Brannigan Foods Case Analysis

BRANNIGAN FOODS:
STRATEGIC MARKETING PLAN
Mitchell Lunde
University of Maryland University College
MRKT 495
21/10/2013
Table of Contents
Executive Summary
Company/Product Analysis
Problem Statement and Underlying Symptoms
Bert Clark faces many challenges as vice-president and general manager of
Brannigan Foods Soup Division, but nothing could have prepared him for what
he recently read. A critical analysis of the entire soup industry indicated the
situation as dismal and with no end in sight. Because of the increased health
concerns amongst American consumers and the perception of most soups as
being high in sodium and full of preservatives, many consumers have either
stopped buying soup entirely, or have moved to fresher, healthier soups. Not
only is the report slightly negative, but the companys own market share, sales,
and profitability has been slipping for the past three consecutive years indicating
only one thing: new strategies had to be implemented in order to subside the
downward spiral.
The people he depended most on in his division had all provided their own
careful analysis and recommendations, but despite their efforts, there was no
comprehensive solution amongst any of the recommendations. There was
however one point which Clark felt was his divisions most pressing need: in
order for the company to grow, it had to target products to a younger audience
despite the fact older segments consumed a majority of condensed and ready to
eat (RTE) soups. In order to acquire this group however, the correct marketing
strategies had to be assessed and implemented, and fast.
Marketing objectives for Brannigan include the following:
* Increase profits by 3 percent every year for the next 5 years
* Develop 2 new products internally over the next 5 years
* Increase shelf space by 1 percent over the next 5 years

* Increase R&D budget from $14 million to $19million

Supporting Evidence
Taken from the report, health concerns were clearest amongst those who were
part of the baby boomer generation, or those born between 1946 and 1964
(Quelch & Kindley, 2013). Members of this group have enjoyed long lives and the
first wave are entering retirement. They are aware of their health needs and
know there are many healthy soup options available. Despite the increased
longevity in this developed and diverse segment, it is in Brannigans best longterm interests to find a way to target younger segments. The products perceived
health benefits is of little concern to young consumers. Instead, this group is
more concerned about price and convenience. Increasing R&D spending would
help fuel new product development and help Brannigan respond to changes in
consumer preferences more quickly. To increase profits however, the company
had a couple of options which might backfire if consumers responded negatively.
One was to continue increasing the price of certain lines of soup for the following
years. Another was to increase the A&P budget by $20 million. This option of
course would eat into earnings if sales did not increase.
Current Target Market
With over 90 percent of all respondents in DeGennaros report saying that soup
is a good thing to have in the pantry (Quelch & Kindley, 2013), Brannigan is in an
excellent position to not only continue to target its core segment, but also
capture other attractive consumer segments that have evaded the company thus
far. Currently, senior citizens are the largest consumers of soup and happen to be
the most brand loyal, according to the report. This segment represented over 40
percent of the adult population totaling almost 80 million people according to
report by Rajesh Iyer and Timothy Reisenwitz (2010). Many are entering
retirement age and this presents a problem for Brannigan as it must also target
younger generations of people with new products which are designed to fit their
needs.
Attractive Consumer Segment
Young professional mothers who often had little time to prepare a home cooked
meal usually looked for products which provided quick solutions to their
dilemma; soup would serve as an excellent solution. Another cohort group who
was also a member of the household, millenials, consumed 2.1 cans of soup per
week with 48 percent eating dry soup and 78 percent eating wet soup (Quelch &
Kindley, 2013). This market segment also considered soup as a snack with
consumption remaining steady year round rather than seasonal (2013).
Current Product Positioning Strategy
With a wide array of products that catered to multiple consumer needs, they
have been able to maintain a leading position in the market of shelf-stable soups
(Quelch & Kindley, 2013), but consumer tastes were constantly changing, and in
order for the company to maintain its competitive advantage, it had to continue

to offer new products. The company had been able to maintain profits from
falling as much as sales due to annual price increases. Its condensed and readyto-eat soups provided 78 percent of the divisions sales along with 86 percent of
its profits (Quelch & Kindley, 2013).The recently acquired Annabelles Fast n
Simple soup-in-a-pouch was slightly higher priced compared to most
competitors, but the product was positioned as a gourmet product intended to
capture younger market segments with its exciting array of flavors and better
quality ingredients. The other product introduced with little traction several years
ago, Brannigans Heart Healthy low-sodium line, had now become a rewarding
product for the company, bringing in $320 million in sales for the year 2011
(Quelch & Kindley, 2013).
Exhibit 1 Brannigans Product Value Proposition
More for more
More
Price
Benefits
Fast & Simple Meal-in-a-pouch | | Heart Healthy |
| Brannigan core Soups (wet & condensed) | Ready-to-eat soups |
Less
| | Less for least
|
Environmental Analysis
Internal Strengths and Weaknesses
According to Julian DeGennaros summary report based on the State of the Soup
Industry, those who are part of the baby boomer generation are considered the
most brand loyal out of all other market segments. This is a plus for Brannigan
Foods as this group of consumers represents a large portion of the American
adult population. Not only is this group brand loyal, but they are also heavy
consumers of soup who maintain a good stock in the pantry year round.
Brannigans maintains 40 percent of the $6.4 billion soup market, with a 16
percent lead in front of its closest competitor, General Mills, followed by an
astounding 33 percent ahead of Unilever. Another strength for the company is
that Clarks division was responsible for more than half of the U.S. divisions total
profits (Quelch & Kindley, 2013). These strengths served as an advantage over
competitors, but there were internal weaknesses which were a cause for
concern.

