Monthly Archives: September 2018

Sun-Maid Raisins Gets an Update

 

Do you remember the last time you bought raisins? It may have been awhile if you are like many consumers who look for the newest products on the market.

Raisins have been a staple of many families; that box of Sun-Maid Raisins in your pantry is from one of the oldest farm cooperative organizations around. Sun-Maid has been in business since 1912 and the cooperative is owned by family farmers who grow raisins and grapes in the Central Valley of California. However, although longevity can be a powerful statement for a company, it can also keep a company from being seen as relevant and up-to-date by today’s younger Millennial consumers. This is the case faced by Sun-Maid.

For the first time in more than 10 years, Sun-Maid will be launching a nation-wide marketing campaign to attract new consumers. The challenge is clear: Raisins are not a top-of-mind snack and faces many challengers for valuable grocery store shelf-space. Consumers are attracted by innovative, new foods. And, while Sun-Maid has launched new flavors of sour raisin snacks, the need for a makeover was clear.

Maintaining growers is also crucial. Raisin acreage in San Joaquin Valley has declined and raisin crops have been replaced by higher value crops including almonds, wine grapes, and other crops. The challenge is to increase consumption, retain growers, and gain new consumers.

What kind of snack do you buy?

Group Activities and Discussion Questions:

  1. Discuss how to build and use a SWOT analysis grid: strengths, weaknesses, opportunities, and threats (internal and external factors).
  2. Review Sun-Maid Raisins: http://www.sunmaid.com
  3. For Sun-Maid, break students into teams and have each team build a SWOT analysis grid.
    1. Strengths: what is company good at?
    2. Weaknesses: what needs work?
    3. Opportunities: what is going on in marketplace?
    4. Threats: what should company be wary of?
  4. Based on the analysis, what are the issues and risks that might occur?
  5. Debrief by building SWOT analysis grid on the white board. Does this give a good picture of the situation faced by Sun-Maid?

Source:  Rodriguez, R. (19 August 2018). Will adding a sour kick get millennials to eat raisins? Fresno Bee.

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Cold and Hot: Coca-Cola and Coffee

While we in the U.S. might not be familiar with U.K.-based coffee company Costa, it has almost 4,000 stores, including several hundred in China, and is the third largest coffee brand in the industry (behind Starbucks and McDonalds). Costa was recently acquired by Coca-Cola for $5.1 billion. Why? Simply stated: because purchases of soft drinks are down, and coffee consumption is up. Coca-Cola’s earnings have gone from $14 billion in 2013 to under $9 billion in 2017. According to Euromonitor, coffee sales are forecast to grow 15.6% by 2022.

To date, Coca-Cola’s products have included soft drinks and water products including Coca-Cola, Sprite, Fanta, Diet Coke, Coca-Cola Zero, Coca-Cola Life, Dasani, Minute Maid, Ciel, PowerAde, Simply juice beverages, Coca-Cola Light, Fresca, Smart Water, Fuze, Honest Tea, and more, including several alcohol products in Asia. However, the company has not had a hot-drink in its product mix, nor has it had a significant retail footprint.

Competition will be fierce. In addition to Starbucks, McDonalds, and others, there is Nestle which owns Nescafe instant coffee and Blue Bottle (which has exclusive rights to Starbucks packaged coffee and tea. Another competitor is JAB (European conglomerate) which owns Peet’s Coffee and Keurig. For Costa, the deal will help strengthen the brand and expand into new geographies.

The coffee battle has begun.

Group Activities and Discussion Questions:

  1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  2. Have students view Coca-Cola’s products: https://www.coca-colacompany.com/brands/product-description
  3. Show video about purchase: http://fortune.com/2018/08/31/coca-cola-costa-coffee-whitbread-hot-drinks/
  4. Show Costa Coffee Web site: https://www.costa.co.uk/
  5. Which strategy is Coca-Cola using for Costa Coffee? Why?
  6. Divide students into teams. Have each team select one of the four different strategies and explain why that strategy could be used to market Costa Coffee.
  7. Have each team determine the marketing mix (4Ps) to support their strategy choice.
  8. Debrief the exercise.

Source:  New York Times, Fortune, CNN, Telegraph, and other news outlets

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Is this a good deal?

Everyone loves a deal. Just showing a sign with “50% off!” can get shoppers racing to the store to rack up credit card points. But is that perceived ‘deal’ really a deal? Or is it a ploy? And, do shoppers always make the right choices when comparing pricing options? Oftentimes, shoppers do not make the lowest-cost choice, but instead fall prey to their own mathematical errors.

Answer this: Which is a better deal for a $6, 6-ounce product:

  • Option (a): 33% off the regular price, or
  • Option (b) 33% more product for the regular price?

At a quick glance, it appears the two deals are equivalent. But are they? No.

  • Option (a) $6 – 33% discount ($1.98) = $4.02, divided by 6 ounces = $0.67/ounce.
  • Option (b) 6 ounces plus 33% more volume (1.98 ounce) = 7.98 ounces, divided by $6 = $1.33/ounce.

In order for the two options to be truly equivalent, the price discount of 33% must be countered by a quantity increase of 50%.

This is a common scene for product discounts in stores. Generally, consumers prefer product bonuses instead of price discounts, even though these do not offer the same benefit.

Go ahead and try to make these calculations in your head! Then, carefully examine the promotions offered by retailers before making your final decision.

Which promotion would you use?

Group Activities and Discussion Questions:

  1. This activity is a good time to set students loose in stores on a field trip.
  2. Divide students into teams. Have each team walk through a local store to determine how prices are advertised and shown in stores. They can compare the shelf price with prices found in sales flyers (usually at store entrances).
  3. As they wander the store, have students find examples of products that are offering a discount, or offering an extra portion in the package. (They can use smart phones to take photos of the examples.)
  4. What pricing strategies are being use?
  5. Do they always make the lower-cost choice?
  6. Debrief the exercise.

Source:  McGinty, J. (3 August 2018). 50% off: Why that deal isn’t as good as you think. Wall Street Journal.

 

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