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**// Saxonville Sausage Case Study Analysis  //** **// Group 6  //** ** Robert Graham Arnold ** ** Donald Derham ** ** Michael Floyd ** ** Christian Frierson ** ** Rebecca Godwin ** ** Chris Gremillion ** ** Grant Guidroz ** ** Michael Gvoich ** ** Jon Hardwick ** ** Jeigh Hymel ** ** Corey Roblin ** ** Landon White ** ** Isaac Woo **

** Dr. Roger Hinson ** ** Louisiana State University ** ** March 14, 2011 ** **// Table of Contents  //** ** Subject ** ** Pages ** ** · **** Background Information 3 ** ** · **** Goals 4-5 ** ** · **** Constraints 5-7 ** ** · **** Central Issue 8 ** ** · **** Alternatives 8-12 ** ** · **** Competitive Analysis 13-14 ** ** · **** Best Alternative 14-15 ** ** · **** Implementation Plan 15-16 ** ** · **** Executive Summary 16-17 ** ** · **** Bibliography 18 **


 * // Saxonville Sausage  //**


 * Background Information **

Saxonville Sausage is a private family owned company in Saxonville, Ohio, with 2005 revenues of approximately $1.5 billion. Their main focus is on pork sausage products that are always fresh. Saxonville’s main product is their bratwurst line, which makes up seventy percent of their revenues, breakfast sausage that consists of twenty percent of their revenues and their small Italian sausage line, named //Vivio// that only makes up five percent. Unfortunately, Saxonville's sales in bratwursts have been flat and their breakfast sausage line has been steadily underperforming in the market resulting in a double-digit decline in revenue. However, the Italian sausage was the one category showing growth across producers in the retail sausage market, having an annual increasing rate of 9% in 2004 and 15% in 2005. The one area where they have been consistently increasing is their //Vivio// Italian sausage line, primarily in the New England area. Saxonville hired a new marketing director in Ann Banks to "make her mark" and launch a national Italian sausage brand that Saxonville needed to bring to market in order to achieve profit objectives for the next fiscal year. Saxonville Sausage needs a well-thought-out positioning marketing plan to move their Italian sausage brand to national category leader and match up core values in the “hearts and minds,” of consumers with the attributes of a product portfolios to meet their specific needs. **// Goals  //** ** Successfully launch a national Italian sausage product in order to meet profit objectives for the next fiscal year. ** ** § **** Choose the best positioning strategy **  · Establish a connection between the brand and the customer’s core values  · Choose the best positioning strategy: Family Connection, Clever Cooking, Confidence, Appreciation, Quick and Easy, Tradition  · // Exhibit 9:  // Positioning Concept Voting, reveals Family Connection and Clever Cooking as the top 2  · Enhance marketability to multiple demographics, simultaneously. (nationwide) ** § **** Choose a brand name that appeals to the expanded market ** ** Should Saxonville keep the Vivio name or change to a different name? ** Saxonville wants to alleviate concerns about Focus groups revealed that the top-scoring names were “Italy’s Best,” “Primo,” and “Perfecto.” “Vivio,” ranked seventh. Research shows that there is brand vagueness under the Saxonville flag, because the name Saxonville appears “too German,” to produce a quality Italian sausage. The current packaging with “Vivio fresh Italian sausage,” and the Italian flag in one corner creates some confusion for customers. In order to demonstrate innovation and quality within Saxonville’s product, a new brand needs to be set up to help with the company’s positioning. However, such a move will fail to make use of the existing consumers that have become accustomed to the // Vivio // name. § ** Tap into new market areas ** For Saxonville to compete on a nationwide scale, they must effectively branch out to new retailers than the ones that they currently use in the New England Area. They must create new relationships with other supermarkets that could sell their products because like Saxonville, “some retailers do not operate nationwide.” (Campbell) **// Constraints  //**

 § ** Senior management’s lack of marketing orientation  **  · Senior management was skeptical of positioning and referred to it as “one of those business-school buzz words” (Moore).  · They didn’t have a well thought out plan for launching their // Vivio //product  · “Management is not willing to discount the product’s price” (Moore).  · Management is not willing to discount the product’s price for initial promotion  § ** Consumer Taste and Preferences  **  · Management needs to consider the change in consumer tastes and preferences. One of the top global trends is that, “ Consumers are increasingly choosing naturally healthy foods such as fruit, vegetables, salads, nuts and yogurt. Fruit is now America’s second-favorite snack” (Haynes).  § ** Misallocation of Resources  **  · “Since 2004, brats and breakfast categories across all sausage producers have been flat nationwide” (Moore).  · “Breakfast sausage resulted in double digit decline” (Moore).  · Italian sausage was the only group showing annual growth but they haven’t dedicated enough resources to it.  § ** Freshness   ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l14 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · By branching out nationally, freshness levels may be compromised because of the time length of delivery to west coast supermarkets. <span style="margin-left: .5in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § ** Cannibalization  ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l14 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · Careful consideration must be taken in positioning the Italian sausage line to avoid cannibalization in Saxonville Sausage’s other brands. <span style="margin-left: .5in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § ** Timing  ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l14 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · With the following years profit objectives in mind, the time line of the launch should be carefully thought out, and coincide with peak sausage season. <span style="line-height: 200%; margin-left: 1.5in; mso-list: l14 level3 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § Peak volume season: October- February <span style="line-height: 200%; margin-left: 1.0in; mso-list: l14 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · “Each tactic has to be realized by the slated date for the brand’s national launch early in 2007” (Moore). <span style="line-height: 200%; margin-left: 1.0in; mso-list: l14 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · Before the launch, we have to consider an advertising company to handle a multifaceted national campaign and the training of regional sales managers and retailers about how our product is differentiated from the competition. <span style="line-height: 200%; margin-left: .5in; mso-list: l6 level1 lfo12; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § ** Demographics  ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l5 level2 lfo11; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · To increase the amount of sales of Italian sausage, the demographics of the market comes into play. <span style="line-height: 200%; margin-left: 1.5in; mso-list: l5 level3 lfo11; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § Decide whether to place the product in stores with areas that are mainly family or single households. <span style="line-height: 200%; margin-left: 1.5in; mso-list: l5 level3 lfo11; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § Research the age of the population, and relate income levels to the communities, to see if Italian sausage would have higher demand. <span style="line-height: 200%; margin-left: 1.5in; mso-list: l13 level3 lfo14; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § Per capita spending on groceries and fast food. If the majority of the population tends to spend more money on fast food rather than groceries, it may not be wise to tap in a new product in that area. <span style="line-height: 200%; margin-left: .5in; mso-list: l4 level1 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § ** Fast Food Competition  ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l4 level2 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · Fast food chains are presently moving into as many vacant locations as possible to increase their market share. Unfortunately for grocers, they are a threat to sales because of their convenient locations and speed of producing meals. <span style="line-height: 200%; margin-left: 1.0in; mso-list: l4 level2 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · If there is a steady increase in the number of fast food chains in the area, would it be wise to bring in new products to compete against them? <span style="line-height: 200%; margin-left: .5in; mso-list: l4 level1 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> § ** Sustainability  ** <span style="line-height: 200%; margin-left: 1.0in; mso-list: l4 level2 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · The general trend today is to “go green” or become more sustainable. <span style="line-height: 200%; margin-left: 1.0in; mso-list: l4 level2 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · Companies such as Walmart, have adapted themselves to such a trend, to where they will not ship a product across the nation because of the number of miles that the products must travel. <span style="line-height: 200%; margin-left: 1.0in; mso-list: l4 level2 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;"> · If Saxonville wants to go nationwide to stores like Walmart, production of their sausage will be an issue to abide by sustainability plans of retailers. ** // Central Issue  // ** The central issue facing Saxonville Sausage is the successful launch of a national Italian sausage brand. The development of a new brand name and positioning strategy will be essential to reaching the target market. The implementation of an effective brand is the most important problem because the brand is the first thing a consumer can relate to. “ When a brand taps into what really matters to customers, customers feel good about using that brand” (Moore). The resolution of the central issue will provide the most benefit to Saxonville by increasing profits of the Italian sausage brand. ** // Alternatives  // ** When analyzing the marketing approach there are different choices that have to be made. Careful thought must be taken to understand which way is the best road for the company. For Saxonville Sausage and Ann Banks, the new marketing director, they need to focus and develop a strategic plan before expanding into this Blue Ocean area of the market and figure out a way to differentiate their product from other companies. The goals have been developed, which include launching a successful line of Italian sausage and creating a name that appeals to the market to achieve profit objectives. Three