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Saxonville Sausage Case Study Analysis Group 6

Robert Graham Arnold Jon Hardwick Rebecca Godwin Landon White Grant Guidroz Chris Gremillion Jeigh Hymel Michael Floyd Donald Derham Isaac Woo Christian Frierson Michael Gvoich Corey Roblin

Dr. Roger Hinson Louisiana State University March 14, 2011

Table of Contents

Subject Background Information Goals Constraints Central Issue Alternatives Competitive Analysis Best Alternative Implementation Plan Executive Summary Bibliography

Page Number 3 3-4 4-6 6 6-10 10-12 12 13 13-14 15

Saxonville Sausage
Background Information Saxonville Sausage is a private family owned company in Saxonville, Ohio, with 2005 revenues of approximately $1.5 billion. Their main focus is on pork sausage products that are always fresh. Saxonvilles main product is their bratwurst line, which makes up seventy percent of their revenues, breakfast sausage that consists of twenty percent of their revenues and their small Italian sausage line, named Vivio that only makes up five percent. Unfortunately, Saxonville's sales in bratwursts have been flat and their breakfast sausage line has been steadily underperforming in the market resulting in a double-digit decline in revenue. However, the Italian sausage was the one category showing growth across producers in the retail sausage market, having an annual increasing rate of 9% in 2004 and 15% in 2005. The one area where they have been consistently increasing is their Vivio Italian sausage line, primarily in the New England area. Saxonville hired a new marketing director in Ann Banks to "make her mark" and launch a national Italian sausage brand that Saxonville needed to bring to market in order to achieve profit objectives for the next fiscal year. Saxonville Sausage needs a well-thought-out positioning marketing plan to move their Italian sausage brand to national category leader and match up core values in the hearts and minds, of consumers with the attributes of a product portfolios to meet their specific needs.

Goals
Successfully launch a national Italian sausage product in order to meet profit objectives for the next fiscal year.

Choose the best positioning strategy Establish a connection between the brand and the customers core values

Choose the best positioning strategy: Family Connection, Clever Cooking, Confidence, Appreciation, Quick and Easy, Tradition

Exhibit 9: Positioning Concept Voting, reveals Family Connection and Clever Cooking as the top 2

Choose a brand name that appeals to the expanded market Should Saxonville keep the Vivio name or change to a different name? Saxonville wants to alleviate concerns about Focus groups revealed that the top-scoring names were Italys Best, Primo, and Perfecto. Vivio, ranked seventh. Research shows that there is brand vagueness under the Saxonville flag, because the name Saxonville appears too German, to produce a quality Italian sausage. The current packaging with Vivio fresh Italian sausage, and the Italian flag in one corner creates some confusion for customers. In order to demonstrate innovation and quality within Saxonvilles product, a new brand needs to be set up to help with the companys positioning. However, such a move will fail to make use of the existing loyalist that have become accustomed to the Vivio name.

Constraints
Senior managements lack of marketing orientation Senior management was skeptical of positioning and referred to it as one of those business-school buzz words (Moore). They didnt have a well thought out plan for launching their Vivio product Management is not willing to discount the products price (Moore). Management is not willing to discount the products price for initial promotion

Consumer Taste and Preferences

Management needs to consider the change in consumer tastes and preferences. One of the top global trends is that, Consumers are increasingly choosing naturally healthy foods such as fruit, vegetables, salads, nuts and yogurt. Fruit is now Americas second-favorite snack (Haynes).

Misallocation of Resources Since 2004, brats and breakfast categories across all sausage producers have been flat nationwide (Moore). Breakfast sausage resulted in double digit decline (Moore). Italian sausage was the only group showing annual growth but they havent dedicated enough resources to it.

Freshness By branching out nationally, freshness levels may be compromised because of the time length of delivery to west coast supermarkets.

Cannibalization Careful consideration must be taken in positioning the Italian sausage line to avoid cannibalization in Saxonville Sausages other brands.

