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Mavesa`s Nelly Brand : Pricing to Gain Market Control
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19/03/2013
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Mavesa’s Nelly Brand: Pricing to Gain Market Control
Problem statement
The year is 1999 and Jose Luis Paez, the category manager for Marvesa mayonnaise is contemplating whether he should use a new pricing strategy that cuts the price of their product due to Venezuela’s current economic conditions and increasing competition in the segment. As this new strategy aims at gaining market share the possibility of negatively impacting profits in the foreseeable future is also an issue. Therefore, is this the best strategy Marvesa should use in order to alleviate the problem? SWOT MAVESA

STRENGTHS| WEAKNESSES|
* Traded on the NYSE; * Extensive product portfolio; * Management talent; * Market share leader in most of its categories despite multinationals; * Strong recent growth; * Geographic expansion through exports, acquisitions or mergers; * Owns 60% of industrial segment (restaurants); * Good national distribution network; * Flexible and responsive to changing market conditions; * Lowest cost producer of the low cost segment;| * Contracting mayonnaise sales within Marvesa; * Nelly has minimal brand loyalty and brand image; * In category where low price is a primary criterion, Nelly`s price are not among the lowest; * Do not have the appropriate sales force; * High overhead costs;| OPPORTUNITIES| THREATS|

* Salad dressing segment growth; * Growth in the industrial segment; * Improve channels to increase shares in medium and small stores; * Flexi-pack; * Huge growth in the household segment;| * Changing competitive environment becoming more saturated, volatile economic environment; * Recession in Venezuela; * Kraft is launching mayonnaise; * Shift in lower priced brands due to economic downturn; * De-evaluation of the bolivar; * Competition: Albeca and Kraft; * Economy brands expected to represent 34% * Mature...
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