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Case study: Oscar Mayer

Strategic Marketing Planning

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

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 3 4 4 5 6 2 . . . . . . . . . . . . . . . . . . . . . . . Question 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 Contents 1 2 3 4 5 6 7 Situation . . . . . . . . Question 2 . . . . . . . . . . . . . . . . . . Question 3 . Question 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Question 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tobias Strebitzer Marketing & Sales February 16. Question 5 . . . . . . . . . . . . . . . . . . .

The diversity of products is not only a benefit to his customers. Summarizing the proposals for each memo. containing solutions on what’s best for the company. As stated by McTiernan. McGraw realized that the problem wasn’t a hard one.Tobias Strebitzer Marketing & Sales February 16. this just means that a lot of work of his decision. and bringing them all together. after he has read a the ideas listed in the four memos. 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. clues.making process is already done: Due to the different positions and opinions of the four managers.What changed the presidents perspective? What strategic decision-making process does McGraw pursue? At a first glimpse. 3 . His four trusted managers each provide him memos. that each memo is reacting to specific problems that the company has. he can rely on his team of managers who are eager on pushing oscar mayer back on the horse. His challange is to to create a strategic plan for the company to face some major challenges coming up in the processed meat market. McGraw would definitely harm all the other departments. struggling with four totally different solutions from very different managers seems to be a challenge. Another point is.makers in different competitive fields. and each of them being quite different to the others. but looking closer at it. but also strengthens his own company against competitors by providing profit. 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. decisional range of opportunities is already widely spread and many facts. 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. By the end of the case. 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. Neglecting the solutions to these problems of course means ignoring them and facing them later. 2012 1 Situation Marcus McGraw is the president of Oscar Mayer Foods.

the Oscar Mayer segment needs to consider changes in price. The investment decision should therefore account for these mechanisms. long run. which defines a high market growth.Tobias Strebitzer Marketing & Sales February 16. or by offering products at a lower price. The second-best alternative is investing in the Oscar Mayer brand to provide shortrun profits. the high market share. 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. Missing this opportunity could challenge the existence of the company. it currently serves the company as a cash cow having a high market share in a market of relatively poor market growth. Demand for white meat rises. like the rising demand for healthier and more convenient products. Looking at the Oscar Mayer brand from a strategical point of view. Oscar Mayer stands for traditional 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 ¨ . improving one or more departments. 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. its long-time experience in the branch and quite high profit margin. Here. competition may be able to outpace Oscar Mayer products by improving convenience and providing healthier products. but due to their traditional way of thinking. McGraw needs to find a broader strategic direction. without damaging the others. they were missing some important trends that are currently happening in the market. which will take account of the various situations. 2012 To best mitigate this damage. which has partially positive as well as negative impact: Their clients brand awareness and trust is solid. an investment in Luis Rich products seems to be the most viable solution. 5 Question 4 Absent any resource constraints. As the goal is set to achieve a growth in volume by 4%. as otherwise a 4% growth can be hard to achieve in a stagnating market. as it 4 . convenience and health level.

as explosive investments in LR could lead to business failure in case of trend expiry. 6 Question 5 Given the information in the case. They need to stay high in market share by investing in maintenance of their products. Looking at the Louis Rich brand. First things to do from here is to forecast the development of each division over the next couple of years. Currently. As a strategic course. OM ı products were not yet lowered in price. which means that he needs to allocate $27 MM. * Customer trend preferring white meat. While the OM brand was developed over a long time and has a strong brand name. for long-run orientation.9%. distribution channels and marketing. the portfolio should be backed up by a new.to mid-term profit. it still declined in revenue by 4. their rate of growth is currently high.Tobias Strebitzer Marketing & Sales February 16. Additionally. As seen in the McTiernan report (customer satisfaction). as acquisitions tend to potentially bring negative side impacts. i would suggest to reinforce the Oscar Mayer brand.5% over the last three years. The least decision to make is investing in other smaller companies. convenient product line. Still.contribution. but instead paid off with market share. acquisition investments can be thought of. his managers calculate with a decrease of 6. The important thing here is that the white meat trend must not be temporary.and cost. but also plan on lowering costs in the future to stay reasonable. When the departments are in line. This can have different reasons: * Continuous reduction of advertising & promotion expenses over the last years. 5 . it is also a game of numbers. red meat outperforms white meat by taste and convenience. One of the major issues seems to be the 15% increase of operating income over all divisions. what strategic course do you think the Division should pursue? In the end. The idea is to line up the investment alternatives towards their contribution to the company’s goals. as well as carefully developing the louis rich brand. Making investment decisions in the product line that loses market share due to an expiring trend would be critical. to get an idea of short. 2012 provides over 80% of the income. * Louis Rich brand products cannibalize Oscar Mayer ¨ products and stealing¨t’s market share. I believe that first the already established departments need to be sanitized by it’s own power.

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