Brannigan Foods

STRATEGIC MARKETING
PLANNING
 Agenda

I. Context
II. Problem statement
III. Situation Analysis
I. SWOT
II. Porter 5 forces
IV. Alternatives
V. Marketing mix
VI. Recommendations
 Context

Brannigan Foods is the market leader in soups

It is facing a soup industry in steady decline
Decreasing sales, market share and profits
Analysts summer report gave important
insights
Trend towards healthy foods Baby Boomers
Trend towards fast and simple meals working
mothers
 Problem Statement

Determine the most profitable way to use resources

Which one of the four alternative plans should be implemented
in order to reverse the steady industry decline (long-term) and
increase profit margin by 3% per year (short term)
 SWOT
Strengths:
Brannigan is the current market leader with a high market share
It has high brand awareness and withholds very good results in the top of
mind
Condensed and ready to eat soups are a part of the American culture and is
consistent in the all-around American diet
Weaknesses:
Decrease in sales, market share and profits over the past three years
A poor job in targeting new segments of the market derived from changes in
societys behaviors and values
Internal teams of finance, marketing and sales, R&D, and simple meals units
are not integrated with each other; this might derive from a lack of
communication between the teams
 SWOT
Opportunities:
Innovate with new products that are in line with consumers needs and that
will boost profits up to a 3-4% increase
Generate creative solutions (dry soups) with retailers to create winwin
situations
Threats:
Private labels grow steadily 5% per year and retailers seek new shelf space
for their products, reducing the shelf space availability for Brannigan
New competition is entering the market with disruptive and incremental
innovations that threaten Brannigans leadership position and that have
eroded its sales
A lack of coherent targeting, segmentation and positioning has created a
gap between the product offerings and what consumers really want
 Porters Five Forces
Rivalry amongst existing sellers:
Rivalry in the Soup industry is quite high since there are many companies
competing on price, quality, taste, health factors, product innovation like
General Mills, Unilever and private labels
Threat of new entrants:
The threat of new entrants is relatively low since most of the companies of
this industry are large and account for an important part of the market share.
The main barrier entries are:
High levels of advertising and promotion investment in order to generate brand
awareness
Difficulties obtaining shelf space
 Porters Five Forces
Threat of substitute products:
This threat is relatively high since there are many other products that satisfy
the same need of a quick, tasty and cheap meal like fast food and need for
healthy food like organic foods
Bargaining power of buyers:
Customers power is high since they are demanding more innovative products
and new flavors. In addition, due to the recession, they also seek for cheaper
prices, which fosters competition among companies
Bargaining power of suppliers:
Moderate as nothing is mentioned in the case about them as such
 Invest in growing sectors
Reinforce former strategy but increase investments in the dry soup, fast
meal and healthier soup category

PROS CONS

Categories are not as large

Categories demand is as the canned soups
growing supported by trend category
towards fast and healthy
meals Strong competition

Focused on long term growth Focuses more on star

products
 2010 2011Growth 2013
Ready to serve wet (10.5) 2012 2013 Tipha
soup 2257 2020 % Traditional ready to eat soups
Condensed wet soup 1893 1821 (3.8)% Ready to serve wet soups 998 893 893
Dry Soup 1366 1397 2.3% Condensed Wet soups 917 882 882
Ready to serve broth 862 915 6.1% Broths 414 439 439
Refrigerated soups 142 164 15.5% New products, acquisitions last
Frozen Soups 27 46 70.4% 10 years
Deli Soups 110 140 27.3% Low Sodium RTE "Heart
Total 6657 6503 (2.3)% Healthy" 321 356 390
2013 2013
Annabelle's Fast n Simple 71 79 86
Year 2011 2012 E Tipha
Dry soups and mixes 53 54 55
Net sales of Brannigan's
Other, including private label 199 209 209
Foods worldwide 7330 7979 8230 8230
Total 2973 2913 2954
Net Sales of US Soup
Division 3034 2973 2913 2954 For achieving sales of 2954 million in
Less: 2013, Heart Healthy and Fast n Simple
Cost of good sold 1669 1635 1602 1625 categories will have to grow by 21.5%,
Marketing, R&D, Selling compared to previous years 12%;
Expenses 425 416 408 426
Other expenses 625 627 600 606
which seems unreasonable to expect
Net Earning 315 295 303 297 even with increased promotion of 18
Broken out of Marketing million $.
and selling expenses
Advertising and Promotion 189 178 170 188 Net profit growth target of 3% is not
 Acquire Product lines to complement core
Healthier and convenient segments that have new flavours

