Gardenburger proposes expanding its veggie patty brand into new retail and distribution channels. It plans to strengthen its position in current channels like food service and natural food stores. Gardenburger also wants to develop new products to leverage its brand awareness and health perception. However, critics argue Gardenburger lacks market leadership as it was not first to market. Expanding distribution without differentiation may not be effective given competition. Introducing many new SKUs could confuse customers unfamiliar with the brand. Strengthening positions in all channels may overstretch resources.

1. MKTG 540 Case Analysis April 27, 2011

2. Proposed Growth StrategyBrand the Veggie Patty CategoryLeverage the brand into new channels (retail 70% penetration, 6 SKUs)Support expansion with advertising and promotionStrengthen leadership position in current channels (food service, club stores, natural food stores)Develop and introduce new products2

3. YES: Branding the Veggie Patty CategoryCategory doesn’t have a “name” yetGardenburger marketing has focused on association with veggie patty, not ALL meat alternativesIn better position than competitors: self-descriptive nameWorthington Foods: MorningStar name means nothing and has way too many associationsHarvest Burgers are Pillsbury: different associationsBoca Burger has no name associations3

4. YES: Leverage Brand into New ChannelsNeed to Cross the Chasm from “cultural creatives” to “health modifiers”… and they buy in grocery storesTarget: women aged 25-54, looking for convenience, taste, and healthy alternatives to balance dietDifferentiation: taste, quality ingredients, convenienceTo increase brand awareness, product must have widespread availabilityCapitalize on mainstream “Health” movementWorked at Quaker: granola, oatmeal, waffles, GatoradeVeggies are mainstream, Soy is not—better fit4

5. YES: Support Extension With Ads & PromoNecessary to increase brand awarenessHealth modifiers less informed than “cultural creatives”Word of mouth won’t sufficeMainstream = increased competitionTrade promotion necessary to get shelf space and move consumers up the hierarchy of effects to trialMorningStar advertising at 10X, must respond$11MM to $1.5MM, $14MM to $3.8MM 5

6. YES: Strengthen Leadership Position in Current ChannelsPosition in club stores is necessary for mainstream availabilityPosition in natural food stores is critical for association with “health” to maintain credibilityPosition in food service channel will drive brand awareness6

7. YES: Develop and Introduce New ProductsDifferentiation based on flavor and taste needs to be supportedBrand loyalty developed through introduction of varietyShould leverage brand awareness, perception of “quality”, and health-movement“Mainstream” tastes change over time 7

8. NO: Branding the Veggie Patty CategoryJust changed name to Gardenburger in ‘97Not 1st to market or market leader in a competitive space (23% to 46% share)May generate primary demand that buys from MorningStarWill be Super ExpensiveDifferent naming conventions in food service versus retailWill limit future product extensions8

9. NO: Leverage Brand into New Channels6 SKUs are arbitrary and confusing to customers who don’t know the brand yetTesting to identify top “flavors” per cityShould limit expansion to NE, SW, and NW…not Midwest or SEDistribution expansion will be expensiveRequires massive resourcesNo current relationships with national distributors: will take timeExpanding distribution without differentiation is ineffective9

10. NO: Support Extension With Ads & PromoExpansion needs to be targetedCan’t compete with MorningStar spendCompetition may drive additional spend and drive profit from entire industryWithout brand awareness, category growth benefits market leader10

11. NO: Strengthen Leadership Position in Current ChannelsPosition in health food stores isn’t necessary, as cultural creatives won’t buy “mainstream” productsPosition in food service channel needs to be targeted and use same naming conventions to avoid diluting brand awareness11

12. NO: Develop and Introduce New Products“Gardenburger” name limits possible brand extensionExtensions could dilute association with “veggie burger,” not meat-alternativeAdditional SKUs will confuse customers12

13. Discussion QuestionsHow is Gardenburger differentiated from competitors? How should they be?How should Gardenburger leverage its health-association to mainstream consumers without losing its more hard-core current customer base?How can Gardenburger promote trial without price-based promotions?13

14. Budget Allocation14

15. Questions?15