Culinarian Cookware: Pondering Price Promotion

MARKETING-II DATE OF SUBMISSION-13.12.2012

SUBMITTED BY:SECTION-C, GROUP 13: Abhijit Das- 2012PGP005 Ashwin Vijayan- 2012PGP073 Kumar Abhishek- 2012PGP178 Payal Anand- 2012FPM10 Rajat- 2012PGP292 Sumit Bapuji Gedam- 2012PGP382 Vikash Kumar- 2012PGP438

Based on the facts of the case, comment on the appropriateness of the following consumer oriented sales promotion: 1. Contests / sweepstakes: Contests / sweepstakes are effective to create mass awareness about the product and product features. Such sales promotion is appropriate for low segment products CX1 category to create a pull and attract new consumers. Timing: A proper yearly plan should be charted to create and maintain an interest in the consumers. Communication: Through national magazines 2. Coupons: Coupons can be given to new customers to incentivize repeat purchases. The distribution of coupons should be done with all segments of cookware to promote the sales across all categories. Timing: Coupons can be given round the year for a discount on the next purchase Communication: Through point of sale banners and displays 3. Loyalty programs: Loyalty programs can be run for existing customers to maintain a stable relationship. This would lead to an increased sales of higher segment products as more existing consumers would upgrade with higher segment Culinarian products. Timing: Throughout the year Communication: Through personalized mails 4. Sampling / trial offer: Free sampling or trial does not go with company's current image of premium cookware. Sampling can be tried for launch of new products but in this case the Culinarian is a well known brand among cookware. 5. Premiums: The company is already operating in the premium segment. 6. Rebates: Rebates or paybacks to customers is an effective method of price promotion where the retails cannot take the benefit. Rebates can be applied on slow moving SKU's and lower segment product range CX1. Timing: During spring season Communication: Through national magazine 7. Product placement: Product placement should be given prime importance as it affects the point of sale purchase decision. It also helps to attract new customers. As Culinarian

has good relationship with its retailers and it offers higher margins, it can easily pitch in for good shelf space and product placement. 8. Price promotion [discount]: Earlier experience of price promotion suggest that the company should not go for discounts as the benefits are not passed on to the consumers fully. It also results in inventory mismanagement and loss of sales for the months preceding price promotion. Based on the facts of the case, comment on the appropriateness of the following trade oriented sales promotions; 1. Sales contest/ incentive: It seems appropriate for higher segment product like PROX1 and SX1. Product Scope: PROX1- Demand of PROX1 has decreased from 74640(47540+27100) in 2005 to 73490(35560+37930) in 2006. So, incentives should be given in this product line to trade. SX1- Demand of SX1 is 65690(40690+25000) in 2005 and65600(36530+29070) in 2006. It is almost constant. So, incentives should be given in this product line to spur its demand. DX1- Demand of DX1 has increased from 484590(207020+277570) in 2005 to 600820(236350+364470) in 2006. So, incentives are not required in this product line to trade. CX1- Demand of CX1 has increased from 356980(204230+152750) in 2005 to 389140(166600+222540) in 2006. So, incentives are not required in this product line to trade. Discount Rate: Reward should be based on performance. It should be linked to the amount sold by the retailers and not on the amount purchased by them to prevent forward buying. The exceptional retailers should be incentivized based on the percentage of sales. Timing:Spring demand for both PROX1 and SX1 are falling and fall demand is increasing. So, offer incentives during spring. Communication: Through national magazines 2. Promotion allowance [volume rebate / quantity discount]: As the companys strategic priorities is to increase its market share of the premium cookware segment, volume rebate seems to be appropriate for product line like PROX1 and SX1 to counter their stagnating demand. Product Scope: Demand of PROX1 and SX1 is going to be stagnant/decreasing in 2006. So, trade should be offered volume rebate on these product lines to spur their sales. And DX1 and CX1 product line doesnt require any quantity discount as their demand is expected to increase in 2006.

Discount Rate:It should be provided only when more than 1000 products are bought in a single order as demands are expected to be 73490 for PROX1 and 65600 for SX1 in 2006. Timing: Spring demand for both PROX1 and SX1 are falling and fall demand is increasing. So, offer volume rebate during spring. Communication: Through national magazines 3. Cooperative Advertising Allowance Culinarian focused on magazines (e.g., Bon Appetit, Cook Illustrated, Martha Stewart Living) and newspapers (e.g., USA Today) targeted at high-income audiences. Hence , it spend very less in cooperative trade advertising due to the companys strict requirement regarding the type of the publication the trade could use. Culinarian can continue with its strategy to subsidize cooperative trade advertising for retailer catalogs, direct mail, and magazines that it used for its national advertising campaign. Timing: It should be provided for 2 weeks per quarter.

4. Slotting Allowance As the sales for promoted pieces increased an average of 15% during gift-promotion programs without reducing the list price, this fitted to the strategic priority of the firm i.e. to preserve its prestigious image and to increase its market share. Product Scope: Slowest moving CX1 and DX1pieces should be included in the gift promotion program. Slotting allowance can be provided to the retailers for the shelf space provided. Timing: It should be ran twice a year and not coincide with the peak sales month of Nov/Dec and May/June Communication: In-store advertising and National Magazines. Slotting allowance can be negotiated for the point of purchase displays to be used in In-store advertising.

5. Trade shows Since culinarian has a premium product image, the Trade fair should be effective. The presence of top chef in the show with the vendor booth is something they can look on. Product Scope: Premium product such as SX1 and ProX1 will be more attractive.

Timing: They can concentrate mainly on regional food festival period. Communication: In-store advertising and regional magazines and newspapers.

6. Point of purchase displays Point of purchase display wont be an effective promotion for culinarian. Since it is fairly seasonal purchase mainly for gifting, the purchases are not impulsive. People who buy for self-use are mainly comes under premium category where much of the buying are planned.

7. Seasonal discount Seasonal discount can be a tricky but more than a well thought decision for Culinarian. Their 2004 sales promotion had a grey area on the aspect of transferring benefit to the customers. Keeping these in mind a well-informed sales force who can pull the customer details during the discount period is necessary. Apart from discount they could go for gifts which could make sure that the products are not stuck in the intermediate pipelines. Product Scope: Mainly for high premium products. Timing: Should be run during the very seasonal period (E.g. Christmas) when the competition is very high. Communication: Regional and National Magazines. Period should be communicated well in advance with retailers.