Carrolls Meats - Download MS Word file

Seamus Carroll founded Carroll Meats in 1979 and he quickly built up a reputation as a supplier of high quality sliced meats. Since then, the founder has attempted to grow the company by adding value to traditional products, introducing new products and entering new markets.

In the late 1990s, Carroll decided to enter the chilled ready meals segment. He felt that there was a gap in the market as there was no other Irish producer of a branded ready-meal product. As a supplier of cooked meats, he knew the retail trade well and knew that the ingredients could be sourced locally. He approached the major supermarket buyers in Ireland with a view to producing a branded product. Their response was encouraging and they were willing to stock the brand if the profit margin was right.

The market for chilled ready meals in Ireland
In the late 1990s, the chilled ready meals (vegetable, meat or fish-based meals) market was relatively under-developed in Ireland. The sector tends to be dominated by private-label sales by multiple retailers, such as Tesco’s and Marks and Spencer. In contrast to the frozen ready meal sector where branding is the norm, there is virtually no branding of chilled ready meals. Large manufacturers have been deterred from entering the market on account of several other factors:

• Problems of short shelf life
• Potential for growth of food-borne bacteria (particularly salmonella and listeria) if temperature abuse occurs
• High wastage levels
• Handling of these products during transportation and in the retail shops is complicated
• The high level of own-label penetration, which reflects the close co-ordination required between retailer and supplier to ensure product quality and safety.
• Barriers to international trade due to the need for efficient hygiene and temperature control.

The factors that contributed to the growth of ready meals in the EU were numerous and varied:

• an increase in the number of single person households
• increasing household penetration of microwave ovens
• a move towards lighter meals together with greater health/weight consciousness
• consumer interest in ethnic foods
• a move away from family meal occasions
• increase in female participation rates in the labor force, which is linked to increasing demand for convenience products
• the increasing sophistication of the `chill-chain’
• changes in technology and packaging (foil containers have been replaced by PET containers that can go straight into the fridge, freezer, microwave or conventional oven).

Chilled ready meals tend to be perceived as highly-priced luxury goods, hence their consumer base is relatively affluent. the product appeals to the buyer who does not always have the willingness, or ability, to prepare meals. The market is mainly comprised of professional people with busy lifestyles, well traveled, who eat alone - even if they live as families. Consumers also purchase ready meals when faced with times pressures or to get out of the rut of daily meal preparation. It is expected that the consumer profile will change as the products become more widely diffused through the population.

Marketing strategy
The product range consisted of Italian, Chinese and Indian dishes, such as lasagne, curry and stir-fry, which were sold with an accompaniment such as rice. Carroll decided to base the products on mainstream international dishes in order to appeal to the perceived conservative nature of the Irish customer. The whole product range was available pre-packed and sold as a microwave product. The product lines, chilled ready meals and processed meats, were sold under the company brand. The following choice criteria were important to consumers:

• freshness is one of the main selling points of chilled foods
• high quality
• nutritional value
• convenience
• taste
• novelty

Carroll decided against the adoption of a premium pricing strategy and felt that the product offered good value for money. The product range is limited and the packaging rather basic which helped restrict costs. The quality of the product was considered to be vitally important. With respect to distribution, the product was sold in multiples, city-centre convenience stores and garage forecourts.

The Future?
The product is in the early stages of its life cycle and there is relatively little competition in the chilled ready meals market in Ireland. In general, other ready-meals manufacturers produce frozen products for the international marketplace. The Irish market is not yet national in the sense that few national brands exist and the retail chains have yet to distribute private-label products nationally. The competitive situation has allowed the company to enter the market with little or no advertising. However this is not considered to be a major disadvantage since the brand names of competitors in the chilled foods segment are not well known, and own-label brands do not use national TV advertising..

Carroll monitors market trends and believes that he has a general feel for the type of issues that are of concern to consumers in relation to their food consumption. The owner is in regular contact with salespeople, he reads the trade press and talks to owners of similar companies at trade fairs. In this sector of the food market, consumers generally tire of eating the same products on a regular basis, and Carroll is aware that a broad product range and/or high rate of product turnover will be required in the future to maintain consumer interest. Carroll is worried that the recent BSE crisis will affect sales of traditional meat-based dishes, such as lasagne.

According to Carroll, chilled foods are sometimes bought on impulse. Therefore factors such as the attractiveness of the product, the impression of freshness, the range of products, all help stimulate impulse purchasing. The convenient nature of the product meant that independent outlets such as city centre convenience stores (e.g., SPAR) and garage forecourts are important in generating impulse purchases. Some of these smaller retailers are not in a position to sell own-label products since private-label manufacturers are not interested in supplying small retailers. Small independent retailers are restricted by space to the number of lines they can carry. They do not have sufficient turnover or highly sophisticated distribution systems to overcome problems related to short shelf-life and temperature control which together can result in high wastage levels.

Packaging plays an important role in keeping food products fresh. In the EU, the trend towards `green’ products has seen the growing use of recyclable board trays rather than plastic. Modified atmosphere packaging provides a shelf life of around 6 days, vacuum packaging somewhat longer, but is generally not appropriate to ready meals. Technology such as pasteurization or irradiation is effective in lengthening the shelf life of products but the former is felt to compromise texture and eating quality, and the latter is not used because retailers and manufacturers fear adverse consumer reaction.

At present, Carroll is more interested in developing the home market rather than on exporting. The UK could be a potential export market. It is close to Ireland, both culturally and geographically, and per capita consumption rate of ready meals is higher in the UK than Ireland. However, the UK market shows signs of approaching maturity, due to competition from alternatives (take-away in particular) and the expectation that microwave ownership will plateau. In the UK private label sales of chilled foods are the norm, with the multiple retailers accounting for 94% of total sales. The UK market is highly competitive, and there has been growth in the number of "budget brands" which are positioned very closely in price terms to cheaper frozen products.

Marketing Activity
The company’s marketing activity to date has been intuitive and ad-hoc in nature. The owner-manager acknowledges that his lack of marketing expertise may hamper the future growth of the company. He would like to undertake a formal marketing planning process in order to explore areas for improvement.

Questions
Perform a SWOT analysis of the firm and/or the chilled ready meals sector.
What information would you require in order to develop a marketing plan for the company? Describe the potential structure and contents of a marketing plan.
What recommendations would you make as part of the marketing plan?
What are the major challenges that face Carroll Meats in the future?

By Dr. Breda McCarth
Lecturer in Marketing, School of Business, Waterford Institute of Technology

This case was developed as a basis for class discussion, rather than to illustrate either effective or ineffective handling of an administrative situation.