Group 14
Group 14
Rupa Murudkar
Rupa Murudkar
Stuti Anand
Stuti Anand
Suraj Dash
Suraj Dash
Shwetank Dixit
Shwetank Dixit
Sophie Bendetowicz
Sophie Bendetowicz
Market Leader Market Leader
A cash cow in Stewart’s household division A cash cow in Stewart’s household division
T
Targeted a wide audargeted a wide audience due to its muience due to its multi-functional utilitylti-functional utility High brand recall in product category
High brand recall in product category High distribution penetration
High distribution penetration
Increasing threat of private label brands
Increasing threat of private label brands –– had lost a market share had lost a market share of 5% in the last decade
of 5% in the last decade Rel
Relatively low advertising recall of atively low advertising recall of the brandthe brand Needed a lot of push
Month,
Month, 2006 2006 Budget Budget Allocated Allocated to to RBSRBS
Net Incremental Net Incremental Contribution Contribution Return on Investment Return on Investment in Consumer in Consumer Promotion activities Promotion activities January January 398,580 398,580 63,852 63,852 16.02%16.02% April April 174,643 174,643 22,785 22,785 13.05%13.05% June June 253,390 253,390 50,615 50,615 19.98%19.98% September September 253,390 253,390 60,820 60,820 24.00%24.00% T Total otal 1,080,003 1,080,003 198,072 198,072 18.34%18.34% •
• Consumer promotion in September were more effective than any other Consumer promotion in September were more effective than any other consumer promotion don
consumer promotion done by RBS e by RBS as ROI is as ROI is 24% which 24% which is highestis highest •
•June and September months had same budget for promotion, butJune and September months had same budget for promotion, but September consumer promotion provided better net incremental September consumer promotion provided better net incremental contribution for RBS
contribution for RBS •
•September consumer promotion: $1.5 refund offer for a proof ofSeptember consumer promotion: $1.5 refund offer for a proof of purchase from advertisement featuring RBS and two other household purchase from advertisement featuring RBS and two other household division brands
division brands •
•Thus, refund offers are more effective for RBS as compared to twin packThus, refund offers are more effective for RBS as compared to twin pack refund offer in June.
Case Case Size Size 2007 2007 Manufacture Manufacture selling price ($ selling price ($ per case) per case) 2007 2007 Suggested Suggested retail price ($ retail price ($ per box) per box) 2007 2007 Actual retail Actual retail price ($ per price ($ per box) box) 2007 2007 Retailer Retailer revenue ($ revenue ($ per case)* per case)* 2007 2007 Retailer Retailer profit ($ profit ($ per case) per case) 2007 2007 Sales (in Sales (in cases) cases) 2007 2007 Retailer Retailer overall overall profit ($) profit ($) 8 oz. 8 oz. 7.2 7.2 1 1 0.9 0.9 10.8 10.8 3.6 3.6 714,000 714,000 2,570,4002,570,400 1 lb. 1 lb. 12.02 12.02 1.67 1.67 1.503 1.503 18.036 18.036 6.016 6.016 1,226,000 1,226,000 7,375,6167,375,616 5 lb. 5 lb. 54.28 54.28 7.54 7.54 6.786 6.786 81.432 81.432 27.152 27.152 648,000 648,000 17,594,49617,594,496 Case Case Size Size 2007 2007 Manufacture Manufacture selling price($ selling price($ per case) per case) 2007 Manufacture 2007 Manufacture variable variable manufacturing cost($ manufacturing cost($ per case) per case) 2007 2007 Manufacture Manufacture profit($ per profit($ per case) case) 2007 Sales (in 2007 Sales (in cases) cases) 2007 2007 Manufacturere Manufacturere overall profit overall profit ($) ($) 8 oz. 8 oz. 7.2 7.2 3.05 3.05 4.15 4.15 714,000 714,000 2,963,1002,963,100 1 lb. 1 lb. 12.02 12.02 5.03 5.03 6.99 6.99 1,226,000 1,226,000 8,569,7408,569,740 5 lb. 5 lb. 54.28 54.28 22.34 22.34 31.94 31.94 648,000 648,000 20,697,12020,697,120 * 1 case =12 boxes * 1 case =12 boxes
As per exhibit 9, Trade promotion during May-June
As per exhibit 9, Trade promotion during May-June
resulted in $215,729 incremental contribution. on
resulted in $215,729 incremental contribution. on
other hand, consumer promotion during same time
other hand, consumer promotion during same time
yielded incremental contribution of only $ 50,615.
yielded incremental contribution of only $ 50,615.
