Floyd Menaugh, president of the Bennett Frozen Food Company, was concerned with the fact that his company was lacking good sales and marketing information. The company had monthly shipment figures, broken down by product and the market areas serviced by the company’s food brokers. However, the company did not have up-to-date sales figures and it did not know how well its competitors were doing. As a result, Mr Menaugh was thinking of subscribing to a commercial marketing research service that could supply the kind of competitive information the company did not have.
Mr. Menaugh was considering the services offered by Selling Areas Marketing, Inc. (SAMI) and the A C Nielsen Company. The two services were similar in some ways, but they were quite different in others. Mr Menaugh was wondering which of the two services would more closely satisfy the company’s needs. He judged that the SAMI service would cost about 60 to 70 percent of the Nielsen service, which could cost s much as $250,000 to $300,000.
The Bennett Frozen Food company was a national supplier of frozen desserts, pies, cakes, rolls, biscuits, and other bakery products. Its product line was the largest in the frozen bakery goods field, was of high quality, and was priced somewhat higher than the average competitor’s product. The company’s products were sold largely in the frozen food sections of supermarkets.
The sales of Bennett products occurred mostly in the larger cities. The 10 most important cities accounted for almost 50 percent of total sales, and the next 12 most important cities accounted for an additional 22 percent of sales. Because local market conditions varied tremendously as a result of local and regional competitive brands of both the fresh and frozen variety marketing efforts for the Bennett line tended to be tailored to reflect the intensity of competition present in each market. Promotional support usually consisted of trade allowances, trade allowances, trade promotions and spot television commercials, all of which could be adjusted to local market conditions.
Sales of the company’s products were handled by a sales force of 24 persons who were assisted by 72 frozen brokers located throughout the United States. These brokers had exclusive responsibility for selling the company’s product in their own market areas, which typically consisted of a central city with two or three surrounding counties, or two or three neighboring cities with their surrounding counties. In some southern and western regions, a broker’s market area might consist of all or parts of two or three states. The food brokers called on the major chains and larger independent stores in their respective market areas. Orders from large customers, such as retail chains, were shipped directly form the Bennett plant. Smaller orders were supplied to customers from a number of regional frozen food warehouses.
The marketing department of the Bennett Frozen Food Company was responsible for developing new products, preparing advertising campaigns and budgets, pricing, packaging, promotions, and marketing research. In general, the marketing department was responsible for all aspects of the company’s marketing planning and programs except those associated with the Bennett sales force, the food brokers handling the Bennett line, and the retail which displayed and sold the line to final consumers.
Mr. Menaugh met with Walter Malinson, the sales manager, and with John Gerlinger, the marketing manager, to discuss the matter of which commercial marketing research service would better serve the company’s needs. Mr Menaugh felt that the warehouse withdrawal service offered by SAMI, but not both Prior to the meeting Mr Menaugh had sent each of the men descriptive materials of the two companies’ services. After a discussion of a number of relevant points, Mr Menaugh asked Walter and John to consider the matter and to recommend the service their respective departments would prefer to have available and to list the reasons for their preference. He then adjourned the meeting.
To: Floyd Menaugh, President
From: Walter Malinson, sales Manager
With respect to the issue of which marketing research service the company should purchase, the sales Department feels that its needs would best be served by the warehouse withdrawal data available from Selling Areas – Marketing, Inc. The reasons for this preference are as follows:
1) Every 28 days (13 times a year) SAMI provides complete sales volume data for each of the 54 markets it serves. For each product category, they make available total sales by all competitors and total sales by brand, in both units and dollars. These data are actual shipments from warehouses, not estimates based on sampling.
2) The data would be useful to our district offices, because frequently the sales of a district accrue primarily from the one or two metropolitan areas in the district. In many cases, the district’s metropolitan area is among those included in the SAMI reporting system. (Nielsen data are on a regional basis and, therefore, cannot serve this purpose).
3) As many of our important retail customers operate primarily in one market, they are only interested in sales figures from their markets. They obtain this information from SAMI. Our sales force and our brokers need the same information when talking with retailers, especially when the retailers use SAMI data as a basis for taking an action unfavorable to one or more Bennett products. It is important to remember that bakery goods are essentially a “local” industry, and that data from SAMI are “local” in nature. (Again, Nielsen data are too regional to be of much use to our sales representatives in this regard)
4) As we normally test new products in two or three markets, SAMI sales figures of successful new product tests could be used to convince the retail trade in other markets that the new product will be profitable addition to their lines.
5) In most markets, many items in the Bennett line are either the industry leader or a close second or third. Because of the breadth of our line and the high volume and high markups associated with most of our items, SAMI sales data will demonstrate to vary and uncertain retailers how much more profitable the entire Bennett line is, compared with competitors’ lines. Such demonstrated profitability can be used by our brokers and our sales representatives to gain greater retail availability in general and additional shelf space in stores where only a portion of our line is already merchandized.
Bennet Frozen food Co is a National food company and Brokers are appointed for regional areas who are responsible for sales in their areas. There is a provision to get a feed back from these brokers. The Market Research Co who are less costly are more suitable for providing data and trends considering the overall National scenario.