Oscar Mayer: Strategic Marketing Planning

Presented by : Aditi Agarwal, Akhil Datta, Bharat Mehrotra, Rohith Krishna, Sonia Sehgal

Oscar Mayer- A History

1883Founded by a German Immigrant Oscar F. Mayer

1904First meat packers to brand their Products

1924First meat packers to Introduce packaged slice bacon

1929The Brand Oscar Mayer is born

1936Wienermobile makes a debut and continues till today

1963The Oscar Mayer Wiener Jingle becomes a hit

Oscar Mayer is one of the leading Meat processing companies in America and is owned by Kraft Foods Ltd. It is well known for Hot Dogs, lunch meats and bacon products. The brand has its own song and vehicle for advertising purposes

GFDDFGHJKHGFHJK

Oscar

Mayer

70%

Louis Rich30%

Pound Volume Produce (in Millions)

2 Years Ago Last Year Current Year Next Year (Projected)0

200

400

600

800

1000

886 916 934

971

The Produce of the company has a steady increase with a projected produce of 971 million next yearOut of the current produce, Oscar Mayer accounts for 70%

Oscar Mayer78%

Louis Rich22%

Share of Revenues - 2 Years Ago

Revenue Generated (In $ Millions)

Revenue generated by the company is growingLast Year there was a 10% increase in Revenue, the current year its 2%Another visible trend is declining share of Oscar Mayer

2 Years Ago Last Year Current Year0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

1,693

1,883 1,924

Oscar Mayer71%

Louis Rich27%

New Products

2%

Share of Revenues - Current Year

Case Facts

• Marcus McGraw is the president of his Division for the last 4 years and has worked with Oscar Mayer’s for 22 years

• He receives a market research from McTiernan Corp. informing him about a threat to the current product portfolio

• Marcus receives 4 memos from his trusted managers with solutions on how to deal with the threat

• Marcus comes up with a Strategic Decision Making Process to help him evaluate the solution and come up with a suitable recommendation

Case Facts: Threat

McTiernan’s Report• Change in meat consumption trend • More importance given to nutrition • More convenience needed • Losses have been offset so far by Louis Rich line• Louis Rich is running out of steam • Future of the +3-4% annual lb volume growth

in trouble

Meat Consumption Trend

The consumer trend shows an increase in Chicken consumption and a decrease in Beef consumption which is Oscar Mayer’s strength for the last 100 years

Case Facts: Solutions offered

Solution 4: Restructure Red Meat- “Back to the basics”

Solution 2: Acquisitions – “Buy Buy Buy!!!”

Solution 3: Diversification of products -”Bright ideas”

Solution 1: Louis Rich “Bet On the Winning Horse”

Bet On the Winning Horse

PRO’s• It still has potential• It’s currently the highest earner in

the stable • More nutritional

CON’s• Copycats are arriving in the

market• It might reduce the OM brand

value• Not fast and easy to Use

The Louis Rich brand is a turkey based line of products which are nutritional as well as cheaper. Increasing advertising and launching new products under this brand can capture 50% of the market`

Acquisitions –“Buy Buy Buy!!”

• Can support further LR expansion

• Both healthier and convenient products can be produced

• Relatively low risk

• More expenses will be incurred • Benefits can only be felt in the

long run• Mite lead to more devaluation of

the OM brand name

PRO’s CON’s

The Director of finance and planning looked up 3 smaller companies with similar products which Oscar Mayer could purchase

Acquisitions –“Buy Buy Buy!!”

• Can lead to a loss in reputation• More expense are involved • Will heavily rely on OM resources for support• Any benefits will only be seen in the long run• It may lead to a recourse imbalance for all the departments

Bad Idea

Diversification - Bright Ideas

PRO’s• Provides more convenience• Explores a new market• Can easily be combined with

other OM or LR products • It builds on the explosive growth

of the microwave oven

CON’s• Idea is still experimental • Nutrition issue • If the idea fails the repercussions

would be terrible • Stuff ‘n’ burgers fiasco

Jim Longstreet wants to invent a 4th major category which addresses the changing lifestyles of people. The two ideas he proposes are “Zappetites” and “Lunchables”.

