As part of our Global Strategic Management (GSM) module, we were required to read through a Royco case study analyse the issues that the company was facing and perform our own analysis on the company and the industry. From this analysis we were required to come up with recommendations to help Royco grow their business and resolve problems within the company

1. Royco Minute Soup Case
SOC Ltd. Consultancy Group

2. Mandate
To introduce Royco Simmer Soup into the
French Market - Paris, Lyon and Angers
Product launched through B2B -
Supermarkets and Hypermarkets
Hiring trnd to facilitate with a WOM
Campaign (B2B)

3. Deliverables
Develop Simmer product within 6-9 months
Launch Royco Simmer Soup between 9-12 months
Number of Boxes sold (includes 4 sachets) 1,122,876
- Sales revenue of €1,177,671
- Profit €183,286
WOM Campaign launched in business districts with 2,500
connectors

4. External Analysis

5. Ambient Soup, French: 2013
Revenue Shares
Knorr
39%
Liebig
33%
Private
10%
Maggi
7%
Royco
7%
Other
4%
Sales
Knorr Liebig Private Maggi Royco Other

6. Buying Decisions
• Soup is a moderate-involvement product, therefore
consumers pay attention when making purchasing
decisions about Soup products. Especially in terms of
KSF's such as Taste, Quality and Brand.
• This makes marketing and competing in this industry
challenging.
• In order to excel, competing companies must establish
a strong perceived differentiation (e.g premium
quality or product innovation) or through cost (e.g low
prices/promotion - sampling)
• Royco Minute Soup will need to develop a marketing
plan to tackle and address this strategic issue

7. Attractiveness of the Market
• Life Cycle - Soup Market is in the Mature Stage of
the Life Cycle
• Profitability - Soup market offers low profitability
as it is in the Mature Stage of the Life Cycle and
High level of Competition
Thus, the attractiveness of the market is LOW

8. Industry Trends
Soup Market
• Five Categories: Instant dry, ready to serve, simmer, fresh and frozen
-Ambient category: (90% of Sales)
Instant dry soup (IDS)
Simmer
Ready to serve
Business Districts of Paris, Lyon and Angers
-80% of office workers consume a snack in France at least one a day.
-90% of offices have a kettle in their kitchens
-Men are more reluctant to try a product than woman.
Advertising - Consumers Trust in relation to Adverts
-Consumers trust recommendations from people they know
-Branded Websites
-Ads on Tv
Revenue (%)
9%
21%
70%
2013 2007 Difference
84% 78% 6%
69% 60% 9%
62% 56% 6%

9. Industry Trends (Continued)
Health
• Consumers have become more health conscious
-Prefer snacks with less fat and less sugar.
Retail Prices
• Ready to serve soup - €2.35/Litre
• Simmer Soup - €1.09/Litre
• ID'S - €1.58/Litre

10. Competitive Rivalry
Level of Competition
• High Level of competition in the market
• Direct competitors are Knorr, Liebig, Private Label,
Maggi
• Ready to serve - Knorr, Liebig & Private Label
• Instant Dry - Knorr, Royco Minute Soup, Maggi
• Simmer - Knorr, Liebig, Maggi

11. Competitive Rivalry
Market Size for France
• In 2013, Soup has a retail value of €422
million.
• Market Value:
-€295,262,000 Ready to serve
- €38,074,000 Instant dry
- €89,551,000 Simmer
• Royce Minute Soup €29,316,980 (77% -
IDS)

12. Porters Five Forces
Fixed costs - High
• Factory equipment, large staff numbers, Large
quantities of stock
Difficulty in selling equipment - High
• Specialised equipment that would be used to specific
industries packaging requirements
Specialised skills – Medium
• Certain parts of the industry require specialised skills
specific to soup production and would not be able to
be utilised by other industries
Thus, barriers to exit it HIGH
Barriers to Exit

13. Threat of Substitutes
Home Cooking and Eating Out
• Many people have a wide variety of options past soup
Low Switching Costs
• Cost of switching to alternatives is low and easy
Culture
• Cultural trends on popular lunch snacks can affect soup
market
Thus, threat of Substitutes is HIGH

