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Strategic Analysis Report of Natural Balance Foods

Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics

Natural Balance Food company logo

Natural Balance Food company logo

1. Introduction

Organisations continue to change, re-shape and evolve profoundly on how they structure their marketing strategies particularly for new products to meet the demands of their target customers and survive the stiff competition from their close rivals. A good example is a British company called Natural Balance Foods which manufactures ‘healthy snacks’ namely, Trek and Nãkd (two branded products) which it considers as innovative products that can enable the company to compete with its competitors across the UK. This report evaluates the potential market opportunity for a new and appealing fast brand of Natural Balance Foods in the UK and makes effective recommendations for its launch. The product is called Nãkd Pecan Crunch Bars which sits within Natural Balance Foods portfolio. It starts by analysing the current marketing activities of the company and proceeds to evaluating the key dynamics and trends in the competitive and external environments of the organisation. It then recommends how the new brand of Natural Balance Foods will be successfully launched and concludes with a brief summary of the report’s key findings.

2. Analysis of current marketing activities of Natural Balance Foods

The major products or brands of Natural Balance Foods are Trek and Nãkd. However, it provides a wide range of products within its two branded products. For instance, it offers Nãkd Bars, NãkdProtein Crunch Bars, New Nãkd Breakfast Bars, NãkdNibbles and NãkdPosh Bits. As for Trek brand, it offers Trek Protein Energy Chunks, Trek Protein Energy Bars, Trek Protein Flapjacks and Trek Tough Mudder Mixed Boxes (NBF, 2018). The organisation relies on a number of promotional campaigns to advertise its products to its target markets. For instance, other than using its website and social media sites, Natural Balance Foods hires media agencies such as the WPP to promote its products to its target customers including vegans, vegetarians people with food intolerances and ‘health balance women’, among others (Campaign, 2018). It also relies on MEC to use social media to advertise its wholefoods that are made from plants to encourage and direct people to buy the company’s products online (Campaign, 2018). The company also relies on shows, exhibition sampling and magazine covermounts to promote its two brands (Briggs, 2016). Additionally, through its website (Veganuary.com) and print adverts on supermarket websites and account magazines, for example, Costco’s Connections Magazines and Waitrose Weekend magazine, Natural Balance Foods features advice, resources and information to help its customers switch to its brands (Briggs, 2016). To ensure that customers access its products at the right time, quality and place, the company ensures that its highly-demanding street food retailers are supplied with sufficient stock of its two brands through its evenly located seven warehouses across the UK (NBF, 2018). The company also relies on its wholesale distributors and website ordering to help customers access its products by providing them with the information they need to make the exercise prompt (Searby, 2015). Different from this, Natural Balance Foods works closely with large supermarkets such as Sainsbury and Tesco which has over 700 outlets to make its products available to customers (Searby, 2015). With regards to price, due to difficulties in predicting the costs of sourcing organic or/fair trade ingredients, the prices for the company’s brands are not constant, thus, the reason why the company relies on special offers and discounts to promote sales of its products (NBF, 2018).

