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Case Analysis Giant consumer Products The Sales Promotional Resource Allocation Decision
Assignment Submitted to
, IIMZ
Prepared by:
Name we
August 2012
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Table of Contents
Table of Contents........................................................................................................ 2 Introduction ................................................................................................................ 3 Company & Industry background................................................................................4 Consumer buying pattern.........................................................................................4 Frozen food division ................................................................................................5 Promotional Planning & Execution............................................................................6 Questions ................................................................................................................... 7 Would the promotion end up being a win for not only FFD, but also for retailers and consumer?............................................................................................................... 7 How should FFD structure the promotion?................................................................7 Should FFD go with the off invoice pricing that retailers preferred having the manufacturer temporarily reduce the price to retailer of a given item for a specified time so that the retailer could purchase it in the desired quantity or should FFD stick with the pay for performance approach? Or alternatively, should FFD compensate retailers only if they hit some established target?................................9
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Introduction
This case is about Giant Consumer Products, Inc. in the year 2008. The result for the month of July 2008 was bad for Frozen Food Division. The sales volume was down by 3.9% gross revenue was down by 3.6% & marketing margin was down by 4.6% as compared to the plan. This poor performance will adversely affect the financial status in the market also. Now to act on these negative results and turn this into positive the CEO Mr. Allan Chapps met with Mr. Byron Flatt. Vice-President Sales. They are contemplating on the sales promotional activity to improve on the sales. The agenda for the discussion among the top management and even in the next level of management is to do an analysis of this respective activity and conclude whether GCP should go ahead for it or not for their frozen food department.
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Was successf ul
6 to 8 Ounce package.
The Natural MealTM, a highly successful regional brand was acquired by GCP and it accounted for 25% of FFD revenue (almost 150 million per year). It was understood that among these two brands cross brand cannibalization will not happen. This company predicted that after acquiring it would be possible for the business to grow by 5 to 10 time as a result from synergy through existing similar business and due to efficiency gains resulting from scale economies. The Natural MealTM brand Simple color palette and imagery. For health conscious customer. Was successf ul in healthy Low in fat, organic frozen food, no Page 5
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Questions Would the promotion end up being a win for not only FFD, but also for retailers and consumer?
Yes the promotion would bring a win win for all the three pillars of business i.e. to FFD, to Retailers and to consumer. From the exhibit 4 it is very clear that whenever there had been promotional activity, the respective product has received a remarkable incremental growth. For example D32 in Nov 2008, Sep 2007 and Feb 2008. And similarly for D 16. During these activities the consumer gets a deal for price saving along with the known quality for which the company is famous for. Retailers enjoy additional sales and hence additional revenue just by preparing themselves in right way and at right time.
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Total cost associated with undertaking sales promotion Direct expense Promotional allowance COGS Distribution Indirect expense Cannibalization
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