PLANT-BASED MEAT

PLANT-BASED MEAT

MARKETING ENVIRONMENT

Plant-based Meat (PBM) will  2qbe based at the heart of London’s hart of activities  `hence will be accessible to customers thrilled by beyond meat cuisines as compared to the traditional meat cuisines. The firm will purely be defined and understood by customers as a den of healthy foods with main focus on providing its customers with non-meat traditional and cultural cuisines.  The firm will, target the mainstream market as well as segmented. PBM protein will be based on vegetables with its foods prepared and designed to cook, look and taste like the traditional meat dishes such as taco’s, lasagna, beef stew, hamburgers, sausages, and chicken. All these products will be non meat. The line of production of its products will be defined and informed by direct communications with the product distributors and manufacturers. In essence, PBM will be joining the fairly ballooning market of green meat which for long time been dominated as a niche for some producers like Beyond Meat, Impossible Foods, and Hungry Planet. Like Beyond Meat, the firms main strength is banked on its ability to provide customers with a more eye  appealing plant-based meat innovations to the traditional meat industry—pure vegetarian industry. As such, the firm will attract customers from the mainstream market as well as strict vegan segment. According to a report published by Guardian News “Third of Britons have stopped or reduced eating meat” shows that at least one in eight Britons have switched from traditional meat to plant-based meat as per UK’s revolution of eating habits citing health diet needs, environment conservation and animal  welfare concerns (2018). According to the publication, the vegan market in the UK as 2018 had increased in fourfold. This indicates that the market which was since a niche for companies like Beyond Meat have since expanded covering a significant portion of UK’s population.

PORTERS COMPETITIVE FORCES

In non-meat based industry, PBM will be among the firms producing and selling similar products amongst its competitors like Beyond Meat. In effect, these firms will be competing against PBM Cuisines to ensure sustainability and growth. Porter (1998) identified five competitive forces that firms should put into consideration to influence their profitability even in the face of stiffest competition. The Five forces of competitive establish the ground rules for competition in any particular industry. Nevertheless, a couple of economic studies have maintained that different industries experience different levels of competition which can sustain profitability of firms competing in a given industry. The profitability of firms may also be dependent on the competitive advantage which relies on positioning and industry structure. Porters competitive which includes; intensity of competition or rivalry among the existing firms,  threat of new entrants, threat of substitute products or services, bargaining power of buyers and suppliers to the industry.

The intensity of rivalry in the industry

The level of competition varies across different industries. Porter advises that if rivalry in an industry is low, the industry is considered to be disciplined (1998). On the contrary, when rivalry invokes counter-competitive strategy from other firms in the industry, the rivalry is said to intensify anad is referred to as cut-throat, weak, or intense depending on the firms’ determination to gain competitive advantage.  PBMs industrial rivalry as of now is moderate since the firm is yet to unleash its competitiveness. However, the competition is likely to be intense or cut throat if Beyond Meat or any other firm in the industry launches a counter competition strategy. This is largely because; PBM is a new entrant with less know-how of the market and incomparable financial muscles. With certainty, PBM is likely to evoke intense competition due to its nature of products which are highly perishable as well.  However its effects will be balance by the high rate of switching from traditional meat to plant-based meat in the UK as concluded by Guardian News which illustrates that more than third of UKs population is switching to plant based meat. This shows that PBM will have a considerable share of the mainstream market switching to plant-based meat thereby absorbing the intense competition caused by the nature of product dealt with in plant-based meat industry. As per Porter (1998), PBM intends to adopt various strategies including changing pricing strategy, exploit the channels of distribution and product differentiation to counter the intensity of rivalry in the industry.

Threat of Substitutes

According to Porter (1998) the emergence o new substitute products in the industry ends up affecting the prices of the existing product. This is because, more often than not, substitute products may be offered at a low price thereby offering an alternative product that similarly satisfies customers’ needs. This risks divesting a portion of cost-conscious customers to the newly introduced substitute selling at low prices.  This kind of competition is not usually foreseeable by firms as it emanates from outside. For PBM however, the threat of new substitute remains relatively low due to entry barriers such as high capital requirement. It is worthy to note however, should new substitutes invade the industry; the pricing of PBMs products will be limited hence limiting its profitability which would be an unlikely event at its infancy stage. This will provoke a different competitive strategy to counter the competition from the new substitute. PBMs price elasticity would be affected a great deal if more close substitutes becomes available and consumer demand of the new products increases.  The emergence of close substitutes in the industry would limit PBMs ability to raise prices or its products.  This would require PBM to put forth a different competitive strategy such as value-based pricing and product differentiation.

