1. Scope of Analysis – page 2
2. Situation Analysis – page 2
3. Statement of problems – Doritos – page 7
4. Alternate Solutions to the Problem/Evaluation – page 9
5. Final Decision and recommendation – page 11
6. Appendices – page 13
7. References – page 14
Snack Food Limited - Doritos
1. Scope of Analysis
In the following report I propose to analyse the Supermarket industry, in particular Woolworths and their relationship with Snack Foods Limited. I’ll begin analysing the Aggregate market factors of the supermarket industry to determine how the industry is performing and get an idea where some problems are stemming from. Looking at the market growth, competition and consumer segments of the industry will help establish where the market is headed and the current trends that brands need to be up to date with.
Performing a Value Chain analysis of Woolworths will help determine where their competitive advantages lie and the productivity of their operations. Also indentify their channels systems and relationships with their intermediaries. This will help determine areas in which Doritos and Woolworths can work together to develop solutions to problems in the market place as well as build a positive channel relationship.
2. Situational Analysis
2.1 Aggregate Market Factors (Lehmann & Winer, 2008)
2.1.1 Category Size
The category of snack food industry is rather large in Australia, its value determined to be $2.9 billion. More specifically the potato crisps sales segment makes up 48.7% of the total sales. There are numerous businesses in this industry, over 130, in the snack food industry. The industry profit was 151.9 million from 2011-2012 and exports totally 220.2 million (IBISWorld, 2011).
2.1.2 Market Growth
The snack food market is in the maturity stage of its lifecycle, meaning revenue grows at the same pace as the economy, also ccharacterized by a saturated domestic market and a range of well-established products and producer. The primary concern for manufacturers in this life-cycle stage is to maintain market share and induce sales growth through timely innovation and differentiation strategies. The annual growth from 07-12 is –0.3%, however a predicted growth of 1.3% over the next 5 years. Through the five year period to 2011-2012 the has been a decreasing trend in new players entering the market, possibly due to limited growth opportunities combined with increased levels of market concentration seems to have inhibited new competitors from entering the market (IBISWorld, 2011).
Competition within the snack food industry is very intense. As stated earlier there are over 130 different businesses in the category. Players in the industry are competition for supply contracts for key inputs, shelf space, and customers. They compete on quality, cost and points of differentiation. The past five years have also been characterized by increased external competition from substitute products like healthy alternative snacks and the growth of bakeries, cafes and coffee shops has resulted in the emergence of strong competition for the consumer’s indulgent or discretionary spending (IBISWorld, 2011).
Customers are now savvy than ever; food choices and eating habits are changing. Customers are making more healthy choices; this impacts supermarkets, as they have to supply brands and products that are healthy with sufficient shelf space. As well as brands like Doritos as consumers may opt for a healthier snack meaning they need to come up with new strategies to regain shelf space and brand loyalty. Customers for snack foods can be from any demographic, however frequent shoppers of supermarkets are likely to be parents, so supermarkets and Snack food companies should target this segments. However they shouldn’t overlook the influence of the end-user’s preference can have and this isn’t always the purchaser.