Business Analysis & Marketing Plan

Walkers Hot & Healthy

It’s Crunch Time for Crisps

3WALKERS HOT & HEALTHY

Walkers R & D Team

CERTIFICATE

This is to certify that the Project titled Business Analysis and Marketing Plan has been submitted by: Mr. Sufyan Saboowala bearing Roll Nos. 48 respectively towards fulfilment of the

requirement of the internal examination of Business Economics for

F.Y.BMS (Sem II) and has been carried out under the guidance of Prof. Kazi at Habib College of Commerce and Economics.

Place: Mumbai

Date: 08th Mar 2010

------------------------------

Prof. Kazi

1.0 EXECUTIVE SUMMARY

3WALKERS HOT & HEALTHY

Walkers R & D Team

The sweet and savoury snacks market is a very successful industry worldwide, with potato chips

constituting 27.1% of the global snack market (Business Insights, 2009). In the UK, crisps form

an integral part of consumers’ lives. They are eaten between meals as filler or even as an

accompanying side-dish, forming part of many people’s lunchboxes. Even during these periods

of recession, the crisps market is doing well. In fact, the business is flourishing since crisps are

seen as indulgent and impulse products that are cheap. Since 2007, the market grew by 5% in

the UK (Mintel, 2009) (1). In this competitive area that is the crisps business, Walkers is

incontestably the market leader, eating up 54% of the market. It enjoys an excellent reputation

and strong brand equity, of which large numbers of loyal customers are adamant about.

However, what could undermine their success is the growing number of health-conscious

customers turning to healthier innovative snacks. This is largely influenced by the Government

putting in place various health-awareness campaigns to overcome the increasing problem of

obesity, which is hitting the population like an epidemic. The focus was on the reduction of fat,

salt and sugar in food. The snacks industry was the main target of those attacks. To fight back,

a new range of products, Hot and Healthy, is to be launched, adding to the Walkers portfolio. At

the time of launch, only two flavours will be presented. They are the Beef Chilly and the Chicken

Tikka. Safflower oil is chosen to substitute sunseed oil since it is lower in saturated fatty acids,

also known as the bad fats that clog arteries, while being higher in polyunsaturates, the good

fats, which help lower blood cholesterol levels. Another interesting fact about this range is that it

will touch on people’s increasing desires for ethnic flavours. Not only is the ethnic population on

the rise in the UK, but it has been found that Indian and Chinese cuisines are very popular

amongst the general population, and they would now like to find those flavours in their everyday

crisps. This is a perfect opportunity as two desires will be fulfilled with one range. The target

market is the 15-34 year olds with a busy schedule, who often eat crisps at lunch, in between

meals or even at home watching television. The new crisps will be readily available to

consumers via corner shops, supermarkets and cafeterias, with a unit retail price of 50 pence.

2.0 MARKET AND OPPORTUNITY ANALYSIS

2.1 Industry Overview

3WALKERS HOT & HEALTHY

Walkers R & D Team

2.1.1 Sweet and Savoury industry analysis:

In 2009, the consumers continued to give themselves little treats of sweet and savoury snacks.

The unforeseen economic meltdown caught the consumers off guard, leading to tightening of

consumer spend. However, impulse products under the sweet and savoury market, like crisps,

managed to sail through the economic turmoil. The connoisseurs have kept going back to their

loved brands with however higher expectations with respect to new product development or

improvement of existing products (Euromonitor, 2009).

The sweet and savoury industry is further segmented into various categories, as shown below in

the graph. Globally, it is largely dominated by processed snacks followed, by crisps. The graph

below gives the segmentation of global snack market for the year 2008 (Business Insights,

2009).

Table 1: Performance of global snacks market by productSource: Business Insights, 2009

In the United Kingdom however, crisps have a strong foothold in the lives of consumers. A

variety of crisps are consumed between meals. They also serve as tasteful accompaniments to

meals. Walkers Crisps dominate this savoury snack market by far.

Broadly, the sweet and savoury industry environment in the UK can be analysed with the help of

the PEST model.

1. Political environment:

3WALKERS HOT & HEALTHY

Walkers R & D Team

In modern and complex economies, government intervention is inevitable in order to

uphold the consumer’s trust and faith in the government’s systems. Over the years,

consumers’ lifestyles have become eclectic and the culture of ready meals and snacks

has become popular. This has lead to several lifestyle diseases. The government in the

United Kingdom has become proactive in promoting healthy eating and balanced diet

patterns to the citizens. The government, along with various other organizations like the

NHS, initiated several awareness campaigns to tackle the growing problem of obesity.

The campaigns promote the reduction of fat, salt and sugar the consumer’s daily diet.

This move by the government can lead to a projected decline of 4.1% in the sweet

snacks market and 3.4% in the savoury snacks market over a period of five years (Just-

Food, 2009).

