Subject: Marketing Essentials

Module code: MOD001027

Munchys

Name: Chin Tong Sin

Student ID: A3953

Due date: 13th May 2016

Lecturer name: Ms. Gomala

Acknowledgement

I wish to my deep gratitude and sincere thanks to our Marketing Essentials lecturer,Ms.
Gomala for her invaluable guidance, constant encouragement, constructive comments,
sympathetic attitudes and also passion which has sustained my efforts at all stages of this project,
Munchys, and let me came know about so many new things. Her invaluable advice and suggestion
for the corrections did enhance to performing my project well.

Besides that, I would like to thanks my friends who always helping me when I have
problems while doing this project. Thanks to their passion and advises to let me done my project
in short period of time.

Finally, I would also like to thank all of my classmates who giving their time to listen my
presentation of this project.
 Table of Content Page

1.0 Mission Statement................................................................................................................ 5

2.0 Current Market Position....................................................................................................... 5
2.1 Product .................................................................................................................................. 6
2.2 Place ...................................................................................................................................... 7
2.3 Price....................................................................................................................................... 8
2.4 Promotion .............................................................................................................................. 8
2.5 People .................................................................................................................................... 8
2.6 Physical Evidence ................................................................................................................. 9
3.0 Market Overview ................................................................................................................. 9
4.0 SWOT Analysis of Munchys ............................................................................................ 10
4.1 Strengths ......................................................................................................................... 10
4.2 Weaknesses .................................................................................................................... 10
4.3 Opportunities .................................................................................................................. 11
4.4 Threats ................................................................................................................................. 11
4.4 Key Issue ........................................................................................................................ 11
4.6 Key Opportunities ............................................................................................................... 12
4.7 Competitor Analysis ............................................................................................................ 12
5.0 Assumptions....................................................................................................................... 13
6.0 Objectives ............................................................................................................................... 14
6.1 Sales .................................................................................................................................... 14
7.0 Strategy ................................................................................................................................... 14
7.1 Strategy Introduction ........................................................................................................... 14
7.2 Target Market ...................................................................................................................... 14
7.2.1 Market Segmentation ................................................................................................... 14
7.3 Branding Strategy................................................................................................................ 15
7.4 Product Strategy .................................................................................................................. 15
7.5 Pricing Strategy ................................................................................................................... 16
7.7 Promotional Strategy ........................................................................................................... 16
7.7.1 Advertising Strategy .................................................................................................... 16
7.7.2 Sales promotion strategy .................................................................................................. 16
7.7.3 Sales Strategy ................................................................................................................... 17
8.0 Business growth and development.......................................................................................... 17
9.0 Financial Forecast ................................................................................................................... 18
9.1 Marginal Cost Statement ..................................................................................................... 19
9.2 Income Statement ................................................................................................................ 20
References ..................................................................................................................................... 21
1.0 Mission Statement

To provide fun, cheeky, yummylicious, and affordable biscuits and snacks for everybody
around the world. (Munchy's, 2011) The company wants to add flavors to every persons event
with their snacks and bring more joy to them in the same time. The company always putting their
consumer at the first place to have a good understanding of their consumers need and lifestyle to
provide products and services that are relevant to their consumer needs and wants. The aim of
Munchys is to be innovative, relevant and unique to their customers. (Share, 2015)

2.0 Current Market Position

After they put fully effort to produce their best quality products, Munchys has become
Malaysias No.1 home-grown biscuit brand during the beginning of their production. During
1997 till 1998, the company faced a big problem from their financial. In that time, Munchys
joined Taipan 2009 which provide strategies and methods to the company to go through Global
Financial Crisis. (UKEssays, 2015) Therefore, Munchys have lots of experience in their
business throughout these 25 years. Today, Munchys products can be found in approximately in
60 countries. In 2011, the company has acquired as a second largest biscuit business in
Shandong, China. (Cha, 2013) Furthermore, Munchys products can be found in in almost
20,000 outlets in whole Malaysia which includes the international and local chains supermarkets
and Pharmacy.
2.1 Product
The product that manufactured by the company is basically snack food which are
biscuits, wafers, wafers sticks and crackers in six categories of products, which are sandwiches,
crackers wafers, chocolate-based, plain sweet, and cookies. (Nanthini-rao, 2014) The main
products include Captain Munch Cookies, Munchys Cream Crackers, LEXUS sandwich
biscuits, MUZIC Wafer and Oat Krunch. (Xian, 2013)