3. Evaluation of the key dynamics and trends in the competitive and external environments

3.1 External environment analysis (PEST analysis)

The political stability in the UK provides businesses with a favourable environment to do business in the country (Tse, 2017). According to Charles, Schmidheiny, and Watts (2017), the government of UK acknowledges the positive impact of trade in the country’s economic growth, thus, continues to sign deregulations, bilateral agreements among other trade agreements with different nations across the world (Narooz and Child, 2017). This has a negative impact on the natural food industry because it increases competition from foreign companies. Additionally, the UK government has the highest tax rates across the globe, approximately 28% (Garcia et al., 2017). This aspect too has a negative impact on the natural foods industry because it increases their operational costs and lowers their revenues and profits. The UK’s remarkable economic growth since the end of the recession period and Euro Zone crisis provides businesses with good environment to run their operations (Greco, Locatelli, and Lisi, 2017). Therefore, the natural food industry is guaranteed a conducive environment to conduct businesses. The UK employment rate has also been growing steadily, and more people have access to loans at favourable interest rates (Tse, 2017). This has a positive impact to the natural food industry because it increases the purchasing power of customers and encourages spending on natural foods despite their high prices. With the increased growth of obesity and overweight in the UK, the current social status in the UK in regard to food consumption shows that there is tendency for people to prefer consuming organic or natural foods as opposed to inorganic foods because they associate them with good health, and associate inorganic foods with overweight and illnesses such as obesity (Charles, Schmidheiny, and Watts, 2017). This provides the natural food industry with high demand for its products, thus, boosts the industry’s growth. It is also important to note that most UK food consumers prefer smelling and tasting food products before making purchase decisions (Narooz and Child, 2017). This affects the influence of adverts and print media campaigns on the consumption of natural foods. Additionally, the UK has had a consistent population growth rate in the past few years (Garcia et al., 2017). This provides the industry with high demand for its products, thus, supports its growth. The UK government sets aside annual budget for research and development to support different economic sectors (Greco, Locatelli, and Lisi, 2017). This provides the natural food sector in the industry with adequate innovative and adequate skills to improve quality of food products and services. Additionally, the UK government promotes technological advancements by setting aside a budget annually to support the same (Tse, 2017). This provides the natural food industry with the abilities to track and/or ensure safety of food, as well as modern food manufacturing technologies to improve efficiency and cut down operational costs.

3.2 Competitor analysis

Natural Balance Foods competes with many competitors in the UK foods and drinks industry. For instance, the company’s rivals include; Bear Nibble, Kellogg’s, Cofresh Snack, Mondelez International, General Mills, Nestle, Conagra Brands, and MARS, among others (Owler, 2018). However, the major or key competitors of Natural Balance Foods include; Bear Nibble, Kellogg’s and Cofresh Snack (Owler, 2018). These companies pose a competitive threat to Natural Balance Foods in the UK market because of a number of reasons. For instance, Bear Nibble is known in the country as the best in producing the healthiest and tastiest snacks in the UK market (Bear Nibble, 2018). On the other hand, Kellogg’s has high awareness. For instance, it is known to be the largest cereal maker in terms of sales across the globe that spends more than $1 billion every year on brand marketing and advertising (Kellogg’s, 2018). The other strength Kellogg’s is that it has strategic acquisitions. The company for example has the highest number of acquisitions compared to the three, which enable it to optimise the use of its resources and has worldwide presence because it manufacturers its products in more than 18 countries across the globe (Kellogg’s, 2018). On the other hand, Cofresh Snack Company competes in terms of innovation and offers a wide range of products including rice sticks, potato snacks, nuts, savoury mixes, snack bars, caramel nuts, poppadum curls, value range, and cassava snacks among others (Cofresh, 2018).

3.3 Analysis of the company’s organisational strategy and capability

The vision and mission of Natural Balance Foods are as follow;

Company Mission: To increase world happiness with humour, helpfulness and healthy snacks by making delicious, good-for-customer munchies, doing best to help others, and spreading joy along the way (NBF, 2018).

Company Vision: To be a leader in reinventing and providing healthy snack alternatives in Europe and across the globe (NBF, 2018).

