Wiikano Orchards

Background
The Ohio River Valley is home to the Wiikano Orchards, which are
apple orchards. The Yazzie family owns and manages them. The family-
owned business started operating in 1928, when they received their first
32-section planting of land. Wiikano's name translates to "it is good."
Under the brand name Tuwa, the Wiikano Company has produced and
distributed fresh-pressed apple juice in the Midwest of the United States.
Additionally, they make apple butter, apple sauce, and apple cider.
High grade apples from Wiikano's orchards were utilised to manufacture
apple cider, apple sauce, and apple juice. 54 useable tonnes were
produced on average per acre in 2016, which is 6% less than was
anticipated. A commodity industry is confronting decreased demand for
Wiikano. Apple juice from Wiikano may undergo a rebranding, price
increase, and marketing campaign, according to president Dena Yazzie.
In order to rebrand the product, Tahki Yazzie, a niece of Dena, worked
with undergraduate marketing students to perform marketing research.
She is currently working on a fresh idea that she will pitch to the board
of directors. Wholesalers and merchants would be more likely to
distribute and pay more for Wiikano's apple goods if this idea is
successful trademark Tuwa Additionally, they make apple butter, apple
sauce, and apple cider.

Analysis of situation
The organic segment is likely to be the most attractive segment in the
forecast period owing to the increasing consumer preference towards the
consumption of organic products. In 2016, United States yielded $12
billion revenue in juice production and it is expected to grow through
2022. Demand for conventional juices is declining but the demand for
blended fruit and vegetable juices is expected to increase.
Exhibit 1 shows that apple juice contributes 10.6% of total revenue of
major fruit and nut crops in the United States as per June 2017 which
shows that business of apple juice production has great opportunity to
grow. Grocers, supermarkets, convenience stores and gas stations are
major distribution channels for juice industry in United States. All
together they consist of 61.8% of total distribution.

The demand of organic juices is also expected to increase due to rising

inclination towards organic products especially among consumers
belonging to the upper and middle socioeconomic status as they are
willing to pay premium prices for these products, owing to the health
benefits offered by organic products.

Problem Statement :
The biggest problem here is the higher production and promotion costs.
In the long run, due to decreasing market prices, mergers and
acquisitions will happen resulting in the increase of purchasing power of
buyers and pose a threat on Wiikano. The competition increased by the
International Market, decreased brand loyalty and posed a threat to local
people. In addition, in the short run, decrease in per-capita consumption
of juice will commence and also unknown brand will not be pleasing to
customers to buy.

The issues with current practice of pruning and ineffective training ends
in a lag between actual and budgeted costs. The practice mentioned
above ended up in reduction of harvested apples. Trees which are
densely populated are required to have pruning and extra care since it is
exposed to sun, which had a major contribution to the crops and trees
growth. In a nutshell, desired results were not achieved in spite of the
fact that company spending lots of money on resources and funds on the
employees who were responsible to take care of the orchard.
Total cost is variable in a large proportion. There has been a major
problem with the quality of work done by the labor. The main costs
associated are harvesting and maintenance costs. One suggestion would
be to reduce expenses and also improve the quality or orchard care by
hiring experts or by outsourcing the job.

Strategic Alternatives:
The key issue to be addressed in this report is the apple tree orchard
care, in order to maximize Wiikano’s per acre harvest. The problems
with current practice of ineffective training and pruning clearly result in
a lag between budgeted costs and actual costs. This resulted in reduction
of the expected number of trees per acre, which in its place caused the
reduction of harvested number of apples. Due to the fact that the trees
were densely planted, they required to have proper care and pruning in
order to be well exposed to the sun, which had a major contribution to
the growth of the trees and crops. In a few words, the company spent
solid amount of funds and resources on the employees who were
supposed to take care of the orchard, yet desired result was not achieved.
The Exhibit 7 clearly states
that 89% of the total cost is variable. Therefore, in order to reduce costs
it is reasonable to look at the variable components and find the ones
which were hinted in the case as problematic. According to the
mentioned-above statements, there was a major issue with the quality of
work the labor performed. The main variable costs concerning the labor
were maintenance and harvesting costs. Thus, our suggestion is to
reduce these expenses and simultaneously improve the quality of
orchard care by either outsourcing the job or by hiring only highly
qualified experts, who will perform the job in a better quality and for
lower prices. This will result in higher harvest numbers and cost
reduction, thus leading to increased profits. The average price for
outsourcing pruning is $800-$1000.

Budget Actual Updated costs

Total Variable Costs $4,833 $4,658 $3,978
Labor Maintenance $2,000 $2,000 $1,500
Labor Harvesting $2,833 $2,658 $2,478
Fixed Costs $575 $570.22 $570.22
Total specified costs $5,408 $5,229 $4,548
per
acre
Number of trees per 908 818 818
acre
Production cost per $5.96 $6.39 $5.56
tree
Looking at the first picture gave us an idea that the labor maintenance
and harvesting costs are the highest ones among the variable costs. This
could be okay if the actual performance of the labor justified those high
costs. However, due to the mistakes done by inexpert labor, the costs of
the company increased. This is the major reason why we decided that it
would be better for the company to outsource its labor operations to
more specialized people.

Wiikano needs to set a baseline and specify the KPIs(Key Performance

Indicator) to measure the performance of the new campaign against the
baseline. In the scope of digital marketing, there are 5 metrics to
measure the content, whether it is visible, relatable, searchable,
actionable and shareable.
The KPI as a result of digital marketing, should be measured in terms of:
● Traffic-To see how effective the new strategy is and if they are doing
a good job in terms of web and
content optimization.
● Impressions - how many times the website and the content itself is
viewed
● Number of new contacts/submissions
● The CTR (click-through-rate)
● The bounce rate- the % of people who leave after visiting just one
page

According to the case, the hang tags would be placed on the bottles 3
times per year. It can be a great idea to compare the actual sales of the
apple juice with and without hang tags. This will clearly show the trend
of the impact of hang tags on the sales of the product. Variable costs are
higher with the harvesting costs and labor maintenance. If the actual
performance of the labor is justified compared to the high costs, it
should be good. However, due to the lack of labor’s performance, the
cost of the company increased. Hence it is better for the company to
outsource labor
operations. It in turn reduces the maintenance cost and harvesting cost.
As for the increase in profits, the company earned profit compared to the
incurred loss since there is a reduction of total cost per acre. An
alternative to rebrand the cost or to reduce cost for increasing profits is
handling the production by environmental factors. A large amount of
waste processed in the preparation can be recycled and reused for other
juice production.