I Company Background:
Unilever is the parent company of the Skippy brand peanut butter. Unilever is a multi-national company with over 174,000 employees and operates in over 100 countries. Unilever has an annual advertising budget of over $77 million dollars, however it does not break down the budget per business segment. Total sales for Unilever is over $59 billion USD during fiscal year 2008. (Reed Elsevier Inc)
II. Brief Introduction:
Skippy was founded in 1933, 10 years after the product was initially developed by Joseph Rosefield. Skippy's Peanut Butter is manufactured in a single 158,000 sq ft plant in Little Rock, Arkansas. They produce over 10 million cases of Skippy per year and have a total of 72 different SKU's produced for global consumption. They use over 1.2 billion peanuts a day and each 18 oz jar contains 853 full peanuts. (Food & Drug Packaging, 2004) Sales data for Unilever saw overall growth in this business segment in 2008 of 7.9%. Peanut butter sale is included in the Savory, dressings and spreads product area by Unilever and accounted for sales of over $14 billion Euros. (Annual Report and Account 2008, 2008) Skippy is a marketing based organization. The products they develop and market are geared towards meeting customer needs and attempting to differentiate themselves from their competition. Examples of this would include reformulating the Skippy Peanut Butter to have a more "peanutty" taste (Skippy Peanut Butter, 2009) and also developing Peanut Butter that could be dispensed from a squeezable tube to enable younger kids to make their own sandwiches. Sales in the creamy peanut butter category totaled $845 million excluding Wal-Mart for the year prior to May 21, 2006. Private label sales totaled $157 million during this same time period. (Information Resources, Inc., 2007)
III. Competitive analysis:
Main competitors in the peanut butter industry include The J. M. Smucker Company, Peter-Pan Peanut Butter and Private Label peanut butter. The private label peanut butter has been gaining market share and sales as tough economic conditions continue, and is a threat to both Skippy brand and Smuckers'. Skippy product mix includes the non-stir peanut butter and the All-Natural brand. In addition, both of those categories include both Creamy and Crunchy versions. Different sizes offered would also add to the product mix because most consumers who switch to other brands continue buying the same amount as before. Standard size with the largest market share is the 16 oz version, then there is a 4lb jar available for institutional or large family use. (Yun, April 2009) The J. M. Smucker Company has three brand name product lines competing in the creamy peanut butter category, Adams Natural Peanut Butter, Smucker's All-Natural Peanut Butter and Jif brand label. ConAgra is the producer of the Peter-Pan Peanut Butter, and private label is the fourth main competitor. The main competitor focus of this paper is The J. M. Smucker Company and both of Smucker's brand labels. The J. M. Smucker Company offers both the All-Natural peanut butter to compete with Skippy's All-Natural, and Jif for the sweetened, no stir peanut butter market. The J. M. Smucker Company 2009 sales year to date are $3.757 billion USD, of which Peanut Butter accounts for 14% of the total, or $525 million.
Smucker's has several advantages over Skippy, one of which is offering all of their products in an online store. Skippy has a brand website, however it informational only. Smucker's offers all of their peanut butter products, along with their jelly and preserves, and even add-on products to further enhance the brand and make stirring and re-mixing All-Natural Peanut Butter easier and less messy. Another advantage Smucker's has over Skippy is three strong brands competing against Skippy, with each brand name recognized as a leader in each particular niche. Smucker's brands also have significant name recognition across all three of product lines. Adam's Natural Peanut butter was founded in 1916 and predates Skippy by nearly 20 years. Jif was introduced in the 1950's as a response to the Skippy brand of non-stir, peanut butter brands. And finally Smucker's All-Natural Peanut Butter enjoys name recognition associated with the Smucker's jams and jellies. A weakness for Smucker's versus Skippy is that Smucker's realizes almost 85% of its sales from the US, which leaves it highly susceptible to the US economy, whereas Skippy and Unilever is a true global company with markets in over 100 foreign countries. (Datamonitor PLC, 2007) A primary advantage that Skippy has over Smuckers is total market share, which is significantly higher than Jif.
