MARKETTING RESEARCH

LIFE BREAD

Compiled By:

Shabreen Hakik Student ID# 10924985 Lecturer: Bodo Lang

2010

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TABLE OF CONTENTS

Page 1.0 Present Market Situation 1.1 Market Size 1.2 Macro-Environment Factors 2.0 Customer Analysis Family Life Cycle 3.0 Competitive Set & Competitor Analysis 3.1 Different levels of Competition 3.2 Perceptual Map of Competition 3.3 Key Competitors 3.4 M 3.5 Strategic Importance 4.0 Category Attractiveness 5.0 Bibliography 01 02

04

07

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1.0 Executive Summary

This report was commissioned to examine and investigate current and prospective bread market stability in New Zealand. The information sought to assist LIFE to make a profound decision before launching LIFE bread in the market. An analysis of the current growth of the bread market and the competing and leading brand manufacturers has been illustrated. Further finding illustrates percentage rate of bread consumption. Other findings include the current bread market price and what the market trends in terms of threats and opportunities are. Data collation was as of AC Nielson market information digest, Statistics New Zealand, customer service, Trade Magazines, Libraries, Consumer magazines, Internet, TV news, Database Index and search engines. The research draws attention to the recent result that evident a rise in bread market growth in volume of 5.8 percent and a rise in values of 4.4 percent. Goodman Fielder Ltd, George Weston Foods Ltd and T. Controlled Label are three top market leaders. Food price index report revealed bread price increase up to 2.6 percent. Household are switching to easy and quick home baking and low priced bread. On the contrary 38.2 percent consumers claim to consume bread everyday and 31.4 percent consume bread almost everyday. The low - priced found in Foodtown supermarket is $2.19 for 700g in the T.Controlled range and utmost price at $6.89 for 750gdistributed by Goodman Fielder. Furthermore investigation through primary research identified how consumers define and describe Bread, buying behaviour and consumption habit and their motivation and emotion towards bread. Three individual depth interviews were conducted using few projective techniques to study the distinct consumers. The research evaluates that consumers perceive health claim bread such as Gluten free and high in fibre. Bread is consumed for breakfast, lunch and dinner. Consumers enjoy bread during winter. It concludes that LIFE need to maintain the freshly baked traditional bread definition whilst being innovative with design, package, size and new product promotion. Further marketing research is vastly recommended. It is recommended that LIFE: targets the everyday bread consumers; looks into dynamic design package to get attention and interest of consumers; promote new bread profoundly especially during winter ; introduce smaller size packed bread for one; price towards the low-end range from $1.30 to $3.49 depending on the size. needs to conduct a taste test in a centralised place

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2.0 Introduction
2.1 Background There are three main kinds of bread in the world: those that rise highest and so have to be baked in pans, those with a medium volume, like rye and French breads, and those that hardly rise at all and consequently are called flatbreads (bakeinfo.co.nz) Bread is the biggest contributor to daily life because people eat so much of it. Food manufacturing sales volumes rose by 3.1 per cent in the December 2009 quarter, according to Statistics New Zealand (nzherald, 2010). Considering the above fact and a potential for a new product opportunity - LIFE A New Zealand Food Manufacturer would like to investigate the bread market. Life has seen that the bread market is growing and there is already plenty of competition providing different types of breads. If things go well, Life would like to launch its bread within 12 months. This report investigate deeper into the current state of the New Zealand bread industry in the secondary research section and consumers thoughts, attitude and beliefs are studied in the qualitative research section. 3.0 Secondary Research 3.1 Secondary Research Objectives To find out the growth rates of the New Zealand bread industry within recent years in sales volume and values. To determine the most competing and leading bread manufacturer(s) in New Zealand bread market and their distribution methods, annual sales and growth rates. To determine how often (percentage and numbers) do consumers eat bread and what are the 2 top reasons in general. To determine the prices of the competing brands in the in the New Zealand bread market (including which brand, variety and size). To find out the bread market trend in terms of threats and opportunity. 3.2 Methodology The main sources of quantitative secondary data include the following: AC Nielson Market Information digest, acneilson.co.nz Marketing Research Society of New Zealand mrsnz.co.nz, contact with customer service Statistics New Zealand Consumer expenditure survey, hot off the press, stats.co.nz Trade Magazines FMCG, Marketing magazine, Groocers review, National Business Review. Library MIT, Manukau city library, AUT library online, Cambridge online Internet Consumer magazine (consumer.org.nz), Nzherald.co.nz, Tvnz.co.nz, search engines such as Google, Google scholar, Ask. Databases Indexes NewztextPlus, Index NZ and EBSCO Host

