Case Analysis

1
Case Analysis
Lucas Foods
2
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

3
Company Overview

• A recent entrant into the bakery products market
• Specifically, the biscuit market
• Positioning
• High-priced and high-quality

4
Problem Definition

• Marketing strategy for Gold Medal Crumpettes
• What will best capture the available market
  opportunities and support the companys mission?
• Should Lucas Foods maintain the products existing
  geographic coverage, or should it expand?

5
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

6
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

7
SWOT Analysis

• Weaknesses
• Unknown in other markets
• Limited brand awareness by retailers outside of
  Alberta
• No consumer brand awareness outside of Alberta

8
SWOT Analysis

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

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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

10
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

11
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

12
Competitive Advantage

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

13
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

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Strategic Alternatives

• Identify
• ADVANTAGES DISADVANTAGES of each
  alternative
• Use Quantitative Qualitative Analysis

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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

16
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

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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

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Recommendation

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

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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

20
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

21
Implementation Plan

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

22
Evaluation

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

23
Time Line