Page 1: Introduction
In 1950, Bernard Matthews bought 20 turkey eggs and an old incubator - a total investment of £2.50. Today, Bernard Matthews is a multi-national company with a turnover in excess of £400m, employing over 6000 people world-wide. While the core business remained turkey production, Bernard Matthews decided in 1992 to enter the pre-packed sliced cooked meat market. At the time, it seemed an enormous risk. The capital investment required would be substantial, the market was already dominated by supermarket’s own label products and there were very few poultry products available.
Background to the decision
Although a market leader in the frozen turkey and other poultry markets during the 1980s, this position increasingly came under threat from competition during the early 1990s. In 1992, Bernard Matthews Plc’s turnover dipped after a period of steady growth. Further examination of the data might suggest that the mature stage of the product life cycle had been reached and that some sort of extension strategy was needed. Faced with such a situation, a firm can adopt a number of strategies. Firstly, it has to decide whether to persevere in the same market or to try to enter a new one, developing a new product or staying with the existing one. The various strategy options are shown below in Ansoff’s Matrix.
Bernard Matthews Plc decided to consolidate within its present market and develop its product portfolio, specifically prepacked sliced meats. This strategy of product development, it was hoped, would spread the product base and hopefully provide a more secure business.