Saxonville Sausage Company

Harvard Business School Case

SITUATION ANALYSIS

Situation Analysis (1/3)

THE COMPANY

•70 years old company

•Well established German brand in the US

•1.5 $ billion sales in 2005

•Mainly producing fresh pork

sausages

Situation Analysis (2/3)

MAIN BRANDS 1. Bratwurst * 70% sales, mainly used during weekend BQ * Declining sales in a flat market 2. Breakfast sausages * 20% revenues 3. Store brand sausage * 5% of sales

Situation Analysis (3/3)

VIVIO • Italian sausages brand

• Regional distrib.: Eastern US

• 5% of company sales

• Growing segment (+15% national growth in 2005)

Current Situation

PRODUCT * Undifferentiated product * No clear positioning * Italian name to create consistency PRICE * In line with competition * Inconsistent with Saxonville pricing strategy (15 % premium) PLACE * 16% of national supermarkets * Mainly Eastern part of US PROMOTION * Discounted price during the launching period * No communication

OBJECTIVES

1. Successful launch of a national Italian Sausage brand – Take advantage of high annual growth rates (2004 – 9%,

2005 – 15%) – Increase market share and contribution to total revenues

2. Limit cannibalization of other market segments (Brats and Breakfast Sausage)

3. Decrease problems associated with distributing outside of core geography

CUSTOMER ANALYSIS

SEGMENTATION AND TARGET (1/2)

Segmentation DEMOGRAPHIC Gender, status, number of kids, age of children,, education level, working staus

PSYCOGRAPHIC lyfestile: busy life, short time available for family needs BEHAVIORAL

frequence: heavy, medium and light users

Target

• Busy female head of household

• age: between 20 and 50

• Geography: everywhere in the US

Values

• good, nutritious meal

• satisfy everyone’s needs

• time spent with family

• get everything done

• creativity

POSITIONING (2/2)

• Wholesome meals with fresh ingredients

• Desire to please entire family with single dish

• Quick meal preparation without sacrificing nutritional quality

• Family dinner facilitating feelings of togetherness

ISSUES

•What is the ideal name for Saxonville’s line of italian sausage? •Should a national entrant continue with the Vivio brand name or have a different Italianate name? •Or utilize the Saxonville name to leverage the company’s heritage and brand equity?

• Ann Banks formed a multifunctional task force, “Project Score”, included 10 collegues from the R&D, packaging and graphics, marketing, and sales departments.

• Find the ideal name for Saxonville’s line of Italian sausage.

• Four Steps to do positioning work.

STEPS

• Phase I : To confirm some of the basic information presented in the Attitude and Usage data.

• Phase II : - To understand current behaviors - Triggers to purchase, and unmet needs - To get a clear understanding of product

benefit - To develope a solid feel for core value and

role

Step Two : Building on Learning from the Focus

Groups • Ann and Bishop learned much about consumers

behaviors from the focus group and developed a synopsis of the learning and sent it to every member of Project Score.

• 6 potential bases for positioning : - Family Connection - Clever Cooking - Confidence - Appreciation - Quick and Easy - Tradition

Step Three : Building Positioning Concepts

• Family Connection” and “Clever Cooking” received the highest total votes.

• The result shows that 81% of respondents would definitely or probably buys the product with a positioning focused on “Family Connection” and 72% if the company would use the “Clever Cooking” concept.

• The group embed their ideas to a manageable list of R&D, graphics and sales tactics.

Step Four : Additional Research Delivers a

Verdict – or Two • “Family Connection” had scored better

and receiving the most first-place votes. • Discuss how advertising look and feel,

packaging, product attribute, name, considering sub-branding.

• Picked the winner from the two final concepts.

