Sarap Strategic Management Paper

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This Paper was prepared as an example only of a Strama paper. The names of the companies and the data are fictional.

Our sincere thanks to Me-ann To for authoring this paper and for her generosity in sharing this paper with future Strama classes.

P.S. Please be sure to include the Cover Page and Table of Contents (Sarap Table of Contents.doc) in your own Strama paper. Executive Summary

This strategic management paper aims to develop a viable strategy for the Sarap packaged soups business retail business in the Philippines. The global brand ‘Sarap’ first came into the Philippine market in 1972, with packaged soup cubes as its pioneering and flagship entrant in this high-potential Asian market. Sarap is a relatively familiar brand known not just for packaged soups but for Sinigang mixes, liquid seasonings, recipe mixes, powdered flavorings, packed soups and pasta as well. To date, packaged soups is the biggest contributor in volume and value amongst the products in the Sarap portfolio. With 90% market share in a Php 2 billion market, Sarap cubes revenue in 2004 is estimated at Php1.6 billion and still managed to grow by 7% with an estimated Php1.7 billion sales in 2005.

However, the packaged soups category is experiencing flat growth and has reached its maturity at the dawn of powdered flavorings. The brand’s strategic objective is to defend the relevance of packaged soups by positioning it as ‘best for soupy dishes’ whilst establishing its presence and leadership in the powdered flavorings segment. With the use of several strategic management tools, it was identified that it is best to employ market penetration.

It was established through Project Pinoy that the market for packaged soups still has a lot of room to grow, especially in soupy dishes where only 12% of all soupy dishes is penetrated by packaged soups. By utilizing brilliant marketing, campaigns on soup can help arrest a possible decline in the packaged soups category.

Other opportunities identified through the study apart from aggressive marketing campaigns behind packaged soups are deemed to be necessary to realize and expedite the achievement of the brand’s objective:

• On product distribution, improving the Sarap portfolio to be able to cater to downline channels via direct servicing.

• On geographies, valuing the Visayas and Mindanao regions as a separate entity from that of Luzon and GMA for reasons that the cultures and taste preferences are so distinct in itself creating a world of possibilities for the business.

• On consumer purchasing habits, developing lower cash outlay products as an answer to a growing economic reality.

Simultaneously, other efforts on master brand activations and company-wide initiatives are deemed to be necessary as it can assist Sarap address growing direct and indirect consumer concerns such as:

• The health factor in the use of cooking aids or any convenient, ready-to-eat, easy-to-prepare commodity is addressed by Sarap’s thrust on Vitality.

• Certification of all cooking aids as ‘good for you’ products.

• Differentiating the Sarap brand from competition or other food brand with a relevant and aspiring proposition that consumers will be able to connect to.

Introduction

A viable strategy for the Sarap packaged soups business in the Philippines is what this strategic management paper aims to develop. The global brand ‘Sarap’ first came into the Philippine market in 1982, with packaged soups as its pioneering and flagship entrant in this high-potential Asian market. Sarap is a big player in the packed soups category. Through Sarap’s diverse portfolio, it has established itself to be market leader in several categories and has always been referred to as a respectable brand in the categories it plays in.

Sarap packaged soups remains the undisputed market leader in the packaged soups category with an estimated market size of Php2 billion....
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