The Concept of the Marketing Mix - of Luigi's Family Food - Case Study Example

? Luigi’s Family Food Case The food industry has seen an immense transformation in the past two decades with the technological advancement and their respective implementation to satisfy the consumer demands in a sphere of highly competitive market infested with several players delivering the same product to the consumer. In Chicago the retail food stores have a great demand for frozen pizza which is one of the most frequently purchased items and has preserved its market share through the changing nature of the processed foods industry and even grown in popularity. Around two dozen firms compete in the frozen pizza sector to dominate over the market share (Holocomb). Luigi’s Family Foods Pizza is also a frozen pizza firm in Chicago which has reputation in the market but recently the firm has encountered a sharp decline in the market sales and share. Marketing director of the company, Reggie Pantazi chalks out some future differentiation strategies which would help the company in reversing the declining trend of their market share and evolve as a leading player in the frozen pizza market. The paper in the initial stage will discuss the major competency of the firm and elucidate the competitive and consumer environment of the firm and then will discuss the pros and cons of the strategies adapted by Reggie. Competencies of the firm, competitive and consumer environment Luigi’s Family Foods is a medium sized company established in Chicago with a diversified portfolio of grocery chains, line of frozen pizza distributed regionally in the Midwest. The firms delivers pizzas with moderate qualities which are mainly available in standard varieties like all cheese, cheese and pepperoni, and cheese and sausage) with various sizes as 5 inch snack pizza, 10 inch family-size pizza, and a 14 inch deluxe pizza. The company has involved in the marketing of the products through several advertising campaigns but there has been sharp decline in the sales figure of the firm for which many grocers threatened to discontinue the Luigi’s Family Pizza (Luigi’s Family Food Case). Among the chief competitors recently The Pizza Company introduced a new brand, DiGiorno with a crust that rises for the first time when the pizza is baked in the home, thereby providing the same fresh-baked taste as carry-out pizza and thereby creating a competitive edge(Luigi’s Family Food Case).The market for the frozen pizzas have categorized into 4 categories like the regular pizza (e.g. the Tombstone brand), premium pizza (e.g. DiGiorno, commanding a higher price due to the quantity and quality of ingredients and “eating experience”), gourmet pizza (e.g. Wolfgang Puck’s specialty toppings pizzas), and the less expensive “fill-‘em-up” brands (e.g. private label). Although the traditional toppings are the America’s favorite, but still the specialty toppings have become more popular through companies like Wolfgang Puck Foods. Among the other major competitors are Kraft’s DiGiorno and Schwan’s Freschetta which also possesses solid market shares (Holocomb). Evaluation of the five options as proposed by Reggie Pantazi The marketing manager of the pizza company, Reggie Pantazi sorted out five different policies in mind to accelerate the sales of the company. The policies which were formulated by Pantazi were advertising, extending health line, establishment of premium line, pizza pockets, and establishment of supply food service companies. But for fetching optimized results the company needs to formulate and implement a perfect blend of marketing mix policies. Marketing concept and marketing Mix policy The marketing concept plays a predominant role in chalking out the best decision that the firm must adapt in order to maximize its profit motives subject to the budget constraints. The firm has to think from the production angle as well as the sales want. In the production angle keeping the customers want as the baseline the firm should realize its potential to develop the product. From the sales angle certain things have to be kept in mind from the customer point of view. Customer satisfaction and focus on customer needs before product development should be the primary goal and then the emphasis should be on the realization of profit by successfully satisfying the customer needs over the long term (Borden 9) With these fundamentals in mind the real task of the marketing manager is to develop an optimal marketing mix policy. The 4 P’s of marketing should be kept in mind: a) product, b) price, c) Promotion and d) place. These will include product planning, branding, personal selling, distribution, fact finding, and analysis (Borden 9-10). The marketing mix strategy can be depicted in the diagram as follows: The Marketing Mix Fig.1 The Marketing Mix (n.d.) On the light of the concept we will discuss the pros and cons of the strategies opted and will try to suggest the best option required for the company to adapt in the present situation. Advertising pros and cons Agenda Reggie stressed on the advertising on the radio and the TV in order to expand the frozen pizza category and the usage of the 5 