Question No. 6
The competition in the Italian market was increasing because the market was much fragmented with many localand other regional millers who were selling their products under their brands. Meanwhile, grocery stores were also fragmented. In the meantime, the supermarkets, and hypermarkets have 60% of all values of sales and 64% of Gallos’ value sales. Indeed the private label sales were also increasing in the market from 13% in 1990 to 17% in 1991.
Similarly, the company had three competitors in the market. Flora, Curti-Buitoni, and Scotti. However, the company’s direct competitor was Florawhich had 46% of value shares of Italian parboiled market in 1991. However, the Gallo had 35.4% value of sales in parboiled products and Flora has high-value sales as compared to the Gallo, but the company has aless gross margin of 30% as compared to Gallo.
Meanwhile, if we further analyze the case, then it can be determined that Flora has communication budget of 20%, whereas the communication budget of the Gallo is 15%. Hence company should increase its communication budget in the market to compete with the other players in the market. As far as theline of product is considered, then thecompany should focus on the dehydrated quick-cooking rice, the Meta Tempo product line, which has huge potential growth in themarket.
Question No. 7
There are many situations when acompany has to ensure that its product are well positioned in the market. However, beyond the positioning, thecompany should have good marketing mix strategy to place, price, and promote the product. Similarly, if we analyze, the condition of the company then it can be determined that the company has competitive prices in the market.
Meanwhile, having competitive prices, it has good gross margin than the other competitors in the market. Which shows that the company has acompetitive advantage in operating cost or cost of production, where it can produce aproductat lesser prices than others. Similarly, the company has diversified products to target segmented consumers in the market.
Also, the company has a good product line in the market to offer to the fragmented consumers. Indeed it has been spending about 15% of its sales on the communication budget annually. It advertises through TV commercials, infomercials, and through magazines, and also through the in-store sampling as well and it is sufficient for thecompany to communicate.
However, the place of the product is critical in the marketbecause if a product is well positioned in the consumer’s mind then it will be appealing to the customers in the market. However, if the product is not well placed in the company then all its efforts would go to waste in the market. Consequently, it would lead to reduced sales that would affect thecompany as awhole.
Therefore, it is recommended for the company to put its all efforts towards creating a proper distribution channel in the market which would help thecompany to increase sales. We have already discussed the marketing mix strategies that the company has adopted. Where it has decent pricing, promotion, and product strategy in the market………………..
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