Marketing Plan Project

MBA 437 Trimester 1 2011

Marketing Plan Project

Vanuatu Value Added Products
Kava Store

Group 4

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

Table of Content

1. Executive Summary
2. Introduction
3. Market Analysis
4. Market Research
5. Segmentation
6. Buyer Behavior Analysis
7. Designing Market Strategy
8. Implementation and Control the Marketing Strategy
9. Conclusion
10. Annexes

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

1. Executive Summary

This Marketing Plan is part of the MBA 437 student project assignment (referred to as Group
4) undertaken during trimester 1 of 2011 at Emalus Campus, University of the South Pacific
in Port Vila.
The Group decided to test the viability of Kava Store in Port Vila who specializes in adding
value to locally produce nuts and crops in Vanuatu. The promoter is Mr, Chalot Long Wah
who took a bold move in 1972 to venture into a business that was unexplored, untapped and
created a lot of mixed feelings among potential farmers that were targeted as the producer of
products that would contribute to the processing centre in Port Vila. The promoter saw the
potential business to market the local products from its subsistence farming into commercial
undertaking that has lucrative market both in domestic and international that would boast an
economic benefit for the people of Vanuatu.
The Group acknowledged that limited information would be a constraint to properly assess
the current situation of available information and data that would enable them to enable a
thorough review of their operations; they have continued their study based on the marketing
plan outline and undertaking their market research guidelines.

It is his visionary outlook that the promoter strongly believed in the value-added products and
that this could be the source of alternative income that relies heavily on copra for many years.
He predicted that while natural fruit trees grow in abundance no one is trying to promote the
rich resource that each one tries to tap into. He foresee huge potential to turn high return in
value-added that would make a good spread from the seasonal harvest that comes around
once in a year’s cycle.

The Group sets out a clear strategy for the way forward where marketing framework and
strategies are developed in a marketing plan format. The sequential steps in formulating the
successful marketing plan is attempted and for this reason when completed can be useful
document that serves two purposes for academic study and be of voluntary use to the
promoter of Kava Store at his discretion.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

Introduction

The purpose of this paper is to provide marketing outline for Kava Store and all the crop
and fruit locally produce turned into high quality value-added products in Vanuatu. The
promoter started his business interest to develop local products from a humble beginning
to generate interests among potential farmers in 1972 concentrating mainly on the island
of Pentecost.

At this time, Kava was not widely consumed in social setting until Mr. Long Wah started
to buy larger quantities for exports mainly to New Caledonia and Fiji. The shift from
largely traditional consumption that was strictly conducted in ‘Nasara’ was slowly
overtaking customary barriers and moving towards selected groups who gather to drink
kava for leisure and enjoyment, thereby shifting away from its once customary reserve
occasion.

This once quite respected drink reservedly for customary respect mainly for men has
turned into commercially product dubbed for its explosion in the urban centres of Port
Vila and Luganville. Kava interest started to take hold and intensify consumer taste
further into larger scale consumption for commercial benefit that many experts still feel
that it destroys the cultural importance and chiefly respect that Vanuatu was renowned
for during past years. The transition from the beginning has bear fruit in turning the
bottom line approach of kava store and it is on this basis that the Group will deal with the
marketing plan for the entity.

The fruits and crop that started with kava, peanuts from the early beginning has now
grown into 30 products (as per schedule ….) and it is on this basis that the Group will
deliver its marketing plan.

Mission statement

To be the producer of high quality valued-added products in Vanuatu.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

AN ANALYSIS OF THE CURRENT MARKET TREND

Brief over view of Vanuatu

Vanuatu is an archipelagic nation of about 80 islands in a Y-shaped chain, extending over
1000 kilometres in a north-south direction between the equator and the tropic of
Capricorn. It lies some 2000 kilometres to the northeast of Brisbane in the Coral Sea, at
similar latitudes to Cairns and North Queensland.

Formerly known as the New Hebrides, Vanuatu was jointly governed by both British and
French administrations before attaining independence on 30 July 1980. Its land area
comprises 83 islands, divided since 1994 into six provinces Malampa, Samma, Tafea,
Torba, Penama and Shefa.

A. External market environment

Economic overview
After negative growth in the early 2000s, the Vanuatu economy has recently experienced
strong and sustained GDP growth driven largely by tourism and construction. While
Vanuatu’s economic growth is starting to become more broad-based, it remains centred
on tourism. Tourism related sectors (wholesale and retail trade, hotels and restaurants,
and transport and communication) account for over two-thirds of GDP, and about 70
percent of the increase in real GDP since 2006. The economy also relies heavily on
agriculture. The majority of the population, over 70 per cent of whom reside in rural
areas, is engaged in subsistence agriculture, although most Ni-Vanuatu are also involved
in the cash economy, typically trading copra for money to pay for domestic expenses.

The tourism sector is recognized by the Government of Vanuatu as a key sector for
development. Increased tourism has had direct and indirect benefits for the services
sector, particularly the transport, communication, wholesale and retail trade, banking and
insurance and accommodation sectors.

