Marketing Management II

CASE IV – “CAMPBELL’S SOUP CAN”

Section-B

Submitted to: Prof. Shyam Vyas, Ph.D. Submitted by: Group No. - 8

Due date: 1/11/2010 Submitted on: 1/11/2010

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SUMMARY

One of the largest manufacturers of Soup cans – Campbell Soup Company, was formed in 1897.

After incorporating the Campbell soup soon became the target manufacturer of condensed

canned soups and ready to serve soups. Other manufactured food products were- vegetable and

tomato juices, pickles, seafood and chicken, frozen meat pies, canned beans, canned pasta,

bakery products etc.

The company controls 80 percent of the canned soup market followed by H.J.Heinz co., which

controls a meager 10 percent and few other small players.

Campbell emphasized products compatible with existing production facilities, an approach that

produced sluggish profits. However the company has decided to go for a change in the packaging

of the product and is now thinking of replacing the Tin cans in which it used to produce the soup

in a different container. Campbell’s decision to develop a new package reflects an emphasis for

providing customer satisfaction by knowing and meeting consumer preferences.

The company however does not want to negatively affect the Brand equity in anyway. 

In changing from the can as a container, Campbell would expect to make a large investment in

new installation goods. Revamping production facilities could cost $100 million or more. The

change would also likely mean the raw and processed materials purchased by Campbell would

change from those needed to make a tin can to those needed to produce some other type

container. Thus Campbell has to consider all factors while taking up the new container.

QUESTIONS AND ANSWERS

1. As a convenience goods producer, what marketing considerations do Campbell executives have to keep in mind?

Convenience goods category encompasses a wide range of household products of low unit value. It is implicit that products in this category have low brand loyalty, as the user is not prepared to go to any effort to secure a supply and will accept a substitute. Thus Campbell executives should keep following considerations in mind:

Marketing plays a very important role in creating awareness regarding the convenience goods, and as this product is undergoing a change in packaging, so the customers need to be made aware.

Shelf visibility – As the product is a convenience goods, so it needs higher visibility. It is a staple good and so the higher is the visibility, higher is the sales for the company. Therefore it has to be placed strategically on the retail outlets with the help of marketing planning to boost up the sales.

Packaging – As the packaging is undergoing a change, the company has to ensure on the colors of the packaging also. As food products usually have colors of red and yellow, as these stimulates the taste buds and excites the customer to buy it, so the company has to take care of this.

Convenience - The firm has to keep customer priorities on top of everything. As Plastics is all around in the market, so the company wanted to make the necessary changes and provide convenience to end user.

Re-positioning - As the company is undergoing a change in packaging from tin to plastic, it might expect increase in sales from the young generation. Many young consumers associated cans with preservatives and artificial ingredients; so new packaging must ensure added nutrition to health conscious youth.

2. Do you think Campbell should market soup in a new container under a different brand name? What options does the firm have?

No. Campbell should not market soup in a new container under a different brand name.

Campbell is known for selling soup in cans but if the consumer needs are changing then it should market soup in new container and not phase out the can completely.

A different brand name for the same product would dilute the brand image of the company. A different brand name would mean that the company would have to start from fresh and would

take some time to be in the heart and mind of the consumer.

Other Options the firm has are:

Individual names: P&G has individual brands in different product categories. The advantage is that the company does not tie its reputation with product.

Blanket family names: This policy is followed by TATA. Development costs are lower because there is no need to spend heavily on advertising to create recognition.

Separate family name for all products: the Aditya Birla Group follows this policy. Corporate name combined with individual product names: Honda uses this strategy. The

company name legitimizes and the individual name individualizes the new product.

3. What factors should Campbell have considered in the decision to change to a new package?

Following decision should have been considered by Campbell:-

Changing consumer needs: consumer is a moving target and a company should always be aware of its consumers need and requirement.

Cost involved: Revamping production facilities could cost $100 million or more. So the company should be sure whether the change is really necessary or not.

New technology. The profit margins and the market segments to be targeted & whether new suppliers would be

required or not. R & D being carried out by its competitors in the packaging department. The prevalent customer expectations and lifestyle trends.

4. Establish a list of criteria for Campbell to use in deciding on what package to use. What are the uses / functions of packaging? Is package & packaging - an important issue in marketing?

Criteria for Campbell to use in deciding on what package to use:

Consistency with organizational mission: No compromise with mission. Extent of revenue contribution: An activity with higher level of revenue contribution will be

selected. Profitability: The activity must be profitable when implemented. Requirement of additional work force: Activity with minimum additional requirement of

workforce will be given preference.

Uses and functions of packaging: Self Service: Most products are sold on self-service basis. The package must perform many sales

tasks like attract attention, describe the product’s features, create consumer confidence and make a favorable overall impression.

Company and brand image: Packages contribute to instant recognition of the company or brand.

Innovation opportunity: Innovative packaging can bring large benefits to consumers and profits to producers.

Storage: Good packaging assists in storage of the product in a more efficient manner.

Yes, package and packaging are an important issue in marketing. A thing no matter how good, it sells only when it is visible. Well-designed packages can build brand equity and drive up sales as they are the consumers’ first contact with the product. Packaging is a marketing tool used to reflect the brand. A company uses packaging to sell the product inside. Many marketers have called packaging a fifth, P along with price, product, place, and promotion.

5. Do you see the decision confronting Campbell management as one that may confront many firms in India? Identify a real world brand in Indian context that faced similar choices and discuss the decisions it made – and if the same satisfied the company and the consumer?

The major issue faced by Campbell management was to get the appropriate packaging for its product that would promote primarily usage convenience and also sales and economy. A similar issue that was faced by several firms in the Indian FMCG sector a long time back was of the packaging of Shampoo.

In the late 1970s Chik Velvette was launched in South India, the most innovative decision taken by the Company’s management was to offer the product in sachets rather than bottles.

The sachets offered the consumers unprecedented convenience, it also revolutionized the Shampoo Industry in India as with the introduction of sachets, Chik was able to compete with MNC’s and soon became largest selling Shampoo brand in South India. These unprecedented sales forced all other shampoo brands to make the same changes, to incorporate the similar packaging

Thus a lot of similarity can be seen between the issues faced by Campbell Soup Co. and Chik Shampoo. Also the results indicate that the decision taken by executives at Chik were quite beneficial in respect to consumer satisfaction as well as propelled the company’s growth.

RELATIONSHIP TO CONCEPTS

Marketing approach

Campbell’s decision to develop a new package reflects an emphasis for providing customer satisfaction by meeting consumer preferences.

PackagingIt forms an integral part of marketing. And therefore Sales and convenience are important to Campbell. Any miscues on packaging may influence sales negatively on the whole line of soups. As Plastics was all around in the market, so the company wanted to make the necessary changes and provide convenience to end user.

ResearchResults for incorporating plastic in microwave container were found to be favorable in San Francisco and thus the company wanted to use the same.

Customer preferencesEven though the company might have to face heavy expenses on the new packaging lines, the management was keen to go for it as they wanted to keep customer priorities on top of everything.

BrandThey are conscious of the brand name they have built up over the years. They don’t want to muck up that good, solid, conservative image consumers and retailers have grown to rely upon as any miscues on packaging may influence sales negatively. Further youth associated cans with preservatives and artificial ingredients. A new brand name may reach the young market more efficiently.