Recording-2025-03-12T23:29:26.211Z

Strategic Issues in FMCG Environment

  • FMCG Definition: Fast Moving Consumer Goods (FMCG) refers to products that sell quickly at relatively low cost.

Understanding FMCG

  • Commonly found in supermarkets.

  • Major manufacturers include brands like Mars, Cadbury, Coca-Cola.

  • Examples of products from Mars: Mars bar, M&M's, Snickers, Twix, etc.

  • Notably, Mars' largest selling segment in Australia is pet food products.

Mars Marketing Strategy

  • Mars effectively segments various markets with a range of products:

    • My Dog: Premium pet food for small dog breeds, targeting pet owners who treat pets as family.

    • Pedigree POW: Premium product recommended by breeders, targeting larger dog breeds.

    • Chum: Cheaper wet food for budget-conscious consumers.

    • Goodo: Affordable dry dog food for the mass market.

Additional Mars Products

  • Other notable products include Dolmio, Master Foods, Uncle Ben’s.

  • Mars acquired Wrigley chewing gum in 2008, holding products like Skittles and Starburst.

Company Statistics

  • Mars Australia and New Zealand:

    • Net sales over $2 billion.

    • Operates at seven manufacturing sites with over 3,000 associates.

  • Mars Global Statistics:

    • Over $40 billion in sales globally.

    • Employs more than 70,000 associates in approximately 73 countries.

Historical Timeline of Mars

  • 1911: First Mars candy factory.

  • 1931: Introduction of a candy wrapper that led to the invention of M&M's.

Company Structure and Management

  • Mars is privately owned by the Mars family but managed non-family.

  • A Mars family council oversees the company.

Strategic Management in Accounting

  • Emphasis on SKU (Stock Keeping Unit) management for inventory control.

  • Mars evaluates profit and loss on a per-product basis, allowing detailed cost control.

Cost Analysis at Mars

  • Prime Costs: Include all raw materials like meat, grains, packaging and labeling.

  • Manufacturing Costs: Encompass factory operating costs including equipment depreciation.

  • Logistics Costs: Involves storage and distribution of finished goods.

Finance Overview

  • Example product: Canned dog food priced at $2.22 with net sales of $1.80.

  • Trade expenditure (marketing costs) is subtracted to determine net sales.

  • Margins reflect profit after accounting for conversion costs, advertising, and corporate expenses.

Whiskers Case Study Analysis

  • Product packaged as cardboard boxes with six pouches (competing Furball has four pouches in cheaper packaging).

  • Discussion points to consider: Why does Furball outsell Whiskers despite product superiority?

  • Market share considerations: Whiskers at 48%, Furball at 52%.

Financial Implications for Whiskers and Furball

  • Whiskers' sales figures and market comparisons presented:

    • Regular retail price of $4.59 compared to Furball’s $2.99.

    • Regular sales yield a 55¢ profit after retail margins.

Possible Strategic Directions

  • Recommendations: Changes in product pricing, packaging, manufacturing, and marketing.

  • Considerations for demand sensitivity: Assessing volume effects of price changes and potential cost adjustments.

  • Competition response: Anticipate actions taken by Furball if Whiskers gains market share.

Conclusion

  • Focus on strategic management accounting practices to enhance competitive performance.

  • Constantly evaluating the competitive landscape and internal cost structures is crucial.