MARKETING STRATEGY 468: General Mills Project Bowl Apptit

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MARKETING STRATEGY 468 General Mills -- Project
Bowl Appétit!

• Final Project Report
• Team 11 (Section 201)
•  Lillian Lilly Jorge Tessey
• Gabriel Michalup Hide Tomita
• Amrit Shergill Zoya Trofimenko

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Contents

• Our Goal
• Two Product Solutions Descriptions
• Contextual Analysis Industry, Category,
  Consumer Trends, and Company
• Competitive Analysis Porters Five Forces,
• Product and Brand Specific evaluations Bowl
  Appetit, Betty Crocker, Progresso
• Concept Testing
• Marketing Strategy Competitive Positioning
• Revenue Projections
• Conclusion
• Bibliography Appendices

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Goal
Generate the maximum level of sustainable growth
in single serve, shelf stable food products for
General Mills.


4
Two Product Solutions

• Progresso Chili Chips

• Progresso Lunch-to-go!

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Product 1 Progresso Chili Chips

• NEED/VALUE PROPOSITION
• Men and other hearty eaters need a quick,
  healthy, easy-to-prepare meal, all in one
  package.
• OFFERING
• 15oz. Progresso Bean Chili Tortilla Chips
  (each part in self-contained bowl snaps
  together as one package)
• Price 2.89

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Product 1 Progresso Chili Chips

• STRATEGIC PLATFORM
• Hearty and healthy meal kit
• TARGET CONSUMER
• By Demographics Men (25 44 yrs)
• By Usage (Moment-in-Time) Hungry in a hurry.
  Dont want to waste time cooking or bother with
  cleaning up dirty dishes. Want hot filling,
  but healthy.

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Product 1 Progresso Chili Chips
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Product 2 Progresso Lunch-to-Go

• NEED/VALUE PROPOSITION
• Busy women need a quick, healthy,
  easy-to-prepare lunch, all in one package.
• OFFERING
• 12 oz. Progresso 99 Fat Free soup in a bowl
• 2 breadsticks plastic spoon and napkin
  already in package
• Price 2.49.

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Product 2 Progresso Lunch-to-Go
STRATEGIC PLATFORM Portable and healthy
meal kit TARGET CONSUMER By
Demographics Women (25 44 yrs) By Usage
(Moment-in-Time) In a hurry. Need to eat
something filling yet healthy. No time or
suitable place for washing dishes.
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Product 2 Progresso Lunch-to-Go
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Ready-to-Eat Meal Industry

• Total market in 1999 - 14.5 B
• 40 of the US population carries a meal or snack
  from home at least once in a two week period.
• Four categories canned ( 3.2 B), dried (
  1.8B), frozen( 8.9B) and chilled ( 0.7B)
• Fragmented market -- one third of total sales
  come from the top 24 players

Source Euromonitor
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Ready-to-Eat Distribution

• Category fragmented by product type (canned,
  dried, frozen) ready-to-eat not grouped
  together in grocery store (see photo slide, next)
• No consistent product placement from store to
  store
• Result Consumers confused, their favorites are
  hard to find
• General Mills can use distribution strength to
  place new products in most appropriate locations
  Chili for Progresso Chili Chips, and Soup for
  Progresso Lunch-to-go!

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Ready-to-Eat Distribution
Chef Boyardee
Kraft Mac
Hamburger Helper
Bowl Appétit!
Ragu Express
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Product Analysis Ready-to-Eat Meals

• We analyzed five popular meal solutions
  Kraft Mac n Cheese, Stouffers Lean Cuisine,
  Uncle Bens Rice Bowl, Maruchan Instant Lunch,
  and Bowl Appetit.
• These products have a wide range of prices and
  serving sizes.
• We checked nutrition information on the packages
  
• Analyzed
• taste,
• brand awareness
• packaging and
• promotion.

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Product Analysis Ready-to-Eat Meals

  Harris Teeter
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Product Analysis Ready-to-Eat Meals

•    

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Product Analysis Ready-to-Eat Meals
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Soup Industry

• Overall 4 decline in soup market forecast, but
  three segments are growing
• Soups away from home
• Ready-to-serve soups (more likely to be premium
  soups)
• Menu items in restaurants.
• Biggest concerns are time, convenience, and ease
  of preparation

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Chili Industry

• 85 of consumers surveyed in 1999 considered
  Chili as a meal.
• Sales revenue growth 25 over last 3 years
• New products introduced cater to adults, oriented
  around nutrition, eg chili ready meals (cans,
  dried in a pouch).
• Most popular type is regular chili with beans.