Timing With the following years profit objectives in mind, the time line of the launch should be carefully thought out, and coincide with peak sausage season. Peak volume season: October- February

Each tactic has to be realized by the slated date for the brands national launch early in 2007 (Moore).

Before the launch, we have to consider an advertising company to handle a multifaceted national campaign and the training of regional sales managers and retailers about how our product is differentiated from the competition.

Central Issue
The central issue facing Saxonville Sausage is the successful launch of a national Italian sausage brand. The development of a new brand name and positioning strategy will be key to reaching the target market. The implementation of an effective brand is the most important problem because the brand is the first thing a consumer can relate to. When a brand taps into what really matters to customers, customers feel good about using that brand (Moore). The resolution of the central issue will provide the most benefit to Saxonville by increasing profits of the Italian sausage brand.

Alternatives
When analyzing the marketing approach there are different choices that have to be made. Careful thought must be taken to understand which way is the best road for the company. For Saxonville Sausage and Ann Banks, the new marketing director, they need to focus and develop a strategic plan before expanding into this Blue Ocean area of the market and figure out a way to differentiate their product from other companies. The goals have been developed, which include launching a successful line of Italian sausage and creating a name that appeals to the market to achieve profit objectives. Three alternatives have been developed to leave Saxonville Sausage Company to success.

Alternative One

Keep Vivio name Family Connection Strategy

Our first alternative includes keeping the Vivo brand name when launching it nationally, and also using the Family Connection strategy. By keeping the name the same they can build off the success experienced in the regional market from the loyalist they already have. The Family Connection positioning strategy scored the highest in the quantitative marketing research and seems to best match up core values of the consumers with the attributes of the product. Female heads of households are the primary purchasers of Italian sausage. The value ladder developed from focus group of the target audience revealed that they value: feeding her family good food, hoping her children have happy memories, making home cooked food that all will love, not being remembered for doing laundry and nagging, bringing a sense of tradition to their lives, gathering people together and facilitating their experience, and creating the kind of home she wants her family to have. Disadvantages for alternative one would be not doing anything to make the name Vivio look more Italian to customers. Customers like their Italian sausage to look as authentic and Italian as possible. If they kept their name and packaging the same then they could possibly lose the appeal of being an authentic Italian sausage brand to new customers. Another disadvantage would be not offering coupons or discounted incentives to retailers or consumers. This does not attract new retailers as well as new customers.

Alternative Two Change to Primo name

Clever Cooking Strategy

The second alternative is to change the name to Primo Italian Sausage. Primo was one of the top names when respondents were given 20 brand names including, Vivio and Saxonville, and asked to select the names that fit best with their ideal Italian sausage product. Vivo scored seventh. While the Primo name is more popular and could enhance marketing the product, Saxonville risks confusing and losing the Vivio following by changing the name. In this alternative the Clever Cooking positioning strategy will be used. This strategy complements the product because of the versatility of Italian sausage because it can be used in a number of different ways. Clever cooking also plays to some of the top values of the target customer such as: using her creativity to come up with interesting meals, knowing about easy meals she can make quickly. Ann Banks also thinks that it would be easier to provide tactical support for the Clever Cooking positioning, and that she can better explain away the risk of cannibalization. Some disadvantages would be by changing their name to Primo, they would be changing their already existing customers recognition of their brand, Vivio. A disadvantage of the clever cooking strategy would be that Saxonville is not able to put recipes on their packaging because the package is relatively small with limited space for such literature. Non Italian consumers might not know any versatile methods of preparing the Italian sausage.

Alternative Three Change to Primo Italian Sausage from Saxonville, Keep Vivio name in existing market

Family Connection strategy

The third alternative will allow Saxonville to keep the Vivio name in the regional market where is has had success, but make use of the more popular Primo name in the markets they are expanding into. This alternative wont confuse the existing loyalist, and will allow them to appeal more to the broader market. Sub-branding the product using the Saxonville brand will exploit the perception of quality associated with their other sausages, and give them recognition on the national stage. This strategy will capitalize on the benefits of the Family Connection positioning strategy mentioned above. It should be mentioned that while this strategy runs the risk of being too generic and easily copied, the risk is mitigated because Saxonville will be the first national player in this category. Disadvantages would be losing the customers already loyal to the Vivio name but changing the name to Primo Italian Sausage from Saxonville would not be significant as if they were to change the name to Primo. At least they still have the companys name in the title of the sausage. In this alternative, they are not expanding their Primo Italian sausage boundaries outside the New England area.

