29 Jun MBA 565-Pauline’s Pierogi Pleasures
Question
1.After reading the case, how should Bob segment his market in terms of the final consumer of Pierogi’s? How will this segmentation help him in determining the approach to use within the retail environment (frozen, fresh or both)? Be specific in your answer. Make sure to include the specific segmentation variables and state why you are using them. Then, describe the current brand management position/stage Bob is facing with his product? Why is this important for him to assess and understand? (Points : 50)
2.Even within the grocery retail industry, brand relationship, customer satisfaction, customer value and product differentiation are important attributes to maintain. For a long-term strategy it is important for Bob to establish all four of these components with his business. Explain how Bob would use marketing research to assist in developing a strong customer focus and customer relationship focus for his firm. In your discussion describe each of the four previously identified components and how these will contribute to the customer lifetime value aspect of his business. (Points : 50)
Guideline
1. Please use lots of citation.
2. Follow the APA format.
3. Please Give the references at the bottom.
4. I am running out time so please if anybody can answer these two question within next 10-12 hours then answer otherwise please no need to do that.
5. Each question should be around 3 pages long.
6. Try to answer these questions after reading the case what I have attached.
7. Please don’t plagiarize anything.
Pauline’s Pierogi Pleasures This case focuses on the marketing plan and marketing issues required to expand a business from
a small operation catering only to a handful of stores and restaurants to a regionally recognized
food provider. Bob has just received his bank loan but is uncertain as to his next move in terms
of expanding the trade area and the appropriate channel to follow in doing so. He has a desire to
place his product into grocery stores and restaurants but is working with limited resources. The
consumer market within which he is operating contains some major hurdles he will have to
address and overcome within his marketing plan as well. Bob is at a decision point and is now
looking for that ‘pie in the sky’ voice to tell him what his next strategic marketing move should
be. Page 1 of 11 Pauline’s Pierogi Pleasures1
Pauline’s Pierogi Pleasures operates under the mission of preparing and offering the finest Ethnic
Eastern European foods available in West Central Florida. Pauline’s product offering includes
Blintzes, Golabki, Kaputsa and Kielbasa but the main item in the product line is the traditional
Pierogi. Since taking over the company six years ago, Bob has had the vision of expanding the
company from a local distribution company to the pierogi provider for the Southeast United
States. Ultimately, Bob wants to further develop an internet presence allowing the company to
deliver directly to the consumer within the continental United States as well as Canada. To date, Bob’s ability to achieve his dream was dependent upon two major events—approval of a
new small business loan and a new marketing plan. With the bank approval of his new small
business loan he can fund the expansion of his production facility which removes the first hurdle.
However, the second hurdle still exists, the development of a marketing plan that would allow
him to expand his distribution. One thing that Bob wants to keep in check is the value and
perspective of the company as he expands the company to new heights. Those values began
when the company originated. History of the Company:
Pauline’s Pierogi Pleasures was originally founded by Pauline Gajdzis. Pauline migrated to the
United States from a small community outside of Krakow, Poland. Pauline started the company
out of her love of a traditional food product known as a pierogi. And just like many other food
1This case is designed for classroom discussion purposes rather than to illustrate effective or
ineffective handling of an administrative situation. This case is based on an actual company but
the names have been changed form anonymity reasons.
Page 2 of 11 based companies in the United States, Pauline built the company out of her kitchen into a very
successful small business. After several years of operations Pauline decided to retire and sell the
company to two sisters who had the desire to own and operate a food based business. Ellen and Rachel successfully took over the company and maintained the traditional Ethnic
European Cuisine. The sisters maintained the customer base Pauline had created since they did
not change the company name. Ellen and Rachel had planned to expand the clientele base from
the local area to a broader target market of people familiar with pierogis; people with an Eastern
European Culture. Unfortunately after only a short time of operation Ellen and Rachel had to
abandon their dreams of business owners after Rachel became ill and was no longer able to
work. Ellen was unable to maintain the company on her own. That is when Bob entered the
pierogi industry. Bob had a strong business background. Over the years, Bob had worked in sales, quality control,
and as a business account manager. Through these various career positions Bob understood the
key requirements of operating a successful business. His most recent experiences included
quality engineer in new product launch for a parts manufacturing facility, six sigma black belt,
and a BA in accounting which he had used in various accounting positions. Bob had no working
knowledge /base experience of operating a food based company but had an interest in cooking
and enjoyed exploring very traditional and culturally based foods. So when the opportunity to
purchase Pauline’s Pierogi Pleasures arose, Bob decided to pursue his dream of owning a food
based business. He actually relocated his family from the Northeast United States to Western
Central Florida. Page 3 of 11 What is a Pierogi?
A pierogi is best described as a piece of pastry or dough that is stuffed with various ingredients.
