CHAPTER 1: Business Definition Royal Springs is a pure water manufacturing company established to provide portable drinking water to citizens

in Ghana and neighbouring countries. The company has been in operation since 2006 providing satchet drinking water to customers in Accra and Kumasi.

1.1

Company Vision and Mission

Vision: To be a leading pure water manufacturing company in Ghana and sub-saharran Africa.

Mission: Provide quality, health and safe drinking water for consumers through provision of quality pure water at moderate prices.

Corporate Objective: To be amongst the three leading pure water companies in Ghana within the next six years.

1.2

Situation Analysis 1.2.1 Market Analysis

The pure water industry in Ghana is currently expanding at a higher scale. Since government campaigns in the early part of the twentieth century to sensitize people on the importance of drinking quality water, people in Ghana have depended much on filtered water. With the recent outbreak of cholera in the country, and the Food and Drugs Board instant reaction to shutting down about hundred pure water manufacturers, the public is being sensitized to consume safe and healthy water. Most members of the public now buy pure water with brands. Drinking water is a necessity and as such the industry keeps expanding.

With the ever important need to be safe from cholera, it is believed that the dependency on pure water manufacturers for healthy and safe drinking water will be at its peak. Also, with the shutting down of some manufacturing companies, a whole new opportunity has availed itself for new and existing pure water manufacturers to expand operations and sales. Moreover, with doctors recommendation to drink a minimum of eight glasses of water a day beginning to be understood by the public, consumption of water is constantly on the rise with most small-sized

Marketing Plan| Royal Springs Company Limited

homes consuming a minimum of one pack of thirty satchet waters a day. The future of the pure water industry looks very promising.

1.2.2

Market Trends & Drivers

Consumer behavior patterns in the industry have been quite remarkable in the last three years; most consumers nowadays prefer to buy satchet water with brand name. it is not surprising to see customers requesting for brands like Standard, Voltic, Mobile, and Ice Cool, the leading satchet water manufacturers in Ghana who have been in the business for over 10 to 15 years. Consumer taste is equally being measured with their respect and depth of knowledge with regards to the health implications of untreated and unsafe water. However, in Ghana, a great deal of the population is still illiterate and most of them buy whichever pure water is available and on sale.

With the recent outbreak of cholera and the information on pure water provided by the FDB, it is expected that the educated few will be cautious in their buying habits of pure water, preferring to buy popular brands. However, these educated members of the populace account for less than 10% of the Ghanaian population. Availability, price and proximity seems to be the three major factors that is expected to continue to drive pure water sales in the country.

1.2.3

Current Marketing Mix

Royal spring currently adopts very little marketing strategies. The company makes much use of direct sales to retail outlets via trucks. Since its entrance into the market, the company has not adopted any form of publicity campaign for its satchet water as there was the strong belief that once it gets out there, and retailers buy, it will eventually be sold. The companys packaging is simple and dull, as much attention has not been given to it so far.

1.2.4

Competitor Analysis

Five main competitors exist in the industry: Standard, Voltic, Ice Cool, Mobile and Everpure. In the pure water market, the leading player is Standard which currently has 15% of market share. Mobile water has a 10% market share; whereas the other three have a total of 18% of the market share. The remaining 57% is shared by numerous pure water manufacturers including Royal Spring.
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The five main competitors have a strong brand name owing to years of operation in the industry. They are well accepted and known household names for providing quality drinking water. Standard water is the highest selling pure water manufacturing company in Ghana; with its premises based in Tema, the company has very strong quality assurance that ensures that every batch of their water on sale is up to the required standard. Advertisements on radio and bill boards have also been used by the company to inform the public of their presence over time. It remains one of the first ever pure water manufacturing companies.

Mobile water is also another Tema based pure water producer. With their attractive packaging and logo, the company continues to perform in the pure water market. It remains the only company with a pure water packaging that though not transparent is very catchy. The company diversified into the bottle water industry and has not been able to achieve strong grounds in that regard. However, their presence in the pure water company cannot be ignored.

Ice cool is also another Tema based pure water company with a different packaging style that stands out. Their satchet pack is packed in such way that every satchet stands to support the other. With the straight look and the company name glooming in blue and white, it is difficult to take your eyes off it. Ice cool has not been so long in the pure water market and keep gaining grounds. The company also is into bottle water manufacturing and mainly provides tailor made bottled water to companies.

Everpure, also another Tema based pure water company is similar in style to Ice cool. The company has gained it grounds mainly through tapping the less saturated and ever increasing market for water dispensers. Gaining grounds through proving dispensary units for offices, the companys satchet water has come to be accepted as a strong brand that also signifies quality.

Voltic company was the last of the five to enter into the pure water market. With its strong brand name in bottled water, the company did not need much advertisement to make inroads into the pure water market. Currently, it is regarded as one of the fastest growing pure water brand in Ghana. With their products scarcely available, the company is using target market segmentation to very good effect.
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These companies however have the most expensive pure water on the market. They all sell to retailers GH 1.20 per pack. Despite their pricing, customers are more satisfied buying such brands than the other infamous brands.

