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IMC Case Analysis

Giant Consumer Products: The


Sales Promotion Resource Allocation Decision

GROUP 4 Amber Kumar Yadav 15/68 Anshul Kumar 15/71 Arnab Guha Mallik 15/74 15/81 Darshan Sullia

SECTION B Ashutosh Vikram 15/210

Question 2: Do you advise Sanchez to run a national sales promotion? If so, which one of the items should the funds be allocated to: Dinardo 32, Dinardo 16 or Natural Meals?
Answer: We first evaluate the positives and negatives of running a national sales promotion

PROS
Increase in short-term sales More attractive value preposition for consumer Improved top-line revenue and margins High potential market for health foods Consumer willing to spend more Cannibalization

CONS

Eat into market share of same brand, other products Brand equity erosion Tarnishing the super-premium image

Stockpiling by consumers

We also look at the pros and cons of the different brands under question

Brand
Dinardo 32 Dinardo 16

Pros
Inexpensive way to feed family of four Appealed to price-conscious consumer Appeal to niche consumer categories Attractive for empty nesters and busy professional couples Organic in nature High appeal for health-conscious consumers growing market Minimal threat of cannibalization appeals to different segments Greater margins

Cons
Already well-established product

Developed to cater to operational needs of market Serve entire consumer base of retailer Offering promotion may spark price war with competitor Tarnish brands premier image

Natural Meals

From the excel sheet we find the Total Brand Impact from promotion on marketing margin for dinardo 32, dinardo 16 and natural meals (Template_part2 and part 3 respectively from the excel sheet) We find that the 1. total effect of D32 promotion (Revenue/month)= -4710831 2. Total effect of D16 promotion Revenue/month)= -5924133 3. Total effect of Natural Meals promotion Revenue/month)= 3995524 Hence we Do Not recommend any sales promotion

Question 3: Prepare Sanchez for additional strategic/ tactical questions that he anticipates from Flatt given at the end of case. Answer: The following are the strategic/ tactical questions that need to be addressed: 1. Would the promotion end up being a win for not only FFD, but also for retailers and consumers? The promotion would end up being a win for FFD, retailers and the consumers. The benefits for all 3 are shown below FFD There would be an increase in overall consumption (market growth) Purchase time acceleration over short-term Increase reach of Natural Meals offering Reduced marketing margin Retailers Increased margins as Natural Meals is a premier product offering high margins It will provide healthy Meals offering wider variety on shelf Consumers Wider variety on offer including healthy alternatives Promotions for Healthy Meals premier product now made affordable 2. How should FFD structure the promotion? The 3 alternatives are 1. Off-invoice pricing

Manufacturer reduces price-to-retailer for specified time period Allows retailers to purchase in the quantity desired 2. Pay for performance approach Retailers compensated for actual amount sold Verified data through registered scanners 3. Target based approach Compensate retailers only in case they hit a pre-specified target

Recommendation: FFD should stick with the pay-for-performance as it would give them the additional incentive to place the FFD products at favourable end-aisle display position and also to manage the promotion in an effective manner. Also Off-invoice pricing would weigh heavily in favor of retailers already earning big margins on Natural Meals; target-based approach too strict