Brim-case study in marketing strategies
I. CASE SUMMARY
The year is 1970 and the total coffee market has plateaued but the total decaffeinated segment is expected to double over the next 10 years. Furthermore, the decaffeinated coffee segment offers higher margins than the regular coffee segment making the decaffeinated coffee market a tempting target for competition. Given that Maxwell House’s Sanka held 92% of the decaffeinated market its position would have been reasonably secure except for one major weakness…its poor taste.
These factors prompted Maxwell House to launch Brim, a decaffeinated blend of high-quality beans with taste-oriented positioning. The introduction of Brim is a flank defensive maneuver designed to preempt competitors from entering the decaffeinated coffee market by further segmenting the overall coffee market and by providing a better tasting alternative to Sanka. Furthermore, management believed Sanka’s 4.4% hold of the Instant and Freeze-dried market was about to face a serious threat from a decaffeinated version of Nestle’s Taster’s Choice Freeze-Dried, a decaffeinated product extension of an already successful brand positioned on taste. Finally, with the introduction of Brim, Maxwell House hoped to insulate the division’s decaffeinated position by offering a better tasting alternative to Sanka.
In 1974, two short years after its rollout, Brim appeared to have won the race to national expansion over Nestle’s Taster’s Choice Decaffeinated. But within the next year Brim’s growth stagnated while Taster’s Choice Decaffeinated continued to grow and Proctor & Gamble introduced High Point.
Now, two years later and six years after the introduction of Brim, the total coffee market is at a 20-year low, the decaffeinated segment has been stagnant for three years and there have been recent reports that the decaffeination process might cause cancer. It is in this environment that Brim must develop next year’s strategic plan and a five-year plan for its product group, modified coffees.
II. STATEMENT OF THE PROBLEM
Several key internal and external issues play an integral part to the main issue of whether and how to revive Brim. The key internal issues includes Maxwell House Division’s recent designation as a “cash cow minus,” Brim’s negative margin and ROFE and the involvement of several levels of management. Key external issues include a stagnant mature market, increasing competition from new entrants, the growth of substitute products and the decline of Brim’s product life cycle. Faced with a stagnant industry and declining market share Brim’s product team faces two major tasks. First, immediately arrest the decline of Brim’s share in the total market. Brim’s market share has dropped from 2.6% to 2.1% in the past two years and its market share is expected to decline to 1.9% within the next eighteen months. Second, Maxwell House must decide on a long-term direction for Brim.
III. FINAL DECISION
IV. ANALYSIS
A.) PRODUCT
Background of Coffee
According to legend, coffee was discovered in Ethiopia when goatherds noticed their flocks stayed awake all night after feeding on coffee leaves and berries. By 1200, coffee had reached Arabia. Before its use as a beverage [next page]