mavesa case2
TRANSCRIPT
Mavesa's Nelly Brand:
Pricing to Gain Market Control
Submitted by
Hari Padmakumar
Jijo Francis
Navtej Singh Sran
Introduction
Was founded in 1949; Headquarters: Caracas.
Founded by Phelps, Andres Boulton, William Coles & Angel Cervine.
became the leading consumer production company in Venezuela by 1999.
Yearly sale of $418 Million.
Has distribution services in more than 54,500 Venezuelan stores
Main products are spreads, sea food products, sauces, beverages and
cleansing products.
Major competitors: Kraft, Albeca and Hellmann’s.
Market Research
• Venezuelan market : 4th largest economy in Latin America
• High inflation
• customers tend to shift towards low price products.
• High Demand for mayonnaise.
• Growth of mayonnaise market: 2% per annum
• varieties of customers in this market segment.
• major purchase of mayonnaise is done by the women (71%)
• Overall production of mayonnaise is about 11,000 tons.
• Sixty percent of the total market share is owned by Mavesa .
19%
35%3%7%
6%
10%
12% 8%
MAVESA'S SALES MIX
Mayonnaise Margarine
Other Spreads Other Sauces
Sea food Products Beverages
Cleaning Products Other
SWOT AnalysisStrengths:
• Mavesa was listed on NYSE and Carcas stock exchange
• It is a leader in management style
• Strong market leader in 34 categories of products
• Control of its national distribution network
• Huge market portfolio
• Adaptive and responsive to changing market conditions
• Expanding geographically through acquisitions, mergers and exports
• It owns around 60 % of the industrial segments( restaurants)
Weaknesses:
• Weak brand image
• Brand loyalty is low
• The price range of the sub-segment products are not amongst the lowest
• Requires high sales force
• High Overhead costs
Opportunities:
• Growth in various segments
• Positive consumer buying behaviors
• Broadening the market segments
Threats:
• High Competition
• Recession in Venezuela
• Devaluation of Bolivar
• Declining growth in the premium segment
Questions
What opportunities exist within the family segment for Mavesa’s mayonnaise brands?
• Two categories : Economy and Premium
• Economy: Low price
• Premium: Product quality; market leader
Describe the trade-offs faced by Mavesa. Should they decide to reposition Nelly using price?
• Gross profit over market share
• Reducing prices
• Introduction of flexi packs
• Reduction of manufacturing costs
What are Mavesa’s strengths, given the current competitive environment?
• Gaining control over market share
• Acquisition of LTO
• Focus on product differentiation
• Regaining loyalty
What other strategies could Mavesa employ to take advantage of the existing opportunities?
• Providing incentives
• Reinforcing brand image
• Increasing promotional discount to wholesalers
• Improving distribution channels
• More emphasis on R&D