14. Threat of New Entrants
Cost of entry - High.
• Set up costs along with running of the business are of high cost
Technology know-how - High
• Significant amount of industry know how, food science’s and tacit
knowledge required
Difficulty of brand recognition - High
• Many well established brands on the market. High prices for
supermarket shelf positioning that current well known brands pay large
amounts for
Life Cycle
• Industry is in the Mature Stage of the Life Cycle, offering low revenues
Thus, threat of new entrants is LOW in soup industry

15. Bargaining Power of Buyers
Price Sensitivity – High
• Consumers can easily switch products if a product is more
expensive than others
Substitutes – High
• The wide selection of substitutes means buyers can easily change
product
Backward Integration – Medium
• Consumers can easily create their own soup. However not
possible in ‘ambient’ category
Buyer Fragmentation - High
• Buyers and businesses are chasing each other for sales and value
Thus, power of buyers is HIGH

16. Power of Suppliers
Commodity Product - Low
• The main contents of soup are commodities produce
can be bought from a wide range of suppliers
Differentiation of inputs - Low
• Suppliers of products for soup do not offer a difference
of inputs.
Cost of Switching Suppliers - High
• Soup companies would order large amounts of produce
and have presumably long term contracts
Therefore, power of suppliers is MEDIUM

17. Porters Five Forces Summary
FORCE LEVEL
Barriers to Exit HIGH
Threat of Substitutes HIGH
Threat of New Entrants LOW
Bargaining Power of Buyers HIGH
Power of Suppliers MEDIUM
Therefore, Competitive Rivalry is HIGH

18. Porters Five Forces Summary
Competitive Rivalry
• The competitive rivalry within the industry is very high,
this causes intense competition within the industry and
a strong downward pressure on prices
Buyer Power
• There is a strong buyer power present once again
putting a strong downward pressure on prices
Threat of Substitutes
• With a high threat of substitutes the soup industry as to
compete with more than direct competitors adding
more pressure to promotion and pricing of products

19. Driving Forces
• Supermarkets and Hypermarkets are both customers
and competitors through selling private labels (had 10%
of overall market share)
-At the moment, retailers have roughly a 38% margin
on selling branded soups. Supermarkets have high
purchasing power and have the ability the to
determine and vary price with their suppliers.
• Health and Nutrition
-Customers have become more health conscious. The
healthiness of snacks has become an important factor as
customers prefer a snack with less fat and less sugar.

20. Key Success Factors
Branding
• Royco has 3 main competitors along with various
smaller businesses to compete with standing out in this
market is a necessity for sales.
• Royco Does possess this KSF
Quality
• With the ease of switching to substitutes or
competitors along with consumers price sensitivity
quality of produce is necessary for keeping and
attracting consumers
• Royco does NOT possess this KSF

21. Key Success Factors
Price
• With high buyer power and competitive rivalry, price is
an important factor to consider when selling in this
industry. Royco soups average price per litre is lower
than the industry average, therefore Royco does
possess this KSF
Taste and Nutrition
• The most important measure of soup quality is taste. A
soup taste determines a customers choice in selection
and is vital for developing a brand in the industry.
• Royco does NOT posses this KSF

22. Key Success Factors
KSF Does Royco possess this?
Branding YES
Quality NO
Price YES
Taste & Nutrition NO

23. Key Success Factors Summary
• We have established that there are four main KSF's
are branding, quality, price and taste/nutrition.
• It is clear that Royco Soup possess some of the
essential KSF's needed for this industry.
• It is clear Royco need to do more than meet KSF's,
of quality and taste and nutrition in order to be
competitive.
• The goal for Royco is to design a strategy that aims
to be distinctively better than rivals on every one of
the industry's KSF's.

