Case 14 - Maple Leaf Consumer Foods Fixing Hot Dogs

CASE BACKGROUND
Maple Leaf Foods was Canadas largest and most dominant food
processor, generating nearly $4.8 billion in annual sales by the year 2001.
The MLF brand had been around in Canada for over 100 years that must be
the reason why the organization and its products are gaining significant
momentum on the international scene.
There are three core areas of business the companys operation
focuses: bakery products, meat products and agribusiness. The meat
products group was by far the largest of the companys core groups. The
group consisted of all the companys meat and non-meat related businesses
and included four distinct Independent Operating Companies (IOCs): the
Maple Leaf Pork, Maple Leaf Poultry, Maple Leaf International and Maple Leaf
Consumer Foods.
Consumer Foods had full responsibility for the production and
distribution of all branded and value added prepared meat products which
included bacon, ham, hotdogs, cottage rolls, and a wide variety of
delicatessen products, prepared turkey products, sliced meats, cooked
sausage products, frozen entrees, lard and canned meats.
MLF hotdog portfolio of products was by far the largest meat category
at MLF Consumer Foods with over twice the dollar sales of any other MLF
branded, value-added, or prepared meat category within the IOC; but in the
year 2001, MLF is losing market share in hotdog sales and the newly
promoted senior marketing director Kelly Gervin is now concern on how to
battle the decline in sales volume of MLFs hotdog products.

PROBLEM
What competitive strategy should Kelly proposed to increase the
market share of MLFs hotdog brands?

ISSUES
The Hotdog Industry in Canada and U.S.

Demand for hotdogs was consistently strongest during summer.

Hotdog consumption preferences were subject to significant
regional differences in Canada.
Western Canadians want beef hotdogs.
Quebec markets are partial in hotdogs at low price
segment.
Atlantic Canada wants low-fat hotdogs.
Hotdog consumption was consistently uniform throughout all
income levels.
Children where heavy influencers in hotdog purchase decision
Hotdogs had always been subject to consumer scrutiny
concerning their content and manufacture.
Canadian and U.S. Dept. of Agriculture required by law that
meats used in hotdogs include only muscle meat.

Schneider Foods (JMS)

JMS is a tough competitor of MLF.

Fought every inch of shelf space and was tactically reactive and
retaliatory.
It knew hotdog business well and had loyal employees.
JMS has strong national brands and it supported consistently
effective promotional campaigns.
Aggressive on pricing.
It has not proliferated subrands.
It did not change packaging on a regular basis.
It had great consistency in its sales and marketing staff.
Great job in managing its trade relations.
Consumers view JMS as provider of quality, heritage and great
tasting products.

Maple Leaf Foods (MLF)

Had two segments in hotdog market: (1) by adult or family and

(2) by price (premium, mainstream and value/economy)
Had nine different brands of hotdogs.
Some products lacked good taste.
Product is at high price compared to JMS product.
Has uncompetitive product portfolio according to one of the
retailer.

ALTERNATIVE COURSES OF ACTION

1. MLF should compete through focused low-cost provider of products.

2. MLF should implement focus differentiation strategy.
3. MLF should acquire small competitors.
RECOMMENDATION
MLF should apply focus differentiation strategy since its niche market is
narrow and the buyer needs and preferences are different. Since MLF started
offering unique hotdogs that JMS didnt, MLF should continue it to
differentiate itself from its competitor. MLF just have to improve the quality
of the product.
MLF should reduce the category in its price segment. MLF should focus
only to Premium Price, Mainstream Price and Value Price segments so that
ML can focus more on differentiating its products. MLF should stop producing
brands at less than $1.89 cost.
MLFs Top Dog Singles, although highly priced reflects its quality. MLF
should market this product through free taste in the grocery or supermarket
so that consumers who are price conscious will know that the price is
reasonable for its taste and quality. It can be the national brand of MLF
together with the Top Dogs (Regular and BBQ) since Top Dogs brand is one of
the most saleable products.
ML (100, Regular, Beef BBQ) and Shopsys (Regular, BBQ and Beef) are
also profitable brands that can represent as national brand.
MLF should also do extensive marketing their regional brands: Burns in
Western Canada, Hygrade in Quebec and Shopsys in Ontario. Since those
brands satisfy individual preferences in such region, there will always be a
market.
Then, MLF should improve the Lean n Lite brand hotdog since 70% of
consumers were interested in low-fat products. MLF can also make it fortified
but they should be very careful to not compromise its taste. Thus, Lean n
Light brand should target health conscious consumers.