Mavesa's Nelly Brand: Improving Distribution to Gain Market Control

Mavesa S.A. is a leading Venezuelan food company that is confront the dilemma of repositioning its Nelly mayonnaise brand using a lower price in response to the economic conditions. This hot strategy attempts to gain grocery store share, but it represents an adverse involve for profits in the long run. In my opinion, the company sooner of reducing the product?s price, it should focus more on giving attractive incentives to wholesalers. In addition, the company should take into regard a new campaign to reinforce the brand mental picture of this product in order to retain customers? loyalty. Finally, the company should foreclose investing in R&D to break packaging and tasting.

During the 1990s, Venezuela was experiencing a deep recession and the effect was felt up in the food industry in a step-down of consumption, but most important in the way that consumers were ever-changing to lower priced brands. Mr. Paez, manager for Mavesa mayonnaise, argued that a price cut would growing sales for around 40 percent with a taxation profit remaining the same. However, the estimate was unrealistic since the mayonnaise market was contracting and he was expecting to sell more than 60% event of tons (see exhibit 1). Therefore, from my perspective, I believe that improving the scattering in small and median(a) stores through wholesalers is the best substitute(a) to increase sales without dropping the price.

So far, small and medium stores were serviced mostly by wholesalers (75 percent); however, Mavesa?s products were not present in most of these stores. Thus, the actual problem in distribution sess be solved with a better incentive to wholesalers which nates improve Mavesa?s sales without investing in more direct sales force for those channels. Personally, I would increase the advance discount given to wholesalers (see exhibit 2) from 25% to 30% to travel them to push...

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