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3.3 The growth rates of the New Zealand bread industry within recent years in sales volume and values. In order to enter the bread market it is paramount for LIFE to understand the New Zealand bread market and its movement before investing. Bread and other bakery retailing recorded a decrease in both sales volumes and values in the December 2009 quarter. Volume was down 10.9 percent on the last quarter, and this was the main driver behind the 11.7 percent ($23 million) fall in values. In the last 3 years the sales volume is now 33 percent down on the peak seen in December 2006. The sales value trend has fallen 4.8 percent since the June 2009 quarter, after rising 4.6 percent between the June 2008 and June 2009 quarters (Retail Trade Survey, 2009). Both the sales volume and the values have shown some strong declines however, another source recorded; a rise in volume of 5.8 percent and a rise in values of 4.4 percent or $99 million (nzherald, 2010). Figure 1 shows the movement trend (Appendix 1). 3.4 The top five most competing and leading manufacturer(s) and top five brands in New Zealand bread market in terms of percentage value. LIFE will be competing with all the bread category and manufacturers in general. The most common category is loaf bread (sliced) and this data is collated from ACNeilson database 2007 and 2008;
Top 5 Manufacturer (by Value)
Goodman Fielder Ltd George Weston Foods Ltd T. Controlled Label Yarrows The Bakers Ltd Dallas Bread Figure 2

2007
55.3% 26.9% 7.5% 0.6% 0.3%

2008
54.8% 23.7% 9.0% 0.7% 0.4%

Top 5 Brands (by Value)

QB (Quality Bakers) Tip Top Vogels T. Controlled Label Freyas

2007
29.1% 17.1% 10.5% 7.5% 6.7%

2008
27.7% 14.9% 11.0% 9.0% 7.3%

Goodman Fielders top brands include: Vogels, Quality Bakers, Freyas. Goodman fielder is ranked number one in manufacturing bread and bakery products. Net income rose to $116.5 million, or 6.7 cents a share, in the six months ended December from $95.6 million, or 5.5c, a year earlier (nzherald, Feb2010). Another top selling brand is Tip Top manufactured by George Weston Foods NZ Ltd (GWF). Private label manufactures called T. Controlled Label are specialized in store brands almost exclusively. For example, Foodstuff and Progressive have exclusive range of bread with different brands such as Pams, Signature, First Choice and Budget. 3.5 How often do consumers eat bread (percentage and numbers) and what are the 2 top reasons in general. A free database of social statistics compiled by voluntary users from all around the world has been collected. When asked online How often do you eat bread? 89 people from New Zealand responded. Statistic in percentage shown below; 38.2Percent consumes bread everyday(not less than 9 out of every 10 days) 31.46% consumes bread almost everyday 19.1% consumes bread several times a week 3.37% consumes bread about once a week 1.12% consumers bread several times a month 4.49% consumes bread about once a month 1.12% consumes bread about once a year 1.12% consumes bread almost never
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38.2 per cent people said they have bread everyday, 31.46 per cent have bread almost everyday, 19.1Percent have bread several times a week, 3.37Percent eats bread once a week, 1.12Percent said several times a month, 4.49 Percent have bread once a month and 2.24 Percent said theyll either have bread once a year or never (Social statistics, 2010) Two primary reasons why majority of the people eat bread; Bread today have so many healthy choices; high in grains, high in oats, linseed, sesame seeds, low fat, Weight Watchers thin sliced grained, white bread, brown bread, organic bread etc and now is Pro biotic and Omega 3 (Yarrows.co.nz. 2010). Most people eat a large percentage of bread as home baking began to decline as lifestyles became busier (BIANZ Slice, issue 5). People use bread for toast in the morning and sandwiches for lunch. Bread products are also used in making stuffing such as burger, wraps etc. 3.6 The prices of the top 8 competing brands in the New Zealand bread market (including number of varieties and size). Prices has been collated from Foodtown Manukau branch on Sunday 21st March 2010 and crosschecked on the website late on the same day; Brand Name No. of Size and Price Varieties Tip Top (Rolls, Buns, Sandwich, Toast) 24 720g $3.89 6pk $2.99 Signature (Pita, Toast, Sandwich) 19 700g $2.19 8pk $3.39 Natures Fresh (Buns, Sandwich, Toast) 17 700g $2.49 8pk $3.69 Vogels (Sandwich, Toast) 15 720g $4.79 Freyas (Sandwich, Toast, Breadstick, Loaf) 14 500g $5.49 750g $6.89 Molenberg (Rolls, Buns, Sandwich, Toast) 13 700g $2.99 6pk $3.29 Mackenzie (Rolls, Toast) 8 915g $5.35 4pk $3.49 Ploughmans (Toast bread) 7 750g $4.19 3.7 The bread Market Trend. Bread prices increased up 2.6 percent (Food Price Index, May09). Consumers are certainly looking at spend in all aspects of their lives, with a focus of staples such as breads, particularly house brand and cheaper branded (Foodservice magazine, June09). Recent economic factors are having an effect and in hard times, people are finding the cheaper breads to be budget tolerable. Global economic conditions have resulted in households turning to home baking. If we look at TV food-based programmes, the emerging trend is foods that are easy to make; healthy and delicious home based cooking that anyone can make (Leslie B, 2009). Another definite trend is the percentage of population asking for gluten-free. There is research and development going on right now to achieve the best alternative to glutenfree flour and folic acid to be made compulsory (Foodervice Magazine, June09). Quest for healthy bread is growing and have been evident in international market as well. Top trends for 2008 and beyond, a global database that sources data on countries and markets, says consumers of all ages will continue to lean towards bakery products they view as healthy or nutritious with a growing obsession with body image (Leslie B, 2009). The manufacturers must therefore tailor their products to meet this consumer demand for bread that will boost their nutritional input and compliment their vanity.

