Giuseppe’s Sausage company strategy is to start small and work up to a larger clientele by initially concentrating on high quality, unique specialty sausages customized for clientele in their local region. Smaller companies are able to offer a wider variety of specialty sausages because they are only concentrating on a smaller client base whereas larger companies tend to focus on producing a few varieties to cover a larger customer base. Giuseppe’s would only buy top of the line ingredients and developed their own special recipe using exotic meats and spices for production of sausages. Giuseppe’s product line consisted of more than 80 different sausage related products to be marketed to supermarkets, restaurants, casinos, and mail order/individual call in. Giuseppe strategy was to develop a reputation of being the best in the industry. To do this they focused on and provided what their customers wanted – customized specialty sausages, priced their products competitively – just a few cents above competitive prices, and prided themselves on being above average USDA and Health Department standards and regulations when it comes to cleanliness of the sausage making areas.
2.What is the nature and strength of the competitive forces confronting Giuseppe in the Memphis area specialty sausage industry? Is the Memphis area market attractive from the standpoint of offering Giuseppe attractive profit prospects?
The nature and strength of the competitive forces confronting Giuseppe’s in the Memphis area specialty sausage industry are:
1. Rivalry among competitors
The sausage industry is a highly competitive market in Memphis. Already 25 to 30 major brands of sausages sold in the Memphis retail market. The major competitors included Bryan, Jimmy Dean, and Johnsonville.
Competition among these companies is focused on price. Bigger companies with mass production are able to buy their products cheaper therefore able to produce and sell more cheaply than smaller businesses. Other competitive activities included sales promotion, advertising, and product differentiation. Larger companies have a much greater financial ability to be able to invest more into advertising than a new business starting out would be able to. Shelf space and competitive pricing were two major issues that affected sales. Because they are already recognizable brands they can afford to purchase the best shelf space. Consumers will see their products before noticing other not so well known products.
2. Substitute Sausages – Health conscious people who want to decrease the fat content in their diets. Companies that elected to enter the low-fat segments of the sausage market had created a shift in marketing techniques by creating niche segments. These products could eventually replace the need for Giuseppe’s original sausage.
3. Entrance of Non- traditional grocery stores such as Kmart, Walmart, and Sam’s Club now offer a grocery section in their stores. These stores became the new source for the grocery consumer and was forcing many small grocery store out of business. Larger organizations tend to buy their resell goods from already established well known sellers while smaller grocery stores tend to purchase more locally. With smaller grocery stores being forced out of business this was cutting down on the number of potential buyers for smaller businesses to sell to such as Guiseppe’s.
4. Threat of new entrants – with only a few government regulations to deal with and overcome entrance into the sausage industry is relatively easy. It does not cost a lot nor does it take a long time to enter, as well market growth is attractive to new companies who want in the business such as large meatpackers who may monopolize the market share.
5. Bargaining power of both suppliers and customers. – The greater the amount of competition the more...