Factors affecting demand for Baik Sos cooking sauces

Cepuros Food International- Malaysia introduced the Baik Sos to target the urban households living in the Klang Valley region of Malaysia because here the households receive the salary from dual sources and are generally not price conscious. The household in Malaysia demands a premium quality product, which is halal certified and uses the natural ingredients in the process of making. The demand for baik Sos gets an increase in the Klang Valley region of Malaysia because here the consumers believe to use the packaged product rather than making the meals from scratch.  The people in Malaysia have busy lifestyles so they prefer the packaged products, which help the household in making meals fast. They explore globally and have the global travel experience, which shapes the craving to have exclusive, innovative and global flavour profiles (Ferrell, 2014).

The demand for baik Sos increase, because the products made, is halal certified and do not uses monosodium glutamate, it does not uses artificial colour or artificial preservatives and fulfils the needs of the customers by providing good healthy sauce with premium packaging in addition to the involvement of high-quality ingredients (Quelch and Hartman, 2018).

The products of Baik Sos were packaged using vacuum seal, plastic pouches with zip closures and the recipes and the nutrition labelling were put at the back of the bottle. Such packaging and the detailed information of the product helps CFI-M to gain the trust of the customers and become a popular brand. Such a strategy helps the company in retaining its customers and builds its market share (Quelch and Hartman, 2018).

In 2016, CFI-M introduced a single shelf based salsa under the brand name as Baik Sos salsa. In comparison to Baik Sos cooking sauce, Baik sos salsa was mild spicy which was made by mixing of a chunk of tomatoes, onions and lemongrass, chilly and garlic. It was inspired by Mexican style salsas commonly used in the United States. This Baik Sos was introduced to replace the sambal paste, which was very popular in Malaysia. It was priced as a premium product to replace sambal paste and was promoted as first and only Malay- fusion salsa (Quelch and Hartman, 2018).

• Strengths

CFI-M deals in three product lines under the name baik sos. The brand was known for being healthy as the company uses quality ingredients and do not add any kind of artificial colour or preservatives. It offers two brands of cooking sauces i.e. the baik sos sihat line and baik sos riang line. The sihat was positioned as super premium and riang line was positioned as premium. In 2016, CFI-M introduced single, shelf stable salsa under the brand name baik sos salsa which was positioned as premium product and till 2017 it was the only packed sauce in Malaysia. It is analysed that baik sos was the top seller in two of the largest premium supermarkets in Klang valley.  It was analysed that sihat and riang both has strong brand awareness, which was similar to maggi and adabi (Scott, 2015).

• Weakness

Differences between demand for Baik Sos cooking sauces and Baik Sos salsa in Malaysia

It is observed that baik sos salsa did not perform well in case of brand awareness because only 19% of shoppers were known about the brand and out of them only 10% shoppers have actually purchased the product. In Malaysia, people got confused between baik sos sauce and baik sos salsa because baik sos sauce was used in cooking and salsa was used without cooking which creates confusion in the minds of the customer. It was analysed that the company has not used the promotion tools to create brand awareness of baik sos salsa, which in turns leads to decline in sales of salsa as people were less aware of the baik sos salsa (Schneider and Hall, 2011).

• Threats

Introduction of new product lines by nestle or Heinz is a threat for baik sos salsa because they will introduce at the lower prices and will capture the market share. However to overcome such vigorous competition the baik sos salsa brand has to create promotion and brand awareness within a short span of time. It can also cause the dilution of the premium image of the brand (Proctor, 2014).

• Opportunities

If the brand baik sos salsa introduces new flavours and promotes its brand by increasing the selling expenditure it is analysed that there is growth opportunity and the company can double the sales by the ear 2019 and the sales will increase by 15% in the year 2018. The company has immense of growth opportunities if it introduces the new product lines because the people in Malaysia have the global travel experience and demands for unique and innovative flavour profiles. Such demand leads to the creation of immense opportunities for the baik sos brand (Scott, 2015).

To expand the market for CFI salsa line the company must adopt the Ansoff matrix strategy, which describes the scope of growth using the new or the existing product in the new or the existing market. It consists of four growth strategies

Market Penetration-

The company must expand the promotion of existing brand i.e. baik sos salsa by increasing its selling expenditure and using the promotion tools such as an advertisement on radio’s, television and can also increase the sales by building strong relationships with the retailers so that they allow to promote the brand using their shelf case. The company must provide the product at the discount prices to promote the product and build the trust among the customers (Smart Insights, 2018).

The company can develop the market by introducing the new product lines into salsa and promoting the brand by developing the videos, which uses chefs to make the dishes using baik sos products. The company can use other promotional tools such as social media platform to create brand awareness and however leads to an increase in market share (Harvard Business Publishing, 2017).

It is analysed that the consumers in Malaysia has the global travel experience and continuously demands unique, innovative flavour profiles. To meet this demand the brand must introduce different flavours to salsa to attract more customers and increase its market share. The company can bring alterations by developing small packages, which are easy to handle (Grunig and Morschett, 2017).

SWOT analysis of CFI-M in 2017

Diversification

The company can use the strategy of diversification but prior to diversification; it requires intensive research of the market conditions, as there is always a threat of close substitutes, which can lead to dilution of the brand image (SSRN, 2018).

