Final master thesis presentation chusin mateechaipong
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Master Thesis "Developing Marketing Strategies for Organic Products Employed by Small and Medium Retailers in Thailand"
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Final master thesis presentation chusin mateechaipong
- 1. Marketing Strategies For Organic Products Employed By Small And Medium Retailers in Bangkok Chusak Suvimolstien Second Supervisor Developing Chusin Mateechaipong Presenter Prof. Dr. Sven Prüser First Supervisor
- 2. Table of contents Introduction Thesis Statement Research Methodology Results Discussion Conclusion, Outlook and Future Works 2
- 4. 4
- 5. Organic VS Non-organic Sustainable environment Good soil No chemicals 5
- 6. VS Caged Chickens Free Range Chickens (Organic) 6
- 8. 6,281.41 5,510.13 10,524.01 13,419.25 55,992.32 69,748.72 86,871.89 135,634.33140,939.98119,722.81105,967.10 192,220.03 219,390.66 0.00 50,000.00 100,000.00 150,000.00 200,000.00 250,000.00 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 LandunderorganicfarminginThailand (1/10hatares) Year Land under Organic Farming in Thailand Land under organic farming in Thailand 9.38 15.22 23.01 23.70 24.42 20.15 33.86 44.98 0.00 10.00 20.00 30.00 40.00 50.00 2003 2004 2005 2006 2007 2008 2009 2011 OrganicValue(€mil) Year Thai Organic Value Value (€mil) ONLY 0.21% of the whole area in Thailand 8
- 10. • To find outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok • To identify strength, weakness, opportunity and threat of organic agriculture business in Thailand. • To develop the marketing strategies and marketing practices for organic small and medium organizations/retailers in Bangkok Thesis Statement 10
- 11. Methodology 11
- 12. Quantitative Method Standardized surveys of 438 Respondents A. Demographic B. Purchase & Consumption of organic products C. Consumer’s Satisfaction & Decision on choosing 4Ps of organic products Qualitative Method Semi-structured interview of Six Key Experts • Marketing Mix Strategies • Obstacles • Future 1. Green Net 2. Aden 3. Thai Organic 4. Rangsit Farm 5. Health Society (Lemon Farm) 6. Thai Ministry of Commerce • Marketing Strategies • SWOT • Marketing Strategies 12
- 13. Quantitative Method Standardized surveys of 438 Respondents A. Demographic B. Purchase & Consumption of organic products C. Consumer’s Satisfaction & Decision on choosing 4Ps of organic products • Characteristics of organic consumers • Marketing Strategies 13
- 14. Qualitative Method Semi-structured interview of Six Key Experts • Marketing Mix Strategies • Obstacles • Future 1. Green Net 2. Aden 3. Thai Organic 4. Rangsit Farm 5. Health Society (Lemon Farm) 6. Thai Ministry of Commerce • SWOT • Marketing Strategies 14
- 16. 22.20% 17.30% 11.80% 10.60% 77.80% 82.70% 88.20% 89.40% <20 years 20-30 years 31-40 years >40 years Age Organic non-buyers Organic Buyers 17.40% 13.50% 82.60% 86.50% Male Female Gender Organic non-buyers Organic Buyers 11% 16.40% 89% 83.60% Yes No Children in the household Organic non-buyers Organic Buyers Organic Consumer Demographic 16
- 17. Have you ever buy organic products? (n=438) Yes (371) No answer (1) No(66) 85% Buy Organic Products 38%Buy Organic For 2-5 Years 34% Buy Organic Once a month Purchase of Organic Products 17
- 18. Reasons to buy organic products 129 209 339 194 316 214 58 55 43 309 228 99 240 118 221 375 380 380 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% better taste fresher than the other products good for my health good for my children not contain pesticides / have lower residues want to try somethcing new good for the environment trendy/fashionable to buy organic products I have a record disease Yes No 18
- 19. Knowledge-based society and Social Contribution Network Loyal Consumers Advocate Consumers Consumers Prospect Consumers Suspect Consumers Building Trust and Consumer- Producer/Retailer Network Development of Household Economic and Boost consumption (Reduce production/logistics cost ) Health and Environment Campaign Educate about organic via mass media Strategies for Different Organic Consumer Segments Daily/once a week>10 yrs 5-10 yrs Every week Once per month2-5 yrs <1 yr Once every few months 19
- 20. Marketing Mix 20
- 21. Product: Which strategies should we use? Fruits&Vegetable 73% Eggs 5% Rice&Cereal 5% Milk 2% Bread&Pasta 1% Meat 1% Juice 2% Never buy 11% Which organic products do you buy the most? 82% said Brands and Labels are important in choosing organic products Cross Promotion • Characteristics & Service • Controlling production standard • Packaging & logo 21
