Marketing Mix: Place

The "Place" component of the marketing mix is mainly about distribution. It is important to provide the product at the right "place", which is convenient for consumers to access. With regard to the recent development of the Internet being the distribution channel as well as taking into account the age and shopping behavior of Ambro's main target group, it seems very reasonable to market their product online.

Distribution channels
Ambro currently only sells their product at their own website. This seems to be a cost-effective and suitable strategy for the moment. The main benefit of internet-based distribution according to Olsen (1998) are the following:

• Drive revenues up by extending the company's reach to broader, more global markets
• Reduce costs by bypassing traditional distribution channels by avoiding commissions, and lowering transaction fees 
• Enhance customer experience by providing more and better information with multimedia.

A major disadvantage of online sales is the fact that the customer lose face to face contact with the product and the value provider. However, we have found that Americans have an increased desire to order items online. Therefore, it can be concluded that the average American consider the benefits of internet-based distribution for retailers to be significantly higher than its costs.

In the longer term, Ambro wishes to expand to larger retail websites online. These websites will have the capacity to facilitate to the increased demand for Ambro at that point of time. Potential websites to look at are Amazon, AmericaGrocer and Walmart.

As for the retail stores, Ambro would receive substantial in store promotion if it was present in these traditional brick and mortar stores. However, the current margins retailers charge are too high. This will drive up Ambro's retail price, placing the product out of financial reach for most of the US consumers. Driving down Ambro's production costs should be achieved before considering such a move to the retail stores.

Sources:

• Olsen, M.D., et al, (1998), 'The internet as a distribution channel', Cornell Hospitality Quarterly,  vol. 39 no. 4 42-54
• Delivering Services via Internet: New Distribution Channel for Traditional Services; Zagreb International Review of Economics and Business, 2004, vol. 7, issue Special Conference Issue, pages 141-152

Marketing Mix: Price

Current and future pricing

As discussed earlier, Ambro’s current price for one package is 79€ (including international shipping). For two packages, customers pay 119€ during the pre-sales phase. With one package, you are able to make 7.5 full meals or 15 breakfasts, making one full meal cost 10.53€ or 7.93€, respectively.

A non-negligible part of the price is caused by international shipping costs, which are quite expensive. In order to cut these costs and to offer smaller, easier-to-use packages to consumers, one of Ambro’s short-term goals should be to find local production partners. Thereby, they will be able to offer the product on a much lower price. Our estimate for this new price is 50€ per package, making one meal cost 6,67€.

Comparison with substitutes

Soylent, which we view as the closest available substitute for Ambro, is much cheaper. “A week’s worth” (21 meals) package costs about 48€ ($65), resulting in a price of 2.29€ per meal. This means that Ambro, even considering the new estimated price for the US, is more than double the price of Soylent. However, one needs to keep in mind that Soylent is no direct competitor; a significant difference to Ambro is that Soylent is not organic.

A price comparison to other substitutes, such as easy-to-take along snacks, seems rather difficult. They might be cheaper but their nutritional value may, even if they are combined to form a full meal, stay a lot lower than Ambro’s. Rather, we compare Ambro to the popular U.S. meal substituting dietary shakes. If we plot Ambro against these competitors in a Price / Organic quality matrix (and against the U.S. averages) we see the following:

First a short explanation. The official definition of organic products is: a labeling term that refers to an agricultural product produced in accordance with the regulations of the National Organic Program in the United States. This mainly refers to the production process. Organic products become more and more prevalent in United States supermarkets. Both Soylent and IdealShape are products which are cheap and rely heavily on the use of chemicals and therefore not organic. The price is based on US averages and the average of one meal over the whole product range of the different brands.

When we want to compare these products it is important to note that they all serve a different industry, IdealShape is focused on dietary products and although Ambro and Soylent will be most likely labeled to this segment by the FDA, they are no dietary  products, but rather serve different needs as discussed before. As can be seen, Ambro is priced rather premium, but is still cheaper than a regular U.S. meal. Considering the fact that most organic meals are more expensive than regular ones, we could safely state that Ambro is a relatively cheap meal substitution.

Why premium pricing?

As mentioned before, Ambro is following a Blue Ocean Strategy by creating a new market. Ambro will be the first healthy meal substitute. As a first mover, the company can set the price without heavily considering competitors' prices. However, not only competitors but also substitutes must be taken into account; compared to substitutes, Ambro is offered at a premium price.

This pricing strategy can be justified by the following reasons:

• Ambro's main target group are high-income earners
• Ambro is a high-quality convenience product
• The organic food category is supposed to continue to grow; people are willing to pay more for healthy, organic food

Marketing Mix: Promotion

Here we want to answer how promotion of Ambro should be carried out – where and when to do marketing to reach our target group.

Marketing channels

Internet: social media

Firstly, we think that internet is the prime advertising channel for Ambro to use. As a totally new, niche market product with no direct competitors, it is important for Ambro to get some opinion leaders to market their product. These opinion leaders would be successful and extremely busy business people interested in healthy lifestyle and who blog regularly. Such bloggers are Timothy Ferriss (Fourhourworkweek) and Dave Asprey (The Bulletproof Executive), which were both mentioned by Ambro’s founders. Other bloggers to contact would be those successful bloggers on the Digital100 Power Index.

Ambro could try to get their attention multiple ways:

• Give free samples to the bloggers
• Engage beta users to write on online forums on busy but healthy lifestyle and participate in these as well
• Acquire meetings with influential people known for blogging when visiting Stanford University with the Start-up Sauna program in January

At the moment Ambro has around 120 beta users, some in the US as well.  Getting them to praise Ambro on online forums is very important in terms of Word-of-mouth – health enthusiasts, especially those with busy life, are likely to rely on recommendations by other people. Also other social media channels such as Youtube could be used for building awareness of meal substitutes. In addition, Ambro could advertise on facebook since that is often quite cost-efficient – and may reach lots of people with interest in their product.

