Lora Brill is the Vice President (VP) of a US based breakfast Cereal Company, known as United Cereal (UC). The case is about the dilemma she is facing in taking the decision for immediate launch of a new healthy breakfast cereal in France or go for a Euro launch of the same product at a later time.
UC has always been an innovator, and the major contributor to its success in the last century has been its strong R&D function which has developed more successful products than any other competitor. Apart from its R&D, UC has also founded the concept of “brand management” and has made sure that all of its brands carry the corporate persona which has always been about “listening to the customer” and then after “spotting the trend” move towards “making the market”.
Europe has been a tough ride for UC because of the vast variation in market trends and customer preferences in different countries of the continent. The data suggests that the variations are so vast that developing a sustainable business model becomes a challenge. Like UC, most of its competitors are operating via local subsidiaries, and this has been a successful strategy to cater the need of different trends in different European countries.
This decentralization at the management level has lead to increased pressure of cost and minimized the profitability of the company as evident in Exhibit 1 and 2. Europe is not a densely populated region; therefore, having diverse brand positioning in different countries with different people responsible for the brand’s success has increased the cost significantly without a sizeable increase in profitability. To counter the situation, Lora Brill has come up with the idea of centralization and implementing a coordinated product marketing strategy which would help in cost reduction.
In order to be successful in European market, Brill has also come up with the idea of Euro-brand team which would comprise of brand managers from each country and representatives of centralized functional departments (R&D, operations, purchasing and logistics etc.) with a team leader selected from one of the brand managers. Brill believes that since each country’s brand manager will be part of the team; hence, any decision taken by this group will be owned by the whole team, and there will be a coordinated effort for the success of the Euro-brand.
The decision, which has now become a headache for Brill is either to launch the new product in French market with the current organizational structure or delay the launch, reassign the new roles and then launch the product as a Euro-brand for the first time in UCs European operation’s history.
As Lora Brill, United Cereal European VP, would you authorize Jean-Luc Michel’s request to launch of Healthy Berry Crunch in France? Be sure to analyse both sides: Launch and delay launch; summarize in a table format and then discuss.
Based on the available data, market situation and experiences of the company in Europe, as UC’s European VP; I would not authorize the immediate launch of Healthy Berry Crunch (HBC) in France. Following table analyses both sides of the immediate launch requested by Jean-Luc Michel:
|Positives of immediate launch of HBC
||Negatives of immediate launch of HBC
- Positive 2nd survey results with modified recipes with a willingness to repurchase up to 64%.
- First mover advantage, as no other blueberry flavoured product exist in the healthy cereal segment.
- Below par consumer feedback during test market launch.
- Continuous decline in actual sales volume during test market launch.
- No growth in the UC’s existing Healthy Crunch segment in recent time.
- No expansion of competitor’s berry-flavoured brand’s range in last 4 years.
- Financial concerns shown by Jorge Sanches and approval hurdles.
Jean-Luc Michel is definitely an enthusiastic CM; however, it appears that he is either not well aware of UCs corporate values or deliberately wants to rush the European VP into a decision about which necessary research and data analysis has not been done. His claim that there is a serious “need” of a healthy berry-flavoured breakfast cereal needs to be bolstered through a verifiable independent source i.e. customer survey or focus group results (Bstieler, 2012).
Exhibit 3 showing the results of test market and consumer panel results, clearly indicates that the market share has declined from 1.5% to 1.0% and even though the customers are well aware of the advertisement and brand, only 3 of the 188 respondents have actually bought the product with their own money. Moreover, the response on the repurchase question can be misleading as the sample includes people who have actually purchased the product and also who have only consumed it during free trials. Even after including the “free tasters”, the intent to repurchase the product is below the company’s par of 64%.
Apart from this, the sample size of 188, 126 and 126 against the awareness, attitude and repurchase intent parameters respectively, is very low and insufficient for deciding country wide product launch (Chen & Shyu, 2006).
Does United Cereal represent an example of centralized or decentralized international management? Discuss in the context of corporate values, policies and practices and then discuss UC organizational process.
As far as the corporate values, policies and practices are concerned, UC is an example of centralized international management. It is evident that the historic values of “commitment, diligence and loyalty” have made the UCs progress possible throughout the century and is still the continuous process within UCs values structure.
If we take the example of French market given in case, the policy of “Listen to the customer” is clearly reflected as full scale test launch was done and then the customer’s feedback was obtained. This is a clear sign that UC’s policy has been consistent towards gauging the customer’s priority and then introducing or modifying its products as per customer’s liking (Poddig & Varwig, 2013).
Even though UC has positioned its different brands, quite contrarily in different markets, this has nothing to do with the corporate values and structure i.e. one cannot say that the company has different policies for different countries. The policy is consistent throughout; however, as the policy is itself dependant on the external factors like customer priority, market trends and need for innovation; therefore, the execution of the policy takes different shapes in different markets depending on market dynamics.
Another core value of the company is pioneering the concept of “brand management”. This idea has been successful as the people involved with a brand own it completely. As it can be seen that the brand managers are the leaders of cross-functional teams and hence they are not only able to measure customer trend but also communicate them to the internal organizational staff. This helps the company to get the desired output in the form of a product and ensures that every brand launch, relaunch or repositioning is successful (Berk & Gurler, 2011).