Children studying in primary and secondary schools are the largest buyers of sweet and

savoury snacks. It has been observed that such snacks formed an integral part of their

lunchboxes. Due to the adverse affects of snack food on children’s health, the

government, through its Better Regulation Commission, has proposed certain standards

for school food. The standards restrict the sale of confectionery, savoury snacks except

nuts and seeds, and deep fried snacks like crisps and burgers. (Better Regulation

Commission, 2007).

2. Economic environment:

The United Kingdom was faced with two unfortunate economic crises in the second half

of 2007. The tumult in the financial markets along with steep increase in the fuel and

food prices severely affected the business and commerce, as well as consumer

confidence. The consumers have become relatively conservative in their approach to

spending on consumer goods.

The sweet and savoury market has however shown a steady growth in sales. This

reason could be attributed to the nature of these products. Snacks are particularly seen

as indulgent and impulsive products with a low unit price. Snacks are also low

involvement products unlike other consumer goods. In the United Kingdom, the market

for crisps and snacks grew by 5% since 2007. This is mainly because the snacks

companies have responded well to the consumer’s needs in this fragile economic

environment. (Mintel, 2009) (1).

In spite of positive growth signs, the manufacturers still have to struggle due to the

existing credit crunch, coupled with the rising costs of wheat, flour, maize and potatoes,

3WALKERS HOT & HEALTHY

Walkers R & D Team

and instability in crude oil prices. All these factors put a strain on the manufacturer’s

profit margins. (Research and Markets, 2008).

3. Socio-cultural environment:

The sale of sweet and savoury snacks thrives on consumption patterns of younger

consumers aged between 15-34 years. Due to persistent efforts by the government to

encourage consumers to adopt healthier lifestyles and eating habits, the demographics

of main consumers of snacks has changed. Fewer children are attracted to crisps and

snack. The Government regulations as mentioned above have also been a cause in

making crisps and other sweet and savoury snacks unpopular among children.

Therefore, the consumption has shifted to adults, mainly men (Mintel, 2009) (1). Another

important aspect to be considered is the growing migrant population in the UK. This would

affect the snacks manufacturers to develop new products or modify existing product to suit the

tastes and preferences of this growing segment of the population. Statistics show that from

2006 to 2007 the ethnic population in the UK has increased significantly as shown in the table

below (Office for National Statistics, 2009).

Ethnic groupMid-2006

populationMid-2007

populationAll Groups 50,762.9 51,092.0White: British 42,737.7 42,736.0White: Irish 581.3 570.5White: Other White 1,699.1 1,776.3Mixed: White and Black Caribbean 274.5 282.9Mixed: White and Black African 107.7 114.3Mixed: White and Asian 246.4 260.9Mixed: Other Mixed 200.9 212.0Asian or Asian British: Indian 1,264.2 1,316.0Asian or Asian British: Pakistani 861.0 905.7Asian or Asian British: Bangladeshi 338.3 353.9Asian or Asian British: Other Asian 323.1 339.2Black or Black British: Black Caribbean 594.7 599.7Black or Black British: Black African 694.5 730.6Black or Black British: Other Black 113.8 117.6Chinese or Other Ethnic Group: Chinese 374.2 400.3

Table 2: Ethnic Population showing figures in thousands. Source: Office for National Statistics, 2009

4. Technological environment:

The market for crisps and snacks is highly dynamic. High penetration in the market and

intense competition facilitates new product development. The technological environment

of this industry would involve various factors like sourcing the ingredients required for

3WALKERS HOT & HEALTHY

Walkers R & D Team

making the product. Increasingly, companies are becoming particular about ‘food miles’.

Consumers are concerned about the source of the contents in the product along with the

distance the food travels to reach the consumers. Most of the manufacturers like

Walkers claim ‘100% British potatoes’ in order to reduce the carbon footprint of popular

snacks. (Charlotte Eyre, 2008).

2.1.2 MARKET TRENDS AND NEEDS:

The sweet and savoury market was not bogged down by global economic recession.

The results were a striking contrast to the recession. The UK snack and savoury market

grew by 9% in value terms. This growth can be attributed to changing tastes and

preferences of consumers. The companies are in tune with this change and have each

time delivered new flavours to keep the crisps and snack market between growth and

maturity rather than decline stage of product life cycle.

The growing concern for obesity is an important factor in new product development or

product improvement. Consumers are concerned about the content of the food they

consume. With hectic lifestyles, they seek complete transparency from companies on

the ingredients used to make the products. Therefore the companies have adopted a

two-fold strategy to combat the fear of decline in sales. Increasingly, the companies are

improving products to project the nutritional value of their goods as suiting the needs of

consumers. High obesity rates are a major threat to companies. Therefore, most of the

companies are trying to cash in by indulging consumers in different and off beat flavours.