24. Internal Analysis

25. Porters Generic Strategy
Cost
Focus

26. Porters Generic Strategy
• Royco operate a cost (niche market) focus
strategy.
• The company focuses on a narrow market to
increase total customers by charging lower
prices and therefore are pursuing a cost
focus strategy
• A firm that has a cost focus strategy may
possess a competitive advantage because
they have the ability to obtain total
customers in a niche market

27. Resources
Tangible Resources
• Physical Resources: Products located and sold in various
supermarkets and hypermarkets in Belgium and France.
Intangible Resources
• Brand, image and reputation assets: Strong brand image in
"IDS" market (77% of market)
• Relationships: Strong relationships with supermarkets and
hypermarkets across Western Europe. (Supermarkets are a
crucial Driving Force within the Industry).
• Human assets and intellectual capital: Top Management -
Has experience within the food industry and has tacit
knowledge in KSF's such as branding

28. Capabilities
Brand Management Capabilities
Over the last three years
• Marketing campaigns aimed at brand recognition
such as TV commercials, radio, print and online
advertising.
• Marketing budget has fluctuated but in 2014 is €1.2
million after several internal negotiations

29. Financial Analysis
2011 2012 2013
Sales (Total
IDS)
€44,209,000 €40,998,000 €38,074,000
Royco
Sales - IDS
€21,368,000 €19,600,000 €18,445,000
Royco
Volume
Growth -
IDS
N/A -8.27% -5.89%
• New industry trends, stated
above, show consumers
have become more health
consensus and looking for
high quality and taste.
• This has caused negative
growth in IDS market which
is clearly evident in Royco
Finacical performance.
• Royco has suffered
unfavorably trends as it has
experienced negative
growth in the last two years
due to being heavily
involved in the IDS market.

30. Sales and Costings Analysis
Retail Price
(Average)
Cost (42%
Margin
Assumption)
Profit Royco Cost
Percentage
Potential
Change
1.11 - IDS
IDS (Royco) 1.58 1.11 0.47 -
Simmer 1.09 0.76 0.33 32% ↓
Decrease
Ready to
Serve
2.35 1.65 0.70 48% Increase
↑

31. Overall Soup
Market Positioning
(Revenue)
0
50,000
100,000
150,000
200,000
LIEBI (CVC)
KNORR
PRIVATE
LABEL
ROYCO
MINUTE SOUP
MAGGI
OTHER
LIEBI (CVV)
KNORR
PRIVATE LABEL
ROYCO MINUTE
MAGGI
OTHER
OVERALL (AMBIENT) SOUP MARKET, FRANCE: 2013
COMPANIES
REVENUES
(€K)

32. Sales Performance
• Sales Performance 2013 in the Instant dry
soup market in France amounted to
€29,171,000
• Royco sold 19,710,135 units in 2013
• France with 65.7 million inhabitants vs. 11.7
million in Belgium – sales in each country were
more or less equal

33. Competitive Advantage
• Currently struggling to connect with professional
women working in medium to large offices
• Royco has an overall 7% market share and although
their lower prices are beneficial for customers, it is
not a competitive advantage in the specific market
Royco is targeting
Royco does NOT have a competitive advantage

34. Current Customer Profile
Target
Audience
•Senior Citizens (43% of Sales) and Families (29% of Sales)
Target
Location
•Paris, Lyon & Angers
Purchasing
Patterns
•Customers purchase 3 times per year
•8 sachets on each occasion
•Spend €3.20 on each visit (8 sachets*€0.40)
•Thus, annual spend per customer is €9.60

35. SWOT Analysis
Strengths
Resources (Intangible)
Strong brand image in "IDS" market (77% of market)
(However this specific market is declining)
Relationships: Strong relationships with supermarkets and hypermarkets across Western Europe.
(Supermarkets are a crucial Driving Force within the Industry).
Brand Management Capabilities
Over the last three years
Marketing campaigns aimed at brand recognition such as TV commercials, radio, print and online
advertising.
(However Royco brand reputation is only strong in the IDS market only)
KSF's
The four main KSF's are branding, quality, price and taste/nutrition.
It is clear that Royco Soup possess some of the essential KSF's needed for this industry i.e Brand &
Price
Easy & practical to use product
Convenient source of food to consume as a snack or lunch (not time consuming)

