KENCHIC LIMITED MARKETING PLAN 2010

SITUATIONAL ANALYSIS
PRODUCT DESCRIPTION. Kenchic specializes in production and marketing of premium poultry meat for the middle and up market segments of society in Kenya. The poultry meat is positioned to meet the market demand for healthy low fat sources of protein. The product includes processed and packed whole chicken, assorted packed chicken parts (gizzards, breasts, drumsticks and wings) and spiced specialty chicken meat.

PRODUCTION LOCATION. The Chicken are reared in the companys farms in Athi River, Machakos district, 15km to the east of Nairobi. The climate here is favourable for chicken rearing. These farms provide 30% of the companys requirements. The remaining 70% is sourced from contracted famers. The slaughter house and production facility for the poultry meat is located in Limuru in central Kenya, 30Km west of Nairobi. The infrastructure in terms of roads, electricity, water and telephone in this area is excellent assuring easy access to the market. COMPETITION Primary Competitors Kenchic is so far the leading company in the market when it comes to production of chicken. The primary competitors for Kenchic include: Alpha-fine foods, Farmers Choice, Small scale farmers majoring in the production of chicken. Substitutes Since our chicken is consumed by people who prefer white meat over red meat our main competition in this category would be the fish industry and breeders of organic(traditional chicken). Low fat red meat would be considered a substitute too. The main competing companies in this category include Kenya meat commission, Farmers choice and Alpha fine foods

DEMOGRAPHICS Kenyas population is estimated at 40 million and an estimated 41% of the population is in urban areas according to data from CIA world fact book, 2006 estimates. This is Kenchics main target market. 55.1% of the population is aged between 15-64 years of age as seen below in data from CIA world fact book. This forms a big part of the chicken market.

Table 1. Population distribution in Kenya between urban and rural areas: Urban: 41% Rural: 59% Population distribution by age: 0-14 years: 42.6% (female 7,322,130; male 7,454,765) 15-64 years: 55.1% (female 9,508,068; male 9,631,488) 65 years and over: 2.3% (female 432,012; male 359,354) (Source: CIA World Fact Book, 2006 estimates

ECONOMICS GDP growth has been steady for the last seven years. Figure 1. Movement of seasonally adjusted and unadjusted GDP (Kenya national Bureau of statistics third quarter GDP release 2009).

Income distribution favours urban areas hence the target of urban towns. GDP growth has been positive and is projected to be 3.7% in 2010 and 4.8% in 2011 (World bank economic outlook report 2010).

Inflation in Kenya has led to a general rise in prices and ultimately, negatively affects Kenchics revenues. However, lately, inflation has been declining, which has caused people to have more discretionary income. This presents improved market prospects for Kenchic. Figure 2. Overall Month on Month and underlying inflation rates (Kenya National Bureau of statistics).

High interest rates discourage expansion of the business and restrict growth of the food service sector. However it is noteworthy that they have been relatively stable for the last twelve months shown in Figure 3 below. Figure 3. Interest rates (Kenya National bureau of statistics)

Exchange rates of the Kenya shilling remains fairly stable providing a favorable environment as far as cost management of imported inputs is concerned. Figure 4.

Liberalization of the poultry market has presented stiff competition to Kenchic in form of organized industries and small scale farmers. Infrastructure is well developed favouring efficient movement of products and by-products. SOCIO-CULTURAL FACTORS Change in eating habits where people prefer to eat out. Enhanced health consciousness especially of the working class, who believe chicken is better than red meat which has been associated with many health issues. Changing lifestyles where most people have no time to cook and prefer to eat ready made food- Leads to fast food culture. All these factors combined have changed the chicken market, and presented Kenchic with an opportunity to cash in. Most religions and cultural groups embrace chicken as a healthy food. POLITICAL LEGAL STRUCTURES Kenya is fairly stable with little interference of politicians in business. The government has a policy of pulling out of business leaving it to private entities which augurs well for the sector. However Corruption and governance issues remain a challenge increasing cost of doing business e.g. maize import/export scandal led to increase in animal feeds, eventually making chicken expensive to consumers and farmers. There is increased Social and political pressure on corruption to be eliminated coming from civil societies and KACC. In terms of legal structures, Laws that protect unfair competition are upheld and protect Kenchic from malicious people. Laws governing quality (KEBS), labor relations, the environment (NEMA) and the Public Health Act have to be adhered to by all industry players. These impact the business positively as they give confidence to consumers that the chicken meat is safe and of the right quality. TECHNOLOGICAL Kenchic has access to good technology which increases the quality of chicken and hybrid eggs. For example incubators, hybrid eggs, computerized systems that enhance quality management and market analysis.