alternatives have been developed to lead Saxonville Sausage Company to success. ** // Alternative One  // ** § ** // Keep Vivio name  // ** § ** // Family Connection Strategy  // ** Our first alternative includes keeping the Vivo brand name when launching it nationally, and also using the Family Connection strategy. By keeping the name the same they can build off the success experienced in the regional market from the loyalist they already have. The Family Connection positioning strategy scored the highest in the quantitative marketing research and seems to best match up core values of the consumers with the attributes of the product. Female heads of households are the primary purchasers of Italian sausage. The value ladder developed from focus group of the target audience revealed that they value: feeding her family good food, hoping her children have happy memories, making home cooked food that all will love, not being remembered for doing laundry and nagging, bringing a sense of tradition to their lives, gathering people together and facilitating their experience, and creating the kind of home she wants her family to have. Moving into the Family Connection positioning strategy puts multiple constraints into play. When families are taken into consideration, the demographics of the location of where the product is placed are important. Today, there has been an increase in options for food away from home. Because of the rising income in families, there is less of an incentive to purchase food that has not been prepared and made at home. Purchasing meals at a full service restaurant or a fast food restaurant provides an easier outlet to solve a family’s hunger situation. In this alternative, Saxonville would have to market their Family Connection positioning strategy effectively by providing information of how it is healthier and less expensive to create meals at home, rather than eating away from home. Because female heads of households are the primary purchasers of Italian sausages, the strategy should be show more bias towards them. (Stewart) Disadvantages for alternative one would be not doing anything to make the name Vivio look more Italian to customers. Customers like their Italian sausage to look as authentic and Italian as possible. If they kept their name and packaging the same then they could possibly lose the appeal of being an authentic Italian sausage brand to new customers. Another disadvantage would be not offering coupons or discounted incentives to retailers or consumers. This does not attract new retailers as well as new customers. ** // Alternative Two  // ** § ** // Change to Primo name  // ** § ** // Clever Cooking Strategy  // ** The second alternative is to change the name to Primo Italian Sausage. Primo was one of the top names when respondents were given 20 brand names including, Vivio and Saxonville, and asked to select the names that fit best with their ideal Italian sausage product. Vivo scored seventh. While the Primo name is more popular and could enhance marketing the product, Saxonville risks confusing and losing the Vivio following by changing the name. In this alternative, the Clever Cooking positioning strategy will be used. This strategy complements the product because of the versatility of Italian sausage because it can be used in a number of different ways. Clever cooking also plays to some of the top values of the target customer such as: using her creativity to come up with interesting meals, knowing about easy meals she can make quickly. Ann Banks also thinks that it would be easier to provide tactical support for the Clever Cooking positioning, and avoid the risk of cannibalization of their other products. Saxonville has to position their Italian sausage line in manner that does not affect sales of their other sausage lines. A way that this can be done is to provide in store examples of how Italian sausage is not an alternative from their other types of sausage, but of equal quality and has its own unique uses. Their goal is to expand their market share and not to switch the preferences of customers who are already using one of Saxonville’s lines. A disadvantage would be to change their name to Primo. They could potentially lose customers that have recognition of their existing brand, Vivio. Another disadvantage of the clever cooking strategy would be that Saxonville is not able to put recipes on their packaging because the package is relatively small with limited space. Consumers may not know many versatile methods of preparing the Italian sausage that would turn them to other sausage varieties. ** // Alternative Three  // ** § ** // Expansion of the company towards the West coast. // **  § ** //  Keep the name Vivio but enlarge the Italian Flag on the packaging to make it more recognizable that it is Italian Sausage  // ** § ** // Offer bulk incentives to dealers and retailers  // ** The advantages of option three are their expansion of all lines of productivity, which means that they can cover more market space and generate more profit. Product expansion will make the marginal value of the product decrease, allowing the company to obtain more profits from bratwurst and breakfast patty sausage sales or lower prices. Saxonville is also keeping the name Vivio so they can retain their existing customer base. Keeping the brand name insures the loyalty of their current customers while attempting to attract new customers. They would be making the product look more Italian with the increased size of the Italian flag on the packaging of