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Raymond Mushroom Corporation. Case Solution & Answer

Raymond Mushroom Corporation. Case Solution

Problem Statement

This case study features the president of Raymond Mushroom Corporation: Ms. Deborah, who was taking a critical decision in 1984. The president of the aforementioned corporation was stuck and was unable to decide whether she should or she should not raise the price of “canned mushrooms” in combination with the promotional program that was intended to build the customer or consumer preference.

Case Analysis

The president of Raymond’s Mushroom Corporation, in the early 1980’s realized that they were indeed in loss. The key factors that contributed to the overall poor performance of the company were the lack of proper marketing and advertising strategies. Ms. Deborah Raymond was considering a proposal that included:

  • Rename the canned mushrooms.
  • Increase the price of canned mushrooms.
  • Promote canned mushrooms.

Raymond realized that the company needed an effective marketing and advertising campaign, which highlights on the richness, high quality and decadent nature of the canned mushrooms that Raymond Mushroom Corporation sold. The goal or objective of the company was to increase its sales and profit margins.

Market

RMC is located in Hudson, Pennsylvania and was known as one of the biggest domestic mushroom harvesters. Raymond Mushroom Corporation harvested freshly grown, high quality mushrooms around 6 times a year.  The special mushrooms of RMC were sold to the following:

  • Food Processors.
  • Special canned mushrooms of RMC were available in four different forms, in the market:
  • Whole canned mushrooms.
  • Sliced canned mushrooms.
  • Canned mushroom crowns.
  • Canned mushroom stems.

Supermarkets across the US, promoted the use of canned mushrooms. Canned packs of mushrooms were available on multiple shelves around the superstore for the ease of customers. The mushroom cans could be easily found in the canned vegetable section, Italian cuisine sections and also in the sections selling steak related products.  A typical supermarket back in 1980’s carried around four to six different brands of canned mushrooms, which included: national brands, stores’ own personal packaged mushrooms and big labels like RMC. Between 1970’s and 1980’s; the average consumption rate of fresh mushroom increased drastically about 15%,but a trend was observed that the customers preferred canned mushrooms (sliced, steams, crowns, and whole) over the fresh mushrooms.

RMC sold its products through brokers. About 40% of the company’s sales were generated generally from four to five different markets. Patterns of RMC’s sales changed each month. Customers of the company belonged from multiple regions of the world, including: Florida, New Orleans, Minneapolis and even England.

Problems Faced by RMC

The average yield of the mushroom industry was about 3.1 pound per square feet, and even after being the biggest domestic harvesters; RMC’s yield was about 2.8 pound per square feet. According to the marketing manager of the Raymond Mushroom Corporation, only a few orders in the large capacity were the sole sales of the company’s compared to the normal or modest size-orders that the company’s competitors sold. These large orders were also very infrequent. The manger was also focused on meeting the delivery deadlines of these orders, in order to maintain the brand’s reliability.

RMC sold a pound of canned mushrooms at the price of around $1.39 in the early 1981. In the beginning of the 1982; the price of one pound canned mushrooms of RMC cost around $1.33 and in 1983 the price reached to $1.29 per pound. This price of RMC canned mushrooms were decreasing year by year, and the reason behind that was the lack of customer awareness and RMC’s capability in meeting the delivery deadlines on time…………………

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