Elements for peanut butter

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  • 1. 1. Elements of a Marketing Program a. Image i.Unique Selling Proposition (USP) b. Marketing Strategy i.Product Features, Benefits and Appealsii.Positioning iii.Pricing iv. Distribution channelsv. Communications strategies c. Launch Strategies i.Launch plans 1. Public Relations strategy and execution 2. Advertising strategy and execution 3. Other promotiona. Direct marketingb. Third-party marketing, managing referralsc. Other promotional programs d. Creation of Promotional Package e. Dissemination of Information2. Implementation a. Structure b. Refining the message c. Creating and maintaining relationships d. Will it work? e. Success metrics f. Goals, year one g. Goals, years 2-5 h. Outcome measurements i. Requirements for success3. Proposals with Budget4. Appendix:JustificationUnderlying AssumptionsReferences

2. PEANUT BUTTER HISTORYThere are many claims about the origin of peanut butter. Africans ground peanuts intostews as early as the 15th century. The Chinese have crushed peanuts into creamy saucesfor centuries. Civil War soldiers dined on peanut porridge. These uses, however, borelittle resemblance to peanut butter as it is known today.In 1890, an unknown St. Louis physician supposedly encouraged the owner of a foodproducts company, George A. Bayle Jr., to process and package ground peanut paste as anutritious protein substitute for people with poor teeth who couldnt chew meat. Thephysician apparently had experimented by grinding peanuts in his hand-cranked meatgrinder. Bayle mechanized the process and began selling peanut butter out of barrels forabout 6 per pound.Around the same time, Dr. John Harvey Kellogg in Battle Creek, Michigan, beganexperimenting with peanut butter as a vegetarian source of protein for his patients. Hisbrother, W.K. Kellogg, was business manager of their sanitarium, the Western HealthReform Institute, but soon opened Sanitas Nut Company which supplied foods likepeanut butter to local grocery stores.The Kelloggs patent for the "Process of Preparing Nut Meal" in 1895 described "a pastyadhesive substance that is for convenience of distinction termed nut butter." However,their peanut butter was not as tasty as peanut butter today because the peanuts weresteamed, instead of roasted, prior to grinding. The Kellogg brothers turned their attentionto cereals which eventually gained them worldwide recognition.Joseph Lambert, a Kellogg employee who had worked on developing food processingequipment, began selling his own hand-operated peanut butter grinders in 1896. Threeyears later, his wife Almeeta published the first nut cookbook, "The Complete Guide toNut Cookery" and two years later the Lambert Food Company was organized.In 1903, Dr. George Washington Carver began his peanut research at Tuskeegee Institutein Alabama. While peanut butter had already been developed by then, Dr. Carverdeveloped more than 300 other uses for peanuts and so improved peanut horticulture thathe is considered by many to be the father of the peanut industry.C.H. Sumner was the first to introduce peanut butter to the world at the UniversalExposition of 1904 in St. Louis. He sold $705.11 of the treat at his concession stand andpeanut butter was on its way to becoming an American favorite!Krema Products Company in Columbus, Ohio began selling peanut butter in 1908 ~ andis the oldest peanut butter company still in operation today. Kremas founder, BentonBlack, used the slogan, "I refuse to sell outside of Ohio." This was practical at the timesince peanut butter packed in barrels spoiled quickly and an interstate road system hadnot yet been built. 3. In 1922, Joseph L. Rosefield began selling a number of brands of peanut butter inCalifornia. These peanut butters were churned like butter so they were smoother than thegritty peanut butters of the day. He soon received the first patent for a shelf-stable peanutbutter which would stay fresh for up to a year because the oil didnt separate from thepeanut butter.One of the first companies to adopt this new process was Swift & Company for its E.K.Pond peanut butter ~ renamed Peter Pan in 1928. In 1932, Rosefield had a dispute withPeter Pan and began producing peanut butter under the Skippy label the following year.Rosefield created the first crunchy style peanut butter two years later by adding choppedpeanuts into creamy peanut butter at the end of the manufacturing process.In 1955, Procter & Gamble entered the peanut butter business by acquiring W.T. YoungFoods in Lexington, Kentucky, makers of Big Top Peanut Butter. They introduced Jif in1958 and now operate the worlds largest peanut butter plant ~ churning out 250,000 jarsevery day!A Spread of the Peanut Butter IndustryAt the thought of the word peanut, one would not miss mentioning the legumes mostpopular use - as peanut butter!Peanut butter is one of the many products that fall under the bread spreads category.