Brannigan Foods Case

7/21/2019 Brannigan Foods Case

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BRANNIGANFOODS

Strategic Marketing Planning

Section D Group 10

Arijit Nayak (15P189)Chandrima Dhar (15P19)

!ihir "pa#ani (15P$1$)Nidhin Geor%e &homa# (15P$15)

Sam'it Da#h (15P$$5)Shii Sharma (15P$0)*iek A%ar+a, (15P$0)



Content#Introduction:................................................................................................................ 2

Context:....................................................................................................................... 2

Prole! State!ent...................................................................................................... "

O#tion$ #ro#o$ed to Clark:.......................................................................................... %

I. In&e$t in gro'ing $ector$....................................................................................%

II. Ac(uire #roduct line$ to co!#le!ent t)e core in gro'ing $ector$.....................*

III. In&e$t in organic gro't) +ro! internall, de&elo#ed ne' #roduct$...................--

I. In&e$t in t)e core..............................................................................................-"

Reco!!endation$: /.................................................................................................. -*

Conclu$ion: /..............................................................................................................-0



-ntroduction.

Bert Clark1 &ice/#re$ident and general !anager o+ Brannigan Food$ Sou#

Di&i$ion i$ e&aluating o#tion$ +or +uture in&e$t!ent a&enue$1 #ro&ided , +our

o+ )i$ ke, !anager$ a$ed on t)eir &ie'$ o+ an anal,$t$ re#ort on t)e Sou#

indu$tr,. Sou# indu$tr, 'a$ !ature and Brannigan$ $ale$ and #ro3t$ )ad

een declining. 4)ere 'a$ al$o an ongoing $)i+t in t)e con$u!er trend$ in

$ou# con$u!#tion1 in lig)t o+ )ealt) and oe$it, concern$1 and #re+erence +or

$i!#le and con&enient !eal$. Clark 'a$ e$#eciall, concerned aout engaging

,ounger con$u!er$. 5e a$ked +or and got reco!!endation$ aout +uture

#lan$ +ro! )i$ +our !o$t tru$ted $uordinate$. 5ere1 'e anal,6e t)e

reco!!endation$ and #ro#o$e a $olution o+ our o'n +or t)e +uture directiono+ t)e co!#an,.

Conte/t.

4)e Sou# Di&i$ion i$ re$#on$ile +or %78 o+ t)e #ro3t$ o+ t)e co!#an, and

"78 o+ t)e $ale$. 4)e !o$t #ro3tale #roduct categor, t)i$ di&i$ion )a$ i$ t)e

Read, to 9at Sou#$ R49;1 ')ic) account$ +or <"8 o+ t)e total re&enue$

=->"2 Million; and *-8 o+ it$ #ro3t$ = 2-7 !illion;. 4)e$e #roduct$ are in

!ature $tage and are in $lo' decline.

27-7

27--

Gro't)

Read, to $er&e 'et$ou#

22%*

2727

1052

Conden$ed 'et $ou#-0>

?-02

- 82

Dr, Sou#-?<

<-?>

* 2.?8

Read, to $er&e rot) 0<2 >-% <.-8

Re+rigerated $ou#$ -"2 -<" -%.%8

Fro6en Sou#$ 2* "< *7."8

Deli Sou#$ --7 -"7 2*.?8

&ota,335

4350

$2

4ale -: 4otal !arket $ale$ o+ all $ou# categorie$ in = !illion$;



4)e Sou# Di&i$ion )a$ ot)er #roduct and rand $eg!ent$ $uc) a$ Dr, Sou#$1

5ealt)ier Sou#$ and t)e Fa$t @ Si!#le Meal$. Fi&e ,ear$ ago1 a $ou# co!#an,

na!ed Anaelle Food$ 'a$ ac(uired to roaden t)e range o+ #roduct$ oered

, introducing t)e Fa$t @ Si!#le !eal categor,1 and t)e $trateg, t)at )a$

een +ollo'ed during t)e #a$t +e' ,ear$ )a$ een to $trongl, in&e$t in Dr,

Sou#$1 5ealt)ier Sou#$ and t)e !entioned Fa$t @ Si!#le !eal$.

Cu$to!er Seg!entation: Ba, oo!er$ orn ->"< -><"; are t)e large$t

and !o$t lo,al rand $eg!ent. 4)e, are leaning to'ard$ eating )ealt),

$ou#$ lo' $odiu!1 3er enric)ed;. Anot)er categor, i$ t)at o+ 'orking

!ot)er$1 ')o #re+er +a$t1 $i!#le !eal$. Brannigan i$ al$o acti&el, tr,ing to

engage ,ounger con$u!er$.

Con$u!er e)a&ior: On an a&erage1 -." can$ o+ $ou# #er )ou$e)old are

con$u!ed #er 'eek. Con$u!er$ aged -0/2" a&erage 2.- can$ #er 'eek. "08

o+ con$u!er$ eat dr, $ou# and *08 eat 'et $ou#. ?08 o+ all con$u!er$ eat

$ou# a$ a $nack. Millennial$ age -%/?7; are !o$t likel, to do $o. %%8 o+

con$u!er$ $a, t)at $o!eone in t)eir )ou$e)old eat$ $ou# all ,ear round1 ut

0<8 o+ con$u!er$ are !o$t likel, to eat $ou# ')en it i$ cold out$ide. 4)i$

$)o'$ $ou# i$ $till #ercei&ed a$ a $ea$onal +ood. *08 con$u!er$ $ee $ou# a$

a )ealt), or lo' calorie o#tion +ood. <-8 o+ con$u!er$ take lo' $odiu! in to

account ')en #urc)a$ing $ou#. 4)i$ $)o'$ t)e increa$ing trend to'ard$

eating )ealt), +ood$. 9x)iit -;

