Clover Valley Dairy Compan

Topics: Milk, Marketing, Dairy product Pages: 5 (1818 words) Published: November 9, 2011
The study data appear to support the notion that CFC grape juice is held in high esteem in Puerto Rico, yet a solution to CFC’s sales problem is needed. With this in mind, Ms. Verbrugge arranged a meeting with Jeff Hartman, Market Research Manager, to discuss and review the situation. Ms. Verbrugge wanted to examine the problem in more detail and was prepared to commit

additional funds for marketing research. Before making any decision, however, she wanted Mr. Hartman’s assessment of the situation. Source: This case was reprinted with permission from Subash C. Jain, International Marketing Management, CA: Southwestern Publishing Co., 1993.

Cases for Part I
Nature and Scope of Marketing Research

Clover Valley Dairy Company
In the fall of 1978, Vince Roth, General Manager of the Clover Valley Dairy Company, was considering whether a newly developed multipack carrier for yogurt was ready for market testing and, if so, how it should be tested. Since 1930, the Clover Valley Dairy Company had sold, under the trade name Valleyview, milk, ice cream, and other milk by-products—such as yogurt, cottage cheese, butter, skim milk, buttermilk, and cream—in Camden, New Jersey. The raw milk was obtained from independent farmers in the vicinity of Camden and was processed and packaged at the Clover Valley Dairy. Clover Valley’s sales had grown steadily from 1930 until 1973 to an annual level of $3.75 million. However, between 1973 and 1977, a series of milk price wars cut the company’s sales to $3.6 million by 1977. During this time, a number of other independent dairies were forced to close. At the height of the price wars, milk prices fell to 75 cents per half-gallon. In the spring of 1977, an investigation of the milk market in Camden was conducted by the Federal Trade Commission and by Congress. Since then, prices had risen so that Clover Valley had a profit for the year to date. Clover Valley served approximately 130 grocery store accounts, which were primarily members of a cooperative buying group or belonged to a 10-store chain that operated in the immediate area. Clover Valley no longer had any major chain accounts, although in the past they had sold to several. Because all three of the major chains operating in the area had developed exclusive supply arrangements with national or regional dairies, Clover Valley was limited to a 30 percent share of the Camden area dairy product market. Although Clover Valley had a permit to sell its products in Philadelphia, a market six times the size of Camden, management decided not to enter that market and instead concentrated on strengthening their dealer relationships. In addition, it was felt that, if a

price war were to ensue, it might extend from Philadelphia into the Camden area. With the healthier market and profit situation in early 1978, Clover Valley began to look for ways to increase sales volume. One area that was attractive because of apparent rapid growth was yogurt. During the previous three years, management had felt that this product could help to reverse Clover Valley’s downward sales trend, if given the correct marketing effort. However, the financial problems caused by the loss of the national grocery chains and the price war limited the firm’s efforts. As a result, Mr. Roth felt that Clover Valley had suffered a loss of share of yogurt sales in the stores they served. Since 1975, Mr. Roth had been experimenting with Clover Valley’s yogurt packaging with the hope that a new package would boost sales quickly. All dairies in Clover Valley’s area packaged yogurt in either 8-oz or 1-lb tubs made of waxed heavy paper. Clover’s 8-oz tub was about 5 in. high and 21 in. in top diameter, taper2 ing to 13 in. at base. 4 The first design change to be considered was the use of either aluminum or plastic lids on the traditional yogurt tubs. However, these were rejected because the increased costs did not seem to be justified by such a modest change. Changing just the lid...
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