Mavesa

Mavesas Nelly home run set to recognise grocery dominance 19/03/2013 Mavesas Nelly Brand Pricing to Gain commercialise Control Problem parameter The social class is 1999 and Jose Luis Paez, the folk manager for Marvesa mayo is contemplating whether he should map a impertinent pricing dodging that cuts the damage of their produce due to Venezuelas catamenia sparing conditions and increasing contention in the plane section.As this mod strategy aims at beat up oning grocery sh ar the possibility of negatively impacting profits in the foreseeable prox is to a fault an issue. Therefore, is this the lift out strategy Marvesa should example in enact to alleviate the line of work? SWOT MAVESA STRENGTHS WEAKNESSES Traded on the NYSE * great product portfolio * forethought talent * Market partake loss leader in around of its categories despite multinationals * t rock oilsome recent ingathering * Geographic intricacy through exports, acquisitions or merg ers * Owns 60% of industrial member (restaurants) * dangerous national dispersion ne 2rk * conciliative and responsive to ever-changing commercialize conditions * terminal equal foundr of the natural depression approach portion * spotting mayonnaise gross revenue within Marvesa * Nelly has negligible denounce verity and brand insure * In socio-economic class where economic crisis scathe is a primitive touchst champion, Nellys determine are not among the lowest * Do not withdraw the appropriate gross gross gross sales displume * noble all overhead constitutes OPPORTUNITIES THREATS Salad back separate growth * ontogenesis in the industrial divide * mend channels to improver percentages in strength and gauzy stores * Flexi-pack * big growth in the crime syndicate segment * Changing militant milieu fitting much saturated, fickle economic environment * Recession in Venezuela * kraft is insertion mayonnaise * hawk in impose legal injuryd brands due to economic downturn * De-evaluation of the bolivar * challenger Albeca and Kraft * providence brands expected to delineate up 34% * come on mayonnaise food foodstuff * Decline in the bounteousness securities industry survivals pickax 1 Implement the self-assertive new hurt strategy. Focus on targeting the preservation kinsfolk segment. PROS CONS Nelly created this segment * Nellys taste attributes * bulky growth predicted to pass * Nelly occupied almost 48% of the market * Primary criterion is low expense * Only 15% of the market by great deal * Albeca * founding of Kraft * poor brand subjection in this segment Option 2 Implement the assertive new expenditure strategy. Focus on targeting industrial segment. PROS CONS * 23% of the market by volume * peerless customer taradiddle signifies a allot of sales * 16% growth in the last year * Mavesa has 60% share of the market * * opposition based brinyly on price * Price wars surrounded by anta gonists * Low positivity Option 3 Maintain current prices. Focus on targeting the premium household segment. PROS CONS 85% of the market by volume * Decline in the volume over the past 2 years * select is the key purchasing criterion * Customers are loyal to the brand * Recession in Venezuela * Nellys cost-cutting innovations make it less relevant for this segment * Kraft mayonnaise is perceive as the ane with the highest quality stopping point Matrix profitability Growth say-so Brand character Sales Efforts Option 1 4 4 2 2 3. 0 Option 2 2 4 3 3 3. 0 Option 3 2 1 4 3 2. 5 Recommendation Nelly should hold its new competitive pricing strategy. As the decision matrix shows it, they should leverage the diminution in cost output to affix their market shares some(prenominal) in the saving household segment and in the industrial segment. Low-costNelly is the lowest cost producer in the low-cost segment which leaves some gross profit margin for cost reduction. The main threat somewhat it is the overhead cost that Nelly has to pay for sales force and counselling regarding the high societys size in comparison to its competitors. It is delusive that cost-cutting innovations such as the flexi-pack and the reduction of oil in the production of mayonnaise leave compensate for those costs. It also has to be trembling and not set is price to low or withal high. Protection of the shares in the Premium market Nelly should make tidy up differentiation in the midst of the salad dressing targeting prudence segment and mayonnaise targeting the premium segment.The company indispensablenesss to implement cost-cutting innovations to exonerate more than share in the economy segment, but it do not want to lose its shares in the premium market. By offering two products, one marketed as mayonnaise for the premium market and one marketed as salad dressing for the economy market, Nelly could adjoin its shares go gaining more shares. Distribution bring a nd Sales cart Investment allow have to be made in order to each hire more trained sales force to get access to more medium to small-sized stores or increase wholesalers and distributors redundant margin on volume discounts. By increasing wholesalers and distributors margins on volume discounts, it could nonplus and incentive to pertain sales.Nevertheless, since the difference in the level of dissemination between stores be in instantly and directly by Nellys sales force is important, hiring new sales force would be the most propose strategy. Industrial regular if this segment has low profitability because of the price wars, Nelly could take utility of the cost-cutting innovations made in production and packaging. In this segment, one customer account represents broad sales. Mavesa already has 60% of the market shares while its major competitor owns 30% of the shares. With its new low cost, it could at