Executive Summary
Sathers has plenty of opportunities for business. Average American consumers
like to snack and with Sathers commitment to value, it is not difficult for the consumer to
find something in the Sathers line of products that would fill the craving for snacks as
well as save the consumer money. Sathers was mainly known for candy but not for their
Snacks to Go product line. The main question and concern for Sathers at this point was to
decide whether or not to drop the snack nut line. So they had to evaluate and weigh out
their strengths and weaknesses. Sathers also wondered if they should make possible
alternative products for the Snacks to Go line or to improve the existing lines
performance.
Environment
Snack consumption in the late 1980’s was on the rise. Sathers marked ten straight
years of sales gains with sales of $135 million in 1993. Sathers recognized that
consumers are fond of the “value line” products. Since Sathers is always looking for
something new to add to their product line, the Snacks to Go line appeared to be a perfect
fit for their existing menu of candy, snack mixes, and cookies. In 1986, candy
consumption was about 16 pounds per capita a year. By 1994, it rose to nearly 22 pounds
per capita a year. Americans wanted convenience and easy access to their snacks items.
According to ICC/Accutracks Convenience Store Report, Sathers was ranked twelfth in
suppliers of confections, gum, and snacks in 1991. Sathers was also ranked seventh in
sales for all non-chocolate brands (ahead of Tootsie Roll).
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Industry
Sathers was a commodity business that provides various snack products such as
candy, nuts, and snack mixes that are packaged in basic cellophane bags that hang of peg
board displays in various stores throughout the United States.
The main competitors for Sathers included: Planters, David & Son, and Evons. In 1994,
Planters took over most of the market having a 35.2 percent market share.
Private labels came in second with 19.2 percent market share, then Fisher with 3.8
percent and Eagle with 2.6 percent. The remainder of the market consisted of smaller
brands. Over the years, Sathers had purchased other candy and nut manufacturers such as
North Star Candy Company and Powell Inc. These types of acquisitions have allowed
Sathers to be its own supplier and make connections from other suppliers for many
needed items required for producing their snacks. Sathers then sells their products to
distributors, wholesalers, and larger stores such as K-Mart.
Organization
Sathers had six main categories (products) which include: general candy, seasonal
candy, nuts and natural snacks, cookies, international, and private label candy. These
snacks were sold in over 50,000 stores including: discount, grocery, drug, and
convenience stores. Sathers central operations of manufacturing for their products was in
Minnesota. This operation also consisted of a telemarketing center and fleet trucks for
distribution.
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Once the product gets distributed to stores, it gets put on a peg board display rack
(provided by Sathers) according to a Sathers plannogram. Sathers products are also price
pointed at a “two for $1” to add value for customers.
Sathers said their strategy for the 21st century was to “ continue to develop our position in
nuts, natural snacks, and cookies, but will dominantly be a candy manufacturer.”
Marketing Strategy
Snacks to Go product launch was mainly in the southeast region of the United States.
These states included: Oklahoma, Arkansas, Louisiana, Mississippi, Tennessee, Alabama,
Georgia, and both North and South Carolina.
The impressions that Sathers makes on consumers is that Sathers brand is targeted
towards teenage, downscale males and 20-40 year old males or females who are
unsophisticated and nondescript. Value pricing is Sathers foundation. Sathers suggested
retail price for snacks was $1.49. Sathers also wanted a price point of two for $1. The
only promotions that Sathers did was strictly for retailers and distributors. Sales teams
had a quota to meet and if they met that quota, they would win prizes.
Statement of Primary Problem
The primary problem that Sathers was facing was that they do not have any real
customer promotion. Sathers has a heavy concentration on supporting retailers and/or
distributors and their efforts to sell, but do little to promote to consumers of their
products. Sales incentives were used to motivate the sales force initially.
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Only sales people could participate in program and they had to meet a sales quota
provided to them for Snacks to Go products. Sales team members had chances to win
prizes such as: televisions, CD players, weekend getaway trips, or special event and
sports tickets.
Sathers promoted to the sales teams by sending out direct mail kits ( which included:
samples of the Snacks to Go product line, sales flyers, and introduction letters), and
brochures.
