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McCormick Gourmet

Essay by   •  April 1, 2016  •  Case Study  •  938 Words (4 Pages)  •  1,185 Views

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Driving innovative products: New products launched in the past three years accounted for 8% of sales in 2014. Consumer insights drive our product development work and we have 400 research and development professionals around the world.

Innovation: Within a year of the launch, McCormick's skillet sauces have a

10% share of the category. The McCormick Gourmet launch continues to do

well. Roughly 80% of retail distribution points have converted over to the new

packaging, and consumption for this line was up 4% during 2Q15. New

innovation plans for the back half include slow cooker sauces, gluten free

recipe mixes, and Kitchen Basics stock cubes.

Building brand equity: Management called out the recent Grill Mates

campaign as a prime example of how this works well. 2Q sales of this line

grew 9%, and McCormick expects the momentum to continue through grilling

season. Management attributes the success to in-store execution, new TV

advertising, and the flavor line-up. The company is also increasing digital

relevance. The McCormick website is now in the top 40 destinations for

consumers to get recipes (up from 175 in 2012).

Leveraging category leadership and fine-tuning category price points:

o Retail price points: The company has placed a sharper focus

on retail price points and category management. McCormick

believed that retailers were leaving money on the table with

category price management—in many cases the value offerings

were priced below Private Label. McCormick has been partnering

with retailers on shelf price adjustments, and the company is very

encouraged by the results for both parties.

In-roads from smaller competitors hurt McCormick's

share in 2014. In early 2014, the share losses were

particularly pronounced in the Southeast U.S. One of

McCormick's first actions in 2014 was a realignment of

the sales force and putting more resources here. Many

of the in-roads were new competitor gourmet lines that

McCormick believes were not priced high enough.

Pricing optimization tools: In order to accelerate pricing

optimization, McCormick plans to launch a new comprehensive

category management tool by the end of 3Q. The company is

creating a dedicated team to work with this. The tools focus on

spices and seasonings (but have been applied to other lines

such as Recipe Mixes). The tool spans everything from Premium

and Gourmet to Private Label and Value offerings.

McCormick has used its analysis to adjust strategy

around specific products. The company shifted

promotional support to ~12 key spice and seasoning

items that McCormick found to be particularly price

sensitive. The redirection of trade promotion went

toward more price elastic items where there were many

competitor options and items that consumers bought

more often. One example of this type of item is Vanilla

Extract. McCormick could shift dollars out of Pumpkin

Spice Extract to support this. Pockets of strong growth in

international markets

New products launched in the past three years accounted for 8% of sales in 2014. Consumer insights drive our product development work, which has led to the introduction of gluten-free recipe mixes and the expansion of salt-free seasoning blends to inspire healthy choices. For price conscious consumers, we added squeeze pouch ketchup in China and Grill Mates® burger seasonings and value-priced grinders in the U.S. New skillet sauces meet demand for convenience in the U.S., and we introduced gourmet cooks in the U.K. to new FlavorLock™ herbs. In our industrial business, sales contribution from new products was particularly strong in 2014, led by snack seasonings and flavors for new restaurant menu items. Across our consumer and industrial business, new products increase our ability to flavor all types of eating occasions, from preparing a meal at home to fine dining to grabbing a quick snack. In 2014 we increased our investment in brand marketing support to US$227 million, and are planning further increases to create momentum for future growth. While a portion of this spending is devoted to creating awareness and trial for new products, the majority is aimed at building consumer equity for our leading brands in markets around the world. We are emphasizing product freshness, our role in preparing healthy food and the ability of a homemade meal to bring people together.

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