Reference no: EM131019503

Part 1. Profile the market

- Task Description

This assessment provides short case studies of segmentation and questions which relate to them.

Task 1

Read the case study. Write your answers to the questions.

Case Study

Sno's Hay and Feed has developed a new method for compressing and vacuum packing Lucerne hay which keeps it fresh for more than three years. The invention has several benefits for the long term storage and use of lucerne hay over traditional methods of baling and storage.

The benefits are:

• reduces transport costs by >75%
• reduces storage costs by >75%
• dramatically extends storage time in hot dry weather
• reduces risk to horse owners and horse breeders of the vagaries of fresh chaff supply
• can be carried in the back seat or boot of a car with no mess
• dramatically reduces the risk to horses of mould in humid weather
• reduces risk to farmers supplying Lucerne to Sno's business of the vagaries of supply and demand
• lucerne hay itself is a high protein natural feed that is highly suitable for horses that are ‘working' to keep them in condition with good muscle mass.

The competition for the new product are:

• traditionally baled Lucerne hay which takes eight times that space and becomes dry and dusty over a period of a year
• compressed lucerne hay with additives which subject the product to mildew attack
• pelleted compressed lucerne hay which becomes dry and dusty if not used quickly
• grain fed which is much more expensive but higher in protein content.

Sno conducted a market survey by:

• sending emails to the secretaries or presidents of horse clubs and horse associations asking for his survey to be forwarded on to members
• collecting survey data at agricultural shows
• using an opt-in website.

Sno identified the following segments:

• people who attend country horse shows and gymkhanas (horse events) and need to take horse feed with them but usually do not have a lot of room in the horse float to put bales of Lucerne
• people who muster cattle on horseback over hundreds of kilometres in Western Queensland, and the Northern Territory and need to take feed for their horses with them to last two weeks or more for their horses
• people who transport live sheep and cattle to overseas markets by ship and need to carry feed with them
• retail stores in rural and semi-rural areas which sell feed and other products for livestock
• local community people who can pick up supplies direct from the farm
• all people who feed horses during winter when fresh lucerne hay is available as lucerne does not grow during winter
• gardeners using Lucerne as mulch.

Sno identified his market as horse owners and retail suppliers of horse products. Sno determined the total market to be worth $300M by accessing a census on horse numbers in Australia involved in racing, breeding, events and recreation and applying some benchmarks on average feed consumption from a state wide survey. He identified another market of $200M being 20% of export chaff for horses. Sno identified his target segments as:
• owners using horses for mustering in Western Queensland and the Northern Territory estimated to be $5M in size
• owners with horses involved in events estimated to be $100M in size
• recreational horse owners estimated to be $70M in size Sno identified the following marketing options:
• creation of a website to hold:
- case studies
- testimonials from well known people in the horse industry
- technical data and reports about the product
- photographic evidence of the storage saving attributes and long lasting qualities
• editorials in local newspapers and horse magazines
• direct mail to horse clubs and associations throughout Victoria, Queensland, New South Wales and Northern Territory

• direct sales to resellers using samples to familiarise the resellers and customers with the product
• word of mouth locally and regionally by having a stand at agricultural shows and horse events.

Sno positioned his product as ‘Long-life chaff' with a premium pricing of 30% above competitive products.

1. What segmentation criteria did Sno use? What criteria did he not use? What may have been the impact on the success of Sno's marketing plan of his choice of segmentation criteria?

2. Were there any elements of what defines a useful segment that Sno did not include in his segmentation? What impact may that have had on the success of his marketing plan?

3. What was Sno's positioning strategy?

4. What additional data would have been helpful to prioritise Sno's marketing options for the events segment?

5. What legislation would Sno have needed to be cognisant of in designing and executing his market survey?

6. What targeting strategy did Sno use?