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Abstract
Purpose – The purpose of this paper is to examine the issues related to the promotion and marketing
of olive oil, by the Greek company Minerva S.A. Thus, the product, its target market and competition
are examined, a SWOT analysis is performed and the marketing mix is presented.
Design/methodology/approach – Since the aim of this study was to examine the marketing
practices of the company Minerva S.A., the case study method was preferred because its fundamental
characteristic is the “focus on a particular setting or event”.
Findings – The findings showed that the company offers high quality products in good prices and
is a market leader. However, it faces severe competition. The company advertises its olive oil products
and conducts intense promotional campaigns to promote them in the local market and abroad. Exports
are a good opportunity to increase sales.
Originality/value – This paper is one of the few that have examined the promotion and marketing
of olive oil worldwide and it is one of the very few that have examined such issues in the Greek market,
where little research has taken place in this sector. Thus, it can give an important insight in the olive
oil sector and become a useful tool for managers in this sector.
Introduction
Olive oil is claimed to be beneficial for health, as it is rich in vitamin E and it does
not contain preservatives it is widely used in cooking worldwide. As Duff (1998),
mentions the preference for olive oil is due to health reasons, because as it was found,
the replacement of saturated fats by olive oil results in a lowering of the rate of heart
disease.
Olive oil is one of the most important products of the Mediterranean diet and a very
important element of the Greek civilization and culture. For centuries it is used in
various products such as soap and cosmetics (Giakoumaki et al., 1999) and for the
storage of food products such as vegetables and fish. In addition, the Greek Orthodox
church uses olive oil in baptism. In the ancient years it was used in medicine
(Papaioannou, 1978) and in the Olympic Games, they placed on the heads of the winners
leaves of olive tree, because they had a great respect for “Kotinos” (the ancient name of
the olive tree).
The objective of this study is to examine the issues related to the production of
olive oil and the marketing practices implemented by “Minerva S.A.”, a major player
in the Greek olive oil market. Thus, the company’s target market and competition
are analyzed, a SWOT analysis is performed and the marketing mix is presented.
The marketing practices implemented by the company are compared with those
employed by other companies in the international market.
Literature review
The olive oil market
The major producer of olive oil in the world is the European Union (EU), and it
produces the 80 per cent and consumes the 70 per cent of the total olive oil world
production (European Commission, 2007). Italy and Spain are the major producers and
they can influence the prices of olive oil, for example in 2005, dry weather in South
Spain resulted in the reduction of production and the consequent increase in price. On
the contrary in 2006, there was a lot of rain, production increased and prices declined
(Minerva, 2006).
Greece has the third place in the world production after Spain and Italy (Sandalidou
and Baourakis, 2002), and it produces about 300,000-400,000 tons annually (IOBE,
2006). In addition, it has the first place in olive oil consumption (Hellonet, 2006), since it
consumes about 15,000 k per capita annually (IOBE, 2006). About half of the produced
olive oil is exported and about the 75 per cent of it to Italy (Antoniades, 2006). However,
not packaged/not standardized olive oil dominates exports (Antoniades, 2006) and very
small quantities of the packaged/standardized olive oil are exported (about 6 per cent
according to ICAP, 2006).
According to the Greek National Statistical Service, in the period 1990-2003, olive oil
had the 65-76 per cent of the home market. However, not packaged/not standardized
olive oil has a significant part of the market, which in 2004-2005 arrived at 38 per cent
(ICAP, 2006).
In the Greek olive oil market there are a lot of small businesses, about 150
(Antoniades, 2006) as well as many peasants, about 450,000 (Antoniades, 2006)
producing not packaged/not standardized olive oil.
According to the Union of Greek Olive Oil Standardization Industries, 70 per cent of
the not packaged/not-standardized olive oil is of low quality and although the EU is
trying to prohibit sales, the percentages still remain high.
Since olive oil production exceeds demand, there are very few imports and great
amounts are exported. In addition, taking into consideration that the Greek olive oil
market is in its mature stage, exporting is the only way for the sector’s development
(ICAP, 2006).
Marketing practices in the olive oil industry
Olive oil is promoted as beneficial to health and industrial strategies and advertising
are often based on health claims (Duff, 1998). Though, nowadays, the EU regulation
has imposed the use of “nutrient profiles”, which are already in use in the USA and
Canada and are under development in some European countries. Many critics argue
that this would mean that products such as olive oil should not carry health claims.
