Oscar Mayer: Strategic Marketing Planning

Presented by : Aditi Agarwal, Akhil Datta, Bharat Mehrotra, Rohith Krishna, Sonia Sehgal

Oscar Mayer- A History

Oscar Mayer is one of the leading Meat processing companies in America and is owned by Kraft Foods Ltd. It is well known for Hot Dogs, lunch meats and bacon products. The brand has its own song and vehicle for advertising purposes

1924
First meat packers to Introduce packaged slice bacon

1929
The Brand Oscar Mayer is born

1883
Founded by a German Immigrant Oscar F. Mayer

1904
First meat packers to brand their Products

1936
Wienermobile makes a debut and continues till today

1963
The Oscar Mayer Wiener Jingle becomes a hit

GFDDFGHJKHGFHJK

Pound Volume Produce (in Millions)

1000

886
800

916

934

971

600

400

Oscar Mayer 70%

Louis Rich 30%

200

2 Years Ago

Last Year

Current Year

Next Year (Projected)

The Produce of the company has a steady increase with a projected produce of 971 million next year Out of the current produce, Oscar Mayer accounts for 70%

Revenue Generated (In $ Millions)

2200 2000 1800 1600 1400 1200 1000

Share of Revenues - 2 Years Ago

1,883 1693 1,924
Oscar Mayer 78% Louis Rich 22%

800
600

Share of Revenues - Current Year

Louis Rich 27%

400
200

Oscar Mayer 71%

0
2 Years Ago Last Year Current Year

New Products 2%

Revenue generated by the company is growing Last Year there was a 10% increase in Revenue, the current year its 2% Another visible trend is declining share of Oscar Mayer

Case Facts
Marcus McGraw is the president of his Division for the last 4 years and has worked with Oscar Mayers for 22 years He receives a market research from McTiernan Corp. informing him about a threat to the current product portfolio Marcus receives 4 memos from his trusted managers with solutions on how to deal with the threat Marcus comes up with a Strategic Decision Making Process to help him evaluate the solution and come up with a suitable recommendation

Case Facts: Threat

McTiernans Report Change in meat consumption trend More importance given to nutrition More convenience needed Losses have been offset so far by Louis Rich line Louis Rich is running out of steam Future of the +3-4% annual lb volume growth in trouble

Meat Consumption Trend

The consumer trend shows an increase in Chicken consumption and a decrease in Beef consumption which is Oscar Mayers strength for the last 100 years

Case Facts: Solutions offered

Solution 1: Louis Rich Bet On the Winning Horse Solution 2: Acquisitions Buy Buy Buy!!!

Solution 4: Restructure Red Meat - Back to the basics Solution 3: Diversification of products -Bright ideas

Bet On the Winning Horse

The Louis Rich brand is a turkey based line of products which are nutritional as well as cheaper. Increasing advertising and launching new products under this brand can capture 50% of the market`

PROs It still has potential Its currently the highest earner in the stable More nutritional

CONs Copycats are arriving in the market It might reduce the OM brand value Not fast and easy to Use

Acquisitions Buy Buy Buy!!

The Director of finance and planning looked up 3 smaller companies with similar products which Oscar Mayer could purchase

PROs Can support further LR expansion Both healthier and convenient products can be produced Relatively low risk

CONs More expenses will be incurred Benefits can only be felt in the long run Mite lead to more devaluation of the OM brand name

Acquisitions Buy Buy Buy!!

Bad Idea
Can lead to a loss in reputation More expense are involved Will heavily rely on OM resources for support Any benefits will only be seen in the long run It may lead to a recourse imbalance for all the departments

Diversification - Bright Ideas

Jim Longstreet wants to invent a 4th major category which addresses the changing lifestyles of people. The two ideas he proposes are Zappetites and Lunchables.

PROs Provides more convenience Explores a new market Can easily be combined with other OM or LR products It builds on the explosive growth of the microwave oven

CONs Idea is still experimental Nutrition issue If the idea fails the repercussions would be terrible Stuff n burgers fiasco

Diversification - Bright Ideas

LUNCHABLES Good Idea
Explores a new market Can be combined with any of the other departments Attracts a new client base for the company Easy to produce Provides nutrition value Provides convenience Can be sold to anyone

ZAPPETITES Bad Idea

Frozen food never tastes as good as fresh Microwave food is believed by some to cause cancer Stuff n burger fiasco Nutrition issue Still in R&D stage Extra man power will be needed

Restructure Back to the Basics

Eric Stanger, VP of the OM Brand does not want to see the OM brand slip away from the processed meat industry. He points out 5-6 strategies in order to breathe life into the OM brand

PROs It gets the main business of OM back on track It reduces operation costs It can balance the Health concerns

CONs It does not consider the changing marketing scenario

Restructure Back to the Basics

Good Idea
People still like red meat Taste factor Conventional American food habits Nutrition can be provided Gets the OM flagship back into the game Reduces costs

BCG Matrix

THE STRATEGIC DECISION MAKING PROCESS

Problem Identification Situation Analysis Analysis of Solutions Measure Viability of Solutions Choose the best possible

Better planning & effective allocation will help in optimal utilization of resources Conducting customer feedback will help in penetrating the consumers psyche Analysis of each of the solutions keeping in mind the pros and cons of each and the prevailing market trends, choosing a mix of solutions and finally preparing an estimate of the future earnings from the brand by applying the chosen solution.

Opportunity Matrix
Success Probability
High Low

Opportunities
1. Louis Rich white meat products, Lunchables 2. Low fat, low salt Oscar Mayer products 3. Processed red-meats that has no nutritional value 4. Acquisitions & Mergers

Attractiveness

High

Low

Threat Matrix
Probability of Occurence
High Low
1.

Threats
Competitor catching up with similar products. Change in customer base. Lesser red-meat consumption. Advertising and Promotion budget not allocated well. Louis Rich milking Oscar Mayer. Oscar Mayer brand subdued by Louis Rich.

Seriousness

High

2.

3.

Low

4.

Competitors & Their Effects

Competitors:
Multi Billion Dollar companies who have acquired small meat packers and consolidated the meat industry. Examples are ConAgra, Sara Lee & others Strengths Products are lower on fat content and more convenient to purchase for the consumer Weakness Not much Market Experience as Oscar Mayer

Effects:
Weakening sales Reducing market share Agile competitors, i.e. they can think of new ideas in a more competitive manner, serve the customers better Increasing investment in A&P Increasing investment in R&D New price-sensitive products with relation to emerging consumer trends

Investment Decision Making

Key Questions to ask:
Volume v Profit Acquire v Develop Rebrand New Product Development

Our Recommendation-Mixed Bag

Suggestions from different Managers to be taken Boost the Switch to Rich campaign Lunchables - Combine it with the other departments Have a 10% price cut of the top 3 OM brands Increase the OM A&P budget by $25MM Reinstitute the Wienermobile program Get enough R&D recourses to formulate a low fat& salt red meat line Analyse whats need to increase utilization and cover additional price reductions in OM plants

Why Choosing Just One is a Bad Idea

It may cause friction between the different managers The other may be discouraged form sending more ideas It may lead to fall in importance of the other divisions An increase in A&P for would lead to budget cuts for the others If one idea fails it may lead to a disastrous situation for the entire company

New Trends
As you can see in 2010, the consumption of Broilers (Chicken) was projected to surpass that of Beef and Pork (red Meats). This leads us to confirm that Oscar Mayers cannot avoid the Louis Rich brand and the idea of the Lunchables

Product Life Cycle

Louis Rich is in Growth Stage of the Product Life Cycle Oscar Mayer is reaching Maturity