Launching New Mini Home-based Smart Farm for Ginseng (“The Machine”)

1.0    Introduction and Product Description

Ortritious Pte. Ltd. is a Singapore-based company that supplies ginseng to distributors and consumers directly. They are the first ginseng farm to be licensed in Southeast Asia. It is important to regulate the temperature, humidity and accelerate growth of its sprout plus harvesting within four short weeks. Ginseng sprouts produce more saponins than its matured cousin (Song, et al., 2019) which is the core benefit of ingesting ginseng. To make ginseng even fresher, we are looking to launch The Machine that can fit into most homes with all the abilities of a fully functional ginseng farm.

2.0    A Critical Analysis of the Market Context

2.1    Host Country

PESTEL analysis will be used in this section to determine the macroeconomics factors’ fitness (Yüksel, 2012). Technology, Environmental and Legal are minor factors that will be disregarded as The Machine has multiple manufacturers that are not made of advanced science, it can create its own atmosphere with green initiative and is not a regulated item.

In political terms, Singapore is one of the countries with the most complete set of laws and is known for her rigidity when it comes to enforcing them. Food and water are the fundamental needs so there is tight regulation on all consumables. Multiple layers of licensing and testing are required before any consumable can hit the market. One machine will need several food and fire-safety licences which may pose an issue when huge numbers of machines are deployed and have a change in regulations. Occasionally, the government will issue grants for good initiatives on healthy eating.

Economics influences the buying power of middle-class families on The Machine. It is a high-ticket item so people may buy it to impress their peers or get their ego boosted by owning a piece of Korea’s signature. Bad economics will impact the leasing revenue for rental models, provided there are prior investors willing to bulk import The Machine. Additional revenue includes servicing and sales of seedings will also be affected if they purchased the machine and leave it dormant.

The upper social class is our key customer. Having live crops in their kitchen is a more-than-affordable lifestyle. They are health advocates and they would spend money to enjoy the best. High-end products surprisingly continue to be consumed by the rich during recession (Hassan, et al., 2015). The Machine will be similar to a rich man’s toy.

2.2    Host Industry

Porter’s five forces model will be used to identify the practical attractiveness of competition (Grundy, 2006). There are a total of three low, one moderate and one high threats pertaining to the launch of The Machine, it is highly potential as an emerging product (Omsa, et al., 2017).

Under industry rivalry it is a low threat as we are the first and by far only ginseng farm in Singapore with no strong players in the South-East Asia region. The Machine focuses on home units and its atmospheric settings are optimised for maximum survivability and accelerated growth of ginseng.

The bargaining power of customers is also classified to low threat as this is not a mass market product. Only surface information is available to the public while detailed specifications or functionalities will need input from the field expert. Price range is also not visible as all machines are highly configurable.

The last low threat is the bargaining power of suppliers. Our supplies come from Korea and fortunately, there are many non-associated vendors. With a little research and development, the parts can be manufactured in China too. As we have the full design blueprint, assembly and servicing can be performed locally by trained personnel too. 

Threat of new entrants is moderate here as this venture does not need high set up cost or deep knowledge. One example is China can quickly perform reverse engineering and penetrate our market with more affordable cost. However new licences will take at least 3 months to be ready, we have a proven track record for growing ginseng locally and the nutritional value is already tested for our specific setup.

Unfortunately, the threat of substitutes is high. Even though ginseng cannot grow under Singapore’s nature environment, consumers can import fresh ginseng from Korea within the same day. Alternate health food such as cordyceps can be grown here without sophisticated systems. There are also smaller or multi-purpose mini-farm available that provide a higher versatility.

2.3 Summary

From the above analysis, the opportunities outweigh the threats posed. Farming is greatly encouraged by the local government to achieve 30% inhouse crops production by 2030 (CNA, 2019). Being a country of low natural resources, the government is heavily funding firms involved with food production. We can partner with luxurious housing developers to include one machine in every home to exalt their units and for us to get bulk discounts with our suppliers, which in turn strengthen our relationship. To put the consumers’ mind at ease, we should provide free installation and three years servicing. We can also set up peer-to-peer channels for consumers to sell their extra growth where such sharing economy will also boost our branding effort (Eckhardt, et al., 2019). Rental, hire-purchase and loan schemes can be arranged to increase the affordability.

