Gold Medal Crumpettes

Topics: Marketing, Cost, Economics Pages: 11 (2195 words) Published: December 3, 2014
Table of Contents

Table of Contents………………………………………………………………………………………………………………. P.1 Project Summary………………………………………………………………………………………………………………… P.2 Problems..………………………………………………………………………………………………………………………….. P.2 Assumptions..…………………………………………………………………………………………………………………….. P.2 Decision Criteria…....………………………………………………………………………………………………………….. P.2 S.W.O.T. Analysis….……....…………………………………………………………………………………………………. P.3 Alternative Analysis…………..………………………………………………………………………………………………. P.4 Recommendations…………………………………………………………………………………………………………….. P.5 Marketing Strategy……………………………………………………………………………………………………………. P.5 Financial Assumptions………………………………………………………………………………………………………….P.7 Profitability Analysis Option 1: Maintain Existing Coverage………………………………………………..P.8 Profitability Analysis Option 2: Phased Expansion..…………………………………………………………… P.9 Profitability Analysis Option 3: Rapid Expansion…………………………………………………………….…. P.10 Profitability Analysis License Product…..………………………………………………………………………….… P.11

Project Summary
Lucas Foods is a food manufacturing and wholesaling business specializing in frozen egg products, shortening, flour, baking mixes, spices and bulk ingredients. The company is owned by Jerry Lucas, who purchased the company from a major brewery in 1979. Their primary customers are the five major national food wholesalers with their secondary customers being smaller regional wholesalers and independent grocery stores. The company followed a portfolio approach, regularly adding and removing products with marketing cycle in mind. Lucas Foods generated a current annual sales level of $12 million and has been a recent entrant into the bakery products market. Their specialty product is Gold Medal Crumpettes which is targeted as a high priced and high quality biscuit.

Problem
Since Lucas Foods is a new entrant in the bakery products market, and having such a high quality product, they are having issues determining the best marketing strategy to achieve maximum growth and potential for their crumpet. Main challenges are how will they capture the available market while supporting the company’s mission? Geographically, their main issue is should Lucas Foods expand their coverage or maintain existing coverage in Alberta and parts of Saskatchewan?

Assumptions
-current annual sales of $12 million in total products, sales equal $82 560 in total annual crumpet sales Current sales are in Alberta only, 16% of 43 000 cases is 6880 cases (6880 x $12= $82 560)

-to achieve $50 million in total annual product sales, total crumpet sales must increase to $344 000 annually ($50 million/ $12 million= 4.166)
(4.166 x $82 560 = $344 000)
($344 000 / $12.00 = 28 667 cases annually)
-*Saskatchewan numbers have not been given therefore annual sales will be only calculated based on Alberta sales

Decision Criteria
1. Improve or maintain profitability
2. Exploit market opportunity as much as possible while maintaining feasibility and profitability 3. Fit with company activities
4. Be consistent with company mission, which is to become a major national food manufacturer, wholesaler and exporter 5. Be consistent with marketing objective of growing to $50 million in annual product sales increasing from current annual sales of $12 million 6. Be consistent with Lucas Foods’ portfolio management approach concerning risk, return and diversity 7. Lucas Foods believes its competitive advantages are:

Excellent customer service
Product knowledge
Marketing expertise
Level of customer service

S.W.O.T. Analysis
STRENGTHS
(internal)
-50 year history
-Sales have doubled since 1979
-Excellent reputation in Alberta
-Well-diversified product line
-Strong product knowledge
-Marketing expertise
-Customer service

WEAKNESS
(internal)
-Unknown in other markets
-Limited brand awareness by retailers outside of Alberta
-No consumer brand awareness outside of Alberta
-Limited geographic distribution...
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