3.

OSCAR MAYER: STRATEGIC MARKETING PLANNING

a.
According to the case, the Oscar Mayer brand was seeing a fall in sales and
profitability, while the Louis Rich was recording growth. Discuss how the company could
reverse the decline of the Oscar Mayer brand while strengthening the Louis Rich brand.
Suggested answer
The annual report, given by McTiernen Corp, underlines two major threats of Oscar Mayer that
will affect companys future profit growth.
(i)
(ii)

The increasing recognition of healthier products with less fat and salt content.
The increasing need for products that are more convenient to cook and easy to consume.

Over the last five years red meat consumption level (annual per capita pounds) has decreased
nationwide from 134.7 to 124.9, while white meat demand increases from 33.8 to 45.2. These
two main trends have affected two main brands of the company i.e. Oscar Mayer and Louis Rich.
OM brand, in particular, is in worrisome position as it was reported by McTiernen as too high
in fat content. The brands pound volume sales have decreased from 671 to 650, while operating
income has gone up to a small extent for the last two years. In the meanwhile, LR brand, which
makes white meat products, has shown the signs of slowing growth; the pound volume has gone
up only by 10.9% since last year versus 13.4% and 14.2% in the previous years; however, the
operating income has gone up more than three times for the last two years.
Analysis of the opportunities
The gap between the forecasted gains and desired gains of Oscar Mayer is what gave rise to four
different opportunities to eventually achieve the desired result through the right strategic
marketing decision.
New product attempts of the company have not delivered the convenience level of the
consumers; launching new lines will also require a high capital investment and is expected to
short-term losses, so this will be a high-risk decision. New acquisitions can increase the capacity
for making additional products of LR and the company can possibly increase their sales. But
since the company is experiencing the slow sales growth and has enough capacity to satisfy the
current demand, the goal is to increase sales and to maximize the capacity utilization of current
plants. Also, investing in new products will not resolve the problems with the existing OM and
LR brands, which brings majority of the revenue.
Arriving at a strategic decision
It is of utmost importance that while trying to achieve the goal set by the Company that they
operate within the set corporate mission. At this stage, Oscar Mayer has six points to pay utmost
attention to in arriving at a decision which will eventually determine their success. They are as
follows:

(i)
(ii)
(iii)
(iv)
(v)
(vi)

Taste
Increases sales volume
Nutritive Value/Quality
Convenience
Achieve long term gains
Accelerate brand growth

Decision that may lead to success

However, investing in the R&D and further growth of the OM as well as spending on advertising
campaign for LR may lead the company to success. The reasons are enumerated below.
(i)
Based on the customer satisfaction survey customer are appreciating the overall taste of
red meats, so the company should use this aspect to keep selling OM products and diffuse the
market of red meats further.
(ii)
Investment into R&D for OM brand will help the product adjusts to the changing market
conditions and gains its market share. This is a crucial step for the company since it will help
them to in re-design the product and make it healthier, which will increase its popularity.
(iii) Price cuts on the top OM products may lower the short-time profit, but it is expected to
increase sales volume in pounds and help generate future sales.
(iv)
Increasing the A&P budget for LR brand and building Switch to Rich campaign will
result in increasing demand in white meats and drive more sales.
Conclusion
After restoring the OM brand and increasing LR sales, the company can follow the proposal of
Jane Morely and acquire new companies in order to increase the excess capacity for its LR
factories. Then for the following year McGraw can think about launching new products, but as of
today the focus shall be aimed at improving OM and LR brands.