Walmart and Vlassic Pickles Case Prelim Report PDF

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Walmart v. Vlasic Pickles Case Study Preliminary Report including key facts, problem statement, solution, and rationale. ...

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Alaina White Walmart and Vlasic Pickles February 15, 2018 I.

Key Facts Patrick Hunn, Team Leader of Walmart Sales, for Vlasic Foods International made a deal with Walmart, who accounts for 30% of Vlasic Foods sales, to offer a gallon jar of their pickles at the front of the Walmart store. This gallon jar of pickles would be sold at $2.97 a jar, and would be Walmart’s new “customer stopper” product offered in over 3,000 of Walmart’s stores. In this deal, it was told that Walmart would continue to buy Vlasic’s other products, like relishes, peppers, and other sized pickles (“grocery segment”) with each order of the gallon jar. Walmart did not tolerate late orders or out-of-stocks, and Vlassic has no difficulties meeting Walmart’s volume requirements. The gallon jar of pickles was originally located in the Food Service, or Institutional section, of Walmart, and was not as frequently shopped as the other aisles. A manager of a Walmart store had an idea to sell the gallon jar of pickles at a discounted price (using promotional dollars) for Memorial Day weekend. The gallon jar of pickles “sold like crazy” and other stores wanted to duplicate the promotional success. When the deal was being made, Walmart executives were convinced that the sales of gallon pickles would increase in the place of the jars were moved to the end aisles. Another control measure was made that said the total number of cases that Vlasic

would sell to Walmart would be established at the start of the fiscal year as part of the normal planning process. The gallon jar started off to be successful, selling more than 240,000 gallons per week, however, the production quantities started to put a strain on the production system, as Vlasic’s profit was down 25- 50 percent. Because production was so high, and the profits that Vlasic was making from this promotion were just a few cents, there were small losses per jar. The marketing department at Vlasic reported that the profits predicted for this deal were diminished by the expenses associated with the loss of business in other non-Walmart stores. The price deal became a normal, Walmart everyday low price in the customer’s mind, and Walmart continued to profit from the deal. Walmart continued to show growth in its new stores and existing stores with is high revenue and gained profits. Through the deal to sell Vlasic’s other products, these product’s sales grew (cannibalization). II.

Problem Statement Vlasic’s deal with Walmart seemed that it would be a good promotional deal for both Vlasic, and Walmart, however, some marketing, logistic, and financial factors were not considered before making this deal. From a marketing and financial standpoint, a profit and loss statement should have been developed to see just how many of the discounted gallon pickle jars they could sell. This also would have been a good way to review the costs that would incur in the production and distribution of these jars.

III.

Critical Thinking and Rationale Walmart had the power of the buyer because even at the beginning of the deal, Walmart accounted for 30 percent of Vlasic sales. If Vlasic chose not to do business with Walmart, they would lose that percentage of sales. To not do business with Walmart would not be a realistic option for the Vlasic company, because they would lose that outlet, placement, and profit of their product. Walmart also could have easily switch pickle suppliers, or even easily decided not to promote Vlasic’s pickles. Logistics and supply chain management had a great role in the way Walmart conducts business. The products they put on the shelf have a very low shelf life, as they do not like to store excess products. Keeping count of how many products are needed, and when they are needed are very important in the Walmart store. If a deal like this is ever done again for Vlasic, the management team should definitely take a greater preparation and develop a greater strategy into how they are going to supply their outlet the number of products needed, and also they should develop a profit and loss statement to see if they can afford to produce the quantities needed and to also see if they can make a profit....