Tootsie Roll Case Study
1. Strategy Assessment
Tootsie Roll’s simple strategy is to be (and remain) a top-quality producer and distributor of Tootsie Rolls and other candy products, in an industry where it currently has 2 to 3 percent of market share. Specifically, the company has determined to specialize, almost entirely, in hard candies (such as Tootsie Pops and Blow Pops) and chewy candies (such as Tootsie Roll, Frooties and Flavor Roll), and it currently maintains a 50 percent market share in this unique segment. The success of Tootsie Roll in the U.S. for the past 19 years is attributable to the strong consumer awareness of the company’s brand name and brand loyalty. Over time, Tootsie Roll has neither diluted the quality of its products nor failed to deliver consistency in its brand extension through strategic acquisitions. Notwithstanding such success, management must not overlook the inherent danger that a potential blow to such differentiation could engender. It must recognize that as the parental base loyal to the ‘Roll’ begins to disappear, subsequent parental groups may not be able to communicate the special quality of the ‘Roll’ to their children, since they may not possess the positive and familiar image of their predecessors. The strength of the brand could wane as its uniqueness is lessened through a reduction of brand and name awareness, or if another company is able to produce a comparable product that was attractive to youngsters who were never exposed to the Tootsie Roll.
Tootsie Roll has also expanded into foreign market, which accounts for 10 percent of the company’s sale. The company is currently working toward worldwide market penetration and targeting export growth to take advantage of increasing foreign demand for U.S. candies and the decreasing international trade barriers. The strengths/weaknesses and opportunities/threats of Tootsie Roll’s strategy are summarized in Exhibit I.
To be successful in its strategy and to become “the world’s largest
Tootsie Roll’s simple strategy is to be (and remain) a top-quality producer and distributor of Tootsie Rolls and other candy products, in an industry where it currently has 2 to 3 percent of market share. Specifically, the company has determined to specialize, almost entirely, in hard candies (such as Tootsie Pops and Blow Pops) and chewy candies (such as Tootsie Roll, Frooties and Flavor Roll), and it currently maintains a 50 percent market share in this unique segment. The success of Tootsie Roll in the U.S. for the past 19 years is attributable to the strong consumer awareness of the company’s brand name and brand loyalty. Over time, Tootsie Roll has neither diluted the quality of its products nor failed to deliver consistency in its brand extension through strategic acquisitions. Notwithstanding such success, management must not overlook the inherent danger that a potential blow to such differentiation could engender. It must recognize that as the parental base loyal to the ‘Roll’ begins to disappear, subsequent parental groups may not be able to communicate the special quality of the ‘Roll’ to their children, since they may not possess the positive and familiar image of their predecessors. The strength of the brand could wane as its uniqueness is lessened through a reduction of brand and name awareness, or if another company is able to produce a comparable product that was attractive to youngsters who were never exposed to the Tootsie Roll.
Tootsie Roll has also expanded into foreign market, which accounts for 10 percent of the company’s sale. The company is currently working toward worldwide market penetration and targeting export growth to take advantage of increasing foreign demand for U.S. candies and the decreasing international trade barriers. The strengths/weaknesses and opportunities/threats of Tootsie Roll’s strategy are summarized in Exhibit I.
To be successful in its strategy and to become “the world’s largest