Alternative Four Expansion of the entire company west to the Mississippi River Keep the name Vivio but enlarge the Italian Flag on the packaging to make it more recognizable that it is Italian Sausage Offer bulk incentives to dealers and retailers

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The advantages of option four is their expansion of all lines of productivity which means that they can cover more volume and generate more profit. They are expanding into unchartered territory as far as Italian sausage goes. This would be an example of Red Ocean strategy. Product expansion will make the marginal value of the product decrease, allowing the company to obtain more profits from bratwurst and breakfast patty sausage sales or lower prices. Saxonville is also keeping the name Vivio while retaining the brand name. Keeping the brand name insures the loyalty of their current customers while attempting to attract new customers. They would be making the product look more Italian with the increased size of the Italian flag on the packaging of the sausage. By offering bulk incentives to dealers and retailers, Saxonville is insuring that their products will reach the shelves of local stores for their customers to enjoy. Also by offering bulk incentives, Saxonville could offer lower prices to their retailers. With todays competition in the food industry and threats of new entrants, retailers need incentives to save money anywhere they can by purchasing Saxonvilles products. Disadvantages of option four are that the name is still not generically Italian. Primo or Italians best would have been a better name to start off with instead of Vivio. There will be huge short term loses due to expansion and dealer incentives with unsure profits from new Red Ocean markets. Bratwurst and breakfast sausage are still declining in sales volume in the New England region so the expansion of these product lines could have risks on overall profits.

Competitive Analysis
The major strengths of Saxonville are manufacturers have experienced the growth in Italian sausage across the board as well as within our company. Another advantage Saxonville has is they can be one of the first companies to develop a national Italian Sausage brand, and the

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other national players are constricted by their frozen trucks. Their regional competitors have picked a local positioning strategy hindering their ability to expand and distribute outside their core geography. When Banks questioned the national sales manager about completion from the other national giants, he responded, Ann, those guys are frozen producers not freshtheir distributors drive freezer trucks. It would mean reconfiguring their whole distribution network to play in this category (Moore). It seems Saxonville would be operating in a Blue Ocean for a time if they developed a national Italian sausage brand. Saxonville also has the benefit that they have an established a brand name, which will help launch this new line.

Saxonville also has a few weaknesses that will need to be improved if they want to see increased future profits. One of the biggest flaws is that of an underdeveloped marketing department. Saxonville has brought in a new marketing director, Ann Banks, who is helping the company in implementing a new strategy to grow their Italian sausage line. Another problem is their inability to gain market share into the Italian sausage line, due to the lack of supermarket distributors. As of right now, there is no clear way to combat this problem but a few ideas could be: offer a discount price to retailers, offer bulk discount prices to retailers, or give supermarket retailers a percentage of profits of the sales they have participated in. Anything that will allow Saxonville to gain more distributors will help them in the long run.

However, some external threats to Saxonville include substitute products and the threat of new entrants. As of 2005, Saxonville was ranked sixth out of eight companies in breakfast sausage brands. This contributed to the cause of double-digit revenue declines. These declines and flat lines are symptoms of problems of management. While it seems Saxonville will enjoy a

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Blue Ocean for a time in the Italian sausage category, it wont last forever and new entrants could come in.