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Consumer Trends

• Work Family Home Cooking
• Result? Higher Willingness to Pay for convenient
  and easy-to-prepare meals.
• More two-income and single-parent families dual
  convenience nutrition focus
• More whole meals purchased at stores rather than
  in restaurants(54.2 vs 45.8 of family budget).
• Microwaves almost universal (86 of households)

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Our Consumer Survey

• 52 Respondents queried about ready-to-eat meals.
  Result?
• Women are more concerned about nutrition than
  men. 50 of Male respondents didnt care vs
  24 of women.
• However, nutrition is trumped by convenience in
  reason for purchase ready-to-eat meals.
• Top nutritional concerns are fat, calories, with
  sodium distant 3d.

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More Survey Results

• Campbells soup is the product most frequently
  purchased by women in the last 6 months (55)
• 50 of married respondents eat ready-to-eat food
  for lunch while 77 of singles eat it for dinner.
• General Mills brands associated with
  ready-to-eat Hamburger Helper Progresso
• (Text of Survey - Appendix 1)

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Consumer Survey Results
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Consumer Survey Results
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Consumer Survey Results
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Company

• General Mills recently acquired Pillsbury
• Appropriate time to expand the Progresso and
  Pillsbury lines
• Take advantage of synergies between General Mills
  and Pillsbury
• Strong distribution and retailing relationships
• New products should fit with combined firms
  capabilities and strengths

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General Mills SWOT Analysis
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Porters Five Forces- Ready-to-Eat Industry

• Buyer Power
• General Mills distributes the majority of its
  products directly, through its own sales
  organization, to retailers, co-operatives and
  wholesalers.
• Targets alternative distribution channels,
  particularly convenience stores, vending and
  non-grocery outlets as well as foodservice
  outlets.
• Due to its size and huge range of offerings, the
  company is able to command strong representation
  through these channels.
• Supplier Power
• Power is low brand manufacturers are in a good
  position to negotiate with suppliers since
  ingredients are commodities.

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Porters Five Forces- Ready-to-Eat Industry

• Threat of Entrants
• Market is so segmented than new entrants can
  always come in to target niche segments.
• However, its does require a moderate to heavy
  investment in production and distribution
  facilities.
• Threat of Substitutes
• Many substitutes including soups, delis, home
  food, frozen foods, power bars, pizzas, noodles,
  canned, chilled and frozen meals.
• Competitive Rivalry
• High rivalry many major players like Kraft,
  ConAgra, Hormel, Campbells Soups,
  Nestle,Maruchan and private labels offer products
  that are close substitutes for the Progresso
  range.

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Porters Five Forces- Ready-to-Eat Industry
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Bowl Appétit! Marketing Mix

• Product
• Variety Bowl Appétit! comes in 10 different
  flavors of pasta, rice and potatoes
• Quality Low quality of ingredients. No
  nutritional value. High calories.
• Packaging Medium size plastic bowl covered by an
  appealing carton box. A thin plastic film
  protects the content.
• Sizes Single-serve portions that range from 57g
  to 88g

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Bowl Appétit! Marketing Mix

• Price
• Bowl Appétit! rice, pasta and potato bowls are
  priced 1.89 at local grocery stores. There is no
  price difference among the 10 varieties despite
  the fact that they contain different ingredients.
  
• Place
• Bowl Appétit! products are located in the
  packaged dinner aisle, and are widely available
  in grocery stores, retail stores, clubs, and mass
  merchandisers

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Bowl Appétit! Marketing Mix

• Promotion
• Advertising The target audience is working women
  and the message is that Bowl Apettit! is a fast,
  convenient and easy to prepare meal.
• Web Site Customers can sign up to receive an
  email newsletter from Betty Crocker with
  information about their products and recipes as
  well as other useful information such as dinner
  planners.

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Bowl Appétit SWOT Analysis
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Bowl Appetit

• Market share ()
• Fast penetration /Among all major products, Bowl
  Appétit!Pasta ranks 7th, Rice ranks 12th, and
  Potato ranks 40th.