Cu$to!er #erce#tion o+ Brannigan: Cu$to!er$ #ercei&e Brannigan to e

e)ind co!#etitor$ in t)e +ollo'ing 9x)iit -;:

• 5ealt) trend$

• Diet clai!$

• Con&enience oering$

• Fla&or$ e$#eciall, #o#ular regional one$

• Sea$onal #roduct$ out$ide o+ cold 'eat)er



Retailer #erce#tion o+ Brannigan: Retailer$ #ercei&e Brannigan to e t)e

categor, leader in $ou#$. But1 it i$ $een a$ le$$ #ro3tale t)an co!#etitor$

and not inno&ati&e. 9x)iit -;

Di$triution c)annel$: Retailer$ and $u#er!arket$ #ro&ide ade(uate c)annel$

to reac) t)e con$u!er$. 5o'e&er1 t)e relation$)i# i$ eco!ing $trained a$

Brannigan need$ !ore $)el+/$#ace +or it$ &ariou$ ne' #roduct$ and retailer$

are un'illing to increa$e t)e $)el+ $#ace +or Brannigan1 a$ t)e, dont 'ant

one co!#an, to !ono#oli6e all t)eir $)el+ $#ace. 4)e, 'ant to !axi!i6e t)eir

#ro3t$ , !aking $)el+ $#ace a&ailale to #ro3tale #ri&ate lael #roduct$.

Retailer$ are al$o eco!ing intolerant o+ t)e co$t o+ ringing in ne' #roduct$

'it) $)ort li+e c,cle$ t)at +ail to !eet t)eir $ale$ and #ro3t ex#ectation$.

Stocking +ee$1 return$ and ot)er c)arge$ +or eac) ne' #roduct roug)t it in

'ere a con$tant +actor +or Brannigan.

Co!#etitor$: 4)e $i6e o+ t)e S Sou# !arket i$ = <." Billion. Brannigan i$ t)e

!arket leader1 )a&ing an o&erall !arket $)are #+ ?>.08. It$ !aor

co!#etitor$ are General Mill$ and nile&er. It al$o +ace$ $ti co!#etition +ro!

#ri&ate lael #roduct$ and deli $ou#$. ?%8 o+ con$u!er$ u, $ou# +ro!

$u#er!arket deli $ection$ a$ t)e, elie&e t)e, are +re$)er and )ealt)ier and

#ro&ide a +a$t and $i!#le !eal 9x)iit -;. Ne' $!all co!#etitor$ are

entering t)e !arket 'it) !ore con&enient1 )ealt)ier $ou#$ and ne' Ea&or$

')ic) are eco!ing #o#ular a!ong cu$to!er$1 like t)e Mexican and A$ian

Ea&or$.

Pro',em Statement

Clark need$ to deter!ine t)e !o$t #ro3tale 'a, to de#lo, t)e co!#an,$

re$ource$1 $o a$ to $te! t)e declining $ale$ and #ro3t$ o+ t)e di&i$ion. 5e



need$ to deter!ine ')ic) o+ t)e alternati&e$ $ugge$ted , )i$ $uordinate$

$)ould e i!#le!ented in order to re&er$e t)e $tead, indu$tr, decline long/

ter!; and increa$e #ro3t$ , ?8 #er ,ear $)ort ter!;. 4)e deci$ion +actor$

c)o$en , Clark are:

-. olu!e &$ #ro3t2. S)ort ter! &$ ong ter!?. Brand e(uit, &$ Brand con$traint". Categor, trend &$ #er+or!ance%. 5ealt)<. Con&enience*. Ri$k o+ o#tion$0. O##ortunitie$ and re$ource li!it$>. )at 'e do 'ell

-7. Co!#etition

ption# propo#ed to C,ark.

- -ne#t in %ro+in% #ector#

Srikant 4i#)a i$ t)e categor, !anager +or Si!#le Meal$1 5eart 5ealt), Sou#$1

and Dr, Sou#$. According to 4i#)a1 Brannigan $)ould kee# in&e$ting

increa$ingl, in t)e gro't) categorie$ o+ dr, $ou#$ and )ealt)ier $ou#$ a$

t)e,re &er, #ro!i$ing. 5e #ro#o$e$ an increa$e in t)e ad&erti$ing and

#ro!otional ex#enditure o+ dr, $ou#$ in general and t)e Fa$t @ Si!#le $ou#

and 5eart 5ealt), $ou# line$1 and ne' dr, !ix Ea&or$ Ga6#ac)o1 4eri,aki

Bee+; in #articular. 4)i$ $trateg, +ocu$e$ a lot on H$tar #roduct$ BCG #roduct

!atrix; and a long ter! gro't) &i$ion. )ile t)e$e categorie$ are indeed

gaining #o#ularit,1 t)e, are not nearl, a$ ig a$ t)e canned $ou#$ categor,.And eing &er, #o#ular1 t)e$e categorie$ 'itne$$ed )ig) co!#etition t)at led

to a larger )it to t)e #ro3t !argin$ t)an t)e core #roduct$.

A$ 'e )a&e calculated ao&e1 t)e $ou# !arket i$ declining , around 2.?8

#er ,ear 4ale -;. Sale$ o+ t)e #ro#o$ed line$ )a&e een gro'ing at -28 #er



,ear. A$ $)o'n in t)e +ollo'ing calculation$1 t)e $ale$ 'ould )a&e to gro' ,

2-.%8 to !eet )i$ target $ale$ o+ = 2>%" !illion.

27-2 27-? Gro't)27-?

4i#)aGro't)

4raditional read, to eat $ou#$

Read, to $er&e 'et $ou#$ >>0 0>? /-7.%8 0>?

