Grenner Pastures the Launch of StaGreen by HydroCan Company

Executive Summary HydroCan Company has been in operation for about one year. The company has come up with an innovative product known as StaGreen, which aims to address the environmental and cost needs in the two markets of USA and Canada. However, given that the company is relatively knew in the market, it has found the process of entering the market more challenging and somehow complex.Advertising We will write a custom case study sample on Grenner Pastures the Launch of StaGreen by HydroCan Company specifically for you for only $16.05 $11/page Learn More This dilemma has forced the company to seek consultancy services in order to provide key strategic ways and recommendations for the way forward. As a result, Stone Age Marketing Consultants has been able to carry out market research and analysis and identified key characteristics of the market, which the company can explore before settling on the appropriate market. Moreover, the aim of the market res earch has been to identify and recommend the appropriate entry strategy, given that the company is new and is likely to face stiff competition from established companies. Therefore, the report provides critical steps towards HydroCan Company introducing its innovative product in the market. Background HydroCan Company is one year old and its owners include four agricultural engineers and one accountant. The company has intentions of operating and serving in both USA and Canada’s markets. As a result, in the recent past, the company has been involved in obtaining patents in both markets for a new type of lawn-care product. The new product the company intends to introduce in to the market is known as StaGreen. The new product is applied to grasses and when this happens, it enables the roots system of grass to retain water longer. This reduces the need for both extra watering and frequent fertilizing. The owners of the company are much more ambitious on introducing the product t o the market. Although they have a wonderful product for the market, the owners of HydroCan Company seem to have no idea about the best way to introduce the product to the market. They are mixed-up with regard to which particular market segment they should concentrate on and introduce the product to, how the new product can be positioned in the market, and also what best launch strategy can be used to introduce the product in the market more successful. This confusion is further made complex to due to presence of numerous competitors in the market, which the company has to contend with and subsequently, design appropriate marketing strategies in order to achieve competitive advantage over them. In this regard, the HydroCan Company owners have sought services of Stone Age Marketing Consultants, who are accredited marketing consultants and the company hopes to achieve the best form of advice in terms of launching and introducing the product to the market successful.Advertising Lo oking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Statement of Problems HydroCan Company is faced with a challenging and complex situation regarding introduction of StaGreen product into the market. At the same time, the company does not have a clear idea on how to market the product, both in USA and Canada. This problem is compounded by the fact that the owners of the company and subsequent product to be introduced do not have defined and clears knowledge about the market for the product. Two major markets exist in the two countries, which the product can be sold or introduced to. The two markets structures have divided the management team as to which is the appropriate one given the position, nature, and ability of the company in its current form. The two major target markets the company has potential in include consumer lawn and garden market, as well as commercial lawn and garden market. The two marke ts are totally different from each other, with diverse and unrelated characteristics. The two markets therefore require different launch strategies in selecting the appropriate market segment. The company’s CEO, Gary Gillis, favors and wants the company to target consumer lawn and garden market, while Carla Humphreys prefers the commercial lawn and garden market. The two top managers of the company seem to be determined in having their choices adopted by the company, and it is from this strong conviction of the two that marketing consultants have to be involved in determining which is the best strategy to adopt for the new product. At this point, it can be stated that, the primary problems of the company revolve around finding the best marketing strategy and the appropriate market in which to introduce the new product for the company. Therefore, a comprehensive strategy for the launch of StaGreen has to be developed and this will see successful introduction of the product in the market. Situation Analysis The product to be launched has been described as similar in appearance to most brands of common lawn fertilizer. In fact, StaGreen has been categorized as chemical fertilizer but with distinct special characteristics, which make it superior to other available fertilizers. For instance, the major benefit that has been associated with the product is its ability and effect on the root system of most of the common types of grasses used for lawns. The product is manufactured in such a way that it has small pellets that are attached to roots, which enable attraction and retention of moisture. With these superior features, laboratory tests have been conducted on the product and indicated capacity to reduce the manual watering on most types of grass by up to 40%. As a result, the product is perceived by company managers to have the ability of attracting high demand from consumers. In order to find out the viability of the two markets and associated financial i mplications, the marketing consultants carried out a detailed study and analysis of the two markets.Advertising We will write a custom case study sample on Grenner Pastures the Launch of StaGreen by HydroCan