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4.0 Qualitative Research 4.1 Qualitative Research Objective To determine how consumers define and describe Bread. To find out consumer habit in terms of when and how do consumers prefer to have bread. To determine how consumers of all demographics feel about bread in general. To determine what effective aspect of change would interest the consumers which would motivate them to buy bread. 4.2 Methodology To answer the above objectives I will use qualitative research in the form of individual depth interviews. I will be the interviewer and I will interview 3 dissimilar respondents, one male and 2 females of different age, youngest age will be no less than 18 years old and eldest age will be 50+. Word association test, sentence completion, third-part techniques and card sorting will be used as projective techniques in order to delve below the surface responses to obtain true feelings, meanings and motivations of the consumer. In order to help me analyse my findings better voice recording cell phone will be used. 4.3 How consumers define and describe Bread. Respondent 1 mentioned that bread is the first food that you learn. We have many varieties but bread is only recognised as bread if it has that same old traditional shape, ingredient and texture - A traditional definition of freshly oven baked. Respondent 2 describes bread to be one of oldest processed food. She remembers her childhood days when bread was very different from how it is seen as industrialized processed and everyday consumption food. Respondent 3 describes bread as delicious, healthy, readily processed and everyday eatable food irrespective of the time of the day. All 3 of the respondent defined bread as baked food product made of flour, wheat or meal that is moistened, kneaded and made into various forms and shapes. 4.3 Consumer habit in terms of when and how consumers prefer to have bread. Respondent 1 buys seed & grain bread and have it for breakfast every morning. He prefers toast with margarine and sandwich for lunch al least 2-3 times a week which includes after work at times. Respondent 3, likes buns, grain bread and fruit bread with Jam & peanut butter, usually for breakfast either at home or caf. Respondent 2 have bread for lunch almost everyday in a form of sandwich, wrap, stuffing or toast with avocado or tuna. Sometimes she would have toast bread for breakfast but not always because cereals and cornflakes is a quicker option. Furthermore, accordingly to the likes of both the respondent 1 & 2, they both prefer more bread during winter with hot soup, chowder and coffee or tea. All the three respondents show a trend in eating habit. It seems they consume more bread during winter and bread for breakfast and lunch is common in all three. According to all the three respondents, bread is consumed daily either for breakfast, lunch or dinner. Mostly bread is consumed for breakfast and lunch.

