Phillips Food: King Crab
Phillips Foods, Inc. – Introducing King Crab to the Trade Executive Summary: The Phillips Foods, Inc. , case discusses target marketing for specialty seafood. Phillips Foods, Inc. was founded in 1914 by Augustus Phillips on Hoopers Island, Maryland. Phillips had developed a reputation for fresh seafood caught and sold locally. By 2006, Phillips Foods had three business units that were generating profits and became one of the largest seafood businesses in the United States. The restaurant division operates 8 full-service restaurants as well as fast food restaurants, mainly in airports.
The food service division services restaurants and foodservice institutions. The retail products division services grocers and retail food merchants. The three division generated $160M in revenue in 2006. Brand image and production were keys in building the Phillips brand name. Phillips was renowned for its close associations to Maryland. Production was also a key in reinforcing the Phillips image and brand. The company decided early on to own and operate its own plants, this was important for preserve quality and safety.
The Phillips brand was able to expand its production and keep its image as a local brand. By 2006, Phillips operated 13 plants overseas and 1 plant in Baltimore. Analysis of Problem: As the case opens two key decision makers are having a dialog regarding the success of the first phase of marketing and potential plans for phase two. Cherry Stockworth, vice-president of marketing, and Ron Birch, product manager of a new king crab product are discussing Ron’s use of the remaining budget for the king crab product line.
Ron has successfully launched phase one of king crab in foodservice trade magazines and as 2007 approached the opportunity of participating in a tradeshow had become available. The International Boston Seafood Show (IBSS) presented the opportunity for Ron to market to a grocery stores and retail food merchants. IBSS was one of the largest seafood shows in the country and the attendees were generally serious merchandisers and industry heavy weights. Phillips king crab products were revolutionary in the seafood industry and were also consistent with consumer demands.
The target market was evolving from food service institutions to inclusiveness of retail establishments. Phillips had discovered and perfected a process by which blue king crab (large Alaskan/Russian crab) could be fished, gutted, pasteurized, and packaged for immediate consumption through their production facilities. The product could be stored for up to 18 months as a result of effective pasteurization. The king crab introduction couldn’t come at a more opportune time for Phillips Foods as consumers purchasing habits were changing to more health conscious products.
Consumers were averse to purchasing seafood from the market because of their inability to cook the products effectively, and the amount of time it took to clean and prepare the product. King crab was a healthy ready to eat product, and Ron’s task was to get king crab into the prime real estate of grocery store refrigerators. Cherry Stockworth was convinced that the tradeshow would capitalize on the effects of removing king crab from the commodity seafood counters. Phillips had good success with its phase one marketing and was going to have the opportunity to attend IBSS for phase two.
In her excitement Cherry offers to cover half the cost of the trade show if Ron were to agree on attending and using the balance of his marketing budget on the campaign. Ron was happy with the results of the first phase, but was not closed to the idea of attending the tradeshow. He would have to crunch some numbers and asses the return on investing in the tradeshow. Recommendations: My recommendation for Phillips Foods is for them to take the king crab product to the IBSS. In doing some analysis with the provided numbers in this case, I have concluded the feasibility of the trade show to be high.
Ron has spent roughly $80K (half) of his budget on the first phase of marketing King crab through trade publications. Ron can easily spend phase two on the same publications or he can take up Cherry on her offer. Appendix A, shows that Ron will need approximately 19 people to effectively manage the tradeshow and its volume. Based on this headcount, it will cost Phillips $164,700, of which Ron will be responsible for $82,350. Ron and Cherry are both understand the importance of spreading the word of their brand, since they have made progress in the food service industry.
The tastes of consumers and purchasing habits in grocery stores is changing it would be a great opportunity to display their product. According to the case, tradeshows are an avenue to display products, set up tastings, and catch the eye of potential retailers and grocery store merchandisers. Appendix A further analyses the potential draw at the IBSS show and affirms that 8% capture will provide significant traction in acquiring the attention of a new audience that actually shows interest and is looking for new products for their chain.
Continuing to advertise in trade publications seems to have been effective in only two of the three advertisements that Ron has chosen thus far. The problem that seems to be existent in this strategy is that it limits the audience that Phillips is going to be able to attract. Unless the foodservice institutions began to advertise Phillips Foods direct to consumers it doesn’t seem plausible that consumers can be targeted through this avenue. The restaurant division is not going to be a good source of advertising to new consumers either. Restaurants are a great way to maintain the brand name and maintain the high quality food standards.
Conclusion: According to my calculations in Appendix A, the tradeshow is a great value with the offer from Cherry on the board to cover half the cost. Management support seems to be in the tradeshow as well, and this will be part of Ron’s decision as he must please the organization. At this point Ron needs to make a decision that will have an immediate impact on the king crab product line. He stands to lose a lot more if he misses out on the tradeshow and places advertisements with only a decent response. In addition, Ron is looking to reach a new audience and doesn’t seem to have a plan set for reaching the retail and grocery customers.
The tradeshow provides visibility in both target markets and is in line with the changing customer preferences. Phillips Foods, Inc. has placed itself in a position to succeed with its pasteurization process and its branding strategy. The king crab product line is a perfect complement to the Phillips Foods product portfolio by way of high quality and high margin. Moving a commodity into retail ready-to-eat space has created a value added product and the potential to help seafood consumers find quick, safe, and healthy cooking solutions at the seafood counter. Appendix A