Case study : [pic] Peugeot pepper mills Introduction Peugeot is a company which is born in 1810, in Doubs (East of France). It has been launched by two brothers, Jean-Pierre and Jean-Frederic Peugeot. Initially it was a steel foundry. In 1818 they registered a patent for manufacturing tools and saws in particular. The first mill was for coffee and it was created in 1840. The lion trademark appeared in 1850 on the different tools, and it was registered in 1858. It symbolizes the quality of the brand. The first pepper mill appeared thirty four years after the coffee one, in 1874. It was called the “Z” model.
A main attempt of innovation occurred in 1930 with the first electric coffee mill. They launched the final model in 1952 which was more useful. It corresponds to the end of the hand-ground coffee mills. Then they constantly extended their range with several mills. In 1996 they reached a high level of sales with one million mills all over the world. The year after the first electric pepper mill was created, the model “Laval” in three colours: black, white and blue. In 2003 Peugeot registered two patents for salt and pepper mills. Then a high number
Presentation of the company In 2006 PSP is the world leader in the production of salt and pepper mills with a turnover of 25 millions and 3 millions items sold. The headquarters is in the Doubs, as the original company in 1810. 84% of the capital is held by Jean-Claude Fornage and the remaining 16% is held by the Peugeot family. They reached the world leader position in production of electric pepper and salt mills in less than ten years. In 1998 the growth accelerated because of the takeover of the firm. The export market is linked to this acceleration.
The efficiency of the marketing strategy is the source of the growth on the French market. This strategy was applied to the export market in the early 2000’s. The company has two main segments: the general public and the professional sector. The general public is the main target of the company because they represent 90% of sales. In 1985 the Peugeot group decided to sell its “hand-tools” activities to Stanley Works, the world leader on this market. Jean-Claude Fornage who was the head of Stanley Works France decided to takeover the former Peugeot activities. Then in 1990 he decided to concentrate only on the production of mills.
The Peugeot brand enjoyed the use of its name since the mid 1850’s and meanwhile the car maker Peugeot wanted to separate its name and its activities from the salt and pepper mills production. Consequently in the 1990’s Jean-Claude Fornage took over the mills only with the Peugeot name. The manufacturing and the marketing are the core activity. The firm sold its mechanisms to other companies who assembled them into a final product. In 1997, 70% of the volumes of the mechanisms were sold to a single German client (Schmitt and Brendel) which have acquired by PSP in 1998. It permitted to extend the international, especially in China.
So it permitted to change the strategic direction of the firm and modified deeply its competitive environment. Jean-Claude Fornage hired some managers from several competitors such as Maurice Lauzet who was the head of the Research and Development in the area of process and product innovation for the French branch of Stanley Work. In 2002 Guy Degrenne sold his factory to PSP and it permitted to extend the industrial activities of the firm. Key points PSP: | |Company/ turnover |Management |Product |Market | Before 1990 |PSP was a manufacturer of component; | |The first pepper mill had |Professional market/ | | |the sales of the finished product | |been created in 1874 |principally in Germany | | |represented 10 % of the turnover | | | | |1990 |Small firm / 15 employees |Jean-Claude Fornage |Production on novelty, |70 % of the volumes of the | | |became director |originality design and |machines were sold to a single | | | | |colors |client Schmitt and Brendel | |1998 |PSP acquired the company Schmitt and | |Creation of technological |The company became | | |Brendel / | |barriers |internationalized | |the turnover went from 4 to 10,3 | |( innovation, design, | | | |millions | |reputation) | | |After 1998 |Acquisition of the manufacturing of |JCF | |Sales of finished product to | | |bowls and grinding. |hired a specialist of | |the general public | | |research and | |/ top and middle market with | | | |development Maurice | |technological barriers | | | |Lauzet | | | |2000’s | |Creation of the R and D|Invention of new systems |The new models generate the | | |department |and mechanisms |major part of the turnover ( 70| | | | | |% in 2007 ) | Strategy Jean-Claude Fornage decided to associate the values of authenticity and modernity to target the general public. This was permitted because of the acquisition of the trademark Peugeot and the fact that he hired some managers from competition. The success of PSP is due to its industrial experience and also the reputation of the trademark.
So he can dominate the top and middle market range and face the competition from Asia. Indeed the industrial processes are quite complex and require a high level of qualification. In 2003 Maurice Lauzet created a machine for the cutting and working of metal rods which reduced the costs. This whole strategy corresponds to counter strike to the tendency which was to produce many mills at a low price and with a low quality. The strategy of PSP is mainly based on innovations, the research and development department headed by Maurice Lauzet is the lung of the company.
Then the marketing strategy reinforces the vision of the trademark Peugeot which is already fixed on the world market. In Japan, Canada and on the East cost of the United States the brand Peugeot is associated to the mills. Now several sectors are targeted by the marketing department. There are managers for the French sales, the International sales, the gastronomy sector and the gift industry. Then the retailers are mainly composed by independent and specialized shops (70%). The big department stores such as “Les Galeries Lafayette” reach 20% of the sales and the other 10% is for wholesalers of the professional sector.