IV: Environmental Variables

Significant legal and political influences currently facing the peanut butter industry include food safety concerns. Recently large food safety issues and recalls have impacted multiple food categories, including peanut butter. Sales of peanut butter for all brands was off by twenty-five percent year over last, after the most recent outbreak of salmonella food poisoning from tainted peanuts. Only a few small private labels were actually affected by the contamination, however the entire industry suffered as a result. Main brand labels had to respond with ad campaigns and separating their product from the affected products Attempting to guarantee their brand label was safe. (Robbins, 2009) The American Peanut Council condemned the action of the one peanut processing plant, which although is only responsible for a very small percentage of total peanut production, significantly impacted the entire industry. “This is a clear and unconscionable act by one manufacturer,” said Archer. “This act is not by any means representative of the excellent food safety practices and procedures of the U.S. peanut industry.” (American Peanut Council, 2009)

Another potentially significant legal risk to Skippy Peanut Butter and other peanut butter manufactures comes from new studies regarding Acrylamide and possible food safety issues. Acrylamide is formed in many different types of foods, including peanut butter when heated at high temperatures. It is not yet proven that Acrylamide is dangerous for humans, however it has been shown to cause cancer in animals. If it is proven to be dangerous to humans, could leave Skippy vulnerable to lost sales legal fees. (Datamonitor PLC, 2007)

Technology opportunities could help improve quality of raw product peanuts and lower peanut grading costs. The FDA is currently working on developing new technology to automate the peanut grading process, which currently is a manual process and experiencing labor shortages. Automating the peanut selection process will improve the efficiency by more than sixty-five percent over the manual process. It currently takes up to six people to officially grade peanut quality. They must "hand-shell, pick, sort, and grade each nut" (Durham, Feb2009, Vol. 57 Issue 2) Secondly, peanuts can only be processed if their moisture rate is less than 10%. Current grading techniques only identify the moisture content after they have been shelled, resulting in increased waste of product.. (Durham, Feb2009, Vol. 57 Issue 2)
Economic influences continue to affect all market segments with an ongoing global recession. The recession creates new opportunities for the peanut butter industry as a low cost staple item that also is high in protein. Some researchers are predicting sales growth opportunities tied to the recession to cause peanut butter sales to increase by 26% by 2013 as consumers turn to lower cost staples. (Chapman, 2009) The recession, if localized in the US puts Skippy competitors at a higher disadvantage because 84% of Smackers' market is in the US (Datamonitor PLC, 2007). Skippy is shipped globally, which spreads the risk over a broader population. Additional economic influences come from the WIC program which contributes to additional food spending by low income women with children. The US department of Agriculture completed a study and identified WIC directly related to $100 million in peanut butter sales in 2007. With the US annual peanut butter sales estimated at $800 million annually, this represents a large market which can be easily targeted for marketing. (Olveira, March 2009)
Significant ethical issues facing the peanut industry near term are related to the still recent salmonella contamination in early 2009. How the companies approached the peanut butter contamination and recall would directly impact customer good will towards the product. Experts say that how a company responds to a crisis is at least as important as the crisis itself. Costco who sold affected peanut butter contacted 1.8 million customers and informed them of the peanut butter recall. Both Skippy and Smucker's advertised nation-wide campaigns stating their products were safe. (Kimes, March 16, 2009)
V Existing consumers of Skippy
Although one associates kids with peanut butter and jelly sandwiches, they are not the largest demographic users of peanut butter. Based on a sample of 25,000 users, the largest two age group ranges were from 35-44 and 45-54 with a combined percentage of 49%. Under the age of 24 accounted for just 11% of total market share. 48% were male, which indicates that it isn't just moms purchasing Skippy. Another significant percentage of purchasers 50% earn less than $60,000 USD. These distributions demonstrate indicate price sensitivity and elasticity. The second largest percentage of peanut butter consumers , 39% have incomes ranging from $60,000 to $149,999. The lower the income, the heavier the user of peanut butter. Peanut butter is an inexpensive protein substition for meat, with two tablesoons equaling 1 oz of meat. It is also a valuable source of protein for vegetarian eaters as well. Peanut butter is purchased year round and as a food staple, not subject to seasonal purchasing habits. It does have a high price elasticity, so any change to the price can drive customers to a competing brand or over to private labels, which has been the case during the recession. Private labels have seen an increase in the last year and is a threat to Skippy and Smucker's. Assumptions that can be made about the consumers in the income range less than $60,000 is they will be most price sensitive and more likely to buy the larger version of the peanut butter. They may be receiving WIC financial assistance in making the purchase and will be less likely to purchase the All-Natural version. The consumers in the $60,000 to 149,999 and up are more likely to be less price sensitive, and more likely to choose the reduced fat or all natural peanut butter brands