Consumer promotion was given on 1lb. case which
Consumer promotion was given on 1lb. case which
is a higher selling product and gave higher
is a higher selling product and gave higher
margin($6.99 per case) to manufacturer, but lesser
margin($6.99 per case) to manufacturer, but lesser
contribution indicated lower sales volume. Hence,
contribution indicated lower sales volume. Hence,
consumer promotion are lesser effective.
consumer promotion are lesser effective.
During same time trade promotion on 8 oz. case,
During same time trade promotion on 8 oz. case,
provided higher sales volumes even though it did
provided higher sales volumes even though it did
not have higher margins( $ 4.15 per case)
Helps in generating sales and increasing the topline of the Helps in generating sales and increasing the topline of the company
company
Stimulates dealer and channel involvement Stimulates dealer and channel involvement
Main objective is to create an immediate sale and not to create Main objective is to create an immediate sale and not to create product involvement
product involvement
Optimal for product categories with low brand loyalty & low Optimal for product categories with low brand loyalty & low differentiation like baking soda
differentiation like baking soda
It lures customers from competitor’s products’ by It lures customers from competitor’s products’ by
differentiated positioning & consumer promotions differentiated positioning & consumer promotions In a low involvement
In a low involvement product category it helps to attract theproduct category it helps to attract the price sensitive consumer
price sensitive consumer
Builds up consumer demand even though it is a low Builds up consumer demand even though it is a low involvement product
involvement product
The optimal strategy in a low
The optimal strategy in a low involvement category would be an optimal mix ofinvolvement category would be an optimal mix of both push and pull advertising, which ensures that the retailers push your
both push and pull advertising, which ensures that the retailers push your
products over competitor’s products and at the same time the customer’s prefer products over competitor’s products and at the same time the customer’s prefer
your products over that of the competitors' your products over that of the competitors'
Trade promotions and consumer promotions should not go
Trade promotions and consumer promotions should not go
together because of the following reasons:
together because of the following reasons:
R
Retailer may get the
etailer may get the chance to jack up
chance to jack up their profits by
their profits by
increasing the price when both trade and
increasing the price when both trade and consumer promotions
consumer promotions
are in place. This will have the following repercussions:
are in place. This will have the following repercussions:
Possibility of losing on many price-sensitive Possibility of losing on many price-sensitive customers- Vcustomers- Volume will takeolume will take
a hit a hit
Promotes the retailer to enjoy double benefits which are neither passedPromotes the retailer to enjoy double benefits which are neither passed
on to RBS nor to the consumers on to RBS nor to the consumers
Contributes to too much variation in the price of the products whichContributes to too much variation in the price of the products which
doesn’t allow reference prices to be formed in consumer’s mind (Refer doesn’t allow reference prices to be formed in consumer’s mind (Refer
Point 7 in Exhibit 3) Point 7 in Exhibit 3)
Illustration:
Illustration:
During the month of January in 2006, both consumer and tradeDuring the month of January in 2006, both consumer and trade
promotions happened simultaneously promotions happened simultaneously
Retailers exploited this opportunity and raised the prices of theRetailers exploited this opportunity and raised the prices of the
products products
Gap between trade promotions should be higher
Illustration:
During the trade promotion on the 8 oz. box in October,
2006 (after 15 days from the previous promotion), even
after offering a better trade discount from the previous
offer the incremental contribution declined (negative)
Successive trade promotions for the same size of
the product should not be carried out
Illustration:
During the trade promotion on the 5lb. box in April, 2006
(after trade promotions offered on all box sizes
previously), even after offering a better trade discount
from the previous offer the incremental contribution
declined to less than half
Increase the proportion of trade promotions (by
Increase the proportion of trade promotions (by
10%) and cut down the consumer promotions (by
10%) and cut down the consumer promotions (by
25%)
25%)
T
Trade promotions found to
rade promotions found to be more value ad
be more value adding as
ding as
compared to consumer promotions
compared to consumer promotions
Reduce the cost of TV advertising (35%) and
Reduce the cost of TV advertising (35%) and
increase the cost of print advertising by 10%
increase the cost of print advertising by 10%
RBS
RBS
is
is
not
not
getting
getting
much
much
advertising
advertising
and
and
merchandising support in exchange for trade
merchandising support in exchange for trade
promotions anyways
promotions anyways
Effective consumer promotions involve the use of
Effective consumer promotions involve the use of
coupons which can be cut off from the magazines
coupons which can be cut off from the magazines
