Brannigan Foods Case Study Exercise


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Complete Marketing exercise of a Company that needs to make a repositioning of the brand and product lines in order to survive in the future.

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Brannigan Foods Case Study Exercise

  1. 1.   BRANNIGAN  FOODS   STRATEGIC  MARKETING   PLANNING                             IE  Business  School   Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza  
  2. 2. IE  Business  School   PROBLEM  STATEMENT     Bert   Clark,   vice-­‐president   and   general   manager   of   Brannigan   Food   Soup’s   Division,   has   to  decide  which  of  the  four  alternative  plans  his  team  members  have  proposed  should   be   implemented   in   order   to   reverse   the   industry’s   steady   decline   as   well   as   the   division’s  sales,  market  share,  and  profitability  decrease  for  the  last  three  years.  He  has   to  move  the  division’s  growth  back  to  a  3-­‐4%  at  the  end  of  the  fiscal  year.     ANALYSIS  OF  THE  SITUATION     Company:  Brannigan  is  a  company  that  has  been  operating  for  over  100  years.  It  has  a   Soup   Division   which   has   experienced   a   decrease   in   its   profitability   and   needs   to   create   a  new  strategy  to  stop  the  declining  sales  and  market  share  it  has  been  experiencing.  It   is   important   to   highlight   that   the   soup   division   is   the   cash   cow   (according   to   the   Boston   Consulting   Group   product   matrix)   of   Brannigan   Foods,   reaching   up   to   40%   of   the  company’s  total  sales.     The   most   profitable   product   category   this   division   has   is   the   Ready   to   Eat   Soups   (RTE),   which  accounts  for  a  total  of  71%  of  the  total  revenues,  ($210MM  in  total).  The  Soup   Division   has   other   product   and   brand   segments   such   as:   Dry   Soups,   Healthier   Soups   and  the  Fast  &  Simple  Meals.       Five  years  ago,  a  soup  company  named  Anabelle  was  acquired  to  broaden  the  range  of   products  offered  by  introducing  the  Fast  Meal  category,  and  the  strategy  that  has  been   followed  during  the  past  few  years  has  been  to  strongly  invest  in  Dry  Soups,  Healthier   Soups  and  the  mentioned  Fast  Meals.     Regarding   brand   awareness   and   value   perceived   by   customers,   Brannigan   is   behind   competitors  in  the  following  aspects:   • Health  trends   • Diet  claims   • Convenience  offerings   • Flavors  –  specially  popular  regional  ones   • Seasonal  products  outside  of  cold  weather   For  retailers  the  company  doesn’t  seem  innovative  nor  profitable.       Customers:   A   fact   to   point   out   is   that   Baby   Boomers   are   the   larger   and   most   loyal   segment   but   they   are   getting   older   and   their   preferences   are   evolving   into   living   healthier   lifestyles   and   consuming,   in   the   case   of   the   soup   division,   more   salubrious,   low-­‐sodium   based   products.   As   a   counter   part,   this   added   value   is   not   perceived   by   younger  target  segments  of  the  population,  which  look  out  for  other  incentives.     In  general  terms,  consumers  are  seeking  for  innovations  in  the  sector  and  new  flavors   as  well.       Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   1  
  3. 3. IE  Business  School   Competitors:   New   small   competitors   are   entering   the   market   with   more   convenient,   healthier   soups   and   new   flavors,   which   are   gaining   popularity   among   customers,   specially  the  Mexican  and  Asian  tastes.       Some   of   the   small   competitors   that   represent   an   opportunity   for   acquisition   and   increase   of   the   brand   portfolio   of   Brannigan   are   Roarin’   Cajun   Foods,   Brothers   Gourmet   and   Red   Dragon   Foods,   which   is   the   option   the   company   is   strongly   considering.     Furthermore,   other   important   competitors,   which   represent   a   clear   threat   to   the   company,   are   the   Private   Labeled   soups,   which   have   been   increasing   their   sales   by   5%   over   the   past   several   years.   It   is   important   to   state   that   another   drawback   for   Brannigan   is   that   retailers   are   decreasing   the   company’s   shelf   space   by   3%   on   a   yearly   basis  in  order  to  provide  extra  space  to  their  own  private  labeled  products.       Collaborators:  Retailers  are  a  very  important  part  for  the  strategic  marketing  decisions   of   Brannigan;   they   provide   the   adequate   channels   to   reach   the   end   consumers.   Retailers  and  Brannigan  must  work  hand  in  hand  in  order  to  increase  net  profits.  