I. Situation Analysis
A. Mission Statement: Calambra utilizes California’s Central Valley, Oroville olives coupled with seventh-generation expertise to produce hand-pressed, extra virgin olive oil, providing connoisseurs with the highest quality and best tasting olive oil in the world. B. Production Capacity: The year is 1993 and is the first year of operations for Calambra. Partnering with Gino Ambrano, a seventh-generation olive-oil presser of Sicilian descent, Calambra had purchased 800 gallons of Gino’s olive oil to test the market potential. Because the mission of the organization is to provide the highest quality, best tasting olive oil on the market, only Ambrano’s olive oil may be used for this venture. For personal reasons, Ambrano is only willing to press about 6000 gallons of olive oil for 1994. Of the 6000 gallons, 210 will be lost during the bottling process leaving 5790 gallons to be filled into 750-milliliter bottles. With 3.7853 liters to a gallon, production capacity for 1994 is 2435 twelve-bottle cases. Financial Capacity: In 1993 Calambra was making a gross margin after brokerage of $59.16 on a twelve bottle case sold at $150.00 each. If a bottling company is utilized the gross margin will decrease around $4.00. Not much else is given. Marketing Capacity: Promotion in 1993 consisted $1500 in advertising, organizing taste tests, and handing out giveaways as well as receiving free coverage in San Francisco Focus magazine and in an article of the Los Angeles Herald for winning a well know olive oil taste test competition. The primary costs of these efforts were Frank’s time and 25 cases of oil used in the taste tests and giveaways. More time and money can be spent. C. Competitive Environment: Calambra is in the olive oil business fit for consumption. There are several retail grades in this category, from highest to lowest quality: Extra Virgin olive oil, Virgin olive oil, Pure olive, and Olive Oil. Calambra specializes in the Extra Virgin category which accounts for less than 10% of the olive oil produced and contains no more than 0.8% acidity. Judged to have a superior taste, like fine-wine the best products are considered to be produced from the traditional Mediterranean region. Calambra has decided to emphasize the origin of their olive oil (Central Valley, California) to gain a competitive advantage and ranked number one in a taste test among 21 Italian, French, Spanish, Greek, and California olive oils. D. Strategy Criterion: Calambra is moving in a product development direction and is trying to compete in the Extra Virgin olive oil market. With the intent to become the leading brand in the market, the product differs from its competitors due to its origin, its high quality and its original packaging, as it is sold in “dead-leaf” green wine bottles, with the bottling year on each label to encourage consumers to make the connection between olive oil and fine wine. E. Business Decision: Frank Lockfeld, owner and founder of Calambra must decide on how many gallons of olive oil to purchase from Gino Amabrano for 1994. Though it is only three months in to the venture, and the market has yet to be proven for their product, the nature of the industry requires planning far in advance. F. Symptoms: Some surface indicators signaling the existence of the marketing problem include: The existence of a viable market segment for this expensive, high quality olive oil has yet to be proven. Also, are the promotion efforts sufficient enough to make consumers aware of the product they are offering? And finally, the price in which the olive oil is being offered at. II. Marketing Problem
Frank Lockfeld’s main marketing problem concerning his olive oil business is proving if there is a feasible market segment for high quality California olive oil. A subset of this problem would be determining how many gallons of olive oil to order from Ambrano for the year of 1994. This is proving to be an...
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