Sara-Lee is a leading global manufacturer and marketer of a wide range of brand-name consumer products with several lines of businesses. Sara-Lee’s food service division is America’s fourth largest full-line food service company. The company seeks to introduce new gourmet long good spaghetti pasta in the processed food industry which the customer will know as Spaghetti Noodle. The Spaghetti Noodle will be made from Desert wheat that is grinded and separated so that it separates semolina from flour. The spaghetti noddle will be different and superior to that which is currently being offered by competitors (www.saralee.com). Though Sara-Lee has suffered major setbacks in issues regarding food safety it retains a major market share in the food industry through its marketing strategies. The introduction of this new product demonstrates the confidence that Sara-Lee has in its customers both current and potential. Sara- Lee Pasta’s mission is to provide the customer with a premium pasta meal and dining experience (www.saralee.com).
Table of Contents
Executive Summary. 4
Situation Analysis. 4
Product Description. 5
Value Proposition. 5
SWOT Analysis. 5
Critical issues. 7
Market Analysis. 7
Macro Environment 7
Market Size and Growth. 8
Competitive Analysis. 9
Appendix A.. 11
This paper seeks to formulate a marketing plan for a proposed new product for Sara-Lee. Sara-Lee is a leading global manufacturer and marketer of a wide range of brand-name consumer products with several lines of businesses. Sara-Lee’s food service division is America’s fourth largest full-line food service company. Every organization or company that aspires to succeed in the competitive market has initiated a marketing strategy that will undercut the competition. Studies carried out on several large firms have proven that the economic performance of companies is directly impacted by the company’s marketing strategy. This marketing strategy cannot be complete without a marketing plan. The first step in creating the marketing plan is to first understand the company’s profile. A marketing plan is a document that describes the company’s goals, and objectives and the strategy to achieve the same (www.saralee.com).
Sara- Lee’s mission is to build brand leadership through developing and marketing brands. Sara- Lee ensures that it provides the finest pasta meal and dinning experience to its customers. Simply said it’s to make its customers happy….on a daily basis (www.saralee.com). Sara-Lee understands fine dining and to ensure it creates and retains customers who are satisfied, it conducts extensive training for the employees, employs competent personnel as well as contracting reliable service providers such as Pasta Delight Corporation (PDC) (www.saralee.com).
The proposed new product is Sara-Lee Pasta/Spaghetti Noodle. This product is different and superior to what the competition is offering. The Spaghetti Noodle will be made by PDC from superior pasta dough that has a distinct color, and produces firm, first class pasta. The prototype Sara-Lee Pasta/Spaghetti Noodle meets the following descriptions; Grain used is wheat, the color is pale straw, the dimensions are- length 10 in and width of 1.8 mm, it has a long thin shape, its food group is carbohydrates and it will be packed in red cartons bearing white lettering. This description makes the Sara-Lee Spaghetti Noodle distinctive in the market (www.saralee.com).
Sara-Lee realizes that having a strong value proposition is of intrinsic value in today’s competitive and challenging market. A strong value proposition is a valuable component in the launching of a new product. This is demonstrated by supporting the operator partners in adding value to their businesses. This is by means of ensuring the partners increase their profitability, and generate increased sale volumes by providing them with trusted superior brands (Business wire & Gale, 2006).
SWOT is stands for Strengths, Weakness Opportunities and Threats. This analysis is meant to shed light on the company’s realistic position in the face of growing stiff competition (Burrows, 2000).
· Strengths: Sara-Lee’s major strengths originate from its strong financial base, and a leading brand name. Sara-Lee’s financial muscle has been demonstrated by the huge acquisitions and expansions it has made in recent years in its spin off strategy. This strategy has demonstrated its ability to pay-off debts, acquire businesses, and develop brand names. The company’s growth trend, financial health, profitability, market multipliers, and fundamental value. Sara-Lee’s ten year revenue growth rate of about 6.42% is above average compared to the competitors. The company has experienced a steady revenue growth rate. Sara-Lee has strong operations and production resource strength that are derived from the acquisitions and expansions it has made internationally. Logistics and manufacturing needs are outsourcing from partnerships to ensure that Sara-Lee is able to serve its customers efficiently. The management structure of Sara-Lee is an added strength (Burrows, 2000).
· Weaknesses: Sara-Lee has been unable to maintain long-term stockholder equity. The issue of food safety at its food plants is a weakness that saw it recall foods that were already in the outlets due to an outbreak of listeria monocytogenes in 1997 and 1998.
· Opportunities: Sara-Lee has been able to penetrate the international market. International markets are the only option for Sara –Lee since the diversified foods industry has limited domestic market potential. Sara-Lee has embraced online marketing and sales. This is a perfect opportunity for advertising of its products.
· Threats: The outbreak of listeria monocytogenes cost Sara-Lee a loss of market share and customers to the competitors. The threat of government regulation following the outbreak and the resulting lawsuits has had huge repercussions on the integrity of the company. Outsourcing is a threat to Sara-Lee in that it provides the supplier with more bargaining power. The supplier can consider entering the market as a competitor (Burrows, 2000).
Sara-Lee strong financial and resource base needs to be protected by sound management strategies that will guard against bad investments. It needs to consolidate its subsidiaries by merging in line with the trend of its major competitors such as Kraft Foods (Burrows, 2000). Marketing resources need to be employed more in e-commerce, food safety research and technology as well as training. Attracting new and retention of existing customers is a principle that will ensure Sara-Lee’s services will exceed the expectations of its customers. Building customer loyalty and referrals is a task that Sara-Lee has invested in by communicating in the Community Newspaper and through Grass roots campaign. This approach targets the domestic market (www.saralee.com).Greater penetration into the international market has to be encouraged through increased research. Economic mishaps in the European market have not deterred Sara-Lee in pursuing strong foundations by adjusting and strategizing to offset the potential repercussions of these downturns (Harris & Hoffman, 2009).