/-7.%

8

Conden$ed et $ou#$ >-* 002 /?.08 002 /?.08

Brot)$ "-" "?> <.-8 "?> <.78Ne' #roduct$1 ac(ui$ition$ la$t-7 ,ear$

o' Sodiu! R49 5eart 5ealt), ?2- ?<7 -2.78 ?>72-.%

8

AnnaelleJ$ Fa$t n Si!#le *- 07 -2.78 0<2-.%

8

Dr, $ou#$ and !ixe$ %? %" 2.?8 %% ?.08

Ot)er1 including #ri&ate lael ->> 27> %.78 27> %.78

4otal 2>*? 2>-? /-.>8 2>%" /7.<8 4ale 2: Gro't) #roection$ according to #rediction$ o+ Mr. 4i#)a in = !illion$;

4)i$ gro't) $ee!$ unrea$onale to ex#ect in a declining !arket $cenario1

e&en 'it) increa$ed #ro!otion ex#en$e$ o+ = -0 !illion. Al$o1 t)e $)ort/ter!

oecti&e o+ ac)ie&ing #ro3t gro't) o+ ?8 'ould not e ac)ie&ed e&en i+ $ale$

#roection$ are !et1 a$ $)o'n elo'.

Kear27-

-27-2

927-?

27-? 4i#)a

Net $ale$ o+ BranniganJ$ Food$'orld'ide

*??7 *>*>

02?7 02?7

Net Sale$ o+ S Sou# Di&i$ion?7?

" 2>*?2>-? 2>%"

6e##.

Co$t o+ good$ $old-<<

> -<?%-<72 -<2%

Marketing1 R@D1 Selling 9x#en$e$ "2% "-< "70 "2<

Ot)er ex#en$e$ <2% <2* <77 <7<

Net 9arning ?-% 2>% ?7? 2>*7roken out o !arketin% and#e,,in% e/pen#e#

Ad&erti$ing and Pro!otion -0> -*0 -*7 -00 4ale ?: 9arning #roection$ a$ #er Mr. 4i#)a$ reco!!endation$ in = !illion$;

4)e anal,$i$ a$ #er t)e deci$ion criteria #ro#o$ed , Clark i$ a$ +ollo'$:



olu!e &$ #ro3t: 4)e $ale$ o+ t)e ne' #roduct line$ are = ""% !illion at

#re$ent 4ale 2;. 4)e categor, i$ gro'ing , -28 #er ,ear. Increa$ed

#ro!otion ex#enditure !a, !ean )ig)er gro't)1 t)oug) likel, not at t)e

#roected le&el o+ 2-.%8. But1 t)e #ro3t target o+ ?8 'ill not e ac)ie&ed ,

t)i$ $trateg,.

S)ort ter! &$ ong ter!: 4)i$ $trateg, i$ +ocu$ed on t)e long ter! gro't).

S)ort ter! target i$ not eing ac)ie&ed.

Brand e(uit, &$ Brand con$traint: Brannigan i$ #ercei&ed , con$u!er$ a$

eing e)ind co!#etitor$ on )ealt) and diet trend$ and con&enience

oering$. 4)i$ $trateg, !a, re!ed, t)at.

Categor, trend &$ #er+or!ance: 4)ere i$ a clear trend to'ard$ )ealt), and

con&enient $ou#$ ')ic) t)i$ $trateg, addre$$e$. 4)e categor, )a$ een

gro'ing at -28 annuall, ')ic) $)o'$ good #er+or!ance in a declining

!arket.

5ealt): Heart Healthy $ou#$ i$ gaining !arket $)are.

Con&enience: Fast and Simple $ou# i$ on t)e rig)t track.

Ri$k o+ o#tion$: Increa$ed #ro!otional $#ending !a, not tran$late in to

gro't) a$ #roected.

O##ortunitie$ and re$ource li!it$: An increa$e o+ = -0 !illion in #ro!otional

ex#enditure lead$ to decrea$e in #ro3t$. It took % ,ear$ +or t)e ac(uired line

to reak e&en1 in$tead o+ t)e initial #roection o+ t'o ,ear$.

)at 'e do 'ell: 4)e #roduct categor, i$ ne' to Brannigan and not a

traditional $trengt).

Co!#etition: 4)ere i$ )ig) co!#etition in t)i$ categor, a$ con$u!er trend$

are leaning to'ard$ it. In order to kee# u# 'it) co!#etition and #rotect it$



!arket $)are1 Brannigan 'ill )a&e to +ocu$ on t)i$ line o+ #roduct$ $ooner or

later.

Mr. 4i#)a$ reco!!endation$ a##ear to e o&erl, o#ti!i$tic. S)ort ter!

target o+ ?8 gro't) in #ro3t 'ill not e !et i+ t)i$ alternati&e i$ i!#le!ented.

5o'e&er1 t)e #ro#o$ed +ocu$ on )ealt), and +a$t and $i!#le categor, i$ in

line 'it) !arket trend$. 4)e co!#an, cannot ignore t)e$e #roduct line$ +or

ac)ie&ing long ter! gro't) and !aintaining it$ #o$ition a$ !arket leader in

t)e +uture.

-- Acuire product ,ine# to comp,ement the core in%ro+in% #ector#

Claire Macke, i$ t)e Director o+ Finance and Planning at Brannigan and

+a&ored t)e ac(ui$ition o+ #roduct line$ in order to otain a +oot)old in t)e

ne' Ea&or$ and )ealt)ier $ou#$ categorie$ (uicker. According to )er an

ac(ui$ition 'ould )a&e a +a&orale i!#act on gro$$ !argin$ &ia

!anu+acturing and o#erating $,nergie$ and ad&erti$ing and #ro!otion

ex#en$e$ could e reduced +ro! ex#ected nu!er$ , u$ing t)e Brannigan

rand na!e. 4)e diLcult ac(ui$ition o+ Annaelle$ Food$ not'it)$tanding1

canniali6ation 'a$ a concern and u$ing t)e Brannigan rand na!e in$tead

o+ retaining t)e ac(uired rand na!e$ 'ould antagoni6e t)e retailer$ ')o

'ere 'ar, o+ large &endor$ gaining $)el+ $#ace. 4)e #ro$ and con$ o+ t)e

$trateg, are li$ted elo'.