Threats are being scanned in relevance with today's market's context (Meredith, 2007). Due to different atmospheric settings like humidity, saltiness and temperature between Singapore and Korean, The Machine’s lifespan or working condition may vary. This could encourage competitions of building localised machines but could be solved by ploughing back some profit to improve our future units. Service staff with high experience can leave without proper handing over causing delayed maintenance schedules. We depend very much on the manufacturer’s service team and that gives an edge over us, we plan to train our own service team once a certain milestone is achieved. Customers may also order seedlings directly from overseas that will affect our secondary revenue source which engenders us to fortify our customer relationship.

Ethically, overconsumption of ginseng is not necessarily beneficial to health. We cannot directly address this to our consumers as that is our primary revenue source, that is why P2P channels should be established.

3.0    Segmentation, Targeting and Positioning (STP)

3.1    Segmentation

Hideous market segments will destroy even the best product (Camilleri, 2018). Creating an unerring segmentation will allow speed to market and save invaluable marketing resources.

The Machine will be suitable for dwellers living in the tropical region as ginseng cannot grow naturally in hot weather. To visibly see the benefits of ginseng, we are looking at age 40 or above and people with health issues such as erectile dysfunction, weak immune system and so on. It is ideal to have a retiree or semi-retired person residing in the same household who love gardening as certain light chores will still have to be done periodically. The person should have green fingers and does not mind repeating the process of seeding and harvesting monthly, perpetually. It gives the person a joy to experiment and tweak the conventional way of planting to create their masterpiece. They can also be keen health advocates who have a firm belief that health is wealth, which brings us to the next important topic – wealth. A recommended income of more than SGD500,000 or net-worth of SGD2,000,000 will be suitable. Their homes should be at least 200sqm, so it does not cramp up the space. Cities and towns with high GDP will be preferred especially areas of larger land mass with more landed houses. Educated and docile customers are crucial to intake the fact that ginseng sprout is better than old roots. They should have eccentric habits like being a perfectionist where they only want the best, the freshest and within their immediate reach (Henrich, et al., 2010). It is also important that they are effective and lazy in a good way, having the thoughts of paying any amount of money and having the entire concierge team taking care of things for them. In this way they will not circumvent us to source for cheaper servicing or seedlings.

3.2    Targeting

The primary reason for proceeding with concentration targeting strategy which is also known as micromarketing (Schlegelmilch, 2016) is to engage the clients with the highest efficiency and effectiveness. The limited marketing budget forces the strategy to be lean and precise. To be niche it means we can curate the variables to launch bespoke campaigns that can target more individuals personally. The group of clients we target will love to have special and exclusive attention who would like to think they received more attention than the others.

Our primarily clients will be the high-net-worth individuals or families situated in Singapore. The first phase is to create a local presence and once that is established, Kuala Lumpur and Bandar Seri Begawan will be targeted next. Kuala Lumpur has 13,800 millionaires (Malaymail, 2014) while Brunei’s GDP per capita is USD78,900 which is top ten in the world (Indexmundi, 2019). All countries and cities mentioned have high spending power and their common choice of home will be landed property, bungalow, detach house, mansion and villa – just to name a few. These are our perfect clients who have the buying capability and space to place The Machine. They are also hospitable who like to host parties or gatherings at least once a fortnight with different crowds. In this way they will get to exhibit their toy and increase the consumption of our ginseng. Another match will be a house of modern design or in high technology settings as The Machine will be fittingly complementary. The household member will have to consist of at least one domestic helper or elderly who can be trained to take care of the crops and make seedlings order via our web application.

3.3    Positioning

Figure 2. Ortritious Positioning Map

Majority basis of our mapping is perceptual positioning (Leuthesser, 1993) as we focus on the importance of health and a sense of upper social lifestyle. The secondary input with physical positioning (Herrmann & Huber, 2000) is on the volume of output the units can produce. Design is not a factor as home-based smart farming is relatively new, the semblance of one another’s unit will be near indistinguishable. The mapping is a comparison of competitors in multiple countries.

