[Solved] Brannigan Foods Strategic Marketing Planning Case Study Solution

Introduction for Brannigan Foods

Brannigan Foods is caters to the RTE and Healthy Foods Market. The soup division at Brannigan Foods is responsible for more than forty percent of the company’s overall revenue. The general manager is concerned about the declining soup industry as well as the soup division’s declining profits and market share, particularly among the significant baby boomer demographic segment. In the hopes of reversing these trends, he asks four key managers to review an analysis of the soup industry conducted by a consultant and recommend a strategy for a turnaround. Every manager outlines a unique strategy, which can range anywhere from making investments in core market segments and products to acquiring new product lines and customers.

The Text for the Case study can be found here

SWOT Analysis of Brannigan foods

Brannigan Foods Case Analysis

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Brannigan Foods: Environment analysis: Porter 5 Forces

1. Competition and rivalry

The level of competition in this industry is high due to the large number of companies that are vying to provide the best price, taste, quality, and other benefits to their customers. We can say that private labels pose a threat to Brannigan as a result of the fact that retailers are offering cheaper brand names and products than Brannigan.

2.New Competition:

The potential for new competitors to enter the market is limited due to the fact that the industry is dominated by large players who hold a significant portion of the market share. There will be significant financial investments required for advertising and promotion, and it will be challenging to secure shelf space for the product. These are the barriers.

3. Power of Substitutes:

There are a lot of fast food restaurants that serve food that can be eaten quickly and is tasty. As a result, the danger is quite severe. People are spending more time at work and want to devote less time to activities like cooking as a result of this, the demand for alternative products has significantly increased.

4. The bargaining power of customers:

An increase in the percentage of the population that is employed drives up the demand for products that can be consumed quickly or that are innovative and feature new flavors and a superior taste. Customers are also more willing to negotiate lower prices as a result of the recession. As a result, the power to bargain is quite high.

5. The bargaining power of suppliers:

Is averagely high due to the fact that the prices charged by the suppliers change based on the rate of inflation, and they would raise their prices. The quality of the raw materials that are supplied can also vary from one supplier to another.

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Alternative 1 for Brannigan Foods: Invest in R&D: Srikant Tipha

Advantages:

• Growth Synchronization with the rising sectors
• Brannigan becoming synonymous with a healthy lifestyle

Disadvantage:

• The Net Sales are estimated to be $2913, but to Srikant Tipha, it is estimated to be $2954
• COGS is 55% of the Net sales of the US sub division •
• Marketing expenses are increased by $18 million
•  Other expenses are assumed to be 21% of the Net Sales
• An additional eighteen million dollars will be spent on advertisements and promotions.

Verdict: The first alternative is not the best choice because, according to Srikant Tipha, the estimated net earnings for the year 2013 will not allow the company to meet its objective, which is to raise the amount of money it makes by 3%.

Alternative 2 for Brannigan Foods: The Acquisition Route

Advantages:

• No significant investment in R&D
• Reduced Risk from eating away at its own brand’s products (cannibalization)

Disadvantages

• Previous acquisitions like Annabelle were not successful
• Lack of core competence in operating in sea foods and Oriental Flavors
• High Investment and the one-time cost
• The cost of Financing can be high as well, as the growth has slowed down

• An annual decrease in Net Sales of 2% (As seen in exhibit 1), Brannigan’s ready-to-eat soups are mature products that are experiencing a gradual decrease in sales of 1-2% per year in terms of dollars and a decline of 2-3% in terms of volume.)
• Cost of Goods Sold represents 55% of Net Sales
• The cost of marketing equals thirty percent of gross revenue divided by two
• The costs associated with advertising and promotion account for 45 percent of total marketing costs.
• Figure out your other monthly costs.

Verdict: Alternative 2 is not the best choice because, following the acquisition of Red Dragon Foods, the company’s net earnings have been steadily declining, and the goal of achieving a 10% return on investment within five years is impossible to accomplish.

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Alternative 3 for Brannigan Foods: Back Star Products and Invest in R&D – Anna Chong

Investing in research and development as well as advertising and promoting new product entries is one alternative that is presented by Anna Chong, who serves as Chief Innovation Officer. She makes the point that it is essential to “milk the cash cows” and provide financial support for the investment in “star products.” She suggests some very creative ideas, such as new flavors that are adaptable to the evolving preferences of the general public, new innovative packaging, and new applications for the soups themselves.

