Marketing Report for Sweet Leaf Bath Co.
November 24, 2018
Executive Summary for Sweet Leaf Bath Co.
To increase sales growth to achieve an overall annual range of between $150,000 to $200,000 CAD, while maintaining and operating within a budget of $5,000 for the whole year.
The recommended target market for Sweet Leaf Bath Co. are Canadian women aged 35-44, who make a median income, with 1 or 2 children under the age of 18, and are residing in urban communities. This is because they find sustainable, Fairtrade products appealing, as well as use various outlets such as vendor shows and online marketplaces to make purchases. By providing high-quality products at relatively lower prices, it gives the company a competitive advantage because they can target women in the middle income bracket, compared to competitors who are targeting those who are wealthier.
It is recommended that Sweet Leaf select Pristine Planet as its new distributor as well as institute a reordering policy with current retailers. Pristine Planet's website targets the exact buyers that are interested in Sweet Leaf's products by allowing only sustainable products to be sold off their website. As well as it offers additional benefits such as increased online exposure, which are included in the affordably priced membership fee at $550 for the year. A firm reordering policy with current retailers would result in a steady stream of income.
Recommendations for promotions would be investing in Google Adwords campaign for the full year at a cost of $1,800, as well as to purchase point of displays for retailers would be a one time cost of $1,100. Google Adwords would contribute to growing Sweet Leaf's online presence, while point of displays would attract new customers to purchase products, and remind retailers to reorder more product. It's also recommended that customers be encouraged to bring back the eco-friendly containers to receive 10% off their next purchase.
In order to reach the intended sales goal it's recommended to invest in the above combination of alternatives to maximize the potential of Sweet Leaf Bath Co. The total cost of implementing this plan is $3,450 which comes under budget by $1,500.
To grow the business of Sweet Leaf Bath Co., in order for partner, Stacey Guymer to be compensated so that she can return to her position on a full time basis. This would entail a sales growth to the effect of a range of $150,000 to $200,000 CAD for the 2012 fiscal year. This must be done within an allocated $5,000 budget for the year.
Sweet Leaf Bath Co. is limited to an annual budget of $5,000 ($416 per month), so they will be restricted in their choices concerning promotion and placement. They don't have any external loans, such as bank loans, financially limiting them to use money generated solely from profits. However, this means they don't have any debt, so they don't have much liability and can select a riskier option. The company is therefore constrained to choosing a cheaper alternative, such as not investing in a distributor contract or a website redesign.
Sweet Leaf has an online presence due to their website and various blog sites, through their relationship with “mom bloggers”. Annual website traffic for the site showed a decline of 4.7% from 2010 to 2011, suggesting that a website redesign may be beneficial in optimizing both customer experience and showcasing company information, increasing online exposure, and encouraging customers to buy online and therefore increasing brand recognition and sales. The website allows for the company to expand into the US market, as 27% of sales are gained from the states, and their product is not available in retail locations outside of Canada. The company is established in the green community with many of their products possessing a certification from Fairtrade Canada, associating their brand with being environmentally and socially sustainable. This suggests a target market of women residing in Canada because they shop online the most and are not hindered by shipping and duties fees as those residing in the States. As for retail locations, Sweet Leaf doesn't have a formal reordering policy so it would be advantageous to provide these locations with point of displays to encourage customers to buy products as well as to remind retailers to reorder, as the average order is $185.
Due to the company's production facility being located in Creamer's basement and Guymer's part-time availability, Sweet Leaf is restricted to the amount of product they can make. It's estimated that if both partners work full time, they can produce $150,000 worth of products annually. The company also demonstrates a strength in quality of product, as all soaps are handmade and carefully crafted with ethically sourced and environmentally sustainable ingredients, making them one of only two companies in Ontario, and one of eight in Canada which produce such products. However, because the ingredients are Fairtrade products, there are issues concerning availability and cost, therefore Sweet Leaf's shea butter supplier is one of its direct competitors, Delpointe. This makes their products a luxury item, which reflects a target market of women belonging to a higher income bracket who can afford to support such a lifestyle.