the sausage. By offering bulk incentives to dealers and retailers, Saxonville is insuring that their products will reach the shelves of local stores for their customers to enjoy. Also by offering bulk incentives, Saxonville could offer lower prices to their retailers. With today’s competition in the food industry and threats of new entrants, retailers are trying to cut costs as much as possible. By purchasing Saxonville products in bulk will help their need to save money. Branching out towards the western area of the country will be a long process, because Italian sausage is unfamiliar to consumers in that area. After new relationships are created to retailers of the product, there must be a way to attack the sustainability constraint. What Saxonville may consider as a viable option is to create more manufacturing plants across the nation so transportation of the sausages will be less costly and will also reduce the risk in freshness of their product. Spoilage is a major concern while dealing with perishable foods, so an efficient means to transport Saxonville’s products out west will certainly help their profitability. A disadvantage of alternative three would be the one time startup costs for Saxonville. If they were to branch out west, they would need to purchase new trucks and find a way to manufacture their products so supplying the demand will be more efficient. They would also have to find new distributors of meat to make their sausages, which may make their products, taste differently. Another disadvantage to this option is that the positioning strategy is on a broad scale, rather than targeting a specific demographic. Advertising will have to be relied on heavily to get an unfamiliar product out to new consumers. ** // Competitive Analysis  // ** The major strengths of Saxonville are manufacturers have experienced the growth in Italian sausage across the board as well as within our company. Another advantage Saxonville has is that they can be one of the first companies to develop a national Italian Sausage brand while the other national players are still constricted by their frozen trucks. Their regional competitors have picked a “local” positioning strategy hindering their ability to expand and distribute outside their core geography. When Banks questioned the national sales manager about completion from the other national giants, he responded, “Ann, those guys are frozen producers not fresh…their distributors drive freezer trucks. It would mean reconfiguring their whole distribution network to play in this category” (Moore). Saxonville also has the benefit that they have an established a brand name, which will help launch this new line. If they due expand Saxonville will have to use their power of suppliers by offering bulk incentives in order to gain new retailers and supermarkets such as Wal-Mart outside of their “local” positioning strategy. Saxonville also has a few weaknesses that will need to be improved if they want to see increased future profits. One of the biggest flaws is that of an underdeveloped marketing department. Saxonville has brought in a new marketing director, Ann Banks, who is helping the company in implementing a new strategy to grow their Italian sausage line. Another problem is their inability to gain market share into the Italian sausage line, due to the lack of supermarket distributors. As of right now, there is no clear way to combat this problem but a few ideas could be: offer a discount price to retailers, offer bulk discount prices to retailers, or give supermarket retailers a percentage of profits of the sales they have participated in. Anything that will allow Saxonville to gain more distributors will help them in the long run. This will continue to be a problem as they try to expand. Threat of entry including the high prices or acquiring new assets including land, warehouses and processing plants will be extremely risky for the company. These assets and the required technology are very costly, but through economies of size such as buy bulk commodities through long-term contracts, they can help suffice the fixed costs of these new assets. These new markets will also lead to intense rivalries between other Italian sausage companies that already control the new markets that Saxonville is trying to enter. Also these markets will have multiple substitutes that have been controlling the market that are performing the same task of feeding the family. According to Porter the rivalry of these substitutes will eventually lead to price wars making it very hard to cover fixed and variable costs. As of 2005, Saxonville was ranked sixth out of eight companies in breakfast sausage brands. This contributed to the cause of double-digit revenue declines. These declines and flat lines are symptoms of problems of management. This increased competition may also put them in the market powers of the buyers, which will force their prices to be lower than the other Italian sausage companies in order to gain their business. ** // Best Alternative  // ** Saxonville Sausage’s best alternative would be the third alternative: § ** // Expansion of the entire company west to the Mississippi River  // ** § ** // Keep the name Vivio but enlarge the Italian Flag on the packaging to make it more recognizable that it is Italian Sausage  // ** § ** // Offer bulk incentives to dealers and retailers  // ** Out of all the alternatives, we are not changing the name to retain our customers that will insure brand loyalty. It will help establish a national Italian sausage brand