36. SWOT Analysis
Weakness
Sustainable Competitive Advantage
No current sustainable competitive advantage as their cost focus strategy can easily be replicated.
Negative sales trend
Worrying financial trend as IDS's revenue is declining year on year due to
New Industry Trends/Driving Forces
Forecasted growth
The soup industry is in the mature stage of the life cycle
The attractiveness of the market is low, thus the product they are selling has sluggish growth and is highly
commoditised.
Only present in a certain market
RMS only operates in IDS's market - limited brand awareness
RMS is targeting the lowest revenue in the Ambient sector
KSF’s
Royco currently do not possess KSF’s of Taste/Nutrition and Quality
Innovation
Currently, Royce's innovation is low in the IDS segment
Average customer only purchases 3 time a year (buying 8 sachets each occasion)

37. SWOT Analysis
Opportunities
Target New Market Segment
Target a different market segment by creating a cheap,
entry product
Sell current products in new markets
Begin selling a soup products in different location
Royco could expand further into the European market or
aim to increase its market share in Western Europe
New Marketing Campaign
Using WOM Campaign to increase brand awareness for
Royco

38. SWOT Analysis
Threats
High level of competition
The soup industry is densely populated with many
competitors
High number of substitutes
Large number of substitutes in the market such as
snack & energy bars and fruit
Negative IDS Market Growth
IDS market is experiencing weak growth annually

39. Current Competitive Position
• In France
-Possesses the KSF of Branding and Price
-However they do not possess Quality and Taste
-Currently, Royco has a market share of 77% in the
IDS sector

40. In Summary
• Royco currently are the market leaders in IDS.
However, this sector is declining year on year.
• Have strong relationships with Supermarkets &
Hypermarkets
• They do no posses certain KSF such as taste &
quality
• Only present in one market and there are a high
number of threats and substitutes present

41. Q2 - Issue Identification
Customer
retention rate is
extremely low
Revenue is slowly
decreasing
Struggling to reach
new potential
customers
Brand image not
where they want it
to be
Do not posses KSF’s
Taste/Nutrition and
Quality

42. Benefits of Solving Issues
Issue Benefits of Solving Issues
1. Customer retention is extremely
low
Total customers
2. Negative revenue growth Improves profitability and efficiency
3. Struggling to reach new potential
customers
Offers new customer base
4. Brand image not where they want
to be
Improves and creates strong brand
awareness and loyalty
5. Do not posses KSF’s Taste/Nutrition
and Quality
Improves quality of product and brand
reputation

43. Q3 - How could Royco grow the
business in its current markets or
expand into new markets?
• Through using the Ansoff
Matrix, we decided to
utilse Product
Development Strategy
• This is to compete in
related markets with a
new product
• In this way, growth by
developing products
should occur to replace
or compliment exiting
products
Product
Development

44. Options
Product Development - Remain in
the IDS market, or to develop into a
new market segment
New marketing campaign

45. Options for Product Development
• Remain in IDS
• Ready to Serve
• Simmer (Sachet)

46. Product Development
Remain in existing market or enter a
new segment
IDS
• Risk – Continued negative growth in market sector
• Cost – Costs are minimal as product is already
established for Royco
• Potential Reward - Doesn’t increase brand
awareness and reputation as IDS sector is only 9%
of overall market share

47. Product Development
Remain in existing market or enter a
new segments
Ready to Serve
• Risk – Leading players (Knorr & Liebig) control a
large market share in the sector
• Cost – Establishing Ready to Serve as a product
would be very costly - an increase of 48% current
manufacturing costs. (Shown in Sales and Costings
Analysis)
• Potential Reward – Offers the largest market size in
the ambient sectors. Presents the opportunity to
attract new customers.

48. Product Development
Remain in existing market or enter a
new segments
Simmer
• Risk – Knorr dominates the market with a market
share of 67%
• Cost – Creating Simmer as a product would involve
less current manufacturing costs (Saving of 32%)
• Potential reward – Offers a new market segment
but market size is smaller in comparison to Ready
to Serve market.