Bargaining Powers of Buyers

Porter (1998) conceives the bargaining powers of customers as the impact that customers produce on the industry. When the customers bargaining power is high, the relationship between the industry and customers is almost monopsony, that is to say, the industry highly depends on one buyer with many suppliers.  Under such market conditions, the buyer and not the supplier are likely to set the prices for the supplier which is unlikely for any business. If buyers are powerful, there is a great likelihood of threatening the supplier to backward integration in which the supplier firm merges with another to lower their buyers’ powers.  Conversely, when the buyers are weak, they are likely to credibly threaten a forward integration in which firms would be prompted to merge with other firms that provide services to the buyers. For PBM, the customers are derived from segment of health diet conscious as well as from the mainstream market which means that the customer are not likely to have strong bargaining power over PBM.

Bargaining Power of Suppliers

The power of supplier ultimately another factor that affects competition in an industry. This is  because suppliers have control of the raw materials, labour as well as other components of supplies which the firms greatly depend on. A producing industry like plant-based meat is likely to elicit situations whereby suppliers have high bargaining power over firms like PBM. In the unlikely event whereby the suppliers are powerful in that they can exert pressure on firms cost of production say by selling raw materials or labour at high prices, the prices of end products are likely to be high due to high cost of production. This may end up reducing the company’s profitability due to the ultimate of high prices reducing sales due to customers shifting to low priced products. Conversely, if the firms in an industry have control over the suppliers, the cost of production is likely to be low since they are likely to acquire raw materials or labour at low prices hence retaining a price elasticity ability over its products.  The firm will therefore be able to capture most of the industry’s profits which increases sustainability of such firms.

Suppliers are however likely to be powerful if they are concentrated which may prompt forward integration in which the affected firms in the industry may need to merge with the suppliers to manage the cost of running the business. On the other hand, suppliers are likely to be weak when there are other competitive suppliers. Backward integration can firms such as PBM have a concentrated purchasing point which would in turn lower the suppliers bargaining power. However, the bargaining power of suppliers is unlikely to be powerful as the firm will rely of various and differentiated suppliers to supply raw materials, labour and other components of supplies.

Threat of New Entrants

In any industry, it is not only the existence of incumbent rivals that pose a competitive threat but also the very possibility that other new firms may enter same industry and market. Theoretically, it should be possible for nay firm to enter and exit any industry or market should the entry and exit be free. Under such a situation, the profits among the firms operating within the industry are said to be nominal. In practice however, the peculiar characteristics of industries dictate entry and exit barriers which in turn protect high levels of profits accruing to such firms in the industry and market. The peculiar characteristics prevent entry of new firms into the market which essentially locks out additional competitors from invading the market of those firms. The peculiar characteristic are referred to as barriers which serve to reduce the rate of entry o additional rivals hence maintain the profitability levels of those already in the industry.

Considering the foregoing, it is unlikely for new entrants to invade the plant-based industry due to the technology used to produce the raw materials in the industry. There are few companies which have the capacity to procure the technology required to produce plant meat. This is also limited by the cost and expertise required to procure full blown technology of manufacturing the plant-based technology. In addition, the capital required to set up a firm such PBM is such a significant amount of money which would effectively prevent low capital business from sprouting. In addition, PBM intends o effectively lock out new entrants from using and selling products similar to PBMs. In effect, PBM intends to secure intellectual property rights on some of its products such as plant-based meat taco, and lasagna.

SEGMENTATION AND TARGETING

PBM will adopt both a narrow focus and broad scope in which it will focus on reaching the niche market characterized by diet conscious market. A broad scope focus will be directed towards the mainstream market which consumes on meat and non-meat products so as to capture a wide market.

