keport on Cscar Mayer

ovan Nanda
1226110140
ec A

tuaton Ana|yss
1here has been a subsLanLlal lncrease ln Lhe proporLlon of worklng women ln uS 33 of
women are worklng moms and Lhese women are ln search of low/ no preparaLlon and ready Lo
eaL foods for Lhemselves and for Lhelr famllles SubsequenLly Lhe consumpLlon paLLern has
been changlng Lowards Lhe convenlence (easy Lo make) food producLs whlch requlre llLLle or
no Llme Lo cook
1hls has led Lo an lncrease ln demand for food whlch can be prepared ln a mlcrowave oven
AlLhough Cscar Mayer have always feaLured klds ln Lhelr adverLlsemenL Lhe purchaslng power
and declslon maklng lles wlLh Lhe lady of Lhe house Pence Lhe LargeL markeL sLrlcLly comprlses
of housewlves and worklng moLhers
AnoLher Lrend ls LhaL people are paylng more and more aLLenLlon Lo Lhelr nuLrlLlon and food
and healLhlness
Market Ana|yss
1he markeL ls faclng a klnd of perfecL compeLlLlon as far as Lhe low faL food ls concerned 1here
have been Loo many enLranLs
MosL of Lhe LradlLlonal red meaL producLs of CM such as bologna hoL dogs and bacon are
faclng sLlff compeLlLlon from low faL and low prlced meaL producLs manufacLured by oLher
companles
ln addlLlon Lo Lhe consumer changes Lhe dlvlslon ls faclng a much more challenglng seL of
compeLlLors Lhan ln Lhe pasL 1hls ls a resulL of shake ouL ln Lhe lndusLry ln Lhe pasL 43 years as
proflL vanlshed for many old Llme meaL packers who depended on sales of unbranded fresh red
meaL producLs As shopplng preference began Lo shlfL from hamburgers and sLeaks Lo chlcken
Lhe Lhln proflL margln for Lhese companles dlsappeared and Lhey were force Lo close down or
sell ouL Lo new ownershlp 1hls klnd of envlronmenL called for more sophlsLlcaLed
manufacLurlng and markeLlng skllls sLronger flnanclal poslLlons and a focus on bulldlng value
added brands and markeL share
keport on Cscar Mayer

1he presence of mulLlbllllon dollar compeLlLors such as ConAgra Sara lee Pormel emphaslzes
Lhe need for lnLroducLlon of a new food producL wlLh vlslble dlfferenLlaLlon
JC1 Ana|yss
trength
O 9owerful brand repuLaLlon wlLh reLallers compeLlLors and consumers 8elng one of Lhe
LrusLed brands Lhe bargalnlng power of Lhls company ls obvlously hlgh
O SLrong acqulslLlon of a no 1 Lurkey based llne 1he Lurkey based llne of producLs ls lower
ln faL conLenL and also lower prlced
O SLrong buslness and dlsLrlbuLlon sysLem allows Lhem Lo Lake rlsk of lnLroduclng a LoLally
new producL whlch has low faL conLenL and ls healLhy
O 1hls flrm has a long hlsLory as geL lL done" organlzaLlon
O unmaLched sales force ls always an area where Lhey can leverage on ln order Lo
lncrease sales
O ouls 8lch has been Lhe leader of whlLe meaL segmenL Pence Lhe 1oLal ulvlslon
Scorecard ls looklng favorable
Jeakness
O As far as Lhe new producLs under Mr Mc Craw over Lhen Lwo decades ls concerned Lhe
8aLLlng average was only 1 ln 10
O 1hey were noL focused on producL and compeLlLlon 1here were way Loo many producLs
wlLh a hlgh faL conLenL and hlgh prlced
O -o producLs on chlcken markeL 1hey were focused on only Lurkey red meaL whlLe
meaL eLc even Lhough Lhere was a robusL markeL for meaL 1hls does noL brlng any sorL
of dlverslcaLlon
O -oL much focused on cusLomer saLlsfacLlon"
O Plgh lnvesLmenL" cosL for second brand(8)
1hreat
O nLry of large number copy caL brands poses a LhreaL 1he exlsLlng food producLs run
Lhe rlsk of enLerlng Lhe maLurlLy sLage of Lhelr llfe cycle very soon
O 1here was a growlng emphasls on Lhe nuLrlLlon among Lhe masses
O 1here was a need for producLs offerlng greaLer fundamenLal changes LhaL wlll affecL Lhe
convenlence growLh ln 33 years
O 8ed meaL producLs (bologna hoL dogs) are Loo hlgh on faL conLenL whereas Lhe markeL
Lrend ls favorlng whlLe meaL whlch ln undoubLedly healLhler
keport on Cscar Mayer