MARKET ACTION PLAN

Target Market. Kenchic targets the middle and upper class segments of the market in urban settings. All ages and both sexes are targeted. Most religions and cultural groups who fall in this segment are also targeted. Market Size The target market size is 10% of the Kenya population equivalent to 4 million people. Price. The price of Kenchic Chicken is going to depend on the market price of live chicken and the cost of chicken feed. The set retail price will be tied to the prices of our competitors. A pre-cut, vacuum-packed 1.4kg will be sold for Ksh.250 to the retailer. This price will provide a profit that will be acceptable to Kenchic. After cutting and wrapping the price will be within a range that a consumer is willing to pay. The price will also be competitive. Place The Kitchen chicken will be availed to the consumer through various channels namely; 1. Franchised outlets i.e. 33 Kenchic Inns 2. Supermarkets e.g Nakumat, Tuskies, uchumi 3. Hotels and other fast food restaurants e.g. Galitos, steers, Java 4. Institutions e.g Hospitals, Universities and colleges 5. Catering establishments e.g. NAS

Product positioning The marketing for Kenchic positions the product among the other lower fat alternative meats such as traditional chicken and fish. Over the past 20 years consumer demand has shifted towards lower fat chicken. The goal of this plan is to capitalize on this trend to encourage more consumption of chicken and grow our market share versus beef which still controls over 70% of the market. Kenchic products will be positioned as a healthy low fat alternative to beef and as a safe high quality alternative to traditional chicken. In-store posters will show that Kenchic has high quality certifications and will emphasize the low fat and healthy aspect of the Kenchic products.

Promotion Kenchic products will be promoted via

1. 2. 3. 4.

Branding of the Kenchic Inns and other fast food restaurants Using branded refrigerators and displays in supermarkets Seasonal media advertisements for value added products e.g. sausages Branding of delivery and sales vehicles

BUDGET CONTROL AND ACCOUNTABILITY

Budget

Kenchic projects to sell 150 tons of poultry meat per week, equivalent to 7800 tones for the 2010 fiscal year. At an average price of Ksh. 250 per kg, revenue expected is Ksh.1.95billion. Discount and rebates for the year 2010 are estimated at Ksh. 5 million. 2010 advertising costs for branding of outlets and vehicles and fridges plus media advertisements will cost Ksh. 100 million. Monitoring and Measurement Sales Sales will be reviewed monthly and if revenue projections do not meet expectations the marketing plan reviewed to bring the business back in track.. Customer Satisfaction Survey In the middle of the year a market survey will be carried out to reevaluate market size, Kenchics market share and Customer satisfaction.. Kenchics 2010 Marketing Budget

Gross Sales (Ksh.250 * 7800,000kg) Less Discounts Net Sales Production Cost of Goods Sold Cost of chicken Processing Freight Labels and packaging Gross Margin Less Advertising Net Profit (Before Taxes) Assumptions: Average weight per carcass Average life of chicken Number of Head Cost of live chicken per kg Cost of Processing per Kg

KSH. (MILLIONS) 1950 5 KSH.1945

780 60 20 120 965 100 Ksh.865

1kg 6 weeks 100 Sh. 100 Sh. 0.77