Crisps and other snacks have always attracted children as they can nibble on tasteful

options. However, the industry is facing an image problem since crisps are seen as

unhealthy and junk food. The consumer behaviour has changed towards impulse foods.

Ofcom, the independent regulator and competition authority for the UK communications

industries, has proposed a ban on the advertising of junk food to children. This ban is

mainly related to advertisements that are aired on television during children’s shows.

The UK Government has been heavily campaigning on the 5- a-day requirement and on

nutrition-rich meals. This nation-wide campaign has laid more emphasis on healthy

eating. In this category, the nuts and fruits snacks are flourishing.

3WALKERS HOT & HEALTHY

Walkers R & D Team

Study shows that 84% of lunchboxes contain fruits and a staggering 5.5 billion

lunchboxes are prepared every year. This has facilitated the growth of packed fruit

snacks. Moreover, there has also been a significant increase in the number of working

women. They are always in search of healthy and convenient snacks between meals

and also for their children’s lunchbox. Earlier the children’s lunchbox was dominated by

crisps.

Crisps and snacks have always been perceived as products satisfying nibbling habits,

products that act as fillers between meals and the like. Most appropriately they can be

termed entertainment products. The house entertainment industry is steadily growing.

Consumers have started to perceive the accompaniments to their entertainment as

healthy treats rather than junk food. There is thus a need to introduce and improve the

ingredients of the products to boost sales. In this category, popcorn is an ideal

entertainment snack as it is perceived as a relatively healthy and convenient snack. The

crisp makers have to concentrate on easy packaging and quirky flavours to provide

alternatives to popcorns.

Consumers are seeking health and indulgence at the same time. There is high popularity

of high fibre, low fat, low salt products. Consumers seek to indulge in their crisps and

snacks. However, they refrain from doing so due to the unhealthy aspects of such

impulse foods. This trait of consumers can be cashed in by the companies by improving

their products and close the gap between indulgence and health (Euromonitor, 2009).

An important trend that provides opportunities for the snack companies is the growing

ethnic population in the UK. The retail value of ethnic cuisine in 2008 was in excess of

1.3 billion GBP. There is a growing popularity among consumers for Chinese and Indian

cuisine (Mintel, 2009) (2).

2.1.3 Competitive Landscape:

The sweet and savoury snack market is moderately intense. The primary target market for most of the

crisp companies was children who would not mind spending their pocket money on crisps to satiate

3WALKERS HOT & HEALTHY

Walkers R & D Team

their boredom. However, over the years this has changed. Other snacks like cereal bars, popcorn, and

confectionery have cropped up.

Crisps and Snacks - UK - January 2009 - Competitive Context UK retail value sales of selected snack foods, 2003-08

Year

Crisps and

snacksChocolate confectionery

Sugar confectionery

Chewing gum Nuts

Cereal bars

  £m £m £m £m £m £m             

2003 2,386 1,926 1,081 328 232 2052004 2,303 1,936 1,092 340 254 2302005 2,268 1,949 1,110 333 275 2502006 2,322 1,953 1,149 329 297 2702007 2,407 2,140 1,184 344 309 287

2008 (est) 2,533 2,225 1,212 355 320 313             % growth 2003-08 6.2 15.5 12.1 8.2 37.9 52.7% growth 2006-08 9.1 13.9 5.5 7.9 7.7 15.9

Table 3: retail value by product and yearSource: Mintel, 2009

The retail sale value of crisps and snacks has declined, but is showing quick recovery

signs. Companies are making new flavoured chips, moving away from the standard

crisps, in order to suit adults’ tastes.

The immediate competitor to crisps and snack is chocolate. The popularity of chocolate

can be attributed to availability of good quality and premium products. Moreover, the

chocolate confectionery companies have come out with an array of organic and probiotic

products, which provide various health supplements.

Changing consumer patterns to healthy eating has led to a soar in nuts and seeds

popularity as well. They are seen as a healthy alternative to other packed bags of crisps

and snacks (Mintel, 2009) (1)

With regards to company market shares in the crisps and snacks field, Walkers Snack Food has

maintained its dominant position.

3WALKERS HOT & HEALTHY

Walkers R & D Team

Table 4: Company Market share Source: Mintel, 2009

2.2 STRENGTH, WEAKNESS, OPPORTUNITY AND THREAT

The following SWOT analysis gives an understanding of the other environmental factors that

could have an influence on the launch of Walkers Hot and Healthy.

2.2.1 Strengths Dominance in crisps and snack market Brand image Customer loyalty Economies of scale Persistent efforts in tackling green issues. Walkers Snack Food Ltd has achieved 7%

reduction in CO2 in each bag of crisps (Euromonitor, 2009).