Cpportunty
O WhlLe meaL" markeL ls growlng 1hls ls where Lhey need Lo poslLlon Lhelr producL as a
healLh food"
O 1he llfe sLyle of consumers has become fasL paced 1here should be
a growlng emphasls on changlng llfesLyles of Lhe consumers 8 and u should be made on
developlng new producLs whlch are easy Lo cook and also porLable
O lmprovemenL can be made Lowards maklng Lhe 8ed meaL producLs (bologna hoL dogs)
O 1echnology skllls ln 8 and u 8elng an old enLranL Lhe company has superlor skllls ln 8
and u Powever lL needs Lo lnvesL more ln 8 and u and keep lLself updaLed wlLh Lhe
laLesL markeL Lrend so LhaL Lhe sales of a producL would noL become sLagnanL

Merts and Demerts of proposa|s by Manager
a) Manager 8ob Coodman emphaslzed on backlng Lhe wlnnlng horse ouls 8lch
Merts
O ln Lhe shorL Lerm Lhls LacLlc mlghL work because ouls 8lch ls currenLly maklng
hlgher proflL Lhan Cscar Mayer WhlLe meaL ls ln Lhe growLh sLage of lLs llfe cycle
Pence Lhls mlghL be Lhe approprlaLe Llme Lo leverage on Lhe opporLunlLy
O Pe has also proposed Lo lnLroduce a seL of new producLs llke 8 1urkey 8acon and
Lhe 8oasL 1urkey and dlnner llne whlch can be cooked qulckly ln a mlcrowave oven
Demerts
O 1oo much backlng of ouls 8lch wlll make way for ouls 8lch Lo overshadow Cscar
Mayer Cne should noL forgeL LhaL Cscar Mayer belng Lhe orlglnal brand has a huge
proflL conLrlbuLlon of nearly 82 1he consumers who are hooked Lo Lhe Cscar
Mayer brand mlghL lose LrusL Moreover many of Lhe producLs suggesLed by Lhe
ouls 8lch llne do noL promlse Lo caLer Lo Lhe consumers need
O Moreover Lhere ls a hlgh ad budgeL of $22M 8lsk ls also assoclaLed wlLh new
producLs (8 Lurkey bacon greaL roasL Lurkey gravy dlnner llne)
b) Manager !ane Morely" Pe emphaslzed on Lhe developmenL of healLhler and more
convenlenL producLs


keport on Cscar Mayer

Merts
O AcqulslLlon of 3 new companles mlghL produce boLh healLhler more convenlenL
producLs
O 1hey can dlrecLly concenLraLe on convenlenL and healLhler llne of producLs wlLh Lhese
companles
O AcqulslLlon of 'Chlcken 8lLe lnc' would brlng Lhem lnLo Lhe chlcken buslness as well
1hls would lead Lo Lhe dlverslflcaLlon of producLs Lhereby reduclng Lhe rlsk of maklng
losses due Lo a parLlcular producL 1he low calorle chlcken salad belng Lhelr sLar
producL offers a loL of opporLunlLy Lo lncrease Lhe proflL margln '1urkey 1lme' ls
closesL Lo Lhelr knowhow and Lhe planL mlghL supporL furLher 8 expanslon Pence Lhe
acqulslLlon of smaller companles seems Lo be a falrly vlable opLlon
Demerts
O 1he acqulslLlon was cosLly 1he prlce Lag was around $1323 MM aplece 1hls mlghL
lmpacL Lhelr operaLlng lncome
O All Lhe acqulslLlons were Lowards whlLe meaL whlle red meaL producL dlverslflcaLlon
was neglecLed compleLely
c) Manager '!lm ongsLreeL' emphaslzed on Lhe lnLroducLlon of a 4
Lh
ma[or caLegory wlLhln
processed meaL LhaL can address Lhe changlng consumer llfe sLyles

Merts
O Pand held porLable grazlng meals such as 'ZappeLlLes' are LoLally sulLed Lo Lhe lasL
movlng llfe sLyle of Lhe consumers
O 1here ls no burden of packaglng aL all lL ls also sulLed for boLh klds and adulLs
O Also lL ls porLable whlch ls whaL Lhe need of Lhe hour ls
O unchables favored Lhe 'lmporLanL problemsuperlor soluLlon' model 1hls klnd of
producL would be a LoLally lnnovaLlve concepL capable of creaLlng Lhe early mover
advanLage
O 1here ls ow cosL lnvolvemenL ln Lerms of creaLlng awareness of Lhe brand
O 1here ls a scope for galnlng 4 annual growLh
O lL could be Lhe 4
Lh
caLegory of producLs LhaL wlll acL as a growLh englne for Lhe nexL
decade 1hls ls by far Lhe besL opLlon

Demerts
ZappeLlLes can be prepared only ln mlcrowave buL noL every famlly had a mlcrowave
9rlce charged was premlum Pence only Lhe hlgher mlddle segmenL could geL Lhe beneflL

keport on Cscar Mayer


d) Manager 'rlc SLanger' emphaslzed on Lhe Cscar Mayer brand growLh

Merts
O Maklng prlce cuLs mlghL aLLracL many new cusLomers and reLaln a few exlsLlng
cusLomers
O mphasls on 9roducL lnnovaLlon ln red meaL segmenL wlll obvlously help ln Lhe long run
O 1here ls focus on opLlmum uLlllzaLlon of CM planLs
O 1here ls 1argeL seLLlng for Lhe sales force Lo relnvlgoraLlng CM brand growLh
O 9oslLlve operaLlng lncome for Lhe currenL and nexL year for CM brand