inch pizza as a substitution of regular butter and jelly sandwich or some other snacks in order to satisfy the after school hunger of children and teens. The cost of campaigning will be costing around $500, 000. Pros Family fun is the prime motive of the company and for the enhancement of the motto rampant advertising is required for carrying out successful business (Luigi’s Pizza and Fun Center).If the substitution of the product through advertising is introduced successfully then it will be regarded as a successful product differentiating strategy as well as a substitution policy. Cons The budget constraint is a big problem to the firm (Luigi’s Family Food Case). Existence of potentially strong competitors spending such a huge amount of money in advertising in order to capture the market would not be a feasible option. It may result into further worsening of the financial health of the organization. Health Line Extension pros and cons Agenda The second thought was of extending the product line by the creation of a version of 10 inch pizza which would use low fat and cholesterol and low costing cheese substitutes. Pros With current financial difficulties the emphasis on a low cost nutritional cheese substitute is an advantageous action of cost cutting mechanism which is required by the firm. At the same time, delivering product with enriched nutritional values will add a competitive edge in the obesity conscious environment of Chicago. Premium Line pros and cons Agenda In order to capture the market, a demand realization for the gourmet premium priced pizza has been identified with plans for producing pizzas which would be topped with trendy specialty items such as sun dried tomatoes, goat cheese, pine nuts, arugula, and pesto and so on (Luigi’s Family Food Case). Pros Premium priced gourmet pizza is a highly demanded pizza product in Chicago. It will capture a huge customer base with high revenue generation for its premium price. Cons The market is highly oligopolistic with gourmet pizza producing giant players like Wolfgang Puck Schwan’s Freschetta, Kraft and so on. So playing this Bertrand game policy following the strong players’ prior conjecture in the market will not give the firm a first mover advantage. Pizza pockets pros and cons Agenda Another innovative idea which was identified was that of launching a totally new product to the market labeled as ‘pizza pocket’ which are microwavable small pockets of dough with pizza filling (tomato and cheese, tomato, cheese and sausage etc) and are appropriate for a quick hot meal. Pros As the product would be new to the market the firm can carry on development process on the product devoid of very expensive R & D processes and would be appropriate for quick hot snacks or mini meals (Luigi’s Family Food Case). Cons Revenue generation will be less. Might not cover the full cost of production. Supply Food Service Companies Pros and Cons Agenda Target location for the optimum selling was identified in the cafeterias in the Chicago area public schools. Pros School canteen systems have choices of one or two hot lunch options available for purchase purposes. This will attract customers, i.e, the majority target customers will be the school children. The great feature of this option would be that the sales will not be to the end users. So there would be no requirement for advertisement. It would be definitely a profitable venture as it has a massive potential as compared to the current situation (Luigi’s Family Food Case). Cons The fact is that the revenue margins would be smaller than the retail chains. Positioning statement The firm is having a crisis position at this current point of time. Thus spending a huge amount of money in advertising in order to capture the market would not be a feasible option. Producing nutritionally enriched low fat less expensive product would also not be a feasible option as already big players are persistent in the market with such products. For the same reasons the idea of introducing premium priced gourmet pizza and pizza pockets would not also be feasible. Targeting a low cost area like the school cafeteria would be the most profitable option as it involves no advertising costs and at the same time would attract a large customer base. This would lead to primary accumulation of wealth and accelerate the growth of the company. After that it may follow the option of introducing new product as a product differentiation strategy like advertisement and promotion to capture the market further. This will be the best possible marketing mix strategy of the firm. References 1. Holcomb, Rodney, Food Industry Overview: Frozen Pizza, n.d., May 24 from, http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2763/FAPC-103web.pdf 2. Luigi’s Family Food Case (n.d.) 3. Luigi’s Pizza and Fun Center, n.d., May 24 from, http://www.luigispizzaandfuncenter.com/index 4. Borden, Neil H, n.d, The Concept of the Marketing Mix, May 26 from: http://www.commerce.uct.ac.za/managementstudies/Courses/bus2010s/2007/Nicole%20Frey/Assignments/Borden,%201984_The%20concept%20of%20marketing.pdf 5. The Marketing Mix, n.d., May 26 from: http://www.netmba.com/marketing/mix/ Read More