Business Situation Analysis ::: Brooks and Company was a food manufacturer established in 1850. Until 1977, its major product lines had consisted of tomato specialties, such as catsup, pickles and barbecue sauces. Its consumer products business accounted for 40% of sales; the balance consisted of institutional sales to restaurants, hospitals, and the armed forces. The company had advertised to the institutional market but never to final (household) consumers. In 1977, the company introduced a new line of Italian specialty products aimed at the final consumer market. The line was composed of a number of prepared pasta dishes, such as spaghetti, lasagna, and ravioli. Each package contained all of the necessary ingredients (except meat) including seasoned tomato sauce, cheese, and noodles. The idea for the line of Italian pasta products had been conceived by Joe Brooks, son of the company president. Joe’s enthusiasm for the product idea was quickly picked up by other executives. The president had married an Italian woman after World War I and their only child, Joe, had been born in Naples, Italy. Because they lacked a Neapolitan (a native of Naples) background, William Johnson, production manager, and Carl Voght, treasurer, approved of the idea on less emotional grounds. Johnson saw in the Italian line certain production possibilities that fitted well with the company’s existing facilities, Mr. Voght had long argued for some type of expansion which would enable the company to solve a number of financial problems associated with its inability to attract outside capital. Many planning meetings were held throughout the summer. These meetings were attended by both the Brookes, Johnson and Voght. Charles Welch, an administrative assistant to the president, was instructed to sit in on the sessions after he returned from vacation on August 1. He acted as informal secretary for the group. The original thinking of the committee was that the product line should be introduced at the beginning of the fall food merchandising season, which started about October 1. This deadline, however, subsequently proved to be unrealistic. Production of the first items in the line did not get underway until September 30 and packaging difficulties prohibited introducing the product before mid-December. In July, the problems involved in the product introduction were not foremost in the planner’s thought Many hours were spent discussing the name of the product line. Finally, the name Velsuvio was adopted as a compromise, but without enthusiasm from Joe Brooks, who believed that the name such as Valencia better described the gourmet image, he thought the line should express. With the exception of the name, the younger Brooks directed most of the decisions related to the marketing program. From the beginning he argued that there were already plenty of “middle class” spaghetti products on the grocers’ shelves. What was needed, he believed, was a prestige – even a “gourmet” line. The popularity of higher-priced Italian restaurants in many cities convinced young Brooks of the opportunity to market a prestige line of Italian food specialties. Early in the planning it was decided not to limit distribution to those regional markets in which Brooks had previously established its reputation. National distribution would be undertaken from the beginning. It was planned that the Velsuvio line would be marketed in all major food chains except those handling only private or controlled brands. Sales to chain headquarters would be made by food brokers handling gourmet products rather than by brokers used to the handling of high-volume canned goods. For the first time in its experience, Brooks planned to undertake an extensive consumer advertising program. A small Los Angeles advertising agency with slight experience in handling food products was appointed. However, by the time the agency had been selected and oriented to the marketing program, the time remaining before the scheduled introduction did not allow for the preparation of magazine advertisements or filmed television commercials. In order to break into the consumer market at the time of the scheduled product introduction on October 1, a consumer advertising program using newspapers, live television commercials, and radio was prepared. Except for the product introduction period, however, relatively little thought was given during the summer planning sessions to the total amount of money required to support the new product with consumer advertising. A number of circumstances combined to prevent the introduction of the product in October as originally planned. No one had assumed personal responsibility for package design and production was held up three weeks while the company waited for supplies of packaging materials. Brooks was forced to move very rapidly to obtain a package, and he was the first to admit that the result was neither very well designed functionally nor attractive from a promotional point of view. Time was short, however, and there was no choice but to use this package or abandon the project for the present season and possibly altogether, depending on competitive conditions. A hastily put together advertising campaign was introduced in November. However, advertising costs had been greatly underestimated, so that the intensity of the campaign was much lower than Brooks had anticipated, even with the limited budget. As a result, most of the budget was allocated to newspapers and radio. Moreover, problems with the scripting of the TV commercials delayed broadcasting until the beginning of December. Newspaper advertisements and radio commercials did commence, however, as planned. The new product was finally launched in mid-December. However, by February, two major competitors began marketing similar products. Shortly thereafter, a market research survey was sponsored by Brooks to determine whether the Velsuvio name made a favorable impression on housewives. The results of the survey were negative. Only twenty-two percent of the housewives interviewed could recall the Velsuvio name and of those, only twelve percent had tried the products. Consumer evaluation of the product line was far from encouraging. Of those who had tried the product for the first time, only four percent stated that they would buy it again. Another indication that worried Brook's management was that few major food chains showed interest in the line. By mid-year, Brook's product sales were so poor that management established a special committee to determine without delay what immediate steps might be taken to reverse the poor sales record of Velsuvio. DIRECTIONS: The questions that follow relate to the preceding passage. Evaluate, in terms of the passage, each of the items given. Then select your answer from one of the following classifications and blacken the corresponding space on the answer sheet. • A MAJOR OBJECTIVE in making the decision: one of the goals sought by the decision maker. • A MAJOR FACTOR in making the decision: an aspect of the problem, specifically mentioned in the passage, that fundamentally affects and/or determines the decisions. • A MINOR FACTOR in making the decision: a less important element bearing on or affecting a Major Factor, rather than a Major Objective directly. • A MAJOR ASSUMPTION in making the decision: a projection or supposition arrived at by the decision maker before considering the factors and alternatives.
