January 2017
Exploration Project
Presented by:
Fabrizio Rossi Fabrice Martini
Executive Summary Forever & Ever is a Dutch based company with a US trademark owner that is specialized in high quality and easy maintainable hydrangeas. The flowers are grown in a nursery in the Netherlands, and there are available in 5 different colours (forever-ever.eu, 2016). Moreover, Forever & Ever is operating in several European countries and their plants are available at most big garden centres in the Dutch market such as Intratuin and Groenrijk. Additionally, the plants have a retail price of approximately â‚Ź19,95 (Personal Communication, 2016). The aim of this paper is to explore the possibilities and conditions of a new product launch by Forever & Ever in the Dutch market. The introduced product is a flower named Hibiscus, and it is very important for Forever & Ever to have the necessary market information in order to meet their objectives. This exploration paper must act as a handbook to Forever & Ever in the direction of creating a strategic plan. After conducting research, we were able to conclude that the introduction of the Hibiscus has certain key aspects, which Forever & Ever has to focus on in order to successfully launch the product. When revising the internal and external analysis, it seems to be a tactical move for Forever & Ever to launch a new product, especially when looking at their slim product portfolio. The confrontation Matrix also shows that the new product will benefit the market opportunities and new ones will arise. Furthermore, Forever & Ever should use, maintain and expand their current social media accounts in order to communicate their values to their current and potential customers. Lastly, it can be concluded that the biggest threat of Forever & Ever is the weak relationship with their retailers. 1
Table of Contents Executive Summary ................................................................................................... 1 1. 2.
3.
4.
Introduction ....................................................................................................... 4 1.1 Problem definition and Purpose ............................................................................ 4 Project Objective ............................................................................................... 4 Short Company Overview ..................................................................................... 4 Research Overview ............................................................................................... 4
2.1 2.2
Internal Analysis ................................................................................................ 5
3.1 Company Description ............................................................................................ 5 3.2 Mission and Vison Statement ................................................................................ 6 3.3 Product Description .............................................................................................. 6 3.3.1 Hydrangea .............................................................................................................. 6 3.3.2 Hibiscus ................................................................................................................... 7 3.4 Target Audience .................................................................................................... 7
External Analysis ................................................................................................ 7
4.1 Market Analysis .................................................................................................... 7 4.2 Competitor Analysis .............................................................................................. 8 4.2.1 Magical Four Seasons ............................................................................................. 8 4.2.2 Endless Summer Collection .................................................................................... 8
5.
Marketing .......................................................................................................... 9
6.
Distribution ..................................................................................................... 10
7.
PESTLE Summary ............................................................................................. 10
8.
9.
SWOT Analysis ................................................................................................. 12
8.1 Strengths ............................................................................................................ 13 8.1.1 High Quality .......................................................................................................... 13 8.1.2 Specialization & Innovation .................................................................................. 13 8.1.3 Unique Knowledge ............................................................................................... 13 8.1.4 Smart Branding ..................................................................................................... 13 8.2 Weaknesses ........................................................................................................ 14 8.2.1 Slim Product Portfolio ........................................................................................... 14 8.2.2 US Trademark Owner ........................................................................................... 14 8.2.3 Retailer Contracts ................................................................................................. 14 8.3 Opportunities ..................................................................................................... 14 8.3.1 Social Media & Applications ................................................................................. 14 8.3.2 Alternative Investment ......................................................................................... 15 8.3.3 New Product Introduction .................................................................................... 15 8.3.4 Market Opportunities ........................................................................................... 16 8.3.5 Different Retailers ................................................................................................ 16 8.4 Threats ............................................................................................................... 16 8.4.1 Retailer Cooperation Issues .................................................................................. 16 8.4.2 Ease of Duplication ............................................................................................... 17 8.4.3 Perceived Customer Value .................................................................................... 17
Confrontation Matrix ....................................................................................... 17 Offensive Strategy .............................................................................................. 17
9.1
2
9.2 9.3 9.4
Adjust Strategy ................................................................................................... 18 Reactive Strategy ................................................................................................ 18 Defensive Strategy .............................................................................................. 19
10.
Theoretical Exploration ................................................................................ 19 10.1 Product Development ......................................................................................... 19 10.2 Price/Quality Ratio ............................................................................................. 20 10.3 Product Placement .............................................................................................. 20 10.4 Brand Awareness ................................................................................................ 21 10.5 Customer Satisfaction ......................................................................................... 21 10.6 Market Demand .................................................................................................. 21 10.7 Conceptual Model ............................................................................................... 22
11.
Purposed Solution and Methodology ........................................................... 22
APPENDIXES ............................................................................................................ 24 Appendix A ..................................................................................................................... 25 Appendix B ...................................................................................................................... 25 Appendix C ...................................................................................................................... 26 Appendix D ..................................................................................................................... 27 Appendix E ...................................................................................................................... 27 Appendix F ...................................................................................................................... 31 Appendix G ..................................................................................................................... 31 Appendix H ..................................................................................................................... 32 Bibliography ............................................................................................................ 34
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1.
Introduction
1.1 Problem definition and Purpose The aim of this project is to explore the possibilities and conditions of a new product launch by Forever & Ever in the Dutch market. The introduced product is a flower named Hibiscus, and it is very important for Forever & Ever to have the necessary market information in order to meet their objectives. This exploration paper must act as a handbook to Forever & Ever in the direction of creating a strategic plan. The purpose of this exploration paper is to offer a guide to Forever & Ever in order to implement the necessarily steps to achieve their objective; successfully launching the Hibiscus in the Dutch market.
2.
Project Objective
2.1 Short Company Overview Forever & Ever is a Dutch based company with a US trademark owner that is specialized in high quality and easy maintainable Hydrangeas. The flowers are grown in a nursery in the Netherlands, and there are available in 5 different colours. (forever-ever.eu, 2016) Moreover, Forever & Ever is operating in several European countries and their plants are available at most big garden centres in the Dutch market such as Intratuin and Groenrijk. Additionally, the plants have a retail price of approximately â‚Ź19,95 (Personal Communication, 2016).
2.2 Research Overview The exploration for Forever & Ever is limited by several factors. One of those factors is that the exploration is limited by a time frame of 6 weeks; therefore, extensive research was not possible. This exploration paper consists of a situation analysis, including an internal, external analysis and several tools like SWOT have been used. We have looked at several macro-environmental in the PESTLE analysis that can have an impact on Forever & Ever. The exploration paper of quarter 1 will be used as a base for the research paper that will be written in quarter 2. In quarter 2 we will 4
focus on finding a proper solution for Forever & Evers’ objective, launching the Hibiscus to the Dutch market. To ensure quality, there has been chosen to use desk research to acquire market information by consulting several websites and databases. Moreover, a qualitative research approach has been used in order to find company information. We had the opportunity to ask the company representatives Vincent van Rijswijk and Janneke Sterrenburg questions during the first meeting and by email. Purpose of project expand portfolio with a second product because Forever & Ever have the hydrangea established in the market and using the same techniques acquired the first time, want to implement the hibiscus in the Dutch market. This is crucially important for the company as only relying on one product is very risky. A broader product development means a reduced risk and potentially higher sales and revenues.
3.
Internal Analysis
3.1 Company Description Forever & Ever is a Dutch based company, founded in 2008 and currently active in the market of Hydrangeas. Their trademark owner is a US company with the same name. Their flowers are grown in the Netherlands, more precisely in the nursery of the Gebroeders Jonkers Elshout, one of the most sustainable in the Netherlands. (Forever&Ever.eu, 2016) Forever & Evers’ selling proposition is their top quality, easily maintainable flowers (Personal Communication, 2016). Their distinction mark is a purple pot with a white Forever & Ever logo on it, see appendix A. The company is selling their product in different European countries such as the Netherlands, Germany, Belgium and France. Forever & Ever is also expanding to the rest of the Europe such as Sweden, Poland, Czech Republic and Russia (Personal Communication, 2016).
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3.2 Mission and Vison Statement Forever & Ever is known as a sustainable Hydrangea grower and renowned for their high quality products. The company has succeeded in annually growing Hydrangea plants while most other companies are only able to harvest their flowers. Additionally, Forever & Ever uses only half the pesticides during the growing process (Forever&Ever.eu, 2016). Currently, there is an increasing environmental awareness in the society. The fact that Forever & Ever is only using half of the pesticides and that they are able to harvest every year, makes them especially successful in the market for Hydrangeas in the Netherlands, France and Germany. The main objective for Forever & Ever is to introduce new products in the European market and as a consequence increase their sales (Forever&Ever.eu, 2016).
3.3 Product Description Currently, Forever & Ever is only offering a single product which is the Hydrangea plant. Due to the great success over the past years, the company has now decided to add the Hibiscus plant to their portfolio. Due to low competition, the Hibiscus was favored as a second product and will be launched in 8 different countries. The retail price for both products is set at ₏19.95 (Personal Communication, 2016). 3.3.1 Hydrangea Forever & Ever is offering a range of high quality, easy to maintain Hydrangea’s. Their Hydrangeas are available in several different colours including blue, red, pink, white and purple and are sold in pots of either 5 or 12 litres capacity (Forever&Ever.eu, 2016). In order to be recognizable and attract customer attention, Forever & Ever decided to brand its products and package them in a purple flowerpot with a printed logo, see appendix A. The unique selling point of Forever & Ever is the high quality of their products due to their intense research & development program. With this they ensure that the plants are easy maintainable so that not only gardeners can use it, but also other people that are less experienced in gardening can enjoy them to the fullest (Personal Communication, 2016).
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3.3.2 Hibiscus The Hibiscus will be added as the second product in their product portfolio. The concept of the Hydrangea plants will be adapted. After a long research phase this species was selected due to its core attributes of being easily manageable due to its long flourishing period (Personal Communication, 2016).
3.4 Target Audience The target audience has been defined by the company and has been divided into three different sectors. The first one is the ‘’Babs’’ which consist of people that have no green thumb and have a busy social life. The second one is the ‘’Wessel’’ which has no time for gardening due to his/her successful and busy job. The third one is “Janske” which consist of Garden lovers with a lot of spare time and gardening experience (Personal Communication, 2016). In order to create successful marketing campaigns and to increase customer relationships, the three target segments have been redefined by adding additional information. The core idea of these segments will be sustained, however by introducing age, geographical and housing data to the already present variables the target group will contain additional information. See appendix B. (Personal Communication, 2016)
4.
External Analysis
4.1 Market Analysis The Netherlands is the largest exporter in the world live trees, plants potted and cut flowers (Hollandtradeandinvest.com, 2016). The value of the Dutch gardening & outdoor living market was approximately worth $2,662.8 million in 2014, and it is estimated that the market will grow by 5%, resulting in a value of $2,796.5 million by the end of 2019. (Data.worldbank.org, 2016). The market of gardening & outdoor living consists of several segments, and the biggest segment is plants, shrubs, flowers and growing media. Which has a share of 48.4% resulting in a value of $1,289.7 million, see appendix B for the full overview of the market 7
(Data.worldbank.org, 2016). Additionally, in 2014 the average Dutch household spent â‚Ź189 on flowers and plants which were most often (61.7%) bought in garden centres and flower shops (Detailhandel.info, 2016).
4.2 Competitor Analysis 4.2.1 Magical Four Seasons According to Vincent van Rijswijk (personal communication, 2016), Magical Four Seasons is one of the main competitors of Forever & Ever. Magical is specialized in high quality Hydrangeas that change in color three to four times within a single year. Moreover, their Hydrangeas have a long lifecycle due to the sturdy stems that can even withstand rain and bright sunlight. Additionally, the Magical Hydrangeas are available in 7 varieties and can be bought in 3.5, 4, 5 and 10-litre pot sizes from March till the end of September. The Magical products can be bought at more than 30 retail chains throughout the Netherlands, for the full retailer list see appendix D (Magical Four Seasons, 2016). Several growers in Europe cultivate the Magical plants, and De Jong Plant is the Magical Hydrangea grower in the Netherlands (Magical Four Seasons, 2016). 4.2.2 Endless Summer Collection
Vincent van Rijswijk (personal communication, 2016) also mentioned that Endless Summer is also one of the main competitors of Forever & Ever. Endless Summer Collection was founded in 2004 and it was the first and best-selling company, of re-blooming Hydrangeas. These high-quality plants from Endless Summer Collection maintain their vibrant colours during their lifecycle. Endless Summer Collection offers 4 varieties of Hydrangeas, see appendix E (Endless Summer Collection, 2016). Bailey Nurseries is the mother company of Endless Summer Collection and the headquarters are located in St Paul, the United States. The company has more than 4,500 customers worldwide and approximately 400 fill-time and 1,400 seasonal workers. Additionally, Bailey nurseries has more than 30 nurseries spread over the United Stated (Bailey Nurseries, 2016). 8
5.
Marketing
Currently, the product portfolio of Forever & Ever consists of one product that is available in several colours. Forever & Ever has been able to modify this specific plant and change their core characteristics including the growth patterns and the care requirements. This results in the creation of a separate variants of this specific species (Personal Communication, 2016). With this altered version, Forever & Ever has been able to be the first company that properly brands and create its own unique product. Therefore, it has been able to add value and to differentiate with both their brand and their core competencies (Personal Communication, 2016). Even though Hydrangeas differ in quality and their characteristics, aesthetically they are undistinguishable for most of the consumers at first sight. Communicating Forever & Evers’ message to the consumer is proving to be an issue, due to the reason that it is very difficult to distinguish the products when comparing to the competitors. Forever & Ever is distinguishing themselves by their recognizable feature: the remarkable purple pot with their logo. Moreover, the purple pot is also used as a medium to communicate their message (Personal Communication, 2016). In addition to the packaging, Forever & Ever is trying to educate their potential customers on the added value and quality of their products with point of sales materials (POS). The point of sales materials is provided to all the retailers that sell the products. However, Forever & Ever has analysed that most of the retailers neglect the use of these materials, while Forever & Evers’ research has shown that the use will boost the sales significantly (Personal Communication, 2016). Forever & Ever is essentially taking a modern approach at gardening with the effort of making it easier, time friendlier and accessible for everyone. In combination with a distinguished product and an elevated price, Forever & Ever relies on the relationship with its potential customers to convey their messages and perceived value. However, with this innovative company and its modern approach, their social media campaign leaves much to be desired. With early indicators that 9
traditional channels do not reach their desired customer base, this is a very easy and cost-effective way to promote the product, convey their message, value proposition, provide after sales services and improve customer relationships when employed effectively.
6.
Distribution
Currently, Forever & Ever is supplying their products throughout Europe and the Netherlands, Belgium and Germany are their biggest markets. Forever & Ever is mostly available at DIY stores and large garden centres such as Intratuin (forever-ever.eu, 2016). This network combined with their online web shop ensures coverage of most of the target customers (Personal Communication, 2016). With demand rising from countries such as Russia, Ukraine and the Scandinavian countries, the distribution network is becoming more complex for this medium sized company (Personal Communication, 2016). With Forever & Ever being the horticulturist, seller and everything in between. It owns the entire upstream supply chain. Their difficulties lie downstream, particularly between their retailers and customers. For a complete list of all Forever & Ever retailers in the Netherlands, see appendix C.
7.
PESTLE Summary
In order to sustain the focus on the project objective only key outcomes of the PESTLE analysis, see appendix E, will be displayed. The Pestle analysis is an external analysis, meaning it is used to explore and evaluate the external forces which effect the company. These are Political, Economic, Social, Technological, Legal and Environmental factors. The political situation in the Netherlands is very stable and the Gross Domestic Product (GDP) for the Netherlands was approximately 752.5 billon USD in 2015 (Data.worldbank.org, 2016). International trade is a key element for the Dutch economic system, and therefore it has a very open economy. Approximately 74.4% of the Dutch population 10
ages between 15 and 64 were working during the first quarter of 2016. (The OECD, 2016) Only 12% of the Dutch population has bought a bouquet online in the past year. These bouquets are mostly ordered for special occasions or holidays such as birthdays, Valentine’s Day and Mother’s Day. This means that flowers and plants are especially bought for special occasions (royalfloralholland.com, 2016) Flowers and plants are a healthy, cheerful and natural mood moderator, meaning that flowers can immediately have an impact on your mood. Additionally, flowers and plants have a long- term positive effect on moods. People from all ages associate flowers and plants with pleasure and happiness. Research has shown that there is a higher sense of enjoyment and life satisfaction due to the emotional benefits of receiving flowers such as stress relief (Aboutflowers.com, 2016). Seasons have an impact on sales of plants. According to Dr. Marianne Altmann, there has been a significant increase in sales during Mother’s Day 2015 when compared to the figures of 2014. This is mainly due to the reason that the customers spent more on average. The average spending for a mother days present was approximately 21 EUR (Altmann, 2015). Moreover, sales for plants and flowers also increase during other holidays such as Christmas, Chanukah, Valentine’s Day and Easter (Aboutflowers, 2016). The different buying behaviours have to be analysed. Men usually spend more on floral gifts than women. Moreover, men tend to buy larger flower arrangements or expensive flowers like roses. Young consumers under the age of 35 buy mostly inexpensive bouquets or loose flowers. These gifts are mainly given when celebrating special occasions or holidays (acrwebsite.org, 1982). Also, research has shown that 91% of the Dutch population went to the local florist shop within the last year. The key benefits that floral shops offer are quality and better customer service. Additionally, 63% of the population visited the local florists more than once. Lastly, 59% of the population purchased flowers and plants at a garden centre or nursery (acrwebsite.org, 1982). However, the buying behaviours are changing as recent studies have 11
shown. While the average consumer spending on flowers and plants did not change over the past five years, there have been several signs of a changing buying behaviour. It seems that consumers are buying their flowers and plants more often at supermarkets for a lower price (Rabobank, 2015). The industry is constantly innovating and developing new ways of producing goods. (Agriholland.nl, 2016) From the first of January of 2018, every glass horticulturist is obliged to purify the water used. This legislation implies that the water should be purified for at least 95% from the chemicals that companies use to protect their products (Waterproof, 2016). During the last few years, environmental standards for the horticultural (greenhouse) sector are being tightened. Several environmental objectives have been defined by the Dutch government.
8.
SWOT Analysis
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8.1 Strengths 8.1.1 High Quality
The company Forever & Ever has various strengths to build upon while introducing a new product to their current product portfolio and thus the market. The first strength is that the company places tremendous efforts in always delivering the highest possible quality. This is an important distinguishable characteristic for their products. The plants are grown and cut at the nurseries while regular controls are undertaken (personal communication, 2016). 8.1.2 Specialization & Innovation The high quality is achieved due to the reason that Forever & Ever is innovative and specialized. With many years of experience in their Hydrangeas, a second product is added to their product portfolio: the Hibiscus. This plant was chosen from a selection of thousands of plants. Moreover, the way it is produced is very innovative and it play’s perfectly into Forever & Evers business model, growing high quality and easy maintainable plants for everyone (personal communication, 2016). 8.1.3 Unique Knowledge
Furthermore, the company has a unique know how which is acquired through extensive research and development. The acquired knowledge is used to introduce the new product and to expand their markets in order to sustain their success. 8.1.4 Smart Branding In the recent years, the company introduced a branded pot (see appendix A) that is used as a communication tool (personal communication, 2016). The pot is branded with the Forever & Ever logo and it helps customers to recognize the brand and link it with the values that they stand for: high quality and service. They distinguish themselves by using this simple tool and it has helped them to be recognizable throughout Europe. Moreover, the branded pot is one of the reasons why Forever & Ever is successful by giving the products something unique and memorable. 13
8.2 Weaknesses 8.2.1 Slim Product Portfolio After looking at the strengths, various weaknesses were discovered. The first weakness of Forever & Ever is their slim product portfolio, which only consists of one product at the moment (forever-ever.eu, 2016). The company is taking a risk by only selling one product, because demand and trends are uncertain and changing all the time. By adding new products to their existing product portfolio, they can attract new customers and increase the company continuity. 8.2.2 US Trademark Owner The second weakness is the trademark owner of Forever & Ever that is based in US. When searching for Forever & Ever on the Internet, the website of the Forever & Ever trademark holder can be found. The websites of the European and US markets have two completely different layouts, but they are using the same name and logo and this can be very confusing for customers. In the end, this might harm the traffic to their European website and their social media accounts (Personal Communication, 2016). 8.2.3 Retailer Contracts
Forever & Ever has no dedicated shops to the Forever & Ever products and therefore it relies on the independent retailers. Although Forever & Evers’ products are widely available in the Netherlands, it still faces competition at the retailers. Most of the retailers neglect the desired product presentation by Forever & Ever by not using the provided point of sales materials. Hence, the customers only see the high price, but not the added values that are communicated through the materials (Personal Communication, 2016).
8.3 Opportunities 8.3.1 Social Media & Applications Forever & Ever relies heavily on the communication with their potential customers and their perceived value in order to sell their products for a higher price and the majority of the industry (personal 14
communication, 2016). Social media could be an ideal and costeffective way to communicate with their customers, but currently it is not being used to its full potential. Social media channels can be used to raise awareness for new products, the reach new customers and even to gain more customer data through analysis. Moreover, they can get create marketing campaigns during holidays in order to boost their sales (Aboutflowers, 2016). Additionally, as Forever & Ever mentioned before, an application can also be introduced and used as a communication platform and to extent additional services (personal communication, 2016). Lastly, the application can be used to gather data, communicate special offers and to assist the customers with their products by providing care instructions. This might lead to higher perceived value and to higher customer satisfaction. 8.3.2 Alternative Investment Creating awareness on social media is not enough to entice customers and convince them of the quality and value of the products. However, this can be supported by constantly exposing the products in public places like hospitals or public gardens. The plants will be gifted to these public places as well as charities, and this might also help to reach people that do not use social media, like elderly. Another option could be to cooperate with developers for new housing projects or with gardeners to create additional awareness. These entities can propose the plants to their clients and might also increase awareness. In order to achieve this, Forever & Ever should invest in PR. However, this investment will return additional awareness and most likely an increase in sales. 8.3.3 New Product Introduction Forever & Ever is planning to expand their product portfolio and introduce their version of the Hibiscus, using the same formula that was used for the Hydrangea. The Hibiscus is as user friendly as the Hydrangea and of similar quality (Personal Communication, 2016). However, with the Hibiscus being a plant that is not widely available in the Netherlands, the introduction of their new product could have huge implications for the company (floraldaily.com, 2016)(royalfloralholland.com, 2016).The opportunity to sell their version of the Hibiscus in a market as big as the Dutch market, with 15
limited competition could help Forever & Ever win market share and create an increasingly dominant position in the market, potentially overshadowing several competitors (royalfloralholland.com, 2016). 8.3.4 Market Opportunities The Dutch botanical industry which includes trees, plants and cut flowers is of substantial size (see market analysis). Furthermore, the market shows steady growth and plenty of opportunities for Forever & Ever to expand (Data.wprldbank.org, 2016). Moreover, it is a market that is constantly innovating: from how to grow better quality flowers and plants to the marketing and sales aspects. This can be used to Forever & Evers’ advantage by innovating in new distinguishable products and marketing (personal communication, 2016). This creates an ideal environment for Forever & Ever to introduce their new product, the Hibiscus, and to create their own segment in the industry with their unique branded products. The introduction of the new innovative Hibiscus by Forever & Ever is the next step where the market is eagerly waiting for (floraldaily.com, 2016) (royalfloralholland.com, 2016). 8.3.5 Different Retailers
Forever & Ever has been trying hard to make customers aware of their product and to communicate their value proposition. However, with their troubling relationship with its retailers, the exposure and message are distorted. Forever & Ever could use the opportunity of retailing trough smaller stores and specialty flower shops. This might be a good way to reach their respective segment and target customers whom value quality over price. Furthermore, these specialty shops usually offer more expertise and personal service making sure that Forever & Evers’ message is communicated directly to their customers. Research by Forever & Ever has shown that this method ensures better sales (personal communication, 2016).
8.4 Threats 8.4.1 Retailer Cooperation Issues
As indicated by Forever & Ever, they are experiencing several difficulties with some of their retailers, especially the larger chains such as Intratuin (Personal Communication, 2016) (forever-ever.eu, 2016). 16
Every year they supply POS material and exact specification how they would like their products to be displayed and marketed. However, the gardening centres seem to neglect these particular instructions of Forever & Ever (Personal Communication, 2016). With its products relying on the perceived value of the consumer and with communication extremely important, these POS materials and specifications have proven to be to the benefit of both Forever & Ever and of course also their retailers. 8.4.2 Ease of Duplication With Forever & Ever being the first ever company to brands its products in their respective industry, it gives them a significant lead and chance to distinguish themselves. However, Forever & Ever has indicated that although they were first, they are no longer the only ones. Their unique branding proposition has enticed competitors to copy what they have seen at Forever & Ever (personal communication, 2016). For Forever & Ever, this could cause them to lose a big part of their competitive advantage and therefore also the consumers’ perceived value. 8.4.3 Perceived Customer Value
Forever & Ever has a high quality product, and their focus relies on the perceived customer value. Since Forever & Evers only attracts and targets a small segment (see target groups), it relies heavily on communication with the customers. In short, not everyone sees the added value of the Forever & Ever products. Those who do not see the added value, will not make a distinction between Forever & Ever and their competitors (personal communication, 2016).
9.
Confrontation Matrix
After creating the SWOT analysis for Forever & Ever, a Confrontation Matrix has been made. The Confrontation Matrix is a tool to identify the business strategy for Forever & Ever in the Netherlands, see Appendix H for visualization of the Confrontation Matrix.
9.1 Offensive Strategy O1, S1: Maintain and use the current social media accounts to communicate with current and potential customers about the high17
quality products of Forever & Ever. Moreover, the planned application can support this strategy by providing additional product information. O2, S4: Launch the distinctive purple pot lead to attention and customer awareness introduced product.
Hibiscus plant in the Netherlands by using the of Forever & Ever. This branding strategy might recognition in the garden centres and increases for the Forever & Ever brand and the newly
9.2 Adjust Strategy O2, W1: The Dutch botanical industry is growing steadily and there is an increasing demand for new innovative products. By adding new products to the slim product portfolio, Forever & Ever can meet the demand for high quality plants for several customer segments and their preferences O5, W3: Forever & Ever has to propose their products to smaller specialty shops where the customers can get all the help that they need. Currently, Forever & Evers’ products are mostly available at big chains, while research has shown that customers spend the most money at smaller florists.
9.3 Reactive Strategy T1, S1: The threat of the weak relationship between the retailers and Forever & Ever is leading to lower sales. The retailers are not using the Point Of Sale material that is provided by Forever & Ever, and these materials are used as a communication tool to inform the customers about the high quality of the products. The Point Of Sales material is very important for the company, since it is also used to distinguish themselves from the competitors. Thus, Forever & Ever has to negotiate with the retailers about this matter, and show them that using the Point Of Sales materials can increase their sales. T2, S4: The competitors can easily copy the distinctive packaging of the Forever & Ever plants. Therefore, it is very important for Forever & Ever to continuously find other ways to distinguish themselves from the competitors and to communicate this to their customers.
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9.4 Defensive Strategy T3, W3: The point of sales materials that are provided are not being used by the retailers, while this is a key element for Forever & Ever to distinguish themselves from the competitors. Therefore, potential customers will not see the added value of the products. Hence, it is very important for Forever & Ever to create new contracts with the retailers where it is stated that the provided materials must be used in the stores.
10. Theoretical Exploration
10.1
Product Development
Developing the right new products is critical to a firm’s success and is often cited as a key competitive dimension. The path to obtaining new products is through new-product development in the company’s own research and development department. New product development is defined as improving an existing product or developing new kinds of products. Therefore, the R&D department is responsible for original products, product improvements, product modifications and new brands that the firm. New products are important to both customers and the marketers who serve them. Consumers like new products because they solve problems and most important bring variety to their lives. Companies release new products as they are they are a key source of growth. However, new-product development can be very risky and requires a lot of resources. Closely connected to product development there is the commercialization, the product placement. Forever and ever has acquired great skills and knowledge whilst establishing their first product, the hydrangea in the market. Forever & Ever plans to use the same skills and techniques as the first time now only specialized and focused on the new product the hibiscus. After intense research the right product, in this case the plant, was selected. It is however important to eliminate as much risk as possible because the companies’ continuous growth would slow down if the product id rejected by the costumers. The hibiscus faces a low competition and this is a further reason for developing the new product. The company has the unique opportunity to secure the first mover advantage, meaning being the first one in the market with a product that the consumers appreciate. 19
10.2
Price/Quality Ratio
The relationship between product development and product placement is influenced by the Price/Quality ratio. Consumers have been proven to be willing to pay a high price if the quality is therefore also higher. The best example are brands. Consumers are willing to pay a higher price for brands which stand quality. Forever & Ever stands for quality and with a retail price of approximately €19,95 also has a rather high price. However, costumers of Forever & Ever place great value in the quality of the products and are willing to pay this price. (Personal Communication, 2016). This indicates that Forever & Ever has found the perfect price and quality ratio. This is backed by the report of Steven M. Shugan: PRICE-QUALITY RELATIONSHIPS “Consumers should use a product's price to determine if the product is affordable. However, consumers also appear to use a product's price as a measure of the product's quality. Many empirical studies (e.g., see reviews by Monroe 1973 and Olson 1977) have shown that when consumers have some uncertainty concerning a product's quality, the consumer often assumes that a higher product price indicates a higher level of quality”. (Steven M. Shugan)
10.3
Product Placement
Before introducing a product to a market, a company must decide on introduction timing, whether the time is right to introduce the new product or if it cannibalizes the sales of the company’s other products. If the new product can be improved or modified to fit the market better than the product launch may be delayed. Another important aspect is that the company must decide where to launch the new product. Few companies have the confidence, capital and capacity to launch new products into full national or international distribution. They develop a planned market rollout over time. In particular, small companies may enter attractive cities or regions on at a time. Larger companies may quickly introduce new products into several regions or into the entire national market. Finally, the last important aspect is the target. The company must target its distribution and promotion to customer groups who represent the best prospects. The prime prospects have been identified by the firm in earlier research and test marketing. The company must also develop an action plan for introducing the new product into the Dutch market. It must spend the marketing budget on 20
the marketing mix and various other activities. (John Dudovskiy)
10.4
Brand Awareness
In the Netherlands, Forever & Ever has established a brand which costumers recognize and appreciate it. This appreciation is shown continuously by rising sales. This means more and more customers get to know the brand and due to the high-quality standards of Forever & Ever reward the Brand with buying the product. Brand awareness is an umbrella variable as it has an effect on every relationship. For this conceptual model, the brand awareness was placed between product placement and customer satisfaction. This is because customers that are already buying Forever & Ever will potentially also buy the new product as long as they are satisfied with the initial product.
10.5
Customer Satisfaction
Customer satisfaction is created by the product placement and in combination with brand awareness I this conceptual model. The costumers will be satisfied if a Forever & Ever launches a second product which is established using the same techniques and skills the company has gathered and learned during the launch of its first product. As both products belong to the same family: Plants, customers will expect the same if not even high quality and price ratio. It is of high importance for Forever & Ever to sustain a high Customer Satisfaction, as this is linked directly to number of products sold (Quelle). In order to do this the wished and concerns or complaints of the costumers have to be acknowledged and solved as far as possible and the Quality of the product must be sustained. Other impacts on customer satisfaction are caused by for example as already mentioned a successful marketing campaign or the implementation of an ethics code for all employees.
10.6
Market Demand
“The key to a successful product development is to create market demand and with that acquire market share� (Trott, Paul). As Forever & Ever can’t be considered a major player on the market, it would not be adequate to aim at gaining market share, but rather in creating market demand, meaning costumers actually demand the product. After this is achieved Forever & Ever can establish in the market and 21
in long term aim at conquering market share from their opponents.
10.7
Conceptual Model
The following is a display of the conceptual model which was developed for a successful implementation of the new product, the Hibiscus. Product is the independent variable, Price/Quality is a moderator variable in this model, whereas product placement and customer satisfaction are mediator variables. Brand awareness has an effect on every relationship and is therefore an umbrella variable however in order to sustain and pursue the project objective it is classified as a moderator variable as well. And finally, the dependent variable is Market Demand.
Price/Quality Ratio
Product Development
Product Placement
Brand Awareness
Customer Satisfaction
Market Demand
11. Purposed Solution and Methodology As discussed above, this report is going to offer and provide solutions in order to successfully establish the new product, “the Hibiscus� in the Dutch market. This section describes the most suitable tactics for Forever & Ever in order to reach its goal of successful launch of the new product. The main factor that can allow a successful establishment of the new product is to create market demand. Costumers of Forever & Ever
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know of the value the company places in quality however in order to attract new costumer’s the company should firstly target its distribution and promotion to customer groups who represent the best prospects. The prime prospects have been identified by the firm in earlier research and test marketing. The company must also develop an action plan for introducing the new product into Dutch market. In order to establish the new product successfully in the market, a short and long-term plan of action was developed. In the Dutch market, Forever & Ever is established and has a well set up distribution and management system. Forever & Ever can build upon that and launch the new product within a short time. However before launching the new product, certain standards have to achieved. In Short Term, it is advised to launch a marketing campaign in order to create a grate awareness of the brand Forever & Ever and the core values the company has. It is further advised to concentrate on social media marketing and magazine promotion as these are both very appealing to the key target groups defined before and due to the fact that both of these methods have a controllable budget, meaning the company has full control of all costs at all time, therefore decreasing risk. Followed by a market analysis, this could be conducted for example by interviewing or surveying the excising costumers in order to determine their needs and desires. Forever & Ever also has to actually launch the new product, however here we would advise to delay the product launch one month after the start of the marketing campaign, as this would increase the sales from the start. Furthermore, if Forever & Ever launch quickly they will sustain the first mover advantage with their product for as long as possible, thus increasing sales and revenues further. In long term, Forever & Ever has to adapt their product constantly to market needs and desires in order to sustain a constant market demand or even gain significant market share. If the product is launched successfully and is proven to be appreciated by the costumers Forever & Ever should add variations to the hibiscus, similar to the small adjustments which were made for the hydrangea, e.g. variation in colour or size. Forever & Ever should use the same skills and techniques acquired 23
when launching the hydrangea to the hibiscus because the hydrangea is a very successful product and has enabled Forever & Ever to grow rapidly and launch a second product which has the potential to bring the company to a whole new level as revenue and sales will be increased, thus providing Forever & Ever to further pursue the defined vision to become a main supplier for a selected and developed high quality plants in the Dutch market.
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APPENDIXES
Appendix A
Appendix B
Target Group 1: Babs 
 The first segment is aged between 18 and 30. This age group tends to live in an apparent, thus limiting the available space for plants. Furthermore, the lifestyle does not provide sufficient time to sustain fragile plants. The income in this sector is limited due to the fact that this age group is mainly still studying or starting their career. This segment is present on social media and can be influenced by SEO or social media marketing (Personal Communication, 2016). Target Group 2: Wessel The second segment can be classified as the working segment aged between 30 and 65. This segment mainly consists of families that are living in houses with gardens. The income in this segment is higher compared to the other two segments. Quality and lifestyle are the key aspects to target this audience (Personal Communication, 2016). Target Group 3 The final sector consists of seniors that are 65 years and older. This
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target audience most likely live in houses or apartments with big garden or a big balcony. Moreover, this target audience takes care of their plants and thus their gardens and balconies. However, this target audience has to be approached in the stores or through the newspapers. Moreover, this segment is very loyal to brands that they are currently using. Quality and the flourishing phases are key elements to this target audience (Personal Communication, 2016).
Appendix C
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Appendix D List of Retailers: • • • • • • • • • • • • •
Life & Garden Tuincentrum Plantencentrum GroenRijk Hombach IntraTuin Coppelmans Kwerkerij van den Ven Groencentrum Roestenburg Kwerkerijen Avri Bloem-en Tuincentrum Ranzijn tuin & dier Zaandam Van der Dussen Tuinplantencentrum
Appendix E
PESTLE Political The political situation in the Netherlands is very stable, and the Dutch cabinet consists of three main political tendencies: the Christian democrats, the liberals and the social democratic parties (Politics & economy - Study in Holland, 2016). In 2014, the Dutch government and LTO Netherlands (Land- en Tuinbouw Organisatie Nederland) made long-term plans, and their aim is that new greenhouses will be carbon neutral from 2020 onwards. Additionally, they aspire that existing greenhouses will be producing economically by using less than half of the fossil fuels than that they were using in 2011. Moreover, the consumed energy of the horticulture sector in the Netherlands has to be fully generated sustainably whilst being economically viable. The Dutch government is currently considering several plans, one of these plans is to subsidize the research of energy-efficiency with €10 million. Additionally, the government is planning to stimulate the horticulturists by providing financial help for these energy-efficient plans and in total €38 million is available for them (Rijksoverheid.nl, 2016).
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Economic The Gross Domestic Product (GDP) for the Netherlands was approximately 752.5 billon USD in 2015 (Data.worldbank.org, 2016). International trade is a key element for the Dutch economic system, and therefore it has a very open economy. The total value of exports was approximately 81.8% of the GDP in 2015 (Hollandtradeandinvest.com, 2016). Moreover, the inflation rate in August 2016 was approximately 0.20% and this is based on the CPI (Consumer Price Index) (Media, 2016). Additionally, the current average interest rate charged by Dutch commercial banks to individuals and companies is 1.39% (Trading Economics, 2016). Moreover, approximately 74.4% of the Dutch population ages between 15 and 64 were working during the first quarter of 2016. Additionally, the GDP per capita in the Netherlands was approximately 48,326 USD in 2015. According to the OECD Better Life Index, the Netherlands has a healthy economy and overall the Dutch population is satisfied with their lives. The population grades their lives with an average of 7.3, which is above the average of 6.5 of the OECD Better Life Index (The OECD, 2016). Social The Online Market
Only 12% of the Dutch population has bought a bouquet online in the past year. These bouquets are mostly ordered for special occasions or holidays such as birthdays, Valentine’s Day and Mother’s day. This means that flowers and plants are especially bought for special occasions (royalfloralholland.com, 2016). Flowers and Moods
Flowers and plants are a healthy, cheerful and natural mood moderator, meaning that flowers can immediately have an impact on your mood. Additionally, flowers and plants have a long- term positive effect on moods. People from all ages associate flowers and plants with pleasure and happiness. Research has shown that there is a higher sense of enjoyment and life satisfaction due to the emotional benefits of receiving flowers such as stress relief (Aboutflowers.com, 2016). 28
Seasonal Sales
According to Dr. Marianne Altmann, there has been a significant increase in sales during mother’s day 2015 when compared to the figures of 2014. This is mainly due to the reason that the customers spent more on average. The average spending for a mother days present was approximately 21 EUR (Altmann, 2015). Moreover, sales for plants and flowers also increase during other holidays such as Christmas, Chanukah, Valentine’s Day and Easter (Aboutflowers, 2016). Buying Behaviour
Men usually spend more on floral gifts than women. Moreover, men tend to buy larger flower arrangements or expensive flowers like roses. Young consumers under the age of 35 buy mostly inexpensive bouquets or loose flowers. These gifts are mainly given when celebrating special occasions or holidays (acrwebsite.org, 1982). Also, research has shown that 91% of the Dutch population went to the local florist shop within the last year. The key benefits that floral shops offer are quality and better customer service. Additionally, 63% of the population visited the local florists more than once. Lastly, 59% of the population purchased flowers and plants at a garden centre or nursery (acrwebsite.org, 1982). Changing Buying Behaviour
While the average consumer spending on flowers and plants did not change over the past five years, there have been several signs of a changing buying behaviour. It seems that consumers are buying their flowers and plants more often at supermarkets for a lower price (Rabobank, 2015). Technological The industry is constantly innovating and developing new ways of producing goods. Theses ways include the development of new types of greenhouses and how to operate them more sustainably. These new greenhouses operate on ecological light bulbs to avoid pollution, reduce energy consumption and increase productivity, see appendix F for
29
more information about these new greenhouses (Agriholland.nl, 2016). Legal From the first of January of 2018, every glass horticulturist is obliged to purify the water used. This legislation implies that the water should be purified for at least 95% from the chemicals that companies use to protect their products. Moreover, the government has to approve the purifiers and the techniques that are used (Waterproof, 2016). This legislation was created to ensure that the water will be safe, and to protect the environment (Helpdesk water, 2016). Environmental During the last few years, environmental standards for the horticultural (greenhouse) sector are being tightened. Several environmental objectives have been defined by the Dutch government, see political on page 8. These objectives include the reduction of energy usage, chemical fertilizers, insecticides, pesticides and decreasing water pollution Energy Usage Reduction
One of the objectives that is set by the Dutch governments, is that 20% of the energy is renewable by the end of 2020. Concerning sustainable environment, The Netherlands has several targets for 2020 (ec.europa/energy, 2015). Moreover, a target is set for annual energy saving by 1.5% per year and this must be achieved by the end of 2020. Regarding the greenhouse emissions, full implementation of the Energy Agreement has a target of the target of 897 Mt (1 metric ton equals 1000 Kilograms) and will limit cumulative emissions to 808–811 Mt CO2 equivalents over the 2013–2020 period. The Dutch also reconsider target level and target horizon (pbl, 2016). 30
Appendix F
Appendix G
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Appendix H VenlowEnergy Greenhouse This greenhouse is built with an insulating glazing, composed of two layers of glass. This greenhouse roof combines high insulating value with high light transmission which is similar to a single greenhouse deck. The glass is three millimetres thick and cured so that large glass sizes (3.5 x 1.6 meters) could be used. The framework is combined with wood in order to safely install the heavier plates. In addition, working in the greenhouse with cool air to dehumidify. It was concluded in 2012 that the VenlowEnergy Greenhouse uses 57% less gas than the industry average. Next Generation Greenhouse semi-close This is a greenhouse that uses not two but three screens making sure that temperature does not escape. Additionally, fresh air in the greenhouse is dehumidified. The greenhouse Next Generation achieved a reduction of 20 to 30% in energy consumption through the use of a heat pump and mechanical dehumidification. The target for this greenhouse is to have 2,500 hectares in 2020. ID Greenhouse This isolated greenhouse novel adapted for cultivation in the Netherlands, which transmits lighter than the greenhouses built so far. The greenhouse roof and walls are glass double coating for better insulation. In the platform is treated net. Small continuous air open windows to the ridge. Because of this, there is no disruption of air pro and con ", and the harvest will be distributed with many small openings without creating shadow on the south side of the greenhouse.
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Information Provided by AgriHolland.com
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