At present, there are no harmonized rules at EU level to ensure the scientific accuracy
and appropriateness of such claims. However, regulation is expected to set clear
parameters across Europe for health claims and they will be allowed only if they are
scientifically substantiated (Tamsin et al., 2005).
As Thompson et al. (1994), claim, a major reason for the consumption of olive oil is
the improvement of the taste of salads and meals. In addition, cost is a major
consideration of the consumption of olive oil because it has a high price, depending on
its origin and its quality (Bourdieu, 1984).
Unilever, launched in France the “premium” quality olive oil “Puget” in a traditional
container. The company conducted extensive consumer research and decided to stress
the authenticity and pure nature of the oil and promote though advertising health
messages and quality of life. The company chose a steel container for the packaging of
the product since traditionally olive oil is sold in tinplate containers and glass bottles.
Tinplate is unbreakable, it can protect olive oil from light and reassure the high quality
of the product. In addition, since most of the olive oils are packaged in glass bottles,
steel differentiates “Puget” from competition (FOOD, 2004). Furthermore, the research
of Sandalidou and Baourakis (2002), in organic olive oil, revealed that the main sources
of competitive advantages for packaging are: material, capacity and resistance.
For the promotion of organic olive oil from Sicily, participations were arranged in
trade fairs in Italy and in other countries. In addition, promotional events were
organized in restaurants. Special attention was given to packaging, labeling, brand
name and the shape of the bottle, so as to create a prestigious market image
(Crescimanno et al., 2002).
In Greece olive oil is mainly advertised through TV. According to the marketing
research company Media Services S.A. in the period 2000-2004, the 48-49 per cent of the
olive oil advertising is done through TV. Some advertising is also done through the
magazines and the radio, but newspapers are rarely used.
The Greek Association of Industries and Processors of Olive Oil (SEVITEL), is
making intense efforts to increase the share of standardized olive oil and stimulate the
demand of the Greek olive oil in the International market. With the EU financing and
the Ministry of Agricultural Development and Food Products, the Union introduced in
January 2005, the two years programme “Kotinos”. The programme is promoting the
Greek olive oil in the Greek and the European market. Recently, other countries such as
the USA, Australia, Canada and Norway joined this programme (SEVITEL, 2007).
Research methodology
Since the aim of this study was to examine the marketing practices of one company
“Minerva”, the case study method is employed, since its fundamental characteristic is
the “focus on a particular setting or event” (Stake, 1995).
The most appropriate sampling method for the case study approach is purposeful
sampling because it allows the selection of “information-rich” cases (Cresswell, 1998)
Two types of purposeful sampling were used: “snowball sampling” and “maximum
variation sampling” (Minichiello et al., 1990). In snowball sampling the interviewees
suggest others who are good prospects to be interviewed. The maximum variation
sampling allows the selection of cases purposefully in order to obtain variation on the
dimensions of interest. Thus, employees from different departments of the company
were interviewed. The marketing manager was approached and he was asked to
suggest four more people in the company from different departments. In particular,
five in-depth interviews were conducted with the managers and top executives of the
departments: Marketing, Sales and Exports. However, although this is a relatively
good sample for a case study, it should be noted that since Minerva is a company with
about 230 employees, there is potential for sample bias when it is projected to the whole
population to the whole population.
In-depth interviewing is considered to be the most valuable data collection method
(Lincoln and Guba, 1985). The questions were broad, to allow respondents as much
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freedom in their answers as possible. The summation of the responses was based on
the content analysis method (Stake, 1995). Qualitative content analysis was applied
and the material from the interviews was divided into content analytical units. Thus,
the results were carefully put into categories according to the points of interest of this
study and the strong points were presented. The in-depth interviews were based on a
questionnaire presented in Appendix. In addition, since several authors have
suggested that it is useful to gather data from multiple sources when conducting
qualitative research (Lincoln and Guba, 1985; Mason, 1996). Therefore, secondary data
concerning general information about the company were gathered through the
company’s leaflets and its Web page.