Competitive advantages of the company

Natural Balance Foods enjoys a number of competitive advantages in the UK over its direct competitors, namely; Bear Nibble, Kellogg’s, Cofresh Snack Company. For instance, it has strong distribution across the country and delivers at subsidised costs (Briggs, 2016). Secondly, based on the fact the company only deals with organic food products, it has a healthy image, thus, gains advantage over its direct competitors (Searby, 2015). Thirdly, despite the fact that some of its competitors are more stable, Natural Balance Foods is financially stable and this gives it a competitive advantage in regard to running its operations across the UK (NBF, 2018). For instance, the company’s net assets as at 31st December 2016 accounted for ‎€5,936,099 (Companies House, 2018). Forth, Natural Balance Foods offers unique products, namely; Trek and Nãkd (two branded products), all of which are natural (mainly fruits and nuts) and do not contain sugar (Campaign, 2018). However, new have it that Despite the claim that sugar content is low in its products, the company’s products, for example, those with dates and raisin ingredients have high sugar because dates account for 50% sugar while raisin account for 10% to 15% (Briggs, 2016). Additionally, the company caters for more than one specific groups and subgroups with certain dietary needs, for example, dairy allergies and celiac. This gives it a competitive advantage because its products are targeted towards unique customer segments. However, due to its small size, Natural Balance Foods has low product awareness, particularly when compared to its direct rivals, for example, Kellogg’s Company which operates in more than 18 countries across the world (Searby, 2015). Nevertheless, the company relies on more on the internet to market its products as opposed to other forms of advertisements (Campaign, 2018). This affects the company’s branding, particularly in the UK where many customers prefer personal selling because it gives them an opportunity to smell and taste products before making purchase decisions.

Natural Balance Foods competitive strategy

Natural Balance Foods adopts differentiation strategy for its Trek and Nãkd (two branded products). This strategy refers to manufacturing or creating products or services that have sufficiently distinctive attributes from those offered by competitors (Mashruwala and Tripathy, 2014). Natural Balance Foods, for example, unlike some of its direct and indirect competitors which offer inorganic snacks, this company offers natural or organic food products (Companies House, 2018). For instance, as mentioned above, the ingredients of all of its products that fall under the portfolio of Trek and Nãkd are natural (mainly fruits and nuts).

3.4 SWOT Analysis of Natural Balance Foods


3.5 Identifying and recommending the potential market for the company’s new product

Nãkd Pecan Crunch Bars, the new product to be introduced in the UK by Natural Balance Foods is organic and is purely manufactured using plant ingredients (no use of animal products). To make the new product (Nãkd Pecan Crunch Bars) a success in the UK market, Natural Balance Foods should adopt the following STP (Segmentation, Targeting, and Positioning) strategy; with regards to segmentation, based on the fact that most people in the UK are health conscious when it comes to food consumption, Natural Balance Foods should adopt psychographic segmentation for its new product. In reference to Schlegelmilch (2016), psychographic segmentation refers to the division of a market into segments based on different customer personality values, traits, interests and lifestyles. This market segmentation is advantageous to Natural Balance Foods because it will allow the company to engage in designing and marketing Nãkd Pecan Crunch Bars in a focused manner. In particular, when marketing the new product, it is suggestible for the company to focus on the psychographic segmentation attribute of lifestyle because it affects the choice of ‘healthy’ (organic) food consumption. Secondly, the next step that Natural Balance Foods should undertake once it is through with its segmentation criterion is targeting. Here, the company should target vegans across the UK, aged between 10 to 60 years who are fond of hiking and travelling, or are still studying. Vegans refers to the people who have abstained from the consumption of animal products, or those whose philosophies are opposed to animal commodity status (Roth, 2009). This type of target market is ideal for Natural Balance Foods because it consists of people who are health conscious and informed or aware of the negative consequences of consuming inorganic or unhealthy foods. This target market is also ideal for Nãkd Pecan Crunch Bars because most of the people travelling, studying, and hiking are fond of consuming snacks and other light-weight meals. Moreover, the choice of the age limit above is ideal because it covers a wider population, thus, will help Natural Balance Foods to make huge sales volumes of its Nãkd Pecan Crunch Bars across the UK. Furthermore, the identification of vegans as the ideal target market for its Nãkd Pecan Crunch Bars is logic because the food product does not contain any ingredients from animals, thus, is likely to appeal vegans. Once the company is through with deciding on its target market (as indicated above), it will be required to create a positive perception of its Nãkd Pecan Crunch Bars in the minds of the target audience. For instance, it is recommendable for Natural Balance Foods to position itself as the only company that offers high-quality and unique snacks in the eyes and minds of its target audience compared to its competitors. This will enable the company to make Nãkd Pecan Crunch Bars the most appealing snack to customers in the UK market, thus, give it a competitive advantage. The following position map (figure 1) shows how the company will position its Nãkd Pecan Crunch Bars to appeal its target customers.