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4.4 How consumers of all demographics feel about bread in general. Consumers of today know about the effect what type of bread has on the health which leads to how people feel about food they consume. Respondent 2 feels purely full and satisfied if she eats her choice of healthy bread which is gluten free, soy and linseed toast bread and she would feel guilty if she eats white bread. Respondent 3 feels energised, fresh, full and well deserved when she eats her choice of bread for breakfast. She enjoys having breakfast after a long night of fast therefore she likes to eat adequate but tasty. Respondent 1 feels vitalised and he feels the size, price and the presentation of bread plays a significant role in his life. Furthermore, he feels healthy and blissful when he knows he has eaten healthier bread. He said that wheat grain bread is significantly more nutritious and is superior to white bread because it has a more interesting flavours and textures. 4.5 What effective aspect of change would interest the consumers and would motivate them to buy bread. The change that would motivate Respondent 1 and 2 to buy bread is low sugar, sodium and fat, less or no oil, no artificial colours & flavours on the label, add honey. All the respondents prefer the placement to be accessible and visible from distance. Respondent 3 said the presentation of the bread should be attractive and must be mouth watering and the portion size should be available for one. She finds bread boring at times and would like to see a new innovation, may be a pack that comes with both bread and spread such as fruit jam or honey for me to put it in my bag and walk out to face the world. Respondent 2 said brands doesnt matter as long as price is affordable however as she is a health conscious consumer she will go for healthier option, gluten free, high in fibre and full of energy is choice. Premium price bread for daily consumption is not affordable. 5.0 Recommendations Considering the fact that consumers are switching to healthier choice, LIFE bread should utterly dedicate to suit the demand in enhance. It is imperative for LIFE to take into account these recommendations before launching LIFE bread; Produce bread that claims to be healthier. Add more functional ingredients. Target the everyday bread consumers Look into dynamic design package to get attention and interest of consumers Promote new bread profoundly in the market especially during winter season Introduce in small size packed bread to suit one person Price needs to be competitive, more towards the low-end in order to target the everyday consumers. Range from $1.30 to $3.49 depending on the size. Maintain the freshly baked traditional definition of bread but introduce new but healthier ingredients. Looks to introduce more different kinds of innovative breads. Needs to market heavily when the new bread is introduced into the market. Conduct a taste test in a centralised place to find out possible preferences. Undertake more market research such as focus group research and on-line surveys.

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6.0 Bibliography ACNeilson Market Information Digest CD Rom. Bread and Bakery. Retrieved June 15, 2008, from MIT Libruary. Ever wondered whats in your daily bread?. Retrieved August 5, 2008, from consumer.org.nz. Food Price Index. Retrieved May 2009, from www.stats.govt.nz Gates, R., McDaniel, C. (2010). Marketing Research (8th Ed.). Don Fowley. Hot off the Press. Retrieved March 12, 2010, from www.stats.govt.nz. Hensen, P. (2008, Februauy). Bakery in 2008?. FMCG, 13, 22 23. Hoh, J. (2007, September). Bread & bakery. FMCG, 13, 24 26. Hurst, G. (2010, March 18). Health & Safety Trainer. Wesfarmers Industrial Solutions. How often do you eat bread? Retrived March 11, 2010 from Reference Social Statistics 2.0 Beta database. Kelly, R. (2008, March). The bread trail. Vegatarian Times, 235, 76. Kiwiblog. (2010), No mandatory folic acid in bread. Retrieved 25, March 2010, from www.kiwiblog.co.nz Leslie, B. (2009, June). Baking & Pastry Local Scene: Baking whats new?. Foodservice Magazine, 30-34. Leo, B. (2010, March 17). Regional Sales Manager. Packaging House Limited. Leslie, B. (2005, June). Bread Product. FMCG, 38. Lewis, R. (2009, November 8). Breakfast staple no good?. The New Zealand Herald, A7. Peter. (2010, March 11). Customer Service representative. Statistics New Zealand. Marketing Research. [Handbook]. (2010). Manukau City, New Zealand. Manukau Institute of Technology. NZ Herald business. (2010, March 8). Manufacturing sales off nine-year low. Retrieved 12, March 2010, from www.nzherald.co.nz. NZ Herald business. (2010, March 11). Boring Food fuels hunger for home. Retrieved 12, March 2010, from www.nzherald.co.nz.

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Sheed, N. (2008, June). Are food shortages looming?. FMCG, 28 29. Sheed, N. (2007, November). Heres to your health. FMCG, 24. Sector, C. (2009). Change a Constant. NZ Retail, 661, 12 13. Supermarket brand share analysis. (2009). Example of Current approach. Retrieved March 2, 2010, from www.stats.govt.nz Sagapolutele, T. (2010, March 20). Student and part-time worker. Frucor Limited. Top 100 Grocery brands. (2007, June). Grocers Review, 17. Winters, J. (2007, November). Its a growing Trend. FMCG, 13, 10.

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