The   disjunctive  is  that  the  relationship  is  becoming  eroded  since  Brannigan  intends  to  have   more   shelf   space   for   new   products   and   retailers   are   decreasing   the   shelf   space   availability  to  introduce  their  private  labeled  products.       The   advertising   strategy   has   been   focused   mostly   on   pull   tactics,   investing   in   generating   brand   awareness.   Yet,   the   push   tactics,   when   it   comes   to   the   direct   relationship  with  retailers,  are  not  efficient  and  can  be  a  good  point  to  emphasize  on,   for  future  negotiations.       Context:   As   stated   before,   sales   from   the   sector   have   been   decreasing.   The   loyal   population  (baby  boomers)  is  becoming  older  and  the  new  generations  of  consumers,   like   the   millennial   generation,   have   not   been   targeted   yet.   In   addition   there   is   an   increasing  concern  in  society  for  eating  healthy  and  preventing  obesity.       There  has  also  been  an  incremental  shift  of  demand  for  fast  and  simple  meals  that  can   be  cooked  without  taking  too  much  time  since  people´s  lifestyles  are  becoming  more   focused   on   work   and   on   an   efficient   use   of   spare   time.   It   is   important   to   note   that   working   mothers   are   a   new   segment   that   has   increased   over   the   past   year   and   still   cook  their  food  for  their  children.       Now,   in   order   to   take   a   closer   look   into   the   Processed   Food   industry,   in   which   Brannigan  operates,  we  used  Porter´s  five  forces  tool  to  analyze  the  microenvironment   and  the  competitiveness  that  Brannigan  is  facing.     Rivalry   among   existing   soup   sellers:  Based  in  our  knowledge  and  taking  as  a  reference   the   real   market,   rivalry   in   the   Processed   Food   industry   is   quite   high   since   there   are   many  companies  competing  on  price,  quality,  taste,  health  factors,  product  innovation,   Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   2  
  4. 4. IE  Business  School   and   product   usages   and   benefits.   The   main   challenge   is   the   fact   that   all   the   competitors  provide  the  market  with  almost  the  same  product  range.     In   addition,   private   labels   are   also   starting   to   represent   a   threat   for   Brannigan   since   retailers  are  offering  cheaper  brands  and  products.  The  only  way  the  company  seems   to   be   competing   with   retailers   is   by   offering   higher   quality   and   probably   taking   advantage  of  economies  of  scale.     Threat  of  new  entrants:   The   threat   of   new   entrants   is   relatively   low   since   most   of   the   companies  of  this  industry  are  large  and  account  for  an  important  part  of  the  market   share.  The  main  barrier  entries  are:   • High  levels  of  advertising  and  promotion  investment  in  order  to  generate  brand   awareness.   • Difficulties  obtaining  shelf  space.  Retailers  prefer  known  brands  since  they  are   the  ones  that  can  afford  intensive  communication  campaigns  as  well  as  point-­‐ of-­‐sale  promotions  in  order  to  generate  demand  and  hence,  sales  volume.     Threat   of   substitute   products:  This  threat  is  relatively  high  since  there  are  many  fast   food   restaurants   that   sell   this   type   of   products,   which   are   even   increasing   due   to   a   shift   in   society’s   values,   which   are   becoming   more   occupied   with   work   and   want   to   invest   the   smaller   amount   of   spare   time   they   have   in   things   other   than   cooking.   Furthermore,  there  are  other  products  that  satisfy  the  same  need  of  a  quick,  tasty  and   cheap  course.       Bargaining  power  of  buyers:  Customers  power  is  high  since  they  are  demanding  more   innovative  products  and  new  flavors.  In  addition,  due  to  the  recession,  they  also  seek   for  cheaper  prices,  which  fosters  competition  among  producers.     Bargaining   power   of   suppliers:  We  assume  that  suppliers  have  some  power  since  they   can  vary  the  quality  of  the  raw  materials.  Another  factor  to  take  into  consideration  is   the  prices  that  suppliers  charge;  due  to  inflation  they  would  probably  raise  their  prices   unless  Brannigan  builds  win-­‐win  relationships  with  them.       And   finally   we   made   a   SWOT   analysis   to   take   a   closer   look   at   Brannigan   strengths,   weaknesses,   opportunities   and   threats   to   identify   possible   new   strategies   and   implementation  plans.     Strengths:   • Brannigan  is  the  current  market  leader  with  a  high  market  share.   • It  has  high  brand  awareness  and  withholds  very  good  results  in  the  top  of  mind.   • Condensed   and   Ready   to   Eat   soups   are   a   part   of   the   American   culture   and   is   consistent  in  the  all-­‐around  American  diet.     Weaknesses:   • Decrease  in  sales  over  the  past  three  years.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   3  