Going back to the tradition of the product, the original pierogis were normally stuffed with
mashed potatoes, spinach, sauerkraut and/or cheeses. When available, some meats would also be
included in the pierogi but most did not include a meat. Another way to describe a pierogi is to compare it to a product many consumers are familiar with
—a ravioli. Raviolis are simply two pieces of dough normally stuffed with cheese or meat.
While the ravioli is normally square in shape, the normal shape of a pierogi would remind you of
a half-moon. Pierogis come in basically two sizes: large and small. The large pierogi is an
entree style or size while the smaller pierogi is normally used for dessert or snack type of
product. Product Offering:
When Bob took over the business, the product offering was limited to just a half dozen flavors of
pierogis. Since taking over the business Bob has created the following product lines/groupings: A breakfast line consisting of three different pierogis,
A lunch and dinner line consisting of ten different stuffings some of which overlap with the breakfast flavors,
A dessert line consisting of two fruit flavors, and
A ‘Create your own’ line. Production Process: Page 4 of 11 Once the dough/pastry has been stuffed, the traditional approach is to boil the pierogi to make
sure it is fully cooked. Then the pierogi can be sold as ‘fresh’ or flash frozen and packaged. The
consumer then further prepares the pierogi by steaming, baking or sautéing on a grill with
various seasonings and spices providing additional flavoring. In the frozen state pierogis have a
shelf life of 6 months. With his current production configuration he can produce 16,600 dozen pierogis a year. With the
expansion he will be able to produce 950,000 to 980,000 dozen per year at full capacity. ‘Create your own pierogi’ option. With this option the consumer can provide fillings or like a
pizza mix the standard stuffing offerings to satisfy their individual taste. If the consumer creates
their own there is a longer turn-around on the order and there are also minimum quantities
required. Since Bob is working with a single production line when doing the ‘create your own’
pierogi he must suspend his normal production operations, clean the machines, produce the
product and then re-clean the machines. Because of the additional labor, the ‘create your own’
pierogi is priced higher than the other pierogis. Bob has developed a line of appetizer pierogis. These pierogis break away from the traditional
pierogi filling and focus more on traditional appetizer flavorings. His short list of flavors
includes philly cheese steak; sausage, pepper, and onions; fajita; buffalo chicken; BBQ; and
cheeseburger. The appetizer pierogi is a little smaller in size than traditional pierogi but the cost
per dozen would remain approximately the same. Page 5 of 11 With the current health movement Bob is also considering offering a pierogi that no other
company offers: gluten free. This will require him to completely shut down production, do a
complete wash down/sterilization before making the gluten free pierogis or he would have to
have a production line dedicated to only making the gluten free pierogi. Either way there will be
additional production costs along with higher materials costs since gluten free flours are much
more expensive than traditional flour. Bob believes this move would put him in strong market
leader type position. He is waiting to see how long term the organic food movement actually is
before he considers creating an organic line of pierogis. Current and Future Distribution:
At best the current distribution system could be described as extremely fragmented. The key
point of distribution currently is the store front located in Hudson. Through this facility the
general public can purchase fresh pierogis over-the-counter. Bob also has an e-commerce
presence but it is receiving minimal traffic. It was through this site Bob hoped to receive B2B
orders and to reach out to individual consumers but has not experienced the level of success
hoped for or expected. Historically the over-the-counter sales contributed the most to sales. In
addition to these sales Pauline’s had minimal distribution through a few small neighborhood
grocers. These outlets have maintained a consistent base line of sales but has not expanded in
terms of overall sales. As a goal, Bob would like to develop the business to achive a sales breakdown close to the
following: Page 6 of 11 20% of sales from ‘direct’ consumer purchase evenly split between over-the-counter and eCommerce
40% of sales through restaurant distribution providers, and
40% of sales through grocery retail with no one grocer maintaining more than 50% of
this category. Bob has also attempted to enter the restaurant market and has experienced limited success.
While the traditional pierogi line has not been successful, offering the ‘create your own’ option
has been successful. He currently has two restaurant chains that have developed their own
specialty stuffings and have required Bob to guarantee he will only produce those flavors for
their restaurant. As a strategic approach Bob has decided to pursue the grocery retail channel
first. Promotional Support:
Much like the other strategic components of his marketing plan, his promotional strategy is
extremely limited and lacking in sustenance. Currently Bob has been highly dependent upon
word-of-mouth from his OTC customers, providing limited growth. Much of the word-ofmouth has been propagated through churches and schools, unfortunately, Bob has exhausted
most of those venues. For his B2B customer, Bob has focused on trade show appearances and limited sales call. (Bob’s
staff is himself and four part-time production workers. He does not have a formal sales staff.)
When possible, Bob has provided product at other business focused functions (e.g. Chamber of
Commerce events, fundraiser events, etc.) which have produced some one-time sales Page 7 of 11 customers/orders. He has not realized any large gains from these business based activities. As the case with many small businesses, a major limitation is the lack of funds to create and support
a salesforce. After reading a few articles in the local paper and business journal, Bob began to dabble in the
social media arena. As the basis of this move, Bob established a website with a twofold purpose.
