Case Analysis – Campbell’s IQ Meals

By | May 2, 2014

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Table of contents

1. Case background 2
2. Problem analysis 2
2.1 Negligence of product life cycle 2
2.2 Inability to meet the continual customer needs 3
2.3 Inappropriate pricing strategy 4
3. Suggestions 4
3.1 Develop different strategies over different product life cycle stages 4
3.2 Product line variation in features such as taste 4
3.3 Adjusting the product and pricing strategies 5
4. Concluding remarks 5

Figure 1 The product life cycle theory 2

Case Analysis – Campbell’s IQ Meals

1. Case background

As a once market leader in the soup manufacturing industry with over 75 per cent market share in 1990, Campbell’s effort in seeking continual business growth in the relevant market sectors and closely linked businesses was without question an encouraged trail. Its decision to enter into the production and promotion of food products with medical benefits seemed to be a smart strategic change based on two major evident: geographical trend and business closeness. On one hand, provided the fact that 58 million American people having some form of cardiovascular disease and 16 million having diabetes, such geographical trend actually indicated great market opportunity for food products with medical benefits; and on the other hand food line with medical purposes still would be in the food industry which could inherit the company’s core competitiveness. In the following reasons behind the unsuccessfulness of the new food line would be discussed.

2. Problem analysis

2.1 Negligence of product life cycle

Figure 1 The product life cycle theory

One major reason behind many new conceptual products’ failure is the negligence of the theory product life cycle which results in the inability to market a new product successfully in the beginning stage. As we know from the product life cycle, a typical product or service could begin with its introduction to the marketing, growth, maturity to its decline or reduce in demand in the market. Together with the different stage is the varied performance of sale. In another word, it takes time for the market to generate the sufficient market base to support the profit-making sale, in particular for a new product to enter into growth or maturity stages. As in the case of the Campbell’s IQ Meals, the market in the 1990s in the US should have the potential to accept the foods with medical purposes but market potential is not equivalent with sufficient and mature market base to support project making new products. Therefore one probable reason behind the unsuccessfulness of the new product line with medical benefit was the company / management’s negligence over the new product’s taking time to mature in the actual market.

2.2 Inability to meet the continual customer needs

From the fact that many of the customers who had enjoyed the medical benefits from the new product line finally turn away from the company’s offering because of being tired of the same nine meals repeating over and over again. Even from our daily life experience we can learn that it is over demanding that a normal person would like to have different taste of food over time though his or her choices may be restricted because of having certain kind of diseases. Therefore, the inability to perceive the demand information from the customers as well as researching the customer behaviors and preference certainly contribute to the market failure of the new product line with medical purposes. Here one major wrong assumption that the company / management could have made is that they were serving patient rather than customers.

2.3 Inappropriate pricing strategy

With one week sample pack of the new product line priced at US $80 and recommended plan priced US $700, another major reason behind the failure of the new product line is the inappropriate pricing strategy. The rationalization is like this: assume that the company had expected great business potential from the new product line, then it must target at the large population which concern their health a lot (e.g. the large population of diabetes patients); and by targeting such large populations the company had to price their products at reasonable level which could be accepted by the majority of the families. But with the fact that many of the ordinary families would find the pricing level of the new product line costly or too high, the company obviously was adopting a seriously wrong pricing strategy to pricing the product too high though the company had a number of reasons to add various cost into the prices of the final products.

3. Suggestions

3.1 Develop different strategies over different product life cycle stages

One strategy related to the product life cycle theory is to advise the management to enact different business and marketing strategies during different product life cycle stages. For instance, the company / management could have warned the investors that the new product line of food could take a certain period of time to mature and contribute to the desired business growth.

3.2 Product line variation in features such as taste

From the lesson that many of the customers who had enjoyed the medical benefits from the new product line finally turn away from the company’s offering because of being tired of the same nine meals repeating over and over again, one main strategy that could have been adopted by the management of the company is that the company should timely differentiate the product offering by providing different provision of product feature combinations. To be detailed, different tastes of the same product offering could be added into the product line to increase the customer choices and keep the product attractive to the existing customers.

3.3 Adjusting the product and pricing strategies

With the conclusion that by targeting such large populations the company had to price their products at reasonable level but the pricing level of the new product line was found to be too high for most families, the company should have adopt consistent product and pricing strategy that at anytime are in accordance with the product positioning. With the clearly positioning at the common families, the products should be developed and manufactured at a controlled cost level by adopting relevant product strategies such as packing design and also the products should be priced competitively compared to the similar product offering to ensure that its price strategy would include its targeted customer groups.

4. Concluding remarks

From the analysis above we can see that the company started with an excellent business opportunity but due to some strategic mistakes, the product line with medical benefits finally turned out to be marketing / business failure which should had been avoided by adopting some strategic changes and some of these changes are mentioned above.