Finally, the approval structure in the company is the biggest and most substantiating clue that the company is actually managed through a centralized system and not the other way round. UC has been very cautious about its corporate image in the general public. As the corporate image is perceived by the value of a brand; therefore, young brand management teams require approvals from higher levels (e.g. corporate VP) for very trivial and seemingly routine tasks.
What do you think of Brill’s Eurobrand proposals? Should she authorize the launch of Healthy Berry Crunch as the Eurobrand? What concerns do you have? How do you resolve them? Be sure to analyze both sides: Launch and Delay Launch; summarize in a table format and then discuss.
In my opinion, the idea of a centralized coordinated brand management team to launch the products as Eurobrands is good considering the fact that there is a constant pressure on company’s profitability due to high operating costs throughout the Europe. Contrary to the earlier disaster of the juice products, this time all brand managers have been valued and included in the team. Therefore, it is expected that they would take the responsibility of the successful launch of Eurobrand concept for which, the HBC cereal is a test case. The Pros and cons of launch and delayed launch are tabulated below:
- Pioneering the blue-berry flavored healthy breakfast cereal
- Capturing major market share, if consumers like the product
- Decision may backfire as different European countries have different taste preferences
- May affect the sales of own product in healthy breakfast cereal segment
- Ownership of Eurobrand by the newly organized Eurobrand team and hence higher expected sales
- Increase in profit margin due to reduction in COGS
- Lost market share due to launch of competitor’s product
- Cost of redoing the formulation, customer survey and trial launch
As far as the internal restructuring is concerned, Brill is moving towards the right direction. However, there are some serious areas of concern which shall be looked into before the product launch. For example, there is a need of re-evaluation by consumer panels for the reformulated product. The data in exhibit 3 has now become irrelevant as the sample size is too small and there is no concrete evidence to support the repurchase intent of the consumers. Also, there may be a need of complete reformulation of the product or a need of different recipes to suite the taste profiles of different consumers in the diverse European market (Oh, So, & Chan, 2013).
Up till now, the launch has been the demand of French CM and country managers of other European estates have not shown any real enthusiasm towards the launch of this new breakfast cereal. Therefore, after the implementation of new brand management structure, HBC must be analysed by the whole Euro-brand team which may have some valuable suggestions regarding positioning, pack size, packing art-work, distribution channels or reformulation of the product. As this will be the first Euro brand; therefore, incorporating the inputs of the whole brand team is necessary for the success of the first Euro brand.
A delayed launch should be preferred over a failed one; therefore, it is necessary that HBC is launched only after successful market trials as per UCs internal values and practices which have been the key towards its achievements. Also, the reorganization would result in cost reduction, and it is expected that the savings can be utilized for further consumer surveys and market trials to generate authentic data for effective decision making (Hart, Robben, & Hultink, 1998). Therefore, it is expected that redoing the surveys and market trials would not be an additional cost to the business.
How might United Cereal implement your recommendations (from Q3)? What do you think of the Eurobrand Team proposal? How can you make the Team work?
The first priority shall be the restructuring of the organization. As long as the failed structure of brand team is there, success cannot be expected. The Eurobrand team structure is the right answer to the diversified market trends of European region. However, there is a slight catch in the team structure. It is expected to be administrated by one brand manager, and the description of the leader of this brand team is very vague and unsure.
In my opinion, this team must be headed by the VP herself as this would not only make the structure fair but also have a leader whose authority would be superior to others and such structures is necessary for a successful decision structure (Bektas, 2013).
The team would be effective only if the roles and responsibilities are clearly defined, objectives are well set and tied up with the timelines. Brand team shall be responsible for market side; technical side shall be dealt by operations team and the responsibility of getting the appropriate feedback from the focus groups and then analysing the data shall be independent function (e.g. from an external agency). This would ensure impartiality and correct picture of the market trends would be painted in front of the top management. Hence any decision based on the customer feedback is expected to be beneficial for the entire team and in turn, the entire company (Chao & Yanbin, 2011).
UCs new VP Lora Brill has found the key to be successful in the European market i.e. synchronised branding for synchronised success. The new structure would enable the brand managers to discuss the different market trends, customer preferences and identification of gaps which can be exploited for the future success of the United Cereal’s brands. As all the brand managers would be part of decision making; hence, they would own decision and are expected to work their hearts out to make any launch, re-launch or repositioning successful.
Throughout its history, UC’s brand team success has happened because of their ability to acquire relevant data from the market, translating that data into market trend and consumer preferences, telling the technical people what they want and then after getting their desired product launching it successfully in the market. Even though there has been a case of failure in the frozen fruit juice area; however, the cause of the failure was completely neglecting the input of brand managers, which were expected to make it successful. UC has learned from its mistake, and the new idea of coordinated branding is expected to be successful.
The dilemma faced by Lora Bill is definitely a very tough one and requires smart and timely decision making. Up till now she has been on the right track, and if she focuses herself on restructuring the organization and making brand managers own every brand launch by centralizing the brand function into one Euro brand team, her strategies are expected to be fruitful for the company in both short and long term. She should prefer to delay the launch rather than failing it and try to make the idea of Euro brand successful with the HBC’s launch throughout the European market simultaneously. As the different European countries have different taste preferences; therefore, depending on the input of brand manager of that particular country, slight modification in the recipe may be considered; however, the overall brand positioning and persona shall not be compromised.
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