First he wanted to provide an informational point for people who were interested in learning
more about pierogis and possibly ordering his product from the website. Bob had hopes and
expectations that the creation of a website would be a catalyst to sales, not only in the southeast
area of the United States but throughout the country. The second purpose was to provide a link source to his social media sites. He had created a
Facebook, Twitter and Pintrest presence. However, the frustrations of trying to maintain the
social media sites far outweighed the results. First, Bob found that there was an existing
Facebook page associated with the company. After several attempts to contact the former
owners, to no avail, and attempts to get Facebook to deactivate the page, Bob had to abandon his
desired page and develop a new name for his site. The last time he checked his Facebook link
was not functioning and he could not figure out why. His Twitter link was functioning but only
had 428 tweets, 298 followings, 75 followers and 11 favorites. Bob had not kept up the tweets as
he should. It had been over six months since he took time to Tweet. And his Pintrest site had no
participants or pins. Page 8 of 11 Internally, his website was also replete with link issues. He had established the site so people
could choose the type of pierogi they wanted to investigate. Two of the links from the homepage
to the subpages were not functioning. Much of the information provided was dated and vary
rarely updated. He had actually received some posts in his blog area inquiring if the company
was still open. Since Bob had not responded to the posts it was likely the customers assumed the
company was no longer in operation but had not taken down the website. Pricing Strategy:
Bob’s pricing strategy is quality/value-priced based. Bob is trying to develop a reputation and
perspective of a high quality item. His standard price for one dozen pierogis ranges between $5
and $7, most at $6 per dozen. The ‘create your own’ pierogi starts at $10 per dozen. Depending
on the ingredients used in the pierogi the price may be as much as $12 per dozen. These prices
are a little higher than the prices of the main competitors. Depending upon the ingredients the
competitors’ prices range from $2.79 to $5.39 per dozen in most grocery stores. Based on his
current production costs and overheads, he does have some room to manipulate price but he also
wants to make sure that his pricing strategy reflects the quality of the product. While he has
completed no in-depth research or analysis, he personally believes he offers the highest quality
pierogi on the market and believes his price should reflect as much. A breakdown of his cost
structure revealed total variable costs of $1.87/dozen and total fixed costs of $0.20/dozen. Bob
has a desired gross margin of 45 to 55 percent. His current annual marketing budget allotted for: Advertising $20,000
Merchant Service Fees $2,600.00
Page 9 of 11 Sales Promotions (Samples) $850.00
Sales Staff $35,000 Competitive Environment:
Pauline’s Pierogi Pleasures is the only manufacturer of fresh pierogis in the West Central Florida
area. There are several fresh pierogi manufacturers in the Northeast United States that operate
within a local market and most do not have the capacity or capability to expand beyond their
current market area. Pauline’s main direct competition is from two national distributors of pierogis. From a product
offering, the fillings are basically the same and the size is comparable to Pauline’s large pierogi.
The largest competitor is Mrs. T’s Pierogis. On the company website Mrs. T’s shows 12
different varieties but normally only three or four are actually available in the grocery frozen
food section. Pauline’s variety matches closely with Mrs. T’s. Another major competitor is Riseman Pierogi. One of the differentiating factors with Riseman is
the organic feature of their product over the other products. This product is closest in price to
Pauline’s since it is a more expensive organic product. In the local market, most retailers only
carry one flavor of the Riseman pierogi. A differentiation strategy Bob has considered following is to offer his product in the grocery
store as both fresh and frozen. Following the guidelines established by the USDA2, he could
prepare and sell his product if he does not flash freeze it. In other words, once he makes the
2 www.fsif.usda.gov web site, “Fresh, “Not Frozen” and Similar Terms when Labeling Meat and
Poultry Products”, retrieved September 1, 2015.
Page 10 of 11 product even though it is parboiled, the product can be labeled as “fresh” and sold as such
through the meat counters of the grocery store. By using this approach Bob is able to maintain
his quality image and differentiate himself from the competition. A second option would be to
sell the product as “Fresh but Previously Frozen”. However, Bob prefers to not associate the
counter product with the frozen image. Entering the Grocery Industry:
It is now time to take the next step and develop a plan that will allow him to enter the grocery
retail industry. To match his quality image he wants to focus on grocers that will provide the
appropriate image and sales support. He has a desire to place his product in Publix’s, a regional
grocery store chain known for its high quality customer service. Bob realizes there are issues he
must first address before going there: What should he do in terms of his current promotional plans?
What would a point-of-sales program look like for his product?
Should he enter with just the freezer line of products or should he also pursue the fresh product line as well?
How can he make his social media presence achieve his desired goals and also support
the entry into the grocery retail environment? Page 11 of 11
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