- 22. Willing to pay more Percent 1-3% 25.8 5% 25.8 10% 23.5 20% 11.6 30% 1.8 40% 1.4 High Cost of Production & Fair Trade Price: Which strategies should we use? 22
- 23. Carrefour 27% Villa 20% Tops 15% Lemon Farm 13% Au Tor Kor Market 15% Bonmache Market 6% Royal Project 1% Food Land 1% Organic Retailer 1% Never Buy and no answer 1% Where do you buy organic products? Close to home 27% Reliable 18% Variety of products 6% Fair price 6% Good service 4% Fresh products 18% Certified products 11% No answer 11% Why do you choose to buy organic products at the above places? Strategic LocationHybrid Marketing Channel Place: Which strategies should we use? 23
- 24. Domestic Consumers Producer Membership System - CSA - Vegetable Basket Home Delivery - Phone - Internet Retail Wholesale Trade Fair Product Management Product Collector Green Market Organic Restaurant Organic Retailer Thai Airlines School Department store Hotel and Restaurant’s Kitchen Hospital Consumer Outside Thailand Health Concerned Teachers and Students Patients Order Order Order Place: Hybrid Marketing Channel 24
- 25. Promotion: Which strategies should we use? TV 48% Radio 1% Books and Magazines 9% Social Media 11% SMS 1% Organic Exhibition 8% Internet 6% Ads Board 2% Asking specialist in the shop 4% Shop Booth 8% No answer 2% Which channels are the most effective for you in knowing about organic products? Home Delivery 29% Giving Information about organic 23% Specialist in the shop 11% Product replacement 5% 0% 0% Discount 21% 0% Suggestion box 1% No answer 10% Which services do you like the most? Advertisement > Online > Mass Media Delivery > Provide Information > Discount 25
- 26. IMC Tools: Advantages VS Disadvantages IMC Tools Advantages Disadvantages Advertising PR Direct Marketing P.O.P Personal Selling Sale Promotion Event Sponsorship Online Marketing • Access to wider audiences • Create image • Able to control message • High cost • Low cost • Access to wider audiences • Low cost • Access to specific group • Able to control message • Successful sale • Low cost • Access to sale point effectively • Arouse buying decision at sale point • Access to specific group effectively • Successful sale • Arouse buying decision effectively • Access to specific group effectively • Create image • Access to wider audiences • Create image • Access to specific group effectively • Create image • Not able to control message • Not able to access wider audiences • Not able to create image • Not able to access wider audiences • Not able to create image • Not able to access wider audiences • Not able to create image • Not able to create image • Not able to access wider audiences • High cost • Able to access only online users Advertising • Access to wider audiences • Create image • Able to control message • High cost PR • Low cost • Access to wider audiences • Not able to control message Online Marketing • Access to specific group effectively • Create image • Able to access only online users 26
- 27. SALES Intro- duction Growth Maturity Decline Factors in Setting IMC: Product Life Cycle TIME 27
- 28. TIME SALES Introduction Growth Maturity Decline Advertising, PR Direct Marketing, P.O.P, Per sonal Selling, Event & Online Marketing Sale Promotion, Advertisi ng, PR Direct Marketing, P.O.P, Per sonal Selling, Event & Online Marketing Sponsorship, PR Direct Marketing, P.O.P, Per sonal Selling, Event & Online Marketing Personal Selling, P.O.P & Online Marketing Factors in Setting IMC: Product Life Cycle 28
- 29. STRENGTHS Consumer demand: growing consumers Audition and certification bodies: supportive Strong green network and export organization Organic legislation: Act number 11 Thailand as an agricultural country: kitchen of the world WEAKNESSES Consumer confusion: pesticide free vs organic Producer Motivation: transition from conventional to organic farming Price barrier: expensiveness Insufficient agriculture research OPPORTUNITIES Rising domestic market: government support Mounting export market: EU, USA, Japan, Asian countries Environmental leadership: sustainability movement and green role model Consumer education: online marketing THREATS Information and choice overload: brands, labels, certifications Demand over supply: demand more than supply Global trade barriers: complication of auditions and certifications Conflicting voices: misinformation in the media SWOT Analysis of Organic Business Consumer demand: growing consumers Consumer confusion: pesticide free vs organic Price barrier: expensiveness Consumer education: online marketing Information and choice overload: brands, labels, certifications Demand over supply: demand more than supply 29
