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Oscar Mayer: Strategic Marketing Planning Case Solution
Oscar Mayer Company, a subsidiary of Kraft Foods, is facing decreased market share in the meat market because of the recent shift of customer towards nutritional and convenient food products. Although the company has acquired a wheat meat company Louis Rich few years back, but the sales have again started decreasing and market researcher McTiernan suggests company to do something before it’s too late. Company’s president McGraw has asked all his team members to come up with proposed solution for this situation. All the four members have made recommendations that best favor their own department. So now it’s time for McGraw to either choose one of them or combine all four of them and come up with the strategy that is not only best for each department but for the entire company.
Following questions are answered in this case study solution:
In the beginning of the case McGraw thinks he has “never encountered such a complex business challenge” as the one he currently faces. By the end of the case, after he has read the ideas listed in the four memos, McGraw can’t believe he ever thought the investment issue was “going to be a hard one.” What changed the president’s perspective? What strategic decision-making process does McGraw pursue?
If McGraw chooses a strategic direction that favors only one department, what negative effects could this have on other departments? How can McGraw mitigate the damage?
What effects is the change in the strengths and weaknesses of competition having on the Oscar Mayer Division? How does this impact the investment decision?
Absent any resource constraints, which of the four departmental directions do you think is the most viable? Which is the second best strategy? Which is the least viable?
Given the information in the case, what strategic course do you think the division should pursue?
Which of Jim Longstreet’s new product ideas is less likely to succeed? Why?
Oscar Mayer Strategic Marketing Planning Case Analysis
1. In the beginning of the case, McGraw thinks he has “never encountered such a complex business challenge” as the one he currently faces. By the end of the case, after he has read the ideas listed in the four memos, McGraw can’t believe he ever thought the investment issue was “going to be a hard one.” What changed the president’s perspective? What strategic decision-making process does McGraw pursue?
After reading the solutions proposed by his management team, McGraw had his perspective totally changed. While initially he was thinking the investment issue to be hard one, by the end of the case he was reminded that he had a bunch of capable and passionate team who can always come up with quality recommendations and can easily execute them. Each team member had made solid recommendations based on their experience and have managed to once again establish the confidence of McGraw on them.
McGraw had employed five-step strategic decision making process while solving this problem. His decision making process involves
Identification of the problem- McTiernan report had helped him identify the problems his company is facing;
Situation analysis- This, he had done by carefully taking into consideration the current positioning of his company, demands of his customer, and company’s competitors;
Analyzing proposed solutions- McGraw had asked all of his four team members to suggest a solution based on their area of expertise. He had then carefully analyzed these solutions based on the main target of the company and feasibility of proposed solutions;
Implementing/Selecting the best solution- For the company, employing a mix of solutions is a better strategy rather than focusing on one;
Evaluating the decision.
2. If McGraw chooses a strategic direction that favors only one department, what negative effects could this have on other departments? How can McGraw mitigate the damage?
Choosing a decision that favors one department can have serious negative consequences on functioning of other departments. Each department manager has proposed the solution that best favors their own department be it in terms of budget or sales. For example, as mentioned in the case, Louis Rich category manager wants his advertisement and the promotion budget increased while on the other hand, Oscar Mayer division demands reinvigorating their brand growth to be number one goal of the company. The product manager suggests launch of new products while declaring previous products to have reached their saturation while finance director thinks new investments can be a primary source of growth and revenue. Since resources are limited, if McGraw decides to go for the solution proposed by one particular manager; for example, with Louis Rich (LR) category manager, it might send a signal to other departments that LR is prime brand of the company. This can have serious effects on the functioning of other departments. Therefore, in order to avoid any such negative effects, McGraw needs a mix solution that not only favors one department or one division of the company but the company as a whole. He needs to combine all four proposed solutions and then come up with a strategy that is not only best for the company but also it does not negatively affect functioning of any department.
3. What effect is the change in the strengths and weaknesses of competition having on the Oscar Mayer Division? How does this impact the investment decision?
With the change in the lifestyle of consumer, their needs have also changed. Because of fast forward pace of life, convenience and nutritional value of product has become a primary factor in determining their buying behavior. This change has drastically affected the strengths and weakness of the competition too. More sophisticated manufacturing and marketing skills, stronger financial positions, focus on building value added brands, and market share have became the major strengths of industry; while reduced brand strength and longevity relative to Oscar Mayer are now considered to be weaknesses. This shift in strength and weaknesses have led Oscar Mayer to develop new convenience products, healthy red meat products, invest in white meat, and devise strategies that help them differentiate from other competitor brands. This has also affected the investment decision of the company as now they are increasing their expenditure on R&D, A&P and on human resources. Since changing strength and weaknesses have caused red meat to shift out of alignment with customer needs, it is important for the company to respond by changing the direction of its investments if it wants to maintain its market share.
4. Absent any resource constraints, which of the four departmental directions do you think is the most viable? Which is the second best strategy? Which is the least viable?
The most viable solution for the company is Stranger’s proposal to reinvigorate the Oscar Mayer brand. As already mentioned in the case, 82% of total profit of the company is generated from this division. Moreover, it is ‘the basic brand of the company’. Therefore focusing on it is the most viable strategy to increase market share both in terms of profits and volume. Prices should be adjusted to bring the brand back in competition. Enough R&D resources should be provided to the brand to help them formulate their low fat and salt line. A&P budget should be restored along with their marketing campaigns should be reinstituted. The second best strategy is recommended by Jim Longstreet, which requires acquiring new plant that produces convenient and healthier products. While Crabbles Inc. and Chicken Rite can help them expand into new products that have remarkable nutritional and convenience vale, Turkey time may act as an extension of LR. The best choice among these three can be turkey time as it is highly related to LR and company can capitalize of its experience on it. Furthermore, the high capacity of turkey time plan can be useful for LR too. The least viable strategy would be the launch of new products. Company already has suffered because of failure in the launch of new products like Stuff and Burgers. This shows that launching new products at this time is quite risky and requires capital expenditure.
5. Given the information in the case, what strategic course do you think the division should pursue?
Pursuing the mix of all four solutions will be the most rational step for the company. Each manager has proposed a solution that best favors their own department; therefore, it is important for McGraw to follow the strategy that helps achieve profits and growth for the whole company rather than one department. Firstly, the company should focus on reinvigorating OM brand growth by increasing their A&P and R&D budget. Their campaign should be reinstituted. Secondly, close in line extensions of OM should be launched that are healthier and convenient. This might include introducing like low fat and low salt products. Thirdly, the company should acquire one of three companies mentioned by Finance Director. Acquiring turkey time is the most feasible option as it is closely related to LR and company can benefit greatly from it. Fourthly, they should focus upon advertisements of LR. New marketing campaigns should be launched to increase brand awareness and to retain the market share. Lastly, reasonable investments should be made in Lunchables. Since the company lacks the experience required in launching new products, reasonable investments in Lunchables can help them expand in the fourth category in the long run.
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