Real estate development has seen a boom since mid-2004, although development has
largely been focused on the island of Efate, particularly the capital Port Vila.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
Technological environment

The arrival of completion is reducing telephone charges in Vanuatu, and although

internet charges for businesses are still among the highest in the region ( several those in
Fiji, for example) the government recently announced the issuance of three new licenses
for the provision of internet and other telecommunication services, which should lead to
better services and lower prices.

Political environment

The political situation in Vanuatu is currently unstable; 11 of the 12 coalition parties are
presently in government, resulting in an ineffective governing coalition. This has caused
inconsistency in policy and leadership direction. This situation has created uncertainty for
foreign investors and development partners.

However, there is general recognition of the need to (i) boost investor confidence; and (ii)
strengthen governance reforms in parliament, public finances, rule of law, and public
service.

Bilateral economic and trade relationship

Vanuatu remains a modest market for Australia with some growth potential, dependent
largely on economic growth and development in Vanuatu.

Australia is the major source of foreign investment in the Vanuatu economy with a focus
on agriculture, tourism, finance and construction. Two thirds of long stay tourists to
Vanuatu (some 50,000 people) and almost all cruise ship passengers are Australian.

B. Competitor analysis
The highly likely competition that is likely to have an impact to Kava Store is the high
quality product imported externally. Vanuatu trading arrangements under the MSG and
other trading arrangement that Vanuatu is committed itself continue to have an adverse
impact on the locally produced products.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
With the liberation on trade tariff, imported products under trade agreement will be very
competitive in our local market; hence retail prices are showing those imported products
are cheaper than Vanuatu’s locally made products.

For Vanuatu to be competitive and maintain fair shares in the local market it must revisit
its overall cost in doing business and in particularly the production costs of producing
local products. Reports have indicated that Vanuatu’s utility costs are some of the highest
within the region hence boosting production costs to increase dramatically.

Vanuatu as a developing country should apply productive rates to product its locally
produced goods the like of Kava Store products.

C - Company analysis.
Kava Store history and reputation are intimately linked to their support of local farmers.
For more than 40 years, they have worked to provide the market with the broadest
possible selection of the highest quality produce available. The company search for that
produce begins right outside their front door in every community where they do business.
They are permanently committed to buying from local producers whose fruits and nuts
meet their high quality standards, particularly those who farm organically and are
themselves dedicated to environmentally friendly, sustainable agriculture.

In particular, it is identifying supply chains with communities, as an immediate measure

to source its local products. It is also encouraging the establishment of smallholder
plantations as the means to increase the supply. The current supply of local products
comes mostly from trees planted by our grandparents and those growing wild.
It is believed that if each farmer in Vanuatu establishes a small plantation of nuts, we can
have a viable export industry in which all members of a community can participate.

A major challenge for Kava store to remain competitive is to share the same shelf at the
retail shops between imported and their locally-produced agricultural products and the
degree of reliance to be placed respectively on imports compared to expanding local
production. But what are the sources for this? Increased domestic production has spin-
offs such as rural employment, domestically-generated food security, better quality

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
(fresh) foods and improved nutrition, higher rural incomes, and local control over
resources.

Kava Store should focus on fostering local industries, strengthening the domestic
capacity and determining what development meant for the country.

One another related note, one idea that has been discussed at Melanesian Spearhead
Group (MSG) meetings and other forum is the possibility of pooling the value added
local products resources of Papua New Guinea (PNG), Solomon Islands and Vanuatu to
support a viable and more consistent supply for the international export marketover three
years in order to ensure the projects are completed. Kava Store should consider this
opportunity as a way forward to strategies its efforts to increase its productions towards
entering regional markets.

SWOT:

Identification of major strength

Vanuatu is primarily agricultural; 80% of the population is engaged in agricultural
activities that range from subsistence farming to smallholder farming of coconuts and
other cash crops. Vanuatu is rich in natural resources and has the potential to develop its
agriculture sectors to competitive levels.

Vanuatu is the only Pacific island country eligible for funding under the US Government
funded Millennium Challenge This five-year compact program aims to benefit rural
agricultural producers by reducing transportation fees hence Kava Store regards this as a
strength as this will means farmer can be able to move their local products to main
commercial centres.

Weakness

Vanuatu faces particular disadvantages, due to its small size and large distance to major
markets. Vanuatu may face especially severe constraints, as its scattered population
reduces access to infrastructure and increases the costs of transport.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
The economic growth is concentrated in urban canters, areas of high agricultural
production, and areas with natural resource potential.

Another weakness is in term of international trade. For a long time only a hand full of
products were cleared for export. A major difficulty encountered by Vanuatu is the
increasingly stringent international market requirements like sanitary and phytosanitary
measures. Vanuatu products must comply with these as a first step to accessing markets.
There is also need for certain quarantine infrastructure.

Opportunity
The Secretariat of the Pacific Community (SPC) is supporting Kava Store in reviving the
value added local product industry through its European Union-funded Facilitating
Agricultural Commodity Trade (FACT) project. The aim of the FACT project is to build
capacity to increase local, regional and overseas trade in agricultural and forestry
products from SPC member countries. Kava Store has been processing and trading value
added local products as its core product locally for some time now.

The construction on the MCC-funded road project is aimed to provide access to better
roads, will assist famers to transport their products to commercial centers the like of kava
stores. Major industries such as tourism and agriculture are expected to benefit from
improved roads, more reliable shipping services and more efficient wharves.