  5. 5. IE  Business  School   • • A   poor   job   in   targeting   new   segments   of   the   market   derived   from   changes   in   society’s  behaviors  and  values.   Internal   teams   of   Finance,   Marketing   and   Sales,   R&D,   and   Simple   Meals   units   are   not   integrated   with   each   other;   this   might   derive   form   a   lack   of   communication  between  the  teams.     Opportunities:   • Innovate  with  new  products  that  are  in  line  with  consumers  needs  and  that  will   boost  sales  up  to  a  3-­‐4%  increase.   • Generate  creative  solutions  with  retailers  to  create  win-­‐win  situations.     Threats:   • Private  labels  grow  steadily  5%  per  year  and  retailers  seek  new  shelf  space  for   their  products,  reducing  the  shelf  space  availability  for  Brannigan.   • New   competition   is   entering   the   market   with   disruptive   and   incremental   innovations   that   threat   Brannigan’s   leader   position   and   that   have   eroded   its   sales.   • A   lack   of   coherent   targeting,   segmentation   and   positioning   has   created   a   gap   between  the  product  offerings  and  what  consumers  really  want.       The   case   states   that   four   members   of   different   departments   of   the   soup   division   proposed   possible   solutions   to   stop   the   decline   in   sales   and   market   share   of   Brannigan’s   soup   division.   We   stated   their   pros   and   cons   and   made   a   quantitative   analysis   of   the   net   earnings   forecasts   and   cash   flows   to   take   the   best   possible   decision   for  the  company.     ALTERNATIVES     1.  Invest  in  the  growing  sectors   Srikant  Tipha,  director  of  the  Simple  Meal  Units,  proposes  to  emphasize  the  company´s   efforts  in  the  Simple  Meals,  Heart  Healthy  Soups  and  Dry  Soups,  by  increasing  an  18%   the  investment  in  advertising.       Pros:   The   strategy   focuses   on   products   and   brand   that   target   growing   segments   of   the   market.   The   consumers   are   beginning   to   shift   into   healthy   lifestyles   and   easy   to   prepare  meals  due  to  time  constrains  in  their  working  schedules,  and  it  works  perfect   with   Srikant’s   division.   (It   is   important   to   understand   the   personal   motivations   when   analyzing  all  the  possibilities).     Cons:  The  strategy  focuses  on  “star  products”  but  leaves  the  “cash  cow”  (ready  to  eat   soups)   behind.   This   is   a   mistake   often   made   because   star   products   want   to   be   promoted  but  if  the  “cash  cow”,  which  finances  the  “star  products”,  loses  profit,  the   subsidy   cannot   continue.   In   addition,   previous   experience   with   Annabelle’s   acquisition   process  was  slowly  picking  up  but  did  not  meet  the  expected  growth  forecasts.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   4  
  6. 6. IE  Business  School   In  the  chart  shown  below  we  can  see  that  with  this  strategy  Brannigan’s  net  earning   wouldn’t  increase,  indeed  they  would  be  reduced  by  a  4%.  This  is  why  this  alternative   is   not   a   good   one   regarding   the   goal   of   increasing   3-­‐4%   the   net   earnings.   (Exhibit   1   shows  the  calculations  done  in  order  to  do  this  forecast)             2.  Acquire  product  lines  to  complement  the  core  growing  sectors   Claire   Mackey,   director   of   Finance   and   Planning,   proposition   is   to   buy   out   small   companies  to  enter  healthier  and  convenient  segments  that  have  new  flavors  and  that   Brannigan’s   product   portfolio   does   not   have.   It   is   important   to   understand   the   situation  of  the  soup  division,  these  new  initiatives  might  be  growing  in  market  share   but  their  future  is  uncertain.     Pros:  The  acquisition  might  seem  positive  since  the  investment  in  R&D  is  literally  null.   If   the   brands   that   are   acquired   are   kept,   there   is   an   important   reduction   in   cannibalization  effects.     Cons:   A   mayor   investment   has   to   be   made   in   order   to   acquire   a   new   company.   Sometimes  the  synergies  between  the  companies  are  not  stable  enough  and  miscues   in  the  lines  of  production  could  occur.  The  past  acquisition  of  Annabelle’s  did  not  meet   the  expectations,  so  the  board  of  directors  might  not  look  at  it  with  enthusiastic  eyes.     In  the  calculations  carried  out  we  observed  that  this  strategy  wasn´t  profitable  either   since   Brannigan’s   net   earning   would   be   decreased   by   an   average   of   7%   per   year.   (Exhibit  2  shows  the  calculations  done  in  order  to  do  this  forecast)         Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza     5  
