EDDIT GRAMMAR MISTAKES

interoffice memorandum

to: bert clark, vice-president and general manager of brannigan foods’ soup division.

from: .

subject: change strategy for brannigan’s soup products.

date: 11/3/16

The decreasing sales volume is the biggest issue of Brannigan. The problem is due to the unmet satisfaction. Brannigan needs to figure out a strategy for solve the problem. Analysis indicates that one strategy best fit with the situation. Which is invest the core products, solving the problem for long term.

Problem Identification

The problem Brannigan Foods faced is the reducing sales on soup products. Consumers’ trends are keep changing, but the traditional Ready to Eat (RTE) Soups of Brannigan do not catch the trend within couple years. The sales volume of the whole industry decreasing in the past three year, which is the other reason of Brannigan’s traditional RTE soups’ decreasing sales. Advice from Brannigan’s consumers indicates innovations are needed. For solving the sagging market problem, Brannigan needs a marketing strategy for long-term, which should also include the innovation plan.

Situation Analysis

· Consumer analysis: Consumers take the dominant position, but Branngian’s traditional RTE soups no longer satisfied them. Fast packaged soups sold with Low prices, this means only big sale volumes could bring high profits. For catching more consumers, Brannigan needs to follow the consumers’ changing demands. Social trend of foods focusing more on diet clamis and healthy. Statistic shows natural ingredients take the second important position when consumers purchasing soups, which is 64% . Less consumers choose to buy traditional RTE soups without healthy ingredients. Consumers are also attracted by different popular flavors. Seniors are frequent buyers, and they are familiar with traditional flavors so they don’t care much about products improvements. But popular flavor lovers and younger generations don’t accept unchanged products anymore. Improving different popular flavors, for younger generations and Asian flavors lovers, could extend profit. Prices are also important. Consumers have high price sensitivity on soups . They do not accept soup with prices too high. Every time when consumers choosing products on the shelf, they will consider whether the product worth for the price. Soups with healthy ingredients and different popular flavors selling with lower prices, could catch most of them.

· Company analysis: The biggest issue for Brannigan is the decreasing sales volume. The objective is bringing the sales back. Result shows the old strategy didn’t stop the decreasing sales. It paid more attention on new products, which did meet in trend consumers’ demands for healthy ingredients. However, those new products are not Brannigan’s core products but just small product lines, which could not beat core products on sales. Obviously, investing much on new products didn’t bring more profit. Brannigan has three strengths, the first one is it has big part of loyalty customers, they helped hold profits when sales were decline. The second one is the consumer awareness. Consumers tend to choose big brand like Branngian, because big brands are always trustworthy and consumers usually choose a brand they are familiar with. The third one is Brannigan’s financial state could support it to change strategy for bringing the sales back. There are also some weaknesses. The first one is the not innovated products. Traditional RTE soups Brannigan produces do not meet consumers’ needs anymore, many of its consumers are attracted by its competitors’ products. The second one is Brannigan offers products for winter mainly, but consumers eat soups in every seasons, not just winter. Brannigan lost this part potential sales and profits. Brannigan has big chance to bringing the sales back on track by planning a new strategy.

· Collaborator analysis: Retailers play an important role in choosing Brannigan’s new strategy. Retailers could choose how much shelf spaces offer for suppliers and they do not want give more shelf spaces to Brannigan. The primary criteria of retailers choosing suppliers and allocate shelf spaces is profit maximization. Compared with Brannigan’s competitors and other small brands, Brannigan brought less profit to its main retailers. Consumer accessibility will lower if retailers decided to cut off Brannigan’s shelf spaces and give that to its competitors. It is nearly possible to ask more shelf spaces from main retailers. But increasing demand of shelf will be proposed in at least one of new strategies. Consider how to benefit Brannigan’s main retailers so that they are willing to offer more shelf spaces will be very important for Brannigan when choosing the new strategy.

· Competitor analysis: Brannigan’s competitors include retailers’ private labels. They beat Brannigan already, in following social trends and gaining profits. Brannigan’s rivals are producing in trend products with various flavors and healthy ingredients, but Brannigan is still stays the same. Also, for not losing profit due to the decreasing profit, Brannigan raised canned soups’ prices. But its competitors offering products with the same or even lower prices. As for the market shares, Brannigan has been the category leader for a long time, so it still takes the largest market share which is 39.8%. The biggest threat is from retailers as competitors. Retailers want to save more shelf spaces for its private labels so it has to cut off shelf spaces of its suppliers. Brannigan will be on that list because it didn’t bring much profit to its main retailers in these years. Retailers hold the control power. The opportunity Brannigan has is it is still the category leader in the industry, the high consumer awareness and accessibility give a big opportunity for Brannigan, because once the new strategy started, consumers will easy to aware and reach its new products. Therefore, it is easy for them to drag consumers back from its rivals.

· Climate analysis: The whole soup industry is decline due to the decrease sales of ready to serve wet soup and condensed wet soup. Other soup categories are still increasing in sales. The two decreased wet soups take the largest sales volumes in the industry. Most of people are still prefer wet soups than dry soups. The sagging economy helps the soups industry because consumers lower the budget on meals and they prefer cooking at home for saving money. This is the opportunities if soup products could be selling in lower prices and healthier content inside the products. The industry also trying to be innovated, so many new products with different popular flavors offered by different companies in these years. One problem of the soup industry is; soup is seasonal products. Consumers buy more RTE soups in the winter. The sales volume may bring up if the economy recover. But under the situation of decreasing economy, make sure how to fit with consumers’ current needs will change the decline issue.

