Entrepreneurship & Small Business Management Duerr's Jam - Essay Example

Entrepreneurship & Small Business Management - Duerr's Jam Introduction: A start up business is affected in a number of ways by the environment in which it operates. Environmental conditions can hinder or promote success. Weather is an important environmental factor influencing the location as well as the demand of products such as air-conditioners and outdoor swimming pools. Competition, legal requirements and tax structure are a few of the many other critical environmental factors. Every entrepreneur seeks profits; therefore, all factors affecting the financial picture are of great concerns. State and local governments can help or hinder a new business by forgiving taxes. The best time to evaluate environmental conditions is prior to making a location commitment. Many states offer company location incentives. One strategy is to establish enterprise zones in order to bring jobs to economically deprived areas. Sponsored by local city/country governments, these zones lure businesses by offering regulatory and tax relief. In exchange for locating or expanding in these areas, eligible business firms receive total exemption from the property taxes normally assessed on a new plant and equipment for three to five years. Locating in an enterprise zone will not solve problems created by poor management or make up for an ill-conceived idea. However, enterprise zones can be used as catalyst to help, jump-start a small firm. Personal Preference of the Entrepreneur: As a practical matter, many entrepreneurs tend to discount customer accessibility, business environment conditions, and resource availability and consider only their personal preference in locating a business. Often, their personal preference is their home community; the possibility of locating elsewhere never enters their mind. Background: Fred and Mary Duerr founded their jam- and marmalade- making business in Heywood, Lancashire, in 1881. Mary prepared the preserves in her kitchen and using her own family recipes, while Fred delivered the filled jars by handcart to the local Co-operative Society and other shops. In 1884 production was moved into a factory building at Guide Bridge, North Manchester; but the business expanded so rapidly that in 1890 Fred commissioned a new model jam and marmalade factory at Old Trafford. The site there is still occupied by Duerr's, now under the direction of Fred and Mary's great-grandsons and his two sons. Business Description: F Duerr & Sons was established in 1881. It deals in food conservatives which include products like jams including reduced sugar jams; conserves; fruit spreads; marmalades and reduced sugar marmalades; peanut butter and fruit curds as well as condiments such as apple sauce. The brand is most prominent within the marmalade sector, with almost 6% market share, and 3.2 million in sales. However, its share has declined from almost 9% in the year 2000 to 5.5% in 2004, representing a decline in sales of 42% over the four year period. This is at a much faster rate than the category as a whole of 6.5%. In April 2003, Duerr's introduced Half Sugar marmalade which contains half the sugar but 50% more fruit, which is suitable for diabetics and can be used as part of a calorie controlled diet. In December 2004, Duerr's launched a range of premium marmalades under the name Mary Berry, a well-known cookery writer. The range comprises three flavors: orange & apricot, ruby red grapefruit, and thick cut marmalade with muscovado sugar. The company is attempting to attract new users with new product launches within the marmalade category. Within the jam sector, Duerr's accounts for just 1% of jam sales, less than 1 million in sales. The company is also represented within the peanut butter sector with the Kernel King brand which accounts for just 1% of sales. It is the only other branded lemon curd within this category, accounting once again for the same percentage again of this sector's sales in 2004. Duerr's claims to be the first UK preserves manufacturer to support Fairtrade. In September 2003, the company produced Strawberry Conserve and Fine Cut Orange Marmalade made with Fairtrade sugar from Malawi. These jams, which bear the Fairtrade Mark, became available in supermarkets in October 2003.In November 2004; the company launched a range of low-carb fruit spreads under the Duerr's brand to capitalize on the overwhelming popularity of the Atkins, low carbohydrate diet. The spreads have no added sugar, but contain the sweetener sucralose. They are classified as having a net carb content of just 5 grams per 100 grams. The spreads are positioned as being a healthy alternative to standard jams, because of their no added sugar, high fruit content, containing between 50% and 65% fruit. They are available in five flavors: strawberry, raspberry, apricot, blackcurrant and orange. This range of low carb spreads is evidence once again of the increasing diversification within the sweet spreads market, with more products aimed at the health-conscious consumer. There is increasing concern over rising obesity levels and the rise in the number of people with type 2 diabetes, which is partly caused by poor diet and excessive consumption of sugar. Other jam varieties include Seriously Fruity Jams, Fruit jams, "Fruit Farm" Preserves, and three Organic Preserves and two organic marmalades. Aims & Objectives: -> To make Duerr & Co a more modern, competitive and efficient business. -> To increase the net profit with a huge margin. -> Deliver customer satisfaction. -> Deliver value to the shareholders. Strategies : -> The best strategy to increase the profits is to focus on marmalades market as it has a huge potential for growth. -> In order to increase the level of customer satisfaction simultaneously with an eye on cost-cutting, it is advisable to enhance