Creamer's past experience as a business manager of a large firm plays towards a strength, favouring the company because it demonstrates her capability of making the right choices to best serve the company. Although Guymer's time is restricted in caring for her children, her studies in aromatherapy, reflexology, and herbology benefit the company by using this knowledge to maximize the potential of the company's products and therefore gaining an advantage over their competitors by creating superior products. Both partners have a shared, extensive understanding of creating sustainable products through obtaining raw materials, this is appealing to individuals who are socially and environmentally conscious.
The 2008 economic crash upset the market for bath and body products, as consumers were choosing to buy cheaper products that lasted longer in an effort to save money. Overall, the market for natural and organic care products increased by 10%, and is projected to grow in 2012, with over 40% of consumers claiming to want naturally sourced products but felt financially restricted. Although the increase shows promise, the market poses as a challenge, and can be overcome by maintaining a relatively lower price point while continuing to endorse sustainability of the environment to encourage more purchases. It can also be overcome by choosing a target market of wealthier, conscious individuals who typically find these products appealing because they have the resources to support such a lifestyle, despite economic conditions.
There is an increasing social demand and pressure from consumers, forcing companies to make decisions that are environmentally and socially responsible. This works to Sweet Leaf's advantage because it is one of the few manufacturers in Canada whose products are guaranteed though Fairtrade Canada, and 71% of consumers trust products that are certified by organizations. The Fairtrade organization is very attractive to consumers, because their products are environmentally sustainable and their ingredients are fairly purchased and sold, making consumers feel they are contributing towards building a better world. Selecting an alternative such as Pristine Planet that highlights these features and caters to individuals who care about such issues would be a lucrative choice. This suggests a target market of women with families who are influenced by their children to make choices that favour protection of the future.
Sweet Leaf Bath Co. has indirect competition with three major companies holding a 65% controlling interest in the US market this is due to their extensive amount of resources and financial backing. Although these companies are not limited in producing a large volume and variety of products, they don't have the same “handmade”, “organic”, “environmentally and socially sound” products that Sweet Leaf does. The company has 5 direct competitors, each with varying sustainability practices, price points, and distribution tactics (exhibit 1). With the exception of L'Herbier, the other four companies have a higher online presence than Sweet Leaf, ranking highest with Tashodi, followed by Kynk Naturals and Earth to Body, and Delapointe. Delapointe is the only other company that is Fairtrade certified, while the other companies claim to use natural ingredients. Tashodi has expanded into popular retailers and into the US market, while L'Herbier has tapped into the spa and healthcare centres by offering bulk product options, giving both companies an advantage over Sweet Leaf. Kynk and Earth to Body have both expanded outside of Ontario and across Canada, similar to Sweet Leaf, however Earth to Body has also implemented a referral rewards program which promotes both loyalty and attains new customers. Sweet Leaf's average retail prices for its's products are overall lower than its competitors, with Delapointe being the most expensive followed by Earth to Body. Sweet Leaf's advantage over its competitors lies primarily in quality and pricing. The company has the highest quality, by providing fair-trade certified products while maintaining the lowest price.
Social trend towards favouring products that promote stewardship of the planet has increased the percentage of consumer that are choosing to buy fairtrade products by 3%. As Sweet Leaf's main selling point is that they are one of the few fairtrade product options, the target market would be very similar for both. One demographic is women aged 25-50, who attended church, lived in an urban population, and had children. These group of women showed a high interest in the product because they had a higher income and cared more about using organic products, as well as for supporting environmental and equality causes. Another group are young customers aged 18-24 with no children. As these individuals are the primary shopper, they are also heavily influenced by social media and by extension social trends. Sweet Leaf's products are appealing to this group because they are unique, and they fit with the “green” trend, which is what these younger women are looking for. Their choices are also swayed by their peers, so if one of their friends stared to use the product, their friends would follow, resulting in a quickly growing customer base. The majority of males are indifferent towards fairtrade issues, therefore it would be more beneficial to target one of the two groups above. This age group also tends to be of lower income, which works in favour of Sweet Leaf, because their prices are comparatively affordable.
