Bitter Competition: The Holland Sweetener Co. vs. NutraSweet (A)
1. How should Vermijs expect NutraSweet to respond in the Holland Sweetener Company’s entry into the European and Canadian aspartame markets?
Vermijs could expect two responses from NutraSweet: try to “save” its monopoly by fighting and low the price and start a price-war with HSC; or accept the entrant and its pricing and finally share the market.
With the acquisition of Searle in the summer 1985 by the giant Monsanto, NutraSweet became a stronger brand. In 1986, the net income of Monsanto Corporation was $433M, and NutraSweet net sales rose to $711M.
With Monsanto support, NutraSweet was strong enough to conduct a price war, but the HSC had strong resources
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The two manufacturers Ajinomoto (NutraSweet) and Tosoh Corporation (HSC) could compete, with quite same net income in 1985, but with two advantages for Tosoh: around $150 000M more assets value than its competitor and an important decrease in Ajinomoto’s net sales (thus in net income) in 1985.
Moreover, another advantage for NutraSweet was the leadership of Monsanto in several U.S. markets, and its partnerships with Coke and Pepsi, allowing the brand to expand easier in the rest America, especially in Canada.
In conclusion, NutraSweet could launch a price-war in Canadian market, because of its size and presence in America, but should compete in Europe with its less comfortable position there than NutraSweet beneficiating from the DSM strong presence in Netherlands, Germany and others European Countries.
2. Specifically, how should Vermijs assess the relative likelihood of the two scenarios – price war and normal competition – he has in the market?
In order to evaluate the relative likelihood of the two scenarios – price war and normal competition let us list the factors that would lead to one of the two scenarios.
Price war
1. Previous experience
- When the NutraSweet entered the market they followed the strategy of Price War. In order to get the significant market share of sweeteners the company offered up to
d. Calculate the price elasticity of demand in each market and discuss these in relation to the prices to be charged in each market.
- 1. How should Vermijs expect NutraSweet to respond to the Holland Sweetener Company’s entry into the European and Canadian aspartame markets?
cash receipts. Its total worth was $2.8 billion. Of this, 60% came from farm sales of milk and
9. Imagine that you are buying a new computer and comparing different brands and prices. Describe at least two nonprice competition factors you might consider when making your decision. (2-4 sentences. 2.0
In the following analysis, we will first identify the key issues that Sunshine needs to tackle. We will then evaluate the current market conditions of the manufactured juice industry, Sunshine, and its competitors. To find a suitable market match for Sunshine, we will look into the behavior and characteristics of orange juice consumers. Afterwards, we
price point than the big 3, the company saw this as the perfect strategy to penetrate the saturated
• Price war may start due to competition which may put pressure on BBBY’s profit margin.
Jif’s flagship creamy peanut butter spread was first introduced in 1958. Since 1981, Jif has been the leading peanut butter brand in the United States. As of 1998, Jif had an estimated 42.5% of the market share, dwarfing closest competitor Skippy at 28.8% (Marigny 99). In 2002, The J.M. Smucker Company purchased the Jif brand from Proctor and Gamble. The purchase of the largest peanut butter brand in the U.S. by the famous jelly manufacturer was likely a strategic move to streamline distribution of the complementary products.
However, soft drinks manufacturers were its major customer (80% of the total aspartame consumption) with table-top product as the secondary (15% of total aspartame consumption) . Notably, the soft drinks industry was dominated by two major players – Coca Cola and Pepsi Cola, accounting for 60% of the soft drinks market. Usually, this would have led to a strong buyer power, however, NutraSweet had the advantage due to its monopolistic position as the sole provider of aspartame. This power could easily dissolve once the patents expire and alternative producers enter this industry.
General Mills competes in a dynamic environment. Some of their competitors are Kellogg’s in the cereal segment. Cereal was a product that used to be the number one election for breakfast in American. As time and new knowledge evolved, consciousness about products with less sugar or gluten free arose making the cereal industry tumble. Products like protein bars, Greek yogurts, and even fast food are the new options to start the date, gaining market share over the cereal industry.
stores counted on soft drinks to generate consumer traffic, so they needed Coke and Pepsi products. But due
The competition between Coke and Pepsi reached its peak to become a real war battle by the year 1980. This war had affected the industry profit for both concentrate producers and bottlers, while the effect of bottlers was much higher. After the successful “Pepsi Challenge” (blind taste tests: sales shot up) in 1974, Coke countered with rebates, retail price cuts and significant concentrate price increases. Pepsi followed of a 15% price increase of its own. During the early 1990’s bottlers of Coke and Pepsi employed low price strategies in the supermarket channel in order to compete with store brands. The concentrate producers were always able to increase their profits by increasing the concentrate price, while the bottlers, especially the
The threat of customers finding substitute products from other manufacturers in the food industry is high. In the ready-to-eat breakfast cereals segment, General Mills’ primary business focus, there are a variety of similar products being
The cereal market is a booming industry. It has been around for over one hundred years and continues to attract millions of customers’ everyday. The market structure of the cereal industry is an Oligopoly. This is because there are four large firms, Kellogg, General Mills, Post, and Quaker Oats, which dominate the industry.
Controversies, Infobase Learning, 26 July 2010, http://icof.infobaselearning.com/recordurl.aspx?ID=2311. Accessed 20 Feb. 2017. This source was written in order to discuss the benefits and harms of using artificial sweeteners in place of sugar. This article was published in the Issues and Controversies database; therefore it has been used in academic writing previously. We can conclude that the source is unbiased and credible. It compared the high health risks of sugar to the very low health risks of artificial sweeteners. Also extensively covered, is the history and development of artificial sweeteners, and the opposing opinions on both. This source is lengthier than many similar ones, and contains more factual information and research-backed claims. Of all the sources, this one supports the thesis the most by providing