A team case competition for the Alpha Kappa Psi Principled Business Leaders Institute in Reno 2010

1. Saxonville® Sausage: The
Italian Opportunity!
AXIS Consulting LTD.!

2. Current Situation!
0% growth in overall sausage!
15% growth in Italian sausage!
16% Vivio® market penetration!
20% annual organics growth!

3. Strengths & Weaknesses!
Strengths:!
!
• Ability to distribute fresh products nationally!
• 44% adult population prefer fresh!
• Matched category growth level!
• Favorable brand image!
Weaknesses: !
!
• Not a first mover in Italian sausage market!
• In-store promotional marketing only!
• Small national presence !
• No “true Italian” heritage!

4. Opportunities & Threats!
Opportunities: !
• Growing Italian sausage market!
• Desire for tasty, easy family meals!
• Growing organic and “natural" markets!
• No national players in fresh Italian sausage !
!
Threats: !
• Local producers!
• Higher spending by potential rivals!
• Increased frozen sausage consumption!

5. GE / McKinsey Chart Analysis!
Business Unit Strength!
High! Medium! Low!
Market Attractiveness!
High!
36%!
Brats
Medium! 4%!
Vivio®
Low!

6. Plan Objectives!
• Take Vivio® national!
• Focus on cohesive branding!
• Increase sustainability!
• Introduce Vivio® Organic line !

7. Branding!
Vivio® !
• Market presence!
• Positive testing!
• Less costly !
Positioning statement: !
“Bringing families together with fresh healthful
Italian sausage”!
Unique Selling Propositions:!
• A national line of fresh Italian sausage!
• Makes for easy and delicious family meals !
• The versatile ingredient no family should go without!

8. Promotional Strategies!
Strategies for Vivio® Natural!
• Labels with recipes!
• Recipe sharing with strategic partners!
• Coupons and discounts with strategic partner!
Strategies for Organic line!
• Co-branding with local organic producers !
• Encourage local producers to promote Vivio® !
Vivio® Natural Vivio® Organic

9. Product!
Vivio® Natural!
• Drop hot sausage ground!
• Drop Italian pepper sausage!
Vivio® Organic!
• Recipe licensing !
• Produced organic farms!

10. Packaging!
Re-sealable sustainable packaging created by Ecoproducts®!
Smaller labels to showcase product!
Recipes on back of label!
Vivio® !
“The versatile ingredient no family should go without”

11. Distribution!
Existing distribution chain for Vivio® Natural!
• Fresh suppliers!
• Sold to wholesalers!
• Promoted in chain stores.!
Organic line licensed in the Pacific and Northeast!

12. Industrial Standard!
• Revenues of $1.5 Billion!
• COGS of $1.223 Million (81.54%)!
• Gross Margin $276.9 million!
• Promotional Expense of $11.850 (.79%)!
• Net Profit of $39.6 Million!

13. Spending to Compete!
2004 – 2005 breakfast sausage
hemorrhaged more than $33,000,000 in
revenue
Recommendation: $12 million introductory
promotional campaign!
Organizational goal cannot be realized
without a financially supported
promotional campaign!

14. Financial
Forecast!
2006! $24,400,571!
2007! $46,046,137!
2008! $54,203,610!
2009! $62,768,957!
2010! $71,762,571!
$175,149,937 NPV !

15. Vivio ® !
“Bringing families together with fresh
healthful Italian sausage”!
Questions?

16. Financial Outlook!
2006 2007 2008 2009 2010
Pessimistic
(net) -$15,135,824 -$10,184,204 -$4,994,249 $455,204 $6,177,130
Inflows $520,296,286 $546,361,100 $573,676,655 $602,357,988 $632,473,387
Outflows $535,432,110 $556,545,305 $578,670,904 $601,902,784 $626,296,257
Expected
(net) $31,139,287 $53,455,464 $62,009,998 $70,992,259 $80,423,633
Inflows $783,073,747 $900,527,309 $945,551,174 $992,826,233 $1,042,465,045
Outflows $751,934,460 $847,071,845 $883,541,176 $921,833,974 $962,041,411
Optimistic
(net) $36,982,104 $72,639,173 $82,175,917 $92,189,499 $102,703,760
$1,054,111,23 $1,106,814,29
Inflows $816,202,719 $1,003,917,845 7 9 $1,162,152,513
$1,014,624,80
Outflows $779,270,615 $931,278,672 $971,935,320 0 $1,059,448,754
Weighted
Average $24,400,571 $46,046,137 $54,203,610 $62,768,957 $71,762,571
NPV $175,149,937