Interesting user statisics about the makeup and prefernces of Peanut Butter consumers in the US include over 89% of US households purchase and consume peanut butter annually. Americans eat more than 700 million pounds of peanut butter each year. Creamy peanut butter is preferred by women and children, and people living on the East coast. Men and people in the west coast region of the US prefer Crunchy peanut butter. Nationwide, more people prefer creamy peanut butter than crunchy. (National Peanut Board Fun Facts, 2007)
VI Marketing Mix
Product Analysis:
Skippy brand peanut butter has two key brands, the natural and no-stir brand. The No-stir Skippy is what most people think of when they think of Skippy and peanut butter. It is sweetened (first ingredient listed is corn syrup) and easy to spread. The packaging has been redesigned and emphasizes 0 trans fats as a healthy choice for the consumer. The Skippy All-Natural peanut butter has only two ingredients listed, peanuts and salt. It is a much healthier alternative to standard Skippy, however the oils separate and must be mixed prior to using the first time by the consumer. After opening, the all-natural peanut butter needs to be refrigerated or re-stirred before every use. There is very little difference between Skippy and the competition other than price. A few niche markets have emerged regarding organic peanut butter which sells at a price premium. Other new products tried by peanut butter manufactures like Jif, a main competitor to Skippy has introduced 4-paks of peanut butter for individual consumption. Skippy has investigated using squeezable peanut butter to make it easier on kids to make their sandwiches, however I did not observe any of this product in any grocery store. Smucker's has even developed ready-made, crust-less peanut-butter and jelly sandwiches to try and increase market share.
Skippy has a competitive advantage because it enjoys a majority share of the peanut butter market. Peanut butter is not affected by seasonal sales fluctuations. Product quality of the peanut butter is rated by the texture and 'peanutty' taste of the peanut butter. Skippy adjusted their recipe to give their peanut butter more of a roasted peanut taste. The Skippy and All-Natural peanut butter operate in the middle of the product mix. (Skippy Peanut Butter, 2009) Private label and generic peanut butter sells at a discount to the Skippy and All-Natural brands. On the high end are organic peanut butters which sell at 2-3 times the cost of Skippy and the All-Natural brand.
The peanut butter industry is in a decline stage, with sales stagnant and many competing brands on the market place. Skippy is managing this stage by updating its brand and keeping the packaging fresh. Adding health benefits for the health conscious consumer, and attempting to create new product offerings for today's increasingly hurried families.
Skippy offers its All-Natural brand of peanut butter in a single 16 oz size. Skippy's no-stir brand is offered at 18oz, 28oz and 40oz. At the local Copp's grocery market, I only saw the 18oz and 40oz available on the shelf. The packaging features Skippy's' trademark Red lettering against a white background. The package was recently refreshed with more appealing peanut illustrations and points out 0 grams of Trans Fat. Other flavor varieties include the creamy and chunky, Reduced fat creamy and chunky, and Roasted honey creamy and chunky variety.
Skippy does not list a guarantee on their website, however Smuckers offers a 800 number for questions or comments on their peanut butter. It would be an implied guarantee regarding the quality of Skippy peanut butter. (Bodapati, October 2005)

Distribution:
Skippy purchases the raw materials (peanuts) from several large peanut production plants and ships them to their single production facility in Little Rock, AK. Their production facility is 158,000 sq ft and handles 100% of the US production volume. From there, the finished product is sold to either the end-user Wal-Mart directly or to wholesalers and middle men who sell to the smaller retail and grocery outlets. I was not able to find distribution channel information for Skippy.
There were no logistics issues reported by the Copp's Food and Drug employee who I spoke with regarding stock replenishment for Skippy brand labels or the competitors. She stated they receive daily replenishment from their warehouse and restock the shelves daily with fresh product. (Laurie, 2009) Unilever also has undertaken a supply chain re-engineering from the customer perspective in order to increase efficiencies and costs for both their customer and ultimately Unilever.