Pro$:

-. It 'ill enale ea$, entr, to t)e recentl, e&ol&ed #o#ular Ea&our and

)ealt)ier categorie$ A$ian Ea&our$;.2. 4)e #roduct$ are #riced )ig)er and )a&e )ig)er !argin1 $o 'ill e !ore

#ro3tale.?. 4)e ac(ui$ition$ are e$ti!ated to add to $ale$ to t)e tune o+ -.% to ?.%8

'it)in % ,ear$.



". Ac(ui$ition #ricing at </* 9BI4DA i$ rea$onale.%. I+ t)e integration i$ )iccu#/+ree1 $igni3cant !anu+acturing and o#erating

$,nergie$ can e ex#ected ')ic) i$ ex#ected to add -78 to gro$$ #ro3t

!argin$ 'it)in t'o ,ear$.

Con$:

-. Annaelle$ ac(ui$ition did not !eet ex#ectation$. 4)e #roected reak/

e&en #eriod o+ t'o ,ear$ turned in to 3&e ,ear$. 4)e !anage!ent o+

t)e co!#an, i$ likel, to &ie' anot)er ac(ui$ition #ro#o$al 'it)

a##re)en$ion.2. I$$ue o+ randing and !arketing in&e$t!ent i$ co!#lex. Brannigan can

eit)er c)oo$e to $ell t)e ne'l, ac(uired #roduct$ under it$ o'n rand

na!e or continue to $ell t)e! under t)e rand na!e o+ t)e earlier

co!#an,. Bot) c)oice$ oer t)eir o'n ene3t$ and c)allenge$. I+ t)e

#roduct$ are $old under t)e Brannigan rand na!e1 co$t o+ #ro!otion

'ould e -%8 o+ $ale$ ')erea$ i+ t)e ac(uired co!#an,$ rand 'a$

continued t)e co$t o+ #ro!otion 'ould e ?78 o+ $ale$. Canniali$ation

'a$ al$o a critical con$ideration. A$ retailer$ are un'illing to #ro&ide

!ore $)el+ $#ace to Brannigan1 i+ t)e #roduct$ are $old under t)e

Brannigan rand na!e $o!e non/#er+or!ing Brannigan #roduct$ 'ould

)a&e to e re!o&ed +ro! t)e $)el&e$. 4)e canniali$ation i$ ex#ected

to e 0.%8 o+ total $ale$ Clark e$ti!ate$ canniali$ation to e 7.<8 o+

total $ale$ i+ t)e ac(uired co!#an,$ rand 'a$ !aintained1 doule

t)at #redicted , M$. Macke,. 5e al$o e$ti!ate$ t)at !aintaining t)e

ac(uired co!#an,$ rand 'ould allo' Brannigan to kee# >78 o+ t)e

ac(uired co!#an,$ $)el+ $#ace and t)u$ reduce canniali$ation ,

*78;. In ot) t)e ca$e$1 t)ere 'ill e $igni3cant increa$e in #ro!otion

ex#en$e$ and $o!e canniali$ation i$ to e ex#ected.?. A ca#ital ex#enditure o+ aout = 2> !illion * x 9BI4DA o+ = ".2 !illion;

'ould e re(uired +or t)e ac(ui$ition. )ile !o$t o+ t)i$ ex#enditure

'ould e reEected in t)e alance $)eet and not t)e inco!e $tate!ent1

intere$t and de#reciationa!orti6ation ex#en$e$ 'ill e added to it and

t)u$ aect #ro3t$.



4)e e$ti!ated inco!e $tate!ent1 +or eit)er o+ t)e t'o tactic$1 +or t)e next

3&e ,ear$ 27--/27-%; i$ gi&en elo'.

Kear27-

-27-

227-

?27-

"27-

%

Net $ale$ o+ BranniganJ$ Food$'orld'ide *??7 *>*> 02?7


"2>*

?2>"

>20>

720?2

6e##.


>-<?

%-<2

2-%>

7-%%0

Marketing1 R@D1 Selling 9x#en$e$ "2% "-< "-? "7% ?>*

Ot)er ex#en$e$ <2% <2* <77 %00 %*<

Canniali6ation // // 2% 2% 2"

Intere$t // // - - -

Net 9arning ?-% 2>% 200 202 2*<7roken out o !arketin% and#e,,in% e/pen#e#

Ad&erti$ing and Pro!otion -0> -*0 -*% -*- -<0 4ale ": Maintaining Brannigan Brand Na!e in = !illion$;

Kear27-

-27-

227-

?27-

"27-

%Net $ale$ o+ BranniganJ$ Food$'orld'ide

*??7

*>*>

02?7


"2>*

?2>"

>20>

720?

2

6e##.


>-<?

%-<2

2-%>

7-%%

0

Marketing1 R@D1 Selling 9x#en$e$ "2% "-< "-> "-7 "72

Ot)er ex#en$e$ <2% <2* <77 %00 %*<

Canniali6ation -0 -* -*

- - -

Net 9arning ?-% 2>% 2>7 20" 2*07roken out o !arketin% and#e,,in% e/pen#e#

Ad&erti$ing and Pro!otion -0> -*0 -0- -** -*" 4ale %: Maintaining ac(uired co!#an, rand na!e in = !illion$;

A$ can e $een +ro! t)e ao&e tale$1 net #ro3t i$ decrea$ing $teadil, o&er

t)e next 3&e ,ear$ in ot) $cenario$1 again$t Clark$ e$ti!ated increa$e in

gro$$ #ro3t !argin , -78. 9&en t)oug) t)e Co$t o+ Good$ Sold i$ reducing



due to increa$ed gro$$ #ro3t !argin1 increa$ed !arketing1 canniali6ation

and intere$t ex#en$e$ reduce t)e net #ro3t !argin o&er t)e next 3&e ,ear$.

