Strategy:Mars in the Earth

It´s difficult to talk about a company without knowing your economic situation. Also, why it decided to follow one strategy in a particular time. In this case, the brand is Mars and its necessities of new challenge.

Looking at percentage figures, Mars has a solid position in the European market with its chocolate bars. Apparently, Mars had enough arguments to go into a new business. High share in the market, high quality in its ingredients, well-known confectionery products and premium level inside of the snack market are some of its strengths. However, there is a point which I don´t consider positive in this kind of product. It´s the premium-price category in the market. Pricing almost near of the high end of the possible price range is used to enhance and reinforce a product´s luxury image. Consumers of this type of products believe that the high price indicates good quality. Also, you belong to an exclusive group or higher status. It makes sense in cars, clocks, clothes….but it doesn´t it whether we talk about snacks. Above all, in a market with huge competence and low prices. Kit Kat, Twist, Kinder, Huesitos are some examples with cheaper prices. These products are oriented to young people who usually don´t have much money. It´s a disadvantage in my opinion despite of its higher quality ingredients.

Mars´ strategy in distribution is looking for provisional solutions in the absence of a  planification in origin. Mars is patching its lack of forecast in some aspect as logistic. A only factory in France is not enough to supply all Europe. Also, ice cream is a seasonal product with expiration date and a special way of transport and conservation. Mars didn´t see which were its barriers and its competitors. Unilever and Nestlé are  larger companies with a diversified business. They can put packs of different products together thanks their diversification. In fact, they do it in supermarkets with product such as Ben&Jerry´s, Frigo, Calvé, etc…..all belonging to Unilever. Mars can´t compete with Unilever´s logistic and agreements. In spite of making some agreements with companies such as Lyons Maid or Miko. It turned out in only a provisional solution. As we could see, those companies were taken over by Nestlé and Unilever time later. Therefore, Mars didn´t get to solve its problems with frozen cabinets, transport and supply for retailers.

I guess, in the strategic plan of Mars would be the fact to make money and do a profitable business. Nevertheless, if we have in account extra costs such as transport, new logistic, freezers for retailers, new agreements, etc….benefits will be less than Mars expects. Also, Mars is already expensive enough product in itself. A priori some thing so easy as freeze the bar and put a stick involve more problems than you could see at the beginning. I think, Mars has a weak position in front of its competitors in the ice cream world. For instance, Spain is dominated by Frigo (Unilever) and Nestlé with some small competitors (low percentage of sales) such as “La menorquina” and “La polar” in some places.

Probably “Mars” ice cream would be in conditions to be absorbed by another larger company. In the text we can read that they got profits in 2000, ¿ Were so many benefits as Mars expected? I don´t think so. Benefits, yes….but not so many ones that they expect.

Comentarios desactivados en Strategy:Mars in the Earth / 01 Dic 2011 por Jonathan Cabrero Sanchez
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