Case Analysis: Case Analysis Lucas Foods


Company Overview: Company Overview Food manufacturing and wholesaling business with a broad product line Primary Customers Five major national food wholesalers Secondary Customers Smaller regional wholesalers and independent grocery stores Followed a portfolio approach Annual sales - $12 million


Slide3: A recent entrant into the bakery products market Specifically, the biscuit market Positioning: High-priced and high-quality Company Overview


Problem Definition : Problem Definition Marketing strategy for Gold Medal Crumpettes What will best capture the available market opportunities and support the company’s mission? Should Lucas Foods maintain the products existing geographic coverage, or should it expand?


Company Mission & Objective: Company Mission & Objective Company Mission To become a major national food manufacturer and exporter Marketing Objective To grow to an annual sales level of $50 million from its current level of $12 million


SWOT Analysis: SWOT Analysis Strengths: 50 year history Sales have doubled since 1979 Excellent reputation in Alberta Well-diversified product line Strong product knowledge Marketing expertise Customer service


SWOT Analysis: SWOT Analysis Weaknesses Unknown in other markets Limited brand awareness by retailers outside of Alberta No consumer brand awareness outside of Alberta


SWOT Analysis: SWOT Analysis Weaknesses Limited geographic distribution No established distribution network outside current markets Recent entrant into bakery goods market Limited production capacity


SWOT Analysis: SWOT Analysis Opportunities: Specialty bakery goods Usually enjoy quick acceptance in the market Consumption of biscuit items uniform across all age groups, seasons, and geographic locations Crumpets considered a ‘luxury’ item Opportunity to gain competitive advantage through positioning strategy Market in Canada and the US Large and mature


SWOT Analysis: SWOT Analysis Threats Highly competitive market Direct competition: crumpets, scones, english muffins, tea biscuits Indirect competition: toast, doughnuts, and muffins Strong brand name recognition from competitors Weston, McGavin Foods, SB Thomas Competitors have established distribution networks Most competitors could quickly retaliate with similar products


SWOT Analysis: SWOT Analysis Threats Distribution in Canada Dominated by only a few firms (power/control) Promotion to the end consumer controlled by the retailer Consumers relatively price-sensitive Not willing to pay more than $2 Implications: Lucas Foods must watch costs closely since any increase in price might cause demand to fall Strengthening Canadian dollar Damaging to exports


Competitive Advantage: Competitive Advantage Does Lucas Foods have a Competitive Advantage? ‘Upscale’ positioning? Product quality? Reputation? Marketing expertise? Level of customer service?


Strategic Alternatives: Strategic Alternatives OPTION A: Status Quo (Alberta Only) Maintain the product's existing coverage and strategy Limit distribution to Alberta only OPTION B: Expansion across Canada Rapidly expand across Canada Goal of becoming a major force in the Canadian biscuit market OPTION C: Expansion into Canada & USA Rapidly expand into both markets Goal: Achieving a dominant position in the North American biscuit market


Strategic Alternatives: Strategic Alternatives Identify ADVANTAGES + DISADVANTAGES of each alternative Use Quantitative & Qualitative Analysis


Strategic Alternatives: Strategic Alternatives Option A (Alberta only) Advantages Minimal risk Requires the smallest promotional budget Disadvantages Limited growth potential Will not enable the company to achieve its mission of becoming a major national player and exporter Will not allow the company to achieve its marketing objective of increasing annual sales significantly


Strategic Alternatives: Strategic Alternatives Option B (Canada) Advantages Opportunity for growth Will allow the company to become a national player Will allow the company to significantly increase annual sales Disadvantages Risk: Company is an unknown outside of Alberta Will require a much larger promotional budget Lack of knowledge about markets outside of Alberta


Strategic Alternatives: Strategic Alternatives Option C (Canada & the United States) Advantages The greatest market potential of all options Will allow the company to become a national player and exporter Will allow the company to increase annual sales significantly Disadvantages Risk: Company is an unknown outside of Alberta Will require the largest promotional budget Lack of knowledge about markets outside of Alberta Spread too thin Conquering two new markets at the same time


Recommendation: Recommendation Considering all qualitative and quantitative considerations, what recommendation would you make to Lucas foods?


Recommendation: Recommendation Option B is the best alternative Lucas Food should rapidly expand its Gold Medal Crumpettes across Canada Option A: Has the production capacity, but there is not enough market potential to allow it to achieve its growth-oriented mission and objectives Option C: Not feasible Lucas Foods does not have the production capacity to expand into both markets Most risky and expensive option


Marketing Strategy: Marketing Strategy How will Lucas Foods go about rapidly expanding its Gold Medal Crumpettes across Canada? Target Groups? Marketing Mix? Product Considerations (packaging, etc.) Pricing Considerations Distribution Considerations Promotion Tactics Personal Selling, Advertising, Sales, Promotion, PR, Publicity


Implementation Plan: Implementation Plan People Who will be responsible? Time When will each activity happen? Money How much will it cost?


Evaluation: Evaluation How will Lucas Foods evaluate its success? Sales, profit, market share? When will it evaluate its success? 3 months, 6 months, 1 year?


Time Line: Time Line