So1 t)e $)ort ter! target o+ ?8 gro't) in net #ro3t 'ould not e !et.


olu!e &$ #ro3t: 4)e $ale$ o+ t)e ne' #roduct line$ are = ?< !illion1 and a,

add -.% to ?.%8 to $ale$ 'it)in % ,ear$. So1 t)e #roected &olu!e o+ $ale$ i$

lo'. 4)e ac(ui$ition target$ )a&e an 9BI4DA o+ aout =".2 !illion1 ut a$

$)o'n in 4ale " and %1 net #ro3t gro't) target o+ ?8 #er ,ear 'ill not e

!et , t)i$ $trateg,.

S)ort ter! &$ ong ter!: 4)i$ $trateg, i$ +ocu$ed on t)e long ter! gro't) in

ne' Ea&or$ and #roduct$. S)ort ter! target i$ not eing ac)ie&ed.



oering$. 4)i$ $trateg, !a, re!ed, t)at1 i+ Brannigan$ rand i$ u$ed +or $ale

o+ t)e ac(uired #roduct line$. I+ t)e ac(uired co!#an, rand i$ u$ed1

Brannigan$ rand e(uit, !a, not e aected t)at !uc). 5o'e&er1 t)e

con$traint o+ li!ited $)el+ $#ace and canniali6ation 'ill e reduced ,!aintaining t)e ac(uired co!#an,$ rand.

Categor, trend &$ #er+or!ance: 4)ere i$ a clear trend to'ard$ ne' Ea&or$

and )ealt), and con&enient $ou#$ ')ic) t)i$ $trateg, addre$$e$.

5ealt): 4arget co!#anie$ )a&e #roduct$ +ocu$ed on )ealt).

Con&enience: 4arget co!#anie$ )a&e #roduct$ +ocu$ed on con&enience.

Ri$k o+ o#tion$: 4)ere i$ )ig) ri$k o+ un$ucce$$+ul integration1 a$ in t)e ca$e o+

Annaelle Food$.

O##ortunitie$ and re$ource li!it$: 4)i$ $trateg, 'ill re(uire around = 2>

!illion in ac(ui$ition ex#en$e1 ')ic) t)e co!#an, 'ill )a&e to orro'.



)at 'e do 'ell: 4)e Ea&or$ o+ t)e #roduct$ are ne' to Brannigan and not a

traditional $trengt). Al$o1 t)ere 'ere !aor #role!$ 'it) ac(ui$ition o+

Annaelle Food$ 3&e ,ear$ #rior.




later.

O&erall1 t)i$ $trateg, )a$ )ig) ri$k and co$t$. S)ort ter! target$ 'ill not e

ac)ie&ed t)roug) t)i$ $trateg,. 5ence1 t)i$ $trateg, i$ unde$irale.

--- -ne#t in or%anic %ro+th rom interna,,y dee,oped

ne+ product#

Anna C)ong1 t)e C)ie+ Inno&ation OLcer1 +ocu$ed on t)e need +or $trong ne'

#roduct de&elo#!ent #roce$$e$ a$ Brannigan !o$tl, o#erated in !ature

#roduct$ and categorie$. S)e ad&i$ed increa$ing t)e R@D udget , o&er

?%8. HDeli $ou#$1 HActi&e i+e$t,le$ HGreat Meal$ 'ere $o!e o+ t)e #roect$

$)e +ound #ro!i$ing. )ile t)i$ o#tion 'ould addre$$ t)e i$$ue o+ c)anging

con$u!er need$ in t)e $ou# indu$tr, and de&elo# ne' #roduct$ at lo'er

co$t$ t)an ac(ui$ition1 it 'a$ 'roug)t 'it) )ig) +ailure rate$. S)orter li+e

c,cle$ !eant +ru$trating t)e retailer$ in addition to un!et #ro3t ex#ectation$.

Al$o1 t)e ne' #roduct de&elo#!ent co$t$ 'ould e &er, )ard to allocate to

$#eci3c #roduct$. 4)e #ro$ and con$ o+ t)e #ro#o$ed $trateg, are li$ted

elo'.

Pro$:

-. It 'ill enale entr, to t)e recentl, de&elo#ed #o#ular and )ealt)ier

categorie$1 like C)icken noodle and Fa$t and Si!#le Mediterranean

4o!ato Ba$il1 #ackaged Deli $ou#$1 H'eig)t 'atc)er$1 Hacti&e li+e$t,le$

etc.



2. It 'ill e le$$ ex#en$i&e to de&elo# ne' #roduct$ t)i$ 'a, a$ co!#ared

to inorganic ac(ui$ition o+ ot)er co!#anie$ ')ic) #re$ent a lot o+

c)allenge$1 a$ li$ted in t)e la$t $ection.?. Brannigan$ traditional $trengt)$ 'ill e rein+orced ne' #roduct$ uild

on Brannigan$ !o$t #o#ular $ou#$;.". Addre$$ con$u!er$ c)anging need$ and $er&e con$u!er$ de$ire +or

inno&ation in t)e categor,. Retailer$ #ercei&e Brannigan a$ not eing

inno&ati&e. De&elo#ing ne' #roduct$ regularl, and co!ing u# 'it) ne'

and exciting Ea&our$ 'ill )el# to c)ange t)i$ o#inion.%. It 'ill enale a #rice increa$e o+ =7.-7 #er can1 re$ulting in an

incre!ental net earning$ o+ u# to =-2 !illion. # to = < !illion in

additional gro$$ #ro3t can e ac)ie&ed i+ +re$) $)el+ $#ace i$ otained1

')ic) ad!ittedl, )a$ a lo' c)ance o+ )a##ening. Pro3t gain +ro! ne'

#roduct$ )a$ a >78 c)ance o+ occurring.