  7. 7. IE  Business  School   3.  Invest  in  organic  growth  from  internally  developed  new  products   Anna   Chong,   Chief   Innovation   Officer,   shows   an   alternative   by   investing   in   R&D   and   advertising   and   promoting   new   product   entries.   She   outlines   that   it   is   important   to   “milk   the   cash-­‐cows”   and   subsidize   the   investment   of   the   “star   products”.   She   proposes   very   original   ideas,   like   new   flavors   that   are   appealing   to   the   growing   demands  of  the  public,  new  innovative  packages  and  new  usages  of  the  soups.       Pros:  Original  ideas,  and  no  need  to  invest  heavily  on  acquiring  a  small  company,  which   avoids  the  risk  of  miscues  in  the  production  lines.  The  new  innovations  target  different   segments   for   the   soup   division,   specially   the   growing   categories   for   healthy   meals   and   active  lifestyles.  One  important  innovation  is  to  add  new  products  for  the  Ready  to  Eat   category,  which  is  the  most  profitable  of  the  company.     Cons:   Only   one   out   of   ten   innovative   products   actually   succeeds   in   the   market   and   becomes  an  established  product  in  the  company´s  portfolio;  the  remaining  nine  do  not   last  longer  than  two  years.  It  is  very  difficult  to  assign  exact  costs  to  the  products  that   were   created   from   inside   the   company.   Moreover,   adding   new   products   with   the   diminishing   shelf   space   in   the   retailer   stores   represented   another   challenge   for   this   plan  since  new  products  would  need  a  reduction  of  the  shelf  space  from  the  Ready  to   Eat  soups.     With   this   alternative   we   can   see   that   once   again   Brannigan’s   net   earnings   wouldn’t   be   increased   but   instead   decreased   a   2%   on   average   per   year.   (Exhibit   3   shows   the   calculations  done  in  order  to  do  this  forecast)           4.  Invest  in  the  core   Bob  Pugh,  director  of  Marketing  and  Sales,  focuses  his  strategy  on  an  increase  in  the   marketing   expenditure   by   $20MM   to   increase   brand   awareness   and   restore   it   to   previous  numbers.  He  also  states  a  price  decrease  of  the  Ready  to  Eat  soups  by  5  cents   and   proposes   a   $22MM   investment   in   capital   to   enhance   the   manufacturing   plants’   efficiency  and  cut  production  costs.     Pros:  The  risk  of  introducing  new  products,  that  might  not  be  effective  in  the  market,  is   reduced   by   100%   since   it   focuses   on   core   products,   primarily   the   Ready   to   Eat   products,  which  are  the  most  successful  products  of  the  soup  division.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   6  
  8. 8. IE  Business  School   Cons:   Price   reduction   would   harm   the   premium   brand   image   Brannigan   already   has.   The  investment  in  the  manufacturing  plants  and  in  marketing  adds  up  to  $42  million,  a   heavy  investment  that  does  not  provide  added  value  to  the  current  strategy,  which  is   clearly  failing.     In   this   case   this   alternative   seems   profitable,   we   can   see   that   Brannigan’s   net   earnings   will   be   increasing   during   the   next   3   years.   (Exhibit   4   shows   the   calculations   done   in   order  to  do  this  forecast)           RECOMMENDATION     Based  on  the  investigation  and  data  analyzed  for  all  the  alternatives,  we  think  that  the   best   alternative   is   a   mix   of   the   option   three   and   option   four.   It   is   important   to   understand  that  these  options  alone  may  not  generate  a  stable  and  steady  growth  in   the  long  term  due  to  possible  fluctuations  in  the  market  trends.     Although  option  four  does  look  profitable,  qualitative  analysis  for  the  long  term  such   as  brand  health,  brand  equity  and  brand  perceptions  in  the  consumers  minds,  are  not   addressed   properly   and   will   hinder   the   company’s   growth   in   an   ever   changing   and   constantly  fragmenting  market.     As   managers,   we   have   a   holistic   view   of   the   whole   context   and   understand   that   it   is   important  to  reinforce  the  “cash  cow”  of  the  division  which  are  the  Ready  to  Eat  Soups   (option   4),   but   we   also   understand   that   the   leader   position   in   the   market   obliges   Brannigan   to   invest   in   R&D   due   to   the   changing   trends   and   needs   of   the   market   (option  3).     It   is   important   to   invest   in   marketing   to   make   the   RTE   soups   strong   in   the   market,   and   to   be   able   to   keep   financing   the   “question   mark”   products,   which   will   become   stars   and  future  “cash  cows”  with  the  way  the  market  is  growing.       This  mix  of  both  strategies  certifies  the  company´s  short  term  goals  and  envisions  long-­‐ term   profits   with   the   investment   made,   since   it   stretches   the   life   cycle   of   the   RTE   soups  and  boosts  growth  in  the  early  stages  of  the  new  products  life  cycles.       Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   7  