The findings
General information
Minerva S.A., was established in 1904 and it was the first Greek company producing
olive oil, which was then packaged in metal containers. The company got its name
from Goddess Athena of the Greek Mythology (Minerva in Italian means Athena), who
offered to the Athenians as a present the first olive tree, to win the kingdom of Athens.
In 1930, Minerva was the first company to sell olive oil in glass bottles of 0.5 l.
In 1949 the company started to export olive oil. Since 1950 the company exports olive oil
in many continents and countries such as Australia, the USA, Egypt, Czechoslovakia,
Germany, England, Venezuela, etc. Recently, the company is trying to export to Japan
where there is an increasing demand for olive oil, and to Saudi Arabia.
Minerva S.A., produces four types of olive oil as well as organic olive oil. In addition
to olive oil, the company produces, distributes and exports other products such as,
kernel oil, sunflower oil, corn oil, margarines, cooking fats, olives paste, butter, rice,
detergents, soap, etc. The company also offers professional products to hotels,
confectioneries, bakeries, and other parts of the food industry.
The company is HACCP certified and its factory is ISO 14001 certified. Minerva S.A.
is trying to satisfy its customers and win their loyalty, by offering high quality
products and is trying to become highly competitive and profitable.
Target market and competition
The company targets all Greeks who consume olive oil. However, the target market of
the company, are women between 25 and 44 years old, because as the company’s
market researches have shown, in most cases it is women who buy the supplies of the
house including olive oil.
According to the market research company AC Nielsen, in January 2007 in Greece
Minerva S.A. had the first place in the olive oil market with a market share of
32.2 per cent. The major competitor of Minerva is Elais S.A., a member of the Unilever
Group, which had a market share of 25.2 per cent. The two companies together
have the 57.4 per cent of the market. The rest of the companies and the Agricultural
Unions have the 19.3 per cent of the market and the private label olive oil have
23.3 per cent. Since the Greek olive oil market is in its mature stage and the only way
for growth is exports. However, there is severe competition in the international market
from Spain and Italy. Thus, the two major players of the Greek market Minerva S.A.
and Elais S.A. have grown through merging and acquisitions of other companies with
diverse food products.
Marketing olive
oil in Greece
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PEST and SWOT analysis
At this point a PEST and a SWOT analyses for the olive oil of Minerva S.A. will be
conducted. PEST and SWOT analyses are business strategy tools, particularly useful
for companies’ decision making. They fall into the situation analysis stage in strategic
and marketing planning.
A PEST is an analysis of the external business macro-environment that affects all
companies. PEST is an acronym for the political, economic, social, and technological
factors of the external macro-environment of a company (Kotler, 1994). Thus, PEST
helps companies understand the big picture of the political, economic, socio-cultural
and technological environment they are operating in and build their vision of the
future. The analysis examines the impact of each of these factors (and their interplay
with each other) on the business. By making effective use of PEST analysis, a company
can ensure that its actions are aligned positively with the powerful forces of change
that are affecting the world. By taking advantage of change, companies are more likely
to be successful than if their activities oppose it PEST analysis also helps not to take
action that is doomed to failure for reasons beyond the company’s control. In addition,
it helps to break free of unconscious assumptions, and to adapt quickly to the realities
of the new environment (MindTools, 2007).
A SWOT analysis builds on the results of the PEST analysis, since SWOT looks
at the organization’s internal strengths and weaknesses and also to external factors,
which may have been highlighted in the PEST analysis. SWOT stands for
strengths, weaknesses, opportunities, and threats and requires listing and analyzing
these four issues (Doyle, 1994). SWOT analysis can help a company identify its
strengths, understand its weaknesses, uncover its external business opportunities
and take advantage of them and manage and eliminate threats. Then the company
can craft a strategy that will help it distinguish from its competitors and compete
successfully in the market (Piercy and Giles, 1989). SWOT analysis is better to
be applied at product or product line level, rather than at the much vaguer whole
company level.
PEST analysis
Political factors. Since November 2003, the EC regulation prohibits the distribution of
olive oil in packages over 5 l without labels and it is obligatory to put on the packaging
the name and the address of the producer. In addition, the legislation imposes
standards to olive oil producers, concerning their establishments, equipment,
technological methods of production and standardization, employees security,
working conditions and payment and the quality of the product. These standards
reassure high quality olive oil for consumers and they will diminish the sales of not
packaged/not standardized olive oil.
