J.M. Smucker Company

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d. Importance of Non-price competition

For Smucker’s fruit spreads non price completion is very important to be stable in the market. There are many competing companies and each firm hopes to attract and retain customers’ loyalty by other means than prices. Smucker’s produces different type of new fruit spreads to retain and fulfill new demands of the consumers and also for health conscious people and natural flavor lovers. Smucker’s attracts consumers by using different packaging style for fruit spreads as easy to use and carry. Smucker’s spends a huge amount of money for advertising. In fiscal 2014 Smucker’s spent about $125 million on advertising. The advertisement of Smucker’s fruit spread says “Meals together and memories forever”, which attracts and capture potential consumers emotionally. Also Smucker’s does cross promotions, which is, how to use fruit spreads with other foods to make new recipes or how to add different fruit spreads with other prepared foods like ice creams, sandwiches or shakes to make the foods tastier. At Ohio, firm has opened a service center to come up with customer issues and to gain knowledge about consumers taste and preferences to make products better with respect to market. An innovation Center is designed as a place to bring customers where they can meet with Smucker's various teams, such as research and commodity purchasing for product improvement.

4. Market Demand:

a. Shifters of Product Demand

- Price of related goods

In USA people consume variety of spreads for breakfast and lunch. People use fruit-full, vegetable oil added butter, smashed potatoes spread, cream cheese, peanut butter etc. If the price of any of these products increases, then it will affect the market of Smucker’s fruit spread and the demand of Smucker’s fruit spread will increase. The change in prices of substitutes mentioned in 2(a), also affect the demand of Smucker’s fruit spread. Fruit spreads are mostly used with breads and buns. These products act as compliment. The price change of these products also affects the market demand of Smucker’s fruit spread. As if the price of bread goes high, people will consume less bread and hence less fruit spread.

-Promotions & Advertisings and Distribution

Smucker’s fruit spread has number of substitutes, from different brands. So non-price completion is very important. Cross promotions and advertisements of are must for Smucker’s fruit spreads to hold the present consumers. Using advertisements Smucker’s convince how the products are different from others and beneficial to consume and can add new potential consumers. Distribution of products is important. Smucker’s occupies 35% of the space that is dedicated to fruit spread in Walmart and Target and 50% in Safeway. As mention earlier in 3(d), Smucker’s also spend a huge amount in advertising and do cross promotions to increase and hold existing market share.

-Size of Market

As Smucker’s produces low sugar and sugar free fruit spreads, if people become more cautious about their health while consuming spreads, will also increase the market size of the Smucker’s fruit spreads. The increase in number of natural fruit spread or organic fruit spread lovers will increase the market size of the Smucker’s. This preference of customers will increase demand for fruit spread market, which means it will increase the market size for Smucker’s fruit spread. This can be observed from the Figure: 1 given below.

[pic 2]

Figure: 1 – Survey results of “How do you think of organic food? ”, conducted by different universities. (Forbes.com)

b. Demand shifters differences across various customer segments

-Price of related goods

Price of related goods can affect every segment of Smucker’s fruit spread customers. Years ago Smucker’s was forced to cut prices on fruit spreads to stay competitive in the market and experienced a significant increase in the sales in all customer segments. Though price of related goods affects the demand of Smucker’s fruit spread, its customer lock in and product network help Smucker’s to hold on all customer segments.

-Promotions & Advertisings and Distribution

Using cross promotion Smucker’s attracts children and teenagers. Children and teenagers like to have ice cream, yogurt and sandwiches. So how to make foods more delicious by adding fruit spreads to foods, impacts one segment of consumers. Some people are vegetarian. If they can't afford organic food, they will buy the best fruit spread that they can pay for and competing price of Smucker’s increases the demand of its product. Smucker’s rely on promotions to create impulse and brand loyalty in every customer segment. Smucker’s recognize and keep track of new and existing customers.

[pic 3]Fig: 2 Shows Customers preference while purchasing fruit spreads

It uses beacons, flash cookies and similar technologies to understand the interest and demands of consumers. As per different survey 45% of fruit spreads consumers say that they prefer purchasing Smucker’s fruit spreads to brand’s fruit spreads (from Figure-2). In all retailers like Walmart, Target or Vons the Smucker’s fruit spreads are displayed at easy approach shelves, so that any child or adult can pick it, just at a glance. These are the strategies Smucker’s follow to capture the new market segment and to hold on the existing market segment.

-Size of Market

The size of the market for the Smucker’s fruit spread varies across the different segment as the children, teenager and adult population grow at different rates. For instance population of children will stay stable until 2025, which is 6.7% of the total population and adults population will grow from76.1% of the US population to 76.5% until 2025. Also it is predicted that the number of diabetic people will increase by fifty percent until 2025, which will also increase the demand of low sugar and sugar free fruit spreads. Different packaging styles are also convenient for some people and increase demand. For instance squeeze packets are more convenient for college going students and corporate jobholders, who can carry their favorite fruit spread with them and can have it any where during breakfast or lunch.