(Nielsen Data)
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Bowl Appetit

(Nielsen Data)
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Bowl Appetit

• Pasta
• Ranks 3rd in this category.
• Easy Mac and Classico are major competitors
  (Nielsen Data)

(Nielsen Data)
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Bowl Appetit

• Rice
• Ranks 4th in this category.
• A total of Uncle Bens rice products sells about
  six times as much as Bowl Appétit!does.
  (Nielsen Data)

(Nielsen Data)
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Consumer Profile

• Bowl Appétit!
• Age Female Head over 55 is the biggest segment
  (30). FH between 45-54 is the second (28) .
• Family Size 69 of consumers has the size
  between 2-4.
• Gender No Female Head counts 6 (Uncle
  Bens10).
• Life Style Middle Aged Childless couples (21)
  and Empty Nesters (23).
• Repeat purchase rate is not yet impressive
  (Pasta 28.6 / Rice 19.2) compared with other
  brands (Easy Mac 43.7)

(Panel Data)
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Consumer Profile
(Panel Data)
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Consumer Profile
(Panel Data)
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Limitations of the Betty Crocker Brand

•       There is an increase in demand for healthy
  food, and Betty Crocker is not associated with
  healthy food. We would like to use a brand that
  can support a healthy product.
•       Betty Crocker has no experience with
  neither soup nor chili products, making it harder
  to use this brand for launching these types of
  food products.

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Limitations of Bowl Appétit! Products

• Dried value meals have seen a decrease in sales.
  The most popular Betty Crocker products are dried
  and thus have a risk in future. Therefore we need
  another brand focused on the growth category.
• Evidence Over the last year there is negative
  growth tendency with BA even though they launched
  the potato flavor.
• Primary consumer of Betty Crocker products are
  white women over 55 years old. We would like to
  go beyond this niche market by using a brand that
  is not solely related to older women, but also
  other target segments.
• Evidence BA is very seasonal not purchased as
  much in summer or Xmas confirms older cook
  woman as key customer.

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Bowl Appétit! vs. Progresso Consumer Profiles
(Panel Data 98 MRI data)
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Our Preference Progresso

• Progresso appeals to a younger consumer Female
  head of Household (FH) under 35 Progresso (31)
  vs. Bowl Appétit! (10).
• Progresso appeals to families (especially with
  kids) - Progresso (39) vs. Bowl Appétit! (30).
• Progresso associated with quality soups and
  beans, favored brand name for chili in concept
  test.

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Progressos Market-Based Assets

• Reputational Enjoys customer loyalty and brand
  awareness, perceived as having innovative new
  flavors
• Relational Strong relationships with retailers
  allows wide distribution and nationwide coverage
• Knowledge Extensive knowledge about customer
  profiles, suppliers and channels

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Progresso Brand

• Personality Excitement daring, spirited,
  imaginative, up to-date
•  
• Description
• High-quality Progresso soups, sauces, beans,
  bread crumbs, tomato products, olive oils and
  vinegars
• Tradition of creating fine Italian and
  Italian-influenced foods and bean and tomato
  based recipes like Chili
• Convenient Ready-to-serve NOT condensed
• Big chunks, seasoned, hearty, fresh-from-the-garde
  n
• Flavorful

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Progressos Brand Report Card
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Progressos Strengths and Weaknesses
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Competition for New Products

• SOUPS
• Campbell Soups, Knorr soups (Unilever), Healthy
  Choice, Advantage/10 Soups (light soups from
  ConAgra).
• Campbells Soup Co ranked as the number one
  manufacturer overall in 1999, with a market value
  share of 54.8.
• CHILIS
• Hormel, Armour Star Chili, Wolf Stagg.
• Hormel is the leader with 39.1 of the market
  share

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Concept Testing

• We tested 19 consumers
• 9 males and 1 female for the chili product
  concept
• 9 females for the soup product concept
• See attached Appendix 2 for test questions

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Concept Testing - Chili

• Key Results
• The Progresso Brand preferred, followed by Hormel
• Surprising result initial product concept was
  Old El Paso branded but consumers strongly
  preferred Progresso
• 70 of those surveyed would try the product
• Most said it appealed to single men and kids
• Consumers overwhelmingly described it as
  complete, convenient and appealing
• Equally associated with dinner and lunch
• 70 willing to pay between 2.49 and 2.89
• Majority preferred name Chili Chips