Figure 1

Munchys uses the finest materials to produce their products and there are no
preservatives in any Munchys products. (Munchy's, 2011) Munchys have Quality Assurance
and Quality Control Department to ensure that the manufacture procedures that are in place are
repetitively follow to the international standards which received from official certification that
set by many supervisory boards. (Munchy's, 2011)These standards are included HALAL and
ISO 9001: 2000 certification and also certification from HACCP (Hazard Analysis Critical
Control Point), and BRC (British Retail Consortium). (Munchy's, 2011) Munchys take their
HALAL status very serious and they have a dedicated agency that deals with all of their products
are Halal. (Munchy's, 2011)

There are three competitors against to Munchys which have their own strengthens and
weaknesses. The competitors for Munchys are Oreo, IKO and Hup Seng. (Lee, 2013)
2.2 Place
Munchys products can be found in almost 20,000 outlets in whole Malaysia which
includes the international and local chains supermarkets and Pharmacy. (KATJIVENA, 2016)For
examples, TESCO, Giant, AEON, 7-Eleven, and Watsons. Besides that, there are total 11 HQs
and branches in Malaysia. (Munchy's, 2011) The branches of Munchys are located in
Butterworth, Kota Bahru, Ipoh, Kuantan, Sabah, and Sarawak and whereby the two HQs is
located in Batu Pahat and Klang. (Munchy's, 2011)

Meanwhile, there are overseas distributors of Munchys which located in 23 different

countries. These countries are Australia, Hong Kong, China and many other countries.
(Munchy's, 2011)

Today, Munchys boasts the highest level of general development production plant and
warehouse facilities that covers more than 400.000 sq. ft. in Batu Pahat, Johor, Malaysia.
(Nanthini-rao, 2014)The area of these facilities are more than 300,000 sq. ft. and it is outfitted
with two wafer plants, four biscuit plants and four wafer stick machines. (Nanthini-rao, 2014)
Munchys also have a 120,000 sq. ft. warehouse which built and operates according to
international warehousing standards. (Munchy's, 2011)The warehouse is built with fully
automated wafer technology. Then, in the year 2011, the company have the second largest
biscuit industry in Shandong, China. The below picture is the warehouse in Batu Pahat, Johor.

Figure 2
2.3 Price
The pricing strategy of Munchys is presently considered an odd-even pricing.
(Nanthini-rao, 2014)The price of the products is cheaper and also better quality compare to other
competitors. (Nanthini-rao, 2014)Basically, the products of Munchys will be placed closely
with their direct competitors on the shelves in the stores to convenient the customers from
differences the price and quality among the products. (Nanthini-rao, 2014) But the pricing
strategy will change depends on the market changes. Therefore, the management of pricing
strategy is very important to aware that their current pricing within the other biscuit industries is
appropriate. (Nanthini-rao, 2014)

2.4 Promotion
Munchys usually will renovate the packaging and adding new flavours for their new
products to create awareness to the customers. It is a push and pull strategy to maximize the new
product. The example for push strategy is the packaging makeover and introducing of new flavours
to create awareness of Oat Krunch. (Nanthini-rao, 2014)Besides that, Munchys proposed a new
concept called lunch time Oat Krunch snack pack. After merchandising and training from, this
product will introduce to the public and store level. (Nanthini-rao, 2014)When the product is
introduced, there will have promotions and free taste testing in the stores to maximize the
awareness of the new product. Meanwhile, Munchys give out the promotional packets and the
pull strategy will starts through different advertising campaigns to gain customers interest. In the
end, these strategies will leading a clear awareness for the customers about the new product.
(Nanthini-rao, 2014)