For the past three years, not only had the soup industry been in decline, but the
divisions profitability, sales and market share had fallen as well (Quelch &
Kindley, 2013). Clark estimated net sales as declining $60 million annually for
the next two consecutive years. Soup consumption in Brannigans primary
product line (RTE, wet and condensed wet soup) was in decline.
External Opportunities and Threats
As canned soup continues to remain a staple in the American diet, Brannigans
should continue to with this tradition by offering fast, simple meals, ready to be
served within minutes for an entire family. Although soup is fast and easy, it is
most often high in sodium and loaded with preservatives, with important
consumer segments demanding healthier options to the already popular soups.
Not only are they craving healthy soups, but also more dry-mix soups and premade deli soups with exotic flavors. Other opportunities presented by Clarks
four leaders included the following:
* Increase the advertising and promotion budget
* Offer promotional deals for hot new flavors (Quelch & Kindley, 2013)
* Acquire smaller competitors who offer healthier, more popular flavors
* Increase PP&E investments
* Introducing new products
A shift in consumer tastes is the greatest external threat the company faces.
Although the company offers healthier soup options, sales indicated that these
consumers were purchasing other products. Another concern for the company is
the possibility of newly acquired brands cannibalizing sales of core Brannigan
products. Retailers were also developing private-label brands of soup which not
only took away valuable shelf space, but also chipped away at sales.
Industry Analysis
Brannigan Foods is under constant pressure from many external forces within the
industry. Some forces are stronger and more demanding than others, but all
must be dealt with in some way in order to remain competitive. Utilizing Michael
Porters Five Forces Analysis, the following information provides an analysis of all
the threats currently faced by Brannigan Foods.
1. Rivalry and threat of new entrants
The soup market is dominated by many competing brands, some are large and
well known while others are small. There is also the threat of retailers private
label soups becoming an increasing competitive force. According to Census
Bureau data, the concentration ratio, CR, for the 4 largest food retailers is
relatively high indicating that this industry is highly concentrated with very few
constituting a large portion of the market. The three largest competitors to
Brannigan includes General Mills, Inc., Unilever, and H.J. Heinz Company,

according to business analysis company Hoovers, Inc. (Hoovers.com, 2013).

Brannigan Foods maintains roughly a 40 percent share of the market, and is a
highly developed brand. New entrants to the market is unlikely due to the high
costs of production is low margins due to how highly competitive the industry is
as a whole.
2. Threat of Substitutes
A consumer can switch brands relatively easily and at little to no cost. Although
Brannigan has tried to stay ahead of competitors by introducing new lines of
products, so have its competitors. Consumer tastes are driven by culture and
age, so not all soups will encompass all segments, making the threat of
consumers substituting Brannigan products for a competitors highly likely.
Brannigan has incrementally increased prices, but is now facing consumer
pushback (Quelch & Kindley, 2013).
3. Buyer Power
There are many consumers and customers of soup, making their power less of a
threat than that of rivals. Soup is enjoyed by many market segments with 90
percent indicating that its a good item to stock up on (Quelch & Kindley, 2013).
No individual segment has significant power over any member of the soup
industry.
4. Supplier Power
Although Brannigan faces increased competition from other branded products, it
is the growing resilience with private label brands being offered by retailers that
pose a significant threat. Although soup is a commodity product, retailers remain
reluctant to offer more shelf space to Brannigan, or any other competitor for that
matter. Instead, retailers have pushed their own private label products. Despite
this, retailers dont maintain as strong an influence as they might do in other
industries.
Financial Analysis
Soup consumption in the U.S. has been on the decline for the past three years,
as indicated in the summary report by DeGennaro (Quelch & Kindley, 2013). This
slump in sales has affected every business within the industry, including
Brannigan Foods. Sales for Brannigan in 2011 totaled $3 billion. Net profit
margins for the year were 10 percent, and is estimated to decline for the next
consecutive two years, according to Clarks forecast (2013). Despite his rather
pessimistic observation of his division, the four people he relied on remained
optimistic and stated so in their accompanying correspondence.
Management Considerations
Clark relied on the advice of his four senior colleagues in order to help him
determine what actions would bring the best possible growth to the division. The