Figure 1: Positioning map for Natural Balance Foods’ Nãkd Pecan Crunch Bars

3.6. Outline of the primary market research for the new product

The following is an outline of the primary research for the target market (vegans aged between 10-60 years) of Natural Balance Foods’ Nãkd Pecan Crunch Bars;

1.0 Defining the research problem: explain the problem the research is intended to solve, how it will benefit the new product under research and formulate the right questions for data collection

2.0 Establishing research objectives: this will include identifying research aim and objectives of the new product.

3.0 Setting timelines for the market research survey: this may include the date to kick-off the survey and the deadline of receiving all information needed.

4.0 Determining the sample size of the target audience of the survey and the amount of data required by the researcher

5.0 Using the right research resources and tools/instruments to collect and analyse data

6.0 Making informed conclusions after analysing the collected data.

4. Recommendations for the new Natural Balance Foods brand

4.1 Marketing Strategies

Natural Balance Foods’ Nãkd Pecan Crunch Bars will be introduced and launched in the UK. This country is politically and economically stable, thus, provides a good environment for doing business. The new brand (Nãkd Pecan Crunch Bars) is organic and is purely manufactured using plant ingredients (no use of animal products). The idea behind its launch is to help the company realise its mission and vision. For instance, it is meant to increase world happiness with humour, helpfulness and healthy snacks by making delicious, good-for-customer munchies, doing best to help others, and spreading joy along the way. It is also intended to help Natural Balance Foods reinvent and provide healthy snack alternatives in Europe and the world at large. It will be targeted to vegans across the UK aged between 10-60 years, particularly travellers, students, and people going for hikes. Natural Balance Foods will position itself through Nãkd Pecan Crunch Bars as the only company that offers high quality and unique (differentiated) snacks in the minds of the target customers. By launching the new product, the company will be able to meet the needs of the health-conscious customers across Europe who demand and perceive organic foods as healthy (fear of obesity and overweight). Natural Balance Foods will be required to integrating new technologies to increase efficiency and reduce operational costs, as well as expand and ensure its distribution across all its branches in the UK because it is supported by the country’s political stability and stable economy and continuous population growth rate. Additionally, other than relying on the internet to advertise its products, the company will also be required to adopt personal selling and other related promotional strategies because consumers in the UK prefer smelling and tasting food products before making purchase decisions.

Figure 2 below (figure 2) shows Ansoff Matrix, which according to Bachmeier (2013) provides marketers with four growth strategies (market penetration, diversification, market development, and product development) which they must assess to identify the most fit for their products by assessing the risks associated with each option.

Figure 2: Ansoff Matrix (Bachmeier, 2013)

Based on the figure above, it is recommendable for Natural Balance Foods to adopt market penetration growth strategy for its Nãkd Pecan Crunch Bars. This is because this growth strategy supports organisations trying to develop new but more of the same (its existing) products in a market. Nãkd Pecan Crunch Bars is supported by this strategy because it falls under the portfolio of the company’s existing products. However, to make the product’s launch a success, the company will be required to adopt a new marketing strategy, for example, personal selling to encourage more customers to try it, launch special promotions such as discounts and price promotions, or even introduce loyalty schemes.