2.5 People
Munchys believe that their employees is important in the process of producing products.
Therefore, the working environment is important for their employees which would be a growing
pool for their talent. (Munchy's, 2011) Two of their core values is innovative and teamwork
which results them improve and build upon each others strengths to form and preserved the
companys playground idea and helping others to reach their highest potential. (Munchy's,
2011)They consider the attitude of the employee is the most important part to work in their
company. They prefer people who have the right skills and the motivation to drive for success to
work in their company. (Munchy's, 2011)Besides that, Munchys also looking at people who
enables to create ideas to form true competitive advantage which can maintain the outstanding
performance of their company. (Munchy's, 2011)

2.6 Physical Evidence

Munchys believe that their employee is important in producing Munchys biscuit,
therefore the working environment in Munchys is like a playground (as shown in below).
(Munchy's, 2011)

Figure 3

The company gives special services to their staff once a month when they purchase
Munchys product in the first week of the month and free deliver in the end of second week.
Besides that, employees will have 25% discount with maximum RM200 per month. (Cha, 2013)
If there are festive in the month, Munchys will expand their limit to RM400. (Cha,
2013)Furthermore, Munchys also taking care the health of the employees by subsidize them
50% of the monthly gym fee in Chi which located in Centro Mall, Klang. (Cha, 2013)

3.0 Market Overview

C.K Tan, who is the companys CEO, believed that branding and computerization and
technology will gain benefits to their business. (Xian, 2013)He spent RM500, 000 on IT systems
for Munchys in 1997 and now, he is still investing on it to make the production of company more
efficient. (Xian, 2013)

Furthermore, Munchys also promote their brand to the public by the sponsorship.
(Nanthini-rao, 2014)For example, Munchys has been the sponsor which organized by top event
and concert organizers, radio, and television station. (SuperBrands, 2016) This make the brand
image of Munchys become easier to recognize due to the high quality products which they
offered. (SuperBrands, 2016)
4.0 SWOT Analysis of Munchys

4.1 Strengths
Munchys have a number of strengths, which is:

Focus on fast growing sectors such as snacks, beverages, and convenient meals.

Deliver consumer needs of health and wellness.

Expanding their recognition by distribution channels rapidly.

Established and well-known brand in Malaysia.

Keep developing and strong company.

Large market

4.2 Weaknesses
Munchys has some areas needed to improve, there are:

The ingredients for produce healthy foods are expensive. Therefore, the cost of production is
high.

Lack of new products because too focus on packaging and promoting.

Only selling biscuits and snacks.
4.3 Opportunities
The reasons why Munchys is recognized by the consumers and have a well-known brand in
Malaysia are:

Awareness among other biscuit industries.

Giving taste test and promotional packs to customers.

Attractive packaging and advertisements.

Satisfied the needs and wants of the consumers which is in different age. For example, kids
prefer Captain Munch Cookies and customers which concerns about health prefer Oat
Krunch.
Inspire new market.
Easy to find in almost every stores.

Availability of warehouse not only in Malaysia but other countries too.

4.4 Threats
Munchys need to be aware of and overcome the following threats:

Competitors in the industry.

Increasing the cost of packaging, equipment and advertising.

Other recognition company which has similar product with Munchys.

More choices of biscuits enter the market.

4.4 Key Issue

From SWOT, there are identified important issues need to be consider:

The cost of production.

Lacking of new products.
More competitors in the industry.
Need to compete with the competitors which have similar products with Munchys.
4.6 Key Opportunities
Popularity of Munchys.
Convenient customers to find the products in almost everywhere.
Fully utilize technology and automation to promote and stable the companys awareness and
production.
Warehouse available in Malaysia and also other countries.
Various types of biscuits attracts different age and needs of consumers.

4.7 Competitor Analysis

There are three competitors of Munchys in the industry. The first competitor is Oreo which
is a US style sandwich cookie. (Lee, 2013) It was developed by the National Biscuit Company.
Besides that, it is known as the worlds bestselling cookie which can be found in more than 100
countries due to their popularity. (Lee, 2013) In the same time, it is also very easy to find in
almost every single shop. Although Oreo is well known as Munchys, the products fat and
calories is very high compare to Munchys product. (Lee, 2013)The consumer which is concern
about health nowadays will not prefer to buy it. Besides that, Oreo have limited capability to set
their price higher because of the low price of competitor.