Demerts
O -arrow focus on ouls 8lch brand ls noL golng Lo help Lhe cause lL ls because Lhey
should Lhlnk abouL promoLlng boLh Lhe brands
O 1here ls huge lnvesLmenL lnvolved ln Lhe ad campalgn
O Sales force has Lo be adequaLely Lralned Lo shlfL Lhelr focus Lowards CM brand
O 1here ls no scope for new acqulslLlons
O 1he volumes are close and Lhe spendlng ls Loo hlgh
O SuggesLed prlce cuLs are noL always Laken ln a poslLlve llghL lL someLlmes brlngs a
negaLlve effecL on a producLs performance Cscar Mayer over Lhe years has earned Lhelr
cusLomer's LrusL by belng quallLy cerLlfled and belleves you geL whaL you pay for
O locuslng purely on [usL brlnglng Cscar Mayer back lnLo Lhe llmellghL also reduces Lhe
scope of dlverLlng lnvesLmenLs and efforLs lnLo brlnglng Lo llfe someLhlng new"

AD budget a||ocaton
lor ouls 8lch
a unlLs ln mllllon
CurrenL ?ear -exL year proposed

Ad budgeL
a
$133 $133
change versus lasL year 163
CperaLlng lncome $29 $27
Change versus lasL year (68)
8Cl 218 174

keport on Cscar Mayer



lor Cscar Mayer
a unlLs ln mllllon
CurrenL ?ear -exL year proposed

Ad budgeL
a
$236 $230
change versus lasL year (36) 393
CperaLlng lncome $110 $110
Change versus lasL year 28 -C
8Cl 466 44

lor -ew producLs dlvlslon
a unlLs ln mllllon
CurrenL ?ear -exL year proposed

Ad budgeL
a
$16 $12
change versus lasL year (23)
CperaLlng lncome (3) (1)
Change versus lasL year (400)
8Cl (312) (833)
8aLlonale for allocaLlon of budgeL
As we can see from Lhe above Lables Lhe reLurn on lnvesLmenLs ln ouls 8lch ls deLerloraLlng ln
splLe of lLs hlgh ad budgeL requlremenL for Lhe nexL year Lhe dlvlslon was glvlng negaLlve
reLurns and Lhe calculaLed 8Cl ls comlng Lo negaLlve 174 whlch ls noL even meeLlng Lhe
currenL year's operaLlng lncome flgure So allocaLlng $22 mllllon Lo a negaLlve reLurn generaLlng
flrm ls noL so vlable for Mr Mcgraw
Comlng Lo Cscar Mayer 1hls Maln dlvlslon ls relaLlvely performlng well compared Lo oLher
dlvlslons and Lhe 8Cl change ln currenL year and nexL year ls only 2 decrease So Mr Mcgraw
can Lake a declslon whlch can supporL Mr rlc SLranger v9 of CM and concenLraLe on
relnvlgoraLlng Cscar Mayer brand growLh
1he new producL dlvlslon 1hls dlvlslon ls lncurrlng conLlnuous loses ln Lhe currenL year nexL
year and 2 years hence forLh Mr Mcgraw had already menLloned LhaL Lhe success raLe of each
new producL ls ln Lhe raLlo of 110 and every Llme Lhe company has Lo pay heavlly for Lhe
keport on Cscar Mayer

fallures because of Lhe amounL of lnvesLmenL golng ln esLabllshlng and wlndlng up Lhe producL
So funnelllng more amounL of money lnLo new producL dlvlslon ls noL aL all vlable
A||ocaton of Ad budget
Mr Mcgraw can allocaLe Lhe full ad budgeL requlred by Cscar Mayer whlch ls $14 mllllon and
can allocaLe $18 mllllon Lo ouls 8lch lnsLead of $22 mllllon ad budgeL for Lhe nexL year


























keport on Cscar Mayer


Inference

Among Lhe four opLlons belng suggesLed by Lhe managers Lhe one LhaL seems Lo be Lhe
mosL pracLlcal one ls Lhe lnLroducLlon of a new producL whlch ls Lhe besL compared Lo
oLhers 1hls opLlon was forwarded by !lm ongsLreeL 1he maln sLraLegy adopLed ln Lhls
opporLunlLy ls LhaL whlch ls commonly known as ulfferenLlaLlon SLraLegy by 9orLer's
Cenerlc SLraLegles where Lhe flrm Lrles Lo provlde a superlor performance producL
unlquely deslgned Lo provlde value Lo Lhelr LargeL audlence and ls well appreclaLed by
Lhem Pavlng already conducLed 8u and also belng aware of who Lhe LargeL audlence ls
and whaL Lhey are looklng for Lwo producLs have been deslgned Lo sulL Lhelr needs
unchables and ZappeLlLes 1hls allows Cscar Mayer Lo sLay ln Lhe lead ellmlnaLe
compeLlLlon and do whaL Lhey do besL l--CvA1s






keport on Cscar Mayer