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Friona. Central Problem. Would consumers, when given the opportunity to buy a better product at a competitive price, remain loyal to a brand and ultimately increase their beef consumption of that brand?. Goals.
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Central Problem • Would consumers, when given the opportunity to buy a better product at a competitive price, remain loyal to a brand and ultimately increase their beef consumption of that brand?
Goals • Increase customer satisfaction by providing the customer with guaranteed high quality, tender beef on a consistent basis • Increase consumption of the Rancher’s Registry brand through retail grocery stores • Create customer loyalty to the Rancher’s Registry brand
Constraints • Retailers were having to price their high cost branded beef to compete with the standard grade beef • Retailers had to see the advantage of investing large amounts of money to market and promote their new product
Constraints • Retailers were demanding geographic exclusivity of the Rancher’s Registry program • Rancher’s Registry had to guarantee the supply of beef to meet the demand of the retailers, including special promotions
Alternatives • Creating a strong marketing campaign focused on product differentiation • Increase communication feedback from the customer to the retailer • Developing the relationship and communication from the retailers to the manufacturer’s
Industry Analysis • According to Northwest Farm Credit Services, Friona Industries is in the top tend feedlots with 275,000 head of cattle • According to the USDS, the trend of shrinking national beef cow herds continues with a 2 percent nationwide decline as of January 2011 • The declining beef supply is the primary force driving the prices of cattle upwards
5 Forces Analysis • Capital intensive for new entrants leading to relatively low threats of entry • 50 largest feedlot operators hold 65% market share, leading to intense rivalry between a few concentrated firms
5 Forces • Friona’s bargaining power comes from the fact that they control a large facet of the beef production process, which is controlled from the time a calf enters the feedlot to the point of delivery to retail stores • Vertical integration of the poultry and swine industries put pressures on the beef industry to integrate supply chains similar in nature
Best Course of Action • We believe the best alternative to increase customer loyalty of the Rancher’s Registry brand is to focus on the retail marketing and promotional campaigns to reach out to customers • The campaign will allow the customer to receive first hand knowledge of the brand that will increase their consumption as a result of increased customer satisfaction of a high quality beef product on a consistent basis
Best Course of Action • We believe that this is the best course of action because in order to sell more premium beef and build on the Rancher’s Registry brand, consumers’ perception of the RR beef must be increased to a level greater than that of substitutes • In order to increase brand loyalty, we must prove our differentiation from our competitors
Best Course of Action • We believe that the future of the brand should be placed in the hands of the retailers, the people most closely linked to the customer. • This should breed customer loyalty through trust of their local butcher
Implementation • Price beef competitively with other beef products • Implement promotional deals such as coupons and bargain deals • Listen to market demand signals and align supply chain accordingly • Adopt channel-spanning performance measures to fine tune the overall satisfaction for the customer
