Sweet Leaf Bath Co. is a business in the bath and skincare, targeted to people aged 25-50 and interested in supporting Fairtrade Canada. The market challenge in 2012 is to increase the sales to $150,000-$200,000 so that Gumyer could come back to full time work. In the past three years, the total revenue, as well as the number of sales, has indicated in steady growth, despite spending little expense on promotion. Therefore, the marketing initiatives for 2012 is mainly in the advertisement. Sweet Leaf possesses strong competitive advantages: high quality, certification of Fairtrade and variety of products.
However, because a limited number of employees and Gumyer is doing part-time next year, it is hard for two employees to produce $150k supply. Sweet Leaf is recommended by listed strategies.
First and foremost, Sweet Leaf needs to continue sticking on existing customers aged 35-44. This group people has the financial capability to afford Sweet Leaf as well as high recognition of Fairtrade. Also, this group will expand the market in BC, matching the placement, Pure Life, in 2012.
Pure Life sells health care products, and it offers 4 exhibits per year to introduce their products face-to-face to customers. Pure Life also has advertisements to promote sales, despite high advertising expense. Furthermore, gift packages have to be sold as primary production in 2012 due to its upper unit contribution. Regarding its high price, small discount or rewards system is set to attract customers.
On the other hand, Sweet Leaf must hire more people to increase the supply. There is no price change in 2012, so the only way of increasing sales is boosting quantity.
Nevertheless, one more distribution, Pure Life in BC, are added to existing 24 retail stores. Thus, it is necessary for Sweet Leaf to attain sufficient supply to 25 stores and other distributions. In addition, the market for bath and skin care has gone up these years, and people pay more attention to “green” and “healthy.” So Sweet Leaf should be confident about their products and no change of a variety of product choices.
Moreover, $4,900 out of $5,000 advertising fee is the primary method to enlarge sales. Besides the promotion in Pure Life, Google AdWords and point-of-sale displays are also included in the advertisement. Google AdWords will let people know the existence of Sweet Leaf and search for more information about it. Sweet Leaf takes advantage of the high quality of products so that people will book the sales online. Point-of-sale displays are also effective, because Sweet Leaf has 25 retail stores in 2012 and every store will lay out a specific case to put their products. Therefore, Sweet Leaf invested $4,900 advertisement in both online and retail stores. To conclude, with limited growth potential in the existing target market, Sweet Leaf could take risks to estimate the possibility of achieving $150,000-$200,000 to let Gumyer come back, by placing a new distributor and setting discounts on gift packages. Most importantly, making efficient use of three advertisement: Pure Life, Google AdWords and point-of-sale displays. This marketing report will prove the assumptions and interpret how the recommendation will attain Sweet Leaf’s goal.
Rose Creamer and Stacey Guymer, partners of Sweet Leaf Bath Co., want to increase the sales to $150k-$200k in 2012 so that Guymer can come back and full-time work for Sweet Leaf. Their specific objectives are growing their company by making a powerful marketing strategy especially distribution plans and promotion effects. There are $5,000 available for them to make new advertisements to achieve their goals. Finance: In 2011, Sweet Leaf started to earn profit which provides the financial resource on investment or promotion in the future. The ratio of COGS decreased year by year and it will increase gross profit (see Exhibit 1). However, operating expense increased nearly double which takes up 73.8% of gross profit. The large part of operating expense in 2011 was advertising and this shows that Sweet Leaf started to put more attention on promotion to attract consumers to reach $15k. Overall, although the trend of net income which is a source of cash goes positively, the small number limits promotion budget as expense especially advertising and travel & vendor occupied large parts of revenue.
Marketing: In 2011, Sweet Leaf started to invest money in the advertisement (see Exhibit 1). In sales channels of online and direct sales, consumers who purchased from Sweet Leaf could send pictures and feelings on the blog. This is a free way to enlarge the publicity of Sweet Leaf. In the future, it is necessary to make sufficient use of existing customers to attract new customers, so that the sales can be up from $25k to $150k-$200k.
