Case Study in Oscar Mayer

Topics: Meat, Pork, Oscar Mayer Pages: 6 (2071 words) Published: October 5, 2012

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Oscar Mayer, a part of Kraft Food, is into Red Meat market in the United States of America. In the recent past, the company acquired Louis Rich which is into white meat products (Turkey). McTiernan Corporation, which is a consulting firm, and on whose prediction of the market Oscar Mayer, has relied upon for years gave an assessment regarding profit growth of Oscar Mayer in the next three to five years. And upon analysis, McTiernan found that Oscar Mayer’s future is not promising as there might be a drop in the growth of the company’s profit in the coming years. McTiernan pointed out a few facts, which according to them will lead to a dip in growth rate and being worked upon can lead Oscar Mayer to maintain its market share and expect a good growth in the coming years. Mr. Marcus McGraw, the president of Oscar Mayer’s food division, has to decide what strategy to follow for the best of the company and for this he has recommendations from four of his trusted managers, taking into consideration the report of McTiernan. The problem which Mr. Marcus is facing is to which strategy to follow as for the maximum benefit of the company. Highlights of the report submitted by McTiernan:

* Change in consumption pattern as people prefer low fat meat. * Louis Rich has a slowing growth rate as copy-cat brands of turkey and chicken meat are there in the market. * Working Moms prefer fast to cook or ready to cook products.

1) Brand reputation with retailers and consumers.
2) Technology skills in R&D.
3) Sales force and powerful distribution system.
4) Successful history and product diversification

1) Short term focus on white meat solution LR has led to the core red meat brand, OM suffering losses, which will ultimately lead to long term decline of the company as a whole(esp. OM red meat lines) 2) Improper allocation of resources, new products did not deliver on changing consumer needs. 3) Strengthening the LR white meat brand has led to weakening the OM red meat lines considerably, while LR sales have begun to decline. 4) Weak pricing strategy of critical items

5) Decrease in Advertising & Promotion budgets.
6) Slow growth: Profits of OM branded lines have been decreasing in the last few years.

1) The changing consumer trends (focus on nutrition and convenience) can be seen by the powerful marketing and R&D department as an opportunity to innovate with new products/category, concepts and work out a feasible future investment solution. Also being an owner of LR, the company starts with an advantage in market. 2) The company can go for vertical expansion by acquiring small enterprises so as to increase production.

1) Competitors creating copy-cat products . Highly consolidated competition with mostly big players. 2) Divisions current portfolio is shifting out of alignment with consumer trends and Changing consumer behavior.

Memo by Rob Goodman (Louis Rich category manager):
* Boosting brand awareness and trial by heaving up the advertising behind the new “Switch-to-Rich” campaign * Making the benefit of a large and demonstrate the advantage of White meat over Red meat * Introduce new products that R&D has developed including LR turkey bacon, the great roast turkey and gravy dinner line. This will require the advertising and the promotion budget of $22MM. But provide another big jump in volume and setup of long-time growth. Memo by Jane Morely (Director of Finance and Planning):

To acquire one of the three companies which are...
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