SummaryOverviewThe company Hydro Can is planning to launch a new type of lawn car product called "Sta Green." They have hired a consulting group called "Stone Age Marketing Consultants" to create a marketing plan to launch there new product. They can't decide between launching the product to the consumer market or the commercial market. So research is conducted on both markets to determine where the product should be marketed to. The Product The Sta Green is a chemical fertilizer created to improve your lawn but with a unique benefit that no other lawn care product has. The fertilizer reduces the need for manual watering on most types of grass by 40%.
The Consumer Market The consumer lawn care market is a very pricey market with Canadians spending $2. 3 billion in 1995. Not only does the consumer market have high spending, it also has high competition. Sta Green's competitors would be "Scott's Turf Builder", "Scott's Miracle-Gro", and "Ortho." These three products control 50% of the total consumer market. Lawn care products are mainly sold in three types of stores; discount stores, specialty stores, and home improvement stores.
The most lucrative of the three are discount stores because in 1994-1995 it is estimated that 60% of fertilizer sales were purchased in discount stores. This is a large comparison to 30% in specialty stores and 10% in home improvement stores. The Commercial Market The commercial market is mainly fixed of Golf courses but also includes office properties and apartment complexes. Golf courses are being blamed for groundwater pollution and owners are looking for new ways to reduce this problem. Sta Green will statistically reduce water usage by 1/2 and fertilizer usage by 1/3. The apartment and office complex market are about 1/8 the size of the Golf course market.
They also do not face the same pollution issues that Golf course owners face. They tend to purchase lawn care products in bulk because they are not used nearly as much as Golf courses. Conclusion The Sta Green product is torn between two options; the consumer market or the commercial market. Both markets have pro's and con's that can benefit the product and with the research collected the Hydro Can company can come to a conclusion on which market is right for them. Problem The problem faced by Hydro Can and Stone Age Marketing is in what market should Sta Green be promoted in? Should it be the consumer market? the commercial market? or both markets? That is the problem faced.
S. W. O. T Strengths- The option to market the product in the commercial market, the consumer market, or both markets- Sta Green reduces the need for manual watering on most types of grass by 40%- fertilization by 1/3 and water usage by 1/2 Weaknesses- Hydro Can management is strongly divided between marketing in commercial or consumer- Sta Green is entering very competitive market (50% is already controlled by two companies) - Tight on money expenses Opportunities- The consumer market is not a brand name market.
Consumer purchase more on in store promotions and sales staff recommendations- Sta Green reduces fertilization by 1/3 and water usage by 1/2 which is an opportunity with Golf courses because of high ground water pollution Threats- Other established lawn care products like Scott's and Ortho- entering a competitive market with consumers- Golf courses are very brand loyal and rarely switch lawn care productsAlternativesCons- If Sta Green markets in the consumer market they will lose money in there first year. To breakeven 60 608 bags of 10 kg Sta Green must be sold a year. Sta Green only has the capacity to make 21 600 bags a year. Therefore that is a loss of $882 200. - If Sta green markets in the commercial industry they will also lose money in there first year. To breakeven 5 422 bags of 50 kg Sta Green must be sold a year.
Sta Green can only make 3 600 bags a year. Therefore they will lose $273 200 in there first year. - The lawn care market only sells in the summer months because of the different weather conditions of Canada. Sta Green will be entering a market with very high and low periods of revenue. Pros- If Sta Green markets in the commercial market they will lose a significantly less amount of money compared to if they were entering the consumer market.
- The commercial market does have 50% open market so there is a higher chance of gaining market share quickly. - The consumer market is not a brand loyal market so it will be easier to put Sta Green into the market compared to the highly brand loyal commercial market.