Campbell Soup, Article Review Example

The WSJ article “Campbell Hopes Tastier Soup Leads to Higher Sales” (Ziobro, 2011) demonstrates that Campbell Soup Co. has finally acknowledged its marketing blunders and plans to fight back with a new, well-developed marketing strategy. Campbell Soup Co. is a major player in the consumer market for packaged soups and its main competitor is Progresso while producers of substitute products such as frozen pizza have also been emerging as serious competitors. The company had been facing declining demand for its soup products because the customers didn’t like the new tastes due to lower salt amount.

Campbell’s new approach also involves a change in its market positioning. It seems from the article that the company focused more on certain market segments such as working professionals but now the company realizes that its positioning strategy might have been too narrowed. The company has decided to expand its marketing focus by including segments such as younger consumers and Hispanics. The company has also demonstrated that it has been closely monitoring marketing environment in the markets it competes which may be why it is changing its marketing strategy (The Times) in markets like China and other emerging nations. It seems that the company overestimated its ability to influence consumption patterns in emerging economies like China and now may focus more in identifying consumers’ preferences and responding to them accordingly.

Campbell’s entry as well as its behavior in new international markets tells us a lot about the societal forces that have been influencing companies’ marketing strategies. Campbell’s entry into new markets is also an outcome of globalization that has been easing trade and investment restrictions (Pu?lecki, 2002) among emerging economies such as China. In addition, the consumers now have more choices than ever, thus, they are more likely to dictate terms. This makes it harder for companies to influence consumers’ behavior and force them to do more to meet consumers’ expectations as Campbell’s experience in China demonstrates. Campbell’s initial approach in China might have been marketing oriented but now the company is probably moving towards marketing orientation in which it will attempt to better understand its targeted market segments (Investopedia).

Campbell is aware of the growing competition from both soup manufacturers as well as other easy-to-make meals. This is why the company has been taking steps to differentiate itself from the competition. First of all, the company has increased focus on innovation such as improving the taste of its soup products, changing recipes of 46 soup varieties, and adding 27 new products. The scope of innovation will not be only limited to soup products but will also extend to other products such as V8 beverages and Pepperidge farm baked goods. The company is also increasing its marketing budget by $100 million because it realizes the importance of communicating product value to the consumers in the face of growing competition and offset some of the adverse impact of potential price increases in the near future. The company slashed marketing expenditure in order to offer lower prices to the consumers but it probably overestimated the importance of price to its targeted consumers as compared to the taste and quality of the products.

The announcement by the company’s CEO Denise Morrison shows that the new marketing plan and competitive strategies were developed at the management level and the leadership realizes that the new marketing strategy will be a long-term commitment. As far as growth strategies are concerned, the management is focused upon two of the four strategies mentioned in the Ansoff’s Product-Market Expansion Grid (VectorStudy). Campbell is pursuing market-penetration strategy because it wants to win back old customers by improving the taste of its soup products and also add new ones by targeting more customer segments in existing markets such as the U.S. The company is engaged in product-development strategy because it plans to add 27 new products to its product line in order to offer more choices to consumers and possibly increase its market share in the process.

The article also allows us to perform a SWOT analysis on the company. The company’s strengths include established brands, market leadership position, financial resources, innovative culture, and a diverse product range. The company’s weaknesses include leadership which failed to respond to changing trends in a timely fashion and misunderstood the preferences of customers in the past and weak sales trend. The opportunities include targeting more customer segments with significant buying power such as Hispanics and younger consumers and joint ventures and acquisitions in international markets. The company’s threats include rising costs, growing competition from both Progresso and other low-cost meal substitutes, weak economy,and higher-than-expected sales decline due to higher prices.

The company realizes that costs will rise and it has also observed that consumers are not particularly interested in the lowest prices at the expense of quality. This is why it is taking numerous steps to further differentiate itself from the competition. One course of action will be to offer more varieties and better taste. The second strategy will be to offer products in more appealing packages. The company will also offer money back guarantee to the consumers to encourage them to try higher-sodium soup products. The company’s proposed actions demonstrate that it took steps to investigate the declining trend in soup sales through market research and discovered that taste was one of the primary concerns expressed by consumers. This is why its new strategy places a huge emphasis on taste and greater choices to consumers. This is also an example of the importance of listening to the consumers through market research to better understand their needs and preferences. The intensity of competition often forces companies to become more consumer-oriented.

The article also shows that globalization often forces companies to take different approaches in different markets because of different market characteristics. Campbell has decided to take a different marketing approach in China and other emerging economies because it has realized these markets are quite different from the U.S. and, thus, require different approaches. Campbell’s management also realizes that the new initiatives may not yield immediate results but it is taking a long-term approach to performance. The company expects earnings to decline by up to 6% in the fiscal year 2012 but it understands that failure to respond to changing trends may impose even higher costs in the long-term. The article also teaches us about the importance of being a flexible organization no matter what the size of the organization is because market conditions and consumers’ preferences continue to evolve.

Reference

Investopedia. (n.d.). Market Orientation. Retrieved September 4, 2012, from http://www.investopedia.com/terms/m/market-orientation.asp

Pu?lecki, Z. W. (2002, March 23-27). The Reduction of International Trade Barriers in the Process of Globalization. Retrieved September 4, 2012, from http://isanet.ccit.arizona.edu/noarchive/puslecki.html

The Times. (n.d.). External Environment Theory. Retrieved September 4, 2012, from The Times 100 Business Case Studies: http://businesscasestudies.co.uk/business-theory/external-environment/the-external-environment.html

VectorStudy. (n.d.). Product Market Grid. Retrieved September 4, 2012, from http://www.vectorstudy.com/management_theories/product_market_grid.htm

Ziobro, P. (2011, July 12). Campbell Hopes Tastier Soup Leads to Higher Sales. Wall Street Journal (Online), p. n/a. Retrieved September 4, 2012, from http://ezproxy.nu.edu/login?url=http://search.proquest.com/docview/876174279?accountid=25320