Opportunities

Products Profiles

Marketing Strategy

Product Strategy

Pricing Strategy

Sales Promotion Strategy

Advertising

Media Plan

References

Appendix

More and more, people are realizing the health’s importance, " No health, no happy life." To keep body healthy, people have to have spent more time and money on exercises and nutritionals. Nutritionals market is becoming bigger and bigger.

But modern life’s rhythm is becoming more and more rapid, people usually have no much time on cooking nutritional food. On the other hand, they care more for health and nutrition than before, and they know health is the most important in the life. So they need some convenient nutritionals, such as Boost Plus, which can offer a compromise. Of course this will increase the convenient nutritionals’ demand.

In this high potential convenient nutritionals market, where competing brands are too many and much alike, and where significant technological improvements are hard to come by, nutritionals manufacturers mount their confidence based on minor modifications in products claims, ingredients and flavors.

Canada is one member of the G-7, NATO and OECD. It has a population of 28 million, and has a second largest territory in the world. Because Canada has a high welfare and high tax social policy, Canadians take much care for health. ⁽¹⁾

Also, Canada has a tight relationship with America and most Canadians prefer to consume American products. Beginning in January 1998, this economic relationship became closer. This will help American product’s selling in Canada. ⁽²⁾

By all these in mind, Boost Plus will be launched in Canada to cater to the growing demand the consumers, namely those persons with increased nutritional needs (e.g., athletes, pregnant women), especially for those who are too busy to cook. It is packed in can. Also four kinds of patients are should be covered. In addition, Boost Plus has six flavors—Vanilla, Chocolate, Strawberry, Chocolate Mocha, Chocolate Raspberry and Strawberry Banana.

Demand

Canada is a developed country. Although it has only 28 million populations, its nominal GDP is 610.3 billion US$. From Table 1, we can see that Canadian economy is keep growing recently.

Table 1. Canada Key Economic Indicators ⁽³⁾

(Billions of US dollars unless otherwise stated)

Nominal GDP, Real growth rate, Per Capita GDP and Imports from USA are all increasing. This will guarantee Canadians’ purchasing capacity. On the other hand, more and more Canadians are paying attention to their health care and nutrition. Both of these will increase the Canadian nutritionals’ demand.

Consumers

Health and life quality is becoming more cared for most Canadians than ever. These Canadian consumers include: Persons with increased nutritional needs (e.g., athletes, pregnant women), Geriatric patients, Patients recovering from illness or surgery, Malnourished cancer patients, Patients needing preoperative and postoperative nutritional support, Persons desiring weight control some of them are athletes, some are pregnant women. On the other hand, as times develops, life’s rhythm becomes more rapid, so some people are too busy to make cooking. The high nutrition fast food and drink can be their best choice.

As we have known, the purchasing agent of a consumer not only has a commanding role in products and brand decision, but also controls the kinds of products he consumes. For the nutritionals, Canadian consumers care for more quality, characteristics than price. ⁽⁴⁾ So we must emphasize Boost Plus’s new characteristics and high quality. At the same time, current consumers are more easily influenced by mass media advertising, which will change their purchasing decisions. Finally economists have an optimistic prediction: Canadian economy will keep stable growth in recent years. ⁽⁵⁾

Problems

Some nutritionals drinks include cholesterol and lactose, which do harm to health.

Some nutritionals drinks has high renal solute load (>380 mOsm/liter), so they can’t drink directly, and must be diluted before drinking.

A convenient energy nutrition drink is lacked in the market.

Present nutritionals drinks available have limited flavors.

Opportunities

More and more Canadians are paying attention to the health and nutrition, which increase the Canadian nutritionals’ demand.

Rapid life rhythm makes the high nutrition drinks more demanded.

Canadian economy keeps a healthy growth recently, and it raises Canadians’ purchasing capacity.

New flavors will attract new consumers.

