UC Case Analysis

UNITED CEREAL: LORA BRILL’S EUROBRAND CHALLENGE

CASE ANALYSIS

Introduction

The case is focusing on European division of a giant multinational breakfast food company, which describes a launch decision for a new cereal product. United Cereal (UC) was established in 1910 by Jed Thomas. It was known in the industry, eventually diversified into snack foods, dairy products. By 2010 UC was a $9 billion business, but the breakfast cereals still accounted for one-third of its revenues. As the breakfast cereal trend soon set in. It was

very necessary for the company to launch a new product. The company had strong values and policies, which it needed for its managers to follow. Breakfast cereal market was a potential market and there were several major competitors. With the growing demand of the ready to eat cereals, the company was now in a highly competitive industry. There are three main questions that one needs to answer in order to analyse the case properly and reach to a clear understanding. Question 1: How should Brill respond to Michel’s mail? Should she launch HBS or not? Launch and Delay of HBC in France Launch of HBC in France

1. According to the Lyon test for both

1. Looking from the given data through

September and October targets have

Sept-Oct targets exceeded the target

 been exceeded quite substantially

But the November shipment has not

2. Sweeter blueberry version which was market tested to a limited level

met the targets 2. The form or consistency is less than

showed a 64% intention of

30% from the Lyon test and that

repurchase which is more than the

doesnot work in the favour

minimum 60% level that is required 3. From the Attitude Data, While 83%

3. The HBC didn’t meet the target during market research of a particular

are in favor of taste of cereal and

 product therefore more study needed

nearly 70% are in favor of taste of

 before the launch of product.

fruit with the perception of health

4. Market study was not performed to

aspect being 90% positive towards

which the market potential was not

the new product

identified therefore it was a risky

4. The competitor in the segment market is Kellogg’s for France. 5.

Delay in Launch of HBC in France

task 5. Brand awareness plays an vital role

They have second mover and first

in launching of the product to which

follower advantage over other

awareness has to be increased before

competitors

launching of the product As

6. In this segment of people are more

advertisements costs will increase to

health conscious and HBS is being

increase the awareness if product has

 positioned as a healthy product.

to be launched immediately

7. There is a possibility of leap frogging by the competitors as seen

 be only 25% and so the spending on

from the past

the marketing and advertising will

8. Since United cereals is already in the healthy breakfast segment in France hence this product will be more of product extension rather than a new product launch which will save huge Launch and marketing costs 9. With Euro operations having 25% more operations cost than US operations and launching a Euro  brand will again increase these costs and hence justification of SG&A will be a problem in Euro launch

Entry Barrier for this Market



6. The repurchase intent is also found to

High Competition

have to be higher and so will prove to be an expensive affair 7. The market size and potential is also unclear



Market Intensive



Access to huge Distribution network



High Reach

Question 2: Does UC represent an example of a centralised or decentralized international management?

This question can be well answered when we try to see the organisation as a whole and understand what arguments help us qualify United Cereal as centralised and what as decentralised. Centralized Processes 

Country managers had decision

Decentralized Processes 

 powers but they had to follow UC way. 



Product customization was by country managers



The launch Strategies were country specific.

Vertical communication structure is followed in the company



Brand was country specific

Marketing budget limit exceeding



Marketing Strategies was done by Country

to get the approval.

managers

The differences from above bend more towards decentralized management so we need to see the organisation structure to reach to a clear conclusion.

Also from the case it can be seen that the watchwords of UC : commitment, diligence and loyalty (page 3) would be diluted if not central control. Also from the organisation structure from below,

Corporates

Review and approval layer

Veryical VP/B

Communication

UC Europe Approvals

rill

Launch CM

Subsidiary Market Research Launch Strategy Product Test marketing

Development

Shows that even if the launch happens at the CM level/ Subsidiary level along with the other  processes, the approvals and review are to be obtained from the higher up in the hierarchy. Thus proving the organization structure to be a highly centralized one rather than a decentralized. Question 3: Should HBC become Euro Brand?

Launch of Euro Brand 

Product launch cost takes

Delay of Launch of Euro brand 

$20million and launching of same  product reduces the SG&A

Difference in taste endure(Euro customers)



Country Managers powers will be

expenses, so a potential savings

demotivating and accountability can be



Leapfrogging would be avoided

decreased.



Consumer tastes are converging



Huge competition



$20million could be lost



CMs are not used to frequent new  product development and are instead used to product extensions so a potential issue

From the above arguments tough the delay sounds more weighted, the launch sounds a  potential option too.

Conclusion

 Now in the light of the above analysis the case puts one in the dilemma that on one hand, the individual launch in France has all the possibility of getting rejected as Brill can say that since the CM did not follow the UC way (completely), as no extensive research done, the launch is to be delayed. On the other hand, there is this idea floating in her mind to obtain economies of scale and she wants Europeanization with the launch of Euro brand.