Question

Case Olive Oil

Bertolli, an Italian leading companies in sales of olive oil, will be the primary player in the project “PREMIUM EXTRA VIRGIN OLIVE OIL” financed by the European Union. The main purpose of the project is to promote consumption of top-quality olive oil and consequently motivate trade in extra-virgin olive oil between the European Union and Latin America. The main theme specifically relates to the contribution made by technological innovation to the production chain of extra virgin olive oil, which has permitted product differentiation between so-called “standard” olive oil and “premium” extra virgin. The event related to the project will be held in the city of Santiago in Chile from 21 February to 14 March 2019 and in Mendoza in Argentina from 27 to 30 March 2019, with talks given by leading companies in the sector. Bertolli will be presenting the company describing its activity: from selection of raw materials to bottling through processes with quality standards that are higher than those required by law; through its marketing and internationalization strategies that have led to its great success in Italy and throughout the world; presenting its philosophy of innovation, which always respects tradition and is based on market segmentation and the diversification in its product portfolio to meet all the needs of its consumers and of organized distribution. Dott.ssa Alissa Mattei (Bertolli Research & Development Director) will give special importance to the research that for years Bertolli has dedicated to the world of olive oil and in particular to the study of the nutrition, chemical-physical and organoleptic aspects of this product. During the talk she will illustrate the steps that Bertolli has taken to estimate market potential and potential gaps in Latin America and will highlight the importance of improving consumers’ perception of high-quality products. In order to help Alissa Mattei, her assistant Chiara’s been asked to come up with a report understanding the reasons of the dissatisfactory performance of extra-virgin olive oil in the market of olive oil in Latin America in 2018. During the project preparation, Chiara discovered that 75 percent of the 562m Latin American population have currently access to food and cooking facilities, while a 80 percent penetration is foreseeable. She found that Latin Americans use extra-virgin olive oil only 1 instead of 2 times a week, because they also use standard olive oil, and quantity use for each meal is only 10 ml of extra-virgin olive oil compared to 20 ml in other countries.

Part A: Chiara will be asked by Alissa Mattei about her opinion of the dissatisfactory performance of extra-virgin olive oil in Latin America in 2018. Help her to identify the main reasons of the dissatisfactory performance, considering that Bertolli sells one-liter bottles. (hints: calculate the potential market, the primary demand, the first level gap, the opportunity gaps and the level of market absorption. Provide the %. Interpret the results of the analysis).

Part B: 1. Based on the results from Part A, which is the best strategy Bertolli could use during the “Premium Extra Virgin Olive Oil” project to decrease the first order potential gaps? In Latin America, should Bertolli concentrate first on non-consumer gap, occasion of usage gap, or dose gap?

2. Please help the company to set up the advertising policy by providing a brief for the Communication Agency, to support the designing of the ad (copy strategy).

3. Beside communication, how can Bertolli differentiate from competitors in terms of price, packaging and channel distribution? How can they use wisely omnichannel strategies?

all the values needed are provided but it has to be in excel form.
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Answer 1

Market potential is the entire size of olive oil that can be achieved in Latin America. If we assume 75% of the population is using extra-virgin olive oil 10ml per week. Then, in terms of volume- market potential will be calculated as-

1. 75% of (562,000,000) * 10ml* 52 = 219180000000 ml or 219,180,000 Litres/bottles of Extra virgin olive oil per year

2. Primary demand- Means the interest of a consumer to purchase the whole line of the product instead of a certain niche. In this case, primary demand will consist of standard olive oil + extra virgin olive oil demand. ie.

75% of (562,000,000) * 30ml* 7*52= 4602780000000 ml or 4602780000 litres/bottles of olive oil per year

3. To analyze the gap between where the brand wants to be and where will it be without doing anything, it is important to understand the factors ( product, price, promotion, place, people, and process). In this case, there can be cultural gaps that lead to a lower volume intake of oil or there can be a price factor that doesn't let people use premium oil more often.

4. If the market penetration increases from 75 to 80%, without any further efforts, market share will increase. However, it will be a small increase. In order to get more market share, the brand should advertise the positive effects of olive oil and introduce smaller packets in the market at lower price points.

The market absorption is difficult to calculate with given data points. I hope you find this helpful!