Brannigan Foods is an established company with a soup division who is a market leader in shelf stable canned soups. Brannigan’s soup division is a cash cow for the company, as it is responsible for over 40% of Brannigan’s total sales. The division specializes in the following four product categories: ready to eat soups, fast and simple meals, heart healthy meals, and dry mix soups.
Among the four, the ready to eat soups category accounts for 71% of the division’s total profit, and is crucial to the soup division’s profitability.As of late, the soup industry itself has been in a steady decline due to an increasing concern for healthier lifestyles and diets. For Brannigan, this has led to a loss in market share and profitability over the last 3 years. Retailers are also losing faith in Brannigan as they are decreasing the company ‘s shelf space at an annual rate of 3%. As more retailers are starting to promote their own private labeled soups, shelf space is getting cut from brand name labels.The Brannigan Foods Soup Division is no longer seen as innovative and profitable by retailers and needs to adopt a new approach for its marketing strategy. Brannigans largest market is the baby boomer generation, but with US health trends on the rise, products are beginning to be much more of a challenge to target.
Despite the high brand loyalty of the baby boomers, it is important to note that Brannigan does not have much presence among the younger generations.Case ObjectiveBert Clark, the VP of Brannigan Foods’ Soup Division, has set the goal of increasing profits by 3% by the end of the fiscal year . He challenged the soup division team with the following four questions prior to the release of Julian DeGennaro’s annual “State of the Soup Industry” report: 1). Can new benefits be added to the current lines to increase their growth and profitability?2). Does an acquisition make sense to strengthen or diversify our lines?3). What new products might we develop internally that address the health and convenience trends? Or do we have enough new products already that we can reverse the slide if they are properly marketed?4). What marketing strategy should be employed in reference to each of the above and how much should be put behind the drive for next year versus what we should invest for our long-term objectives?After analyzing both DeGennaro’s report and the task at hand, four of Clark’s managers each sketched different proposals that are “most likely to turn the division around.” Our goal is to select the best recommendation that will be the most profitable and beneficial for Brannigan Foods’ Soup Division.
SWOT AnalysisAlthough Brannigan has been in a slump recently, they still remain a market leader with 39.8% of total market share. Before any new strategy can be implemented, it is important to look more closely into the Brannigan Foods Soup Division.
To best breakdown the division, a SWOT analysis is necessary.ProposalsThe first recommendation comes from the Director of the Simple Meals unit, Srikant Tipha, and suggests investing in already growing sectors. The proposal puts heavy focus on targeting new and growing markets, particularly the simple meal, heart healthy soup, and dry soup segments.
Tipha wants to reinforce brand awareness with more promotional couponing and sampling of products that are gaining market popularity, resulting in advertisement expenses to increase by up to 18% . The problem with this plan is that not only is it dependent on consumer trends, but it is more concerned with the star products of the company, and pays no attention to the cash cows. This can create even more problems for Brannigan because if the cash cows lose profit, funding for the star products will directly follow suit.The second recommendation is made by the Director of Finance and Planning, Claire Mackey, and revolves around new acquisitions that can potentially complement growth in the core sectors. Mackey wants to buy out small firms who are already gaining a small presence in growing sectors of the industry. More specifically, Mackey finds the healthy and convenience segments of the market to be of Brannigan’s interest.
The proposal also recommends increasing advertising and promotional spending by 18 million dollars to endorse any newly acquired product lines. Although any acquisition gives Brannigan 90% of the company’s existing shelf space, the effects of cannibalization on the division’s slipping market share have to be closely monitored. The biggest concern that arises from this plan is that purchasing a new company is a major investment, and associates with it the risk of a tedious transitional phase that can cause the soup division to be even less profitable.
The third recordation from Chief Innovation Officer Anna Chong is heavily focused on investing in organic growth and the internal development of products. Chong’s plan provides value because it deals both with the division’s cash cows and star products. Chong wants to offer more innovations and appeal to the general public, in order for Brannigan to gain more brand recognition. The proposal aims toward different segments of the market as it introduces new soup flavorings, varieties of packaging, and new soup recipes. By focusing Brannigan’s efforts on internal development and no external acquisitions, this plan eliminates any risk of miscues that can happen within the product channels.
The downside of Chong’s proposal though is the the difficulty in adding new products to Brannigan’s already diminishing self space.The final recommendation sketched by the Director of Sales and Marketing Bob Hugh, is all about investing in the core of Brannigan’s soup division. Hugh wants to increase advertising and promotional spending by 20 million dollars, as well as hopefully make Brannigan’s operations more economical with a 22 million dollar investment towards the restoration of manufacturing plants.Hugh also mentions cutting the costs of ready to eat soups by 5 cents a can, an effort for Brannigan to gain more of a competitive edge in the market. Reducing costs can be a gamble for Brannigan, since lowering prices can in the long run hurt the brand’s established image.
The main issue in Hugh’s proposal is that it’s heavy investments do not necessarily add any specific value to the brand’s products, or even the brand itself.