Skippy sells direct to Wal-Mart through its parent company Unilever. Other grocery and retail outlets will purchase either direct if they are large enough, or through one or more middlemen. Promotion:
Peanut butter is a elastic product and sensitive to price swings. Skippy peanut butter uses multiple advertising platforms. TV, Print, Internet and Coupons. Skippy advertises ease of use and health factors with their peanut butter products. Skippy and Smuckers both had to enlist public relations marketing in February 2009 after a Salmonella outbreak caused from peanuts forced a major recall of peanut butter nationwide. Both Skippy and Smuckers took out nationwide ad campaigns attempting to re-assure consumers that their respective brands were safe to consume. (Robbins, NY Times -- Fallout Widens as Buyers Shun Peanut Butter, 2009)
Skippy utilizes coupons in weekly ad inserts in nationwide campaigns to further stimulate purchase of their product. A second coupon distribution method used by Skippy is coupons dispensed directly at the point of purchase in a "Use it or Lose it" functionality. These have a much higher redemption rate than the coupons in weekly Sunday inserts. (Vaidyanathan, 2002) A third avenue gaining in popularity is downloadable coupons from the internet. Research is showing high conversion rates for these coupons. New research is also showing that young men are now as likely to use coupons as other population segments. In fact low income households are no longer the main coupon user demographic. The study (English in nature) found that 69% of coupon users earned greater than £100.000. (CawIey, 2005)
Personal selling could be used by Skippy by giving out samples in the grocery store, coupled with a redeem it now coupon with a time-sensitive expiration date.
Skippy uses the internet and their web presence to build brand awareness, product awareness, and company history. Contrast Skippy's web presence to Smuckers' web site. Smuckers' not only has the brand and company history on their website, they also offer an online e-market website to purchase gift baskets of their product, or brand add-on items like a device to make stirring natural peanut butter easier and less messy. Smucker's seems to be using their web presence to a greater advantage than Skippy.
Skippy ties their promotional mix and marketing by using cohesive graphics on all of their packaging and ad material. Skippy utilizes the bright red logo on white, along with a striped sky or background with the Skippy light green and white or blue and white background. Price Analysis
No Stir
Skippy total cost cost per oz Jif total cost cost per oz Private Label total cost cost per oz
12oz $2.19 18.3/oz 12oz n/a n/a 12oz n/a n/a
16.3oz $2.19 13.4/oz 18oz $2.29 12.7/oz 18oz $1.95 10.8/oz
28oz $3.49 12.5/oz 28oz $3.55 12.7oz 28oz $2.99 10.7/oz
40oz $4.89 12.2/oz 40oz $4.85 12.1/oz 40oz n/a n/a
64oz $8.09 12.6/oz 64oz $8.39 13.1/oz 64oz $6.89 10.8/oz Jif-to-Go $2.95 21.9/oz
Natural Peanut Butter
Skippy Smuckers Natural Private Label
15oz 2.19 14.6/oz 16 oz 2.19 13.7 16oz 2.89 18.1/oz
26.5oz 3.49 13.2/oz 26oz n/a n/a 26oz n/a n/a

Skippy has a slightly higher cost per ounce compared with Jif and Smuckers. Copps's provides more shelf space with better positioning for Skippy compared to Jif. Skippy occupies bottom 4 shelves including the shelves at both kids and adults eye level. Jif was on the far edge of the peanut butter section, slightly hidden by a free standing bread rack. Private label brand peanut butter realizes on average a 18% savings over Skippy on the No-Stir product mix. The amazing finding in the Natural peanut butter product category was the high cost of the Private Label natural peanut butter compared to both Skippy and Smuckers. Smuckers has the lowest price at 13.7 cents per ounce, compared with 14.6 and 18.1 cents per ounce on Skippy and Private label respectively. Skippy has re-formulated their natural peanut butter to also require no stirring or mixing by adding an additional oil to inhibit separation.
International ramifications
Consumption of peanut butter is still a widely US product. Worldwide, two-thirds of all peanuts end up as peanut oil rather than peanut butter. Africans have used peanuts in stew and Asian's have used peanuts in sauces. Skippy is pursuing markets globally, and adjusting the brand and strategy accordingly per cultural region.
