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Q2.

Improve upon Exhibit 2 in the case and draw up an


exhaustive list of typical costs incurred in a sales
promotion.
Marketing Margin = Revenue - Costs

Incremental Direct Expenses


Volume generated 1. COGS
by sales promotion 2. Promotional Allowance
X 3. Distribution
Price to Retailer 4. Cost of marketing material
5. Cost of product placement
Indirect Expenses
1. Cannibalization
2. Cost of conceptualization of
promotion
3. Cost of promoting the
promotion
4. Differential cost due to
discounts
5. Consumer switching costs
6. Forward buying costs
7. Post promotion slump
1.How was GCP handling the
marketing of the three product lines?
What were their motivations behind
their strategies? Critically discuss
GCPs approach.
2.Improve upon Exhibit 2 in the case
and draw up an exhaustive list of
typical costs incurred in a sales
promotion.
3.Was Capps right in raising his
concerns regarding trade promotions
(cannibalization, brand equity
erosion, forward-buying, pass-
through, and consumer stockpiling)?
How much should this effect the
promotional decisions for GCPs
products?
4.Do you advise Sanchez to run a
national sales promotion? If so, to
which one of the items should the
funds be allocated: (a)Dinardos32-
ounce packages, (b)Dinardos16-
ounce packages, or (c)Natural Meals?