MARKETING OBJECTIVES ⁽⁶⁾

Product Profile

Product name Boost Plus

Price $5.69

Type Fluid

Flavor Vanilla, Chocolate, Strawberry, Chocolate Mocha,

Chocolate Raspberry and Strawberry Banana.

Size/weight 8 fl. Oz. ⁽⁷⁾

Target market Canadian consumers:

Athletes and pregnant women)

Four kinds of patients

Busy people(no time to cook )

Appeal to consumers Provides consumers nutrition they need conveniently

Not to harm to health (no cholesterol and lactose)

Drinks directly ⁽⁸⁾

Target Market

The target consumers are the followings:

Persons with increased nutritional needs (e.g., athletes, pregnant women), Geriatric patients, Patients recovering from illness or surgery, Malnourished cancer patients, Patients needing preoperative and postoperative nutritional support, Persons desiring a convenient high nutrition energy drink. ⁽⁹⁾

Marketing Objectives

Proposed strategies and plans for the coming fiscal are based on the following basic marketing objectives.

To obtain $40 million in 2000 and build product image, with a total expenditure of $ 40 million for advertising and sales promotion.

2. To achieve 80% national distribution for Boost Plus by the end of the first year with

the objectives spread over 4 quarters.

Quarter Percentage of Distribution

Break-Even Analysis

Total fixed expenses / Unit contribution margin = Break-even point

Unit contribution margin = selling price – variable expense

= $3.98 - $2.98

= $1.00/can

Break-even point (unit) = fixed expense / unit contribution margin

= $15,000,000 / $1.00

= 15,000,000 cans

Break-even point (dollar)=$3.98*15,000,000

=$59,700,000

Target Sales

In year 2000, target sales is estimated at $40 million. This is base on the total distributors in Canada, how many distributors can be reached, and the average sales of each distributor. We will keep 100% growth rate in the next two years, and keep 50% growth rate in the fourth and fifth year. To achieve the target, we must not only keep high-intensity advertising, but also get enough distributors. Both of these can guarantee Boost Plus’ coverage.

Profit Analysis

Total expense is estimated at $46 million, in the next four years, budget expense will be $70 million, $100 million, 130 million and $170 million. So we can get figure 1.

Figure 1.

In 2000, we can’t make profit (net loss $6 million), because of the high star-up investment. In the second year, we begin to earn money.

Recommended activities designed to achieve the forgoing objectives are based on the

following major points of the marketing strategy.

Product Strategy

The main emphasis of our product strategy is its nutrient value, which contains 25 essential vitamins and minerals. It doesn’t contain cholesterol and lactose, so it is safe and has no side effect on consumer’s health. Each can of Boost Plus contains 41g Carbohydrate and 23g sugar, which can provide high nonprotein energy. (Nonprotein: nitrogen = 125:1) A convenient package (can) is easy to carry. Because of its renal solute load (380 mosm/liter), Boost Plus can be drunk directly. Another major emphasis is on taste. Six flavors will be offered: Vanilla, Chocolate, Strawberry, Chocolate Mocha, Chocolate Raspberry and Strawberry Banana.

Distribution Strategy

A four-level channel of distribution will be employed to ensure to that Boost Plus will be in the right place at the time and in the right quality.

Manufacturer® wholesaler® retailer ® consumer

The distribution objective of 80% national distribution in 2000 will be spread over four quarters. The strategy of achieve the foregoing objectives is as follows:

First quarter

To distribute Boost Plus to all major grocery and drug chain stores. This will would ensure breadth of coverage and capitalize on the intensive advertising campaign to create shelf off-take.

Stocking allowances will be offered to retailers to induce them to keep sufficient stock to keep up with anticipated consumer demand.

Second quarter

Distribution will be extended to smaller independent retail outlets.

Wholesalers and Mead Johnson Canada’s sales force will be expanded during this quarter due to wider market coverage.

Third and fourth quarter

Distribution will be extended further to the other remaining retail outlets to achieve the objective of 80% national distribution.

