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Kayem Foods, Inc. and Al Fresco Product Line

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Tyler Donaldson

on 13 September 2012

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Transcript of Kayem Foods, Inc. and Al Fresco Product Line

Presented By: Jay McNeil, Kyle Tucker, and Tyler Donaldson Al Fresco : What should Monkiewicz Do? Established in 1909
Family Owned Meat Processing Facility
Top Procducts: Hot Dogs, Bologna, Salami, Sausage, Kielbasa, and Hams Kayem Foods, Inc. The chicken sausage segment was small compared to the rest of the industry (about $75 million in sales).
Projected Growth of 12% Annually
Kayem is looking to find an effective advertising means given the small budget allotted for their Al Fresco product line.
Trade Magazines
Buzz Marketing Techniques
Food Specialty Magazine
Price-Oriented Promotions Situational Analysis: - Over 100 years of success in their industry.
- Popular in the region as a family owned company.
- Established distribution through super markets in the Northeast.
- Al Fresco had become the number-one brand in its niche market. - All-natural ingredients, low-carbohydrates, low-fat. Al Fresco chicken sausage had 75 percent less fat than traditional pork sausage.
- The product was available in seven flavors.
- With its high quality, healthy attributes, freshness, and distinctive flavors, the product could command a premium price.
- BzzAgents reported that the personally liked the product.
- Al Fresco had become the number one-selling branded chicken sausage in the United States by late July 2004.
- Kayem is a great deal smaller than the major players in the industry and has the ability to adapt to changing markets quicker. SWOT Analysis: Strengths - Financial goals were not met.
- Profits were diminishing with the rise of retailer buying power.
- Low budget for marketing:
Consumer advertising for sausage was limited. Hillshire Farms spent approximately $29 million per year on advertising for all of its products, which included sausage, bacon and luncheon meats. Most of this spending was on television advertising. Johnsonville spent about $13 million on advertising for all of its broad product line. Of this, $8 million was for television and $3.5 million for radio.
- Product only offered in limited areas.
- Buzz campaign has limited potential, only consumers reached by agents are aware of product.
- Retail executives not impressed with buzz campaign.
- Because the chicken sausage category was small, it was difficult to obtain many specifics about competition. Aidell, made by a small West Coast meat processor, was one of the leading national brands, with about 30 percent market share.
- Difficulty finding the product in the supermarket. SWOT Analysis: Weaknesses - Demand for healthy substitute to normally unhealthy food.
- Possible to expand to other markets in the South and West.
- Consumers had used sausage as a staple at all three meals for many years, often serving it as the main entrée or as a complement to other center-plate dishes.
- The fastest growing product segment had been specialty sausage.
- Families at all income levels consumed sausage.
- Residents in the South ate the most sausage, followed by those living in the Northeast.
- Traditional retail food outlets accounted for most sausage sales. SWOT Analysis: Opportunities - Strong competition from other established brands.
- Other brands have higher budgets to advertise.
- Substitutes are offered at a lower price.
- The sausage category had recently experienced only modest growth.
- Kayem’s profit margins had been eroding due to increasing the increasing buying strength of retailers
- Price competition from other manufacturers along with the pressure from supermarkets kept profits below expectations.
- Kayem had developed a significant volume in both private label and co-pack business. These activities were not producing the profits that the firm wanted. The private label activity had been at a financial break-even for the last two years. Co-pack was below break-even and only slightly above variable costs. SWOT Analysis: Threats Monkiewicz must decide how to spend the $185,000 marketing dollars that Kayem Foods, Inc. has budgeted in the most efficient manner to obtain growth and profits in the specialty sausage segment. Problem Definition Monkiewicz has to decide how to spend $185,000 on the Al Fresco product line. Despite the disapproval of the retail executives, we recommend that Monkiewicz spends $60,000 for the buzz marketing campaign, $90,000 for promotional coupons (to include the $12,000 - $15,000 that will be required for the buzz marketing campaign), and the remaining $35,000 should be spent on increasing the accessibility of the Al Fresco product line. Recommendation Al Fresco will have greater reach with this option than by marketing with a large trade magazine.
Buzz marketing will last throughout the course of the year instead of in one or two small chunks.
This option works great on a limited budget (and it's effective).
Monkiewicz will also be able to spend adequate amounts to be effective with price related promotions.
This option also helps Al Fresco start to work on their accessibility issue (23% of potential buyers cannot locate the product). Why? We look forward to your thoughts and an interactive discussion! Thank you for your time!
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