Alternatives & Analysis

To reach the objective of Brannigan, which is figure out a long term strategy including product innovation to stop the decreasing sales volume. Couple alternatives could be considered.

· Acquired small companies and store brands which is doing good in trends, but keep the original brand name when selling the product.

Acquisition could be a short term strategy for solving the problem. This alternative satisfied consumer and brings the sales volume back around 1.5% to 3.5% within five years. Brannigan could acquires small companies who are doing great in various popular flavors and healthy ingredients. Couple issues also come along with this alternative. The first one is cannibalization; keep the brand name will reduce Brannigan’s traditional products’ shelf spaces. The second one is year for Brannigan reaches the breakeven from two years increase to five years because of costs on acquisitions. The third issue is the unreasonable prices spend for promotion and advertisements for at least three years to bring up the acquired brand. Acquisition needs more money; this alternative will extend the year for Brannigan starts to gain profit.

· Hybrid. Innovated traditional RTE soups and invest the growing new RTE soups. Rising R&D cost on new products like “To-Your-Health-Chicken Noodle” and “Fast-and-Simple Mediterranean Tomato Basil”. For products needed development and innovation, up the R&D cost from $14 million to $19 million.

Sales could be back to 3% - 4%. This alternative could be a long term strategy for stopping the decreasing sales volume, but brings up more issues. Firstly, only 5% of chance Brannigan could gain more shelf spaces for its new products from retailers. Investment on new products would be waste of money. Secondly, the successful rate of new products in soup industry is very low. Under the situation that sales decreasing and profit decreasing, take risks on low successful rate strategy is inappropriate. Thirdly, the projection of R&D cost is complicated to be accurate. The more possible situation is the actual R&D cost will higher than predicted. Report shows in the 10 potential new products, nine of them failed on gaining net profits. Retailers have very little possibility to accept products which could not bring them higher profit.

· Innovating and investing the core products.

Forecast shows sales volume will increase $331 (in million) by choosing this alternative. This alternative is a long term strategy that mostly fits with Brannigan’s needs currently. Core products already have loyalty consumers and high consumer awareness. Pay more attention on core products and do some innovations cost less than acquisition. Also saved money compared with invest both new products and old products. What’s more, Brannigan does not need to worry about cannibalization and shelf spaces stress from retailers because the innovated core products attracted not only loyal and old consumers but also new customers seeking for products in trends.

· Do nothing. Keep using strategies Brannigan used for the past few years. Keep investment for on-trend winners and acquired potential small companies.

Sales volume will keep decreasing because the unmet satisfaction and huge cost for bring up acquired brands. It is obvious that, keep using the old strategy brings no differences of the situation. Cannibalization will become a critical problem and how to communicate with retailers and let them offer more shelf spaces to Brannign, which is nearly possible, needed to be considered.

· Exit. Giving up all soup products in Brannigan, quit from competition inside the industry.

This alternative will even worse the situation. Soup products take 41% of Brannigan Food’s sales on 2011, though the sales volume projected is decreasing in 2012 and 2013. Soup products are still take an important role in Brannigan Food. It brings almost the biggest profit to the company. Quit will bring huge lost on profit of the whole company. This alternative would be considered in the worst situation, but definitely not for the current Brannigan.

Recommendation

· Consumer Value: Customers are tending to product offering clear healthy ingredients on packages selling with lower prices. Traditional RTE soups without innovations, are no longer satisfied consumers. Soups with affordable prices, various flavors and healthy ingredients fit with consumers’ demands. Only this kind of products for consumers, are worthy.

· Company Value: Stop the decreasing sales volume and gaining more profit in long term. The primary goal for a company is gaining profit. The decreasing sales of Brannigan indicates that Brannigan’s traditional products are fall behind trends. Consumers are no longer be attracted by traditional RTE soups of Brannigan. The way to solve the problem is innovated the products and make products for consumers. Customers want low prices healthy products with different popular flavors, then Brannigan need choose a way satisfied consumers and gaining profits at the same time.

· Collaborator Value: Retailers are collaborators in this situation. Retailers are tending to companies bring more profit to them. There are no reasons for retailers save more shelf spaces for Brannigan just because it is one of their biggest suppliers. Therefore, retailers will choose products which could attract more consumers. For soups products, products have the best-selling will become the primary choice of retailers.

Invest the core products could be recommended after collaborating values from these three concepts. The reason is the same value that company, consumer and collaborator hold at the same time are healthy trend, more popular flavors and lower prices. The same value that the company and retailers hold at the same time are gaining more profit. Invest the core products will not give retailers pressure on offering more shelf spaces and worry about the decreasing profits. As for the Brannigan, only focus on core products investment will not cost lower than acquisition and hybrid, and at the same time, reach the goal of offering products with healthy ingredients and variable flavors to stop the decreasing sales volume. Invest the core products will be the best choice for Brannigan.

Actions

· Reduce the core products prices.

· Be aware of the cost on price reduced.

· Increasing the advertisement and promotion budgets for core products. Improving on the flavors and healthy ingredients.

· Let all sales forces know the changed strategy on Brannigan’s soup products so that they could be used in the right position.

· Tracking the sales of developed core products. Marketing research for consumers’ advice about the core products.

� https://www.statista.com/statistics/284134/us-consumers-most-important-attributes-when-buying-soup-in-a-store/

� https://www.statista.com/statistics/284134/us-consumers-most-important-attributes-when-buying-soup-in-a-store/