Operations: Sweet Leaf offers three ways of sales: online and direct sales, wholesales and Vendor Shows. First of all, online and direct sales is an effective way of sales because Sweet Leaf could use the power of the internet to spread its popularity in order to increase sales. Although it only accounts for 10% of total revenue, the gross margin is the highest among the three channels. Secondly, the scale of wholesales covers Ontario and other cities in Canada. The supply is enough to sale in retail stores until now, although Cramer did the part-time job since 2010. However, if the sales in 2012 increase 6-8 times of 2011, the supply needs to go up dramatically to offer plenty of inventory. Finally, vendor show is to let more people know Sweet Leaf. This event is effective for Sweet Leaf because it attracts more customers and gets support from four retailers.
Human Resource: As the primary managers of Sweet Leaf, Creamer and Guymer have experience of both management and making products. It is a proper complementary that they can match with each other to develop Sweet Leaf. But Guymer is in part-time and it will influence the rate of producing. If the sales boost significantly in 2012 to achieve the goal, it is difficult to climb the rate of producing products to double in the future ($15,000-$20,000), although they could satisfy the current requirements of sales ($75,000).
Political: Fairtrade Canada limits the products of Sweet Leaf, because some ingredients are not permitted to sale in Fairtrade. This causes a limitation of the variety of products and this is a market challenge of a higher standard of products. However, at the same time, it offers a better certification to acknowledge the reorganization of Sweet Leaf. Economic: Although there was an economic crisis in 2008 and this made the market of soap and showers decreased, the market for sustainable products got better after that and the tendency still goes up. Therefore, Sweet Leaf could be beneficial due to the climbing market of the bath to raise the sales. Social: Nowadays, people prefer to purchase ‘green’ products and the trend of buying ‘eco’ products is popular. Also, consumers support the products of Fairtrade Canada because it presents the high quality and safety. The materials and ingredients of Sweet Leaf are all natural which can be the most important advantage to achieve goals because the high-quality products cater to the market. In addition, the certification of Fairtrade will attract more consumers in the future.
Sweet Leaf faces aggressive direct competition of similar bath and skin care products located in Ontario and Quebec. These brands have already possessed a fundamental group of consumers and become popular brands of skin care in Canada. Nevertheless, Sweet Leaf significant competitive advantages are certification of Fairtrade, high-quality products and the variety of products. Although Sweet Leaf is selling in America as well as Tashodi, its primary target market should be in Canada. Tashodi, L’Herbier, Kynk Naturals and Earth to Body do not have the certification of Fairtrade which presents a high standard of products. Kynk Naturals and Earth to Body creates rewards system to attract more customers, but the quality of its products is not as good as Sweet Leaf. It is true that the quality of L’Herbier is considerable competition to Sweet Leaf; it has no official reorganization from Fairtrade. Regarding price which is vital to be concerned, Sweet Leaf is at over average price (see Exhibit 3). This level is proper because the various costs of products are the high and high price is necessary in order to increase sales. Delapointe is a strong competitor due to its certificates from different organizations and monopoly of shea butter. However, Sweet Leaf provides various products and large volumes for customers, high average price with high quality and large volume. Finally, Sweet Leaf is the first Canadian company to recycle plastic tube and created a new tube: an eco tube which indicated the natural and eco-friendly attitude to consumers.
The current consumers are mature women between the ages of 25 and 50, who prefer to purchase ‘green’ products. This aged demographic have disposal salaries to afford high price products because the selling price of Sweet Leaf is comparatively high. This group of people prefers to buy products in physical stores instead of online shopping. On the other hand, mom bloggers could do advertising which will draw more attention and garner more interest. Thus, Sweet Leaf needs to continue keeping these existing customers because the steadily increasing profit proves the success of this group.
Young customer (age 18-24) is a new but essential group of people for Fairtrade and Sweet Leaf. Sweet Leaf needs to put more attention on online sales to cater to their requirements, and it will raise the sales next year. Besides, retired people can use Sweet Leaf as well because natural ingredients are suitable for every customer. Half male customers will not choose Fairtrade and one-third of them are from Quebec. So Sweet Leaf should consider the distribution next year because of comparatively few consumers in Quebec.