Con$:

-. Introduction o+ ne' #roduct$ 'ill cau$e canniali6ation on exi$ting

#roduct line$. A$ !entioned in t)e earlier $ection1 retailer$ are un'illing

to increa$e Brannigan$ $)el+ $#ace. Clark t)oug)t t)at t)ere 'a$ onl, a

%8 c)ance o+ gaining $)el+ $#ace.

2. 4)e ne' #roduct $ucce$$ rate o+ *8 9x)iit -; !ean$ t)at onl, aout -

out o+ -7 $ucceed$1 ')ile de&elo#ing ne' #roduct$ co$t$ aout = 0

!illion #er ,ear. But1 t,#icall, ne' #roduct$ !anage to at lea$t reco&er

t)eir de&elo#!ent co$t$ and !arketing ex#en$e$.

?. It can e diLcult to a$$ign exact R@D co$t$ to t)e ne' #roduct$ a$ onl,

-78 idea$ de&elo# in to #roduct$.

". Retailer$ are al$o eco!ing intolerant o+ t)e co$t o+ ringing in ne'

#roduct$ 'it) $)ort li+e c,cle$ t)at +ail to !eet t)eir $ale$ and #ro3t

ex#ectation$. Stocking +ee$1 return$ and ot)er c)arge$ +or eac) ne'

#roduct roug)t it in 'ere a con$tant +actor +or Brannigan. 4)ere i$ a

c)ance o+ lo$$ o+ retailer$ good'ill1 t)u$ #otentiall, leading to a

de&a$tating c)annel conEict.



4)e #roected inco!e $tate!ent +or t)i$ $trateg, i$ gi&en elo':

:ear$011

$01$

$01

$01

$015

Net $ale$ o+ BranniganJ$ Food$'orld'ide

*??7

*>*>

02?7

Net Sale$ o+ S Sou# Di&i$ion?7?"

2>*?

2>2>

20>"

20<<

6e##.

Co$t o+ good$ $old-<<>

-<?%

-<-7

-%>7

-%*"

Marketing1 R@D1 Selling 9x#en$e$"2

%"-<

"2?

"->

"-<

Ot)er ex#en$e$<2

%<2*

<77

%00

%*<

Net 9arning?-

%2>%

2><

2><

?77

7roken out o !arketin% and#e,,in% e/pen#e#

Ad&erti$ing and Pro!otion-0

>-*0

-07

-*-

-<?

4ale <: Proected inco!e $tate!ent +ro! Anna C)ong$ $trateg, in = !illion$;

A$ can e $een +ro! t)e tale1 t)e $)ort ter! target o+ ?8 gro't) in #ro3t$

'ill not e ac)ie&ed u$ing t)i$ $trateg,. 5o'e&er1 t)e net #ro3t$ $tart

$)o'ing an u#'ard trend +ro! 27-% on'ard$1 !eaning t)ere i$ a #otential +or

long ter! gro't).


olu!e &$ #ro3t: 4)i$ $trateg, !a, re$ult in incre!ental net earning$ o+ u# to

=-2 !illion. # to = < !illion in additional gro$$ #ro3t can e ac)ie&ed i+ +re$)

$)el+ $#ace i$ otained1 ')ic) ad!ittedl, )a$ a lo' c)ance o+ )a##ening.

Pro3t gain +ro! ne' #roduct$ )a$ a >78 c)ance o+ occurring.

S)ort ter! &$ ong ter!: 4)i$ $trateg, i$ +ocu$ed on t)e long ter! gro't) in

ne' Ea&or$ and #roduct$. S)ort ter! target i$ not eing ac)ie&ed1 ut net

#ro3t$ $tart $)o'ing an u#'ard trend +ro! 27-% on'ard$1 !eaning t)ere i$ a

#otential +or long ter! gro't).





oering$1 and on inno&ation , retailer$. 4)i$ $trateg, !a, recti+, t)at.

5o'e&er1 t)e con$traint o+ li!ited $)el+ $#ace and canniali6ation 'ill e &er,

!uc) t)ere.


and )ealt), and con&enient $ou#$ ')ic) t)i$ $trateg, addre$$e$.

5ealt): 4)ere are ne' #roduct$ +ocu$ed on )ealt) like 4o/,our/)ealt) C)icken

Noodle.

Con&enience: 4)ere are ne' #roduct$ +ocu$ed on con&enience like Fa$t/and/

Si!#le Mediterranean 4o!ato Ba$il.

Ri$k o+ o#tion$: 4)ere i$ )ig) ri$k o+ +ailure o+ ne' #roduct$ a$ $ucce$$ rate i$

onl, *8 9x)iit -;.

O##ortunitie$ and re$ource li!it$: 4)i$ $trateg, 'ill re(uire = % !illion in

increa$ed R@D ex#en$e and additional #ro!otional ex#enditure o+ ne'

#roduct line$.

)at 'e do 'ell: Brannigan i$ not #ercei&ed a$ inno&ati&e. 4)i$ +act and t)e

lo' $ucce$$ rate o+ idea$ $)o' t)at de&elo#ing ne' $ucce$$+ul #roduct$ arenot Brannigan$ $trengt).




later.

4)i$ $trateg, i$ #lagued 'it) #role!$ and cannot e counted u#on to

generate long/ter! gro't) +or Brannigan on it$ o'n1 gi&en t)e lo' $ucce$$

rate o+ *8 o+ ne' #roduct$ and t)eir a$$ociated co$t$.



