Question # 1

What are the market trends?: Growing segments, new opportunities, changes in consumer
habits,... To facilitate the analysis, please, calculate the annual growth rates for the processed
meat category during the last two years. What can you say about the stage of the category?
Calculate the annual growth rates for the two segments: white-meat and red-meat. Can you see
any trend?

Oscar Mayer is in the business of processed food industry, which is health sensitive to consumers
and dynamic in nature. The fastest growing segment is working class mothers; it involves the
increasingly fast forward pace of live. This segment of moms constantly looking got new products
that are faster and easier to use. Also the consumption of white meat is getting higher day by day,
as it perceived as low fat and easy to cook meat. Consumers developed strong taste for white
meat also because of health issues. In this scenario Oscar Mayer though an established player in
the industry, finding itself on the verge of changing market scenario and shifting consumer
behavior, leading to change in buying pattern. Here comes an alarming Market research report
which highlights the change coming around. Now, Oscar Mayer has a challenge to respond to
changing market to ensure its growth and sustainability in the business.
Question # 2

In what category would you classify the Oscar Mayer and the Louis Rich Brands (Cows, Dogs,
Questions marks or Stars)?

• Oscar Mayer’s current position is edging at Cash cow, which can further if they have an
action plan and execute to respond to changing market they can continue to be there, else
they will move to “dogs” and other player will emerge.

• The problem facing by Oscar Mayer is the Change taking place in consumer choice, out of
the health consciousness.

• The proposed solution for Oscar Mayer is to identify among each of its products, which of
them falling from demand.
Question # 3

What are the division objectives? Can the division reach both the volume and income objectives
simultaneously?

Before getting into detail, I want to discuss the strengths of two brands which indicate the focus
areas to work on:

Louis Rich Brand

Strengths are growing market segment, "health conscious" segment contributing to the rise in the
operating income exponentially.   However, a 33% of division's advertising and promotional
budget is being consumed for a 24% of total revenue or 14% of division's operating income.  
While contribution to operating income is exponential, it is still less than 1/4th of the total
divisions operating income.

Oscar Mayer Brand

Oscar Mayer brand has been developed over 100 years.   It has a strong brand name, brand equity
associated with it.   It has established marketing and distribution channels.   The numbers show a
decline in the operating income of 18% over 3 years in part this may be due to a decrease in
percentage of division's A&P expenses directed towards OM brand.

One of the key issues faced by McGraw is that there is a large gap between his projections for next
year, and what the managers are promising him.   His goal is to obtain a 15% increase in the
operating income from his division (OM, LR and NP).   The managers are projecting a decrease of
5.2% from the current year.   In absolute terms there is a gap of $27 MM in the projected divisions
operating income. If McGraw were to keep his A&P budget the same as last years, he would save
$32MM over the managers' projections.   Therefore, one solution could be to effectively use the
strengths of the product lines and the A&P dollars by consolidating his sub-divisions.

Comparing the contributions and costs of the three product lines OM, LR and NP as a percentage
of the total division's numbers for the three years can give a detailed picture on the successes and
failures of each sub-division, their strengths and weaknesses. One way is to determine what
percent of the divisions' A&P budget is dedicated to Oscar Mayer vs. what percent of the division’s
operating income comes from OM vs. LR.
Plan of Action

• Oscar Mayer needs to launch new product to meet varying consumer requirement, in
White meat.

• A new white meat based product to be made and made available to consumer.

• New product should be launched after detailed consumer survey.