PROS CONS
Annabelles acquisition did not meet
expectations
Issue of branding and marketing investment
Enable entry to the recently evolved popular categories (Asian flavours)
is complex
Higher priced, higher margin products Advertising expenses will be 15 to 30% of
Addition to sale to the tune of 1.5 to 3.5% within 5 years sales
Expedites entry in to newer categories Cannibalization of existing products
Acquisition pricing is reasonable
Retailers will not allow increase in shelf
Manufacturing and operating synergies
space
Addition of Interest and Depreciation to
costs
 Maintaining Brannigan Brand Name Maintaining acquired company name
201 201 201 201 201 201 201 201 201 201
Year 1 2 3 4 5 Year 1 2 3 4 5
Net sales of Brannigan's Foods 733 797 823 Net sales of Brannigan's Foods 733 797 823
worldwide 0 9 0 worldwide 0 9 0
303 297 294 289 283 303 297 294 289 283
Net Sales of US Soup Division 4 3 9 0 2 Net Sales of US Soup Division 4 3 9 0 2
Less: Less:
166 163 162 159 155 166 163 162 159 155
Cost of good sold 9 5 2 0 8 Cost of good sold 9 5 2 0 8
Marketing, R&D, Selling Expenses 425 416 413 405 397 Marketing, R&D, Selling Expenses 425 416 419 410 402
Other expenses 625 627 600 588 576 Other expenses 625 627 600 588 576
Cannibalization 25 25 24 Cannibalization 18 17 17
Interest 1 1 1 Interest 1 1 1
Net Earning 315 295 288 282 276 Net Earning 315 295 290 284 278
Broken out of Marketing and Broken out of Marketing and
selling expenses selling expenses
In both scenarios,
Advertising and Promotion expected net profit
189 178 175 171 168is decreasing in the near
Advertising and Promotion future, as compared
189 178 181 177 174
to the target of growth of 3%
Maintaining Brannigan Brand name: Less promotion cost, shelf space lost, more
cannibalization suffered
Maintaining acquired company name: More promotion cost, 90% shelf space
retained, less cannibalization loss
 Invest in Organic growth
Less expensive to develop
new products internally
Branningans traditional
PROS CONS
strengths are reinforced (new Cannibalization on existing lines
products build on
Only 1/10 succeeds
Branningans most popular
soups) 5% chance of gaining shelf space

Address consumers Difficult to assign exact R&D

changing needs and serve costs to the products
consumers desire for Loss of retailers goodwill and
innovation in the category other costs as product life cycle
short
Enable a price increase of
$0.1 per can, resulting in an
incremental net earning of up
to $10 million
 Year 2011 2012 2013 2014 2015
Net sales of Brannigan's Foods
worldwide 7330 7979 8230
Net Sales of US Soup Division 3034 2973 2929 2894 2866
Less:
Cost of good sold 1669 1635 1610 1590 1574
Marketing, R&D, Selling Expenses 425 416 423 419 416
Other expenses 625 627 600 588 576
Net Earning 315 295 296 296 300
Broken out of Marketing and selling
expenses
Advertising and Promotion 189 178 180 171 163

Requires 5 million $ additional expenditure in R&D, provides extra sales of 15,

24 and 30 million and incremental gross profit of 7, 12, and 16 million
Requires 6% additional promotional expenditure
Net profit target not being met in short run
 Invest in the Core
PROS CONS

Reduce risk of new product failure

No expense on R&D
Maximise profit on maturing
product
Can attract young customers
through the Boys and Girls Love
Soup program
Avoidance of brand dilution
Price reduction would harm
the premium brand image
Mature product with declining
sales
May lead to loss on market
share in the long term
 2013 2014 201 201 201 201
2012 2013 Pugh Pugh Year 1 2 3 4
Traditional ready to eat soups Net sales of Brannigan's Foods 733 797 823
Ready to serve wet soups 998 893 worldwide 0 9 0
1819 1962
Condensed wet soups 917 882 303 297 295 318
Broths 414 439 439 466 Net Sales of US Soup Division 4 3 7 6
New products, acquisitions last Less:
10 years 166 163 162 175
Low Sodium RTE "Heart Cost of good sold 9 5 6 2
Healthy" 321 356 356 395 Marketing, R&D, Selling Expenses 425 416 427 447
Annabelle's Fast n Simple 71 79 79 88 Other expenses 625 627 600 588
Dry soups and mixes 53 54 54 55 Net Earning 315 295 304 399
Other, including private label 199 209 209 219 Broken out of Marketing and selling
Total Sales 2973 2913 2957 3186 expenses
Advertising and Promotion 189 178 189 209

Price reduced by $ 0.05, Promotion budget increased by 20

million $
Net profit target being achieved in 2013 (3.05% growth)
 PRODUCT PLACE

Baby boomers Packaged deli soups, healthy soups

Working mothers Convenient soups 3% of shelf space has been reducing annually

Millennials Lifestyle soups and broths 62.9% of total product sales is through retailers

Marketing
Mix

PRICE PROMOTION
Product priced at 30% premium over Promotion to be customised based on customer
competitors perception. Brannigan is behind competitors on
health trends, diet claims, convenience offerings,
Perceived value of customers is 15 to 20% flavours, seasonal products outside of cold
weather
premium
Low sodium products and fast and simple to make
convenient products to be promoted
 Recommendation
Investing in organic growth internally as well as investing in the core

Profitable in the short term

Does not provide to adaptation to an ever changing fragmenting
market
Long term growth is secured
Leader position as innovative
Thank You!