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A CASE STUDY ON OSCAR MEYER: STRATEGIC MARKETING PLANNING

Presented by: ASHWINI KUMAR SHARMA ANKUR TAYAL

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Overview The case discusses about the falling revenues of Oscar Mayer foods, a division of Krafts foods. The president of the organization Marcus McGraw received a market report of falling revenues of the company from McTiernan corp., a consulting firm which the division had relied for. The case discusses about evaluating the various suggestions made by the consulting firm to Marcus and finding out the best possible way of improving the company’s falling sales.

Executive Summary Oscar Mayer which is into the business of processed meat, is a division of Kraft Foods. The company’s traditional red meat products like bologna, hot dogs and bacon are under attack of being too high in fat content. The sales of these products are falling due to high health consciousness among its customers. The company evaluates its sale figure by the help of a consulting firm McTiernan, which sends its report to company’s president Marcus. In addition to this report he also receives four alternative solutions from his functional managers with all the relevant data about the same, leaving Marcus to evaluate all the options and to come out with the best possible way to improve the company’s sales according to its brand name and to achieve company’s sales target.

Problem Statement The company is facing now a most critical threat of being losing its sales volume due to high fat content in its traditional red meat products like bologna, hot dogs and bacon. The company tries to improve its sales by evaluating various suggestions made by McTiernan.

Analysis of each suggestion With reference to the above problem statement, a detailed analysis of each of the suggestions given by the Business Managers is done. All of the managers have stated the problem appropriately and given a decent thought to the possible solutions as per their perception. Rob Goodman Advantages: 

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Since there has been an increase in the white meat products over the past two years, there is a chance that this trend will continue. Thus, investing in the segment seems a lucrative prospect. High nutrition value and lower price gives white meat products an edge over red meat products which are helping the former to grow.

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Disadvantages:   

As per the customer satisfaction survey, the white meat products did not taste as good as the red meat products. There have been a series of new competitors with similar products which are affecting the market share of the Louis Rich. On the scale of convenience, the white meat products are nowhere better than the red meat products. This doesn’t make them popular with the “Working Mothers” which constitute a large part in the target audience.

Jane Morely Advantages:  

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The company is still making profit and achieving the target so taking a risk of acquisition is not so large and it could be given a thought. The “Price tag” of each company is around $ 15-25 MM and the average sales of the three together is around $10-20 MM. This indicates that investing in such companies will not be a major risk and the money can be recovered eventually. Further, acquiring Turkey Time Ltd will strengthen the existing LR brand by providing expansion opportunities. Each of the companies offers either a healthier alternative to the current product line, or is a convenient solution of the same. This echoes with the current market trends and hence, can provide OM/LR with the solution to their problem.

Disadvantages: 

Although a low risk, but there is a risk in acquiring new companies. Oscar Mayer has brilliantly utilized its strength to make LR a leader in its segment but the same feat might not be repeated with the new acquisition. If the product fails, that will put OM/LR on back foot and will incur huge losses for them.

Jim Longstreet Advantages: 

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Instead of banking on the new acquisitions, Jim was of the opinion that more research should be done for the development of new products. This move was directed towards the strengthening of the existing brand. Considering the current market trends, he developed with his team members two new products.

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He acknowledged the failure of their last campaign and analyzed the mistakes that were committed.

Disadvantages: 

Marcus admitted that success rate of a new product was one in ten. So, another major investment does not look lucrative.

Eric Stanger Advantages: 

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Oscar Mayer was a very popular brand with an aggressive Advertising & Promotion team. Eric pointed out that they have been neglecting their USP and now it’s time to rethink about it. He also pointed that in order to compete with the competitors, they need to slash their prices like the others and focus more on optimum utilization of their resources.

Disadvantages: 

Budget allocation as demanded by Eric is quite high and if the A&P campaign didn’t give the desirable results then it would be a big problem for the company.

Recommendation As we have analyzed every suggestion has its own advantages and disadvantages, so Marcus must carefully make his decision. Further, in order to maintain the harmony among his various managers, he cannot ignore any of them completely. Above all, being the head of the company, it is his responsibility to choose what is best for the business and the interests of their stakeholders. Therefore, we recommend the following approach for the solution of our problem: 

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Banking on the USP of the company seems to be the best bet. So, Marcus should go ahead with Eric’s suggestion. The same should be extended for Louis Rich as well. But, the budget should be reconsidered. As we see in the McTiernan’s market survey for customer satisfaction, red meat products lag behind white meat products in terms of nutritional value and their pricing but are way ahead in terms of overall taste. So if few products can be developed keeping this fact in mind than Oscar Mayer will be back in the business making huge profits.

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With respect to the above recommendation, Jim should be given one more chance as the products he has developed looks promising. Last but not the least, diversifying a business also helps strengthen the brand value of a company. Further all the acquisition prospects given by Jane look promising. More research should be done on the same ground and a further decision should be taken.

Conclusion Ans. 1. McGraw saw initially that the no two recommendations from his trusted managers were remotely alike. This led him to confusion. But after reading all the memos, he clearly understood the problem and got a clear picture of the problem. Thus he gained his confidence and prepared a suitable strategy. McGraw used a marketing mix strategy to make his decision. He took all the factors in consideration and designed his own strategy. Ans. 2. Had McGraw favored only one department, there would have been many issues with the other departments. For once, there may develop some internal conflicts among the various departments. There may be ego problems too. This will be a bad influence for the working environment and the company. To mitigate the damage, we suggest McGraw to take a decision based on all the positive points from each of the suggestions. This will not only benefit the company but will also prove his leadership skills. Ans. 4. Absent any resource constraints, we recommend McGraw should go ahead with Jim’s plan to launch new products and put more resources into R&D. Also he should put his faith on Eric and increase the budget allocation to A&P campaign. Second best strategy seems to be putting Louis Rich on the driving seat and putting the resources to develop the brand as a part of Oscar Meyer. The least viable plan is acquiring another company. This is because the combination of OM/LR brand has not merged well enough and going ahead with another acquisition will put unwanted pressure on the company. Ans. 6. Jim Longstreet came up with two new products namely, Zappatites and Lunchables. Now, considering the fact that company has fared badly with its new products and the recent campaign i.e. Stuff ‘n Burger was also a failure. Also, that the products under the “Frozen Foods Channel” have failed to attract customers, we feel that Zappatites have less chances to succeed.

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