  9. 9. IE  Business  School   IMPLEMENTATION  PLAN     Due  to  the  context  and  present  situation  of  the  company,  the  most  important  thing  is   to  start  with  the  basics,  go  to  the  consumer  needs,  and  find  out  what  they  value.  The   first   thing   to   do   is   to   reposition   Brannigan   in   consumers’   minds   by   analyzing   the   different  segments  of  the  market.           From  the  consumer  information  research  made  by  Mr.  DeGennaro,  38%  of  millenials   eat  soup  as  a  snack,  78%  think  of  soup  as  being  healthy  and  a  low  calorie  option  for   dieting,  and  61%  of  consumers  take  low  sodium  into  account  when  purchasing.  Even   though  Baby  Boomers  are  the  biggest  market  and  most  profitable,  the  tendency  in  the   future   is   that   it   will   be   reduced,   so   targeting   younger   segments   is   important   for   the   long-­‐term  growth  of  the  company.       1.  Marketing  Mix     Product   The   branding   strategy   will   consist   of   implementing   an   umbrella   brand   of   Brannigan’s   soup   division   that   will   give   emotional   values   to   the   products   and   brands   targeted   to   the  different  market  segments.  These  products  will  include  functional  benefits  that  will   satisfy  their  needs.     Positioning  statement:     “For  people  who  enjoy  healthy,  easy  to  cook,  savory  food,  Brannigan's  Soup  is  a  brand   of  soups  that  offers  convenient,  varied,  trustworthy,  and  very  good  quality  soups  that   allows  customers  to  enjoy  meals  while  taking  care  of  their  health  and  to  save  time  at   very  competitive  prices  based  on  its  experience  as  leader  in  the  category  and  its   innovative  products”     Based  on  this  positioning  statement,  the  company  must  enter  the  21st  century  with  a   strong   argument   that   will   reclaim   their   position   as   leader   of   the   market   providing   a   better  life  quality  offering  through  their  products  and  services.  (The  market  research   showed  they  fell  back  on  health  trends,  diet  claims,  convenient  offerings,  flavors,  and   seasonal  products,  which  are  growing  trends).     The   R&D   products   will   be   divided   into   the   previously   stated   segments   and   will   provide   Brannigan   with   a   Diversification   Strategy   based   on   Ansoff’s   Matrix   since   the   market   trends   are   not   mature   enough   yet,   and   the   products   will   be   introduced   as   new   innovations.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   8  
  10. 10. IE  Business  School   • • • • • • • • • • Packaged  deli  soups:  Price  premium,  for  baby  boomers  and  educated  palates   Simple  healthy  weight  watchers  soups  with  dietary  components:  targeted  to  all   but  the  youngsters   Active  lifestyles  soups  and  broths:  millenials,  working  mothers   Convenient   great   meals   (changing   the   usage   of   the   soup   into   a   sauce):   working   mothers   New   flavored   cold   soups   (E.g:   chilled   tomato   and   avocado,   swan´s   summer   soup):  millennial,  working  mothers   New  flavored  teriyaki  beef:  millennial,  working  mothers   Chicken  Noodled  Soup:  millenial,  working  mothers  and  youngsters   Microwave  ready  soups:  millenial  and  working  mothers   Portable   thermic   microwave   soups   cold   on   the   hands,   hot   on   the   mouth:   millenials  and  working  mothers   Savory  and  tasty  tomato  meatballs  soup:  Youngsters     On  the  other  hand,  the  RTE  soup  category  is  the  most  profitable  one  and  can  be  stated   to  be  the  “cash  cow”  (based  on  the  BCG  matrix)  of  the  company.  The  market  is  very   mature  as  well  as  the  products,  this  is  why  based  on  Ansoff’s  matrix,  the  strategy  will   focus  on  penetrating  the  market.       Place   Distribution  is  a  big  concern  for  the  soup  division.  One  of  it’s  major  problems  is  that   private   labels   are   entering   the   market   and   gaining   a   constant   5%   growth   due   to   the   increasing  price  sensitivity.  This  has  created  a  conflict  of  interests  between  Brannigan   and  its  retail  partners  in  the  shelves  of  the  supermarkets.       