Saxonville Sausage Case Study Analysis

Group 6

Robert Graham ArnoldJon Hardwick

Rebecca GodwinLandon WhiteGrant Guidroz

Chris GremillionJeigh Hymel

Michael FloydDonald Derham

Isaac WooChristian FriersonMichael Gvoich

Corey Roblin

Dr. Roger HinsonLouisiana State University

March 14, 2011

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Table of Contents Subject Page Number

Background Information 3 Goals 3-4 Constraints 4-6 Central Issue 6 Alternatives 6-10 Competitive Analysis 10-12 Best Alternative 12 Implementation Plan 13 Executive Summary 13-14 Bibliography 15

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Saxonville SausageBackground 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

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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

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 loyalist that have become accustomed to the

Vivio name.

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

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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 By branching out nationally, freshness levels may be compromised because of the

time length of delivery to west coast supermarkets.

Cannibalization Careful consideration must be taken in positioning the Italian sausage line to

avoid cannibalization in Saxonville Sausage’s other brands.

Timing 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.

Peak volume season: October- February

“Each tactic has to be realized by the slated date for the brand’s national launch

early in 2007” (Moore).

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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.

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 key 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 leave Saxonville Sausage

Company to success.

Alternative One

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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.

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

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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 that she can better explain away the risk of

cannibalization.

Some disadvantages would be by changing their name to Primo, they would be changing

their already existing customer’s recognition of their brand, Vivio. A 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 for such literature. Non Italian consumers

might not know any versatile methods of preparing the Italian sausage.

Alternative Three

Change to “Primo Italian Sausage from Saxonville”, Keep Vivio name in

existing market

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Family Connection strategy

The third alternative will allow Saxonville to keep the Vivio name in the regional market

where is has had success, but make use of the more popular Primo name in the markets they are

expanding into. This alternative won’t confuse the existing loyalist, and will allow them to

appeal more to the broader market. Sub-branding the product using the Saxonville brand will

exploit the perception of quality associated with their other sausages, and give them recognition

on the national stage.

This strategy will capitalize on the benefits of the Family Connection positioning strategy

mentioned above. It should be mentioned that while this strategy runs the risk of being too

generic and easily copied, the risk is mitigated because Saxonville will be the first national

player in this category.

Disadvantages would be losing the customers already loyal to the Vivio name but changing

the name to “Primo Italian Sausage from Saxonville” would not be significant as if they were to

change the name to Primo. At least they still have the company’s name in the title of the sausage.

In this alternative, they are not expanding their Primo Italian sausage boundaries outside the New

England area.

Alternative Four

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

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The advantages of option four is their expansion of all lines of productivity which means

that they can cover more volume and generate more profit. They are expanding into unchartered

territory as far as Italian sausage goes. This would be an example of Red Ocean strategy. 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 while retaining the brand name. 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 need incentives to save money

anywhere they can by purchasing Saxonville’s products.

Disadvantages of option four are that the name is still not generically Italian. Primo or

Italian’s best would have been a better name to start off with instead of Vivio. There will be huge

short term loses due to expansion and dealer incentives with unsure profits from new Red Ocean

markets. Bratwurst and breakfast sausage are still declining in sales volume in the New England

region so the expansion of these product lines could have risks on overall profits.

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 they can be one of the first companies to develop a national Italian Sausage brand, and the

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other national players are 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). It seems Saxonville would be operating in a Blue Ocean for a

time if they developed a national Italian sausage brand. Saxonville also has the benefit that they

have an established a brand name, which will help launch this new line.

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.

However, some external threats to Saxonville include substitute products and the threat of

new entrants. 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. While it seems Saxonville will enjoy a

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Blue Ocean for a time in the Italian sausage category, it won’t last forever and new entrants

could come in.

Best Alternative

Saxonville Sausages best alternative would be the fourth 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 which

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. The new name in alternative three is too long

and could possibly confuse loyal customers who go to the grocery store looking for Vivio. These

are the reason that alterative four is the best alternative compared to the other alternatives.

Implementation Plan

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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

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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.

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Bibliography

 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>.

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>.

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