(Other well-known spreads include butter, cheese spreads, jams, jellies and marmalades,sandwich spread, and mayonnaise). Like the other spreads, peanut butter is normallyadded to ordinary bread to give it a distinct and specific flavor. At times, it is used inbaking, and also in cooking to create savory sauces for various vegetable, meat, andpasta dishes.Peanut butter is made from roasted, peeled, and ground peanuts mixed with sugar, saltand oil.Peanut butter manufacturers indicated that there is a need to develop the quality of localpeanuts. Currently, a substantial percentage of total peanuts used are imported (usuallyfrom China) because they are cheaper and have relatively low moisture content.According to a major player, his company uses 50% locally produced peanuts while theremaining 50% is imported. Local peanuts, albeit tastier and with better aroma, cannotbe completely relied on because of their high moisture content. Players are critical aboutthe moisture content of peanuts because a high moisture level will cause molds todevelop allowing the growth of a carcinogenic substance called aflatoxin. The Departmentof Healths Bureau of Food and Drugs (BFAD) imposes a limit on the amount of aflatoxinat 20 parts per billion. 4. Another concern is the unimproved market base. Sources say the entire spreads industryalso suffers from slow movement in supermarkets and groceries. This makes the peanutbutter industry specifically more vulnerable to the new and more affordable spreads thathave entered the market. With this and the changing breakfast food patterns from breadwith spreads to the more convenient and varied instant "no-cook" noodles, porridges,biscuits, and cookies, peanut butter stands to lose its hold on its market.The market for peanut butter has remained relatively steady in the past years. The entryof breakfast substitutes like instant noodles, however, have led companies to be morecreative. Players have learned to address consumer demand and preference for morenutritious and healthier foods by fortifying their products with Vitamins A, B1, D3, and E.Another is the introduction of peanut butter with stripes of chocolate and fruit jams likeguava and grape, notably from Unilever Bestfoods. And since bread and spreads gohand-in-hand, another hope for the peanut butter industry is the expected growth thebread industry will post in the medium term.Packaging is also a potential growth consideration. Store checks revealed that peanutbutter substitutes like sandwich spreads, mayonnaise, and cheese spreads have beenenjoying tremendous sales after manufacturers, particularly Unilever Bestfoods and Kraft,introduced these in smaller retail packs at a cheaper cost.Reports say Unilever is positioning its marketing strategy towards the mass market. Thisstrategy clicked with its shampoos in sachets and is expected to enjoy the same successin its mayonnaise, sandwich spread, and the recently launched Bestfoods Say Cheezcheese spread in sachets. It would not be a bad idea if peanut butter producers adopt asimilar scheme and experiment by introducing peanut butter in sachets. Currently, thesmallest peanut butter available is in 150-gram containers.Institutional users could also be tapped to widen the spreads market. Jams, jellies, andmarmalades have been successful in this part. A leading player revealed that part of hiscompanys growth plans is tapping toll-packers and entering into private labelingagreements with supermarkets and food stores.What the industry needs is to maintain producing high quality peanut butter coupled witha little marketing push. The development of more varieties and a touch of advertisingcould definitely help it compete with more popular spreads.WHAT IS LATENT DEMAND AND THE P.I.E.?The latent demand for peanut butter is not actual or historic sales. Nor is latent demand future sales. In fact, latentdemand can be lower either lower or higher than actual sales if a market is inefficient (i.e., not representative of relatively 5. competitive levels). Inefficiencies arise from a number of factors, including the lack of international openness, culturalbarriers to consumption, regulations, and cartel-like behavior on the part of firms. In general, however, latent demand istypically larger than actual sales in a country market.As mentioned in the introduction, this study is strategic in nature, taking an aggregate and long-run view, irrespective ofthe players or products involved. If fact, all the current products or services on the market can cease to exist in theirpresent form (i.e., at a brand-, R&D specification, or corporate-image level) and all the players can be replaced by otherfirms (i.e., via exits, entries, mergers, bankruptcies, etc.), and there will still be an international latent demand for peanutbutter at the aggregate level. Product and service offering details, and the actual identity of the players involved, whileimportant for certain issues, are relatively unimportant for estimates of latent demand.THE METHODOLOGYIn order to estimate the