Best Alternative
Saxonville Sausages best alternative would be the fourth alternative:

Expansion of the entire company west to the Mississippi River

Keep the name Vivio but enlarge the Italian Flag on the packaging to make it more

recognizable that it is Italian Sausage

Offer bulk incentives to dealers and retailers

Out of all the alternatives we are not changing the name to retain our customers which will insure brand loyalty. It will help establish a national Italian sausage brand outside the New England area. By enlarging the Italian flag on the packaging, customers will recognize that it is authentic Italian sausage and possibly purchase the product for this reason. Unlike alternative one, alternative four offers bulk incentives to retailers making it easier for expansion. Expansion allows the company, brand name, and brand equity to obtain more customers and establish a larger market share. Instead of focusing on clever cooking like in alternative two, they are allowing the Italian flag itself to sell the sausage. The new name in alternative three is too long and could possibly confuse loyal customers who go to the grocery store looking for Vivio. These are the reason that alterative four is the best alternative compared to the other alternatives.

Implementation Plan

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The first part of the implementation plan would be to change the packaging design to where a large Italian flag is displayed to ensure the authenticity of their Italian sausage. The next part of the implementation stage would be Saxonville sausage establishing new relationships with dealers and retailers to ensure that they will have retailers and dealers that will purchase their products after expansion is complete. Without having the contracts and relationships with these new retailers, expansion would be extremely difficult if not impossible. The success of this implementation plan relies heavily on the establishment of agreements and contracts with new retailers. After these relationships and sufficient contacts have been made, Saxonville would have to start demanding more resources from its suppliers to be able to produce more sausage. Once demands from retailers exceed the production capacity of producing in just the New England area, Saxonville sausage would then have to invest more capital into their infrastructure. This would include expanding their entire manufacturing capabilities which would include increasing the amount of inputs; purchasing new property; constructing new buildings and warehouses; and developing a marketing channel functions to cover the companies transitional, logistical, and facilitative functions. This ensures that Saxonville sausage will be able to handle the expansion process while maintaining the quality of freshness that customers expect from their product.

Executive Summary
Saxonville sausage is a privately owned company with revenues of $1.5 billion. Their main lines of products are their bratwurst and breakfast patties. They also have an Italian sausage line that is showing an increase in recent sales. Unfortunately, sales in bratwurst and breakfast patties have been experiencing double digit declining revenues as of recent. In order for Ann

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Banks to make her mark on the company, Saxonville has to expand to new market areas around the country. The goal of Saxonville sausage is to successfully establish a national Italian sausage brand in the next fiscal year. Their goals can be maintained through expansion, development of a new product image through a new packaging design, and offer incentives for retailers and dealers to purchase their products in bulk. The development of a new package design will increase the Italian product image, while enticing new customers to purchase Vivio. Keeping the brand name Vivio is the most important aspect of this alternative because they will be able to maintain their customers through this name retention. After the packaging has been modified, the next step will be to target new retailers and dealers to attempt to gain their business through bulk incentives. Once these relationships have been established, then it will be time to begin the expansion phase. The expansion phase is the most costly aspect of this alternative for it involves reliance upon an increase in the Italian Sausage market. This phase is also the most capital intensive phase and will require a large amount of capital upfront. Once the expansion phase is complete, Saxonville should have new distribution and manufacturing centers east of the Mississippi River. The marginal value product will decrease for all of Saxonvilles products making it cheaper to produce their products.

This best alternative demonstrates the most reasonable way to eliminate the constraints previously stated. If Saxonville sausage goes through with this alternative, then they will obtain new revenues from different areas of the country, avoiding cannibalization of their own products. By implementing this plan, Saxonville will not only retain its current customers while gaining new customers and a greater market share.

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Bibliography
Haynes, Fiona. "Top 10 Global Food Trends." Low Fat Cooking - Low Fat Recipes, Tips and Suggestions for Cooking and Eating Low Fat Foods. Web. 14 Mar. 2011. <http://lowfatcooking.about.com/od/healthandfitness/a/10foodtrends.htm>. Moore, Kate. "Saxonville Sausage Company." Harvard Business School. Harvard Business Publishing, 15 Jan. 2007. Web. 14 Mar. 2011. <http://cb.hbsp.harvard.edu/cb/access/8290145>.