibly attract more consumers in to trying the products offered in the line, along with this the P.o.S can be also be used to list down the benefits of the balance choices.  

Coupled with in-store development, this study's supporting primary research finds that it may be beneficial for Greggs to trial offering its balanced choice options through vending machines, this is due to the reason that vending machines can be used where opening a GREGGS store is not feasible: metro or bus stations, universities campuses, gyms, offices and shopping centres - these places are not feasible to open up a standalone Greggs store but it is possible to install vending machines in such places. Additionally, vending machines further aid in targeting convenience-seeking demographics; the importance of which is well documented above. Moreover this would also cut down service time and costs pertaining to staffing and training of people as well.

6.2.2. Physical evidence

A set of physical evidences designed by companies create an interconnected circumstance to make customers perceive the cultural expression and marketing strategies. Greggs have built a series of mature physical evidences, however some physical evidences should be adjusted based on ‘big ideas'. The main colour scheme used in logo, interior design, web pages and work uniform are blue, white and black (Greggs, 2016). To target the young market and hint Greggs' product energy and health value, red and green should be added; cultural connotations of red and green within the UK are energy and health respectively (Mohebbi, 2014:100). But it will be unwise to change the logo which is familiar to customers, unless radically recreating the brand becomes a feasible strategy in the future. Some symbols of sports and pop music also are also acquired in-store for the sake of coherent implication. Referring to the out-of-store evidences, the vending machine idea suggested requires changes made to the packaging to become congruent with this target's value proposition. Results of Questionnaires indicate that only 33.3% respondent do not like to purchase food from a vending machine. Additionally, 36.1% of respondents think that package allowing food to be eaten on the go easily is the most important, and 27.8% of people see the transparent package as the most important factor (Appendix 8). Therefore, we conclude the package should be designed more transparent and easier to hold and unpack, in addition to secondary studies indicating a shift in colour scheme is appropriate. The vending machine acting as physical evidence out-of-store should be also be subject to this new colour scheme; primarily incorporating green and white as this indicated freshness, healthiness, and cleanliness (Mohebbi, 2014:100).  

6.2.3. People

This group suggests that Greggs should invest in creating awareness in its staff about the benefits of healthier lifestyle choices as the staff and all the people related with the business are the ones that are in constant contact with the consumers and thus it should reflect in both their outward appearance and demeanour that health is what Greggs is all about. Apart from having knowledge on the benefits of healthier lifestyle choices Greggs should train its staff in operations related to vending machines as this will be a new avenue of service to the existing staff and thus the staff at Greggs will benefit from such training, enabling them to better serve customers.

6.3. Brand Communication

In increasingly competitive FotG, bakery, and cafe markets, effective brand communication is imperative to attract the specific audience. The development of brand communication may enhance the potential brand value and developing a sustainable differential advantage (Lynch and De Chernatony, 2004).In order to communicate with its customers, Greggs needs to make good use of all available media of advertising both traditional and digital, although given the scale of operations for competitors such as McDonalds, Greggs should not primarily attempt to compete for marketing presence with such companies, instead targeting other bakeries, cafes and independent eateries advertising near the point of sale. Moreover, the business should strike a balance between functional and visual sites of brand communication.  

6.3.1. Promotion:

Greggs uses diverse promotional tools in brand communication in order to directly and indirectly attracting their audience to the products. As to developing more successful promotion strategy, Gregg's should focus on young adults' lifestyle to achieve strong brand awareness resonating with the targeted demographic; shopping experience should also be tailored to this element. According to Varnali et.al. (2012) digital markets such as social media and mobile applications are increasingly integral to businesses operations worldwide. Social media and mobile ordering are the powerful contemporary promotional tools for Greggs to use in its digital marketing strategy. To achieve successful branding in products and effectively communicating, Greggs should be successfully shaping publicizing and building convincing marketing communications for its products and services highlighting these as exceptional comparative to competition, as well as showcasing their specific value proposition.  

As Persaud and Azhar, (2012) state, mobile marketing remains in early development stage for brand promotion, but is becoming more commonly used as a promotional tool. Mobile app ordering which currently provides the customers with the menu, location of nearest store, and links to the website and social networks. With increasing prominence of smartphones this is a critical tool for engaging with customers and delivering tailored, contextual promotions to individuals; moving beyond demographics - useful, yet inherently limited due to their generalisations. Finally, through social media and mobile apps, Greggs gains a marketing channel direct to actual consumers, not potential consumers, through which they may campaign at no additional cost once software has been created.

7. Conclusions & Limitations

The cohort surveyed attempted to reflect contemporary trends and market demands, however due to using convenience sampling this report surveyed mainly university students, who may not reflect well on the general population's demands of FotG products; although given that we conclude capturing and retaining ‘young free and social' and ‘Weight and Wellness' typologies to be core to Greggs' future we still assert that this was a suitable choice of cohort to study. In addition to sample diversity, we would have been able to make stronger claims about our findings given a larger sample size. The study has aimed to correct for these shortcomings in primary research through its broad selection of secondary research.

   

...(download the rest of the essay above)

About this essay:

This essay was submitted to us by a student in order to help you with your studies.

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, . Available from:< https://www.essaysauce.com/essays/marketing/2017-1-9-1483981305.php > [Accessed 19.10.19].