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Concept Testing - Soup

• Key Results
• Progresso and Campbells close in recognition/
  preference
• Soup with breadstick, all in one package, would
  appeal to busy women
• The product was described as quick, convenient,
  high quality
• Concern about sodium, fat, and presence of meat
• Consumers associated it primarily with lunch at
  work, with dinner at home as second use
• 80 of them were willing to pay up to 2.49
• Majority preferred Lunch to go name over
  Complete

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Marketing Strategy

• a) Leverage Market-Based Assets
• Progresso Brand Equity Enjoys customer loyalty
  and brand awareness, perceived as having
  innovative new flavors
• General Mills Knowledge Extensive knowledge
  about customer profiles, suppliers and channels

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Marketing Strategy

• b) Distribution
• Traditional retailers such as grocery
  stores/supermarkets are our target consumers
  preferred channel. General Mills commands a
  strong representation here.
• Continuous Replenishment Strategy to assure
  presence at POS and avoid stock-outs enhancing
  customer satisfaction.

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Distribution Chili Aisle
Placement for our product
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Distribution Soup Aisle
Placement for our product
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Progresso Marketing Strategy

• c) Pricing Strategy

Price



High

Medium

Low



High


Bear Country

Progresso Kits


Quality

Mediu
m

Uncles Ben
Kraft Mc Pasta

Campbells


Low


Bowl Appétit!

Maruchan

• High-value strategy High-quality product at an
  average price. We consider that our target
  customers are price sensitive since they can
  easily compare the quality and price of
  substitutes.

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Progresso Marketing Strategy

• d) Promotion Strategy - Chili
• Objective To make our target consumers aware of
  our new offerings.
• Message Healthy, Hearty, Flavorful Quick.
• Vehicle Television and Newspaper.
• - Television In the short term, we will use
  heavy advertising for sports events.
• - Newspapers We will use free-standing inserts
  in newspapers and issue coupons to induce buying
  by female shoppers.

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Progresso Marketing Strategy

• d) Promotion Strategy - Soup
• Objective To make our target consumers aware of
  our new offerings.
• Message Healthy, Nutritious, Convenient
  Disposable.
• Vehicle Television and Newspaper.
• - Television In the short term, we will use
  heavy advertising in TV.
• - Newspapers We will use free-standing inserts
  in newspapers and issue coupons to induce trial.

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Main Competitive Landscape
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Chili Competitive Landscape
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Soup Competitive Landscape
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Competitive Positioning
THE STRATEGIC GAMEBOARD



3


Create and

Pursue a

Unique

Advantage

2

4


Resegment the
Exploit Unique

Market to
Advantage

Create a Nic
he

Industry Wide


1

Do More and

Better of the
Selective

New Game


Same

Mode of Competition
Scope of Competition

(Where)

(How)


Same Game

Across
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the
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65
Competitive Positioning
66
Competitive Positioning
67
Competitive Response
As General Mills targets this selective market,
the competitors (like Campbells) may avoid
intense action like price-cutting because
Campbells will be hurt more as a leader in the
field.
Porters Generic Strategic Framework
68
Revenue Model Forecasts
See Appendix 3 for Revenue Model
69
Revenue Forecasts

• Two markets -- Chili and Soup with different
  behavior and data
• Principles behind forecast assumptions
• Use historical data where available
• Extrapolate conservatively
• Assumptions (e.g. in price changes,
  cannibalization rates) chosen such that revenue
  outcome is most conservative actual results may
  be higher in each case

70
Our Revenue Model

• New Model created for this analysis
• Improves on traditional pricing model
• is more conservative,
• adjusts for
• brand differences in growth rates
• Cannibalization rates

71
Chili Revenue Model
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Chili Revenue Model Growth Assumptions

• Yearly Sales Growth 20, based on historical
  data extrapolated for three years
• Price Growth 10 year one, based on expectation
  that competitors will respond sharply to our new
  premium entrant, then 5 each year thereafter as
  competition fine tunes its response, 5 also
  applies to our new product

73
Chili Revenue Model Market Share Assumptions

• No new customers in overall Chili market, all our
  customers are taken from competitors
• Proportion of Market Share lost by competitors
  based on product attributes, and on price
  differential between their product and ours,
  adjusted by Consumer Price Sensitivity Factor