following table lists each members best solutions to the divisions growth
challenge.
Table 1 Colleague Proposals
There was nearly unanimous agreement on the need to increase advertising and
promotional spending on new products, but Clark had serious reservations due to
not only the summary report, but his own sales forecast. If sales werent
anticipated to increase, why cut into those lower margins with more advertising?
Still though, he understood there was a need to remind consumers on products
that had reached a mature category stage and to adequately promote new
products that targeted younger, slightly more affluent consumers.
Comprehensive Summary of market situation
Declining sales within the industry as a whole and a slump in Brannigans soup
division sales has created problems for Clark and his colleagues. The goal was
clear, but the strategies to achieve growth were numerous, as indicated in the
correspondence between Clark and his senior colleagues. The company has
invested heavily into products which fit best with consumer sentiment, but the
economy remains stagnant as more people prefer eating at home rather than
going out, which is a plus for Brannigan Foods.
Recommendations
Alternative Strategic Solution 1
To provide to younger consumer segments who demand exotic yet competitively
priced products, Brannigan should increase A&P spending on the Fast & Simple
and Heart Healthy premium soup lines.
Advantages and disadvantages
Not only are these lines star performers representing high growth capabilities,
but these premium soups are well in line with current consumer tastes and with
the product accurately targeted to younger consumers, it is in line with the
companys long-term growth strategy. However, even if these recipes are well
received by a test market, the recipes might not be popular enough to become a
staple item for the company and ultimately become just another short life-cycle
product which fails.
Alternative Strategic Solution 2
To increase sales volume from the largest customer segment, 50+group, a price
decrease of 10 cents per can from Brannigans core RTE wet soups shall be
distributed over a 5 year period and made possible by investing $22 million in
refurbishing older manufacturing plants.
Advantages and Disadvantages

One advantage of implementing this strategy would be that the price decrease
would be visible by customers immediately. The economy is likely to rebound, as
indicated by multiple government reports. Retailers would be more cautious
about taking away shelf space from a product which brings them revenue as
well. The price decrease might even bring in other untargeted market segments
such as low-income families and students who are more concerned about price
rather than health details. Another possibility is that this strategy might alleviate
cannibalization from occurring on a larger scale when new products are produced
and promoted to different segments. Core customers remain satisfied and new
groups are free to try products target to them.
One disadvantage of implementing a price cut strategy would be that the
company inadvertently repositions the its core RTE soups into a lower value
position. Consumers who relate price to quality would prefer competitors soups
that are slightly higher priced over Brannigans. Not all consumers in the senior
segment are concerned with price, therefore this strategy relies mostly on the
hope that consumers will buy more soup because of the price decrease. If the
investment $22 million investment does not produce the expected efficiencies ,
then the company might end up losing more money than it brings in.
Alternative Strategic Solution 3
Targeting young, professional mothers who are equally concerned about the
health benefits of soup as they are with convenience; increase spending on R&D
for 2012 from $14 million to $19 million in order to bring two new recipes from
the Ready-to-eat soup line to full production.
Advantages and Disadvantages
Introducing new recipes to this market segment from the new line of soup will
further propel the brand s perceived image as a consumer oriented that remains
loyal to core consumers but is also willing to offer new products to new
segments. RTE soups are consistent with the consumers preference for fast and
simple meals. Being able to introduce new products will help take away the sting
of not being able to introduce new products first, despite the large share of the
market. However, to create two winning recipes, the company likely has to go
through with producing multiple duds which might have tested well on a small
scale, but end up failing when introduced on a full scale.
Recommended Alternative
In order to achieve the marketing objective for 3 percent annual growth, the
optimal strategy would be to increase advertising and promotions on Brannigans
rising star soup categories which includes the Fast & Simple and Heart Healthy
soup lines.
Rationale for recommended Solution

With the divisions desire to reach younger consumes, most preferably, teens
and young working professionals, Brannigan will achieve the greatest success if
they properly advertise and promote these two new categories of soup. This
Additional details regarding challenges of implementing recommendation in
marketing
Plan:
* Required changes to the target market or positioning strategy
* Required changes to the marketing mix to implement the recommended
* Solution. Discuss changes to product, price, place and promotion that may
be needed. If no changes to any particular marketing mix element needed,
* Discuss why no change needed.
* How management considerations, if any, can be minimized
* How to address any operational issues, if any, to implement recommended
* solution
References
Top Competitors for Cambell Soup Company. (2013). Retrieved from
http://www.hoovers.com/company
information/cs/competition.Campbell_Soup_Company.4540740b62f38c61.html