A  3%  of  shelf  space  has  been  reduced  on  a  yearly  basis,  even  though  it  is  not  the  major   problem  the  company  is  facing,  it  is  a  symptom  that  must  be  put  into  consideration.     We   understand   that   incentives   must   be   offered   to   the   Retail   partners   to   keep   shelf   space  for  Brannigan  soups,  especially  for  the  new  innovations  coming  up.     In  order  to  address  this  issue  we  propose  the  following  actions:     • Invest  in  an  Information  Technology  that  shares  information  between  retailers   and   Brannigan   on   stock   keeping   units   that   will   allow   an   implementation   of   a   “just  in  time”  model  for  stock  replenishment.  This  way,  the  stock  is  reduced  in   the  retailers  warehouse  and  creates  a  positive  effect  on  their  balance  sheets.     • Invest   in   the   retailers   store   with   promotional   POS   materials   with   special   product  stands  and  advertising  that  will  drive  an  increase  in  sales.   • Create   in   store   activities   promoted   by   Brannigan   to   show   the   customers   new   recipes  and  ways  to  use  the  soups  they  can  find  inside  the  stores.       We   believe   this   investment   in   the   distribution   channels   is   crucial   for   the   sustained   relationship  with  the  retailers  since  they  sell  a  62.9%  of  our  total  product  sales  and  it   creates  a  win-­‐win  situation  for  both.       Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   9  
  11. 11. IE  Business  School     Price   It   is   important   to   state   that   price   is   a   sensitive   issue   for   Brannigan,   since   it   is   the   current  leader  of  the  market  and  has  high  brand  awareness  and  top  of  mind,  the  new   brand   positioning   will   reinforce   this   image.   This   is   why   we   will   not   increase   nor   decrease  prices  for  the  RTE  soups.     Instead   we   are   going   to   introduce   to   the   market   a   premium   brand   of   packaged   Deli   soups  by  Brannigan  that  will  be  priced  higher  than  the  RTE  soups.  This  is  a  strategy  that   mixes   Pricing,   Product   and   Brand   Management,   and   Knowing   the   Consumer   trends,   all   together.  Price  premium  will  give  an  image  of  an  enhanced  high  quality  product,  it  will   increase  the  product  portfolio  of  the  brand  and  it  will  also  create  what  we  know  as  a   “Compromise  Effect”  in  the  behavior  of  consumers.       This   effect   states   that   adding   a   new   product   to   the   set   of   choices   a   consumer   has,   can   shift   the   consumers   preferences,   people   tend   to   compromise   and   choose   an   option   that  looks  superior  but  that  has  an  economic  value  also.     When  consumers  arrive  to  the  shelf,  they  will  encounter  a  market  with  a  private  label   soup   on   the   left,   Brannigan   RTE   soup   in   the   middle,   and   Brannigan   Deli   Soup   in   the   right.  They  will  most  probably  choose  the  RTE  soup  in  the  middle  since  it’s  the  safest   choice.   It   gives   more   quality   than   the   private   label   at   a   more   affordable   price   than   the   premium  deli  soup.     Note   that   by   increasing   consumption   of   RTE   Brannigan   soups,   we   are   fostering   sales   and   profit   on   the   short   term   to   finance   the   innovative   products   introduced   to   the   market.       Promotion   Discounts,   offers,   and   promotions   will   be   made   on   mass   media   and   digital   as   a   Pull   Strategy   to   increase   sales   in   the   retail   channels   of   distribution.   (Push   strategies   are   stated  in  the  Place  section  of  the  Marketing  Mix).  In  order  to  reach  consumers  with  the   right   message   at   the   right   time,   an   Integrated   Marketing   communications   campaign   sketch  has  been  outlined  below  using  the  6M’s.     Integrated  Marketing  communications  Plan  (6  m’s)   -­‐   Market:   The   market’s   fragmentation   and   growing   new   trends,   combined   with   a   decline  of  sales  in  Brannigan  Soup  division,  has  generated  a  necessity  inside  Brannigan   to  change  the  marketing  strategy.     -­‐  Mission:  The  integrated  marketing  campaign’s  mission  will  be  to  reposition  the  brand   as  an  innovative  company  that  owns  the  leadership  not  only  for  its  brand  but  also  for   increasing  the  life  quality  of  its  consumers.     -­‐  The  key  message  will  be:  “Brannigan,  the  soup  that  cares  for  you,  just  like  a  mother   would,  every  time,  everywhere”.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   10  