1.2.5 Social:

PESTLE Analysis

Increasing population in Ghana means that pure water market will have to expand production to meet increasing demand. As population continues to grow through emigration, migration and increasing birth and marriage rates, the industry will have to increase its scale of operation to meet the demand that will come with it.

Technological Major Competitors in the industry work with sophisticated filtering and production tools that enhance their work making them produce a greater quantity of pure water in the shortest space of time. Advanced technology has become essential to a companys existence in the industry.

Economic The upsurge in interest rates and taxation will has resulted ina recent increase in the cost of production; these have led to increased prices of pure water on the market with a resultant noneffect on consumer demand since water is a necessity.

Environmental The increase in cholera endemic, though unwanted, has only resulted in increased demand for quality and safe pure water. Also, the means of disposal of satchet rubbers still remains an environmental hazard issue that continues to affect the industry but to no big effect due to inelastic nature of demand for the product.

Political Foods and Drugs Board (FDB), the regulating agency in food and drug issues in Ghana have recently moved to shut down lots of pure water operators with sanctions and punishment to be dealt to any vendor caught trading in the pure water from such companies. The result is a
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reduction in suppliers with demand still high making it possible to increase market structure of existing firms. The findings of the FDB that 85% pure water is contaminated have also resulted in much tighter regulations for potential entrants making the industry very positive for existing manufacturers.

Legal The World Health Organization has constantly pressurized governments in developing countries to ensure healthy and safety measures on food and water. As a result, and due to diseases related to contaminated water, the government of Ghana through the standard board and its regulatory body, FDB, sets standards for and regulate the pure water industry amongst others.

1.2.6

SWOT Analysis

Royal Springs intends to take advantage of the available opportunities in the market. The companys strengths, weaknesses, opportunities and threats are summarized below:

Strengths Royal Springs is the only pure water manufacturing company whose water source is from a spring. Royal Springs has a different taste as compared to competitors products due to its unique source of water supply. The company uses a 10% cost plus pricing strategy which ensures that its products are moderately priced. Weaknesses The companys packaging is not attractive. Low public knowledge of existence of brand. Unsustained marketing efforts that have resulted in a present inability to gain customer loyalty. Proximity to market place.

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Opportunities The closure of about 100 pure water manufacturers comes with an increased opportunity to increase the companys market share as it provides spare markets and consumers to reach out to. The stringent safety and healthier measures currently adopted by the FDB has created a major barrier to entry for potential investors making it possible in the short term for existing companies to take advantage of the current market opportunities. The increasing population and increasing dependence on pure water as the main source of drinking water for the populace promises a massive future growth for the industry. Threats Tough competition in the industry. FDBs new stringent health and safety requirement for manufacturers and the cost associated with it. Effects of FDBs announcement on the lesser known brands like Royal Springs.

Marketing Plan| Royal Springs Company Limited

CHAPTER 2: Developing Marketing Objectives & Strategies 2.1 Marketing Objectives To increase current sales by at least 150% over a twelve month period. To reduce cost of operations by at least 10%. To increase market share to 5% by marketing products into new markets. To improve packaging of Royal Spring pure water. To improve product quality to enable it to compete with major competitors. To increase customer satisfaction. To build customer loyalty.

2.2

Sales Forecast

The companys sales forecast is summarized below:

2.2.1

Market Potential

Given the outbreak of cholera and the fact that water remains a necessity, the consumption of pure water will continue to increase. The market potential is currently estimated at about 20 billion satchet packs (with 30 satchets per pack) yearly in Ghana. The industry is expected to grow continually due to the dependence on pure water as the major drinking water source and the constant increase in population.

2.2.2

Sales Potential

Royal Springs sales potential has never been fully employed. The company currently occupies 2% of the market share. With a production capacity currently estimated at 1.5 billion satchet packs yearly, the company has being unable to meet this production capacity partly because sales is currently pegged at 400 million satchet packs of pure water yearly. The company can increase its sales to 1 billion satchet packs within the year with the present opportunities in the market and its plan to enter new markets.

2.2.3

Sales Forecast

Monthly sales forecast is established on the various marketing strategies that would be effected over the twelve month period; a steady rise in sales in expected every month. It is estimated that
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growth in sales for every new month will be around 4-5%. Demand for products is increased in dry seasons than in rainy seasons; thus sales forecast in the months of April to July and September to November (rainy seasons) are expected to increase at lower rate. The table below summarizes the sales forecast for the twelve month period of 2011: Table 1: Sales Forecast for the 12 month period, January December 2011 Month January February March April May June July August September October November December TOTAL Sales Forecast of satchet bags (in millions) 50 60 70 72 75 75 75 100 100 103 105 115 1,000

2.3

Marketing Strategies

To achieve the marketing objectives the following strategies will be adopted:

OBJECTIVE 1: Increase current sales by at least 150% over a twelve month period.

