Introduction
Brannigan Foods’ soups are one of its most significant sources of revenue, attracting primarily the baby boomer generation (55-75 years old) – the brand’s most loyal soup consumers. Nonetheless, several trends in nutrition put the brand’s soup division under strain. Healthy foods with a low sodium concentration that positively impact the national obesity rates became gradually more popular among consumers, as health awareness in the country increases.
Therefore, the soup division’s targeted demographic affected by the healthcare trend could potentially change their brand of preference. This alteration poses several questions regarding Brannigan Foods’ soups marketing strategy for Bert Clark, vice-president and general manager, particularly whether the company should rebrand the existing soups, acquire new brands, or target different groups.
The Case’s Context
The outlined healthcare trend and loss in customer’s loyalty ultimately result in decreased profitability. The problem leads to the need to develop a new growth plan, focusing on the potential efficacy of adding benefits to current lines, buying new soup brands, and incorporating nutrition and convenience tendencies. The company has four products, the destiny of which is in question, namely: Ready-to-Eat soups, Dry soup mixes, Heart Healthy, and Fast and Simple.
Considering this information, four turnaround strategies are based on the analysis of the food industry of 2012 and propose methods ranging from investing in the core market to acquiring smaller companies and new customer demographics to increase revenue.
Investing in the Growing Sector
Investing in the growing sector is the first proposition that revolves around following the emerging trends concerning healthier soups, dry ones, and prefabricated foods. From my perspective, the proposed plan has several advantages, such as the accelerated growth of existing products (Heart Healthy and Fast, and Simple, specifically) and an increase in their market share.
The strategy also takes into account the effect of nutrition trends, proposing to increase the advertising of Heart-Healthy. Extending the target population to busy mothers with Fast and Simple would require additional advertising investment. I believe that the substantial augmentation of publicity expenditures (by 18 million), perhaps justified in the long-term, would not bring quick results and create additional internal tension caused by declining profits.
Accentuating the significance of following trends, the strategy does not predict increased competition in this sector and whether the trend will not reveal itself as too unstable and transient to complete long-term goals. By chasing the trend, the proposal to invest in the growing sector disregards Brannigan Foods’ strengths. Therefore, I think that considerable advertisement investment could turn out to be unfounded, given the raised competence and the trend’s potential volatility.
Acquire Product Lines to Complete the Core in Growing Sector
An alternative to developing Brannigan Foods’ own products in the category of healthy soups, this proposition suggests a quicker method, which is to purchase preexisting lines from smaller companies. Since flavors branded as “Asian” also gain traction, acquiring Red Dragon Foods to preserve some of the accompanying branding elements, I think, would warrant the soup division a rapid entry into a new promising category. The strategy would also assist in gaining shelf space (90% of Red Dragon Foods’ shelf space).
Additionally, it could propel the company towards a positive profit growth rate, as products of the potentially acquired line are more expensive and have a higher margin. On the other hand, previous experience with the acquisition (Annabelle’s Food’s soups) resulted in deception and was an overall complicated affair, as the profitability threshold was met in five years instead of the expected two.
The introduction of Red Dragon Foods would also entail a reduction in market share and sales of Brannigan Foods’ products. Similarly to the previous one, this strategy is focused on long-term profitability. Nonetheless, I estimate that inefficient integration would damage the company’s decreasing viability further.
Invest in Organic Growth from Internally Developed Products
This strategy concentrates on investing in Brannigan Foods’ research and development areas and creating internally new products catering to the boomers’ generation. It requires a significant budget increase (by 35%) for research and development, as several possibly lucrative projects are being elaborated in-house. I suppose that some of the developed products could satisfy customers’ growing needs for healthier nutrition, Simple Healthy soups, and “Active Lifestyles,” for instance.
Contrarily to the acquisition strategy proposed in the last section, I think that establishing new product lines domestically is less complicated and expensive despite the expenditures on research and development. Moreover, this approach would warrant a price increase of 10 cents for a can. Still, this strategy enables cannibalization, the extent of which could be hard to predict.
From my perspective, introducing new products is generally risky, as success is unpredictable, and retailers disfavor them due to additional costs and short life-spans, ultimately resulting in a decline in sales. Therefore, I estimate that this strategy enables Brannigan Foods to satisfy its customer’s needs for healthier nutrition without more costly external acquisitions, but it may encounter resistance from retailers.
Invest in the Core
As the Ready-to-Eat soup line is perceived as the core of Brannigan Foods, increasing advertising and promotional budget for this product could enhance brand awareness. Another element of this strategy is the decreasing price of the Ready-to-Eat soups that grew over the last years. Considering that consumers are predicted to prefer meals that cost two dollars or less per serving, this step would prevent the weakening of the brand.
Furthermore, I think that the proposed revival of “Boys and Girls Love Soup” could extend the primary customer demographic beyond baby boomers. Investing in the core, I believe, is not as risky as acquiring other companies’ lines or developing new products, which is significant for a company that undergoes a decline. Moreover, It seems to me that a Brannigan Foods’ strength lies in its uniqueness, something that other companies cannot easily duplicate.
Conclusion
Given the strategies’ pros and cons, combining the third and the fourth seems to me as the best alternative to satisfy both long- and short-term Brannigan Foods’ goals. Nonetheless, I would recommend investing in organic growth from internally developed new products over the other strategies. Following macro socio-cultural trends, such as the preference for a healthier diet, influences how well the company’s soups satisfy the customer’s needs, their perception of consuming more natural food, thus increasing Brannigan Foods’ competitive advantage.
I estimate that the company’s existing soup lines can be served for this purpose, being more cost-efficient than acquiring product lines. The proposed increased budget for renovation of the Ready-to-Eat soups encompasses another trend – this line, being branded as a time-saver and appealing with its convenience, could target working mothers and young people. Strengthening the company’s most popular product helps maintain its brand equity and reinforces its production capacity by investing in research and development.