Case study: Oscar Mayer

Strategic Marketing Planning

Brand management & strategy
Author: Course of Studies: Year: Major: Tobias Strebitzer Business & Management 2009 Marketing & Sales

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what negative effects could this have on other departments? How can McGraw mitigate the damage? Favoring and focusing on a specific direction while neglecting the others. 2 Question 1 ¨ In the beginning of the case McGraw thinks he has never encountered such a complex business challenge¨ s the one he currently faces. McGraw realized that the problem wasn’t a hard one. that each memo is reacting to specific problems that the company has. a subcompany of Kraft foods and a big player in the market of processed meat products. 3 Question 2 If McGraw chooses a strategic direction that favors only one department. but looking closer at it. As stated by McTiernan. but also strengthens his own company against competitors by providing profit. McGraw would definitely harm all the other departments. he can rely on his team of managers who are eager on pushing oscar mayer back on the horse. after he has read a the ideas listed in the four memos. this just means that a lot of work of his decision. Another point is. Neglecting the solutions to these problems of course means ignoring them and facing them later. containing solutions on what’s best for the company.Tobias Strebitzer Marketing & Sales February 16.making process is already done: Due to the different positions and opinions of the four managers.makers in different competitive fields. His four trusted managers each provide him memos. clues. decisional range of opportunities is already widely spread and many facts. and each of them being quite different to the others. 2012 1 Situation Marcus McGraw is the president of Oscar Mayer Foods. The diversity of products is not only a benefit to his customers. problems and benefits have been worked out from his managers. McGraw cant believe he ever thought the investment ¨ ¨ issue was going to be a hard one. 3 . Summarizing the proposals for each memo. By the end of the case. struggling with four totally different solutions from very different managers seems to be a challenge. and bringing them all together.What changed the presidents perspective? What strategic decision-making process does McGraw pursue? At a first glimpse. His challange is to to create a strategic plan for the company to face some major challenges coming up in the processed meat market.

Looking at the Oscar Mayer brand from a strategical point of view. but due to their traditional way of thinking. which of the four departmental directions do you think is the most viable? Which is the second best strategy? Which is the least viable? Neglecting initial costs. or by offering products at a lower price. as otherwise a 4% growth can be hard to achieve in a stagnating market. Demand for white meat rises. convenience and health level. its long-time experience in the branch and quite high profit margin. The investment decision should therefore account for these mechanisms. The second-best alternative is investing in the Oscar Mayer brand to provide shortrun profits. the high market share. which has partially positive as well as negative impact: Their clients brand awareness and trust is solid. Oscar Mayer stands for traditional products. the Oscar Mayer segment needs to consider changes in price. 4 Question 3 What effects is the change in the strengths and weaknesses of competition having on the Oscar Mayer Division? How does this impact the investment decision? Oscar Mayer’s strengths are its well-known brand. an investment in Luis Rich products seems to be the most viable solution. McGraw needs to find a broader strategic direction. like the rising demand for healthier and more convenient products. Missing this opportunity could challenge the existence of the company. as it 4 . they were missing some important trends that are currently happening in the market. it currently serves the company as a cash cow having a high market share in a market of relatively poor market growth. which will take account of the various situations. 2012 To best mitigate this damage. which defines a high market growth. As the goal is set to achieve a growth in volume by 4%. long run. without damaging the others. improving one or more departments.Tobias Strebitzer Marketing & Sales February 16. 5 Question 4 Absent any resource constraints. competition may be able to outpace Oscar Mayer products by improving convenience and providing healthier products. Strengthening and promoting Louis Rich products to increase market share would there¨ fore transform them from question mark¨o star¨ This seems to be the best solution for the t ¨ . Here.

* Customer trend preferring white meat. acquisition investments can be thought of. Additionally. the portfolio should be backed up by a new. OM ı products were not yet lowered in price. it is also a game of numbers.contribution. First things to do from here is to forecast the development of each division over the next couple of years. 6 Question 5 Given the information in the case. Still. I believe that first the already established departments need to be sanitized by it’s own power.5% over the last three years. * Louis Rich brand products cannibalize Oscar Mayer ¨ products and stealing¨t’s market share. Looking at the Louis Rich brand.and cost. as well as carefully developing the louis rich brand. 5 . While the OM brand was developed over a long time and has a strong brand name. his managers calculate with a decrease of 6. to get an idea of short. The least decision to make is investing in other smaller companies. They need to stay high in market share by investing in maintenance of their products. but instead paid off with market share. for long-run orientation. their rate of growth is currently high. as acquisitions tend to potentially bring negative side impacts. Making investment decisions in the product line that loses market share due to an expiring trend would be critical. which means that he needs to allocate $27 MM. This can have different reasons: * Continuous reduction of advertising & promotion expenses over the last years. 2012 provides over 80% of the income. The idea is to line up the investment alternatives towards their contribution to the company’s goals. One of the major issues seems to be the 15% increase of operating income over all divisions. As seen in the McTiernan report (customer satisfaction). distribution channels and marketing. Currently.to mid-term profit. convenient product line. When the departments are in line. i would suggest to reinforce the Oscar Mayer brand. red meat outperforms white meat by taste and convenience. what strategic course do you think the Division should pursue? In the end. as explosive investments in LR could lead to business failure in case of trend expiry. but also plan on lowering costs in the future to stay reasonable. it still declined in revenue by 4.9%.Tobias Strebitzer Marketing & Sales February 16. The important thing here is that the white meat trend must not be temporary. As a strategic course.

2012 7 Question 6 Which of Jim Longstreet’s new product ideas is less likely to succeed? Why? ¨ I believe that the Lunchables. as it involves several properties and ¨ criteria that the company has no experience with. while the Zappetites¨arget a broader customer group.Tobias Strebitzer Marketing & Sales February 16. t 6 .product is too risky. The product is explicitly designed for a ¨ very limited customer group.