2.2.2 Weaknesses Growing awareness of healthy eating Crisps perceived as junk food Product portfolio consists of crisps alone

2.2.3 Opportunities Expand into health oriented products Growth of in house entertainment industry Growing cosmopolitan population in United Kingdom offers an opportunity to tap into the

ethnic cuisines market with new quirky flavours Income-rich and time-poor consumers

2.2.4 Threats Children and teenagers are primary consumers of crisps and snacks. The ageing

population in the UK can pose a threat to the target of Walkers (Euromonitor, 2009). Products reaching maturity stage faster due to frequent changes in consumption

patterns

Crisps and Snacks - UK - January 2009 - Market Share

Manufacturers’ value shares in crisps and snacks, 2006-08

Company 2006   2007   2008 (est)   % change

  £m % £m % £m % 2006-08

Walkers 1,279 55 1,308 54 1,358 54 6.2

United Biscuits (UB) 390 17 410 17 452 18 15.9

Procter & Gamble 155 7 160 7 169 7 9

Kettle 43 2 53 2 67 3 55.8

Tayto 35 2 40 2 47 2 34.3

Other 170 7 168 7 153 6 -10

Own-label 250 11 269 11 287 11 14.8

Total 2,322 100 2,407 100 2,533 100 9.1

3WALKERS HOT & HEALTHY

Walkers R & D Team

2.3 ANALYSIS OF WALKERS’ EXISTING PRODUCT PORTFOLIO

‘Hot & Healthy’ will be an addition to the already vast Walkers product portfolio. It is hence

important to know the current position of existing products under the Walkers brand and analyse

their performance and how ‘Hot & Healthy’ could contribute to the profitability of the Company.

This portfolio analysis is done with the help of Boston Consulting Group (BCG) matrix.

High Low

High

Market

Growth

Low Market Share

Yellow Quadrant indicates Stars

Blue Quadrant indicates Question Marks

Green indicates Cash Cows

Red indicates Dogs

The cash cows can be utilised for new product development. Instead of investing money in

products like Walkers ‘Salt and Shake’ that is not doing well in the market and has been

identified as dogs, funds can be diverted to ‘Hot & Healthy’.

‘Hot and Healthy’ should be a significant addition to this wide portfolio. The consumers who

want new flavours should be attracted to it. Moreover, health aspect is also highlighted in this

product which should b a significant attraction to crisps connoisseurs who are health conscious.

3.0 ‘HOT & HEALTHY’ PRODUCT DEVELOPMENT PROCESS

3.1 Product Development stages:

Walkers sensation Walkers Wotsits Walkers sensations

Oriental Crackers Walkers Monster munch

Walkers Quavers Walkers grilled bacon Walkers Ham & cheese Walkers Max

Walkers Doritos Walkers Cheese & onion Walkers Salt & Vinegar Walkers Heinz tomato

ketchup Walkers ready salted

Walkers Square Walkers Salt & Shake Walkers Lite

3WALKERS HOT & HEALTHY

Walkers R & D Team

Development Process Start End

Marketing research

Technology development

Product Design

Product Testing (Prototype)

February 08

August 08

August 09

December 08

July 08

July 09

November09

October 09

Table 5: Start and end dates for each new product development stage

Each stage is explained in more detail below.

3.2 Marketing Research

Walker’s Research & Development team was assigned to study and investigate crisps and their

consumption patterns in the market. Senior Market Analyst at MINTEL, David Bird, noted that

the sale of crisps was tumbling by 12% since 2002. In 2002 the total sales were valued at £2.4

billion which has now fallen by 6% to just over £2.2 million. This decline in sales seems will last

for a while as healthier eating trends persist. Near market saturation and competition from

alternative healthier snacking products such as cereal bars & dried fruit all present a threat.

Crisps are also facing this problem because of the perception of crisps being predominantly

high-fat, high-salt foods with few nutritional benefits. (Mintel, 2009) (3)

Many manufacturers launched new products using a wide range of healthier ingredients such as

soy, rice, parsnip and other root vegetables. Consumers’ eating habits have become eclectic,

thus causing a shift in crisp flavours, from the standard ready salted, cheese & onion & vinegar,

to prawn cocktail and meat-influenced flavours. This also results in a demand for ethnic cuisine

flavours. Research shows that ethnic cuisine is extremely popular in the UK, with 83% of the

adults claiming to enjoy Chinese cuisine while 71% enjoy Indian. Another reason why these

cuisines work well is due to a growing number of manufacturers offering more authentic

flavours, as well as seasonings and accompaniments. The popularity of ethnic flavours can be

seen with the popularity of ethnic restaurants in the UK (Mintel, 2009) (2)

2006 2007 2008 % point change% % % 2006-08

3WALKERS HOT & HEALTHY

Walkers R & D Team

Pub restaurants 52 53 52 -Chinese 30 31 32 +2Indian 29 29 30 +1English 23 24 25 +2Italian 24 23 24 -Pizza restaurant 21 21 20 -1Steak houses 12 11 10 -2Indonesian/Thai 7 8 8 +1Hamburger bars 7 6 6 -1Mexican 6 7 6 -

Table 6: Types of restaurants visited, 2006-08 Source: Mintel, 2009

As far as the target group is concerned, a lot of manufacturers have started targeting other

areas of the population. Some manufacturers specifically targeted younger males; most notably

Walkers with its Nobby’s brand.