Company specifically for you for only $16.05 $11/page Learn More Consumer lawn and garden market The first market concerns the consumer lawn and garden market. According to the findings generated for this particular type of market, it was established that majority of Canada consumers of lawn products spent an accumulated amount of about $2.3 billion in this market. Break-down of the figures in the consumer lawn and garment market show that consumers spend $945 millions to buy grass, trees and plants, $620 million on lawn maintenance, and in this case, fertilizer accounted for 52% of the total amount. Others include $815 million on hand tools, pots, window boxes, books, magazines, and landscaping services. As a result, these figures point to the impo rtance attached to gardening by majority of Canadians. On the other hand, lawn care in the country is perceived to be highly seasonal business, where 70% of business sales take place in the second and third fiscal quarters (April to September). The finding also postulate that, if the company was to target and venture into this kind of market, then it will largely compete with fertilizers, and that this market segment is highly competitive, with top two firms being Scotts Co. and Ortho Chemicals. These two companies have a control power of about 50% of this market segment. Moreover, the market leader in this market segment is the Scotts Co., which has established two strong market brands known as Turf Builder and Miracle-Gro. At the same time, Ortho’s products together with those of Turf Builder are priced competitively and have an added value, whereby, there is inclusion of pesticides within the fertilizer, and this has been seen to prevent most common lawn infestations. Furt her research in this market segment shows that, 40% of consumers in the market have no concrete brand preferences, a situation likely to see them shift loyalty as far as brands are concerned. As a result, findings show that majority rely largely on in-store advertisements and sales staff for critical information and recommendations. More so, it has been found out that consumers express inability to recall brand name or manufacturer of the fertilizer. Findings also show that Miracle-Gro enjoys high brand name awareness but many consumers associate this brand name with plant foods and not lawn fertilizers. As a result, it has been concluded that, consumer behavior and attitude toward product in this market category have forced manufacturers to rely largely on the strong push strategy. Product sale strategy in this market segment tends to be carried out by three distinct retailers. First there are discount stores that include Canadian Tire, Wal-Mart, and Sears; secondly, there are spec ialty stores that include nurseries; and thirdly, there are home improvement stores.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Discount stores as compared to other stores tend to be popular and most preferred by consumers. For example, estimates show that about 60% of all consumer fertilizer is made in discount stores, a situation that has forced retailers using this type of sale strategy to increase budgetary allocation for their promotion and advertisements. Specialty stores on the other hand have been found to be popular among 30% of consumers, while home improvement stores have been found to control 10% of consumer purchases. Growth of home improvement stores is seen to be on the positive rise, especially due to price concessions and promotion support they get from manufacturers, just like in the case discount stores but unlike specialty stores. In consumer lawn and garden market, the research also establishes that manufacturers spend about 20% of sales on marketing activities. A large part of these monies goes to activities such as sales force, selling in general and also trade promotions. These are th e three main channels through which products in this market segment are sold and for a long time, strong sales force has become the most preferred and appropriate sales strategy. With regard to trade promotions, majority of manufacturers provide in-store literature, displays and sales training. Less important is the advertisement. As such, the product that is perceived to have strong market advertisement initiatives is the Miracle-Gro, which is a heavily advertised brand, and the company (Scotts Co) spends about 4% of sales on advertisement. This therefore may account for the high brand- name awareness for the product. With regard to advertisement in this market segment, it has been recognized that majority of companies run their advertisements for their existing brands and any new brand during spring and early months of summer season. Therefore, advertisement expenditures are in most cases likely to go up during the months of March, April, May, and June, and not at all during other months. Commercial lawn and garden market The second market is the commercial lawn and garden market, which differs a lot from the consumer lawn and garden market. Commercial market is heavily concentrated in the golf sector, and in Canada, this includes about 1800 golf courses. Other relevant and potential areas this market can thrive in include commercial properties that include office complexes and apartment buildings. Nevertheless, golf courses remain the lucrative market in this market segment. The study establishes that, at the moment, there are issues in the golf course sectors, where accusations have increased with regard to perception golf courses are responsible for groundwater pollution, and this is contributed by high and frequent levels of fertilizers used to keep courses green. This perception has forced greater concern in the golf community with concerted efforts to identify and, if possible, adopt the most appropriate strategies that can be used to cut both water an d fertilizers that are used to maintain grass in the golf courses. Golf courses owners spend large amount of money to maintain the courses and approximate estimates shows that, the owners spend up to$300 000 to maintain their golf course during the