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Smuckers the Bulk of Smuckers

The vast majority of the trademark value at Smuckers ($1.824 billion) is considered by the company to be indefinite-lived, not subject to amortization. This means that the company believes its marks have near-permanent value, evidence of their strength in the market.

The companys distribution competency is also considered to be one of its greatest strengths. Smuckers has saturation distribution across North America, which allows it to launch brand extensions and new products and to outmuscle smaller competitors. Distribution also allows Smuckers to forge partnership with its retailers that can help with product positioning within the store (merchandising) and with new product introductions. Smuckers can place complementary brands together to enhance its merchandising capabilities. The result has been strong financial performance, which in turn has fueled the companys strong balance sheet. This financial strength has allowed Smuckers to make acquisitions that have strengthened its brand portfolio. For example, the company acquired Folgers from Proctor & Gamble in 2008, taking advantage of that companys inability to leverage the brand — most of Smuckers profit in 2009 came from Folgers which acts as a complement to the Dunkin Donuts coffee already marketed by Smuckers.

The weaknesses at the company seem at present to be more theoretical than actual. Smuckers brands lack dynamism, but they are still strong in their segments. Thus, the brands represent risk rather than weakness. This decision is key because it allows Smuckers to address the issue before it becomes a problem over the long-term. Smuckers also has issues with respect to pricing power. This reflects the issues with respect to the brands. The company for the most part attempts to use the value of its brands as a point of differentiation but this strategy should result in the company being able to generate premium rents on its products. However, margins that lack the industry average indicate that this is not the case. There is the risk that Smuckers brands fall in a position in the market where they are not viewed as premium but are also not viewed as cost leaders either.

According to Michael Porter, this is a difficult position in which to derive long-term success (QuickMBA, 2007). Smuckers at present, however, has enjoyed long-term success, perhaps in spite of the conventional wisdom.

Conclusion

Despite the weaknesses/risks that are apparent, Smuckers has enjoyed success. With Folgers, it acquired the right product at the right time. The timelessness of other Smuckers brands has helped the company to weather the shift in social and demographic trends that would otherwise threaten its business. As a result, Smuckers has been able to record strong financial performance in the long run. In recent years, the company has worked to build out its portfolio of brands. Its acquisition and brand — building strategy has placed emphasis on brands that directly complement the existing product line. This conservative strategy has thus far been effective — Smuckers may not work hard to address its perceived weaknesses but it plays to its strengths and that has allowed it a long run of success (MindTools.com, 2010).

Works Cited:

MSN Moneycentral: Smuckers. (2010). Retrieved May 15, 2010 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=SJM&lstStatement=Balance&stmtView=Qtr

Lin-Fisher, B. (2010). Smucker to cut 40% of Oroville plant workers, build new factory. Ohio.com. Retrieved May 15, 2010 from http://www.ohio.com/news/top_stories/89013322.html

Smuckers 2009 Annual Report. In possession of the author

QuickMBA.com (2007). Porters generic strategies. QuickMBA.com. Retrieved May 15, 2010 from http://www.quickmba.com/strategy/generic.shtml

MindTools.com. (2010). An external-internal analysis. MindTools.com. Retrieved May 15, 2010 from http://www.mindtools.com/pages/article/newSTR_89.htm.

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