  12. 12. IE  Business  School   The   tone   of   the   message   will   be   emotional   on   an   early   stage,   but   we   consider   that   after   the   first   message   has   had   a   wide   coverage   and   frequency   on   Mass   Media   advertising.   A   T.V.   ad   will   be   aired   during   the   Superbowl,   the   world´s   most   viewed   sporting   event.   It   is   a   great   opportunity   for   people   to   see   Brannigan’s   brand   repositioning  and  the  company’s  new  communication.     A   second   stage   of   the   implementation   plan   will   include   new   commercials   to   create   brand  awareness  of  the  new  products  and  will  show  the  functional  benefits  through  a   fun  and  humorous  tone.       Also,  special  promotions  and  offers  will  be  made  year  wide  depending  on  the  product   offerings  and  stations  to  increase  sales  on  specific  products.     -­‐  Media:  The  media  to  be  used  is  above  the  line  media,  specially  television,  to  increase   coverage   in   the   campaign.   Social   media   will   also   be   used   to   propagate   campaign   but   it   will  be  explained  with  more  detail  further  on.       -­‐   Money:   According  to   the  exhibits   of  the  case,  $170   million   is   the  estimated  budget   for   marketing   expenses   of   year   2013.   Exhibit   5   shows   the   percentage   of   the   budget   devoted  to  each  marketing  activity  described  in  more  detail.     -­‐  Measurement:  The  campaign  will  be  measured  in  GRP´s  (frequency  x  coverage)  and   impacts.  For  Digital,  the  campaign  will  be  measured  by  impressions,  clicks,  increase  of   the  website  visit,  and  acquisitions.  Social  media  will  be  measured  on  amount  of  likes,   re-­‐posts,  re-­‐tweets,  shared  videos  and  comments.     Sales  Force     Hunters  vs.  Farmers   In  order  to  reach  an  increase  of  a  4%  sales  earnings  per  year,  the  sales  force  must  be   reorganized   thoroughly.   There   is   a   clear   distinction   in   the   sales   force   team   between   hunter   and   farmers   (hunters   reach   out   for   new   customers   acquisitions   and   farmers   foster  relationships  between  the  key  accounts).       A   20-­‐80   division   will   be   made   (20%   farmers   -­‐   80%   hunters).   This   will   increase   the   search   and   acquisition   of   new   retail   partners   nationwide   and   they   will   push   for   the   new   star   products   without   leaving   RTE   soups   behind,   which   are   the   most   important   source  of  income.       Salaries   will   include   a   mix   of   fixed   and   an   increased   percentage   of   the   variable   part.   Bonuses   will   be   provided   to   the   sales-­‐force   teams   if   they   meet   and   surpass   the   year   sales  objectives.                 Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   11  
  13. 13. IE  Business  School   2.  Digital  Marketing  Strategy     It   is   important   to   state   that   the   way   consumers   behave   in   the   stages   of   the   buying   process   has   changed   drastically.   People   now   have   multiple   touch   points   with   products   and  brands  on  offline  but  also  online  communication  channels.  In  addition  to  this  point   is  the  use  of  information  people  search  online  to  take  decisions  on  the  market  place.   This  is  called  the  Zero  Moment  of  Truth  and  a  few  years  ago  it  was  a  trend,  but  it  has   become  a  reality  nowadays.     We,   therefore,   decided   to   create   a   special   point   for   Digital   Marketing,   since   it   involves   strategies   of   all   the   components   of   the   marketing   mix,   but   that   differs   in   the   implementation  from  the  offline  channels.     We   are   going   to   use   the   three   components   of   digital   media   in   an   integrated   way.   Owned   media   (with   the   creation   of   the   company´s   own   website),   paid   media   (through   the   advertising   and   promotions   that   will   be   made   through   blogs   and   digital   magazines),   and   earned   media   (through   social   networks   comments,   shared   links   and   posts  made  by  active  consumers).   The   key   point   of   the   website   is   to   increase   sales   of   Brannigan’s   soups   and   other   products   but   also   create   a   community   that   gives   value   to   the   consumers,   further   empowering   the   brand´s   relationship,   image,   and   positive   awareness   with   the   final   client.       Search  Engine  Optimization  will  be  made  through  an  organic  optimization  using  special   keywords   such   as   low   sodium   based   soups,   new   soup   recipes,   healthy   soups   in   the   market,  or  how  to  cook  a  fast  but  tasty  meal  in  10  minutes.  These  are  just  examples  of   some   of   the   search   words   people   might   use   on   Google,   Bing   or   Yahoo.   Further   investigation   is   recommended   to   state   what   are   the   searching   habits   of   the   consumers.     