The above research states that ethnic cuisine is very much in demand in the UK and thus, we

plan to launch new ethnic flavours of Walkers which will be cooked in Safflower Oil, which is

healthier than the current oil being used to fry the crisps.

3.2.1 Idea Screening

Walkers are primarily made of British Potatoes, a local favourite our desired target market.

Introducing more flavours is found to be a potential prospect. Moreover, the exotic flavours of

Walker’s Sensations have been well accepted by the consumers.

Table 6 suggests Indian and Chinese as top favourite cuisines in UK. The idea would be to

introduce hot and spicy flavours. Considerations for introducing more flavours are:

Chinese

Indian

Mexican

Caribbean

‘Chicken Tikka’, an Indian flavour, is a good prospect as it has a high recall value and is popular

in demand. Chinese ‘Beef Chilly’ will be second in line as a strong prospect. Mexican and

Caribbean are lower in the rung and will therefore not be launched initially.

Crisp manufacturers have responded to the consumers’ interests in healthier products and thus,

changed ingredients like: baked crisps, multi-grain snacks, rice crisps, corn and different oils for

3WALKERS HOT & HEALTHY

Walkers R & D Team

frying. One main concern for the consumers is the edible oil used for frying crisps. The following

are the edible oils that could be used: Olive Oil, Sunflower Oil, Safflower Oil, Soybean Oil and

Palm Oil. Safflower Oil is the closest that oils could come to being low in Saturated Fats,

Highest in Polyunsaturated & Low in Monounsaturated Fats.

3.3 Flavour Innovation

For new flavour additions, the R&D team came up with two flavours that are appropriate to the

tastes and expectations of the UK market. They are the Beef Chilly and Chicken Tikka. For

research puposes, the three most popular crisps flavours were evaluated and compared with

the two new ones.

Cheese& Onion Ready Salted Beef Chilli Chicken Tikka Salt &Vinegar

- most popular flavour accounting for 25% of retail sales-existing for long

- makes up 24% of retail sales

-existing for long

-beef derivatives account for 7% of retail sales-new ethnic meat flavour

-forms part of ‘other flavours’ making up 23% of sales

-new ethnic meat flavour

-14% of sales

-existing for long

Table 7: comparison of the new flavours with traditional ones

While the Cheese & Onion, Ready Salted and Salt & Vinegar flavours are incontestably the

ultimate favourite flavours, people are showing an incline towards meat flavours. Moreover, the

influence of ethnic cuisines resulted in the population being less conservative in their choice of

crisps. They are looking for somewhat spicier derivatives, opening themselves to other than the

traditional flavours that have been around ever since the beginning (Mintel, 2009) (2)

The Beef Chilly and Chicken Tikka are original flavours that do not exist in the market yet.

Lauching them under the Walkers brand constitutes an advantage for the manufacturer, who will

be making innovative flavours available thereby filling gaps in the market, and also, for the

products, which will benefit from Walkers’ brand value. This is because Walkers is the market

leader, and hence, a very powerful brand, and it also enjoys a good reputation.

3.3.1 Safflower oil versus Sunseed oil

3WALKERS HOT & HEALTHY

Walkers R & D Team

Sunseed oil, which is the oil currently being used in all Walkers crisps, is extracted from

sunflower seeds and has many health benefits. Unlike most cooking oils, for example, palm oil,

which is widely used in crisps, it contains high levels of monounsaturated and polyunsaturated

fatty acids. These are the good types of fats, which help to lower blood cholesterol levels.

Moreover, sunseed oil is low in saturated fatty acids, which is reponsible for the clogging of

arteries.

Safflower oil is very similar to sunseed oil although it contains even lower amounts of saturated

fatty acids coupled with higher levels of polyunsaturates. Therefore, it makes an even better

option for frying crisps than sunseed oil does.

Another key factor to consider when choosing any oil for frying purposes, is the smoke point.

This is the point at which the oil starts to breakdown into smaller molecules, leading to flavour

and nutritional degradation. On that basis, safflower oil is still very good as it has a high smoke

point of 510°F, i.e., 266°C. On the other hand, sunseed oil has a lower smoke point of 450°F,

i.e., 232°C. This means it would reach combustion faster than safflower oil.

