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12 - Maple Leaf Foods - Issue Identification Due to...

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Issue Identification Due to increasing competition, the primary issue faced by Maple Leaf Foods is their ability to increase and, even more importantly in the here and now, maintain market share along with solidly defining their brand image as a result of their proliferation of brands. Although their average selling price per kilogram was increasing, they were selling less as an aggregate. All of this comes on the heels of their major competitor being aggressive on pricing and the smaller players swallowing up more of the niche markets. MLF will have to find a way to boost their sales and brand image in the hot dog industry if they want to capture any loss that they have incurred and gain on their competitors. Other issues of concern are the lack of marketing research available to aid with strategic decisions and, to a lesser extent, low employee morale. Analysis Objectives and Goals MLF’s strategic direction is shaped by 7 core principles (see exhibit 1 on page 164). Most notably, these value focus on market leadership, operation efficiencies, brand equity and being the lowest-cost producer. Kelly Gervin, the newly appointed senior marketing director of the packaged meats group in the consumer foods division, has discovered that the previous marketing director had a goal to become the lowest-cost producer and yet, was nowhere near achieving this. Tying some of these principles together, it becomes quite evident that MLF can become the market leader in some, if not all, market segments through a cost leadership strategy, as it is more sustainable in the long run if relatively stable, no-frills products of reasonable quality are involved which, in this situation, is the case. In addition, economies of scale come in to play and MLF, with their ability to produce large quantities of hot dogs, have the ability to obtain this. Given the volatility of their market position, this strategy must be considered carefully if MLF wants to increase their performance in the hot dog marketplace. 1
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Background/Theories While their current strategy is not explicitly stated, it can be inferred from their 7 core principles that utilizing a cost leadership strategy is their approach to rebuild their competitiveness. The issue here is that they are not successful at it, as they have raised prices on several brands in both 2000 and 2001. Consequently, sales declined noticeably and were swallowed up by their main competitor Schneider Foods (JMS). By using Porter’s Five Forces model, it becomes quite clear that the bargaining power of customers is high.
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