Beccel Margarine is faced with a large number of competitors in the margarine industry, as well as a damaging advertising campaign from the butter industry. In the face of such challenges, Beccel Margarine needs to revamp its advertising campaign and focus not only on the 65+ age group, but also on the larger target market in the lower-income class and 45+ age range.

Beccel Margarine

Beccel Margarine, launched in 1978, is a premium priced margarine known for its heart-healthy qualities. Beccel’s brand awareness increased dramatically via Beccel’s “Young at Heart” marketing campaign, a campaign that stressed the importance of a healthy heart. The campaign built Beccel a strong reputation as a leader in heart health and nutrition education.

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The “Young at Heart” campaign thrust Beccel into the forefront of the margarine business. Since the campaign’s inception, Beccel attained the highest level of customer loyalty amongst other brands in the category, and did so in a category where brand loyalty is low and brand substitutes are high.

Despite Beccel’s high level of success, Beccel now faces a declining growth rate due to a number of competitive factors. The most significant competition Beccel Margarine faces is butter. The Dairy Bureau is aggressively marketing butter as the natural, better tasting choice. The butter industry leads the category in advertising spending, with annual spending of nearly $7 million. Butter companies are adding fuel to the fire by entering the margarine business as well. Though these category extensions hold a relatively low market share, they do pose a threat to Beccel.

SWOT

Beccel’s strength as a company lies heavily in its marketing. Beccel took its brand recognition to very high levels through its “Young at Heart Campaign”. Beccel’s product is a healthier product, and is typically less expensive than butter, its counterpart. Beccel has a very high level of customer loyalty, presenting a significant strength to the company.

Beccel’s weaknesses lie in the fact that they market their product mostly to those 65+, stressing that during the latter part of people’s lives is when they should be more heart conscious. This narrow target focus is a weakness, as margarine should be targeted towards a much larger population. Beccel’s other weakness is that they are a margarine company, and margarine is regarded by some as less natural and less suitable for cooking purposes. On average, people that buy margarine also buy butter for cooking purposes.

Beccel has a number of opportunities. Beccel can market to the younger consumer and the consumer with the lower income. Margarine is often seen as a low-priced butter substitute, and would therefore fit the price needs of the lower income families. Beccel can also build on the change in the distribution channel, as Canada’s biggest grocery chain, Loblaws, acquired Quebec’s Provigo chain, historically the biggest market for butter and the weakest market for Beccel. Beccel has the opportunity in the butter market. Though Beccel has based itself on being a heart healthy margarine company, they could enter the butter market and tap into a new customer base, while providing a complementary product not completely different than their own.

Beccel’s most significant threat is competition from butter companies and from other margarine companies. Butter is the “gold standard” for taste, and butter is known as best for baking. The Dairy Bureau launched expensive marketing campaigns to remind consumers of the ‘advantages’ they feel butter has over margarine.

Alternatives

Beccel has a number of options. Beccel could choose diversification into the butter business. This would require a large capital investment, as it is a new product line. However, the costs may not be so substantial that Beccel could not absorb them. Beccel’s butter expansion will essentially mark a similar target market, and a butter product may share similar manufacturing qualities with margarine. Beccel, however, must realize it can not be everything to everyone. Beccel has positioned themselves as the leader in heart-healthy butter substitutes. Entering the butter market might confuse Beccel’s existing customers, as well as its current employees, while possibly creating operational and ideological inconsistencies.

Beccel could buy out minor competitors as a growth strategy. If Beccel chooses to buy out competitors, those competitors with a minor market share would be the best choice. Buying a minor competitor such as Canola Harvest would not only eliminate an up-and- comer, allowing Beccel to gain their market share, but would give Beccel the “canola oil” advantage. However, company buy-outs are expensive, difficult, and not always a financially sound option. For example, Maytag began acquiring other brands in the mid 80’s early 90’s, but the results of the acquisitions were not all positive. Maytag grew substantially, but their return on sales declined dramatically.

Beccel can begin a marketing-development strategy by targeting a larger population of consumers. Currently, Beccel’s focus lies in marketing margarine to the elderly population, whom Beccel feels needs heart healthy products more than ever. However, the average margarine consumers are those in a lower-income category and a lower age bracket than the butter consumer. Beccel leads in households with residents 65+ years of age, households with “empty nesters”, and households with higher incomes.

The margarine market itself is most influential with households with 4+ residents, with the head of household being 45+, and those households with lower income. Their target market conflicts with margarine target market as a whole. Beccel can adjust their focus and marketing towards a larger target. Currently, their focus is on those 65+ with higher incomes, largely ignoring the larger margarine buying consumer (45+ and lower income). Beccel can market to the younger population and the lower income families.

Decision

Beccel must institute a market-development strategy, expanding its target market to the larger margarine buying populace. Beccel already has high brand loyalty with their 65+ consumer. Brand loyalty will not disappear as Beccel focuses on the lower income consumer. Beccel will simply add to its consumer base by effectively marketing to the largest portion of margarine consumers.

Beccel will achieve this marketing strategy through researched television and print ads targeted at the 30-45+ market. Beccel will redesign its packaging, creating a more attractive and “grabbing” product. Beccel will display the benefits of margarine versus butter on its new packaging, targeting the younger population that is now more than ever concerned with cutting fat and cholesterol. Beccel will remain a “heart-health educator”, but will also become the “exciting butter substitute.” Beccel will adjust its market-development strategy by expanding its distribution channel into the newly acquired food store chain “Provigo”, a chain Beccel has historically had minimal influence with.

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