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.