year. Break-down of the spending shows that, 42% is spent on water use and 24% goes to fertilizer purchases. But in case the golf courses are large, these costs go up and may accumulate to about $800 000. If the StaGreen product was to be accepted by majority of consumers in this market segment, then, the product has ability of reducing water usage by about one-half and fertilizer by one-third. In the recent times, there has been increase in popularity of golf especially after decrease in the 1980s. Some of the factors cited leading to popularity of game include growing number of public courses with reasonable fees, the continued aging of the Canadian population, and also the development of better equipment. These factors have combined an d today, they have contributed to the increase in enthusiasm and popularity of the golf game. Due to this, estimates have shown that the number of golf courses may increase by 22% to about 2200 in a period of five years. In Canada, golf courses are dispersed although regions of British Columbia and Vancouver have high concentration of golf courses. At the moment, majority of golf courses purchase maintenance supplies from wholesalers who specialize in products that are uniquely designed for the type of grasses used. Furthermore, manufacturers of these fertilizers tend to be small firms, or divisions of the larger chemical companies. At the moment, the market share leader in golf course fertilizers is Sierra Horticultural Products, which is a subsidiary of Scotts Company. The biggest competitor of the company in Canadian market is the Nu-Gro Corporation, which is a company based in Ontario since 1992. Compared to firms in the consumer lawn market, companies in commercial lawn market spend only 9% of their sales on marketing activities. Observation made is that, majority of firms in this market segment engage in little advertisement and in most cases prefer to use funds on sales calls to golf courses. Moreover, other strategies used by the companies include: providing free samples of their products to non-users and also concentrate on building solid and long-lasting relationships with course owners. The observation made among the golf course owners is that, majority tend to be loyal to one and specific brands hence it takes a lot of effort to convince them to switch brands. But two situations exist, which may trigger change of consumer behaviors among the golf course owners. First, there is the issue of increasing environmental concern, and public debate over it continues to draw mixed reactions, where majority tend to agree to the growing negative impacts of golf course to groundwater. The understanding is that, chemicals used in golf course pollute groundwater which also involves heavy chemical buildup in the nearby reservoirs. This scenario has even drawn attention of USA Environmental Protection Agency, which admits that the golf course chemicals constitute the major pollutants to groundwater. This in turn has increased negative publicity of golf courses in major media channels in the country. Another issue, which may make golf course owners to change their consumption behavior for a long time is the issue of shrinking profits. Although all indications show the popularity growth of golf and more courses being established, it is clear that the number of golfers that can be accommodated on any one course cannot be expanded. These are factors that are seen to have great potential of challenging loyalty of golf course owners for particular brands and may be forced to look for superior and promising brands. Analysis of Alternatives Two alternatives are presented for the company. First, the company can either adopt the first strategy where i t ventures and concentrates in consumer lawn market or the second option where it ventures and concentrates in the commercial lawn market. The first option has numerous strengths and weaknesses. For example, strengths of the first choice include the fact that it is the largest market and products are likely to be sold easily and at faster rate. At the same time, there is no strong brand loyalty, and consumers tend to shift loyalty easily and at faster rate. As a result, the company can easily endeavor to the hearts of consumers, hence making penetration effort in the market more easy. Furthermore, in consumer lawn market, the pricing strategy varies, a situation that can help the company to initiate a price strategy that endeavors well to majority of customers in the market. Also, the sale of smaller quantities in consumer market is likely to see faster movement of product, and this may eliminate the need for inventories, hence reduction in costs of maintenance. But, at same time, w eakness of this market segment, especially with regard to HydroCan is that, the company is new, and toppling some of the established names in the market may not be an easy task. This will require the company to increase its advertisement and promotion budget. Moreover, the product the company aims to produce in the market is less known and its key features are not well captured and conceptualized in the population. This therefore may not arouse the much needed enthusiasm in the market about the product. Hence, this may require the company to increase its advertisement and promotion activities, a situation that may be expensive. Furthermore, it has to be known that the consumer market is largely seasonal and consumers only buy during particular months (April-September), an aspect that may not auger well with the company’s returns on the investment. Furthermore, success in this market require strong market push strategy, and this for new comers may not be possible or appropriat e, given their overall financial and resource constraints. A strong market push strategy may require extensive advertisement, increased and intensified sales, and also increased promotion activities. With regard to commercial lawn and general market, opportunities of this market type are presented in the fact that the game of golf is gaining popularity currently. This has seen increase in the establishment of