OSCAR MAYER(OM) : STRATEGIC MARKETING PLANNING

Prepared By:

Goutham Mohit Nishu Rohit Tanvi Pratik

Brief History
It is a well known meat producing company Established in 1883 by Mr. Oscar F. Mayer

1919- a meat packing plant was purchased 1970- C. F. Claussen & Sons was purchased( packed and distributed frozen products) 1979- OM acquired LOUIS RICH(Manufactured Red Meat) 1981- General Food acquired OM 1985- Philip Morris Companies, Inc., (Parent of Kraft's Food) Purchased General Foods

PRODUCT LINES

OSCAR MAYER(OM)

Lunch Meat

Hot Dogs

Bacon

CASE FACTS
Targets in front of OSCAR MAYER Division 15% operating margins 4% Y-O-Y growth in volume

Major Challenges
1) Shift in consumer inclination. 2) Increased demand for fast and easy to use products. 3) Competition. 4) High expenses.

Outcomes Of McTiernan Report

Core red meat brand of Oscar Mayer is suffering share losses The white meat solution-Louis Rich is slowing down

Meat Consumption
180 160

140
120

100
80

Current year
5 years ago

60
40 20 0 All meat Red White

Outcomes Of McTiernan Report(contd.)

New product attempts havent delivered on the greater convenience that consumers are demanding Competitive environment is much tougher than before

Market Share
25

20

15 current year prior year 2 years ago

10

0 Lunch- oscar mayer louis rich oscar mayer Louis RichOscar Mayer Lunch- Hot dogHot dog- Bacon-

% CHANGE in Pound Volume

16.00%

14.00%
12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% CURRENT YEAR LAST YEAR TWO YEAR

OSCAR MAYOR

LOUIS RICH

TOTAL DIVISION

POUND VOLUME
1000

900
800 700 600 500 400 300 200 100 0 OSCAR MAYO LOUS RICH TOTAL DIVISION CURRENT YEAR LAST YEAR TWO YEARS

REVENUE
2000

1800
1600 1400 1200 1000 800 600 400 200 0 OSCAR MAYOR LOUIS RICH TOTAL DIVISION CURRENT YEAR LAST YEAR TWO YEARS

ROB GOODMAN- Louis Rich Category Mgr.

White meat products are on trend; pump more money to stay in the lead. Rob proposes two initiatives:
Boost brand awareness by increasing advertisement and demonstrating the advantages of white meat over red. Introduce new products that R&D has developed including LR Turkey Bacon and great Roast Turkey and Gravy dinner line.

Estimated Profit & Loss : Louis Rich

CURRENT YEAR NEXT YEAR

POUND VOLUME*
% CHANGE V/S LAST YEAR ADVERTISING AND PROMOTION OPERATING INCOME

272
10.9% $133

305
12% $155

$29

$27

*Figures in millions.

Jane Morley-Director F&P Small companies of interest to Acquire

Turkey Time Ltd. : Location: West Coat Sales: $10-20 MN Crabbies, Inc. : Location: Head Quartered in Maine Sales: $15 MM Products: Shell Fish Products ( Crabs, Lobster)

Chicken Rite Inc. : Location: Savannah Sales: $15MM Product: Low Calorie Chicken Salad in Single Serve Tubs

Product: Similar to Louie Rich and also Ready Made Frozen Sandwiches

Advantages of Acquiring
Turkey Time has almost same product line as of Louie Rich., Which can support further LR expansion Chicken Rite and Crabbies, Inc give us a chance to venture into some new protien sources and convenience products at low risk All the companies being small can be bought for $15-25MM each without much annual debt

Eric Stanger-VP OM Brand

Problems o o o o Ignoring OM at the stake of Louis Rich. High product cost for y-o-y growth. Reduced A&P budget. Slippage in value and Trust.

Get BACK TO THE BASICS

10% Price cut on top 3 brand. Increase A&P budget by $25 MM. Create nostalgia. Get enough R&D to get nutritional products. Update analyses on capacity utilization Rejuvenating Brand Oscar Mayer.

Results

ROB: Wants to spread awareness for White meat, and increase A&P Budget to $22 M. JANE: Wants me to purchase TURKEY TIME Ltd COST=$10-20M
1) We would get frozen food technology, 2) And Excess production and storage capacity.

McGraws Observations

BUT its Profits and Market Cap. are both unknown. JIM: Wants me to expand to 4th category of products. ZAPATITES LUNCHABLES Easy, fast to eat, Useful for working moms Health Values Easy to carry. Still in nascent stage Less in health and hygiene 6-8 months required High cost & low profits. ERIC: wants to improve OM brand value! Increase sales growth!

TO DO LIST
Invest in R&D to formulate a low fat and salt line of OM products. Add a fourth category to the existing product line keeping the white meat demand in mind.. Appropriate allocation of resources on both red and white meat product lines A&P budgets should be increased. Special focus on health conscious market. Acquire well performing companies ->Turkey time ltd.

POSSIBLE SOLUTIONS
1) Purchase Turkey Time Ltd. And start R&D on ZAPPETITE Products to increase growth of OM Division.

2) Spend on A&P of OM and LR division and start R&D on ZAPPETITE products to increase growth of OM division.

THANK YOU!!!