Despite its $1 billion in U.S. annual revenues, Planters Nuts still experienced a decline in its unit sales and household penetration over the past several years. With the shift of preference from peanuts, cashews, and mixed nuts, Planters' main product categories, to almonds and pistachios, Planters must decide on how to redeem its sales losses and whether to shift from its traditional product nut categories into newer ones to keep up with the competition.
Robert J. Dolan; Donald Ngwe
Harvard Business Review (516004-PDF-ENG)
August 24, 2015
Case questions answered:
Case study questions answered in the first solution:
- Analyze the current issues of the Planters Nuts brand.
- What is your recommendation for the Marketing Mix?
- What is your action plan?
Case study questions answered in the second solution:
- Why in Planters struggling in 2012?
- Why do Blue Diamond and Wonderful have much lower market awareness than Planters despite outstripping Planter’s marketing spending in recent years?
- What are the primary assets Planters has to employ toward its mission of creating value for its chosen customers? Is there any type of customer for whom Planters has an advantage over competitors in creating value?
- Kraft has a formal process of setting out the target market to be served. Evaluate the choice for Planters. Evaluate the current positioning of Planters.
- Develop an integrated marketing plan with detailed actions to actualize your recommended positioning statement.
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Case answers for Planters Nuts
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The issues of the Planters Nuts brand
The Planters Nuts brand is having the three issues:
- Current positioning and target market are less relevant to its new products;
- “Leaky Bucket”: Planters became a new entrant in Almonds and Pistachios market with less expertise than other major competitors (Blue Diamond and Wonderful). This results in higher cost of goods sold and the growth in these new areas is not enough to offset the decline in Peanuts’ sales growth;
- Since the company wanted to penetrate new markets, they had to increase marketing efforts & budget, thus lowering their margins.
The Planters Nuts brand should drop its efforts to penetrate new markets and re-focus its resources on the main product: Peanut.
It is clear that by trying to penetrate new markets, the company is facing high threats from big players in Almonds and Pistachios market while losing its Peanut market share to competitors like Emerald and Store brands. Planters Nuts used the same target market for Almonds, and Pistachios is considered inappropriate since Peanut target men and Almonds are preferred more by women.
Also, having to maintain the marketing budget for peanut but also increase the budget for new markets shrinks profit margins. Moreover, Planters Nuts is risking diluting its iconic brand icon “Mr. Peanut” to introduce almond and pistachios based on the fact that most customers perceive the brand as “less fit” to almonds and pistachios.
On the other hand, although it seems the peanut market is shrinking, Table 1 reveals that peanut is still holding the highest market share and penetration. Other surveys also show that customers still consider peanuts as utility players and primary nut. This implies there is always an opportunity to grow for peanut products.
Therefore, I recommend Planters Nuts to quit the new markets and re-focusing its resources on its core product, which is peanut.
Target market and positioning
I suggest the following adjustment for peanut’s target market and positioning:
Gender: Table 11b reveals that women consume more snacks and nuts than men. Although more men eat peanuts than women, the percentage of women who consumed peanuts is still significantly high (44%). Therefore, targeting both men and women will help Planters capture a more significant market share.
Age: the age range should be adjusted to 45-65. This suggestion is based on Table 11a. Customers from this age range have a higher consumption rate index. A smaller age range will help Planters Nuts to be more effective in focusing its marketing efforts.
Peanut right now is trapped between less healthy than almond and less tasty than cashew. The following strategies will address this problem:
New flavored peanuts: new flavors will be the critical differentiation for Planters Nuts to stand out from Emerald and stores brand. Also, the flavors will lower the “less taste than cashew” threat and attract more customers since they usually want to “eat more nuts and types.” “New peanuts” will be appealing to these customers. Also, the flavored peanuts will help change customer perception about “basic nut,” which in turn can justify the price.
- Smoked: based on almond reference, although almond is less tasty than other nuts, customers still like smoked almonds. Therefore, I believe that smoked peanuts will be appealing to customers;
- Other flavors: ranging from typical flavors to new ones to attract more customers who are curious to try new types of peanuts;
Packaging: highlight healthy facts of peanuts to educate customers that peanut can be as healthy as almond, but cheaper and tastier.
The Planters Nuts brand is considered “Costly,” especially when its main product Peanut is usually perceived as “cheap and basic” by customers. Therefore, I suggest the following pricing strategy:
- For basic peanuts: lower the price to become competitive with peanuts from Store brands and Emerald;
- For Flavored peanuts: the price should be the same or a bit higher than basic peanut to justify for the flavors;
- Offer discounts/sales so that the products can be more appealing to customers, who are usually price-sensitive in this market.
Since customers usually “grab-and-go” and move quickly through the aisle, the products should be…