Lessons From Quaker Oats
One of the biggest challenges faced by food manufacturers and the agriculture and food industry in general, is the fact that many food products are mature product lines. That means that sales are essentially steady - at best. In fact by its very nature, the food industry is characterized by relatively steady growth at relatively narrow profit margins. In mature markets, competition typically takes the form of price-cutting and gains by one firm are often at the expense of another. From that point the entire product line or category can become nothing more than a commodity that is priced as low as possible and simply milked for whatever profits are possible. That is not an enviable position, nor is it a position that a firm can easily escape. When an example occurs in which a mature product category is revived from the mature stage, it is worth taking a close look at how it was done. Lessons learned from one firm or product category might be applied to another in order to escape the clutches of maturity and commoditization. The purpose of this note is to examine the case of Quaker Oats rice cakes and how that firm twice managed to escape the clutches of product maturity.
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