Diet conscious consumers are composed of those potential customers that are taking control of their diet which involves consideration of factors such as health and nutrition when it comes to foods they choose. Food choices of this segment of consumers are influenced by the need to address both health and environment sustainability concerns. All they want is food that is better, and safe for their health as well as for the planet. As such, PBM will be the destination for these consumers. This is because plant-based meat is scientifically attributed to wielding nutritional and health benefits that outdo the traditional meat benefits. For instance, vegan products have been proved to test negative of antibiotics, genetically modified organisms, fats and cholesterol, and hormones which are frequently present in real traditional meat (Venice-Afable, 2019). These elements are attributed to have the potential to cause health illnesses on red meat consumers and have been associated with obesity, cardiovascular diseases, type 2 diabetes among others (Vimalathasan & Putros, 2018). PBM will be meeting the health and nutritional needs of diet conscious consumers especially those that are interested in cutting meat out of their diet. Studies have shown that eating vegetarian diets improve better moods as compared to people whose diets include traditional meat which contain a lot of fatty acid, in particular omega 3, which if consumer in large amount can cause bipolar disorder or depression (Vimalathasan & Putros, 2018). In addition, vegetarian diet have been reported to improve hormonal health experience after consumers cut down consumption o animal proteins which stimulate secretion of unsafe hormones.

PBM will also focus on the mainstream market. This is to enable the firm attract and sell to curious mainstream meat eating customers that may be interested in joining the first segment of our products or those that are interested in testing PBM non-meat products. This segment will consist of the people that are still on traditional meat diet but are interested in reducing the levels as they respond to ethical and health  concerns raised by meat consumption.PBM is optimistic that this class if consumers will be buy its products as its products have been significantly improved in terms of taste and reduced price parity. This is so because PBMs products will be priced slightly below the traditional meat prices which will help attract the mainstream meat eaters into plant-based meat products. This segmentation has been influenced by the fact that veganism is gaining popularity in the current social eating trend as more people switch to plant based meat with increased reflection and consciousness about the foods we are eating, lifestyle and the impact of our lifestyle on the environment and to some extent considerations about animals welfare. According to vegetarian has remained relatively stable as from 2017 with growth rates being at 10% regardless of the stable consumption of traditional meat. A further report suggests that those that are seeking alternative proteins represent one-third o total European Union’s protein demand during the past five years (Vimalathasan & Putros, 2018).

From the foregoing premises, there is more than compelling evidence that the mainstream consumers of meat are likely to form the main segment of PBM as sustainability and health concerns intensifies. The future of plant-based meat is bright as the world keep eye on sustainable means of production of consumption by embracing intensive production as opposed to traditional methods which involves rearing of small numbers of animals grown for meat (Gold, 2009). In addition, focus is slowly being diverted to decent standards advocating for animal welfare geared towards ensuring animals like humans enjoy the natural life and die less painful deaths and their body wastes are disposed to the soil thereby contributing to maintenance of soil fertility and biodiversity.

PBM will employ a focus strategy which will inform the scope if its competition with other firms in the industry. As such, the company will adopt narrow focus and broad strategy in which it focus on niche market segment. The target consumers are identified with specialized needs such as health and sustainability concerns. Traditionally, health conscious consumers have been associated with vegetarian consumption as opposed traditional meat consumption. The broad based focus targeting the mainstream meat consumers is encouraged by the popularity of the need agricultural sustainability as the next big thing. This is because farming makes best use of planets goods and services including putting land to better use without damaging the environment. Farming makes use of nutrients in the soil such as nutrient cycling, nitrogen fixation and soil regeneration.

References

Venice-Afable., M (2019). Health-Conscious Consumers and the Demand for Holistic Nutrition Health-Conscious Consumers and the Demand for Holistic Nutrition. https://www.boldbusiness.com/health/health-conscious-consumers-demand-holistic-nutrition/

Vimalathasan., V& Putros., K (2018).  Beyond Meat: Changing Consumers’ Meat Preference. Richard Ivey School of Business Foundation. https://www.homeworkmarket.com/files/beyondmeat-pdf

Public Report (2019). Appetite fir Disruption. Fair A Coller Initiative. https://cdn.fairr.org/2019/07/24112310/FAIRR_Appetite_For_Disruption_Public_24_July_20191.pdf

Gold., M (2009). The Global Benefits Of Eating Less Meat. A report by Compassion in World Farming Trust. https://www.ciwf.org.uk/media/3817742/global-benefits-of-eating-less-meat.pdf

Porter, M. E. (1998), Competitive Strategy: Techniques for Analyzing Industries and Competitors