Sara Lee Mastered its own demise!

I just knew Sara Lee would go into liquidation! For years I’ve feared this would happen, shaking my head every time I walked down the frozen foods aisle and saw the poor and poorer evidence of abandonment of the marketing talent that once shot Sara Lee into the limelight.

Sara Lee was once an FMCG hero! It applied the marketing concept with finesse and dedication. Sara Lee perfectly met the needs and wants of a target segment that was buoyant and dedicatedly keen to support the brand. With offerings that perfectly reflected consumer preference, sales skyrocketed!

But over the past 10 years (maybe 20 or longer), Sara Lee has shown every quality of a company that has lost its understanding of the word, “marketing”.

It’s Marketing Mix has been anything but appropriate, balanced, and proactive!

Product orientation, combined with an absence of the ability to recognise and respond to market trends, stooping to retail greed, and avoiding adequate consumer pull effort, have all been nudging Sara Lee to the edge of defeat.

Just look at the observable Marketing Mix for Sara Lee…

Sara Lee’s Product:

Where is the segmentation study where is the response to customer feedback? Where is the new product innovation? Where is the product portfolio mix management? Where are the product extensions? Where’s the investment in the brand? Where is the introduction of value in the total product particularly augmentations? Where is exploration into alternative channels? Where is evidence of utilising brand equity?

Promotion:

Where is evidence of any trial-inducing, non-price sales promotion? Subservient trade push, co-op and discounting, particularly in the frozen foods all do nothing to engender growth or profits. An absence of understanding of the customer guarantees guesswork in terms of creative concept and design as well as media planning: Sub-standard integration of integrated marketing effort means every dollar spent on promotion is sub-optimally spent.

Place:

Every decent FMCG marketing lead understands the inevitability to having to modify your marketing mix according to the product lifecycle. Sara Lee appears to have resisted following the traditional improving strategic guidelines that apply to products in maturity and ignored the symptoms of decline, without any observable strategic response. The management team drove the Sara Lee vehicle straight into a very observable, brick wall of defeat… oblivious to the alternative options that certainly would have created a turnaround path for the company.

Price

In almost every instance, in almost every industry, almost every product category in FMCG, desperation in pricing is cancerous and terminal.

Sara Lee demonstrated no ability to segment its market, preventing any ability to price fence or protect its margins, or demonstrate any pricing strategy methodology necessary to protect its brand, its profits, and its future.

Instead, we saw Sara Lee buy sales from its existing but eroding franchise by accelerating purchases (on special) – its frozen preservability became a weakness not its strength.  

The future was doomed by ignoring the need to expand usage, users, and uses.

The key element for any FMCG product to grow market share is achieving trial. In the controlled temperature category, this is a very difficult task if you do not understand the potential market and blue ocean opportunities.

People:

Warren Buffett says he stays away from companies that exhibit the ABCs of corporate cancer. Sara Lee’s executive team resisted contact from outside, exhibiting arrogance and bureaucratic management while sitting complacently and “watching Rome burn”.

Processes:

Sara Lee really clearly did not have a market-oriented team. Sara Lee did not conduct routine adequate market segmentation and monitor trends. For a company of this ilk to go into liquidation it I must have ignored all the indicators such as complaints, suggestions from dedicated lead users, feedback from the troops at the coalface, and criticisms as diverse as shareholders, trade partners, and industry scuttlebutt. Without a marketing information management stream attached to marketing governance, Sara Lee was doomed.

Perception:

In FMCG, perception is a reality. Everything Sara Lee offered to the marketplace was tired, old, and worn. There was either complacency or complete incompetence in total product development, in that packaging was bland and homogeneous, lacking any innovative characteristics, shelf shout, and feeling of value.

PESTLE:

 it’s difficult to assess how well the management team engaged and understood its environment but I would say Sara Lee resisted technological development. Sara Lee certainly ignored socio-cultural trends, may have tried to dodge economic indicators and probably focused on low-priority issues such as compliance and cost-focused issues.

The worst possible outcome

And now that liquidators are in charge, it’s unlikely that Sara Lee will have a happy ending unless a market-oriented saviour stands up and recognises the huge profit potential available by taking over Sara Lee and running it, wearing a quality FMCG marketing hat.

Slim Hope for Sara Lee

With good strategic marketing, adequate capital, and a determined set of strategic guidelines, Sara Lee not only could rule again but could become a significantly bigger player in controlled temperature products and its existing categories, as well as new potential categories, than Sara Lee ever imagined!

Sadly, my bet is that the Lisarow facility ends up being sold off for real estate development or as a commodity manufacturing plant struggling to make just-adequate profits to survive, owned by operationally focused management leadership that will deny its potential, turnover with a hardliner cost-control philosophy, and squander the opportunity.

What do other observers believe? I’d love to see some comments!