Diversification - Bright Ideas

Good Idea

LUNCHABLES

•Explores a new market •Can be combined with any of the other departments •Attracts a new client base for the company•Easy to produce •Provides nutrition value•Provides convenience •Can be sold to anyone

Bad Idea

ZAPPETITES

•Frozen food never tastes as good as fresh •Microwave food is believed by some to cause cancer •Stuff ‘n’ burger fiasco •Nutrition issue•Still in R&D stage •Extra man power will be needed

Restructure – Back to the Basics

PRO’s• It gets the main business of OM

back on track• It reduces operation costs • It can balance the Health

concerns

CON’s• It does not consider the changing

marketing scenario

Eric Stanger, VP of the OM Brand does not want to see the OM brand slip away from the processed meat industry. He points out 5-6 strategies in order to breathe life into the OM brand

Good Idea

Restructure – Back to the Basics

• People still like red meat • Taste factor• Conventional American food habits • Nutrition can be provided• Gets the OM flagship back into the game• Reduces costs

BCG Matrix

Better planning & effective allocation will help in optimal utilization of resourcesConducting customer feedback will help in penetrating the consumer’s psyche Analysis of each of the solutions keeping in mind the pros and cons of each and the prevailing market trends, choosing a mix of solutions and finally preparing an estimate of the future earnings from the brand by applying the chosen solution.

THE STRATEGIC DECISION MAKING PROCESS

Problem Identification

Situation

Analysis

Analysis of Solutions

Measure Viability of Solutions

Choose

the best possible

1

4

2

3

High

Low

High Low

Att

ract

iven

ess

Success Probability Opportunities

1. Louis Rich white meat products, Lunchables

2. Low fat, low salt Oscar Mayer products

3. Processed red-meats that has no nutritional value

4. Acquisitions & Mergers

Opportunity Matrix

1

4

2

3

High

Low

High Low

Ser

iou

snes

s

Probability of Occurence Threats

1. Competitor catching up with similar products.Change in customer base.

2. Lesser red-meat consumption.Advertising and Promotion budget not allocated well.

3. Louis Rich milking Oscar Mayer.

4. Oscar Mayer brand subdued by Louis Rich.

Threat Matrix

Competitors & Their Effects• Competitors:

– Multi Billion Dollar companies who have acquired small meat packers and consolidated the meat industry. Examples are ConAgra, Sara Lee & others

– Strengths – Products are lower on fat content and more convenient to purchase for the consumer

– Weakness – Not much Market Experience as Oscar Mayer

• Effects:– Weakening sales– Reducing market share– Agile competitors, i.e. they can think of new ideas in a more competitive manner,

serve the customers better– Increasing investment in A&P– Increasing investment in R&D– New price-sensitive products with relation to emerging consumer trends

Investment Decision Making

• Key Questions to ask:– Volume v Profit– Acquire v Develop– Rebrand– New Product Development

Our Recommendation-Mixed Bag Suggestions from different Managers to be taken • Boost the Switch to Rich campaign• Lunchables - Combine it with the other departments• Have a 10% price cut of the top 3 OM brands • Increase the OM A&P budget by $25MM• Reinstitute the Wienermobile program• Get enough R&D recourses to formulate a low fat& salt red

meat line • Analyse what’s need to increase utilization and cover

additional price reductions in OM plants

Why Choosing Just One is a Bad Idea

• It may cause friction between the different managers • The other may be discouraged form sending more ideas • It may lead to fall in importance of the other divisions • An increase in A&P for would lead to budget cuts for the

others • If one idea fails it may lead to a disastrous situation for the

entire company

New TrendsAs you can see in 2010, the consumption of Broilers (Chicken) was projected to surpass that of Beef and Pork (red Meats). This leads us to confirm that Oscar Mayer’s cannot avoid the Louis Rich brand and the idea of the Lunchables

Product Life Cycle

•Louis Rich is in Growth Stage of the Product Life Cycle•Oscar Mayer is reaching Maturity