My essay for this website
Italy
In Italy, where Gallo has such a long relationship with the consumers, they sought to increase sales through segmentation within their category. Gallo offered three distinct product lines, each with their own subsequent varieties. This was done with the intent of increasing the consumer’s perceived value by catering more specifically to the needs and demands in each segment. Gallo communicated with the consumers through television spot commercials which often portrayed their Blond line as a winning component in cooking contests. They also aired longer instructional infomercials. Their advertisements accounted for a 33% share of voice in their category.
Gallo’s biggest challenger in both volume and value share of market was Flora. Flora abstained from the lower margin white rice segment of the retail market and offered a small variety of parboiled products. The promotion of their four varieties consisted of upbeat television ads that conveyed the stereotypical lifestyle of their respective segments. These ads would likely have run more frequently than those of Gallo because Flora contributed 20% more to advertising than Gallo. This larger share of voice presumably trimmed their manufacturer gross margins, but they still managed an average margin of 30% compared to the 35% Gallo averaged with their Blond line.
Even though the retail rice market in Italy is well established and mature, there will likely be changes that Gallo will have to address. As more competitors recognize the profit margins that are possible in more specialized segments they will likely develop additional varieties. This could escalate small companies such as Scotti [MS1] into direct competition with Gallo on their upper end products rather than just the white rice. Another concern that Gallo must assess as they move forward is that many stores and other outlets may be motivated to offer a store brand to compete.
Argentina
Gallo offered a diverse selection of product
In Italy, where Gallo has such a long relationship with the consumers, they sought to increase sales through segmentation within their category. Gallo offered three distinct product lines, each with their own subsequent varieties. This was done with the intent of increasing the consumer’s perceived value by catering more specifically to the needs and demands in each segment. Gallo communicated with the consumers through television spot commercials which often portrayed their Blond line as a winning component in cooking contests. They also aired longer instructional infomercials. Their advertisements accounted for a 33% share of voice in their category.
Gallo’s biggest challenger in both volume and value share of market was Flora. Flora abstained from the lower margin white rice segment of the retail market and offered a small variety of parboiled products. The promotion of their four varieties consisted of upbeat television ads that conveyed the stereotypical lifestyle of their respective segments. These ads would likely have run more frequently than those of Gallo because Flora contributed 20% more to advertising than Gallo. This larger share of voice presumably trimmed their manufacturer gross margins, but they still managed an average margin of 30% compared to the 35% Gallo averaged with their Blond line.
Even though the retail rice market in Italy is well established and mature, there will likely be changes that Gallo will have to address. As more competitors recognize the profit margins that are possible in more specialized segments they will likely develop additional varieties. This could escalate small companies such as Scotti [MS1] into direct competition with Gallo on their upper end products rather than just the white rice. Another concern that Gallo must assess as they move forward is that many stores and other outlets may be motivated to offer a store brand to compete.
Argentina
Gallo offered a diverse selection of product