the quality provided and also enhancing the quantity of the products to a certain extent. -> Increase in the promotional activities is highly required looking at the current position of the firm in the market. Although a major cost involvement is required here to do so, still looking at the current status of the firm in the market, it is highly recommended. -> Increase in overseas business. SWOT Analysis: F Duerr & Co specializes in the manufacture of branded and private label jams - marmalades, peanut butters, fruit curds, fruit fillings, condiment and mincemeat. It has the reputation of being an oldest remaining family owned preserves manufacturer. It also has an international presence, which is evident from the list of its distributors in the various parts of the world. -> Strengths: . Duerr & Sons holds a position as the dominant marmalades provider in the food industry in various countries. . It is one of the oldest and biggest preserves manufacturers which has witnessed a large number of loyal customers since its existence. . Approximately 40% of the company's sales are through its own label. . A further modification of the positioning of the firms private label could improve the representation at entry price points strengthening the groups private label hold on the market. -> Weakness: . Duerr & Co is still extremely diverse. The firms, considering recent attempts realign towards its core functions still have a number of diverse operations that are loosing money for the group. . The group's quality services continue to perform below standards and it had faced problems working on improving it. It has become very difficult for the firm to retain its existing customers and much capital involvement is required in promotion in order to attract new customers. . Also the group is still yet to completely rationalize its low performance operations in Europe and Asia Pacific with many operations not utilizing retail space effectively in these markets. . Sales currently cannot be increased without capital expenditure and with products outside the group's traditional core selling poorly any gains are removed because of inefficiencies in inventories and retail space. -> Opportunities: . Enhance differential pricing - Duerr should enhance its pricing differential according to the local competitive landscape. This would probably push prices up in certain neighborhood stores, likely without significant market share loss, and allow a more competitive price position in the key locations where Duerr is trading head-to-head with the super markets. . Space utilization - Although Duerr has selectively re-entered certain leisure product categories, it has yet to utilize fully the space vacated when it could not perform well in maintaining its sales and profits margin in selling the jam. This represents a big lost sales opportunity. It is likely that marmalades were partly contrived with a view to filling this vacant space, with damaging consequences, and therefore a substitute for this line is required amongst others. - > Threats: . Consolidation in the preservatives industry. The food industry is extremely competitive and as competition becomes more intense a trend of consolidation is likely to spread throughout the industry. . Customer confidence/acceptance. Much of the Duerr's current strategies are dependent upon continued customer acceptance of the firm's core product lines. The company's brand identity has been affected because of the introduction of numerous product lines that have worked to dilute the Duerr's brand. Such recent actions have increased the threat as to whether consumers will continue to buy the company's products into the future. Marketing Analysis: Here we will consider the 4P's of marketing of this firm. -> Product: There are a large number of products in which Duerr & Sons deals with. The major consideration should have been to fill up the product line wherever a gap is being formed. Its range of products include a large number of varieties under the following heads: a) Retail Jam/Marmalade/ Lemon Cheese b) Retail Condiments c) Retail Peanut Butter d) Retail Mincemeat e) Reduced Sugar High Fruit Spreads f) Portions g) Miniatures h) Pie fillings i) Catering Jams j) Industrial k) Miniature Preserve Gift Packs l) Honey & Maple Syrup portions and m) Ocean Spray -> Price: The general competition of the Duerr's & Sons has a price advantage in its field despite inferior buying power because it sells the products through lower cost space with less dedicated service cost. -> Place: In recent years Duerr & Sons have seen a tremendous growth in the international food sector. Many more promotional activities should be considered in order to expand the overseas business. -> Promotion: The '3 for 2' strategy has been the bedrock of the Duerr promotional effort for many years, coupled more recently with the Advantage Card. This allows for a planned schedule that can be pre-funded by suppliers and allows Duerr to guide points redemption to maximize sales of higher-margin product. Review: The year covered by this report has been a period of intense change for Duerr. In spite of some challenging competition and a downturn in the consumer economy, much of the work identified as necessary to make the business more modern, competitive and efficient has been successfully implemented.They have the right strategy in place under exactly the right management team - a team which is doing a great job in a very difficult market.It can be concluded that Duerr has witnessed enormous strides forward in the past few years. REFERENCES: Tremblay Yvonne. 2003: The Complete Guide to Jams Jellies and Preserves - Page 113. Alpha Books. Wilson, Anne. 1999: The Book of Marmalade: It's Antecedents, Its History, and Its Role in the World Today, Together ... - Page 76. University of Pennsylvania Press. www.duerrs.co.uk Read More