Deli Meat Producer

You have been hired by a producer of deli meats to investigate the cause of its recent decline in market share. The client would like an action plan for resolving the cause of this decrease.

You have been hired by a producer of deli meats to investigate the cause of its recent decline in market share. The client would like an action plan for resolving the cause of this decrease.

1. The Company: - Product: The firm produces plastic-wrapped packages of sliced deli meats at all price points (generic, midrange, and premium). The market share loss is primarily in the premium category. The deli meats carry a well-known brand label. - Price: Products in the premium category carry a higher price and have slightly higher margins. Although price decreases will garner market share, the competitors have maintained prices during the recent loss in market share. -Place (Distribution): The product is sold in grocery stores and delis. Company investigation has shown that grocers have maintained the same amount of shelf facings and space for your product (so the decrease in share was not caused by changes in display or incentives provided to the grocers by competitors). - Promotion: Advertising and marketing efforts have been steady during this period of decline and there has been no noticeable change in the competition’s efforts. 2. The Competition: There are three other competitors in the deli meat industry. Each of these competitors has about 20% of the market share; the client has 40% of the market share. Overall the market (generic, midrange and premium) is growing. The competition uses the same channels to sell its products. 3. The Customer: Although the customer buying premium deli meats has not changed, a survey of the customers indicated a variability in the quality of the product produced by the client. Sometimes the product was better than the competition; sometimes not. This was causing customers to change to the competition.

Isolate the production root cause (blending of variable-quality bins) and evaluate two remediation paths: renegotiating with the supplier for tighter quality specs (lower cost, depends on contract leverage), or implementing in-house sorting (higher cost, operational control). Recommend based on contract status and supplier leverage.