- 30. Conclusion, Outlook and Future Works 30
- 31. • Retailers should take the characteristics of the organic consumers into consideration to better understand consumers’ need and to execute proper marketing strategies • Retailers should make their products in high standard with perfect quality control and certification along with strong logo and packaging • Retailers should educate consumers about the benefits of the organic food as well as clearly explain the reasons that the prices of the organic products are high (e.g. due to additional environment and social cost) • The selection of distribution channel should be prioritized the consumers’ convenience. However, the organic organizations need to consider their company size, readiness and limitation Conclusion and Outlook 31
- 32. • Expansion of the organic consumers’ survey • Additional survey on the economic costs and viewpoints of organic brands • The consumer survey could be conducted through a research on the subject of psychology Future Works 32
Notas del editor
- Have you ever heard of Organic or Bio (in German?) Yes that is partly correct! Some of you might heard about organic, but what does it really mean?You know Organic begins when we grow our plants. I will give you an easy example of “Organic” VS “Non-organic Pears” Organic pears are natured by sustainable ecosystem, good soil and are not depend on chemicals. When it comes to livestock products, the organic livestock have to eat only organic food so they produce healthy wholesome organic eggs and chicken meat that we eat. Also, an organic standard governs the way that the livestock is treated. For instance, the chickens get the chance to see a light of day and they cannot be in the intensive confinement. Now you see how good Organic Business is. Now let us bring you too my country, Thailand.Ref: http://www.organiccouncil.ca/moo/rsa
- Thailand is mentioned as The Kitchen of the World, which imply that Thailand is an agriculture country. The conventional agriculture is practiced widely. However, when it comes to Organic Farming. Guess how many percent for Organic land of the whole agriculture area in Thailand? It is 0.21% of the whole area in Thailand, which is considered very tiny bit. Thailand’s organic sector is small but has grown rapidly over a past decade in line with global trends; the organic product value has increased by five times between 2003 to 2011, from 9.37 to 44.98 million euros. The land under organic farming has also increased 20 times from 2000-2011.
- My project investigates outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok. I conduct SWOT analysis of the organic business in Thailand utilizing a standardized survey of 438 respondents. I conduct semi- structured interviews with five organic product retailer’s owners and one from Thailand Ministry of Commerce. The interview is about the marketing mix strategies of the organic companies, obstacles and future of organic business in Thailand.
- My project investigates outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok. I conduct SWOT analysis of the organic business in Thailand utilizing a standardized survey of 438 respondents. I conduct semi- structured interviews with five organic product retailer’s owners and one from Thailand Ministry of Commerce. The interview is about the marketing mix strategies of the organic companies, obstacles and future of organic business in Thailand.
- My project investigates outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok. I conduct SWOT analysis of the organic business in Thailand utilizing a standardized survey of 438 respondents. I conduct semi- structured interviews with five organic product retailer’s owners and one from Thailand Ministry of Commerce. The interview is about the marketing mix strategies of the organic companies, obstacles and future of organic business in Thailand.
- Discussion part
- Structure of questionnaire and resulting groups of interviewees
- Have to fix bar2,3,4
- I segment consumers based on results as followed: 1……2…..3….4….5….
- Marketing Mix is defined as a set of marketing tools the firm uses to pursue its marketing objectives by marketing its products in an effective manner to certain customer group.