	Existing product line	Introduction of the new product line
Revenue	34,297,050	68,594,100
Variable cost	20,093,082	40,196,142.6
Gross Profit	14,203,968	28,397,957.4
Fixed Cost Selling Expenses General and administrative expenses Operating Income	4,499,925 4,552,246 5,151,797	5,299,925 5,102,246 17,995,786.4

From the above calculation, it is analysed that by introducing the new product line of salsa, the sales will increase but it will also lead to increase in fixed cost. Using the mass market strategies will double the sale but can also leads to dilution of brand image if the competitors come up with the product lines at lower price offers. However if the company adopts the strategy to moderately create brand awareness the sale will increase by 30% in the year 2019. It requires extensive market research for the adoption of appropriate marketing strategy by understanding the customer requirements and analysis of the close substitutes of the product (Bhatia and Thakur, 2017).                                                                    

It is analysed that the people in Malaysia are more health conscious and thus focuses on products that are halal certified and uses quality ingredients in the process of making sauce and salsa. They want the products that are in small packages and consist of the detailed nutrition label. The people in Malaysia have busy lifestyles and demands for ready to use the product, as they do not have the time to start from scratch. However to develop the market for salsa the company must analyse the five forces to gain an in-depth knowledge of the market trends of Malaysia (Kaser, 2013).

 The company must analyse the close competitors of the product so that it does not lead to dilution of the image of the brand and must focus on increasing its selling expenditure to promote and create brand awareness for the product because if people will be aware of the brand it sales can increase in doubles. It must develop the new lines in the product according to the changing taste of the customers and providing them with the unique global flavours (Rosenbloom, 2013).

 The CFI-M must allocate its marketing investments by educating the customers about the product and creating brand awareness by using various celebrity endorsements and using a social media platform to make the people aware of the products. The company must use television and radio advertisements to make people aware at large and must expand its distribution channel to make it easily available to a wide range of customers. The company focuses on making videos and blogs, which uses local chefs to provide different recipes, which uses salsa to create the demand for the product (Abratt and Bendixen, 2018).

 The company can allocate its marketing investments by expanding its distribution channel and make it available at large. The company must use the attractive packaging to build the trust of the customers and must provide free samples with the baik sos sauce to create brand awareness of baik sos salsa. It must bring the innovations in flavours of salsa and must use the mass-market strategy to develop its market in Malaysia (Gopaldas, 2015).

Conclusion

From the above discussion, it is concluded that people in Malaysia have the busy lifestyles and prefer ready to use packages of sauce and salsa because they don’t have the time to make it from the scratch. It is analysed that baik sos sauce enjoys the strong brand image and is considered as a healthy sauce while the awareness for baik sos salsa is still less and various marketing measures are adopted to promote brand awareness and increase the market share of baik sos salsa.

It is analysed that if the company adopts the mass-market strategies the sales will increase to double but it involves higher risk and more selling expenses while if the company moderately creates awareness of the product the sales will increase to 30% by the year 2019. Therefore, the company must conduct extensive research about the trends and the analysis of the close competitors to maintain the brand image in the eyes of existing customers and effectively increase its market share in the new market. The company must develop innovative unique flavours to provide the customers with global flavour profiles.

References

Abratt, R., and Bendixen, M. (2018) Strategic Marketing: Concepts and Cases.  London:Routledge

Bhatia, A., and Thakur, A. (2017) Choice of diversification strategies in an emerging market environment: an empirical evaluation. International Journal of Business and Globalisation, 19(1), pp.52-78.

Ferrell, C.O. (2014) Marketing Strategy. United Kingdom: Cengage Learning

Gopaldas, A. (2015) Creating firm, customer, and societal value: Toward a theory of positive marketing.  Journal of Business Research, 68(12), pp.2446-2451.

Grunig, R., and Morschett, D. (2017)General strategic planning as the starting point for going international for new markets.  Developing international strategies, pp. 57-65.

Harvard Business Publishing. (2017) Competitive strategies [Online]. Available from: file:///C:/Users/TEMP/Downloads/2933585_1984085213_CompetitiveStrategiesAveryGupt.pdf [Accessed 15/12/18]

Kaser, K. (2013) Advertising and sales promotion. Canada: Cengage Learning

Proctor, T.(2014) Strategic marketing: an introduction. 2^nd ed. London: Routledge.

Quelch, A.J., and Hartman, B.K. (2018) Cepuros Foods Malaysia: Finding the Secret Sauce for Growth. Harvard Business Review, pp.1-10.

Rosenbloom, B. (2013)Marketing Channels.  Australia: Cengage Learning

Schneider, J., and Hall, J. (2011) Why the product launches fail. Harvard business review, pp.21-23.

Scott, M.D. (2015) The new rules of marketing and PR: How to use social media, online video, mobile applications, blogs, news releases, and viral marketing to reach buyers directly.  United States of America: John Wiley & Sons

Smart Insights. (2018) The Ansoff model [Online]. Available from: https://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-model/ [Accessed 15/12/18]

SSRN.  (2018) The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems [Online]. Available from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3130530 [Accessed 15/12/18]