Threat
A major hurdle in getting this industry off the ground, however, is the limited supply.
There is not enough value added local product to meet the current demands, and therefore
overseas buyers are not willing to develop the market for the product. Attempts were
made by Kava Store to export value added local products, but these faced the same
problem: the supply was not great enough to meet the local market in Port Vila, let alone
overseas demands. Consistency is still Kava Store’s major limitation and it need to find
ways to overcome this hurdle.
Another threat is the cost of doing business in Vanuatu affects primary production as it
does other sectors. The sectors are constrained by often unreliable and high costs of land,
air and sea transport. A wide variety of taxes, policies and regulations, including high

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
trade taxes and utilities have also seriously hindered development of this sector. Finally
there is the challenge of natural disasters; cyclones can pose serious threats to agriculture
production and food security.

MARKET RESEARCH

Marketing Research is important for many reasons; the first is to identify the target
market for a product or service. Instead of throwing away millions carrying out massive
advertising and promotional campaigns aimed at the greater public, marketing research
can help identify sub groups who could not only afford the product but also have demand
or needs.

For this small business, Kava Store to consider using the following grid to show the two
sources of data and the three important areas of research when undertaking his market
research.
customer competition environment
secondary
primary

Another reason why customer needs have to be discovered is the fact that taste not only
differs but that people have a different perception of quality.
Kava Store would need to gather information from and about his customers so that he can
focus his marketing efforts, maintain and improve customer service, and to guide his
efforts in developing new products.
Information gathered about the competition will assist Kava Store in determining what
works and what hasn't worked and provide ideas for improving the products and provide
insight into how to increase or shift its (Kava Store) share of the market.

The environment section of the Market Research Grid refers to those economic, social,
and political forces that shape business. Gathering information about the environment
allows Kava Store to stay abreast of and respond to particular trends or events that impact
the business. Whether it's a predicted drop in interest rates, or the closure of a local mill,

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011
Kava Store need to be aware of it and evaluate the current effect on the business, be it for
good or bad.
The secondary data sources in this market research would be data that's already been
collected by someone else. KS could refer to government publications, and sources such
as the Department of Statistics, Melanesian Spearhead Group and the Ministry of Trade
and Commerce, trade journals, and surveys conducted by other companies are all
examples of information that's already been gathered that the Kava Store can use to get
an idea on what his customers want, what the competition has done, and what the
environment is like.
Generally, the more detailed and specific the information gathered in its (Kava store)
market research, the more useful it will be for making a decision.
When attempting the market research, some of the things kava store would bear in mind
are the following;
1. Kava Store’s information will only be as good as its market research sample.
Kava store will need to be cautious when selecting its market research sample group to
question. To get useful market research data, the sample group needs to be relevant to
and representative of kava store’s target population, for example, moving away from
asking customers in the store to questioning randomly selected members of its targeted
population. Asking people in the store isn't good enough, as some of them will say "Yes"
just because they like the owner or don't want to offend him. Informal market research is
always tainted to a degree by the relationships of the people involved.
2. Design the survey or market research questionnaire carefully.
Kava store to ensure that its questions are focused specifically on the information it needs
to know, and to not include any questions that may offend anyone. Many people are put
off by questions that ask them how much money they earn, for instance. If you offend or
confuse them, they won't bother to fill out your market research survey.
3. Kava store to ensure survey or market research questionnaire are short.
If possible, keep market research survey or questionnaire short and simple and should all
fit on one page. Many people are intimidated by long forms; others see multiple page
forms as just too much of an imposition on their time.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

4. To always provide some opportunity for detailed answers.

It is envisaged that not everyone will take advantage of it, but some will, and sometimes
these written-in comments are the most valuable of all.
5. Work out your market research recording techniques first.
In the case of Kava Store, oral interview is the most practical method via questionnaires
which will be recorded and notes taken. The purpose of market research is to gather and
analyze the data, so you've got to have a system of recording the data worked out in
advance.
6. Kava store to ensure to set the criteria for the information beforehand.
Prior to asking its customers, Kava store will need to have a market research process
clearly defined and in place. How many customers would have to express an interest in
the product to make it worth the store’s while to continue researching the possibility?
Position the market research criteria beforehand, as in, "at least 50 percent of customers
need to show an interest in the valued added products or there's no point in moving to the
next stage the market research".
The sum of market research carried out will be limited by Kava Store’s time (doing it
himself) and budget (if Kava Store decides to hire someone else to do it). On the other if
one is to succeed in business, market research is necessary at all stages of a business's
life. Only market research can truly keep Kava Store in touch with what's most important
- its customers, and their needs and desires. Researching your market is perhaps your
easiest way to conquer the market. Market research does not have to be costly, nor does it
have to be a complex process. Market research can be as simple and as easy as surveying
a cross-section of your consumers (focus group) to get their opinions about the invention
that you will be offering, or conducting a telephone or mail survey.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

MARKET SEGMENTATION

In segmenting the product markets, Kava Store had to analyze, assess and divide such
markets into groups of consumers or segments with distinct needs and wants. With this
background Kava Store would have a fair understanding of the consumer behavior to be
able to develop the best marketing plans that it can use and understand that would make
each segment unique and different.

