Term Paper: Buzz Marketing

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Buzz Marketing at Kayem

Buzz Marketing: Kayem Foods Al Fresco Chicken Sausage

The intent of this analysis of Kayem Foods' Al Fresco Chicken Sausage marketing strategies is to complete a situation analysis using the company, customer, and competitor framework as first defined by Kenichi Ohmae (1991) in addition to analyzing the company's strengths and weaknesses, its use of traditional marketing programs, this case also analyzes the sausage market and why Kayem pursued a strategy of selling chicken sausage. In addition, the results achieved using the Buzz Marketing campaign are also analyzed. From the analysis completed a recommendation will be provided of whether or not Monkiewicz should implement another buzz campaign for Al Fresco. Specific recommendations of how Monkiewicz should spend the $185,000 will also be provided.

Company, Customer and Competitor Analysis

Kayem Foods is a unique, privately held company specializing in the meat processing, distribution, and retailing industries. In 2004, the company earned $140M in sales, with the majority of sales in branded products. In addition, the company in 2004 reported that 26.6% of their $140M in revenue was generated from sales of private-labeled meat products through supermarkets. Kayem sells a broad range of meat products including bologna, salami, sausage, kielbasa and ham, with hot dogs being the most popular meat products sold. Kayem's product mix is highly eclectic with each product family serving a specific market and price-point requirement in the company's product strategy. The use of MeisterChef and Genoa at the low end of the company's product line are cases in point (Kayem Foods Case Study 2007).

Genoa had specifically been created as a low-price product line within Kayem as well, and has degenerated into becoming a commodity product that retailers would use as a control or loss leader brand, pricing it aggressively below their own brand. Consolidation of distribution channels has also had a significant impact on pricing pressure and fewer distribution partners Kayem can partner with. Given these market dynamics, the use of the Genoa brand fulfills a critical strategic function of buffering or protecting the more profitable, and more differentiated brands from price competition and the consolidation of distribution channels. Kayem has also grown through acquisitions, and retained brands in specific geographic areas due to the highly loyal customer bases in those regions. An example of this the contribution the McKenzie brand contributes to the company with consistent sales to loyal customers throughout Vermont and Upstate New York. At the premium end of Kayem product line is the Al Fresco line of pizza and flavored sausages, both launched in 1999. Since then, Kayem cancelled the pizza line yet continued on with the Al Fresco line that was differentiated by its all natural, low carbohydrate, low fat meal entree with 75% less fat than traditional pork sausage. Kayem's ability to create seven separate flavors at the launch of the Al Fresco Chicken Sausage including roasted garlic, teriyaki ginger, sun dried tomato & Basil, spicy Jalapeno, garden primavera, sweet apple, and sweet Italian. This level of product customization is a unique competitive strength of the company that further fuels the success of the buzz marketing campaign completed. The company's marketing efforts in the past had been for the most part highly traditional, highly conservative and predictable, with limited success as a result. Retailers and distributors have the expectation that meat processors and distributors will orient their marketing strategies to "pull" customers into the stores and purchase products; there is also the expectation that tradition trade-based advertising is the most effective. The Fresco lines' marketing budget is $90,000 which is very small relative to the expenses of these traditional marketing strategies. The prospect of using Bzz Marketing at a price of $47,000 is a gamble in that it invests in social networking-based word-of-mouth techniques for generating buzz about the Al Fresco Chicken Sausages. Predictably retailers and distributors alike are skeptical of the increase in sales for the product being attributable to word-of-mouth techniques. Matt Monkiewicz, Director of Marketing, is faced with the decision of whether to continue investing in buzz marketing strategies despite the expectations of its channel to invest in traditional "pull" oriented strategies. The assumptions of distributor and retailer partners however is that the customer base for Al Fresco Chicken Sausages is identical to the previous generations of products, when in fact this assumption is wrong.

In fact the potential and first adopter customers for the Al Fresco Chicken Sausages are significantly different that the traditional sausage customer. The traditional or mainstream Kayem customer is typically a family, with the larger families having the highest levels of consumption. The prospective customers for the Al Fresco chicken sausages however are health-conscious women in the 25- to 34-year-old age category who purchase the sausages due to their low fat/lean composition. Further this customer segment entertains their friends and family more often than the traditional sausage customer across the entire Kayem customer base. Kayem has also been successful in selling their sausages across the entire spectrum of socio-economic levels, which is a common aspect to both the family-oriented and health-conscious women segments. Southern states represented the majority of demand for sausage followed by Northeastern states, which was is a factor in Kayem being so successful with its mix of products in its native area of the country. All customers for sausages showed a high level of seasonality as well, purchasing 30% of all sausage sold during the three summer months, with breakfast sausage sales peaking during the Holiday Season from November to January.

Of the many competitors Kayem has in all segments its competes in, the most influential are Hillshire Farms, Johnsonville, and Ballpark. Appendix 2 provides a dollar share analysis of competitors at the national level. Of these nationally focused competitors, Hillshire Farms has the most dominant market share in Kayem's strongest region of the country, with 46% share in the Northeast. The competitive dominance of Hillshire has in the past lead to greater price competition as the market, which has seen flat revenue growth during the years of the study t (see Appendix 4 for a market analysis). Regional competitor Perri with 20% market share is also is dominant in the Northeast, yet does not exert as much influence of distribution and pricing practices as Hillshire Farms. One of the most significant differences across competitors is their level of advertising spending in 2004. Appendix 1 provides a comparison of advertising spending and strategies for each of the competitors mentioned in the case which are using advertising as a strategy. Hillshire Farms' $29M yearly advertising budget, the majority of which is in television, is most likely generating significant "pull" of consumers into retailers, a strategy that retailers and distributors tell Kayem to rely on instead of another iteration of their buzz marketing strategy. Next is Johnsonville, spending $13 million with the majority of the budget spent on television, again fostering a strategy of pull marketing, directing consumers to their local retailer to buy the product. From these two nationally-based competitors, the spending drops off quickly, to $1 million in advertising spending by Emeril, the majority of which is in magazines, and $200,000 by Aidell. At $90,000 Kayem's budget for the Al Fresco Chicken Sausage line is small when compared to competitors. Clearly for Kayem the need for being highly creative with their marketing activities and the use of their limited funds is critical; hence the focus on nontraditional marketing approaches.

In terms of Kayem's strengths and weaknesses, the company's legacy and reputation throughout the Northeast is a major component of its brand stability and consistency. The successful integration of acquired brands including McKenzie and as the case study infers (Kayem Foods Case Study, 2007), additional brands is also an inherent strength of the company. The execution of a multifaceted product strategy to use the Genoa brand at the low end of the market to fend off price degradation and the effects of channel consolidation on price is excellent executed. The introduction in 1999 of the Al Fresco Chicken Sausage line and its positioning as a premium product that is unique and differentiated is another example of excellent in strategy execution. Another strength of the company is the ability to manage a non-branded, private label product line that is 26.6% of total revenue for 2004, in addition to the tailoring of distribution channel strategies to support both Kayem branded and private label meat products. The company's ability to sustain distribution channels and shelf space in selected food retailers is also a strength that has been acquired over years of channel strategy execution and work. In addition to all these strengths, the company's ability to execute new product development introductions as evidenced by the creation of Al Fresco Chicken Sausage launch and rapid growth shows the ability to execute marketing strategies as well.

From a weaknesses standpoint, the company has become very provincially focused on the Northeast and is late to move out of this regional focus. Further, the company has major weakness in allowing retailers and distributors to dictate… [END OF PREVIEW]

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