More wholesalers will be added to the distribution channel during these two periods.

Sales force. The main task of the company’s sales force to assist wholesalers on gaining distribution by:

Calling on the retailers and passing on the orders to the wholesalers.

Explaining to the retailers the company’s stocking allowances.

Providing market feedback to improve the distribution channel.

Placing promotional materials at the point-of-purchase locations.

Obtaining in-store displays through the company’s merchandising allowan.

Pricing Strategy

Prices are expected to remain relatively stable throughout 2000 as we do not anticipate introduction of substitutes by competitors during the year. Basically we hope supplies chain price increases like this:

Manufacturer cost * (1+20%) = Wholesalers cost

Wholesalers cost*(1+10%) = Retailers cost

Retailers cost*(1+20%) = Selling price

So we can get the table 2..

Table 2. Recommended price structure

Overall pricing strategy for 2000 is to achieve $ 40 million sales.

Sales Promotion Strategy

The specific objectives of Boost Plus 2000 sales promotion program are to stimulate product trial and repurchase. Basic strategy for achieving these objectives is as follows:

In order to gain trade support in the forms of in-store display and price features by retailers, emphasis will be placed on direct trade incentive in the form of merchandising.

Merchandising allowance support will take the form of contractual payments to retailers for in-store displays. Proposed payments are $15 a four-case display. In-store display will be carried out only in chain and large, independent outlets.

Discount coupons will be strategically placed in newspapers and magazines to encourage consumers to try the product. The coupons will offer consumers 30 cents off the regular retail price. Two million coupons will be mailed during fiscal 2000.

During the first quarter of 2000, we will give the distributors, who order 200 cases for the first time , 10% off price. If their accumulated sales in 2000 exceed 1,000 case, we will give them another 3% off price in the end of year 2000.

During January, 2000, we will choose top 20 groceries to send free sample, every grocery will receive 50 cases free Boost Plus. In these groceries we will hire temporary nutrition consultant to educate consumers of Boost Plus unique composition and its nutritional function. This will create greater product awareness, encourage product trial, and gain product acceptance among consumers.

Free samples will also be mailed to the selected hospitals. We will choose some patients to try Boost Plus. In the end, we will collect the first hand information to write a summary to educate other consumers.

Advertising Objectives

To launch Boost Plus to the Canadian consumers.

To direct advertising to target audiences, who care for more health and nutrition.

To encourage retail trade cooperation by communicating Boost Plus’ brand strength to dealer personnel in buying, merchandising, and store management roles.

To achieve advertising penetration levels as shown below and as measured by penetration study to be concluded in January 2001.

Awareness Level Percentage Recalling One

An advertising tracking survey will be implemented in January 2001. We will hire an advertising research company to help us.

Advertising Strategy

Key strategic considerations governing the use of advertising:

1. Advertising support will be sustained throughout the year but will:

Provide peak support during the introduction stage and periods of major promotional activity (January-June).

Be reduced during July-September to evaluate the effectiveness of earlier advertising strategy.

The basic copy unit for print advertising will be a full-color page, which will give the

target consumer a healthy perspective.

The television copy, in the form of 30-second commercials, will be targeted primarily

at our target market segment.

Advertising production expenses will be limited to a maximum of 5% of the total advertising budget.

Five percent of the total promotion budget will be set aside as a general reserve for contingency use.

Copy Strategy

Boot Plus will be sold on the basis of its unique nutrition composition (cholesterol free and lactose free), high energy and high nutrition.

Boost Plus can be drunk directly, and be carried easily.

Copy presentation will also be emphasize the six delicious flavors offered by Boost Plus.

The mood of the copy will be healthy and bright, emphasizing Boost Plus can give consumers health and nutrition.

The campaign theme that will be adopted is " Boost Plus give you a healthier life. "

Media Strategy

Recommended media plans were developed within the framework of these basic points of media strategy.