The projected income statement from Anna Chong’s Alternative

Advantages:

• Make it possible for people who are interested in “weight watchers” and “active lifestyles” to enter healthier categories by providing options such as chicken noodle soup and quick and easy Mediterranean tomato basil soup, in addition to pre-packaged deli soups
• Less expensive in comparison to the acquisition of inorganic materials
• Brannigan’s most popular soups serve as the foundation for new products, which maintain the company’s traditional strength.
• Enable an increase in the price of up to US $0.10 per can, which can result in incremental net earnings of up to US $12 Million. Up to US $6 Million in additional gross profit can be achieved if fresh shelf space is obtained, despite the fact that the likelihood of this happening is low.

Disadvantages:

• This could lead to the cannibalization of already-established product lines
• It is difficult to assign costs for research and development to new products
• The failure of retailers to embrace the concept of new products with short life cycles, which are falling short of meeting their anticipated levels of sales and profits.
• A low success rate of only 7% for new products, which means that out of every 10 attempts, only one is successful, despite the fact that developing new products costs USD 8 Million per year. However, the costs of research and development as well as marketing are typically covered by the sales of these new products.

Verdict: Alternative 3 as a stand-alone strategy has problems with long-term implementation because of its low success rate (less than 7%) for new products and the expenses and costs that are associated with those products.

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Alternate 4 for Brannigan Foods:  Strategic Investment in Marketing- Bob Pugh

In order to raise the level of brand awareness and bring it back up to where it was before, Bob Pugh, who is the director of Marketing and Sales, has centered his strategy on allocating an additional $20,000,000 to marketing expenses. In addition to this, he announces a price cut of five cents for the ready-to-eat soups and proposes an investment of twenty-two million dollars in capital to improve the manufacturing plants’ efficiency and reduce the costs of production.

Projections

Advantages

• Lessen the likelihood of having to suffer through the failure of new products and the costs that come along with that.
• Maximize profits on products that are reaching their end of life; in other words, “milk the cash cow”
• Act as a means to entice young consumers to become customers by means of the “Boys and Girls Love Soup” program.
• Any brand dilution that has occurred as a result of a decrease in perceived value brought on by an increase in prices and a reduction in the amount of money spent on promotion for RTE products will be reversed, which will stop the decline in sales.
• It is likely that senior management as well as a significant portion of the sales force will support the strategy. Mr. Pugh currently holds the position of Vice President within the organization.

Disadvantage

• A decrease in price may be detrimental to the premium brand’s image. If soup can sales do not go up as a result of this, it may also lead to a decrease in dollar sales.
• The focus of this strategy is an old product that has been experiencing a decline in sales. As a consequence of this, there is a possibility that this strategy will result in a loss of market share and will not be very viable in the long run.
• This strategy will require a capital investment of approximately 22 million dollars in order to be implemented. Because of this, the total amount spent on interest and depreciation will go up.
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Conclusion for Brannigan Foods Case Analysis

According to the findings of the investigation and the findings of the data analysis for each of the alternatives, we believe that the best alternative is a combination of the third and fourth options. It is essential to have an understanding of the fact that these choices may not, on their own, be sufficient to produce stable and consistent growth over the long term due to the possibility of fluctuations in the trends of the market.

Even though option four appears to be profitable, qualitative analyses for the long term, such as brand health, brand equity, and brand perceptions in the minds of consumers, are not addressed properly, which will impede the growth of the company in a market that is always shifting and is constantly being fragmented. As managers, we have a comprehensive understanding of the situation at hand and know that it is essential to bolster the “cash cow” of the division, which is the ready-to-eat soups (option 4).

On the other hand, we are aware that Brannigan’s position as the market leader requires the company to make investments in research and development in order to keep up with shifting consumer preferences and requirements. It is essential to make investments in marketing in order to strengthen the position of RTE soups in the market and to maintain the ability to continue financing “question mark” products, which will eventually become stars and “cash cows” as a result of the way the market is developing.

Because it extends the life cycle of the RTE soups and boosts growth in the early stages of the life cycles of new products, this combination of both strategies ensures the company’s short-term goals and envisions long-term profits with the investment made.

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Samrat Saha

Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page