-* -ne#t in the core

Bo Pug)1 Director o+ Marketing and Sale$1 'ant$ to increa$e t)e !arketing

ex#enditure +or Brannigan$ core R49 read, to eat; #roduct$ , =27 !illion in

order to increa$e rand a'arene$$. 5e al$o 'ant$ t)e co!#an, to take a

#rice decrea$e o+ t)e R49 $ou#$ , % cent$ #er can a$ #rice$ o+ R49 $ou#$

)a&e increa$ed , an a&erage o+ 28 #er ,ear +or t)e #a$t % ,ear$. 5e al$o

#ro#o$e$ a =22 !illion in&e$t!ent in ca#ital to en)ance t)e !anu+acturing

#lant$ eLcienc, and cut #roduction co$t$. $ing t)i$ $trateg, 'ould reduce

t)e ri$k o+ introducing ne' #roduct$ ')ic) !ig)t not e eecti&e in t)e

!arket1 $ince it +ocu$e$ on core #roduct$1 ')ic) are t)e !o$t

$ucce$$+ul #roduct$ o+ t)e $ou# di&i$ion. 5o'e&er1 t)e in&e$t!ent in t)e

!anu+acturing #lant$ and in !arketing i$ a &er, large in&e$t!ent and t)e

#rice reduction could )ar! Brannigan$ #re!iu! rand i!age. 4)e #ro$ and

con$ o+ t)e $trateg, are li$ted elo':

Pro$:

-. 4)i$ 'ill reduce t)e ri$k o+ )a&ing to endure t)e +ailure o+ ne' #roduct$

and t)eir a$$ociated co$t$.

2. It 'ill !axi!i$e #ro3t on !aturing #roduct1 i.e.1 !ilk t)e ca$) co' BCG

#roduct !atrix;.

?. It can $er&e to attract ,oung cu$to!er$ t)roug) t)e HBo,$ and Girl$

o&e Sou# #rogra!.

". An, rand dilution cau$ed , reduction in #ercei&ed &alue due to

increa$ing #rice$ and cutting ack on #ro!otion $#ending +or t)e R49

#roduct$ 'ill e re&er$ed1 t)u$ $te!!ing t)e $ale$ decline.

%. 4)e $trateg, 'ill likel, e acked , $enior !anage!ent and !uc) o+

t)e $ale$ +orce. Mr. Pug) i$ )i!$el+ a ice Pre$ident o+ t)e co!#an,.

Con$:

-. Price reduction could )ar! t)e #re!iu! rand i!age. It !a, al$o lead

to decrea$e in dollar $ale$ i+ $ou# can$ $ale$ do not go u#.



2. 4)e +ocu$ o+ t)i$ $trateg, i$ a !ature #roduct 'it) declining $ale$

-7.%8 and ?.081 4ale -;. A$ $uc)1 t)i$ $trateg, !a, lead to loo$ o+

!arket $)are and not e &er, &iale in t)e long run.?. 4)i$ $trateg, call$ +or a ca#ital in&e$t!ent o+ = 22 !illion in ca#ital

ex#enditure. 4)i$ 'ill increa$e t)e intere$t and de#reciation

ex#enditure $i!ilar to alternati&e 2;.

4)e #roection o+ $ale$ a$ e$ti!ated , Mr. Pug) and t)e corre$#onding

#roected inco!e $tate!ent are gi&en elo':

27-2

27-?

27-?Pug)

27-"Pug)

4raditional read, to eat $ou#$

Read, to $er&e 'et $ou#$ >>0 0>?-0-> -><2

Conden$ed et $ou#$ >-* 002Brot)$ "-" "?> "?> "<<

Ne' #roduct$1 ac(ui$ition$ la$t-7 ,ear$

o' Sodiu! R49 5eart 5ealt), ?2- ?%< ?%< ?>%

AnnaelleJ$ Fa$t n Si!#le *- *> *> 00

Dr, $ou#$ and !ixe$ %? %" %" %%

Ot)er1 including #ri&ate lael ->> 27> 27> 2->

4otal Sale$2>*

?2>-

? 2>%* ?-0< 4ale *: Proected $ale$ 3gure$ a$ #er Bo Pug) in = !illion$;

Kear27-

-27-

227-

?27-

"Net $ale$ o+ BranniganJ$ Food$'orld'ide

*??7

*>*>

02?7


"2>*

?2>%

*?-0

<

6e##.


>-<?

%-<2

<-*%

2

Marketing1 R@D1 Selling 9x#en$e$ "2% "-< "2* ""*

Ot)er ex#en$e$ <2% <2* <77 %00Net 9arning ?-% 2>% ?7" ?>>7roken out o !arketin% and#e,,in% e/pen#e#

Ad&erti$ing and Pro!otion -0> -*0 -0> 27> 4ale 0: Proected inco!e $tate!ent in = !illion$;




olu!e &$ #ro3t: A$ $)o'n in 4ale 01 t)i$ $trateg, 'ill re$ult in $igni3cant

gro't) in $ale$ and #ro3t$.

S)ort ter! &$ ong ter!: 4)i$ $trateg, i$ +ocu$ed on t)e $)ort ter! gro't)

target o+ ?8. It doe$ not addre$$ con$u!er #re+erence +or )ealt)ier and !ore

con&enient #roduct$. A$ $uc)1 long ter! gro't) #otential i$ li!ited ')en t)e

categor, $ale$ )a&e een declining $teadil, in t)e #a$t -7.%8 and ?.081

4ale -;.

Brand e(uit, &$ Brand con$traint: 4)i$ $trateg, +ocu$e$ on Brannigan$ core

#roduct$1 ')ic) !a, lead to increa$e in rand e(uit,.


and )ealt), and con&enient $ou#$1 ')ic) t)i$ $trateg, doe$ not addre$$. But1

t)i$ $trateg, )a$ #otential to generate good $ale$ #er+or!ance in t)e $)ort

ter!.