Economic factors. The difficult economic situation in Greece can influence the sales
of standardized olive oil, because of its high price.
Social factors. The respect for the environment demands technologies friendly to the
environment, for example waste elaboration units, recycling, etc.
Technological factors. The technological evolution resulted in an increased need for
high-end technological equipment to produce high quality olive oil and to conduct
quality control. In addition, the technological innovations should be used also in the
offices of the company, its accounting department, customer service, etc.
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SWOT analysis
Strengths. A strength of the company, is the high quality of its products. The company
has laboratories for the quality control of olive oil. Another strength is its innovative
technological equipment and its modern technological production and standardization
processes.
In addition, the company is in contact with its customers and has a web site where
consumers can get information about the company, its history, products and about the
olive oil. The company has an interest in the development f the society and is
sponsoring social events.
Minerva S.A. is a member of the Federation of Hellenic Food Industry, contributing
in this way to the formulation of a national strategy concerning the food sector.
Membership in these Federations helps the company to operate according to the rules
of the market. In addition, the company pays special attention to its employees and
offers continuous training to them.
The company respects the environment and has a waste elaboration unit, uses
natural gas because it does not pollute, recycles used materials during the production
process, is a member of the Greek Corporation of Recycling and has grass and olive oil
trees in the area around its factory.
Weaknesses. The awards, which Minerva’s competitors have won, are a
disadvantage for the Minerva. For example, Elais S.A., has gained awards for its
olive oil products many times. This weakens Minerva’s position in the market,
although it is also an incentive for the company to try harder.
Opportunities. The company participates in many conferences, where its
well-trained employees inform consumers about its products and can create a good
image of the company in these participants who are doctors, dieticians, etc. The good
impression, which Minerva S.A. creates in these conferences, influences sales because
consumers can understand the responsibility and the prestige of the company.
In addition, as it was mentioned very small quantities of the packaged/standardized
olive oil are exported and this is an opportunity for the company to increase its exports.
Threats. A serious threat for the company is severe competition from its most
serious competitor Elais S.A. Another threat is the illegal trade of unpackaged olive oil
and the unlawful competition in the olive oil market.
In Figure 1, SWOT analysis is presented.
The marketing mix
The marketing mix is the basic, tactical components of a marketing plan. The term
“marketing mix” became popular after Neil H. Borden published his paper in 1964, The
Concept of the Marketing Mix. The ingredients in Borden’s marketing mix included
product planning, pricing, branding, distribution channels, personal selling,
advertising, promotions, packaging, display, servicing, physical handling, and fact
finding and analysis. E. Jerome McCarthy later grouped these ingredients into the four
categories that today are known as the 4 P’s of marketing (Wikipedia, 2007). As Kotler
(1994) describes these are: product, price, place and promotion. However, some
marketers have added other Ps, such as people and process. These four P’s are the
parameters that the marketing manager can control, subject to the internal and
external constraints of the marketing environment. The goal is to make decisions that center the four P’s on the customers in the target market in order to create perceived
value and generate a positive response.
Minerva pays special attention to all the components of the marketing mix and
combines them in various ways to achieve its objectives.
Product. Minerva S.A. is distributing four types of olive oil: Minerva classic, which
is a high quality olive oil and is sold in packages of 750 ml (glass bottle), 1 l (PET),
1 l (tin) and in packages of 2, 3 and 5 l; Minerva Village Koroneiki Variety: which is the
only olive oil in the market made from one the best varieties of olives in Greece, the
Koroneiki. It is distributed in a 750 ml glass bottle, 1 l PET and in 2 l and 5 l packages;
Minerva Mountainous Regions, which is made from selected mountainous olives from
Peloponnesian. It is distributed in 750 ml glass bottle, in 1 l PET and in packages of
2 and 5 l; Minerva Lowland Olive Groves, which is a virgin olive oil made from selected
lowland olive groves in Crete. It is distributed in 750 ml glass bottles, in 1 l PET and in
packages of 2 and 5 l; Minerva Biological Virgin Olive Oil, which is distributed in tin
packages of 750 ml. The company is starting to distribute biological olive oil since it
entered the market in January 2007