Marketing Case Study: Becel Margarine

Becel Margarine: Reinvigorating Growth 1. Problem Statement/IdentificationWhat changes should Becel make to its marketing strategy to increase sales, market share, profits and maintain rapidly growing trend in the long run?

The current strategic objectives and goals of the margarine giant Becel are to:

Deliver strong short and long-term growth

Sustain and consolidate current record market share

Deliver a brand that helps consumers meet their health heart needs

However, in order to achieve its strategic aims the firm must consider the following overriding factors:

Limited growth potential in a thoroughly competitive marketing environment.

Rapidly changing demographic landscape of Canadian consumer and households.

Tight and stringent federal and provincial government regulations stifling growth and innovation

Incompetent and grossly inefficient communications strategy failing to effectively target vital consumers.

The company’s pricing strategy is becoming incompetent as it’s product move through its life cycle.

2. Analysis of the Situation 2.1 Market Analysis

The Canadian consumer market consists of around 31 million people who purchase many billions of dollars of goods and services each year making it one of the most attractive consumer markets in the world. Lipton Foods, a division of Unilever Canada in 1978 decided to launch a healthy and credible alternative spread for consumers wishing to consume a margarine spread which looked after the needs of their heart.

2.2 Cultural and social factors

During the last decade Canadians have noticeably become more health conscious and aware of the consequences of poor dietary intake through the increased number of illnesses such as heart disease, cancers and strokes. A new demand for delicious, nutritious and healthy products has grown and consumers want to gain a healthy lifestyle by balancing calories with reduced saturated fat and trans-fatty acids in their diets.

2.3 Demographic trends

The demographics of people who use margarine and Becel in particular, are disproportionately weighed towards affluent and senior households. However marketing intelligence shows that although a significant portion of the volume of margarine purchased is by people with large families, particularly with four or five members and who tend to have lower than average incomes. The target market for Becel is very close to that of butter, and although the brand enjoys very high customer loyalty, consumer’s factor in more than simply the price and health aspect in deciding in what spread to purchase.

The changing age structure of the population however, provides huge potential growth for the brand which has targeted seniors through its “Young at Heart” campaign. Becel can continue drumming home the message of active, fit outgoing seniors enjoying life to its fullest while enjoying a heart healthy diet, including the consumption of Becel. By associating healthy seniors with a time in life in which is traditionally one ravaged by deterioration and illness, a positive brand message can be reinforced to consumers wishing to purchase the brand.

2.4 Impact of technology

As a premium brand, Becel has to invest and utilize technological gains in order to gain a competitive advantage in the market. By offering constant innovation and differentiating their new products Becel can become Canadians’ most popular choice spread for heart healthy eating. New product development is vital and requires innovation on behalf of R&D to deliver the latest brands to drive sales and growth. The creation of Becel Light and Becel Salt Free demonstrate the ability of the firm to create highly sophisticated margarine products which can help consumers adhere to sodium restricted diets and reduce saturated fats.

New communications technology (such as Internet) also helps company develop more integrated marketing communications.

2.5 Economic environment

Although Becel finished 1999 with a record 31.9% market share in the $450M spreads market, the firm is currently experiencing a slowdown in growth. Margarine is essentially an everyday convenience product and despite Becel charging a considerable premium for its products, consumer interest in healthy products is fueling formidable volume and dollar growth in the market. The premium price of the brand has helped the brand management team justify the high levels of spending on advertising and keep consumers aware of the brand and satisfied.

The company’s growth relies on economy. Since Becel’s current focus is its high quality premium margarine, its high price product would be the first to eliminate from the consumer’s list when economy is bad. Therefore, it is suggested that Becel should explore more markets or establish a back-up marketing strategy when economy turns bad.

2.6 Market size

Market share data analysis illustrates that margarine producers face stiff competition from butter manufactures as they occupy a minority share in the lucrative spreads market. Becel must make inroads with butter users in order to grow because essentially they are competing for the same consumer dollars.

2.7 Consumer segments and needs

Becel is currently engaged in a strategy of benefit segmentation, whereby they have grouped buyers into categories based on the benefits they wish to derive from consuming their particular brand. The margarine market can essentially be divided amongst consumers who purchase brands based on considerations of taste, health and price. Becel has analyzed the strategic advantage and attractiveness