To help up sales numbers and give sales teams support and motivation to sell,
Sathers sent out sell sheets, line art, plannograms, and contracts (to make the agreement
binding). Sathers did all this promoting to retailers and distributors but no consumer
promotions were planned during any of this.
The effects of this problem is that there is such a massive focus effort on
promoting to sales teams, that they seem to be either forgetting or think it is not as
important to promote to the very consumers that could potentially purchase the Snacks to
Go products. If Sathers does not promote to the customers, then the customers will not
know there is a product that they may want to purchase.
Statement of Secondary Problem
The secondary problem that Sathers faced was that people were on a health craze
and generally viewed nuts (as a snack) as being fattening, greasy, expensive, and
containing harmful oils. Because snack nuts contain a high level of fat content, they are
not seen as healthy. The effects of this problem is that people see it as unhealthy and will
not purchase them because there may be healthier alternatives.
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Statement of Third Problem
A third problem was found when Sathers conducted focus groups to find out how
consumers viewed them as a brand. As a whole, the participants of the focus groups
found Sathers brand snacks to be: unsophisticated, plain, common, and geared towards a
downscale population. These findings were found as compared to Sathers competition
(Planters, Fisher, etc.). Sathers competition was found to be stable, trendy, sophisticated,
traditional/classic, and geared towards an affluent population.
And because Sathers is viewed as an unsophisticated, etc. product, people are
more apt to purchase from one of their competitors who are seen as the exact opposite
( sophisticated, etc.).
Strategic Alternative 1
The first alternative for Snacks to Go is to concentrate less on incentives for
retailers to sell and fix more attention on incentives for consumers to buy. If Sathers
focused the incentives offered to retailers (such as getaway trips and tickets to special
events) on consumers, then they may get a higher volume of customers.
If Sathers had these resources to fund these kinds of promotions, it should be focused on
people who currently purchase their product or potential customers.
Strategic Alternative 2
Since people are considering snack nuts as unhealthy, another alternative for
Sathers is to focus on some benefits or positives of eating their products.
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Sathers could advertise and promote their snack products as something consumers can
treat themselves to. If Sathers focuses on benefits of snack nuts they can concentrate on
nuts being a quick, energizing snack high in protein and other essential fatty acids that the
body needs. This way consumers can recognize Snacks to Go as a fast and efficient way
to boost energy and receive essential nutrients throughout the day.
Strategic Alternative 3
A third alternative for Sathers is to advertise and promote themselves as more
upscale and refined. People claim that Sathers packaging is good but geared towards kids.
The main colors on Sathers packaging is dark blue, blue, red, yellow, and the areas
around the writing are white and green.
If they limited the colors then maybe it wouldn’t look so childish. They could also
improve and update their “mascot” (who is a peanut doing things on the go such as:
driving a car and rollerblading) to make the packaging look less juvenile.
Selection of Strategic Alternative
Of the listed strategic alternatives, alternative number one would be the best
suited to have an impact on Sathers as a company. The most basic thing that Sathers
could do is communicate to the public that they have a product and people will buy it.
Obviously since no consumer promotion is happening, people aren’t aware that there is a
product out there to buy.
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Sathers needs to promote to the general consumers and have incentives for people to
purchase those products. Sathers could offer the same incentives given to employees to
customers.
They could hold contests, sweepstakes, coupons, etc. for buying the product.
They could measure their success by capturing customer’s zip codes or e-mail addresses.
Sathers could also do in-store promotions. In addition to the peg board displays that the
products are placed on already, Sathers could create advertisements for the retail stores.
These types of advertisements could consist of: hanging banners, window
decals/graphics, or poster advertisements. If Sathers wanted to do any other
advertisements, they could think about doing internet advertisements, direct mailers to
current customers, or e-mail advertisements.
Summary
Sathers had many ups and downs with the Snacks to Go product line. Numerous
questions were proposed about what to do about the problems presented. After reading
over these issues, the simplest solution seems to be to fix their brand recognition. Instead
of eliminating the snack nut line completely and switching to just candy, they should first
try to elevate the awareness of the Snacks to Go product line presently. If this fails, then
they could question packaging etc. If these suggestions then prove unsuccessful, Sathers
may think of dropping the snack nut line to then provide more focus on different Sathers
product lines such as candy.
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