Four national consumer magazines will be employed, and this will cover the whole Canada.

Four health magazine, such as, Benefits Canada, Healthy Living Guide and Medical Post, etc. Most consumers, who take special care of their health, like to read these magazines. ⁽¹⁰⁾

A minimum of six insertions will be run in each magazine used to insure adequate frequency of impression and provide continuity of support throughout year 2000. At the same time, preferred position space will be used where available at attractive rates to increase readership of each advertisement.

Canadian Broadcasting Corporation (CBC) TV will be employed to advertise in the whole Canada, so we can create Boost Plus awareness and build product image. ⁽¹⁰⁾

To the high potential region, such as British Columbia and Ontario, we make local TV advertising. ⁽¹¹⁾

Spot television: Thirty-second nighttime and weekend commercials must be purchased in order to reach the target customer with the greatest possible efficiency.

Media Plan

The principal features of the media plan are:

We use eight consumer magazines and health magazines, because they are considered to provide extensive coverage to the primary target consumers. Each magazine is scheduled to receive at least six insertions (all insertions are full-page, four-color units). Through these, we must that total exposure of Canadians is estimated at 28 million and net unduplicated coverage of Canadian is about 2.8 million.(1/10 of the population)

The plan also provides for the use of spot television in 8 major markets. These 8 major markets will cover 70% of all Canadians.

Each spot television market will receive 60-100 gross rating points weekly for a total of 26 weeks, which will be divided as follows into four waves of spot activity.

(See detail in the next page table 3.)

Table 3. Spot television plan

From table 3, we can see the spot television will keep a relatively high intensity in the first half of year 2000.

Summary

Forty million US dollar is allocated to promotion. Of the total $40 million budget, seventy percents are allocated to advertising and twenty-five percents to sales promotion, leaving five percent as general reserve.

Figure 2.

As above, total advertising budget is $4 million. It divides in three parts: 70% on TV, 25% on consumer magazines and 5% on production preparation.

Sales promotion

1. 15% on merchandise allowances to retailers
2. 30% on discount coupons to consumers
3. 45% on free Boost Plus as sales aid
4. 5% on promotional materials
5. 5% on miscellaneous expense.

General reserves

Proposed Advertising and Sales Promotion Budget ⁽¹²⁾

Advertising $28 million

Sales Promotion $10 million

General Reserves

Grand Total $40 million

1. 1997 Country Report on Economic Policy and Trade Practiced: Canada, Country Reports On Economic Policy and Trade Practices, National Trade Data, Mar 23,1998
2. Canada: Trade Regulations & Standards, Country Commercial Guides, National Trade Data, Aug 26, 1998
3. Canada; Annual Marketing Plan, Agworld Attache Reports, National Trade Data, Oct 28, 1998
4. Canada: Leading Sectors for U.S. Exports and Investments, Country Commercial Guides, National Trade Data, Aug 26, 1998
5. Canada: Economic Trends and Outlook, Country commercial Guides, National Trade Data, Aug 26, 1998
6. Seymour Sudman and Edward Blair, Marketing Research, McGraw-Hill Company, pp. 201-202, 1998
7. http://www.meadjohnson.com/mjn/products/hep-adult-med/boost.html, Apr 1, 1999
8. http://www.meadjohnson.com/mjn/products/cons-adult-med/2boost.html,Apr1, 1999
9. http://www.meadjohnson.ca/il/i3.htm, May 1, 1999
10. http://dir.yahoo.com/Regional/Countries/Canada/Health/NewsandMedia/,May 1,1999
11. http://dir.yahoo.com/Regional/Countries/Canada/News_and_Media/Television/Public_Television/, May.1, 1999
12. Charles T.Horngren, etc, Accounting, Prentice-Hall Inc., pp. 886, 1995

Note: 60 percent of a quarter’s sales are collected in the quarter of sale; 40 percent is collected in the quarter following.