The second competitor of Munchys is IKO which started the business since 1987. (Nanthini-
rao, 2014)It produce original oat biscuits and have various types of oat biscuits which is same as
Munchys Oat Krunch. Besides that, it also can find easily in supermarkets. But IKO only sells
oat biscuit and Munchys have various types of biscuits like Captain Munch Cookies. In the
same time, the price of IKO is more expensive than Munchys. For example, the Assorted Oat
Calcium Cracker is sell at RM9.75 with 490g but Munchys Oat Krunch with 500g is only sell at
RM 8.90. (Nanthini-rao, 2014)Furthermore, the popularity of IKO is also lower than Munchys.

The last competitor is Hup Seng, the one oldest biscuit company in Malaysia. Hup Seng is
the market leader in crackers. (Seng, 2016)40% of the sales is from their cream crackers which
only consist of flour, sugar and palm oil. They promote their brand in social network but it is not
aware by the consumers. Recently, they have launched oat cookies with three flavors (original,
chocolate chips and chocolate chips with hazelnut). (Seng, 2016) They always having a good
quality and affordable price, but it is lack of flavors, promotion and also events.
5.0 Assumptions
Due to the reason that Munchys always putting full attention in computerization and
packaging and it is lack of new category of products, the company wants to launch a new
merchandise to the market, which is cereal. Today, the public is more concerns about health and
wellness, therefore the food that taken in a day will also being concern in the same time. The
name of the cereal product is Munch Munch which is suitable for kids and also adults. It is a
healthy cereal which contains whole grain oats, wheat, fruit pieces and almond with only 1g of
fats, 5g of dietary fibre, Iron, and Vitamin A, D and E with one cup of serving. There will have
two types of fruits slices launching, which is mix dried blueberries and raspberries slices and
honey coated cereals with raisin. Munchys believe that launching Munch Munch in the
market will increase the level of awareness from the consumers and the loyal customers will
regain interest into the companys product simultaneously. Besides that, to produce Munch
Munch, Munchys no need to change the materials and equipment which means it does not
increases the cost of production while launching a new product.This launching is also aimed to
attract new groups of customers who will makes the profit of the company increases. It is easy to
eat by just adding any milk of consumers favourite. Furthermore, there will have small pack of
Munch Munch which convenient customers to have a quick meal in the rush time. Munch
Munch can eat as a breakfast but also snacks. For example, Munch Munch can be eat with
yoghurt and fresh fruits which is a healthy snack meal. Consumer who are having a diet and
wanted a low calories meal is also suitable to have it. Whole grain oat can help to boost up the
metabolism of the body and berries which adding sweetness into the cereal is also an antioxidant
fruit that is good for health.
6.0 Objectives
6.1 Sales
In this 6 months, Munchys will:

Aim to gain new groups of customers

Increases their profits.

7.0 Strategy
7.1 Strategy Introduction
Strategy is a strategic management process which developed by organization to plan the
performance of the company in a long term to achieve the mission and objectives of the
company. (Nanthini-rao, 2014)With this process, the company will have a clear set of
recommendations to accomplish their goals. (Nanthini-rao, 2014)

There are various types of strategy and in this case, Munchys is using target market,
branding strategy, product strategy, pricing strategy, distribution strategy, and promotional
strategy to sale Munch Munch.

7.2 Target Market

7.2.1 Market Segmentation

Demographic Segmentation

The examples of demographics are gender, age, culture, education and income of the
people to purchase a product. (Nanthini-rao, 2014)The launching of Munch Munch is targeting
18 to 35 age of women who are concerns about the healthy food intake and who are the person in
charge within the home to control the familys food. Besides that, Munch Munch also targeted
working adults who always busying in their working lifestyle but also who are conscious about
their health. Customers who concerns about a balance die is also a target to this new product.
 Psychographic Segmentation

Psychographic segmentation revolves lifestyles, personality and motivations of

customers. (Nanthini-rao, 2014) Due to the increase of the awareness for health and wellness, the
public has made lifestyle changes within the last few years which introduce more information
and ways to maintain a healthy lifestyle. Therefore, this is a good opportunity for Munch
Munch to launch in the market.