Market segmentation consists of a group of customers who share a similar set of needs
and wants (Kotler, p.224). In the case of Kava Store where 33 products are promoted and
the minimum scale of their availability on the market, we rule out mass marketing as that
would mean plunging into unknown world that may not pay off. We draw on selected
segments that are trial in taste and popularity that would assist in to identify market
needs. In selecting targeting markets, Kava Store is able to segment and identify group
potential buyers, group products sold in categories, develop market-grid and estimate size
of markets, take marketing actions to reach target markets

With the unique and different set of target markets, we can draw a line to say that not
everyone want the same products or services so perhaps Kava Store could develop a
flexible market offering that customers could make decisions based on discretionary
options that some segment members value. Kava Store may have also opted for different
market segments; homogeneous preferences may exist when all consumers have roughly
the same preferences; or on the other extreme, consumers may opt for diffused
preferences where their preferences vary greatly. If several brands or products are in the
market as the case of Kava Store, then clustered preferences come into play when natural
market segments emerge from groups of customers with shared preferences.

Whilst Kava Store has localized its products mainly within the Vanuatu market, the target
market is tailored to the needs and wants of local customers groups in trading areas,
neighborhoods, and even individual stores. It identified its market needs that include
product features that have the attraction on packages that breathes quality, less expense

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Marketing Plan Project
MBA 437 Trimester 1 2011
and easy to obtain in the main store at Anabrou or selected shops that is easy to find due
to easy access and centrally located within CBD of Port Vila.

The bases for segmenting consumer markets are used in broad groups of variables to
segment descriptive characteristics in geographic, demographic, psychographic and
behavioural.

According to Kotler, (i) Geographic segmentation calls for dividing the market into
different geographical units such as countries, states, regions, cities or neighbourhoods.
(ii) Demographic segmentation divides the market into groups on the basis of variables
such as age, family size, family life cycle, gender, income, occupation, education,
religion, race, generation, nationality and social class. (iii) Psychographic segmentation is
the science of using psychology and demographics to better understand consumers.
Buyers are divided into different groups on the basis of psychological/personality traits,
lifestyle or values and (iv) Behavioural segmentation, marketers divide buyers into
groups on the basis of their knowledge of. Attitude towards use of or response to a
product.

In marketing mix tactics, Kava Store execute a marketing program although at low key
through selected advertising medium with the 4 Ps. Product – maintain their unique taste
to reflect the local content and minimum imported ingredients. Place – maintain the bulk
in the main shop location and put on sale in key supermarket within CBD locations.
Promotion – publicity predominantly on radio, word of mouth and selected new products
that enter market for the first time on TV. Price – maintain premium added with packaged
specials and price within reasonable means. New products are free tasting on offer to
allow spread in taste

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T

Marketing Plan Project
MBA 437 Trimester 1 2011

ANALYZE THE BUYER BEHAVIOUR

Abraham Maslow hierarchy of needs theory sets out to explain what motivated
individuals in life to achieve. He set out his answer in a form of a hierarchy. He suggests
individuals aim to meet basic psychological needs of hunger and thirst. When this has
been met they then move up to the next stage of the hierarchy, safety needs, where the
priority lay with job security and the knowing that an income will be available to them
regularly. Self-actualization the realization that an individual has reached their potential
in life. The point of self-actualization is down to the individual, when do you know you
have reached your point of self-fulfillment? But how does this concept assist Kava Store
in trying to market its products?
One of the most important marketing tactics that an organization can use to get ahead is
to know their potential customers better than anyone else - what marketers call Buyer
Behavior. Buyer Behavior is simply the study of how people buy, what they buy, when
they buy and why they buy. However, before you can start figuring out your Buyers'
Behavior, you must determine which market segments you will be focusing on.
With a crisply defined segment it is now possible to start the research. It must be done
segment by segment - trying to conduct an analysis across a random set of companies
won't work. We have found that within a particular market segment the buying habits and
characteristics are very similar across all firms within that segment.
The next step would be for Kava Store to identify a representative sample of potential
buyers in the target segment. These should be various types of buyers including financial,
technical and people who would be impacted by the products the store may purchase. The
big challenge is to actually connect real-time with the targeted individuals. This should be
done on a peer-to-peer basis to ask them what internal processes they would go through
in order to buy the value added products from Kava store. Kava Store should ask about
the needs/wants/problems they have as well as other issues that it (Kava Store) would
want to address.
It is important to note that these are not surveys but rather guided conversations that
cover the range of issues of interest to Kava Store. This process can also be used to

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complete a 'lost sales' analysis. If we find we are getting the same answers from our
sample (four or five different companies), then we are confident we are getting the right
story. With experience in conducting these guided conversations Kava Store should be
able to understand whether or not the responses received can be extrapolated across the
entire segment or if further research is needed.
Information gained through Buyer Behavior analysis is tremendously useful in
developing market positions, customer engagement models, promotional activity, feature
sets and pricing plans.