5ealt): 4)e traditional R49 #roduct$ do not +ocu$ on )ealt).

Con&enience: 4)e traditional R49 #roduct$ do not +ocu$ on con&enience.

Ri$k o+ o#tion$: 4)i$ $trateg, i$ +ocu$ed on $)ort ter! gro't) and !ilking o+ Brannigan$ +a$t !aturing ca$) co' t)e R49 $ou#$. In t)e long ter!1 i+

Brannigan doe$ not kee# 'it) c)anging con$u!er #re+erence$1 it !a, lo$e it$

!arket leader #o$ition.

O##ortunitie$ and re$ource li!it$: 4)i$ $trateg, 'ill re(uire = 22 !illion in

ca#ital ex#en$e +or !oderni6ation o+ t)e !anu+acturing #lant$ and additional

#ro!otional ex#enditure o+ = 27 !illion.

)at 'e do 'ell: 4)i$ $trateg, +ocu$e$ on Brannigan$ core #roduct$ and

t)ere, #la,$ to it$ $trengt)$.

Co!#etition: 4)ere i$ )ig) co!#etition in t)i$ categor,1 ut t)e !arket +or

R49 $ou#$ i declining. Co!#etition i$ +ocu$ing !ore on )ealt)ier and



con&enient $ou#$ In order to kee# u# 'it) con$u!er trend ')ic) #re$ent$ an

o##ortunit, +or Brannigan to aggre$$i&el, !arket it$ #roduct$ and ca#ture

!arket $)are +ro! it$ co!#etitor$.

4)i$ $trateg, i$ too +ocu$ed on t)e $)ort/ter! to incor#orate all t)e

re(uire!ent$ o+ Clark at #re$ent. Ne' #roduct$ 'ill )a&e to e introduced in

t)e !arket to kee# u# 'it) con$u!er #re+erence$ ot)er'i$e Brannigan run$

t)e ri$k o+ lo$ing it$ #o$ition a$ !arket leader. 4)i$ $trateg,1 ')ile $ucce$$+ul

in t)e $)ort ter! in $te!!ing t)e decline in $ale$ and #ro3t$1 'ill not e

&iale in t)e long ter!. At t)at ti!e1 Brannigan 'ill need a ne' direction.

;ecommendation#.

ooking at ot) $)ort ter! goal o+ #ro3t gro't) target o+ ?8 and long ter!

target o+ de&elo#ing internal ca#ailitie$ according to con$u!er need$ and

!aintaining rand e(uit,1 Clark $)ould #ro#o$e in&e$ting in core $eg!ent$

+or $)ort ter! Alternati&e I; and in&e$ting in organic gro't) +or long ter!

Alternati&e III;. In&e$ting in core $eg!ent$ 'ould $ecure leader$)i# #o$ition

in !arket $)are and reduce t)e ri$k o+ ne' #roduct +ailure. 4)e HBo,$ and

Girl$ o&e Sou# #rogra! can attract ,oung cu$to!er$. Al$o a$ $)o'n in

3nancial anal,$i$1 it ac)ie&e$ t)e co!#an, target o+ ?8 gro't) in co!ing

,ear$. For long ter!1 in&e$ting in organic gro't) i$ ene3cial a$ it i$ le$$

ex#en$i&e to de&elo# ne' #roduct$. It 'ould al$o ene3t Brannigan$

#erce#tion o+ eing an inno&ator and addre$$ con$u!er$ need$ and rein+orce

Brannigan$ traditional $trengt)$. It 'ould al$o lead to increa$e in $ale$ in

+uture. 4)e re(uired increa$ed ex#enditure +or R@D can e ea$il, $er&ed ,

t)e increa$ed #ro3t$ a$ a re$ult o+ in&e$ting in core #roduct$. Moderni6ation

o+ t)e !anu+acturing +acilitie$ 'ill )el# to reduce co$t$ and ring Brannigan in

to t)e 2-$t centur,1 tec)nolog,/'i$e.



Conc,u#ion.

A$ $)o'n in 4ale 01 i+ in&e$t!ent i$ done in core $eg!ent$ o+ Brannigan

Food$ a$ $ugge$ted , Bo Pug)1 net earning$ increa$e u# to ?>> !illion or

?.7%8 gro't) ,ear on ,ear. 4)e $ale$ 'ould increa$e u# to ?-0< !illion ,

27-". Being !arket leader in Read, to 9at R49; $eg!ent Brannigan $)ould

look +or'ard to !axi!i6e #ro3t on !aturing #roduct. Clark al$o )a$ to decide

on a long ter! $trateg,. Inorganic gro't) i$ di$ad&antageou$ a$ t)e, )a&e

alread, +aced o#erating #role!$ ')en t)e, ac(uired Annaelle Food$ 3&e

,ear$ ago. 5ence t)e, $)ould look to cater to cu$to!er #re+erence$ ,

de&elo#ing ne' #roduct$ internall,. Alt)oug) t)i$ !a, re(uire additional

ex#enditure o+ around % !illion in R @ D and al$o additional #ro!otional co$t$

+or t)e ne' #roduct$1 t)e co$t$ can e !et , t)e increa$ed #ro3t$ due to t)e

increa$ed in&e$t!ent in t)e core #roduct$. 4)i$ 'ould al$o rein+orce

Brannigan$ i!age a$ an inno&ator and )el# increa$e it$ rand e(uit, a!ong

cu$to!er$. A$ $uc)1 Clark 'ould need to ado#t ot) Alternati&e III and

Alternati&e I to $ucce$$+ull, $ati$+, all o+ )i$ deci$ion criteria.

Brannigan Foods Case

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