The fifth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY 5

Reasons for fall in market share and suggestions for improvement

Mr. Abraham has recently joined as the Production Manager of Super Food Products Ltd. an Indian subsidiary of a multinational food manufacturer and having an annual turnover of Rs. 500 crores. His first major assignment in the company was to give a new marketing thrust to the several leading known brands of the company whose market share was continuously eroding in the face of growing competition. To start with, he decided to concentrate on two major brands, Power-pack Instant Milk Powder for family and Tomato ketchup with an annual turnover of Rs. 80 crores and Rs. 100 crores respectively. These accounted for a market share of 47% and 28% respectively for the financial year 2011-12 as compared to 68% and 45% for the financial year 2008-09. In spite these slide in the market shares, these brands could retain higher consumer preference and loyalty vis-à-vis other competitive brands.

With a view to having a better appreciation of promotional themes, Mr.Abraham convened a meeting with the advertising agency, Progressive Advertising Ltd. The meeting generated several new ideas on how to push brands up in the consumer recall and preference.

In the light of the above, answer the following questions:

(i) List out the possible reasons why the company has suffered a fall in its market share?

(ii) If you were the Product Manager, what would be your marketing strategy for arresting the trend of slackening sales in the light of the meeting with the advertising agency?

Answers:

(i)  Possible reasons for fall in the market share are:

- Increased domestic and foreign competition

- Shifts in consumer tastes

- Increased price cutting and better dealer margins by rivals

- Complacency on the part of the top management, taking leadership position in the market for granted

- Technological advances through better R&D by competitors

(ii) As a Product Manager, I would focus on the following marketing strategy:

- Find new users- convince people who do not consume milk powder and tomato ketchup to start using the same under market penetration strategy

- New users- discover and promote new users for the products

- Continuous innovation through better R&D

- Increased distribution effectiveness

- Maintain price level or reduce the same through cost cutting 

Source: Suggested Answers - June 2012 by ICAI