Type of oil Smoke point % FatSaturated Polyunsaturated Monounsaturated

Safflower 510°F / 266°C 9 78 13Sunseed 450°F / 232°C 11 69 20Olive 420°F / 216°C 14 12 74Soybean 450°F / 232°C 15 61 24Palm 455°F / 235°C 52 10 38

Table 8: outline of the advantages of safflower oil other oils

Safflower oil is indeed the best of the lot with an excellent proportion of good fatty acids and a

high enough smoke point.

3.4 Product Testing

The Walkers prototype is presented to the internal company employees from various

departments in order to get their reactions and feedback before the product is further developed

and improved for the market launch.

The product development stage has taken about 2 years. Marketing research began since the

beginning of 2008. The technology development stage had been developed during the second

year followed by the product design development stage until the end of 2009. The company

spent about one year testing the prototype and the new flavours.

3WALKERS HOT & HEALTHY

Walkers R & D Team

4.0 MARKETING STRATEGY

4.1 Segmentation:

According to Haberberg and Alison (2008), the first step in analysing a firm’s competitive

stand is to identify what its target market segments are, and what products it is using to

serve them. For this product line extension, it seems feasible to segment market on the

basis of demography, behaviour and geography. For instance, for Indian and Chinese, Hot

and Healthy is focusing on people between the age of 15 to 34 especially men and

youngsters. The reason we are targeting this age group is because it is the 15-34-year olds

who eat crisps and snacks most frequently and are also the most willing to try out new

flavours. More adventurous crisp eaters eat a greater variety of crisps and snacks, so they

need to be kept on their toes with a constant stream of new products to sample (Mintel,

2009) (1). Also, According to McKinley et al. (1995), due to growing obesity problems

among kids in the United Kingdom, crisps is banned from their school lunch box. With

respect to geography, the segment market will remain the United Kingdom. With regards to

behavioural segmentation our emphasis will be on people who relish ethnic cuisine. Market

segment chosen by the firm or organisation needs to be effective and contributing towards

the success of the firm. The segment chosen must be in some way attractive. It should be

possible to serve them at profit. The attractiveness of the segment market can be analysed

on the basis of their affordability to purchase the launched product and the size of target

segment. Crisps, being such basic products, do not pose much of an affordability issue.

With regards to size of the target market, there is a considerable market size for Hot and

Healthy crisps in the UK as shown by the table below:

Age Groups All GroupsTotal of all groups 51,092.0

15-19 3,354.120-24 3,457.925-29 3,357.730-34 3,311.635-39 3,830.2

40-44 3,960.7Table 9: Ethnic population by age groups

Source: Office for National Statistics, 2009All age groups include the various ethnicities.

4.2 Targeting

3WALKERS HOT & HEALTHY

Walkers R & D Team

According to Keller (2008), a firm can target or serve its products to mass market, niche, locals

and segments. This, in practise, involves offering products or services that appeal to the

individuals in that segment. For our Hot and Healthy crisps, we intend to target mass market

with emphasis on working class with busy schedule. Families that can munch on crisps

together, while watching a movie or a TV show, also youths crunching on crisps in their

universities and social gatherings are all in the target market. The chart below highlights

occasions on which people are more likely to munch on crisps. For Example, findings from

Research shows that 63% of interviewees responded positively on munching crisps while

watching television and 51% respondents mentioned that they would crunch on crisps when

they are at home whereas 42% said yes to eating crisps for a lunch etc (Mintel, 2009) (4).

Table 10: Occasions for eating crispsSource: Mintel 2009

4.3 Positioning

According to Haberberg and Alison (2008), positioning is done to create an image of the

product in the minds of consumers. Many a time, it is done on the basis of differentiation, i.e.

how this product is different from the competitor’s product, serving the same target market. It

must be thus done very carefully since failure may result in switching of customers to the

competitors. For our product, the name “Hot and Healthy” plays an important role in creating

the right image in the minds of the people.

We plan to position our product on the basis of a number of its attributes. Firstly, functional

differentiation: ‘Hot & Healthy’ crisps are different from other crisps since they create positive

images. Secondly, compatibility and interoperability are advantages since we are offering a

3WALKERS HOT & HEALTHY

Walkers R & D Team

variety in flavours... Thirdly, information about its ingredients and content are provided so as

to assure customers that we care about their health and offer products accordingly.

Moreover, the products are good value for money: good price along with good value and

finally, the product quality and reliability are irreproachable.

4.4 Marketing Mix

According to Kotler & Keller (2009), the marketing mix is an important tool in determining

marketing strategies. It includes four P’s that is Product, Pricing, Promotion and Place. It is very

important to offer right product to the right people at the right time and at the right place. If a

company does not offer the right product, as per the needs and demand of the target market,

the product may fail. Also, if the product is not offered to the right market segment, for which it is

developed, there are very rare possibilities that product will exist for long in the wrong market or

may not at all exist. Likewise product must be offered at the right price and place. The Marketing

Strategies for Walkers Hot and Healthy Crisps are derived from this framework.