CURRENT MARKET CONSIDERATION

Behavior Considerations • Vivio loyalist • Competitive brand • Degree of price sensitivity • Frequency of every day dinner preparation • Use of other product within company

Geographic Considerations • Currently in strong Italian sausage markets • Strong Bratwurst markets where Saxonville well developed • Strong Saxonville markets where Italian sausage is distributed • Strong Saxonville markets where vivio is distributed

REVENUE CALCULATION

Vivio 2005 sales performance (from exhibit 2) $ Vol of 16% market $ Vol of 100% market

Vivio Italian Sweet Sausage Link 24.41 oz $ 3,714,499.00 $ 23,215,618.75 Vivio Italian Hot Sausage Link 24.41 oz $ 18,858,587.00 $ 117,866,168.75

Vivio Italian Mild Sausage Link 24.41 oz $ 42,414,884.00 $ 265,093,025.00 Vivio Italian Mild Sausage Link 55 oz $ 2,829,047.00 $ 17,681,543.75

Vivio Italian Sweet Sausage Ground 14 oz $ 2,019,310.00 $ 12,620,687.50

Vivio Italian Hot Sausage Ground 14 oz $ 34,685.00 $ 216,781.25

Vivio Italian Mild Sausage Ground 14 oz $ 1,351,313.00 $ 8,445,706.25

Vivio Italian Cheese Sausage Link 14.7 oz $ 870,081.00 $ 5,438,006.25

Vivio Italian Pepper Sausage Link 14.9 oz $ 160,232.00 $ 1,001,450.00

Vivio Italian Garlic Sausage Link 14.7 oz $ 833,067.00 $ 5,206,668.75 Vivio Italian Mix Sausage Link 55 oz $ 1,235,193.00 $ 7,719,956.25

Total $ 74,320,898.00 $ 464,505,612.50

SWOT ANALYSIS

Strengths • National Distribution Network • Strong brand recognition

Weakness • Potential confusion of Italian named

sausage, vivio, from German named company, Saxonville

• No Comprehensive advertising campaign • Possible cannibalism of similar products

with portofolio

Opportunities • No national competitors of fresh Italian

sausage • Category shows growth across all product

within portfolio

Thread • 29 regional brans with large percentage of

market share according to geographic region

• Frozen product is currently distribute nationwide by a number of other companies

4 P’S ANALYSIS

Product • Saxonville’s Italian sausage is consumer

class product • Homogeneous products, price will be the

main factor

Packaging • Large windows so that fresh ingredients

are highly visible • Strong Italian color/image to promote

heritage • Included recipes for quick meals ideas

Place • Distribution channels already in existence

from national distribution of other portfolio products

• 100% available in nation’s supermarkets.

Promotion • Advertising • Personal selling • Sales promotion • Publicity • Interactive media

Price • Pricing in medium level • Discount for the early stages of the

national product launch • Currently Vivio Italian sausage

priced at 20% higher from store brand’s price

FINANCIAL PROJECTION

Base Year 1 Year 2 Year 3

Sweet Sausage $3,714,499.00 $9,576,442.73 $10,725,615.86 $12,012,689.77

Hot Sausage $18,858,587.00 $48,619,794.61 $54,454,169.96 $60,988,670.36

Mild Sausage $42,414,884.00 $109,350,872.81 $122,472,977.55 $137,169,734.86

Mild Sausage (55oz) $2,829,047.00 $7,293,636.80 $8,168,873.21 $9,149,138.00

Totals $67,817,017.00 $174,840,746.95 $195,821,636.59 $219,320,232.98

% of Revenue 5% 10% 12% 13%

CONCLUSION

•Positioning as a “Clever Cooking” concept could gain more benefits instead of “Family Connection” since the tendency to buy is higher, that consumers is definitely would buy with “Clever Cooking”. •To the family who like to cook something special and creative for their families, each variety of Vivio comes with “family approved” one-dish recipes for a wholesome real meal in minutes. With Vivio, you never run out of ideas for dishes your whole family will love.

Ann Banks should stick with Vivio name. While Vivio hasn’t been a huge success to sausage market, change their name won’t give a huge effect because many customer has aware with the Vivio name. By changing name, it will confuse or alienate the few loyal customers the brand actually has.

CREATED BY HARSHVEER SINGH, JSS NOIDA ,

during an internship by Prof. Sameer Mathur,

IIM Lucknow. www.IIMInternship.com