Solution for case: Smith’s Home Foods. Question One Smith’s Country Ham has been operating for 25 years in North Carolina in the wholesale food division, targeting restaurants and fast food chains. In order to increase turnover and therefore revenue, Smith’s decides to introduce a new product line: Smith’s Home Food. A product line containing 11 packages sold to households and including all kinds of foods: meat, vegetables, fruits etc. lasting for a period of 4 months. The prices of these packages range from $655 to $1532 ($1000 on average).
These packages require a freezer and thus Smith provided the sale of freezers for customers that didn’t own any. Also, it is highly important to mention that Smith gave all its customers the possibility of financing all of its goods; packages and freezers. Through this new division, Smith is not only selling food and freezers; it is actually providing its customers with high convenience! Buyers no longer have to run to the market to get any kind of foods, as Smith includes everything in the packages.
Also, since they will be buying in large quantities they will be benefiting from lower prices, and will escape any rise in market prices during this 4 months duration. Question Two As for problems for this strategy, I think Smith’s should reconsider its sources for advertising in order to acquire higher profile customers that are more eligible for its financing options. It should also extend its product mix to include other packages with different duration (more and less than 4 months). Question Three P=$1000 COGS= 48%= $480 Delivery Charge= $30 Commission Cost= $125
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AVC= CPGS + Delivery + Commission= 480+30+125= $635 UCM= 1000-635= $365 Break even: Revenue= Total Cost Revenue= 1000 x Q Total Cost= TFC + TVC= (57,000/3) + AVC x Q (we divide 57,000 by 3 to get fixed cost for 4 months) 1000xQ= 19,000 + 635 x Q 365Q=19000 Q= 19000/365 Q=52 To break even, Smith’s must sell 52 packages each 4 month. Executive Summary; Smith’s Country Hams, a 25-year-old family business that focuses on wholesale meat products such a ham, bocon, and other pork products, sell to restaurants and fast-food operations in eastern North Carolina.
Smith’s family business has a service that provides home-delivered meats, vegetables, and fruits should be in considerable demand and providing new sales for its business. Smith’s Home Foods is going to be the way of the dogs. The current marketing environment would allude to this company has the potential to be market nicher and local geographic market leader with a high share of the market and high growth. Meanwhile, his business is getting an excessive minimal share and less than minimal growth. The company is supposed to bring a new vision for its marketing mix.
Company should spend much performance in dynamic marketing communication strategy and an effective advertising budget to protect further loss of revenue. Purchasing food through a home food service saves consumers money. Because consumers buy in large quantities, they receive lower prices, and they escape any price increase that occur during the four month period covered by their food package. Making fewer trips to the store also helps customers avoid expensive impulse purchases. Current Marketing Situation;
Smith Home foods has employed a product concept approach to business that would suggest that company believes consumers will favor products that offer the most quality, performance and that the company ought to engage its energy to making continuous improvements in the product. Smith Home Foods uses two important marketing techniques. a) Mass marketing techniques-mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. b) Personal techniques by the Smith’s family business force the purpose of making sales and building customer relationship.
The company location’s makes it the geographic market leader in the business with virtually no competition. The psychographics segmentation of target market would suggest that customers seeking this product a busy in their careers or social activities and interested in all types of time saving opportunities. Strengths, Weaknesses Threats and Opportunity Analyses; The company is the corporation’s question mark performer and has the potential of becoming a star performer given the limited competition in the market.
The company has the advantage of the parent corporation’s 25-year-old positive reputation as a local family owned business known for the quality of their products. The strategy of the company’s in the market involving a poor marketing mix strategy, a poor integrated marketing communication strategic plan and service strategy with no experience. There is no evidence of feedback mechanism to insure customer satisfaction or to encourage company loyalty through sustained company-customer relationships.
Company has no local competition and the company has an opportunity to establish itself as the market leader nicher for the product that is offering. Threats to company are also numerous. Business can damage the reputation of the parent corp. The company has too much financial liability for contrasts that are not honored by customers. Objectives and Issues; The company does not have a sure mission and is engaged in the wrong type of marketing philosophy. The company need develop a mission. The company does not have a power evidence information system. This is virtually taking shots n the dark and hoping to hits something. The company has to create developing a research plan as soon as possible. In the light of target market, The Company has a poor knowledge. The company is supposed to engage in effective market targeting by selecting market segments and to insure a competitive advantage. Sales management is not well developed. The company should develop a system for recruiting, selecting, training, supervising and evaluating the sales team. Questions and Answers; 1- Outline Smith’s Home Foods` marketing strategy. What is Smith’s Home Food really selling?
The company’s cash cow product is pork that are produced and sold wholesale to restaurants and fast food operations throughout eastern North Carolina. The company has a small sales force that is engaged in apparently one time, face to face selling of product and services written agreements but limited activity regarding customer relationship building. The company engaged in product bundle pricing by including products form external sources to make their service more appealing and convenient the potential new market segment. The additional products include other brand-name food products as well as freezers in which to store the frozen goods. - What problems, if any, do you see with each element of the strategy? Firs of all, The Company have not a power sure mission or any information that would suggest there was a formal setting of goals and objectives by the company. Second, there is no indication that any marketing research was conducted to either identify the need or the target segment of population. 3- According to diagram and the amount of package number, to buy 11 Food, 13 pounds per week, 4-5 minimum freezer size , 4-5 Family size is the price of 958.
These amounts are more convenient that the others for the company foods packages. 4- Based your analysis, what steps would you recommend that Christy take improve her marketing strategy and Smith’s performance? First, Christy is supposed to re-evaluate the needs, wants and demands of those members with buying power in the company’s geographic area of service delivery. This contribute the company with more a factual evaluation of whether or not the product she is making has a true growth potential. The company should modify and develop and advertising strategy to using the right
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