49. Product Development
Evaluation
Evaluation Criteria Option that Scores Best
Risk IDS - 77% market share but experiencing
negative revenue growth
Cost Simmer - Offers huge cost efficiency
Potential Reward Simmer - Offers a new market segment
with less number of competitors
Thus, Royco should pursue a Product Development of Simmer

50. Options for Marketing Campaign
• Adverts on TV
• WOM Campaign
• Ads on Radio

51. Marketing Campaign
Adverts on TV
• Level of Trust: Adverts on TV offer a moderate level of
trust to consumers (62% in 2013)
• Cost: Royco previous costs in 2013 was €720,000 (60%
of €1,200,000 marketing campaign). Forecasted costs
are €480,000 for 2014
• Ability to reach Target Market: Previous marketing
campaign has shown that Adverts on TV is not reaching
the Target Market (300,000 people in Business Districts)
desired

52. Marketing Campaign
WOM Campaign
• Level of Trust: WOM campaign offers the highest level
of trust to consumers. (84% in 2013)
• Cost: With a sample of 2,500 participants, costings
would be estimate of €120,000. (fee+spokesperson)
• Ability to reach Target Market: Over 188,000
conversations would be created towards the target
audience with a sample of 2,500 participants

53. Marketing Campaign
Adverts on Radio
• Level of Trust: Adverts on radio offer moderate level of trust
to the target audience (57% in 2013)
• Cost: Royco previous costs in 2012 was €322,000 (23% of
€1,400,000 marketing campaign) Forecasted costs are
€180,000
• Ability to reach target audience: Previous marketing
campaign has shown that Adverts on radio has been
unsuccessful in reaching the Target Market (300,000)

54. Marketing Campaign
Evaluation
Evaluation Criteria Option that Scores Best
Level of Trust WOM - offers the highest level of trust
to consumers (84% in 2013)
Cost WOM - most cost effective as it
estimated to be €63,000 for a sample of
2,500 participants
Ability to reach Target Market WOM - most effective method in
reaching target audience as over
188,000 conversations would be created
Thus, Royco should pursue a WOM Campaign

55. Strategic Plan

56. Recommendation - Product
Development Simmer
Define
• Creating a Simmer (Sachet) product under Royco's name
Features
• It will be a premium quality
• Flavors will be decided with the WOM Campaign by
consumers who will be enabled to create & vote on new
suggestions
• The selling point will be that it is a healthy snack product for
the business professions
• It will be launched in line with WOM Campaign to gain as
much exposure as possible
• Sampling of flavors

57. Recommendation - Product
Development Simmer (Sachet)
Benefits
• Solves issues
-Of operating in a negative revenue growth sector
-Improves brand image and reputation as product
is seen as a much healthier snack option
-Provides greater quality and taste/nutrition as
Simmer is a high quality product
• Flavors will be decided with the use of the WOM
Campaign by consumers who will new suggestions
Thus, creating and building customer engagement

58. Who will be our Simmer
customers?
HypermarketsSupermarkets

59. Simmer Costings
Breakdown of Costs Costs
Flavour Costs €0.05
Packaging Costs €0.10
Distribution Costs €0.04
Total Cost per sachet €0.19
Overall cost of producing box containing 4 sachets is €0.76
Population of France 65m
Market Size €89.5m
Forecasted Market Penetration 1.3%
Projected Royco Simmer Revenue €1,177,671
Number of Simmer Boxes Sold 1,122,876
Production Cost per box €0.76
Sales Price per Box (Margin 38%) €1.05

60. Sample Costings
• Royco have the resources and capabilities to give out samples of 50,000 in selected cites
City Number of
Samples
(includes 2
sachets)
Costings
(0.19*2=0.38)
Paris 25,000 €9500
Lyon 12,500 €4750
Angers 12,500 €4750
Total 50,000 €19,000Royco (Margin 38%)
Revenue €1,177,671
(€1.05* 1,222,876)
Costs of Production
(1,122,876*0.76) €853,385
Sampling €19,000
WOMCampaign €122,000
Profit €183,286
Supermarkets
(Margin 36% on
€1.05)
Will be explained in detail
later on