4.4.1 Product

Firstly, Walkers will be launching healthy crisps, made up of British potatoes, using safflower oil.

As its name suggests ‘Walkers Hot and Healthy Crisps’ comes into positive health category of

snacks. Secondly, the strategy that will have to be implemented in order to develop competitive

advantage of this product is the hybrid strategy as given by Bowman’s generic strategy clock.

The crisps are differentiated in terms of healthy crisps without demanding premium price. For

Instance: Walkers Hot and Healthy crisps is a positive image crisps with a price as low as 50 p

compared to other healthy crisps which are priced at around 1.70 GBP - Kettle brand for 50

grams. Finally, with regards to product justification, findings from research (Mintel, 2009) (4)

shows that product improvement of crisps so far is mainly done by reducing fat and calories

content; therefore there is room for creating a positive profile.

4.4.2 Pricing

Pricing is a very sensitive element of the marketing mix. There are many factors that may

influence pricing decision of the marketing manager such as the nature of the product, target

market spending power, competitors’ pricing strategies, demand and supply factors etc. It

requires a lot of knowledge and experience to choose the correct pricing strategy and come to

the right price. For Walkers Hot and Healthy crisps we have adopted the penetrating pricing

strategy. Our aim is to penetrate into substantial amount of the market share at relatively lower

price and once the market is captured, then we might increase the price in order to make

maximum profits. The pricing objectives would include the following:

3WALKERS HOT & HEALTHY

Walkers R & D Team

One of the main objectives would be survival. As per Kotler and Keller (2009),

companies that face intense competition, mature market and changing consumer wants,

must adopt this as their pricing objective. This is mainly to avoid extinction. By

introducing Walkers ‘Hot & Healthy’, the company aims to provide two new flavours at

the same price with an added advantage of healthy concept.

The other important objective would be to make consumers switch to Walkers ‘Hot &

Healthy’. In this case it would be advisable to adopt a conservative approach. It is

intended that at least 1% of the market in the first year will switch to this new product.

The current growth rate in the market of sweet and savoury snacks in the UK is

approximately 6% (Euromonitor, 2009).

The product will be sold to the retailers at 40 pence for 50 grams and the retailers would add

their margin of an estimated 20% and sell it to the consumers at 50 pence. Since Walkers

enjoys economies of scale through standardisation and mass production, it is possible to

keep costs low. Its competitor, Kettle’s premium and healthy crisps, falling into the same

category of positive health image, is priced at £ 1.70 for 50grams pack.

4.4.3 Distribution:

Distribution channels and networks play important role in the success of any brand. Walker’s

Hot and Healthy crisps will reach market via individual retailers, middlemen and supermarkets,

for example, local grocery shops in residential areas, convenience stores, and supermarkets

like Tesco, Sainsbury’s, Asda and Waitrose.

In order to ensure commitment of the intermediaries in the supply chain, attractive incentives

and commissions will be offered. Distribution networks will not only play an important role in

supplying crisps to the final consumers but will also be motivated for in-house promotion of

Walkers Hot and Healthy Crisps.

4.4.4 Marketing Communications (Promotion)

According to Walkers Brand Manager, Hugo Amos (2005) “Promotions are what built the

Brand”. Walkers is known to be doing an excellent job in terms of marketing a quite basic class

of product. Advertising is done through television, newspapers and even the internet. This effort

helps to maintain brand awareness and provides quick information on any new product that is

being launched. Relevant information is also printed on the packaging to make people aware of

what has changed and why. Since the Beef Chilli and Chicken Tikka flavours are not only an

extension of a product line, but actually members of a different range altogether, any form of

advertising should highlight that factor. The advertisements should also explain the switch from

3WALKERS HOT & HEALTHY

Walkers R & D Team

Sunseed Oil to Safflower Oil. Print advertising should be used which will provide reasons for the

change, as well as regular TV advertising for some time. Point-of-sale (POS) promotion is also

very important to make shoppers aware of the new products as they walk down the aisle. Digital

marketing is also a key factor as people tend to look for more information online now more than

ever. However, Walkers already has a detailed website with links to all their different range of

products.

Base: all internet users aged 16+ who have heard of the brand Source: Mintel, 2009

5.0 FINANCIAL PROJECTIONS

5.1 Sales forecast for first three years

The sales forecast is based on forecast figures obtained from Euromonitor’s report on Sweet & Savoury

Snack, UK, 2009. As per the report the crisps and chips market is estimated to grow by 6 %. Adopting a

3WALKERS HOT & HEALTHY

Walkers R & D Team

conservative approach it is estimated that the growth in the first year will be 1 % followed by 0.5 % in

each year.