MARKETING STRATEGY

Marketing strategy occurs in the after the following activities have been undertaken.
1. Situation analysis (survey the marketing environment as in the use of a SWOT
Analysis

2. Conducting Marketing research and forecasting demand

3. Segmentation. This involves two (2) steps - (a) Analyze consumer markets (b)
Analyse the business markets

4. Marketing Strategy

Marketing strategy involves the following 4 P’s processes:

1. Product of service strategy

2. Pricing strategy

3. Place or positioning strategy

4. Promotion strategy

Since 1970, The Kava Store (KS) has maintained a unique stance on processing value-
added Vanuatu primary products. It has grown from strength to strength by engaging in
all the P’s of the marketing processes, above by processing most of Vanuatu’s local fruits
and nuts including kava. Kava Store has also acquired fame in the Pacific in its unique
techniques of processing, drying, storage, preservation, packaging and labelling of all its

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Marketing Plan Project
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local products. Training programs are also undertaken by KS to local entrepreneurs
engaged in processing and marketing of Vanuatu’s primary products. Planned trainings
have occurred at the Vanuatu Agricultural College in Santo and other regional countries
by KS.

The main focus or strategy that KS will engage in from 2011 onwards will be in the
following areas:

1. Continue to seek funding from Vanuatu Government through Donor Partners to

engage laboratories and regional universities to do more research in the improving
and advancing of value adding of local fruit and nuts. To adhere to international
bio-security issues for all its products and align itself to the international food
safety regulations.

2. Continue in its current work on drying, processing, preservation, storage,

packaging and labelling of its products for its domestic market.

3. Training of local farmers in the processing, preserving, packaging, labelling and

marketing of local fruit and nuts domestically.

4. Encourage Tamarind farming, processing, and storage, packaging and sales to our
domestic market. A new trend in local Vanuatu sweets with plans to exporting in
future.

The owner, Mr Charlot Longwah, has confirmed that despite a lack of a formal marketing
plan in place since its inception in 1970, KS has successfully engaged in processing and
marketing of its products locally.

The latest focus is in the farming, processing, packaging and sales of Tamarind fruit.
Tamarin seedlings have been distributed to farmers throughout Vanuatu.

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Marketing Plan Project
MBA 437 Trimester 1 2011

What is a Product

When we think of a product, we visualize a tangible object with physical properties. A

product is composed of intangible benefits as well as tangible characteristics. As a result,
a product is defined as a bundle of attributes and benefits designed to satisfy customer
needs. The fact that customers seek different benefits means that they will see products
differently. Therefore, a product is not a uniform well-defined entity. The benefits of the
product are those characteristics consumers see as potentially meeting their needs.

FIG 2.1
Core Product
Benefits
Tangible
Product
Augmented
Product

• Core Products – Benefits determine whether the consumer buys it.

• Tangible Products – Marketers must turn the desired benefits into product
attributes. Product attributes identify the tangible products, e.g. the Vanuatu
Government’s desire to promote value-adding of its fruits and nuts and the work
by Kava Store

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Marketing Plan Project
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• Augmented Product – The Kava Store products has the potential for industrial
marketing where terms of the sale includes elements other that the tangible
product. The classic case was Kava Store’s exports of Vanuatu sugar coated
peanuts in 1973 to New Caledonia. One of the elements of this products was its
purchase was its delivery and credit terms to the French company. This posed
cash-flow problems for KS because funds for the exports were received almost a
year later.

• KS processed the following local Vanuatu value-added fruits and nuts including
kava :
• Tamarind
• Nangai
• Navele
• Natapoa
• Chilli
• Pepper
• Pawpaw
• Mango
• Kava
KS currently sells its products domestically in grocery stores in Port Vila and Santo. Au
Bon Marche is the major distributor for these products.

3.0 Product Classification

Products are classified by the degree to which they represent tangible physical
characteristics. See Fig. 3.1

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Marketing Plan Project
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Classifying products by degree of tangibility

FIG 3.1

Most tangible Least

tangible
Durable goods Non-durable goods Non-durable goods Services
– packaged – non-packaged

In the case of products from KS, the value-added products would be considered as
“Convenience goods” because they are goods that consumers purchase frequently with
little deliberation or effort. They are generally packaged goods such as packaged Nangai,
Tamarind, Navele, Natapoa, Kava, etc.

4.0 Current product life cycle stage

There are four (4) points to consider in the current product life cycle stage for the Kava
Store brand. To have a product life cycle is to ascertain 4 issues.
1. Products have a limited life
2. Product sales pass through distinct stages, each posing different challenges,
opportunities and problems to the seller
3. Profits rise and fall at different stages of the product life cycle
4. Products require different marketing, financial, manufacturing, purchasing and
human resource strategies in each life-cycle stage.
The Kava Store has always processed and sold their products for the domestic market.
Production to meet local demand is not sufficient. There was only one major export in
1973 to Noumea, New Caledonia of Vanuatu sugar coated nuts. Kava Store sold Vt.1
million vatu worth of sugar coated nuts. The venture did not continue due to the French

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company in New Caledonia paying their debtors 7-12 months after each sales. This
posed a major cash flow problem for the Kava Store.

5.0 New product development requirements

The Kava Store has now ventured into Tamarind sweets production. This is a lucrative
business and proves promising for the Kava Store and Vanuatu as a whole in the coming
years. Plans to purchase twenty (20) solar dryers to facilitate the drying of the Tamarind
fruit is now underway. This will cost millions of vatu and KS is looking at the Vanuatu
Government to assist as this is a policy initiative in its PLAS plans.