Issues of lost customer confidence in relation to its food safety record have to be addressed by going public over its commitment to guarantee food safety. This will help in stock rebound and restoration of the much needed stockholders confidence, both current and potential.
Sara-Lee’s products cut across all age-groups. Its products are affordable across the income divide. The company ensures that customers at all income levels have access to Sara-Lee branded products. The proposed Sara-Lee Pasta/Spaghetti Noodle will be first class choice to customers as well as affordable at any income. There are legal and political factors that directly influence Sara-Lee operations, such as the U.S. government’s involvement in the food safety probe. The repercussions could negatively impact on Sara-Lee. The advancement of Information Technology (I.T) has contributed to the company’s growth in that Sara-Lee embraced online marketing that opens up an international market at the click of a button (Burrows, 2000) Global market trends such as worsening economic conditions in important European markets as well as unfavorable foreign currency exchange rates have lowered the international sales volume of Sara-Lee (Harris & Hoffman, 2009)
Market Size and Growth
Sara-Lee food service division, being America’s fourth largest full-line food service company has a domestic and international market share that can only be quantified by its gigantic annual revenues which are in the excess of $2.8 billion, and a customer base of above 50,000. In total Sara-Lee as a global manufacturer and marketer of a wide range of brand-name consumer products employs over 138,000 people and has annual revenues of over $20,000 billion and an operating income of $1.9 billion (Burrows, 2000). For a brief insight into the steady growth of Sara-Lee see Appendix A.
However the pasta and spaghetti market that Sara-Lee is venturing into is flooded with other big and smaller firms that Sara Lee has to compete with. There is increased improvement on quality and marketing from smaller private label companies whose products give retailers bigger profit margins than the products from large firms such as Sara-Lee. This is slowly shrinking the market for Sara-Lee since the customers cannot easily tell the difference in quality (Zimmerman et al, (2007). Its acquisition of potential competing firms and aggressive expansion strategies gives Sara-Lee leverage to exploit a market niche. Sara-Lee’s objective in launching the proposed Sara-Lee Pasta/Spaghetti Noodle is to place Sara Lee Pasta as the number 1 gourmet pasta in the processed food market, commanding the larger market share within half decade (www.saralee.com).
Sara-Lee food service division, faces competition from large firms such as Kraft Foods Inc as well as small firms such as Target corp. Kraft Foods Inc has ten business divisions with over 70 major brands. It is the largest packaged food company in the U.S and Canada. Its major marketing strategy is brand marketing (Burrows, 2000). Other big competitors for Sara-Lee are; Quaker Oats Company which is the second largest manufacture of syrups and value-added pasta products. Its major marketing strategy is pricing, product value for money, innovation and convenience (Burrows, 2000).
However, big firms are losing business to private-label competitors (Zimmerman et al, (2007). This is demonstrated by the fact that the private label firms experienced a 4.3% rise in sales totalling to $44 billion in the year 2006-2007. This creates a challenge to Sara –Lee (Zimmerman et al, (2007).
These challenges are brought in by changing market trends. Competitors such as Kraft Foods are up scaling on the quality of their products by offering products with extra complimentary nutrients like vitamins and convenient products such as the DiGiomo Ultimate which is a microwaveable pizza. Big retailers are undercutting Sara-Lee by operating bakeries, dairy plants and such facilities to produce store branded foods that are their own. Supermarket chains are implementing taste tests by tapping customers, who help the supermarket improve on the taste to suit the customers. Retailers who produce their own food products are prioritizing shelf space to suit their products hence disadvantaging Sara-Lee. The packaging of retailer’s food products is becoming more appealing. The profit margins for private label food products are higher for retailer, reaching as much as 10%-15% higher than the established brands such as Sara-Lee (Zimmerman et al, (2007). Retailers such as Target, Safeway, and Kroger are investing heavily on catchy and off beat advertising. Their generic-type products are cheaper by 25%-30% than Sara- Lee’s products. These generics could have the same characteristics as Sara-Lee products, but priced 15%-20 less. The change in the market trend towards organic and healthier foods has been fertile ground for private-label firms as they undercut Sara-Lee. These foods are no longer confined to special sections in the supermarkets but are strategically displayed all over the stores (Zimmerman et al, (2007).
The components of change in the net sales for the second quarter ended December 27th 2008 in six Sara-Lee’s business segments in North America and Internationally.
Second Quarter Ended Dec,27, 2008
Total Net Sales Change
N.A Fresh Bakery
N.A Food Service
Int’l Household & Body Care
Total continuing business
N.B unit volume+ price/mix/other= Adjusted net sales change + Acq./Divest+ foreign exchange= Total sales change
(Harris & Hoffman, 2009)
Burrows., (2000). Impact Analysis of Sara-Lee’s Corporate Restructuring on Michigan’s Turkey Industry and Southwest Michigan’s Local Economy. Michigan: Michigan State University.
Business wire., Gale. (2008, May 16).Business Service Industry: Sara-Lee Foodservice Helps Operators Feed Their Bottom Line. Retrieved February 14, 2009 from http://findarticles.com/p/articles
Harris. J., & Hoffman. A.,(2009). News: Sara-Lee Reports Second Quarter
Fiscal 2009 Results. Retrieved February 14, 2009 from http://www.saralee.com/~/media
Zimmerman. A., Kesmodel. D., Jargon. J., (2007). From Cheap Stand-In to Shelf Star — Food Retailers Put Spotlight on Store-Brand Products, To Dismay of Sara-Lee, Kraft. Dow Jones & Company, Inc.