UNITED CEREAL: LORA BRILL’S EUROBRAND CHALLENGE

CASE ANALYSIS

Introduction

The case is focusing on European division of a giant multinational breakfast food company, which describes a launch decision for a new cereal product. United Cereal (UC) was established in 1910 by Jed Thomas. It was known in the industry, eventually diversified into snack foods, dairy products. By 2010 UC was a $9 billion business, but the breakfast cereals still accounted for one-third of its revenues. As the breakfast cereal trend soon set in. It was

very necessary for the company to launch a new product. The company had strong values and policies, which it needed for its managers to follow. Breakfast cereal market was a potential market and there were several major competitors. With the growing demand of the ready to eat cereals, the company was now in a highly competitive industry.

There are three main questions that one needs to answer in order to analyse the case properly and reach to a clear understanding.

Question 1: How should Brill respond to Michel’s mail? Should she launch HBS or not?

Launch and Delay of HBC in France

Launch of HBC in France

1. According to the Lyon test for both

September and October targets have

been exceeded quite substantially

2. Sweeter blueberry version which

was market tested to a limited level

showed a 64% intention of

repurchase which is more than the

minimum 60% level that is required

3. From the Attitude Data, While 83%

are in favor of taste of cereal and

nearly 70% are in favor of taste of

fruit with the perception of health

aspect being 90% positive towards

the new product

4. The competitor in the segment

market is Kellogg’s for France.

5. They have second mover and first

follower advantage over other

competitors

Delay in Launch of HBC in France

1. Looking from the given data through

Sept-Oct targets exceeded the target

But the November shipment has not

met the targets

2. The form or consistency is less than

30% from the Lyon test and that

doesnot work in the favour

3. The HBC didn’t meet the target

during market research of a particular

product therefore more study needed

before the launch of product.

4. Market study was not performed to

which the market potential was not

identified therefore it was a risky

task

5. Brand awareness plays an vital role

in launching of the product to which

awareness has to be increased before

launching of the product As

6. In this segment of people are more

health conscious and HBS is being

positioned as a healthy product.

7. There is a possibility of leap

frogging by the competitors as seen

from the past

8. Since United cereals is already in

the healthy breakfast segment in

France hence this product will be

more of product extension rather

than a new product launch which

will save huge Launch and

marketing costs

9. With Euro operations having 25%

more operations cost than US

operations and launching a Euro

brand will again increase these costs

and hence justification of SG&A

will be a problem in Euro launch

advertisements costs will increase to

increase the awareness if product has

to be launched immediately

6. The repurchase intent is also found to

be only 25% and so the spending on

the marketing and advertising will

have to be higher and so will prove

to be an expensive affair

7. The market size and potential is also

unclear

Entry Barrier for this Market

High Competition

Market Intensive

Access to huge Distribution network

High Reach

Question 2: Does UC represent an example of a centralised or decentralized

international management?

This question can be well answered when we try to see the organisation as a whole and

understand what arguments help us qualify United Cereal as centralised and what as

decentralised.

Centralized Processes

Country managers had decision

powers but they had to follow UC

way.

Vertical communication structure

is followed in the company

Marketing budget limit exceeding

to get the approval.

Decentralized Processes

Product customization was by country

managers

The launch Strategies were country

specific.

Brand was country specific

Marketing Strategies was done by Country

managers

The differences from above bend more towards decentralized management so we need to see

the organisation structure to reach to a clear conclusion.

Also from the case it can be seen that the watchwords of UC : commitment, diligence and

loyalty (page 3) would be diluted if not central control. Also from the organisation structure

from below,

Shows that even if the launch happens at the CM level/ Subsidiary level along with the other

processes, the approvals and review are to be obtained from the higher up in the hierarchy.

Thus proving the organization structure to be a highly centralized one rather than a

decentralized.

Question 3: Should HBC become Euro Brand ?

Corporates

UC Europe

Review and approval layer

Product DevelopmentTest marketing

Subsidiary

Launch Strategy

Veryical Communication

Market Research

Approvals

Launch

VP/Brill

CM

Launch of Euro Brand

Product launch cost takes

$20million and launching of same

product reduces the SG&A

expenses, so a potential savings

Leapfrogging would be avoided

Consumer tastes are converging

Delay of Launch of Euro brand

Difference in taste endure(Euro

customers)

Country Managers powers will be

demotivating and accountability can be

decreased.

Huge competition

$20million could be lost

CMs are not used to frequent new

product development and are instead

used to product extensions so a potential

issue

From the above arguments tough the delay sounds more weighted, the launch sounds a

potential option too.

Conclusion

Now in the light of the above analysis the case puts one in the dilemma that on one hand, the

individual launch in France has all the possibility of getting rejected as Brill can say that

since the CM did not follow the UC way (completely), as no extensive research done, the

launch is to be delayed. On the other hand, there is this idea floating in her mind to obtain

economies of scale and she wants Europeanization with the launch of Euro brand.