Solution for case: Smith’s Home Foods.
Smith’s Country Ham has been operating for 25 years in North Carolina in the wholesale food division, targeting restaurants and fast food chains. In order to increase turnover and therefore revenue, Smith’s decides to introduce a new product line: Smith’s Home Food. A product line containing 11 packages sold to households and including all kinds of foods: meat, vegetables, fruits etc. lasting for a period of 4 months. The prices of these packages range from $655 to $1532 ($1000 on average). These packages require a freezer and thus Smith provided the sale of freezers for customers that didn’t own any. Also, it is highly important to mention that Smith gave all its customers the possibility of financing all of its goods; packages and freezers. Through this new division, Smith is not only selling food and freezers; it is actually providing its customers with high convenience! Buyers no longer have to run to the market to get any kind of foods, as Smith includes everything in the packages. Also, since they will be buying in large quantities they will be benefiting from lower prices, and will escape any rise in market prices during this 4 months duration. Question Two
As for problems for this strategy, I think Smith’s should reconsider its sources for advertising in order to acquire higher profile customers that are more eligible for its financing options. It should also extend its product mix to include other packages with different duration (more and less than 4 months). Question Three
COGS= 48%= $480
Delivery Charge= $30
Commission Cost= $125
AVC= CPGS + Delivery + Commission= 480+30+125= $635
UCM= 1000-635= $365
Break even: Revenue= Total Cost
Revenue= 1000 x Q
Total Cost= TFC + TVC= (57,000/3) + AVC x Q (we divide 57,000 by 3 to get fixed cost for 4 months) 1000xQ= 19,000 + 635 x Q
To break even, Smith’s must sell 52 packages each 4 month. Executive Summary;
Smith’s Country Hams, a 25-year-old family business that focuses on wholesale meat products such a ham, bocon, and other pork products, sell to restaurants and fast-food operations in eastern North Carolina. Smith’s family business has a service that provides home-delivered meats, vegetables, and fruits should be in considerable demand and providing new sales for its business.
Smith’s Home Foods is going to be the way of the dogs. The current marketing environment would allude to this company has the potential to be market nicher and local geographic market leader with a high share of the market and high growth. Meanwhile, his business is getting an excessive minimal share and less than minimal growth.
The company is supposed to bring a new vision for its marketing mix. Company should spend much performance in dynamic marketing communication strategy and an effective advertising budget to protect further loss of revenue.
Purchasing food through a home food service saves consumers money. Because consumers buy in large quantities, they receive lower prices, and they escape any price increase that occur during the four month period covered by their food package. Making fewer trips to the store also helps customers avoid expensive impulse purchases.
Current Marketing Situation;
Smith Home foods has employed a product concept approach to business that would suggest that company believes consumers will favor products that offer the most quality, performance and that the company ought to engage its energy to making continuous improvements in the product.
Smith Home Foods uses two important marketing techniques. a) Mass marketing techniques-mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. b) Personal techniques by the Smith’s family business force the purpose of making sales and building customer relationship.
The company location’s makes it the geographic market leader in the...
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