Strategy: By boosting production and marketing royal springs pure water into new markets at a moderate price of GH1 per bag. Selected markets are Takoradi, Cape coast, Sunyani and Berekum. Also, the company plans to introduce Direct Home Sales Service that enable high

Marketing Plan| Royal Springs Company Limited

income homes to place direct orders to the company for supply of pure water. The service will be provided at an extra charge of GH 0.50 per bag.

OBJECTIVE 2: Reduce cost of operations by at least 10%.

Strategy: Through expanded scale of operations and production to take advantage of economies of scale.

OBJECTIVE 3: Increase market share to 5% by marketing products into new markets.

Strategy: By marketing products into new markets and increased advertisements to boost overall sales.

OBJECTIVE 4: Improve packaging of Royal Spring pure water.

Strategy: By redesigning the package and developing a more attractive package.

OBJECTIVE 5: Improve product quality to enable it to compete with major competitors.

Strategy: By adopting rigid quality control measures in the production process.

OBJECTIVE 6: Increase customer satisfaction.

Strategy: Through rebranding and improvement in product quality.

OBJECTIVE 7: To build customer loyalty.

Strategy: By adopting promotional and sales strategies to meet customer needs.

Marketing Plan| Royal Springs Company Limited

2.4

Marketing Mix

Royal Springs intends to use its strategies relative to product, price, promotion and distribution to meet its marketing objectives.

Product: The Company will take steps to increase its package quality as a means of attracting more customers. Product quality will also be improved through adoption of stringent quality control measures throughout the production process. These measures are to ensure that customers get value for money. The production department will be responsible for ensuring product quality and quality packaging. Price: The companys use of 10% cost plus pricing strategy will ensure the company sells its products at GH1, the old price it used to sell its products. This is due to its intentions to reduce unit costs by expanding production. The price, along with the quality of the product, will serve as a strong competitive edge for the company as it embarks on an objective of expanding its market share. The production department will also be liable for ensuring costs of production are reduced whilst abnormal losses are reduced to the barest minimum.

Promotion: Retailers of the company will occasionally be given promotions depending on how quick they sell the companys products. Te promotion will range from discounts to credit. Also, the companys customers who use the direct home sales service will be given two free bags of satchet water at the end of every month. Promotional strategies will be developed and implemented by the Sales and Marketing departments. Inputs on which promotional strategies to use will be provided by the companys sales force.

Distribution: The Company will set up wholesale outlets in the new markets and will provide delivery services for retailers at a small fee. Delivery within Accra will be provided free of charge. The wholesale outlets are to enable the company get closer to its customers in all the regions they are located. The Sales and Marketing department will also be responsible for ensuring availability of the companys products at the various market locations.

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Marketing Plan| Royal Springs Company Limited

CHAPTER 3: Revenue & Cost Estimation 3.1 Sales Budget SALES (REVENUE) BUDGET GH Sales (in bags): Retail Price per bag Sales (in bags): Direct Price per bag SALES REVENUE 800 mn GH 1 200 mn GH 1.50 300 mn 1.1 bn 800 mn

3.2

Cost Budget COST BUDGET GH

Production quantity (in bags) Estimated cost price per bag COST OF SALE

1 bn GH 0.70 700 mn 700 mn

Other Period costs: GH 300,000 The cost is made up of Depreciation: GH 10,000; Salaries: GH120,000; Delivery costs: GH 150,000; Advertisements: GH 120,000.

3.3

Budget Income Statement ROYAL SPRINGS COMPANY LIMITED

BUDGETED INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 GH Sales Cost of sales GROSS PROFIT Other costs NET PROFIT 1.1 bn (700 mn) 400 mn (300,000) 399.7 mn

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Marketing Plan| Royal Springs Company Limited

CHAPTER 4: Implementation & Evaluation 4.1 Implementation & Control

The marketing plan will be implemented by mainly the Sales and Marketing departments and the production departments in order to achieve the companys marketing objectives of increased sales and reduced costs. The marketing and Production managers are to supervise programmes and activities to ensure there are no variations from the plans. Any deviations should be directed to the appropriate channel. Minor deviations within the arms of the individual departments can be addressed by the respective department heads; however, major deviations from the marketing plan must be communicated at once to the Chief Executive Officer for emergency measures to be adopted to ensure Royal Springs is back on track.

4.2

Role of Sales Function

The sales function of Royal Springs will play the following roles in designing an overall long term marketing plan for the company: Gather and provide detailed and recent information on customer behavioural trends and purchasing patterns to guide in the development of the overall marketing plan. Gather and provide up-to-date information on customer feedback and complaints on product use. The sales manager based on previous sales will develop a detailed long term sales forecast for the overall marketing plan. Sales force and the sales function will be largely responsible for developing realistic strategies towards achieving overall marketing objectives. The sales function will also be responsible for developing a sales budget based on the sales forecast to be reviewed by the marketing manager. Sales manager is responsible for implementing promotional and distributional strategies.

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Marketing Plan| Royal Springs Company Limited