74
Consumer Price Sensitivity Factor (CPSF)

• Lack of data prevented precise consumer price
  elasticity calculation
• Consumer Price Sensitivity Factor is a proxy for
  elasticity captures concern over price
  difference between our product and competitors
• Base level is 1 above 1 is more price
  sensitive, below 1 is less price sensitive
• CPSF for Chili is .85 Chili consumers consider
  other attributes to be more important than price

75
Chili Revenue Model Assumptions
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Chili Revenue Forecast
Revenues are in US Million
77
Taking Market Share from Competitors
78
Source of Customers by percent
79
Market Share before after entry
Market Share including new product
1998
1999
2000
2001
2002
2003
2004
Our Product
0.0
0.0
0.0
0.0
5.0
10.8
17.5
Armour Star
11.0
10.6
10.2
9.8
9.3
8.7
8.2
Dennisons
8.7
8.5
8.3
8.1
7.9
7.7
7.5
Hormel
36.8
39.1
41.6
44.2
42.9
41.0
38.4
Libby's
6.8
6.5
6.3
6.0
5.7
5.3
5.0
Nalley's
6.4
6.6
6.8
7.0
7.1
7.3
7.4
Stagg
7.0
6.9
7.1
7.3
7.4
7.6
7.8
Wolf Brand
8.8
8.6
8.8
9.1
8.9
8.7
8.4
Others
14.6
13.2
11.0
8.5
5.8
2.9
-0.2
Total Market Share
100
100
100
100
100
100
100
Note New Product introduced in 2001, takes 5
share in 2002
80
Sensitivity Analysis
81
Sensitivity Analysis
82
Sensitivity Analysis Results

• Significant Assumptions in descending order
• CPSF
• Product price
• Market Growth
• Not significant degree of switching from Hormel

83
Soup Revenue Model
84
Soup Revenue Model Growth Assumptions

• Yearly Sales Growth based on historical data for
  each brand, extrapolated for three years
• Price Growth 2.2 annually, across all
  competitors and including new product

85
Soup Revenue Model Market Share Assumptions

• Overall growth rate of Soup market is 0.1
  distribution of that growth is uneven, favoring
  convenience packaging and premium Soups.
• Proportion of Market Share lost by competitors is
  based on product attributes, and on price
  differential between their product and ours,
  adjusted by Consumer Price Sensitivity Factor
• Cannibalization rate is calculated as in 2
  above, assumed no reverse effect (increase in
  canned sales) by consumers introduced to
  Progresso via the new product

86
Consumer Price Sensitivity Factor (CPSF)

• Lack of data prevented precise consumer price
  elasticity calculation
• Consumer Price Sensitivity Factor is a proxy for
  elasticity captures concern over price
  difference between our product and competitors
• Base level is 1 above 1 is more price
  sensitive, below 1 is less price sensitive
• CPSF for Soup is 1.5 Soup consumers consider
  price to be one of the more important attributes

87
Soup Revenue Model Assumptions
88
Soup Revenue Forecast
Revenues are in US Million
89
Taking Market Share from Competitors
90
Source of Customers (by percent)
91
Market Share before after entry
92
Progresso Expected Market Share
Years
93
Sensitivity Analysis
94
Sensitivity Analysis
95
Sensitivity Analysis Results

• Significant Assumptions in descending order
• Price (highly significant up to 2.59, less
  significant above that price)
• CPSF
• Degree of switching from Campbells
• Degree of Cannibalization from Progresso canned

96
Conclusion

• Synergies created by GM and Pillsbury
• Progresso high brand equity fits target markets
  -- young, quality conscious and growing
• Products fill unserved market needs healthy,
  quick hot food in a kit
• Make optimal use of GM production and
  distribution networks

97
Bibliography

• Sloan, Elizabeth. Soups On Food Technology,
  October 2000, Vol. 54, No. 10. p26.
• EuroMonitor
• SP Market Insight
• General Mills website and Annual Report
• Nielsen Data / Panel Data
• Hormel, Campbell ConAgra website
• U.S. Department of Commerce
• Marketing Management, Kotler, Philip.
• MRI Data 1998
• U.S. Government Census 2000

98
Appendices

• Survey Questionnaire
• Concept Development Questionnaire
• Revenue Model
• Product mock-ups