We want to be the market leader in terms of the crop's exoticness and its produce. Having the ability to produce ultra-rare crops with low yields is a short-term strategy as consumers will have a hard time justifying the return on investment of their purchase. It will not be wise to sell luxurious products without substance. Being conventional with any produce will enter the red ocean (Kim & Mauborgne, 2015) with many similar competitors. It also gives consumers a sense you get what you pay for a kind of standard which may diminish our product. The dream quadrant Is to produce ultra-high yields for self-sufficiency but it will not be anytime near.

The reason why consumers will choose us despite our price is that we offer the most balanced exotic-crop-to-produce ratio. It is not only a rich-man’s toy to hoard respect and also essentially, fulfil its full functionality to grow fresh healthy food from home. Proud owner of this unit will have ready ginseng anytime and as they see the entire growing process, it will give them the perception on how safe the crop is. This is a true alignment to our standard of living as we increasingly expect our sellers of any kind to be more transparent.

4.0    Recommended Extended Marketing Mix

4.1    Product

Product is the most important marketing mix for The Machine. It is a luxury item that requires high interactions with the customer to satisfy their potential requirements (Waterschoot & Bulte, 1992). To ensure our product belongs and will continue to stay in the top-end category, the quality, design and features are all state-of-the-art developments.

The core product of The Machine is to allow owners to enjoy fresh health food within immediate reach. It consists of eight actual products that are tangible and touchable. The Machine will be a compact rectangular container that is fully enclosed with ventilation and a touch of modern finishing. Programmable and powerful climate control unit is installed to provide suitable weather for the crops. It includes an air humidifier that keeps the humidity consistent throughout. To maximise planting capability, well-designed and food-safe aluminium racks and trays structure are in place. There will be a modest water reserve tank, a high pressure pump and comprehensive spray nozzles to hydrate the entire planting area. Optimised frequency spectrum of LED lights are equipped for accelerated output. It has weather-proof precise timer-control to automatically adjust the lights and pumps. Finally, the underneath single canal drainage system enables easy cleaning and maintenance. Most of the augmented features have already amalgamated with the actual product, there are still plausible additions. It has a mini fridge with recommended temperature to store the harvested sprouts. Every unit includes full installation and three years full servicing. We also commit same day seedlings delivery. Lastly, an online community will be established for customers to exchange tips or sell their excess reaps.

The importance of having product extensions is to let our customers know we are serious and are here to stay (Hamilton & Chernev, 2010; Abdolmalekia & Ahmadian, 2016), and that is why The Machine’s product roadmap will consist of three depths. Photovoltaic shingles system with battery packs to provide renewal energy. Atmospheric water generator to precipitate pure water for self-sufficiency. Fully automated planting and harvesting mechanism to produce the freshest yields. The width spreads to home farms that can plant other continental crops and we are also looking at home farms that can recycle plantings seeds so the customers no longer need to order seeds from us. The future product setup is headed towards a fully self-sustaining ecosystem.

4.2    Price

The price of Machine is based largely on its quality and partially on price referencing. Benchmark is not adopted because there are not many competitors to compare with. The value of The Machine will be an estimation, we will strive to price amongst the highest and this will be perceived as top quality by the market (Ingenbleek & Lans, 2013). Having top-range price will spark curiosity which in turn the customers can be positioned more strategically in the AIDA funnel. To maximise profit, we will adopt delayed price skimming techniques where the price of the machine will start to decline only when a newer unit is being introduced (Lowe & Alpert, 2010). The new unit has the effect of market cannibalisation and to execute effectively, the older unit will have to confidently adhere to its price without discount until nearing the end of its sales cycle.

Since we are using a value-based pricing method, we will have to emphasize on The Machine’s benefits and deliver its value to the fullest. The estimation of its value is based on how we disrupt the conventional access to health food without pesticides and chemicals. It gives a sense of accomplishment for buying into the future and it is priceless to gain awe and respect from peers who visited their home. Extrinsically, this unit is more economical than its competitors and has lifetime value. The Machine is built to last and is not a fixture but a fitting, owner can bring The Machine to any new home and it will continue to work. To further value-add, we would also consultatively advise the customer on their decision-making based on the available space they have, consumption requirements and other factors. 