Further  on,  a  Search  Engine  Marketing  strategy  will  be  made  with  promotional  banners   posted  through  paid  media  such  as  blogs  of  key  opinion  leaders  in  the  cooking  industry   and   specialized   cooking   digital   magazines.   This   campaign   will   be   measured   in   a   Cost   Per   Click   basis   to   ensure   return   of   the   investment   and   an   increase   in   volume   to   Brannigan  soup  website.     And  finally,  a  Facebook  page  will  be  created  to  generate  engagement  with  consumers   and   offer   them   content   of   value.   A   YouTube   channel   will   be   created   with   5-­‐minute   videos   of   cooking   recipes   using   Brannigan   soups.   A   twitter   account   will   be   activated   to   tweet   the   recipe   of   the   day,   or   products   of   the   day,   and   new   interactions   the   brand   has  to  further  engage  the  consumers.  Social  media  will  be  monitored  closely  to  protect   the   brand   image   but   will   serve   as   a   contact   point   to   direct   the   consumers   to   the   website  and  generate  sales.     The  main  benefits  we  see  in  this  strategy  involve  the  distribution  channel:   • Costs  will  decrease  and  margins  will  be  incremented  because  it  is  a  direct  sell   that  does  not  have  an  intermediary’s  fee.     Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   12  
  14. 14. IE  Business  School   • • • Digital  channel  is  available  24/7     Adding   a   shopping   cart   provides   full   information   about   the   consumer’s   preferences,   making   it   possible   to   offer   suggestions   for   cross-­‐selling   complementary  products  (like  the  related  products  amazon  recommends)   It   serves   as   a   communicational   tool   to   offer   relevant   information   of   new   promotions,   recipes,   nutritional   facts   and   recommendations,   flavors,   and   packaged  innovations  that  consumers  value     Concerning   Pricing   strategies,   prices   will   remain   the   same   in   digital   to   keep   a   fair   competition   since   the   company   does   not   want   to   hamper   the   relationship   with   the   retailers  that  account  for  more  than  a  60%  of  the  company´s  sales  (even  though  this   percentage   wants   to   be   lowered   as   much   as   possible   to   reduce   their   power   over   Brannigan).     Promotions  will  be  used  to  increase  sales  offline,  for  example,  redeemable  coupons  on   the   retail   stores.   This   can   be   negotiated   with   the   retailer   partners.   It’s   a   great   opportunity  for  cross  promotions,  and  cross  selling  to  increase  sales  in  other  divisions   of  the  company,  not  only  soups.     For   further   information   about   the   total   expenditure   of   the   $170   million   budget   for   2013,  exhibit  5  shows  the  percentages  for  each  activity  in  more  detail.     Exhibit   5   shows   the   percentage   of   the   investment   of   the   activities   in   the   marketing   budget  for  2013  based  on  the  170  million  given  to  us  in  the  case.       CONCLUSIONS     To  wrap  up  the  case  and  its  main  takeaways  we  can  conclude  that:     • A   context   analysis   using   tools   such   as   BCG   product   matrix,   SWOT   analysis,   Porter´s  five  forces,  or  Ansoff’s  matrix  gives  a  good  starting  point  to  understand   the  company  and  start  identifying  possible  strategies  and  implementation  plans   • It   is   imperative   to   understand   consumers   desires   and   needs,   and   try   to   solve   them  in  the  best  way  possible  to  create  value  in  the  product  offerings   • Quantitative  analysis  for  possible  solutions  to  problems  in  a  company  must  be   made   to   forecast   possible   outcomes,   yet   this   analysis   has   to   be   supported   with   a  qualitative  analysis  to  expect  better  results  when  implementing  a  strategy   • Short  term  projections  are  important  and  profit  is  a  need  that  stockholders  and   bosses   demand,   but   long   term   projections,   that   may   not   be   profitable   at   the   beginning   but   have   the   potential   to   break   through   the   market   and   generate   profit  in  years  to  come,  have  to  be  considered  indispensable  strategies  for  the   sake  of  the  company’s  future.           Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   13  
  15. 15. IE  Business  School   EXHIBIT  1                 EXHIBIT  2     Assuming  that  the  Red  Dragon  brand  is  going  to  be  kept  as  such               Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza         14  
  16. 16. IE  Business  School   EXHIBIT  3     EXHIBIT  4     EXHIBIT  5               Juan  Manuel  Restrepo  Davies   Mª  Concepción  Aragonés  Cabeza   15