4.2 Marketing Objectives

The SMART marketing objectives of Natural Balance Foods’ Nãkd Pecan Crunch Bars are as follows;

  1. To achieve 70% sales of Nãkd Pecan Crunch Bars to Vegans aged 10-60 years by one year.
  2. To achieve 80% awareness of Nãkd Pecan Crunch Bars in the UK by 5 months
  3. To make Nãkd Pecan Crunch Bars a preferred of 10-60-year-old vegans in the UK in 6 months
  4. To achieve a 30% return on investment/capital employed for Nãkd Pecan Crunch Bars by one year

4.3 Marketing Programmes (7Ps marketing mix)

4.3.1 Product strategy

To ensure that the success of its Nãkd Pecan Crunch Bars, Natural Balance Foods should ensure that the product is of high quality and unique from the others. By differentiating the product, the company will be able to enable customers to easily identify them, thus, easily influence their purchasing behaviour.

4.3.2 Pricing strategy for low-end and high-end customers

Natural Balance Foods should charge relatively fairer prices for its Nãkd Pecan Crunch Bars than those offered by competitors in order to influence customer purchase intentions. However, the price should be aligned with the return on investment objectives, thus, the need for the company to ensure that it gives or lets consumers acknowledge the value of the product, particularly if they feel that the price is high.

4.3.3 Promotion strategy

When promoting its Nãkd Pecan Crunch Bars, Natural Balance Foods should adopt personal selling and other related promotional strategies because consumers in the UK prefer smelling and tasting food products before making purchase decisions.

4.3.4 Place strategy

To develop its Nãkd Pecan Crunch Bars through place strategy, Natural Balance Foods needs to ensure that its stores or outlets are strategically located, particularly in places where vegans are common. This will influence their purchase intentions, particularly if the previous costs of purchasing the product from far distances is high.

4.3.5 People strategy

For the company to manage to offer high quality Nãkd Pecan Crunch Bars, the company should ensure that it treats its people (employees) well, for instance, training, rewarding, and promoting them in order to influence them to reciprocate by offering excellent services to customers.

4.3.6 Physical appearance strategy

Natural Balance Foods should ensure that it has a unique, engaging, attractive and detailed website for its Nãkd Pecan Crunch Bars in order to appeal to its target audience and influence their purchase intentions towards the product. This will enable its target customers to easily identify the product from others when they go shopping. It can also ensure that the features of Nãkd Pecan Crunch Bars are reflected in the uniforms of its staff in order to enable customers to easily identify the product from others in any store.

4.3.7 Processes strategy

Natural Balance Foods should ensure that its R&D systems or Customer Relations (CRM) systems are directed towards meeting the needs of the target market for its Nãkd Pecan Crunch Bars. This will enable the company to address all needs and demands of its customers, thus, influence their purchase intentions towards Nãkd Pecan Crunch Bars.

4.4 Monitoring and Control

Just like what the company did to the development of the existing products in the UK market, Natural Balance Foods should put enough measures to ensure that the development of the new product is within scope, on budget, and on time so that it succeeds with minimal risks. Therefore, the company will be required to compare the actual performance of the product with the planned performance and take corrective actions in order to yield the product’s desired outcome in case of the existence of significant differences. The exercise should be continuous, thus, will be performed throughout the product’s life cycle.

5. Conclusion

By launching the new product, Natural Balance Foods will be able to meet the needs of the health-conscious customers across Europe who demand and perceive organic foods as healthy (fear of obesity and overweight). Natural Balance Foods will be required to integrate new technologies to increase efficiency and reduce operational costs, as well as expand and ensure its distribution across all its branches in the UK because it is supported by the country’s political stability and stable economy and continuous population growth rate. Additionally, other than relying on the internet to advertise its products, the company will also be required to adopt personal selling and other related promotional strategies because consumers in the UK prefer smelling and tasting food products before making purchase decisions. To ensure the success of the new product, it will be important to start by conducting a primary research on the same, employ effective market growth and market mix strategies and put enough measures to ensure that the development of the new product is within scope, on budget, and on time so that it succeeds with minimal risks.

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Comments

Silas Nyamweya (author) from Nairobi, Kenya on December 24, 2020:

If you need such case studies written from scratch, get in touch with me via silasnyamweya@gmail.com

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