View Full Version : The following appeared in a memo from the marketing director of "Bargain Brand" Cerea

11-19-2004, 07:24 AM
The following appeared in a memo from the marketing director of "Bargain Brand" Cereals.

One year ago we introduced our first product, "Bargain Brand" breakfast cereal. Our very low prices quickly drew many customers away from the top-selling cereal companies. Although the companies producing the top brands have since tried to compete with us by lowering their prices, and although several plan to introduce their own budget brands, not once have we needed to raise our prices to continue making a profit. Given our success selling cereal, Bargain Brand should now expand its business and begin marketing other low-priced food products as quickly as possible.

Obviously, the marketing director is enthusiastic about Bargain Brand Cereals' success in selling low-priced breakfast cereal. The marketing director states that over one year, the very low prices of the cereal took many customers away from the top-selling cereal companies and that despite the top brand cereal companies reducing their prices and planning to introduce budget brands, Bargain Brand has never had to raise its prices to continue making a profit. The marketing director then comes to the conclusion that the company should expand the business and start selling other low-priced foods as soon as possible. At first glance, the marketing director would appear to have a good idea, but upon closer inspection one can see that more research should be done before such products are launched in the marketplace.

In the first place, Bargain Brand Cereals' low-priced breakfast cereals have only been on the market for one year - a very short time in terms of analyzing the overall success or failure of a product. With such a short history, it is impossible to evaluate the long-term viability of the product in the marketplace, particularly with respect to the actions and reactions of competitors. The marketing director even mentions in his or her memo that the top brands have already tried to compete by lowering prices. It is likely still too early to tell what effect that will have on the future sales of Bargain Brands cereal. Additionally, the marketing director states that several of the companies producing the top-selling brands plan to introduce their own budget brands, indicating that they have not yet done so. He or she also states that Bargain Brands has never had to raise its prices to continue making a profit. Although that may be true because the competition has not yet fully reacted, the other companies are organizing a direct attack on the Bargain Brands cereal - companies which likely have tremendous funds available for launching these new bargain products, possibly even selling them at or below cost to try to drive Bargain Brands cereal out of the market. Faced with these current and upcoming battles, the marketing director's conclusion that they should launch other low-priced food products as quickly as possible might be foolish rather than wise. The company may need to save its funds to try to survive in their current market rather than extending itself out into more fields of competition.

Secondly, the marketing director assumes that low prices are what attracted consumers to Bargain Brands cereal. It is possible that it was not price that attracted customers - rather the package, promotion or the fact that the other cereals were not as good as Bargain Brands cereal. The company may have some special advantage with its cereal that others do not have - and that it cannot duplicate in any other types of foods. Success in selling low-priced cereal does not indicate the chances for success with other low-priced foods. Indeed, there may be some industry-specific factors in cereal marketing that have allowed Bargain Brands to succeed in the short-term. Bargain Brands may have some special expertise with cereal that they cannot duplicate with other types of food products. The marketing director presents no direct evidence or market research to indicate that Bargain Brands can successfully expand its business into other food areas. Without such information, the marketing director's argument is unconvincing.

In summary, without detailed market research showing the true reason why Bargain Brands cereal has been successful, without knowing the likelihood of its continued success, and without showing how it can translate that success to other areas, the marketing director's argument is based on speculation and faulty logic. To strengthen his or her argument, market research should be conducted to determine how the marketplace is reacting to the competition's strategies in the cereal market, and whether there is a demand in any other particular areas for low-priced food products. Additionally, the marketing director must show that Bargain Brands has some type of competitive advantage that it can successfully apply to its strategies in the low-priced food product market.

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11-26-2004, 04:19 PM
good reasoning, needs a formal intro para though. Could the para's be split to form related yet diff stands of critique?
avoid using "obviously" ;)
otherwise things are looking up mate :)

12-24-2004, 05:58 PM
Thanx you your remarks