Nick Morreale
AgBm 302
2/9/11
Assignment #2
1) In order to analyze a product like Pringles, the SWOT analysis should be used. These are the
strengths, weaknesses, opportunities, and threats that the product has. Pringles' strengths lies in
its loyal customers and convenience factor. Pringles are great for traveling and on-the-go
events. Customers and loyalist's of Pringle's find the taste of the chip to be the most distinctive
attribute and is what keeps them coming back for more. A weakness of Pringles chips is that
the market they are in is saturated with all types of potato chips and brands. It makes for easy
entry into the market from competitors who have similar ideas. Pringle's do have opportunities
and are working towards them to remain in the market and produce profits. They have
introduced new flavors to the market including mexican dip, buffalo wing, and mozzarella
sticks & marinara. Pringles has also introduced new forms of packaging for the snack sized
chips. They now offer Pringles in the form of stick chips in order to appeal to people who
prefer different forms of chips. Pringles has also integrated a new larger can called the 100crisp “Super Stack.” Threats of Pringles include Frito Lay's product Stax. Theses chips are
similar to Pringles and pose a threat to Proctor & Gamble's Pringles. Threats can be any
potential company that can make potato chips more appealing and tastier. Companies that can
advertise and market their product efficiently and effectively could potentially knock Pringles
off the map. Luckily for Pringles they have loyal customers and have been in the business for
quite some time.
2) In order to consider each yogurt product as a Strategic Business Unit, I have used the BCG
matrix to understand and describe them. The first product, probiotic yogurt enjoys large and
growing shares and has high relative market share. These factors make the probiotic yogurt a
Star on the BCG matrix. Stars generate profitable income and should be invested in to promote
future growth. The second product, greek-style yogurts are experiencing growth in the industry
but have lower market share. These factors show that greek-style yogurt is a Question Mark.
This product has potential to become a star or even a cash cow. A decision has to be made on
whether to invest in the product or disinvest and cut your losses. The third product, plain
yogurts have low industry growth and low market share. This product is considered a Dog on
the BCG matrix. In the case of being a Dog, plain yogurts are not generating enough profits
and may be making little or no profit at all. They have low industry growth and a stagnant
market share. If the product's outlook isn't profitable it would be in the company's best interest
financially to withdrawal and invest more time into other prosperous products. The final
product was flavored yogurts which enjoyed a large relative market share and a mature market
where the growth has slowed down but remained stable and efficient. This product is
considered a Cash Cow, and generates strong cash flow. It is in the company's best interest to
generate as much cash from the flavored yogurts and use the money to invest in question mark
and star products.
3) In the recent wave of industrial concentration many food manufacturing industries are
struggling to compete in the market. Large corporations, mainly Wal-mart has become king by
offering everything consumers need in one center at lower prices than its would be competition.
The three largest food manufacturers are Tyson Foods, Kraft Foods, and Pepsico company.
Increases in consumer spending for prepared meals, growth of food sales from non-traditional
retailers, and consolidation in retailing has let to the concentration in the food marketing
system. Food manufacturers have no choice but to become more dependent on fewer outlets
shift in bargaining power.
4) The CR4 is the sum of market shares for the four largest companies in an industry. If the
number of firms in the market decreases faster than the number of plants, studies show that the
CR4 increases steadily. The change depends on the company and amount of change between
firms and plants. Company's and industries are seeing a steady to substantial increase in their
CR4 when their firms are decreasing faster than their plants. This is because company's are
trying to become more effective, efficient, and substantial.
5) New products in the food marketing system have a fail rate of about 70-80 percent. However, a
small percentage of company's in the U.S. have about a 75 percent success rate for new product
introductions. The reason for these failure and success percentages has to due with successful
research and strategic marketing or lack there of in the case of product failure. To increase
success of new products, its crucial for manufacturers to do extensive market research and
strategic marketing. New products are not actually innovative products but variations of
products already in the market. Ideas are taken from successful products and are changed or
manipulated to give off a new look and attract potential buyers.