- As shown in the chart, Thai consumers buy organic Fruits & Vegetables the most and 82% said Brands and Labels are important in choosing organic products. What can we implement utlizing these findings. Well, if we know organic & fruits and vegetables are the most famous products. Why don’t we do “Cross Promotion”. What is Cross Promotion? You may wonder. I will give you a clear example, Go Organic promoted its pasta sauces through miniature recipe leaflets attached to organic egg boxes. Tesco markets its organic grocery lines using leaflets in the packaging of fruits and vegetables. The benefits of cross promotion are that 1. cost of promotion is less 2.win-win situation for both parties 3. easiest and most successful marketing strategies 4. both business can promote themselves simultaneously.Organic Product Strategies can be divided into 3 aspects; 1. Product Characteristics & Service 2. Controlling production standard 3. Packaging & logoFor Product Characteristics & Service, as you know organic products aim for higher standard, for example, taste and appearance, than conventional ones in order to make a significant market impact. Some organizations like Green Net and Lemon Farm do contract farming, setting up more than one producer group within one category of products so that there is more reliable availability as well as a friendly competition among the groups to “naturally” improve their quality. Regarding controlling standard; I will give you example of Green Net. Green Net differentiates its products by product, service, personal and image differentiation. Product diff in terms of quality, variety and standard certification. Service diff in terms of information and data about products, service dissemination. Personal diff in terms of info background and source of production. Image diff in terms of environment and fair trade.Packaging and logo are the important means of communication. A good logo should be attractive, easy to recognize and confirm the organic identity of both company and products.
- A lot of studies mentioned that “The price can be the major cause for consumers not buying organic products” Mr. Kitipong, CEO of Aden told me that the price of the organic products would confine their purchase for the lower level of income group. (Press) The Two major reasons for the high price of organic products are 1) high cost of production; imagine we have to spend more time and labor to look after the organic produces such as pest control. 2) organic products not only fulfill the needs of customers in consuming healthy food but, ultimately, also serve the society through Fair trade. Organic retailers therefore need to communicate with the consumers by all means, preferably through mass media, to ensure consumers are clarified the reason of higher prices. If the environmental and social costs were added in the actual cost of conventional products, they would not remain cheap.
- More than half of the respondents tend to shop the organic products more in department store than in specialized stores or in the wet market. The main department stores, where the respondents buy the organic products in Bangkok is Carrefour, Villa, TOPS, Foodland, which are counted as 63% together. The major wet organic markets in Bangkok are Au Tor Kor market and Bon Mache Market Park, which counted as 21%. For the main specialized storesare Lemon Farm, Royal Project store and other retailers, which are counted as 15%. The reason people buy organic products are that it is close to home in terms of transportation. In addition, department store are often accessible by car and local transportation, and there is a variety of activities that consumers can do e.g. buying other products, having food in the restaurant, and watching movies.Also, they provide reliable fresh products. So what can retailers learn to adapt their place strategies? 1. Find a strategic location, where the consumers can access the products conveniently.2. Do Hybrid Marketing Channel, you might wonder what is that, I will clarify you in the next slide
- Hybrid Marketing Channel occurs when a single firm uses two or more marketing channels to reach one or more customer segments such as organic restaurants, department store, hotel, hospital, school , Thai airlines, domestic and foreign consumers. This strategy is used by most of the organic organization since it can gain maximum profits due to their higher segments.
- Companies must consider several factors in developing their promotion mix. One of the factors are product life cycle. Product life cycle can be compared to the human’s life; starting with Introduction. Followed by Growth and Maturity stage. Ended up with Decline stage.
- Communication tools change in cost-effectiveness at different stages of the product life cycle. As showed in this slides, in the introduction stage, advertising have the highest cost effectiveness. In the growth stage, demand has its momentum through sale promotion. In maturity stage, sponsorship grow more important.In the decline stage, personal selling continues strong.
- SWOT Analysis of Organic Business in Thailand. I would like to choose some major points on strength, which is consumer demand in Thailand. Due to my survey, 85% of the respondents have bought organic products meaning that Thai consumers strongly support organic products. However, there is threats which make consumers confused since there is information and choice overload.When it comes to Weaknesses, 69% of the respondents confused between organic and pesticide-free products. Mr. Karn from Thai Organic mentioned that the consumers do not easily understand terms such as “organic” in Thai and often fail to connect with a term on an emotional level. Moreover, price is also a major barrier for consumers to buy organic products. Hence, there is an opportunity for consumer education and organic organizations should be proactive in their messaging strategies.
- Answer the research objectives:1.2.3.
- My project investigates outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok. I conduct SWOT analysis of the organic business in Thailand utilizing a standardized survey of 438 respondents. I conduct semi- structured interviews with five organic product retailer’s owners and one from Thailand Ministry of Commerce. - Add SWOT
- Marketing Process
- Product-market growth matrix (Ansoff)
- Discussion part