Quaker oats annual report 2018

Research Paper

QUAKER OVERNIGHT OATS EXECUTIVE PRESENTATION

Presented on: December 9, 2017

BUS5470 - Marketing Management

QUAKER OATS Mission Statement

Quaker is a proud part of the PepsiCo family. Our Mission is to “provide consumers around the world with delicious, affordable, convenient, and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats.

We are committed to investing in our people, our company, and the communities where we operate to help position the company for long-term, sustainable growth.” Bailey, S. (2014)

Quaker Oats Financial Objectives

The financial objectives of Quaker Oats is to increase profits while maintaining a global presence in the market place. Since the merger of Quaker with PepsiCo there has been little change in the company’s financial position over the years. (Values are listed in millions)

Quaker Foods 2016 2015 2014
Net Revenue 2,564.00 2,543.00 2,568.00
Operating profit 653.00 560.00 621.00
“Net revenue grew by only 1% whereas operating profit increased by 16%” PepsiCo. Annual report.

Quaker Oats Financial Objectives cont’d

Hence, with the report of low financial growth we are aiming to increase net revenue using Quaker Overnight Oats over the next 3 years by 15%.

To increase net revenue we will increase our marketing efforts by widening our target market to include younger customers and customers focused on maintaining a healthy lifestyle.

In year one we aim to increase sales by 5%. The anticipated operating costs during this time will increase by 7%. However, in year 2 we anticipate that profits will increase to 10% and then steadily increase to 15% in year three. During this time we plan to keep operating costs low while aggressively increase our marketing and sales efforts in order to meet this objective.

QUAKER OATS MARKETING OBJECTIVES

With the growing inclination toward healthy food, we believe that we are in a great position to grow our customer base and continue to be a leading force in the industry.

Our aim is to widen our target market range by increasing our focus on the health benefits of our products to include young children and health oriented individuals who have not traditionally been a part of our target market. Hence, we are building a marketing plan geared to this market by introducing Quaker overnight oats.

This product was introduced in 2016 which saw moderate success, however our goal is to increase awareness of this product and make it a staple breakfast item that all can enjoy.

Market Overview

Our target markets will include individuals focused on living a healthy lifestyle as well as household families. We will target household families with two are more individuals consisting of adults and children. This is a good market for our product seeing that Overnight Oats is an easy, versatile, healthy meal that will fit into all kinds of family lifestyles.

The second market will include any individual who exercise daily and are focused on living a healthy lifestyle. This is a good audience for Overnight Oats since our product is a wholesome, low fat, low calorie meal that is also heart healthy.

In addition we will target families of military members and persons in the health profession.

Product overview – Overnight Oats

Quaker Overnight Oats is a superior product compared to our competitors. We are providing a trendy new oatmeal option that is wholesome, quick and easy to prepare and takes all of the guesswork out of preparation.

We also have the advantage of generations of history standing behind our brand which helps us gain customer loyalty and trust which is an important quality when consumers are considering which brand to choose.

Product overview – Overnight Oats

Overnight Oats are simply oats, fruit, nuts, and spices prepackaged for easy preparation. These oats come in multiple flavors to satisfy all kinds of tastes and offers variety to our customers.

Our overnight Oats are also low in calorie, heart healthy as well as a low fat food which makes it a great addition to a healthy diet.

Competitor Business Analysis

Quaker Oats' competitors in the food-cereal and snack for breakfast business has grown. However we have identified our top competitors to be Kellogg and General Mills.

Other competitors in the market place includes but is not limited to La Crosse Milling, Post, Torto, Uncle Sam cereal etc.

This competitor analysis will cover Quaker Oats' top competitor for the cereal and snack for breakfast industry.

Competitor Business Analysis - Kellogg

Kellogg’s started out in 1898 hence the company’s strength comes from having years of experience in the cereal and breakfast industry. The company has also launched Kellogg’s institute of food and nutrition research, a facility where the company can engage itself into research and development of new product offerings and ideas.

However, one drawback to Kellogg is that, even though the company is interested in producing wholesome breakfast products, they have not entered the market for old fashioned oats or the overnight oats breakfast idea.

This remains a major advantage for Quaker Oats.

Taken from Kellogg.com

Competitor Business Analysis – General mills

General Mills' overall strength comes from having a strong presence in the global market, they have made their products quiet appealing to the younger generation, this is an area where Quaker Oats can improve by redesigning its packaging to be more attractive to children and using marketing tactics to get children eating heart healthy oats for breakfast. In addition, 17% of General Mills net sales comes from cereal which takes up its second largest income generating activity, and is being marketed widely in north America which captures 65% of total sales in that area.

Taken from generalmills.com

Competitor Business Analysis – General mills

General Mills is a very strong competitor for Quaker oats.

In order to capture or regain a segment of this market share, Quaker needs to be engaged in intensive marketing efforts. However, while General Mills has a very strong market presence and started out with cheeri-oats they have tapered off to offering more of sweetie type cereal instead of the good old traditional oats that maintains health. As such Quaker Oats still has room to enhance this product offering to its customers thought overnight oats.

Distribution Situation

For our distribution situation, we will use our current grocery retail channels that includes: Super-centers (Wal-Mart, Target, K-Mart), Warehouse clubs (Sam’s Club, B’J’s, Costco), online marketplaces such as Amazon, convenience stores, drug stores, vending machine suppliers, and military base stores.

Quaker Overnight Oats will also be sold on college campuses where we plan to market to busy college students. We plan to use social media platforms to reach potential customers online. We also plan to emphasize that our customers are making a good choice when they choose to eat Quaker Overnight Oats.

