Oscar Mayer

Oscar Mayer was founded in 1883 and developed on the principle of quality over price. The company rapidly grew by acquiring plants, expanding the distribution of its products, and innovative early marketing programs (i.e. Oscar Mayer theme song). Sales increased and Oscar Mayer became the leading manufacturer of processed meats. In 1979 the company acquired Louis Rich, Inc. to broaden its product portfolio to include white meat. Shortly after the acquisition, Oscar Mayer was purchased by General Foods Corporation (parent company of Kraft Foods) and is currently the fastest growing division at Kraft.

The president of Oscar Mayer is Marcus McGraw. He has a long history with the company spanning 22 years and directly manages several of the division’s top managers. McGraw received an annual market research report from McTierson, Corp., a consulting firm highly regarded by Oscar Mayer. The report detailed several significant changes occurring in the marketplace for processed meats. The report also gave a strong opinion about the changes in consumer demand for processed meats, and how these changes could threaten Oscar Mayer’s profits over the next 3-5 years. Several of McGraw’s top managers submitted responses to the McTierson report explaining their views on the best course of action. Each manager had a different recommendation, and varied by department. Suggestions included more investment in the Louis Rich division, acquiring another company that offers healthier products and adds to the current portfolio, developing more convenient, fast products, and sustaining the current Oscar Mayer products by transforming to healthier products, at a lower cost.

The main issue is that Oscar Mayer’s current product portfolio is not aligned with changing consumer preferences for low fat, healthier meat. Sales from red meat are decreasing due to increased health awareness. In addition, a large group of Oscar Mayer’s target audience is working moms, however current...