Tamarind sweets processed by Longwah

Sales Assumptions – Current by KS.

Tamarind Sales Projection

Year 2011 2012 2013 2014 2015
1,820,00 2,002,00 2,020,20 2,022,02 2,022,20
Sales 0 0 0 0 2
Cost Price 728,000 837,200 853,580 856,037 830,724
1,092,00 1,164,80 1,166,62 1,165,98 1,191,47
Profit 0 0 0 3 8

Assume :
10% sales increase per
year
15% cost increase per year
Production at rate of 10% per year
Sold only to 7 shops over 52 weeks

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6.0 Product liability, safety & social responsibilities considerations

The major concern by KS is the acceptance of its products, its value-added fruit and nuts
to meet international food standards. Due to stringent international food security
regulations, currently, KS only supplies to its domestic markets but still its production
volume is unable to meet domestic demands.
To maximize production at 100 percent level to meet demand in its domestic markets
which ultimately increases its bottom line, KS has an advantage. The urban population
has increased by 43% from 1999 Population Census to 2009 Population Census in FIG
6.1. All domestic sales for KS occur in Vanuatu’s 2 urban areas of Port Vila and
Luganville grocery shops.
The social responsibility that KS has is twofold.
1. KS provides employment at the rate higher than the minimum wage scale
of Vanuatu which is Vt.148 per hour. KS employees are employed at a rate of
Vt.1, 000 per hour. These workers crack the canarium nuts on an 8 hour day
work schedule. Other KS workers are paid Vt.300 per hour.

2. KS assists farmers in improving their production by proper care to their

plants through the technical assistance provided by the Department of Agriculture
and Rural Development.

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FIG 6.1

2009 Pop Census 1999 Pop Census

Total Urban
Population Total Urban Population

44,03
Port Vila 9 Port Vila 29,356
13,15
Luganville 6 Luganville 10,738
57,19
Total Urban 5 Total Urban 40,094

7.0 Specification of core physical good and/or service

Labeling of products by KS has been done in accordance with international food
regulations. Products are properly labeled on their outside labels before being sold to the
domestic market.

8.0 Supporting customer service(s) need

To improve on its products and customer service, KS has invested millions of funds in
the initial set-up of this value-adding products by engaging research work on finding the
best processing, preservation, storage and packaging of it products.

9.0 Warranty - what is covered, time, who will support it

KS has managed to improve on its packaging of its products. Hence, the products sold
on the domestic market have clearly defined product information on its packaging.
Information on each product package/label has the following: product name, product
photo, processing specification and expiry date.

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11.0 Packaging

Above are examples of packaging and labeling of the KS products. It is done

professionally and in accordance with international packaging requirements.

12.0 Cultural sensitivity of product

• Promotion needs

There are no restrictions or cultural sensitivity to most of KS products. The minor

product that has a slight reaction is the kava product. Women’s and Church group
have rallied that it causes social problems - spending problems for low income
earners whose partners consume kava excessively. This problem is a widespread
social issue and not aimed specifically at KS. The KS counter-acts this by
employing more women in cracking its canarium nuts at Vt.1, 000 per hour. Others
are employed in preparing and drying fruits and nuts are paid Vt.300 per hour,
Vt.152 more than the minimum wage rate for Vanuatu.
• Protection needs

Protection of the Vanuatu value-added products are required to safe-guard its brand,
packaging and labeling techniques. This will make it unique and easily marketable
as an export. Research and plans are still on-going. Vanuatu, being part of a wide
Melanesian Spearhead Group (MSG) country, most primary products are similar to

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that found in other MSG countries such as Papua New Guinea, Solomon Islands,
New Caledonia and Fiji.

13.0 Fit with line product

• Place / positioning

The KS products are well placed in Vanuatu domestic market as meeting standard
international requirements of processing, packaging and labeling. KS is the only
company processing Vanuatu primary value-added products with recognition in the
Pacific region and Europe. Japanese citizens are now buying the Vanuatu nangae
(canarium nuts) for cakes and biscuits. KS is still unable to meet its domestic
demand for its value-added products. Production by local farmers will need to be
increased to meet this demand. The current positioning of the KS products is well
placed, in that,
• Objectives

The objective of KS is to promote Vanuatu’s value-added products for domestic

consumption and surplus to be sold as exports. Currently, domestic demand is
higher than KS production levels. Local farmers are encouraged to plant more
priced commodities by distributing seedlings.
• Major message themes for integrated marketing communications

Eat more locally produced value-added products increases employment

opportunities and returns to local farmers.

• Promotion

Having no major rival competitor, the KS has not engage in major advertising
projects. Unable to meet domestic demand at current production levels, advertising
is not an option.
• Promotion blend

The KS brand is unique because of its long history of perfecting value-added

Vanuatu products.

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• Price

KS prices its value-added products at a reasonable and affordable price for its
domestic consumers. Unable to meet its domestic demand, pricing is not a major
issue for KS. Customers are willing to pay what is produced.

MARKET SEGMENTATION

In segmenting the product markets, Kava Store had to analyze, assess and divide such
markets into groups of consumers or segments with distinct needs and wants. With this
background Kava Store would have a fair understanding of the consumer behavior to be
able to develop the best marketing plans that it can use and understand that would make
each segment unique and different.

