The case study discusses the business relationship between Vlasic Pickles and Walmart and a deal that was made that changed the terms of their relation. Vlasic Pickles is the market leader in the sale of pickles in the United States. The company’s most important client is Walmart which had been successfully selling the company’s brand of pickles for years. The manager of Vlasic Pickles entered into an agreement to sell a large jar of pickles at Wal-Mart for $2.99 per jar. The deal captivated the interest of a lot of customers of the store and therefore the demand for the product increased. Based on the law of supply and demand a lower price increases the demand for a product (“The law of supply and demand”, 2018).
The manager thought that this deal would help increase the profitability of the company. Soon the marketing department of the firm realized that the deal had backfired. The sales of its product brand increased since Walmart started selling more of the item, but therefore the rest of its sales at other stores went down since the $2.99 jars cannibalized its sales. Market cannibalization can have a negative impact on both the sales volume and market share of an existing product (“Market cannibalization”, 2018). The organization was having production issues to meet the demand for this product and its profitability went down. To resolve this business problem the company can renegotiate its terms with Walmart to eliminate the offer in the short term.
The deal should be negotiated in a manner to make both parties happy (“Negotiate the right deal with suppliers”). A meeting should be arranged with a Walmart purchasing manager to discuss the situation. The product could be continued to be offered in the large jars, but at a higher price point. The long-term outlook for Vlasic Pickles is positive if the firm can retain Walmart as a client under more favorable terms for pricing of its products.