McCormick is a world’s leading producer and seller of spices. McCormick specializes in selling spices of all types including the standard and most widespread cinnamon and pepper and more exclusive spices popular in the particular region or culture. The target audience of McCormick includes restaurants and large manufacturers of food. Also, the company expands its product lines for home cooks too. What concerns my preferences of spices for food and drinks, they are very different. I like to drink coffee with cinnamon. I do not think I like other spices for drinks. Pepper and salt are my favorite spices for food because they are universal. However, sometimes I like to put cloves to some types of food.
Every business is dependent on the macro-environment factors in the country or the world. For instance, the economic recession has led to significant changes in the behaviors of American consumers. This negative change affected everyone’s budget and people became thriftier. They avoid visiting restaurants and the demand for spices decreased. Also, people started buying only simple spices. McCormick realized the need to expand the target market to cope with difficult times. So, the company started new campaigns that attracted the attention of those who cooked at homes. This strategy allowed to stay competitive and did not lose profit.
Shopping habits of consumers vary from country to country. For example, people from developing countries usually go to open markets to buy spices and other food. Thus, McCormick faces a challenge because of the lack of access to open markets or a lack of people’s interest in visiting supermarkets or stores. The solution is that McCormick tries to adapt to different consumers’ habits by selling products to different retailers including open markets in Shanghai, Beijing, or Turkey.
Businesses can be also affected by political and natural powers. For example, the political instability in the country may lead to the unknown and even dangerous consequences. Some of McCormick plants were in countries that became unrest, and it resulted in the need to find new places for production. Natural powers such as weather are very important for the business. Bad weather conditions result in a bad harvest so the company may lose revenues.
These unpleasant events resulted in the increasing prices for spices. McCormick faced rapid inflation of prices for commodities. The price for pepper, for example, increased twice in one year and a half. The profits of the company fell quickly. However, McCormick found ways to prosper. It changed advertising strategies for products and focused on usual spices.
Porter’s five forces analysis can be used for the explanation of McCormick’s performance. Supplier power is significant because changes in weather conditions lead to suppliers’ increasing costs of products. Buyer power is not so large because it is not easy for buyers to decrease prices (only during macro-environment changes). Competitive rivalry depends on the competitors’ expansion and product line. McCormick has large markets and numerous consumers so it is not easy to compete with it. Threats of substitution and new entry are not relevant in this case too. Substitution is not easy because customers cannot find other ways of receiving products rather than buy them. The threat of new entry is not serious too because it takes a lot of effort and money to enter the market. These facts prove that household spices are a good industry to be in.
McCormick expands the business by focusing on constant increasing of business and introduction of new product lines.