Market segmentation consists of a group of customers who share a similar set of needs
and wants (Kotler, p.224). In the case of Kava Store where 33 products are promoted and
the minimum scale of their availability on the market, we rule out mass marketing as that
would mean plunging into unknown world that may not pay off. We draw on selected
segments that are trial in taste and popularity that would assist in to identify market
needs. In selecting targeting markets, Kava Store is able to segment and identify group
potential buyers, group products sold in categories, develop market-grid and estimate size
of markets, take marketing actions to reach target markets

With the unique and different set of target markets, we can draw a line to say that not
everyone want the same products or services so perhaps Kava Store could develop a
flexible market offering that customers could make decisions based on discretionary
options that some segment members value. Kava Store may have also opted for different
market segments; homogeneous preferences may exist when all consumers have roughly

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the same preferences; or on the other extreme, consumers may opt for diffused
preferences where their preferences vary greatly. If several brands or products are in the
market as the case of Kava Store, then clustered preferences come into play when natural
market segments emerge from groups of customers with shared preferences.

Whilst Kava Store has localized its products mainly within the Vanuatu market, the target
market is tailored to the needs and wants of local customers groups in trading areas,
neighborhoods, and even individual stores. It identified its market needs that include
product features that have the attraction on packages that breathes quality, less expense
and easy to obtain in the main store at Anabrou or selected shops that is easy to find due
to easy access and centrally located within CBD of Port Vila.

The bases for segmenting consumer markets are used in broad groups of variables to
segment descriptive characteristics in geographic, demographic, psychographic and
behavioural.

According to Kotler, (i) Geographic segmentation calls for dividing the market into
different geographical units such as countries, states, regions, cities or neighbourhoods.
(ii) Demographic segmentation divides the market into groups on the basis of variables
such as age, family size, family life cycle, gender, income, occupation, education,
religion, race, generation, nationality and social class. (iii) Psychographic segmentation is
the science of using psychology and demographics to better understand consumers.
Buyers are divided into different groups on the basis of psychological/personality traits,
lifestyle or values and (iv) Behavioural segmentation, marketers divide buyers into
groups on the basis of their knowledge of. Attitude towards use of or response to a
product.

In marketing mix tactics, Kava Store execute a marketing program although at low key
through selected advertising medium with the 4 Ps. Product – maintain their unique taste
to reflect the local content and minimum imported ingredients. Place – maintain the bulk
in the main shop location and put on sale in key supermarket within CBD locations.
Promotion – publicity predominantly on radio, word of mouth and selected new products

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that enter market for the first time on TV. Price – maintain premium added with packaged
specials and price within reasonable means. New products are free tasting on offer to
allow spread in taste

IMPLEMENT AND CONTROL THE MARKETING STRATEGY

How do we implement and control the above marketing strategies?

It is very important that any company or person engaged in business implements and
controls his or her marketing strategies. It is obvious that if one does not implement and
control the business marketing strategies, the business will not grow and of course
demand and customer satisfaction will not be met. So to implement and control the
marketing strategies one would need to do the following:

1) Customer and farmer awareness of the Kava Store value added

products;

Kava store in Port Vila operates without making too much noise by advertising its
products. The main concern for Kava store is that there are not enough of the value added
products to meet the demand of the customers in the market, bearing in mind the ultimate
goal of Kava store is to maximize supply. Hence Kava Store’s marketing strategies need
to be implemented and controlled.

i) Kava store needs to organize awareness to the local farmers persuade them on the
importance of the product and the potential of making a lot of money out of the product;
In fact, Kava store strategy for the next three years is to run awareness and training on
value added products not only for the local farmers but also for the farmers in the South
Pacific;
ii) Tools and equipments for producing value added products would be the next thing to
look at. Once farmers are fully aware and trained on how to make the products then the
farmers would need the tools and equipments to produce the value added product. The
farmers need to be trained on how to use the tool and be aware of the safety measures
when operating the tool.

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Marketing Plan Project
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Above is a picture of the Solar food dryer.

Kava store used to use the natural sun to dry their product. Until recently a new
equipment was introduced which is solar food dryer.
Rural farmers will now be capable of producing value added products after the
introduction of a new solar food dryer. The solar food dryer was an initiative of the
Vanuatu Kava Store and the University of New South Wales, Australia. Its main aim is to
provide sustainable solutions in food preservation for remote communities using local
resources and solar energy.1
iii) Who would provide the tools to the farmers?
It is envisaged that Kava store will work closely with the Government and aid donors in
obtaining assistance for the farmers in their production process.

2) Develop the customer base;

Vanuatu is in short supply of the fruits, nuts and kava product. The issue now is to
maintain the current local customers and create customer base overseas.
i) Government and the Melanesian Spearhead Group.
Kava store and Farmers need to work closely with the Government and the Melanesian
Spearhead group to help create market overseas under the free trade agreement. Farmers
and Kava store will benefit from exemption of import duties.

1
(Daily Post Newspaper, December 2010)

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Manufacturing Sector

This sector continues to remain in the priority list of the government given the significant
importance it could play to enhance the country's economy. The manufacturing
manufactured products for the domestic market and for export

Industries producing consumer goods for the local market are generally small and based
in urban areas. They produce soft drinks, bread, furniture and clothing.