Comparisons
I found very few differentiators between Skippy and the competition Jif and Smuckers. The two biggest differentiators was the Jif-to-Go pack which sells for 8.5 cents more per ounce than Skippy's' 16.3oz jar, which is their top selling product offering. Second largest difference with Skippy and Smucker's is the online e-market place presence.
Considering the findings that today's consumer and even coupon user is just as likely to be a young male and a upper income wage earner, the more likely they will visit your website and purchase directly from your e-commerce site. Skippy could offer taste sample cases and gift boxes with their product depth and increase sales. Other options to increase sales is to look at other nuts and legumes to turn into non-peanut spreads and capture the market who has peanut allergies.
References
American Peanut Council. (2009, 1 28). News Releases. Retrieved 10 19, 2009, from American Peanut Council: http://admin.peanutsusa.com/documents/Document_Library/APC%20statement%201-28-09%20-%20FINAL.pdf
Annual Report and Account 2008. (2008). Unilever N.V. Annual Report and Account 2008.
Bodapati, A. a. (October 2005). Purchase-Frequency Bias in Random-Coefficients Brand-Choice Models. Journal of Business & Economic Statisics , 482.
CawIey, I. M. (2005). Coupons have 'wider appeal than just old'. Precision Marketing , 5.
Chapman, M. B. (2009). Food Trends for REcessionary Times. Consumer Pulse , 2.
Datamonitor PLC. (2007). J.M. Smucker Company SWOT Analysis. Ohio: J.M. Smucker.
Durham, S. (Feb2009, Vol. 57 Issue 2). Helping the Peanut Industry. Agricultural Research Feb2009, Vol. 57 Issue 2, p22-22 , p22-22.
Food & Drug Packaging. (2004, May). Food & Drug Packaging. Retrieved 10 19, 2009, from http://findarticles.com/p/articles/mi_m0UQX/is_5_68/ai_n6048213/?tag=content;col1
Information Resources, Inc. (2007). Retailers Struggle within Peanut Butter and Jelly Categories. Retrieved 10 19, 2009, from http://www.allbusiness.com/retail-trade/clothing-clothing-accessories-stores-stores/3897632-1.html: http://www.allbusiness.com/retail-trade/clothing-clothing-accessories-stores-stores/3897632-1.html
Kimes, M. (March 16, 2009). How do I keep my company's reputation intact when our industry has been tainted by bad news? Fortune , 30.
Laurie. (2009, 10 15). Grocery Manager - Copps. (G. Carlson, Interviewer)
National Peanut Board Fun Facts. (2007). Retrieved 10 15, 2009, from nationalpeanutboard.org: http://www.nationalpeanutboard.org/classroom-funfacts.php
Olveira, K. H. (March 2009). Economic Linkages Between the WIC Program and the Farm Sector. USDA.
Reed Elsevier Inc. (n.d.). LexisNexis® Academic. Retrieved 10 19, 2009, from LexisNexis® Academic: http://www.lexisnexis.com.proxy.uwec.edu/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T7633620229&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T7633620240&cisb=22_T7633620239&treeMax=true&treeWidth=0&csi=149541&docNo=9
Robbins, A. M. (2009, 02 06). Fallout Widens as Buyers Shun Peanut Butter. Retrieved 10 19, 2009, from NY Times: http://www.nytimes.com/2009/02/07/business/07peanut.html?_r=1
Robbins, A. M. (2009, 02 06). NY Times -- Fallout Widens as Buyers Shun Peanut Butter. Retrieved 10 15, 2009, from NY Times: http://www.nytimes.com/2009/02/07/business/07peanut.html?_r=3
Skippy Peanut Butter. (2009). Skippy Peanut Butter History. Retrieved 10 20, 2009, from Skippy Peanut Butter: http://www.peanutbutter.com/history.aspx
Vaidyanathan, P. A. (2002). Use It or Lose It: Purchase Acceleration effects of time-limited promotions. Journal of Consumer Behaviour , 393-403.
Yun, A. L. (April 2009). Reconsidering the Microeconomic Foundations of. Board of Goveners of the Federal Reserve System.