outside the New England area. By enlarging the Italian flag on the packaging, customers will recognize that it is authentic Italian sausage and possibly purchase the product for this reason. Unlike alternative one, alternative four offers bulk incentives to retailers making it easier for expansion. Expansion allows the company, brand name, and brand equity to obtain more customers and establish a larger market share. Instead of focusing on clever cooking like in alternative two, they are allowing the Italian flag itself to sell the sausage. Overall, Saxonville’s main objective is to be the first to establish Italian Sausage to consumers outside of the New England Area. This alternative is the most viable plan to do so. ** // Implementation Plan  // ** The first part of the implementation plan would be to change the packaging design to where a large Italian flag is displayed to ensure the authenticity of their Italian sausage. The next part of the implementation stage would be Saxonville sausage establishing new relationships with dealers and retailers to ensure that they will have retailers and dealers that will purchase their products after expansion is complete. Without having the contracts and relationships with these new retailers, expansion would be extremely difficult if not impossible. The success of this implementation plan relies heavily on the establishment of agreements and contracts with new retailers. After these relationships and sufficient contacts have been made, Saxonville would have to start demanding more resources from its suppliers to be able to produce more sausage. Once demands from retailers exceed the production capacity of producing in just the New England area, Saxonville sausage would then have to invest more capital into their infrastructure. This would include expanding their entire manufacturing capabilities which would include increasing the amount of inputs; purchasing new property; constructing new buildings and warehouses; and developing a marketing channel functions to cover the companies transitional, logistical, and facilitative functions. This ensures that Saxonville sausage will be able to handle the expansion process while maintaining the quality of freshness that customers expect from their product. ** // Executive Summary  // ** Saxonville sausage is a privately owned company with revenues of $1.5 billion. Their main lines of products are their bratwurst and breakfast patties. They also have an Italian sausage line that is showing an increase in recent sales. Unfortunately, sales in bratwurst and breakfast patties have been experiencing double digit declining revenues as of recent. In order for Ann Banks to make her mark on the company, Saxonville has to expand to new market areas around the country. The goal of Saxonville sausage is to successfully establish a national Italian sausage brand in the next fiscal year. Their goals can be maintained through expansion, development of a new product image through a new packaging design, and offer incentives for retailers and dealers to purchase their products in bulk. The development of a new package design will increase the Italian product image, while enticing new customers to purchase Vivio. Keeping the brand name Vivio is the most important aspect of this alternative because they will be able to maintain their customers through this name retention. After the packaging has been modified, the next step will be to target new retailers and dealers to attempt to gain their business through bulk incentives. Once these relationships have been established, then it will be time to begin the expansion phase. The expansion phase is the most costly aspect of this alternative for it involves reliance upon an increase in the Italian Sausage market. This phase is also the most capital-intensive phase and will require a large amount of capital upfront. Once the expansion phase is complete, Saxonville should have new distribution and manufacturing centers east of the Mississippi River. The marginal value product will decrease for all of Saxonville’s products making it cheaper to produce their products. This best alternative demonstrates the most reasonable way to eliminate the constraints previously stated. If Saxonville sausage goes through with this alternative, then they will obtain new revenues from different areas of the country, avoiding cannibalization of their own products. By implementing this plan, Saxonville will not only retain its current customers while gaining new customers and a greater market share.

** // Bibliography  // ** <span style="line-height: 200%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none; text-indent: -.5in;"> Haynes, Fiona. "Top 10 Global Food Trends." //Low Fat Cooking - Low Fat Recipes, Tips and Suggestions for Cooking and Eating Low Fat Foods//. Web. 14 Mar. 2011. <http://lowfatcooking.about.com/od/healthandfitness/a/10foodtrends.htm>. <span style="line-height: 200%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none; text-indent: -.5in;"> Moore, Kate. "Saxonville Sausage Company." //Harvard Business School//. Harvard Business Publishing, 15 Jan. 2007. Web. 14 Mar. 2011. <http://cb.hbsp.harvard.edu/cb/access/8290145>. Stewart, Hayden. “The Demand for Food Away From Home.” // United States Department of Agriculture //. January 2004. Campbell Jr., Joseph. “Accessing Today’s Consumer.” // Associated Grocers Incorporated, Baton Rouge, Louisiana //. 30, Mar. 2011. Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Harvard Business Review (January 2008). Print.