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Chestnut Foods Case Study Solution
Chestnut Foods Case Study Help
Chestnut Foods Case Study Analysis
The following area concentrates on the of marketing for Chestnut Foods where the company's customers, competitors and core competencies have examined in order to justify whether the decision to release Case Study Help under Chestnut Foods brand would be a possible choice or not. We have actually to start with looked at the kind of customers that Chestnut Foods deals in while an examination of the competitive environment and the company's strengths and weaknesses follows. Embedded in the 3C analysis is the reason for not releasing Case Study Help under Chestnut Foods name.
Chestnut Foods consumers can be segmented into 2 groups, final consumers and industrial consumers. Both the groups utilize Chestnut Foods high performance adhesives while the business is not just associated with the production of these adhesives however likewise markets them to these client groups. There are 2 types of items that are being sold to these possible markets; anaerobic adhesives and immediate adhesives. We would be concentrating on the consumers of instant adhesives for this analysis given that the market for the latter has a lower capacity for Chestnut Foods compared to that of immediate adhesives.
The total market for instantaneous adhesives is around 890,000 in the United States in 1978 which covers both customer groups which have been identified earlier.If we take a look at a breakdown of Chestnut Foods prospective market or client groups, we can see that the business sells to OEMs (Initial Equipment Makers), Do-it-Yourself consumers, repair and upgrading business (MRO) and producers handling items made of leather, plastic, wood and metal. This variety in customers suggests that Chestnut Foods can target has various alternatives in terms of segmenting the marketplace for its brand-new item especially as each of these groups would be needing the same type of product with particular changes in need, amount or product packaging. Nevertheless, the customer is not price sensitive or brand name mindful so introducing a low priced dispenser under Chestnut Foods name is not a recommended alternative.
Chestnut Foods is not just a producer of adhesives however enjoys market leadership in the instantaneous adhesive market. The company has its own competent and competent sales force which adds value to sales by training the business's network of 250 suppliers for facilitating the sale of adhesives. Chestnut Foods believes in unique circulation as indicated by the truth that it has selected to sell through 250 distributors whereas there is t a network of 10000 suppliers that can be explored for expanding reach through suppliers. The business's reach is not limited to North America just as it also delights in worldwide sales. With 1400 outlets spread out all across The United States and Canada, Chestnut Foods has its in-house production plants instead of utilizing out-sourcing as the favored technique.
Core skills are not restricted to adhesive production only as Chestnut Foods also focuses on making adhesive dispensing devices to assist in making use of its products. This dual production strategy gives Chestnut Foods an edge over rivals considering that none of the competitors of giving equipment makes instant adhesives. Furthermore, none of these competitors offers straight to the customer either and makes use of distributors for connecting to customers. While we are looking at the strengths of Chestnut Foods, it is important to highlight the company's weaknesses.
The business's sales staff is skilled in training suppliers, the truth remains that the sales team is not trained in selling equipment so there is a possibility of relying greatly on distributors when promoting adhesive devices. However, it must likewise be noted that the suppliers are showing unwillingness when it concerns offering devices that needs maintenance which increases the obstacles of offering equipment under a specific brand.
The company has actually products aimed at the high end of the market if we look at Chestnut Foods product line in adhesive equipment particularly. The possibility of sales cannibalization exists if Chestnut Foods offers Case Study Help under the very same portfolio. Provided the fact that Case Study Help is priced lower than Chestnut Foods high-end line of product, sales cannibalization would absolutely be affecting Chestnut Foods sales profits if the adhesive devices is sold under the business's trademark name.
We can see sales cannibalization impacting Chestnut Foods 27A Pencil Applicator which is priced at $275. If Case Study Help is launched under the business's brand name, there is another possible danger which might lower Chestnut Foods profits. The fact that $175000 has been spent in promoting SuperBonder suggests that it is not a good time for releasing a dispenser which can highlight the fact that SuperBonder can get logged and Case Study Help is the anti-clogging solution for the instant adhesive.
Additionally, if we look at the market in general, the adhesives market does disappoint brand name orientation or rate awareness which offers us two additional factors for not releasing a low priced product under the company's trademark name.
The competitive environment of Chestnut Foods would be studied via Porter's five forces analysis which would highlight the degree of competition in the market.
Bargaining Power of Buyer: The Bargaining power of the buyer in this industry is low particularly as the buyer has low knowledge about the product. While companies like Chestnut Foods have actually handled to train distributors regarding adhesives, the final consumer depends on distributors. Roughly 72% of sales are made directly by manufacturers and suppliers for instantaneous adhesives so the buyer has a low bargaining power.
Bargaining Power of Supplier: Offered the fact that the adhesive market is dominated by three players, it could be said that the provider takes pleasure in a higher bargaining power compared to the buyer. The truth remains that the provider does not have much influence over the buyer at this point particularly as the buyer does not reveal brand recognition or cost sensitivity. When it comes to the adhesive market while the purchaser and the maker do not have a significant control over the actual sales, this indicates that the supplier has the higher power.
Threat of new entrants: The competitive environment with its low brand name commitment and the ease of entry shown by foreign Japanese competitors in the instantaneous adhesive market suggests that the market permits ease of entry. However, if we take a look at Chestnut Foods in particular, the business has double abilities in terms of being a maker of immediate adhesives and adhesive dispensers. Possible threats in equipment dispensing market are low which reveals the possibility of producing brand awareness in not only instant adhesives but likewise in dispensing adhesives as none of the market players has handled to position itself in dual abilities.
Danger of Substitutes: The risk of substitutes in the instant adhesive market is low while the dispenser market in particular has substitutes like Glumetic idea applicators, built-in applicators, pencil applicators and advanced consoles. The truth remains that if Chestnut Foods presented Case Study Help, it would be indulging in sales cannibalization for its own products. (see appendix 1 for framework).
Despite the fact that our 3C analysis has provided different factors for not launching Case Study Help under Chestnut Foods name, we have a recommended marketing mix for Case Study Help provided below if Chestnut Foods chooses to go on with the launch.
Product & Target Market: The target market selected for Case Study Help is 'Motor lorry services' for a number of factors. This market has an extra development potential of 10.1% which may be an excellent enough specific niche market section for Case Study Help. Not only would a portable dispenser offer benefit to this specific market, the truth that the Diy market can likewise be targeted if a drinkable low priced adhesive is being sold for usage with SuperBonder.
Price: The recommended cost of Case Study Help has been kept at $175 to the end user whether it is sold through distributors or by means of direct selling. A rate listed below $250 would not need approvals from the senior management in case a mechanic at a motor vehicle upkeep shop requires to buy the item on his own.
Chestnut Foods would only be getting $157 per unit as shown in appendix 2 which provides a breakdown of gross profitability and net profitability for Chestnut Foods for introducing Case Study Help.
Place: A distribution model where Chestnut Foods straight sends out the item to the regional distributor and keeps a 10% drop delivery allowance for the distributor would be used by Chestnut Foods. Given that the sales team is currently engaged in selling instant adhesives and they do not have expertise in offering dispensers, involving them in the selling process would be pricey specifically as each sales call expenses approximately $120. The suppliers are currently selling dispensers so offering Case Study Help through them would be a favorable option.
Promotion: Although a low marketing budget should have been assigned to Case Study Help however the fact that the dispenser is a development and it requires to be marketed well in order to cover the capital costs sustained for production, the suggested advertising plan costing $51816 is suggested for initially introducing the item in the market. The prepared ads in magazines would be targeted at mechanics in automobile upkeep shops. (Recommended text for the ad is displayed in appendix 3 while the 4Ps are summed up in appendix 4).
