Mavesa's Nelly Brand: 

Pricing to Gain Market Control

Submitted by

Hari Padmakumar

Jijo Francis

Navtej Singh Sran

Introduction

Was founded in 1949; Headquarters: Caracas.

Founded by Phelps, Andres Boulton, William Coles & Angel Cervine.

became the leading consumer production company in Venezuela by 1999.

Yearly sale of $418 Million.

Has distribution services in more than 54,500 Venezuelan stores

Main products are spreads, sea food products, sauces, beverages and

cleansing products.

Major competitors: Kraft, Albeca and Hellmann’s.

Market Research

• Venezuelan market : 4th largest economy in Latin America

• High inflation

• customers tend to shift towards low price products.

• High Demand for mayonnaise.

• Growth of mayonnaise market: 2% per annum

• varieties of customers in this market segment.

• major purchase of mayonnaise is done by the women (71%)

• Overall production of mayonnaise is about 11,000 tons.

• Sixty percent of the total market share is owned by Mavesa .

19%

35%3%7%

6%

10%

12% 8%

MAVESA'S SALES MIX

Mayonnaise Margarine

Other Spreads Other Sauces

Sea food Products Beverages

Cleaning Products Other

SWOT AnalysisStrengths:

• Mavesa was listed on NYSE and Carcas stock exchange

• It is a leader in management style

• Strong market leader in 34 categories of products

• Control of its national distribution network

• Huge market portfolio

• Adaptive and responsive to changing market conditions

• Expanding geographically through acquisitions, mergers and exports

• It owns around 60 % of the industrial segments( restaurants)

Weaknesses:

• Weak brand image

• Brand loyalty is low

• The price range of the sub-segment products are not amongst the lowest

• Requires high sales force

• High Overhead costs

Opportunities:

• Growth in various segments

• Positive consumer buying behaviors

• Broadening the market segments

Threats:

• High Competition

• Recession in Venezuela

• Devaluation of Bolivar

• Declining growth in the premium segment

Questions

What opportunities exist within the family segment for Mavesa’s mayonnaise brands?

• Two categories : Economy and Premium

• Economy: Low price

• Premium: Product quality; market leader

Describe the trade-offs faced by Mavesa. Should they decide to reposition Nelly using price?

• Gross profit over market share

• Reducing prices

• Introduction of flexi packs

• Reduction of manufacturing costs

What are Mavesa’s strengths, given the current competitive environment?

• Gaining control over market share

• Acquisition of LTO

• Focus on product differentiation

• Regaining loyalty

What other strategies could Mavesa employ to take advantage of the existing opportunities?

• Providing incentives

• Reinforcing brand image

• Increasing promotional discount to wholesalers

• Improving distribution channels

• More emphasis on R&D