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Oscar Meyer Case

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Oscar Meyer Case Study Analysis Marketing Management 3301 * Main Protagonist: Marcus McGraw head of Oscar Meyer division at Kraft. * Receives three different letters from: * Jane Morely head of finance * Rob Goodman Louis Rich Manager * Jim Longstreet Head of new product development * Eric Stanger Head of Brand Management.

Issues: * Increasing trend towards less fatty and salty meats that are more health conscious. * Increasing demand for easy to cook and quick meals that can satisfy the needs of working and busy moms. The report by McTieran corporation suggests that OM is not making a sufficient effort to offer healthier snack options as hot dogs and red meat products are becoming less popular. As suggested by the case the 5 year Annual Per Capita Pounds data of white and red meat. White meat has had an overall increase in sales of 33.73% in the past 5 years whereas red meat has decreased by (7.28%) Diagnosis: The decrease in red meat sales means that OM is having difficulties reaching its 4% annual growth rate target. McGraw must therefore decide how to reach this goal while addressing the loss of sales. Further complicating the issue is the other brand of Louis Rich white meats which has had increasing overall sales of 10.9% in the past year. However, as argued by McTieren the growth has slowed from the previous years where it was reaching growth rates of 13.4% and 14.2%. Suggestions: McGraw’s objective is to increase growth by 4% (currently 2.6%) and to increase operating income by 15%. 1) Morely suggests the company adopts a new company line that focuses more on healthy food. Chicken Rite, Turkey Time, or Crabbies. 2) Longstreet believes the company should focus more on the easy and simplicity of meals that the consumer desires. He suggests two lines Zappetites and Lunchables. 3) Stanger suggests the company continues on its path of working on the core of Oscar Meyer to improve its quality. He believes that if the company cuts prices and increases advertising budgets they can achieve high results. 4) Finally Goodman believes OM continues research and development on their LR line to increase market share, and develops new Turkey bacon and gravy lines so that the company can continue on the path of developing the LR lines and as they are early adopters hopefully capturing up to 50% of the market. Risks: OM’s newest brand Stuff n’ Burgers was a product that was easy and quick and failed with only $35 million profit compared to LR’s $511 profit. Operating income was (5). This suggests that Morleys suggestion of developing a new healthy line is risky in light of their recent losses. as suggested by SnB quick lunches are not always the best solution they must be exactly what the consumer is looking for. Investing in new products will not solve their slow sales growth of OM and of LR. Plan of Action: I believe that the company should continue the development of OM and further expand LR. * Consumers ranked the taste of red meat higher to white (8.5 compared to 7.3) * Price cuts may lower contribution margin * I would invest more money into research and development to help expand our market share by understanding what the consumers want and providing healthier (white meat) options while keeping our famous red meat brands. OM has a strong brand name which means that it will not need to invest incredibly large sums into brand promotion but rather just into new products or healthier advertisements. * In addition America is a nation that loves fads and phases whereby they become obsessed with a particular trend. Currently this trend is weight loss but in the future this could change. By investing a lot of time and money into a completely new product rather than focusing on its current ones OM it is focusing on something that may not be stable. * OM should introduce turkey bacon and some new healthier options but not develop completely new product lines. This is expensive and by testing the waters with one or two options before they fully commit to a new line they can save money and reduce the risk. Reality Test I would agree with Goodman and increase the promotional budget by $22M to set up the firm for long-term growth, this would result in higher product awareness and it would further develop our LR brand. I would then form a focus group to discuss the new turkey bacon line as well as potentially one or two more turkey products. This will increase our healthy image and allow us to get feedback on the product. * I would also attempt to create healthy recipes with the turkey products to encourage consumers to buy it and see that it could be used, these recipes could be found on LR website and would increase traffic there as well. * Further OM development by encouraging consumers to buy the product by causing them to remember the taste of red meat over white (playing to their taste preferences).

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