The recommended target market are mature women, aged 35-44, who are part of the middle income bracket, with 1 or 2 children under the age of 18, and are residing in urban Canadian communities. These individuals were selected because they are typically the primary shopper in the family, and therefore make choices concerning what products should be used by not only themselves but by their children and spouses. This demographic is also shown to care the most when considering making purchases that are environmentally and socially conscious, because they are heavily influenced by their kids and are more prone to making responsible choices that result in a more favourable future. As these women are also educated, they tend to be more knowledgeable and make more informed decisions, such as purchasing products that are fair-trade certified. They also use social media and interact with the internet often so they are aware of social trends, and enjoy frequent online shopping. Individuals belonging to a middle income bracket ensures that Sweet Leaf can gain a competitive advantage as the other companies target individuals of a higher income bracket with their higher price points. The income bracket also consists of more individuals making the likelihood of a sale also increases. This population also works well because it's usually these types of women that attend events such as farmer's markets or vendor shows with hopes of finding a unique product, such as those from Sweet Leaf. Past experience with the “mom bloggers”, has demonstrated that this target market is an established platform that has showed success and reliability. Overall, this target market complements Sweet Leaf Bath Co.'s strengths very well.
The recommended placement of Sweet Leaf's products would be through Pristine Planet's online platform. Pristine Planet's website serves as the perfect middleman, because they connect green buyers and sellers by targeting consumers that find eco-friendly products appealing. They also gain significantly more website traffic than Sweet Leaf's current website, resulting in more online orders. Although this number is quite low compared to Etsy's millions of visitors, the option is significantly cheaper, and it also means competing against fewer products, as products on Pristine Planet must have one of the company's “tags”, while Etsy caters to a much broader market. This option also includes free advertising on social media sites, and other online benefits that overall increase Sweet Leaf's online presence, which are all included in the $550 membership fee for the whole year. If the average online order remains consistent at $65, and contributes 100% of total sales, then in order to reach the profit target of 150,000 they would have to sell 2,264 units at 17% sales of all six product categories (exhibit 4). It would also be beneficial to establish a reordering policy with current retailers. This wouldn't be challenging since these relationships are already in place and it would become a reliable income source. The creation of these displays should focus on advertising body butters and gift packages, as they have the highest unit contributions and will increase sales the most.
The recommended option for promotions is to invest in both, Google Adwords campaign and point-of-sale displays. This would amount to a total cost of $2,900 for the year. A Google Adwords campaign is promising because it would increase the company's online presence as well as it's a customizable option and can therefore be fit to attract the target market. For example, key words that can be chosen are “green”, “fairtrade”, “sustainable”, and “bath”. The monthly budget would be set to $150 per month, and would be purchased each moth for a year, this would give the company a fair amount of exposure, and therefore the likelihood for sales increases. It's also a much cheaper option compared to Facebook's ad campaign, where a profit is only made if CPM were selected at $0.33, which is the lowest the bid amount can be, assuming that the average online order is $65 (exhibit 2). Google is also a better option because its volume of users is much higher than facebook's especially because most older women use google more frequently. Point of sales displays should also be purchased and sent to all retail locations, as to cement the plan of implementing a policy of reordering. This will serve as an incentive and a remainder for retailers to reorder more product. It will also draw in more customers, as the product will be more noticeable, and will help with brand recognition. The cost of these are relatively cheaper at $1100 which would cover all 20 retail locations and leave the company with extras they could use for future retail locations. Daily Deal site promotions were evaluated and due to the large amount of discounts needed, the company would be making a loss unless they chose to sell only their soaks, scrubs, and butters with the minimum discount of 50%. However, they would likely not appear on sites such as Groupon because there wouldn't be enough “buys” as well as the unit contribution is merely a few cents, compared to selling at retail or online. (exhibit 3). In addition, the company could offer 10% off the next purchase if the eco-friendly containers are returned, because the discount offered would still be cheaper than producing a new container. This offers an incentive to customers and promotes loyalty.
The total cost would come to $3,450, which is below the budget by $1,500. If the alternatives above are selected then intended sales goal of $150,000 to $200,000 can be attained.
Exhibit #1: consumer perception map
Exhibit #2: facebook cost for one sale
(assuming that average online sale order is $65)
EXHIBIT #3: profit for Groupon & Wag jag
Exhibit #4: unit contributions
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