PR

As a new product, it is important for Ambro to get publicity through different online newspapers/magazines in the areas of technology, start-ups, healthy lifestyle etc., to reach the innovators and early adopters of a new product. Ambro has already received some media coverage on Wired and Business Insider. Other very influential magazines to get articles on would be Discover or other online tech newspapers covering new technology trends. Such articles are extremely important for marketing – therefore, Ambro should be sure to contact such magazines, give ideas for articles and be present at important innovator events, from where they could acquire media presence.

Speaker events

Ambro recently attended Slush, a startup event in Finland. The objective of the event was to meet investors as well as spread the word of Ambro. The group should look for similar local events in the big cities of US, especially our first target region San Francisco West Bay area. The event could be such that are meant for startup or even ones meant for promoting new ideas (such as in TEDx events) – for Ambro meaning promoting the organic food substitutes to be able to live healthy and feel good despite extremely busy jobs.

Naturally, all these promotion ways should be continued also after the launch, but these are especially important before launching the product as well.

Marketing campaign

As the financial districts are the best locations for reaching extremely busy business people, we suggest Ambro to make physical marketing campaigns in these areas during lunch times – by giving free samples. Naturally, Ambro cannot spend too much on free samples due to high production costs, but the positive outcomes are likely to beat the losses – after all, Ambro needs get visibility among the business people.

Website and social media channels

Time of promotion

Timing of promotion depends heavily on Ambro’s final decision of their launch date. Online promotion for raising awareness should be started right away – there can never be enough of awareness of a new product. Attending of speaker events is only possible to do when in the country; with their current plans, this would mean in the beginning of 2014. However, they should already be in touch with any organizers. Physical marketing campaigns should be made at the time of launch. 

Marketing messages
In all of their marketing messages, Ambro should communicate the product's core attributes for the consumers - making food easier, quicker and healthier. This should apply to those professionals in extremely busy jobs who

1. need to save time
2. want to eat healthy
3. want to feel good 

Thus, we believe these core values should be used in all marketing actions:
Time-saving, healthy, wellbeing

Other notes

We decided Ambro should not offer discounts on the product at this point, since this might hurt the image of the premium product. Production and other operating costs may be quite high in the beginning, which also suggests not cutting the price down.

Marketing Mix: Product

When are which needs addressed?

Well, as is mentioned in positioning, Ambro is targeted at the busy but health-conscious people. So it satisfies the need for a quick lunch, which means that it actually provides consumers the time lost with having a regular or even fast food lunch since Ambro could be easily made and be consumed on the go. Besides, Ambro satisfies the need for healthy food – an optimized portion provides both men and women with all the healthy, nutritious ingredients of a perfect meal. 

But is this linkage clear enough? Are organic foods healthy? The topic is subject to discussions lately, but the most important blogs (like this one, this one or this one) tend to positively answer this question and rely themselves therefore amongst others on this Newcastle research, even though a Stanford Analysis seems to oppose it (which in turn is again opposed here). Apart from academic research, many consumers live with the simple heuristic that organic food means also healthy food, so therefore we think marketing Ambro as organic will appeal to health fanatics.

Our target customers can use Ambro as a replacement for breakfast, lunch or dinner. Ambro could be used as a replacement for any of them. However, research shows that most U.S. citizens regularly skip breakfast. Therefore, Ambro could be the most convenient solution for breakfast skipping while simply consuming it on the way. However, it is just as likely that business people need a quick lunch, or work late and miss a good dinner later the day. In those cases, Ambro provides a healtheir solution than fast food or simple sandwiches.

Product Features

So far, the product consists of a powder that is sold in big bags of 8 meals. One meal always accounts for two breakfasts. The powder itself provides the specific ingredients, but consumers still need to scoop and mix the product themselves.

Since Ambro is a higher-than-average priced product (see the other post), it is important that the texture and layout of the package carry distinctive features that promote Ambro’s premium positioning. This can be reached through using high-end materials, and/or carefully designed packages that support the product image. For example the brand Innocent produces premium smoothies and communicates a playful brand image through their layout and premium package materials.

Possible Product Improvement

A possible improvement could lie in creating one-portion packages, so that people do not need to worry about amounts anymore. To even increase simplicity, these packages could be made in a way that users can open the package, add the water, close the package, shake, and consume. The package might look something like this:

The first package should have some resealing mechanism on top so that consumers can add water, close the package, shake, and consume. The second package however, should have some folding feature so that consumers can unfold it, add water, put the cap on, shake and consume. The third package would use the same mechanism as the first but with a different material.

Blue Ocean Strategy

In fact, Ambro does not particularly face competition but rather enters a whole new market. In other words, Ambro creates a blue ocean strategy. Ambro renders competition irrelevant by creating a leap value for both themselves as well as the customer. While meal replacements already exist, Ambro is the first one using organic and healthy ingredients. This drives up the price as well, leaving greater potential for operating profit. So with regards to competition, Ambro will be the very first healthy meal substitute, and ideally, Ambro will also be easier to use than competitive products.

Ambro’s cost are high though (which is different from traditional Blue Ocean Strategy) but this is only due to the use of specific ingredients. When the product attracts an initial customer base, opportunities for cheaper ingredient growing and processing could be slowly adapted via economies of scale so that Ambro in the end appeals to a larger customer base. Regarding regular meals on the other hand, Ambro is still cheaper - let alone a regular organic meal.

Sources

Kim, W.C. & Mauborgne, R. (2004). Blue Ocean Strategy. Harvard Business Review, 69-80.