new golf courses, and this may be the opportunity to be exploited by the company. Moreover, with increase in the aging population and improvement of equipment, there is perception that the golf game is gaining more demand, and it may provide an opportune market for the new products. Another great opportunity lies in the fact that, golf courses have come under heavy criticisms due to ability of courses to pollute groundwater. Environmentalists and government watch agencies in the matters of environment have identified golf courses as major contributors to groundwater pollution. This has not augured well with majority of owners, who have no option but to look for new types and forms of fertilizers that guarantee sustainability of the environment. Furthermore, StaGreen as product has been experimented and found to provide solutions to various problems currently experienced in the golf courses with regard to environment. Hence, the company can successfully use this opportunity and introduce its product to course owners who are likely to embrace the product if found to be suitable. The challenge with this type of market segment has to do with high levels of consumer loyalty to one and specific brands. Unlike in consumer lawn markets, commercial lawn market is characterized by strong brand loyalty, which makes it difficulty to convince consumers to shift or change their consumer behaviors. Furthermore, sales strategies in this market segment move away from the convectional ones, while advertisement and promotion may not pay a lot in this market segment. But on overall, the identified issues of shrinking profits and environmental concerns may be the biggest reason for this kind of market to be penetrated by new entrants. Recommendations The first step towards identifying the appropriate market segment for a new product include identifying the customers and understanding the consumption needs and wants of the consumers (Hartline, 2010). This is especially important given that products are designed and introduced to the market with the aim of serving and satisfying the varied body of consumers available in the market. Therefore, HydroCan Company can establish the needs of consumers in the two markets and explore whether the products meet the threshold of satisfying consumers’ needs (Narayanan and O’Connor, 2009). In doing so, the company needs to introduce sample products in identified stores (Chaston, 1999), both for the consumer lawn market and commercial lawn market. In this way, the company should initiate another research to establish product acceptance among consumers in the two markets before having a final say on which market to have greater concentration or specialization (Rainey, 2005). Also, timing of the product with regard to launch is important, and the company should launch when the demand for the products (fertilizers) is high (Lyikoey and Qvist, 2006; Avlonitis and Papastathopoulou, 2006). Another recommendation is that, given the conditions and characteristics in both markets, it is appropriate for HydroCan Company to venture in both markets but make every effort to respond uniquely to the needs of each market. For example, in consumer lawn market, the company can increase advertisement and promotion of the product, especially by emphasizing on key and unique features of the product as opposed to competitor products. The emphasis should be on the environment benefits and suitability of the product as compared to other available products from competitors. In this regard, the company needs more demonstrations about the product to varied groups of customers to convince them about the suitability of the product. This should be followed by establishment of front-shops in major strategic areas that can be used for experimentation and demonstration of the product. With regard to commercial lawn market, the company can utilize the existing issues in the golf course and make some significant penetrations. For example, the company can adopt marketing strategies that reflect demonstration, free samples, and reduced prices in order to give owners of courses a chance to test the product. With many improvements and more consumers showing interest in the product, the company can in turn increase availability of the product to more consumers. The point of importance here is that, more sales calls should be conducted and the company should concentrate on building a strong customer base that is loyal. Conclusion The report was as a result of request by HydroCan Company, which intend s to launch a new product but has no information or knowledge about the market. Hence, Stone Age Marketing Consultants are invited to provide consultancy. The report provides a detailed analysis of the market and business environment, which confronts HydroCan Company. From this, it has been found out that companies of new products, which are relatively new in the market, face numerous challenges when introducing new products. These challenges are compounded by competition from established firms. Nevertheless, the analysis and recommendations provide a clear roadmap, which HydroCan Company can adopt in order to launch its product. However, more research work is needed, especially with regard to movement and performance of the product in the market. References Avlonitis, G. J. Papastathopoulou, P. (2006). Product and Services Management. NY: SAGE Press. Chaston, I. (1999). New Marketing Strategies: Evolving Flexible Processes to Fit Market Circumstances. NY: SAGE. Hartline, F. O. (20 10). Marketing Strategy. OH: Cengage Learning. Lyikoey, G. Qvist, K. (2006). The Timing of New Product Launch. Berlin, Germany: GRIN Verlag. Narayanan, V. K., O’Connor, G. C. (2009). Encyclopedia of Technology and Innovation Management. MA: John Wiley and Sons. Rainey, D. L. (2005). Product Innovation: Leading Change through Integrated Product Development. Cambridge: Cambridge University Press This case study on Grenner Pastures the Launch of StaGreen by HydroCan Company was written and submitted by user Harold Holloway to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.