In millions      

Particulars 2010 E 2011E 2012 E

Sales forecast for Crisps/chips industry 1870 1935 1942

Projected growth % 1 1.5 2

Projected sales 19 29 38Table 11: sales forecast figures

5.2 Break even analysis

For break even analysis, the variable costs are estimated at 12 pence per unit and fixed cost per unit is

estimated at 18 pence. The total fixed costs would stand at 3.42 million GBP. The selling price to the

retailer is estimated 40 pence. The total cost manufacturing is estimated at 30 pence. Therefore, the

break even can be calculated as follows:

Estimations per unit Amount Selling Price per unit 0.40

(-) Variable cost 0.12Contribution 0.28(-) Fixed cost 0.18

Profit 0.10Table 12: Break-even analysis

Therefore Breakeven (in units) = Total fixed cost/contribution per unit

i.e. Approximately 12 million units.

In conclusion, in order to break even Walkers will have to sell at least 12 million bags of ‘Hot &

Healthy’ in one year.

6.0 REFERENCES

Better Regulation Commission (2007), Spotlight on better regulation, Government Standards for School food, [online] available from http://archive.cabinetoffice.gov.uk/brc/upload/assets/www.brc.gov.uk/spotlight_paper_school.pdf [last accessed on 10 February 2010]

3WALKERS HOT & HEALTHY

Walkers R & D Team

Business Insights Ltd (2009), The Top Ten Snack Companies, emerging opportunities, growth strategies and financial performance [online] available from http://www.bi-interactive.com/index.aspx?StoryID=726574&ReportID=1028&Lang=en&MainPage=renderIntro [last accessed on 10 February 2010]

Business Source Complete (2009) Walkers Crisps Retains its Carbon Label [online] available from http://web.ebscohost.com/ehost/pdf?vid=1&hid=4&sid=6cf6eda2-6bc7-408f-8862-072bc9428a2a@sessionmgr11 [last accessed on 10 February 2010]

Business Source Complete (2009) £20 relaunch for Walkers Crisps [online] available from http://web.ebscohost.com/ehost/pdf?vid=2&hid=4&sid=3b5b5c4d-91d7-44f8-bc5d-8d07ce38972b@sessionmgr4 [last accessed on 11 February 2010]

Business Source Complete (2003) Walkers to relaunch Crisps range with healthier cooking options [online] available from http://web.ebscohost.com/ehost/pdf?vid=2&hid=4&sid=f6de52ca-8745-41b3-bb36-5e97317e43b7@sessionmgr12 [last accessed on 11 February 2010]

Charlotte Eyre, 2008, UK snack firms focus on food miles [online] available from http://www.bakeryandsnacks.com/Processing-Packaging/UK-snack-firms-focus-on-food-miles [last accessed on 11 February 2010]

Emerald Insight (2009) Indulgent snack experience attributes and healthy choice alternatives [online] available from http://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0701110506.pdf [last accessed on 12 February 2010]

Gemma Charles, January 2008, Walkers abandons potato head line [online] available from http://www.brandrepublic.com/News/779774/Walkers-abandons-Potato-Heads-line [last accessed on 12 February 2010]

Haberberg and Alison (2008), Strategic Management: Theory and Application. (1st Edition), Oxford University Press, United States: New York.

Just-Food (2009) Unhealthy Conditions for sweet and salty snacks [online] available from http://www.just-food.com/store/product.aspx?id=44799 [last accessed on 13 February 2010]

Kotler & Keller (2009), Marketing Management. (13th Edition),Pearson Prentice Hall, United States: New Jersey.

McKinley et al (2009), Boosting Better Break-times for Children: An Inspiring Start [online] Available fromhttp://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0170950501.pdf [Accessed 13 February 2010]

Mintel International Corporation, 2009, Crisps and Snacks– UK [online] available from http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393870 [last accessed on 13 February 2010] (1)

Mintel International Corporation (2009), Ethnic Cuisines - UK March 2009 [online] available from http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393883 [last accessed on 14 February 2010] (2)

Mintel (2009), It’s Crunch Time for Crisps. [Online] available from http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=54 [last accessed on 17 February 2010] (3)

Mintel (2009), Crisp-eating Community Calls for Cajun Squirrel [online] Available from http://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=125716&anchor=atom/display/id=393870/display/id=437508 [Accessed 17 February 2010] (4)

Office for National Statistics (2009) Population Estimates for Ethnic group Mid-2007 [online] available from http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=14238 [last accessed on 14 February 2010]

7.0 APPENDICES

2.1.1 PEST Model

3WALKERS HOT & HEALTHY

Walkers R & D Team

2.3 Boston Consulting Group Matrix

4.4 Marketing Mix

3WALKERS HOT & HEALTHY

Walkers R & D Team

4.4.4 Product Images: