Marketing - Positioning and Segmentation - The Snack Food Market in Australia

Ashleigh Robinson21783

MKT100 Individual Assessment Task

‘Positioning and Segmentation’

The Smith’s Snackfood Company

Ashleigh Robinson – 21783

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Table of Contents

Table of Contents

TABLE OF CONTENTS.............................................................................................................................. 2

EXECUTIVE SUMMARY........................................................................................................................... 3

COMPANY PROFILE.................................................................................................................................. 4A BRIEF HISTORY OF SMITH’S SNACKFOOD COMPANY....................................................................................4SMITH’S TODAY...............................................................................................................................................................5

MARKET SEGMENTATION.....................................................................................................................7PARTY SNACKERS...........................................................................................................................................................8INDISCRIMINANT SNACKERS........................................................................................................................................8ECONOMICAL SNACKERS..............................................................................................................................................8NUTRITIONAL SNACKERS.............................................................................................................................................9WEIGHT WATCHERS.......................................................................................................................................................9GUILTY SNACKERS...................................................................................................................................................... 10

PERCEPTUAL MAPS................................................................................................................................ 10SMITHS CHIPS PERCEPTUAL MAP ..........................................................................................................................11SAKATA RICE CRACKERS PERCEPTUAL MAP.....................................................................................................12NOBBY’S NUTS PERCEPTUAL MAP........................................................................................................................13

COMPETITIVE ADVANTAGE.............................................................................................................. 14PRODUCT: SMITH’S CRINKLE CUT CHIPS.............................................................................................................14POSITIONING STATEMENT ..........................................................................................................................................15

CONSUMER PROFILE............................................................................................................................. 16

VALUE PROPOSITION............................................................................................................................ 18

REFERENCES............................................................................................................................................. 19

APPENDICES............................................................................................................................................... 20

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Executive Summary

This report provides an analysis of positioning and segmentation in regards to the snack food

market within Australia. It will specifically focus on The Smith’s Snackfood Company, which

currently operates within the Australian snack food market. Some topics that will be covered in

this report include;

- A brief company profile and description of the Smith’s Snackfood Company’s product range

including; Smith’s Chips, Doritos, Twisties, Burger Rings, Parker’s Pretzels, Nobby’s Nuts,

Cheetos Cheese and Bacon Balls, Tasty Toobs, Cool Pak Popcorn, Red Rock Deli, Grain

Waves and Sakata Rice Crackers.

- A detailed segmentation of the snack food industry into six categories of snackers; party

snackers, indiscriminant snackers, economical snackers, nutritional snakers, weight watchers

and guilty snackers.

- A number of product specific positioning matrices including; Smith’s Crinkle Cut Chips,

Sakata Rice Crackers and Nobby’s Nuts.

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- A detailed explanation of the competitive advantages The Smith’s Snackfood Company holds

over its major competitors, as well as specific competitive advantages and a positioning

statement for the individual product of Smith’s Crinkle Cut Chips.

- A specific personal profile of a potential consumer for the individual product of Smith’s

Crinkle Cut Chips

- An in depth value proposition and brief for an advertising agency promoting Smith’s Crinkle

Cut Chips and the specific features and benefits of this particular product, which include;

flavour, the use of local produce, product differentiation and convenience as well as the ability

for cross promotion.

Company Profile

A Brief History of Smith’s Snackfood Company

Francis Leigh Smith originally founded Smith’s Potato Crisps Ltd. in the United Kingdom after

World War 1. Throughout the Great Depression, Smith moved to Australia with his associate,

George Ensor, to expand his business, and the first Smith’s chips were manufactured within

Australia in 1931.

Over the years, there had been number of ownership changes and a number of new products were

added to the original Smith’s potato chip including; Twisties, Parkers Pretzels, Burger Rings and

Nobbys’s Nuts (Smith’s, 2011a, para. 5). Finally in August of 1998, PepsiCo Inc. purchased the

Smith’s Snackfood Company.

(Please refer to appendices 1, 2 and 3).

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Smith’s Today

The ‘Smith’s Snackfood Company’ (Smith’s) is a subsidiary of PepsiCo Inc. It is the snack food

operating division within Australia and as stated by PepsiCo, it is considered to be Australia’s

leading snack food company. (PepsiCo, 2012, para. 1).

The Smith’s Snackfood Company has a reasonably large product range of which fall under four of

the five product categories of salty or savory snacks including: salty snacks, crackers, nut snacks

and popcorn – the product range can be seen detailed below in Table 1, which is located on the

following page.

Further, Smith’s is manufactured all over Australia with manufacturing sites and distribution

centers located in New South Wales, Western Australia, South Australia and Queensland.

(Please refer to appendices 4).

Table 1 – Summary of Smith’s Snackfood Company Brands

Smith’s Chips

(Crinkle Cut and Thin Cut)

Doritos Corn Chips

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Twisties Burger Rings

Parker’s Pretzels Nobby’s Nuts

Cheetos Cheese and Bacon Balls Tasty Toobs

Cool Pak Popcorn Red Rock Deli

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Grain Waves Sakata Rice Crackers

Market Segmentation

Market segmentation can be described as “…a process by which a market is divided into relatively

similar, meaningful and identifiable segments or groups.” (MKTG, 2009, p69).

Further, as stated by Long (2012, p1), within the snack food market, consumers will fall into six

identifiable groups: (1) Party Snackers; (2) Indiscriminant Snackers; (3) Economical Snackers; (4)

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Nutritional Snackers; (5) Weight Watchers; and (6) Guilty Snackers. These segments are further

detailed below.

Party Snackers

Party Snackers can be described as middle-aged consumers, between the ages of 40 to 60 years

old. Their psychographic characteristics can include being very sociable and outgoing. Some

benefits sought include snacks that is easy to serve to guests when holding functions and parties as

well as a snack that compliments a variety of beverages and tastes excellent. Further, this particular

market can be segmented into a medium or average user group, as they only snack occasionally.

Items from Smith’s which fall under this market segment include: Nobby’s Nuts and Parker’s

Pretzels.

Indiscriminant Snackers

Indiscriminate Snackers can usually be described as teenagers, from the ages of 15 to 19 years old.

Their psychographic characteristics can include being self-indulgent and pleasure seeking. The

main benefits sought include a snack that tastes good and satisfies their hunger cravings. This

market can be segmented into a high or heavy user group, as they tend to snack often.

Items from Smith’s which fall under this market include: Doritos, Cheetos Cheese and Bacon

Balls, Twisties, Tasty Toobs and Burger Rings.

Economical Snackers

Economical Snackers can be described as large families, usually with 5 or more members as well

as single parent families, due to the fact that they only have one source of income. Their

psychographic characteristics can be described as confident, educated and price-orientated - being

aware of available discounts and competition prices. The main benefits sought include a snack that

has good value for money, as well as one that is priced reasonably low. This market can be

segmented into a medium or average user group.

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Items from Smith’s which fall under this specific market include: Smith’s Chips (Crinkle Cut and

Thin Cut) as these products are reasonably low priced, with regular specials as well as being

included in value packs to provide value for money for consumers and potential customers.

Nutritional Snackers

Nutritional Snackers can be described as educated parents, usually with a family consisting of

young children. Some psychographic characteristics include being self-assured, in control and

knowledgeable. The main benefits sought include a nutritional and natural snack, with low

artificial colouring and substitutes for flavouring. This market can be segmented into a low or light

user group.

Items from Smith’s that fall into this segmented market include; Grain Waves and Sakata Rice

Crackers.

Weight Watchers

Weight Watchers can usually be described as young males and females, usually of a single marital

status. Their psychographic characteristics can include; being adventurous, as well as someone

who loves the outdoors and is into health and fitness. Some of the benefits sought from snack

products include; a snack that has low calories and provides energy. This market can be segmented

into a low or light user group.

The item from Smith’s that falls under this segmented market is the Sakata Rice Crackers. The

reason Sakata rice crackers have been included within both the nutritional snackers and weight

watchers segments is that they are known to be 100% natural – with no artificial flavours, colours,

preservatives and no added MSG. These benefits would appeal to both individuals who are

interested in nutrition and eating healthy, as well as those who are watching their weight and being

fit.

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Guilty Snackers

Guilty Snackers can be described as consisting mainly of females with no specific age limit. Their

psychographic characteristics can include loneliness, as well as a sense of worry or anxiety. Some

benefits sought from this market include; a snack that tastes good, one that is quick and easy as

well as relatively low in calories. Further, it can be common for this segment to use snacks to

create a personal space, a way to take a minute for themselves away from the burden of daily life.

This market can be segmented into a high or heavy user group.

Some items from Smith’s that fall under this segmented market include Red Rock Deli chips and

Cool Pak Popcorn.

Perceptual Maps

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Smith’s Chips Perceptual Map

Explanation:

As can be seen in the Perceptual Map featured above, Smith’s Crinkle Cut Chips have a number of

different competitors within the marketplace, which can include; Pringles, Samboy, Thins, The

Natural Chip Company and Coles Simply Less. Smith’s can be considered to be a more classic and

original flavour than some of its other competitors. Further, the majority of other competitors

including Thins, Samboy and Pringles can be viewed as more synthetic due to the fact that Smith’s

Chips are cooked using healthy sunflower oil and have 75% less saturated fat compared to other

chips cooked in 100% palmolein oil.

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Sakata Rice Crackers Perceptual Map

Explanation:

As can be seen in the Perceptual Map featured above, Sakata Rice Crackers has a wide range of

competitors within the market place including: Fantastic Crackers, Peckish Rice Crackers, Coles

Brand Crackers and Vita Wheat Rice Crackers. As can be seen in the perceptual map above, the

Sakata Rice Crackers have the most visual appeal compared to some of their other competitors,

which is achieved through the use of bright and attractive colours. Further, Sakata also has the

lowest amount of calories, with only 397 calories per 100g.

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Nobby’s Nuts Perceptual Map

Explanation:

As can be seen in the perceptual map above, there are a number of competitors within the snack

food market that compete with Nobby’s Nuts. Some of these competitors include; Coles Salted

Peanuts, Maja’s Bhuja Mixed Nuts, Mother Earth Cashews and the Gourmet Nut Co. Flavour

Escapes. As can be seen above, Nobby’s Nuts are considered available to a mass market, unlike

some of its other competitors that are very much targeted toward a niche market, such as Maja’s

Bhuja Mixed Nuts. Further, Nobby’s Nuts are the second least expensive option available to

consumers, only after Cole’s generic brand peanuts.

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Competitive Advantage

Competitive advantage is defined as “…the ability of one organisation to outperform other

organisations because it produces desired goods or services more efficiently and effectively than

its competitors”. (Waddell, Jones & George, 2011, p21).

The Smith’s Snackfood Company is considered one of Australia’s largest snack food companies,

which is a competitive advantage in itself in relation to other smaller competitors within the snack

food market. Being such a large industry player within this market, Smith’s has the benefit of high

brand awareness and consumer loyalty. Further, being such a large company poses a threat to new

entrants within the snack food market, which is due largely to Smith’s product differentiation

strategies, forward integration that is used to provide greater economies of scale, as well as

efficiency and effectiveness of production and wide distribution channels.

Product: Smith’s Crinkle Cut Chips

Smith’s crinkle cut chips are an extremely well known and recognised product, which has been

branded as “the original and the best” within Australia for over 80 years. They have a number of

competitive advantages over their main competitors, which consist largely of brands such as Thins,

Samboy, and Pringles.

Firstly, Smith’s chips are cooked in sunflower oil, an oil which is naturally less is saturated fat and

contains 75% less saturated fat than other competitors chips which may be cooked in 100%

palmolein oil. This offers consumers a healthy alternative to some of its other competitors within

the market for snack foods.

Further, Smith’s is a very large company and in turn has a substantial amount of resources that

they can allocate and invest into various promotions and advertising, which helps to secure and

develop their brand within a fiercely competitive market. One example of a Smith’s Chips

consumer promotion is the “Do us a Flavour” campaign, where consumers had the chance to enter

a competition to create a new flavour for Smith’s Crinkle Cut Chips. Further, one other successful

consumer promotion was the “Track-A-Pack” campaign, where Smith’s teamed up with Sony

Music to offer consumers an incentive in the form of a free music download with every purchase.

In addition, one example of Smith’s successful advertising is the “48 Hour” campaign. This

promotes the fact that Smith’s chips travel from the farm to the packet in 48 hours.

(Please refer to Appendices 5, 6 and 7)

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Positioning Statement

Smith’s Crinkle Cut Chips are a snack food product that aims to provide a great tasting and value

for money snack through locally provided ingredients and produce, to delight and exceed

customers expectations, Australia wide.

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Consumer Profile

The main market segment that Smith’s Crinkle Cut Chips fall under is the Economical Snackers.

Please see detailed below the personal profile of a potential customer within this specific segment.

This is Tricia Jones. She is 42-years-old and works hard as a full-time legal executive assistant in

Sydney CBD. She earns an annual income of $50,000.00. Tricia lives with her husband and three

children in Hornsby. This is a well-educated, middle socio-economic household. Her children are

all young boys, aged 5, 9 and 13. Tricia spends a large portion of her income on her three children,

mainly on items such as clothes, sporting equipment and groceries. A smaller portion of her

income is put into savings, which is put towards travel to keep-in-touch and visit her family that

lives overseas. Tricia’s interests include spending quality time with her husband and children;

going to parks, playing video games, watching TV and movies as well as playing sports such as

tennis and going bowling together. Tricia and her family mostly eat at home, they only go out for

dinner once or twice a month.

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With three children and a husband, Tricia is a bargain-hunter when it comes to the family

shopping, and specifically in regards to her weekly food and grocery shopping. Tricia and her

family tend to eat a lot of packaged foods – convenience is important in this family! She loves

good value for money and is always looking for discounts and value packets – to get more for her

money.

Smith’s Chips specifically provide value and benefits that meet the specific target market and

needs of Economical Snackers such as Trish Jones. They regularly provide discounts on their

products, as well as have a range of value packs available for purchase.

(Please refer to Appendices 8 and 9).

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Value Proposition

Smith’s Crinkle Cut Chips provide consumers with a number of features and benefits that can be

used to provide an advertising campaign with the aims of increasing brand awareness and loyalty

as well as increasing sales and overall profits.

Some of the outstanding elements of this product include;

- Flavour:

Smith’s Chips are known as the “original and the best” and have been for over 80 years. Further,

the crinkle cut chips comes in a range of different flavours to suit different consumer tastes and

preferences. These include; original, salt and vinegar, chicken, cheese and onion, as well as

barbeque.

- The Use of Local Produce:

Smith’s Chips are cooked with raw products including corn and wheat flour. The products are

sourced locally from within Australia (Smith’s, 2011b, para. 3), which in turn promotes buying

within the community and helps farmers to build the local economy.

- Product Differentiation and Convenience :

Smith’s has partnered with Visy, an Australian cardboard company, and have introduced an

innovation and sustainable alternative to the regular packets for the Smith’s chips range. (Bean

Media, 2012, p4). This alternative not only offers a point of difference compared to other

competitive products in the snack food market, but it also offers consumers value for money,

product protection and convenience - as it is easy to handle with handles to carry and an easy

access window to retrieve products.


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- Ability for Cross Promotion:

As previously mentioned, Smith’s is a subsidiary of PepsiCo Inc. This allows for the opportunity

for cross promotion, with items from PepsiCo such as Pepsi, the soft drink. This is a form of

marketing promotion with has already occurred in the UK, with one of Smith’s products, Doritos,

and PepsiCo’s product of Pepsi – and is something which can be considered within Australia to

help increase sales of Smith’s Crinkle Cut Chips and overall profit. Further as stated by Indra

Nooyi, the current Chairman and Chief Executive Officer of PepsiCo Inc. “…we benefit from the

opportunity to cross-merchandise and promote our products. But in emerging markets, in

particular, our Snacks business benefits massively from the scale of our Beverage business…”

(Guru Focus, 2012, para. 8).


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References

Bean Media (2012). Profile: Continuously Competitive. Visy & Smiths – working together to chip away at climate change. Retrieved November 20th from: http://www.beanmedia.com.au/profiles/The%20Smiths%20Snackfood%20Company.pdf

Guru Focus (2012). PepsiCo: Management Stands Behind “Power of One”. Retrieved November 23rd 2012 from: http://www.gurufocus.com/news/161266/pepsico-management-stands-behind-power-of-one

Lamb, W.C. , Hair, J.F. , McDaniel, C. , Summers, J. & Gardiner, M. (2009). MKTG. (1st Asia Pacific Ed). Australia: Cengage Learning Australia Pty Ltd.

