MKTG495 Temple University Memo for Brannigan Foods Case Below are the Brannigan Foods Case Questions for inclusion in your group memo for this week. How wo

MKTG495 Temple University Memo for Brannigan Foods Case Below are the Brannigan Foods Case Questions for inclusion in your group memo for this week. How would you analyze the process Clark is using to determine his best “investment bets” for allocating resources?Which of the four managers’ proposals should Clark favor? Absent any resource constraints, which of the four departmental directions do you think is the most viable? Which is the second best strategy? Which is the least viable?If Clark chooses a strategic direction that favors only one department, what negative effects could this have on other departments? How can Clark mitigate the damage?What effects is the change in the strengths and weaknesses of competition having on the Brannigan’s division? How does this impact the investment decision?Given the information in the case, what strategic course do you think the division should pursue? INTEROFFICE MEMORANDUM
TO:
BERT CLARK, VP & GM, BRANNIGAN FOODS’ SOUP DIVISION
FROM:
JACOB BEVENOUR, RYAN CARTY, JAMIE DOUGHERTY, SARA TOROMANI, HAIJIAN
ZHANG, ANALYSIS BRANNIGAN FOOD
SUBJECT:
SOUP POSITIONING STRATEGY
DATE:
OCTIBER 16, 2018
EXECUTIVE SUMMARY:
The soup department of Brannigan Foods if looking to increase profits this year by 3%.
With new trends in the market, they are looking for a new strategy to find these profits.
Our analysts have recommended focusing on production and reviving Brannigan’s core
ready-to-eat (RTE) shelf line.
THE PROBLEM:
After the Julian DeGennaro’s “State of the Soup Industry” was released, Brannigan
Foods’ Soup Division is noticing changes in the market even after raising prices
consistently over the last 5 years, they still hold the top market share of shelf-stable
soups. With new trends rising, the company is now looking at possible alternatives to
take advantage of these trends and achieve their profit growth goal of 3%.
COMPETITION ANALYSIS:
In the U.S. soup market, shares total $6.4 billion U.S. dollars. As we know, Brannigan’s
Foods is the leading brand in the U.S soup market, occupying 39.8% of the industry and
as such will impact many Americans throughout their life. The second place is leading by
General Mills, and the market share of its are 24% of U.S. The third place is leading by
Unilever, which occupies 7% of total market share in U.S.
Besides those three monopolistic companies in the soup markets, there are more and
more small competitors have already affected those leading companies. The smaller
competitors whom bring healthier and more convenient soups. And, not only the benefits
that other competitors created, but also more and more flavors that they innovated in
recently years such as South Asian and Mexican flavors. For example, Red Dragon
growing very fast recently, and they are selling Southeast and Chinese soups, which
targets different markets. Their main customers are form Safeway and Ralph’s chains,
and their sales are $36 million a year. For instance, Roarin’s Cajun Foods produce new
product, ten-bean dry mix soup with MSG and sodium free, and the sales are $18 million.
What’s more, Brothers Gourmet as the high-end brand in the soup industry, it focuses on
classic “deli- like” products such as Brooklyn Chicken Noodle, which can bring high
profit.
Strength:
Opportunities:
? Market Share
? Profitability
? Ease of use
? 91% of consumers agreed that
canned soup is good to keep in
the pantry.
? Regional/Seasonal flavors
Weaknesses:
Threats:
? Innovation
? Health trends
? Seasonal Products
? “deli soup”
? Regional/seasonal flavors
ALTERNATIVES:
1) Invest in growing sectors:
Growing sectors should be a lower priority for Brannigan Foods. These sectors can be
beneficial for Brannigan, however with the risk involved it would be beneficial for
Brannigan Foods to target a different area. These sectors include dry soups, healthier
soups, and fast meals. These sectors are becoming more and more popular among
consumers, but it might not last too long, in addition to that these a specialized product.
Some popular companies in this growing sector include Roarin’ Cajun Food, Red
Dragon Food, and Brothers Gourmet. The pros of this are that Brannigan foods can
capitalize on a popular sector of the marketplace. This way they can try and increase their
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revenue through various sources of marketing. This also brings in a new customer
clientele and diversifies the different products that they sell making them more appealing
as a company and also adding new customers into their market. Some cons of this sector
are that although it is a growing area, it could potentially stop and change to something
different. These companies are also established and created a strong customer following
because of the product they already produce. In addition to these although they are in a
growing market, this market is not the majority of the marketplace. This sector would be
a gamble should Brannigan Foods not succeed and it could potentially harm the
company.
2) Invest in organic growth from internally developed new products:
Investing in organic growth from internally developed new products would be the
second best viable option. After having read Anna Chong’s email, there are several pros
and cons in follwing through with this strategy. Among some of the projects in
development that Clark suggests are packaged “deli soups”, “active lifestyles” soups and
broths, and “healthy weight watchers” soups. This would emphasize the importance of
consumer’s changing needs and the core strength. Clark thought about acquring more
shelf space for the products, which would ultimately result in additional $6 million gross
proft. However, shelf space RTE products had a 5% chance of ocurring, which would
turn down the opportunity to reusult in higher gross profit. The profit gain from the price
premium for the new RTE soups, from Brannigan’s core RTE soups, had a 90% chance
of occurring”, which can be looked at as a positive aspect. But, as Anna and her team
projected an increase in R&D investment, Clark was worried about the high hopes that
they had, since it is hard to assign exact costs to R&D, and very few make it to
launching. The retailers of Brannigan are worried that the products will have a short-life
cycle, and not meet their sales and profit expectations. There are chances of additional
loss of retailer’s goodwill, another concern for Clark. Even though there exists
opportunity for profit growth, the risk of money loss and uncertainty of life cycle of the
products is much greater.
3) Invest in core products:
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Bob Pugh had a very good idea on how to bring increased sales to Brannigan Soups. If
the company stays within their bread and butter cash cow market they can stem
growth. They may have struggled with profits due to the average 2% increase each year
for the last 5 years. This price premium is too much for consumers to continue to
overlook store brands.
A mix of health and price conscious consumers are now more prevalent in the market
with the rise of upscale markets such as Wegman’s, Trader Joe’s, and Whole Foods these
private label foods are becoming an equal or better substitute to name brands (Nielsen,
2018). Pugh see this his strategy aims to bring value back to Brannigan’s core products
while also investing in cost cutting manufacturing processes.
This is the best viable option for long term results. Brannigan needs to turn back to their
core product for profits before they can begin to invest in more trendy
products. Traditional soup flavors still encompass the majority of Brannigan’s 60% share
of the RTE market.
Pugh’s plan calls for a $22 million investment in production processes and a price cut to
close the gap with store brands. A boost in marketing for to show they are becoming a
healthier option than substitutes could help boost sales as well. With a $20 million
budget, reviving the “Boys and Girls Love Soup” campaign will aid in gaining younger
customers combined with overall support to the core brand will attract RTE buyers.
RECOMMENDATION:
Our analysts recommend returning their focus to core product lines.
They have
incredible market share already in the shelf-stable soups. To solidify this market share
they need to make plant improvements in order to lower their per-can costs before
consumers respond to price raising trend Brennigan has been setting over the last 5 years.
Their wet soups bring in 70% of their soup profits and little signs of the RTE soup market
declining rapidly, investing in production methods is a reasonable action to cut costs and
maintain market share.
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