Critical Analysis Article( no more than 3 pages)

General Mills’ choice on yogurt business

Background

In 1977, General Mills started selling Yoplait, a French brand yogurt. Unlike the typical U.S. yogurts at the time, which were unflavored, with sweet jam at the bottom of the container, Yoplait sold a blended product (John, 2017). However, this year, General Mills reported a smaller-than-expected quarterly profit as yogurt and cereal sales declined in North America, sending the company’s shares down 9 % to their lowest levels in nearly two years (Vibhuti, Gayathree, 2017). The company blamed weak demand for its Yoplait Greek and Yoplait Light varieties (Paul, 2017). Nevertheless, Yoplait Greek and Yoplait Light have suffered the most over the past year, as Americans' shifted away from low-calorie diets in favor of more natural, wholesome ingredients (Annie, 2017).

Consumer no longer prefer Yoplait because “the way people look at weight management has changed. They aren't counting calories anymore," said Chief Executive Jeff Harmening, in an interview. Artificial flavors and sweeteners, used in Yoplait Light and Greek 100, "don't fit into that," he said (Annie, 2017). People prefer purer, simpler, and more natural yogurt, such as Greek yogurt (John, 2017). Even though Greek yogurt tend to be twice as expensive as normal yogurt, its sales still have increased from 0.7% of the total industry in 2006 to 19% today (John, 2017).

Problem Statement

General Mills, in order to reverse its falling sales, must renovate yogurt products to attract customers again and maintain its yogurt business.

Alternative Solutions

General Mills could improve products to fit changing consumer behaviors. Yoplait is well known as the light and low calorie product, however, people nowadays prefer Greek yogurt which is natural and organic. Executives have said that General Mills didn't have enough Greek yogurts on shelves and until recently, no organic products (John, 2016). Brands that marketed themselves as "light" or "low calorie" have performed poorly across many pockets of the grocery aisle, as the definition of healthy has evolved to terms like "natural" or "organic."(John, 2016). Therefore, General Mills should develop more natural and organic yogurt to satisfy consumer tastes.

Moreover, General Mills could develop a price advantage. Some of General Mills’ goods were competitively priced, meaning more discounts were needed than the company had anticipated (John, 2017). General Mills could revise its price or offer discounts to bolster competitiveness, thereby increasing sales.

Additionally, General Mills could create a new tasting yogurt. General Mills has already fallen in the Greek yogurt market. Today Chobani is the number one seller of Greek yogurt in the country, with nearly 50% market share (Derek, 2011). It makes more sense to try a new market through product innovation for General Mills.

Recommendations

It seems pretty tough for General Mills to compete with other industries in the Greek yogurt market now, and reducing its prices may let the industry’s balance income worse. Therefore, I think the best solution for saving General Mills yogurt business is to create a new type of product. In July, General Mills released a French style yogurt called Oui, receiving a lot of praise. Yoplait's Oui comes at a time when sales of Greek yogurt are down nearly 5 percent, which means that French-style yogurt could be poised to become the latest "it" product in the dairy world. "There's been no big innovation in 10 years," David Clark, the president of U.S. yogurt at General Mills, told BuzzFeed. "Greek was the last thing to happen in yogurt." (Lynsey, 2017).

Program Performance Metrics

An intermediate metric to determine the effectiveness of this strategy is short term profits for Oui. It should be positive net income if the strategy is successful.

A conclusive metric to determine the effectiveness of this strategy is if Oui could captive market share from its rivals. The strategy would be successful if the company’s market share increases.

What I Have Learned from This Critical Analysis Exercise

I realized the importance of marketing research for a company. I think the reason why General Mills suffered market share loss is that they didn’t do well in marketing research. If they do enough work in marketing research and forecast to know about consumer behavior changes, they could response to consumer behavior change immediately. If it is, I think at least it wouldn’t suffer big share loss because it is a long history company which has high consumer awareness.

References