Long (2012). MKT100 Individual Assessment Task 2012. Retrieved November 2nd 2012 from http://lms.icms.edu.au/mod/resource/view.php?id=27770

PepsiCo (2012). The Smith’s Snackfood Company – Brands. Retrieved November 3rd 2012, from http://www.pepsico.com.au/brands/Smith’s/

Smith’s (2011). The Smith’s Story. Retrieved November 4th 2012 fromhttp://www.Smith’s.com.au/index.php/Smith’s_history (a.)

Smith’s (2011). Performance With Purpose. Retrieved November 10th from http://www.Smith’s.com.au/index.php/performance_with_purpose (b.)

Waddell D., Jones, G.R. & George, J. (2011). Contemporary Management. (2nd Ed). Australia: McGraw-Hill Australia Pty Ltd.

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Appendices

1 .

1946 Smith’s truck - ‘helping to feed the nation’Source: (Commercial Motor, 2008, para. 1)

Commercial Motor (2008). Albion helps to feed the nation. Retrieved November 3rd 2012 from http://www.commercialmotor.com/big-lorry-blog/albion-helps-to-feed-the-natio

2.

Advertising booklet issued by Smith’s (1935).Source: (Flickr, 2010, para. 1)

Flickr (2010). Holiday Tours of Scotland by Car – advertising booklet issues by Smith’s Potato Crisps, c1935. Retrieved November 4th 2012 from http://www.flickr.com/photos/36844288@N00/4356332954/in/pool-vintage_advertising/

3.

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Smith’s Potato Crisps Advert (1935)Source: (Flickr, 2012, para. 1)

Flickr (2012). Smith’s Potato Crisps – advert, c1935. Retrieved November 4th 2012 from:

http://www.flickr.com/photos/36844288@N00/4355587055/in/pool-vintage_advertising/

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4.

Location of Smith’s and Sakata manufacturing sites and distribution centers within AustraliaSource: (Smith’s, 2012, p4)

The Smith’s Snackfood Company and Sakata Rice Snacks Australia: Australian Packaging Covenant Action Plan. (2011 – 2015). Location of Smith’s and Sakata Operations within Australia.Retrieved November 4th 2012 from http://www.Smith’s.com.au/app/webroot/downloads/ActionPlan.pdf

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5.

Smith’s “Do us a Flavour” CompetitionSource: (Absoluteleigh, 2009, para. 1)

Absoluteleigh (2009). New Smith’s Chips Flavours. Retrieved November 23rd 2012 from http://absoluteleigh.com.au/new-Smith’s-chips-flavours/

6.

Smith’s Customer Promotion – Track-a-PackSource: (Brands Bands Fans, 2012, para. 1)

Brands Bands Fans (2010). Download Bandit. Retrieved November 24th 2012 from http://www.brandsbandsfans.com/archives/1608

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7.

Smith’s “48 hour” Advertising CampaignSource: (POPAI, 2012, para. 1)

POPAI (2012). Smith’s 48 Hour Pre Packed Unit. Retrieved November 23rd 2012 from http://www.popai.com.au/awards/2010/details.aspx?GUID=1eec9969-cddb-49f3-ae46-67a1abac3d1c

8.

Smith’s – Value for Money 6 PacksSource: (Product Revier, 2012, para. 1)

Product Review. (2012). Smith’s Crinkle Cut Potato Multipack Chip Reviews. Retrieved November 22nd 2012 from http://www.productreview.com.au/p/smith-s-crinkle-cut-potato-multipack.html

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9.

Smith’s Chips – Special DiscountsSource: (ibuyforless, 2012, para. 1)

ibuy4less (2012). Smith’s Chips. Retrieved November 24th from http://www.ibuy4less.com.au/publics/productDetails.aspx?id=59421

10.

Smith’s – Example of Product DifferentiationSource: (Woolworths, 2012, para. 1)

Woolworths (2012). Smith’s Chips Multi Packs Crinkle Cut Variety. Retrieved November 24th from: http://www2.woolworthsonline.com.au/Shop/ProductDetails?Stockcode=245856&name=Smith’s-chips-multi-packs-crinkle-cut-variety

11.

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Cross Promotion Example – Doritos and Pepsi Source: (Encounter Magazine, 2012, para. 10)

Encounter Magazine. (2012). How to maximize sales when you’re puckish for profits. Retrieved November 25th 2012 from http://www.encountermagazine.co.uk/uncategorized/maximise-sales-peckish-profits

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Marketing - Positioning and Segmentation - The Snack Food Market in Australia

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