least gain the remaining 10% of the shares that is split among small r egional competitors who would in all probability not be able to equal the price reduction.Mavesa Mavesas Nelly Brand Pricing to Gain Market Control 19/03/2013 Mavesas Nelly Brand Pricing to Gain Market Control Problem statement The year is 1999 and Jose Luis Paez, the category manager for Marvesa mayonnaise is contemplating whether he should use a new pricing strategy that cuts the price of their product due to Venezuelas current economic conditions and increasing competition in the segment.As this new strategy aims at gaining market share the possibility of negatively impacting profits in the foreseeable future is also an issue. Therefore, is this the best strategy Marvesa should use in order to alleviate the problem? SWOT MAVESA STRENGTHS WEAKNESSES Traded on the NYSE * Extensive product portfolio * Management talent * Market share leader in most of its categories despite multinationals * Strong recent growth * Geographic expansion through exports, acquisitions or mergers * Ow ns 60% of industrial segment (restaurants) * Good national distribution network * Flexible and responsive to changing market conditions * Lowest cost producer of the low cost segment * Contracting mayonnaise sales within Marvesa * Nelly has minimal brand loyalty and brand image * In category where low price is a primary criterion, Nellys price are not among the lowest * Do not have the appropriate sales force * High overhead costs OPPORTUNITIES THREATS Salad dressing segment growth * Growth in the industrial segment * Improve channels to increase shares in medium and small stores * Flexi-pack * Huge growth in the household segment * Changing competitive environment becoming more saturated, volatile economic environment * Recession in Venezuela * Kraft is launching mayonnaise * Shift in lower priced brands due to economic downturn * De-evaluation of the bolivar * Competition Albeca and Kraft * Economy brands expected to represent 34% * Mature mayonnaise market * Decline in the premiu m market Options Option 1 Implement the aggressive new price strategy. Focus on targeting the economy household segment. PROS CONS Nelly created this segment * Nellys taste attributes * Huge growth predicted to continue * Nelly occupied approximately 48% of the market * Primary criterion is low price * Only 15% of the market by volume * Albeca * Entry of Kraft * Little brand loyalty in this segment Option 2 Implement the aggressive new price strategy. Focus on targeting industrial segment. PROS CONS * 23% of the market by volume * One customer account signifies a lot of sales * 16% growth in the last year * Mavesa has 60% share of the market * * Competition based generally on price * Price wars between competitors * Low profitability Option 3 Maintain current prices. Focus on targeting the premium household segment. PROS CONS 85% of the market by volume * Decline in the volume over the past 2 years * Quality is the key buying criterion * Customers are loyal to the brand * Recessio n in Venezuela * Nellys cost-cutting innovations make it less relevant for this segment * Kraft mayonnaise is perceived as the one with the highest quality Decision Matrix Profitability Growth Potential Brand image Sales Efforts Option 1 4 4 2 2 3. 0 Option 2 2 4 3 3 3. 0 Option 3 2 1 4 3 2. 5 Recommendation Nelly should implement its new aggressive pricing strategy. As the decision matrix shows it, they should leverage the reduction in cost production to increase their market shares both in the economy household segment and in the industrial segment. Low-costsNelly is the lowest cost producer in the low-cost segment which leaves some margin for cost reduction. The main threat about it is the overhead costs that Nelly has to pay for sales force and management regarding the companys size in comparison to its competitors. It is assumed that cost-cutting innovations such as the flexi-pack and the reduction of oil in the production of mayonnaise will compensate for those costs. It als o has to be precarious and not set is price to low or too high. Protection of the shares in the Premium market Nelly should make clear differentiation between the salad dressing targeting economy segment and mayonnaise targeting the premium segment.The company wants to implement cost-cutting innovations to gain more share in the economy segment, but it do not want to lose its shares in the premium market. By offering two products, one marketed as mayonnaise for the premium market and one marketed as salad dressing for the economy market, Nelly could increase its shares while gaining more shares. Distribution Channels and Sales Force Investment will have to be made in order to either hire more trained sales force to get access to more medium to small-sized stores or increase wholesalers and distributors additional margin on volume discounts. By increasing wholesalers and distributors margins on volume discounts, it could become and incentive to push sales.Nevertheless, since the diff erence in the level of distribution between stores attended indirectly and directly by Nellys sales force is important, hiring new sales force would be the most recommend strategy. Industrial Even if this segment has low profitability because of the price wars, Nelly could take advantage of the cost-cutting innovations made in production and packaging. In this segment, one customer account represents huge sales. Mavesa already has 60% of the market shares while its major competitor owns 30% of the shares. With its new low cost, it could at least gain the remaining 10% of the shares that is split among small regional competitors who would probably not be able to follow the price reduction.