Old El Paso Case Notes

Background
• Established in 1938brand equity
• Subsidiary of General Mills strong parent brand
Problem/Opportunity
• Need to develop a marketing plan for the brand
• Implement a growth strategy that will result in a 5% sales increase for the brand while maintaining the current profitability
Analysis
• Strengths o Very large market shareequity, customer base, loyalty o Currently they are under General Mills which is the 6th largest food company, they already have so many brand in the US , and on average 1 shopper placed at least one GM product in their grocery cart during each visit -> has brand awareness and experience o diversified product line o Sold in 98% of grocery stores large distribution channels, market development
• Weaknesses o Customers don’t think about Mexican food as a number one meal, it is does not have top of mind awareness and if they do think about it they wonder if it’ll be too complex o Mature brand in a slow growing market-> Cash caw, means they need to either introduce a new product in this mature market or find new uses for their current products and promote them to get new clientele to grow at the mature stage
• Opportunities o General Mills-> large brand recognition and know how to launch successful marketing campaigns and new products
• Threats o It is considered a premium product in Mexican meal kit section as majority of the products are priced higher than the competitors o Customers want a quick and easy meal to make, this takes a lot of preparation so some customers may stay away because they want something quick and easy like a hamburger o Currently the market share for Old El Paso has been going down in 2 of the 3 categories (Mexican salsa and Mexican dinner kits specifically)
• Consumer Analysis o 70& of decisions to purchase Mexican meal products are made before consumers ever arrive at the grocery store o 65% of people agree that Mexican make as meal fun but there is a difference between the attitudes towards Mexican good and actually purchasing o Consumers respond well to in store pricing promotions meaning they may purchase more if they believe they are getting a deal if they came to the grocery store without Mexican food in mind they may choose to purchase it because it is on sale o Broken into 3 types of consumers
♣ Meal kit
• Very to little knowledge of Mexican goods
• Much lower level in their ability to cook
• 29% of the total market for Mexican foods were meal kit consumers
• NOTE higher in Quebec
♣ Component
• These individuals know how to cook Mexican and they are familiar with the foods
• They enjoy the preparation and know how to make multiple dishes
• These customers account for 42% of total market of Mexican foods consumers
♣ Kit and Component
• 29% of the total market purchased both kits and components
• They are very similar to the component consumer but they also appreciate the convince of having it all in one o So they don’t mind the prep part and buying all the ingredients they actually enjoy it
• Competitive Analysis o Direct
♣ Private Label Brands
• Sell for cheaper so the grocery store can make larger margins, can also control the promotions and shelf space
• Sell for a dollar cheaper in most cases
♣ Mexicasa
• .3% of total market share o Indirect
♣ At home meals (chicken, burgers)
• Spaghetti is leading in annual consumption with 18, and tacos only at 3%
• Tacos are considered #1 in makes a fun meal (good to promote to children)
♣ Dining out at a Mexican restaurant
• Can be expensive
• But they can order whatever they would like and avoid the prepping part
Decision Criteria
• Needs to increase sales by 5% and maintain profitability
• Needs to great growth within the mature market
• Needs to create brand awareness and how Old el Paso differs from other companies
Alternatives
1. Target the current market, also introducing a new segment, while using existing products
a. This will be trying to increase the current market that we have buying habits. We are currently only seeing the components which are not the most expensive product being sold the most. In this alternative we will use new promo events (such as a who can make the best chilli?) and increase TV advertisements
b. We will introduce a new segment market that is for Kids. We will use the introduction of a cartoon character on some of the products that kids would enjoy such as the meal kits because it is a case fact that tacos a a fun dinner and kids are normally the ones to want to make tacos
c. The new cartoon will be a dancing taco with a Mexican hat on. Once the kids see this within the grocery store it will become an in store decision that the parents will most likely buy because the child wants it
2. Create new product for old market
a. To create a product that is easier to prepare for the “Meal Kit” consumers who currently believe that the product takes too much time and can be confusing to make. This will help to grow the consumer section that is currently not being utilized to the best of its ability
b. It could be something like a new taco seasoning (would have to go through R&D) that offered a new taste like none of the others out there. It would have pamphlet inside, instead of just being on the side of the box. With pictures and steps of exactly what you need to do and easy simple instructions. Also would be important to note in promotion that it is an all new taste and easy to make in 15 minutes or less. This will ensure our target market who currently doesn’t enjoy prepping meals knows it’ll take as long as making a chicken dinner.

Recommendation
• Old El Paso will maintain their current promotions and advertising in place
• They will use a market penetration strategy
• They will keep the pricing level the same since they are already seen as a premium priced product there is no reason to change the prices since consumers are willing to pay the price
• They will introduce new promotions based around Taco Tom the new cartoon for Old El Paso products.
Implementation
• Price o We will keep the price point the same because we are already seen as a premium product and are prices ahead of all the other competitors.
• Place o The promotions will take place through TV ads on Kids channels in the morning before school and in the afternoon when they get home from school. This way the kids will be thinking about Tacos all day and let their parents know that tacos would be a great idea for dinner when they get home from school. The in store promotions such as a coupon will be located in the isle where the Old El Paso is sold attached to one of the shelves. The recipes will be in the same isle aswell.
• Product o We will be changing the packaging on the Meal Kits , Taco Shells, Tortillas and Seasonings. We chose these 4 products because if these are currently the highest earning profit and it order to maintain the profitability and grow sales we will target the most frequently bought products with the highest margins. The packing will have Taco Tom, in a dance pose with a sombrero on. The children segment loves cartoons that are fun and often times it is funnier when food dances.
• Promotion o We will be holding multiple promotions. One will be a TV add introducing Taco Tom and his taco friends making Tacos and showing how easy it is to prepare for mom and dad and how fun it can be. Since 91% of sales are drives by strong brand equity it is more important for Old El Paso to focus on branding rather than in store promotions. Although with that said, we do want to increase the number of consumers who purchase in store as an impulse rather than a premeditated thought. There will be coupons sold at the point of purchase for a buy one get one free of the components that you can buy separately. That way it will increase the willingness of the component consumers to purchase more at one time. The other promotion will be a recipe promotion. We will have small recipe cards hanging in the same isle as the coupon on new dishes using the same simple ingredients and will include the cook time and words such as simply and quick to influence the current segment of individuals who do not want to deal with the preparation.