7.3 Branding Strategy

The consciousness about the packaging of Munchys results that their name and logo on
the packaging is being recognizable by the public through research. It is a red planet logo (Figure
4) which place at the top left side of every product. Therefore, to maintain the awareness, the
logo will also be placed on the packaging of Munch Munch to convenient customers to
recognize companys new product. In the same time, there will have a picture (Figure 5) on the
packaging to show customers what ingredients is in the package.

Figure 4 Figure 5

7.4 Product Strategy

The new product is cereal which named Munch Munch. It is a healthy and
convenient food which matches the current trend of today. Therefore, the healthy and
nutritionists of it is the selling point.
 7.5 Pricing Strategy
I. The price will be include 6% establishment GST
II. The price will lower than other competitors.
III. Price will be set at RM18 for 400g.

7.6 Distribution Strategy

Munch Munch will be send to the retailers from the factory depends at which states in
Malaysia. The main method of distribution is through large hypermarket chains which is
TESCO, Giant and supermarkets such as 7-Eleven and 99 mart and also small grocery shops
which situated in almost every town in Malaysia which means it is covering a wide range of
locations.

7.7 Promotional Strategy

7.7.1 Advertising Strategy
Online Network

Will run advertisements in Facebook and YouTube which most of the people will often
use in a day.

Television

Advertising in networks through ASTRO include (TV1, 2, 3, and NTV 7) Zee, AXN,
AFC and MTV. Mostly of the target consumers were watching these stations during the
weekends and during holidays, therefore it would help us to create awareness to the public.

7.7.2 Sales promotion strategy

Munchys will implemented push and pull strategy to promote. There will have
packaging makeover and free taste testing in stores. Meanwhile, there will have advertisement
through billboards, poster, TV, and internet. The billboard is design by Skyboard Media Sdn Bhd
which located in Lebuh Bandar Utama.
 7.7.3 Sales Strategy
Initially, there will have training for staff to have the skills to promote the products in
store. There will be at least one sales person working in the hypermarkets. The staff will have a
little booth in the hypermarket and giving free taste testing to the customers. Meanwhile, website
advertising will be in Facebook and YouTube which most of the public uses it in a day.

7.7.4 Packaging Strategy

The packaging for Munch Munch will be white and blue colour and it has a picture of
the cereal on it which shows clear set of the product. The cereal will be packed into aluminium
bag and then put into a recyclables box to protect the product against environmental conditions.

8.0 Business growth and development

The launching of Munch Munch is expected to gain a new group of customers and
profits for the company. It is a new category of product for Munchys and there will be more in
the future. The promotional strategy will be continue for 6 months to have a firm awareness to
the public. Furthermore, if the product is demanded in the market, Munchys will probably
launch a new flavour of it to provide more choices to their customers.
9.0 Financial Forecast

Variable cost: RM
(i)Direct materials : whole grain oats 2
(per unit) wheat 2
fruit slices 1
sugar 1
aluminium package 2
recyclable paper box 1
total 9

(Iii)Direct labour: =RM 5

(per unit)
Total
variable cost= Direct materials + direct labour

=RM9 + RM5
=RM14per unit
RM
Fixed cost: Rental of the little booth (RM200 per month) 1200
Depreciation on machinery (RM500 per month) 3000
Utilities (RM300 per month) 1800

Total 6000
9.1 Marginal Cost Statement

Munch Munch
Marginal cost statement
RM RM
(per (5,000 units)
unit)
Sales 18.5 92,500
Less: cost of sales
Variable cost 14 70,000
Contribution 4.5 22,500
Less: Fixed cost
Rental of the little booth 1,200
Depreciation on machinery 3,000
Utilities 1,800
Profit/ (loss) 3,000
9.2 Income Statement

Munch Munch
Income Statement for the year ended 31 October 2016
RM RM
Sales 92,500
Less: Cost of Sales
Purchases 45,000
Less: Closing 2,900
Inventory
Total Cost of Sales 42,100
Gross Profit 50,400

Operating Expenses
Rental of the little 1,200
booth
Depreciation on 3,000
machinery
Utilities 1,800

\ 6,000
Net profit 44,400
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