61. Simmer Strategy
• Royco should pursue a Product Development strategy
to enhance brand awareness and attract the target
audience
• Place Penetrate market in business districts of Paris,
Lyon & Angers
• Promotion Street sampling during peak times 'Lunch
rush' - with explanation of product & demonstration
(WOM Campaign will also be key promotion factor)
• Product Premium health product that is a convenient
snack
• Price Per box (includes 4 sachets - €1.05)

63. Recommendation WOM Campaign
Define - Amplied WOM - trnd
• Launching a WOM Campaign in Business Districts to increase
brand awareness to increase sales
Features
• Educate the public about product as a healthy alternative
• Create communities such as a forum on our website so that
information can be shared easily
• Through this forum we can create & build customer engagement
• 2500 participants to create over 180,000 conversations
• Spokesperson to be hired
• Samples will be disrupted in selected cities during lunch hours
and during commuting times to and from work

64. Recommendation WOM Campaign
Benefits
• Solves issues
-Struggling to reach new potential customers
-Customer retention is extremely low
-Brand image not where they want to be
-Negative revenue growth
• WOM Campaign will give Royco the ability to reach its
target audience in Business Districts
• It will improve brand awareness by encouraging
customer engagement through voting for flavours
• Trnd has the database to access our target audience to
encourage word of mouth promotion

65. Campaign Format & Particapants
Metric Value
WOM Modules Basic+Dialogue+Visibility
Locations Paris, Lyon and Angers
Number of Samples 50,000 (2 sachets in each)
Metric Value
Number of Participants 2,500
Male % 25%
Female% 75%

66. Costing of WOM Campaign - trnd
Number of connectors 2500
Number of conversations 187,500
Fee (€) 40,000
€/conversation 0.21
Printing materials and shipping
Total trnd Fee
€22,000
€62,000
Spokesperson
Total WOM Campaign
€60,000
€122,000

67. Implementation
0-3 Months
• Contact Trnd to begin negotiation of WOM Campaign
• Register Simmer brand name
3-6 Months
• Inform B2B relations about the prospect of new
product launch
• Begin preparing for marketing campaign, promotions
and packaging
• Using WOM Campaign to identify flavor selected by
target audience
• Prepare for manufacturing - Royco Simmer Soup

68. Implementation
6-9 Months
• Begin WOM Campaign with 2,500 connecters
• Prepare to distribute samples to connectors in selected
cites
• Hire Spokesperson to be the face of the Simmer Brand
• Develop pricing & promotion
• Continue preparation for product launch
9-12 Months Launch
• Distribute boxes to numerous retailers
• Create communities for target audience to engage
about the product - forums on website

69. Risk & Contingency
Recommendation
Royco
Simmer Soup
& WOM
Campaign
Risk
Supermarkets
are not
interested in
new product
Mitigation
Intensive
preparation
before
informing
supermarkets
about the
new product
Contingency
Joint Venture
with Maggi

70. Mitigation & Contingency
explained
Mitigation
• To mitigate against this risk, intensive preparation
should be arranged before informing supermarkets
and hypermarkets of the new product.
• This can be an opportunity to persuade
supermarkets about the benefits, such as Simmer
being a prosperous market compared to IDS, and
ensure supermarkets are interested.
• White paper should be prepared explaining the
benefits of Royco Simmer Soup

71. Mitigation & Contingency
explained
Contingency
• Should the Royco Simmer Soup launch fail, Royco
should contact Maggi about the prospect of Joint
Venture.
• Benefits for Maggi: Royco should explain that they
are a leading player in the IDS market.
• Benfits for Royco: Maggi has a market share of 36%
in the Simmer market

72. What
Royco Simmer Soup
When
Starting now and beginning
launch between 9-12 months
How
Using current resources and
capabilities
Also through WOM Campaign
Where
Business districts of Paris,
Lyon and Angers
Supermarkets &
Hypermarkets
Summary
Who
Royco