4.3    Place

The Machine should use direct channel placement where we as the producer will engage directly with the consumers. This new product will require trial and error to perfect its entire lifecycle which is why we will need to understand it thoroughly before implementing or planning for intermediaries. There is more control and versatility where we can change or measure our strategies anytime without hindrance (Hyvönen & Tuominen, 2007). It also eliminates middleman fee and our product can continue to assume its importance as we will handle its branding more fluently.

Being an exclusive distribution means we will have to manage the channel functions entirely. Our foreign manufacturer may see us as a retailer however we are the acting manufacturer locally. We are not a franchise model as we are fully independent and classified towards a reseller business. In this mode the logistic operations are partially defrayed by our foreign partners as The Machine will only be shipped directly upon order and there will not be storage cost. We will have to take charge of the transactional and facilitating functions, but it allows us to have privacy over our customers’ database and knit a closer relationship.

 

In our pull strategy, customers will demand and order the product directly from us. We plan to sponsor our mini roadshow at appropriate private events like private or priority bank’s customers gathering, luxury car show, luxury magazine anniversary, luxury watch launch, property showroom and others. Our staff will be presenting, manning the booth, handling enquiries and taking orders directly from the ground.

4.4    Promotion

Figure 3. Sample advertisement concept

We will be using promotional messages to create brand image, recognition and awareness that will improve our reputation and build strong barriers for the competitors (Nikabadia, et al., 2015). With the right approach, we can stimulate demand for The Machine and will persuade the customers in an extensive outreach. Still, the outreach will be confined to our segmentation and not in a scattershot manner to ensure our advertising dollar is more rewarding. The primary intended message is lifestyle – it is suitable for non essential and yet good-to-have products. Lifestyle defines how one should upgrade according to their affordability and status. The secondary messages are health and future which gives a direct beneficial value. Under rational creative appeal, we will use a combination of contrasting, status and beauty appeal as these commonly represent the luxury product range.

Our advertisement will be placed in luxury magazines and prints. It should be placed three months before any PR events or sales activities so the advertisement is fresh and it can positively influence their buying decision by 57% (Accenture, 2017). The design should be of classy nature and portrays a sense of opulence. Next tool we will utilise is public relationships through events. We can capture more attention from the audience through physical events, it is educational as there are more interaction opportunities and it will boost the salesperson morale. With excellent advertising and PR effort, it will substantially supplement the sales effort which comes to the final tool, personal selling. Further education with questions and answers are necessarily during a sales presentation where customers may have difficult or private issues. Direct selling is able to give better sales forecasts for our marketing measurements and improvements.

5.0    Potential Implementation Issues

There are three main issues identified. Budget is one of the crucial factors for successful marketing campaigns. Being very thin on resources, we need almost irreproachable marketing results to continue our next marketing wave and the operation cost for The Machine. It is understood that marketing will have delayed effort therefore we need to plan the financial milestone for at least the next three quarters. Budget is also important to ensure consistent or improving quality of future campaigns. In order to do so, we need to diligently document all details and measurement variables of this very first campaign.

Insufficient leads generated is another issue, the actual market performance may differ vastly from the planned performance. Our identified market segments have limited audience and may encounter saturation earlier than expected. Even if the leads are there, the conversion rate may be insufficient. A contingency plan should be drafted for secondary market segmentation and sales strategy. The Machine can be bundled with other high-ticket items where its price is masked to the public while we can strategically sell cheaper to the bundler, so The Machine does not lose its perceived value.

The last issue will be staff related. To conserve resources, we will only recruit when necessary. We may not be able to hire suitable talents in-time or there are insufficient training schedules. We assume most new-hires are experienced and ready to perform. Due to the diverse culture of their previous endeavours, there could be a lack of coordination between the marketing and sales team. These factors could misrepresent The Machine or put all our market effort to waste. We plan to mitigate these by having detailed standard operating procedures, structured training and creative bonding sessions.

6.0    Conclusion

The Machine is a good to have product. Marketing “a want” is different from “a need”, especially if pricing is in the picture. However, marketing is so powerful when everything is done right, we can even sell ice to the Eskimo. The old saying goes “fail to plan, plan to fail”. It is important to have a flawless plan, but one can never cover all aspects entirely. There will be many unforeseen circumstances beyond our comprehension at this stage. Nonetheless, we will go ahead to launch the product as the threats and weaknesses discussed above are of mid-to-low risk. Afterall, the best lesson is to learn by experience.

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