O’Brien Candy Company is a hypothetical medium-size candy company located in Manitoba. In the past two years, its sales and profits have barely held their own. Top management feels that the trouble lies with the sales force, that they don’t “work hard or smart enough.” To correct the problem, management plans to introduce a new incentive-compensation system and hire a trainer to train the sales force in modern merchandising and selling techniques. Before doing this, however, they decided to hire a marketing consultant to carry out a marketing audit. The auditor interviews managers, customers, sales representatives, and dealers and examines various sets of data. The auditor’s findings are as follows: The company’s product line consists of primarily 18 products, mostly candy bars. Its two leading brands are mature and account for 76% of the company’s total sales. The company has looked at the fast-developing markets of chocolate snacks but has not made any move yet. The company recently researched its customer profile. Its products appeal especially to lower-income and older people. Respondents who were asked to assess O’Brien’s chocolate products in relation to competitors’ products described them as “average quality and old-fashioned.” O’Brien sells its products to candy jobbers and large supermarkets. Its sales force calls on many of the small retailers reached by the candy jobbers, to fortify displays and provide ideas; its sales force also calls on many small retailers not covered by jobbers. O’Brien enjoys good penetration of small retailing, though not in all segments, “sell-in” strategy including discounts, exclusive contracts, and stock financing. At the same time, O’Brien has not adequately penetrated the mass-merchandise chains. Its competitors rely more heavily on mass-consumer advertising and in-store merchandising and are more successful with the mass merchandisers. O’Brien’s marketing budget is set at 15 % of its total sales, compared with competitors’ budgets of close to 20 %. Most of the marketing budget supports the sales force, and the remainder supports advertising. Consumer promotions are very limited. The advertising budget is spent primarily in reminder advertising for the company’s two leading products. New products are not developed very often, and when they are, they are introduced to retailers via a push strategy. A sales vice-president heads the marketing organization. Reporting to the sales VP is the sales manager, the market research manager, and the advertising manager. Having come up from the ranks, the sales VP is partial to sales force activities and pays less attention to the other marketing functions. The sales force is assigned to territories headed by area managers. The marketing auditor concluded that O’Brien’s problems would not be solved by actions taken to improve its sales force. Discussion Topic As the company auditor, list and discuss three (3) short-term and three (3) long-term recommendations you would make to O’Brien’s top management.