The involvement of Government and the Melanesian Spearhead Group in building the
customer base is more assuring than individual farmers trying to find customer overseas.
ii) Government to open more market beyond MSG countries.
The dream of Kava store is to export the value added product overseas. That can be
implemented with the help of Government opening up market overseas within the MSG
countries and beyond.
iii) Kava store to maintain current customers.
Kava store of course has customers in Vanuatu. It must maintain those customers; keep
satisfying customers with current products, improve the quality of the products that can
last over time and sell them at the reasonable costs.
iv) Competitors.
Although the competition is more at the lower scale in Vanuatu but still there is
competition with few local business persons. There are also overseas competitors selling
their products in Vanuatu. For example the Australian competitor is now selling its
products (nuts) in Vanuatu. It is something that Kava store must keep an eye on it so it
does not become a strong competitor in Vanuatu otherwise Kava store will find hard to
sell its product even in its own country.

3) Advertisements.
Advertisement would be an effective way of gaining more customers locally and
overseas. That can only be implemented when Kava store has enough supply.

Tamarin could rake in millions for farmers: Long wah

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Tamarind sweets processed by Long wah

Local expert on value added agricultural products; Charlot Long wah has revealed that
the local product ‘tamarind’ has a very lucrative local market which could rake in
millions for farmers. But Long wah who has been involved with value added products
even before Independence said this can only be achieved if farmers take another step
further by processing and adding value to their product. The Kava Store owner said: “I
bought farmer’s raw tamarind for Vt300, 000, per ton but if their product is value added it
will cost Vt2 million per ton”. He said tamarind has a very high demand locally and a
very lucrative market.”

Mr Long wah’s comments were made during the exhibition of a newly designed solar
food dryer aimed to boost food processing and value added products.
“We supply 5,000 packets of processed tamarind to seven shops per week. But there are
400 shops in Port Vila who are also interested but we are not able to meet their demand.”
“There is an urgent need for rural farmers to increase tamarind production and also to
make value added products. Most farmer sell around 10kg of raw Tamarind to us for
Vt300,000 per ton but with the newly introduced solar dryer it will take only one day to
process 10kg into value added and sell for Vt2 million per ton.”

“In 10 years time we are expecting a demand of 50,000 packets per weeks. The
production of tamarind has increased every year.” Meanwhile Longwah believes that
even rural farmers can process value added products and he is proud of the solar food
dryer, a joint achievement of his and the New South Wales University.

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Thousands of tamarind seeds have been distributed to rural farmers by the Kava Store but
Long wah still predicts that in 10 years time the demand will still exceed the supply. To
encourage rural farmers he said staring July next year he will be engaged in training
farmers on how to process value added products.
“The agriculture sector still need more ventures to move the country forward,” he added.

There are over 100 other local products which Longwah said rural farmers can process to
become value added2. (Daily Post Newspaper, December, 2010).

The above article shows that advertisement could not even be used to implement the
strategy of selling that particular product of Tamarind as the demand well exceeds the
supply capacity. The article puts it very well that there are 400 shops in Port Vila that are
interested but Kava store can only sell or supply that particular product to only 7 shops in
Port Vila because Kava store does not have enough to supply.
4) Timing.
Timing factor is now an issue only because Kava store is in shortage of supply. After the
training strategy is met only few farmers will make money out of their products.
However, the market demand would not yet be met. It will take some years when more
people have seen the importance and the potential of making money out of the product
that more people will then be interested and engaged in producing value added product.
Until then which is some 10 years down the line (tamarind case above) the market supply
will not met the consumer demand. It would be a similar time frame for any other
product.

5) Forecasts and estimates.

Costs and sales are not an issue at present because there is not much competition in the
quality and sale of value added product in Vanuatu. For example kava as value added
product only has 1 or 2 producers (competitors) in Vanuatu.

2
Daily Post Newspaper, December 2010

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How do we improve on kava?

No proven analytical data available on kava so far to support its exporting prospects.
Nothing at World Health Organisation (WHO), or other major organizations. Hence,
difficult to export due to lack of proven analytical data available would cost about Vt.12
billion for research alone and bout 10-12 yrs for research loaded with lots of uncertainty
if there are future prospects for export. Kava is a very delicate product. Hence, care &
diligence required when handling & processing this product for export.4
At present, value added product such as kava does not have good market overseas
because there is no analytical data supporting its export overseas. Until that is done and
supported by the World Health Organization the kava market overseas could not be
improved and costs and sales ratio could not be considered seriously.

3
Google.com
4
Interview Charlot Longwah, Kava store owner, Port Vila, 1st April 2011.

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BIBLIOGRAPHY

1. Henry Assael, Peter Reed& Mark Patton, Marketing Principles & Strategy,
Harcourt Brace, 1995

2. Kotler, Keller & Burton, Marketing Management, Pearson, 2009

3. Vanuatu National Statistics Office, 2009, National Population & Housing Census,
Vanuatu & Statistics Bulletin, Vanuatu Governement.

Group 4: Aaron H, Ben L, Eric M, Judith K, Neomai T