OVERNIGHT OATS SWOT Analysis

strengths

Over 140 years in business (since 1877)

Global market competitor

Major market share in cereal and snacks

First company to trademark Breakfast Cereal

Offers healthy breakfast options

Extensive distribution channel

Brand recognition and loyalty

weakness

Reduced market shares due to strong competition

Potential customers may need more health education

Lacking innovation pertaining to traditional oats

Similar products offered by competitors

High probability of substitution

OVERNIGHT OATS SWOT Analysis

Opportunities

Producing Overnight Oats, not currently sold by competitors

Reaching new, younger customers by using targeted social media advertising

Ability to produce Overnight Oats with a low marginal cost

With increasing globalization distribution can reach all over the world

The internet and the popularity of social media sites allow us to achieve global reach with our marketing efforts.

The growing trend for a healthy lifestyle

Threats

Competitors may develop their own overnight oats

Consumers may make their own overnight oats (perhaps using Quaker Traditional Oats which will cannibalize sale but at least it stays within the company)

Marginal cost of oats may rise

External environmental threat – natural disasters may impede our production

Positioning by segment

Quaker has positioned itself in several areas of the market. First, the company has positioned itself as an any time nutrition option as oppose to fast food; The company has also positioned itself to the health-conscious market since the product contains fiber, no cholesterol and can be prepared overnight and consumed for breakfast as a healthy alternative. Final the product is positioned as a ready, quick and easy to cook cereal.

The positioning segment will focus on the Psychographic, Geographic, Demographic and Behavioral segment of the market:

Positioning by segment

Psychographic segmentation

This will take into consideration the social class of society, such as upper, lower and middle-class families. Our product will be segmented mostly to middle class, healthy lifestyle people with busy lives.

Geographic Segmentation

Quaker Oats aim is to provide nutritional Overnight Oats to families globally. The merger of Quaker Oats with its parent company PepsiCo has made this effort much easier for the oats product to be distributed to larger geographic areas and reach a larger target audience.

Positioning by segment

Demographic segmentation

Our demographic segmentation is to target persons between the ages of 6 years to 100 who are capable of consuming old fashion oats. We will also target men and women who are engaged in fitness and healthy living. Due to the affordability of Overnight Oats it is a great food option for middle-class families. We will not segment based on religion, race, or nationality because this is a product that can be consumed by almost everyone.

Behavioral segmentation

Behavioral segmentation - We will be positioning our product to individuals who are health conscious. These individuals may be focused on being fit or just interested in maintaining a heart-healthy diet.

Product strategy

Quaker Overnight Oats is in the growth stage of the product life cycle. In this stage our product strategy is to continue marketing efforts to expand product awareness and increase sales. Product packaging and labeling are of extreme importance to our strategy because they will convey a large amount of information to our customers.

The packaging for Overnight Oats is an individual serving of oats in a sturdy waxed paper cup with a tight-fitting lid. This is of the utmost importance because the container must be strong enough to hold liquids overnight and potentially longer without leaking.

Pricing and communication strategy

Pricing strategy

Our price strategy is to increase sales. The price for an individual cup of Overnight Oats is $1.50. This price is good for our target markets because many of our potential customers are price conscious. $1.50 for a meal is a bargain. Customers can save further by buying the 12 cup package for $16.99. Our marketing strategy to increase sales also involves strategies to increase product awareness

Communication strategy

Our communication strategy consists mainly of marketing through social media platforms using Pinterest, Facebook, Instagram, Tumblr and YouTube in order to reach consumers world-wide.

We will also engage traditional promotional activities such as bundled products, advertising and other promotional campaigns to increase product awareness.

Departmental Cooperation

In order to reach our goal, it is important that all department cooperate with each other. We depend on the production department, the sales department, the distribution department as well as the finance department.

The production department will be responsible for the quantity of Overnight Oats and keeping up with the demand.

The sales department will control the communication with online retailers that we are relying on heavily with this product.

The Distribution Department will be responsible for working with all the departments to ensure we are able to scale production and products.

While the finance department is needed to provide the various funding for the marketing budget.

Marketing mixes by segment

We will introduce a new product to the market – Quaker Overnight Oats using penetration pricing, extensive advertising, and current distribution networks in order to increase our revenues and growth rate. Our target audience will include:

middle class working families

military members and families

mothers and students from kindergarten to college

health conscious individuals

OBJECTIVES WHO RESOURCES NEEDED TARGET DATES HIGH/MEDIUM.LOW
Design packaging Marketing department Graphic design Immediately, January 15, 2018 High
Produce social media marketing video clips Marketing department Video producer Immediately, January 15 2018 High
Launch social media campaign Marketing department Social media experts March 1, 2018 Medium
Launch 3 month rebate application campaign Marketing department Contacts with Ibotta and Checkout51 representatives March 1, 2018, Medium
Produce product with new packaging Production department Packaging design from Marketing department February 1, 2018 High
Overnight oats Marketing ACTION PLAN

We aim at using the following action plan in order to successfully carry out and implement the launch of Quaker overnight oats to our targeted audience.

Reference

Bailey, Sharon (2014) PepsiCo: A Company overview, retrieved from http://marketrealist.com/2014/12/pepsico-company-overview/ On November 19, 2017

Pepsico annual report retrieved from http://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2016-annual-report.pdf on November 1, 2017

Quaker History. (n.d.). Retrieved November 2, 2017, from http://www.quakeroats.com/about-quaker-oats/content/quaker-history.aspx

General mills, making food people love (n.d) retrieved from http://www.generalmills.com/en/Company/Overview on November 19, 2017

Who we are (n.d) retrieved from https://www.kelloggs.com/en_US/who-we-are/our-history.html on November 18, 2017