Presentation on theme: "Group 5: Andrei Grechko Shane Johnston Nakia Lape Kyle McDaniel"— Presentation transcript:
1Giant Consumer Products, INC: The sales promotion Resource allocation decision Group 5:Andrei GrechkoShane JohnstonNakia LapeKyle McDanielKevin Niehaus
2Primary Question for GCP How should Giant Consumer Products (GCP) structure a sales promotion so that it is a “win” for all parties involved?
3Secondary Questions Who is Giant Consumer Products? What are GCP’s objectives?What environmental forces are at work?What’s going on in the Frozen Food production industry?What are FFD’s current constraints?What are the key metrics?Who is the target market?What are the strengths and weaknesses of FFD’s marketing strategy?What is their current market position?What are the current market trends?What is affecting GCP’s decision?How should FFD implement the selected alternative?
5Organizational Structure Allan CappsCEOByron FlattVP, SalesMary DavidsonFFD General ManagerMike SanchezFFD Director of Marketing
6Organizational Structure PositiveEach business unit have defined and measurable goalsPromotes AccountabilityNegativeDifficult to get quick answersStructure might be too rigid and not flexible enoughDifficult to work across divisions to achieve organizational goalsUltimatelyNeed to make sure division’s objectives always align with overall strategic goals of the companyDivisional Structure
7Management Philosophy In general fairly conservative management practices and approach in every division/business unitPositive:Standardized practices promote efficiency and result in economies of scaleCareful decision-making processNegative:Slows down the decision making process if the decisions are to be made quicklyMight be difficult to accept change
8Organizational Culture Pride. The most customer-centric management team in the frozen food industry.Premium product quality, strong relationship and support from retailersHelps company stay on top of consumer behavior trendsPromotes long-term thinkingBuilt on brand equity. Company is striving to take into account the preservation of GCP’s brand name and image in every decision that it makes
10Objectives GCP Priorities in second half of 2008 Generate much needed demand in the Frozen Foods Division (FFD) without undermining the long-term health of GCP's brandsIncrease GCP's revenues to a point where they at least reach the low end of Wall Street's expectations
11Most Important Objectives Sales PromotionCan a sales promotion help GCP meet its organizational goals?Which product should be selected for promotion?Determine impact on key metrics and long-term health of brandsMarketing StrategyDevelop the details of a marketing strategy that results in a win-win for the company, retailers, and ultimately consumers.The strategy has to be consistent with the overall goals of the company and ensure preservation of brand image
12Secondary QuestionsWhat environmentalforces are at work?
13Economic conditions and trends FFD had steady 2.8% growth rate between 2003 and 2008 in spite of larger economic downturn.50% of consumer dollars spent at restaurants (2007), likely to decrease as a result of economic conditions.Sales promotions are a must in order to be seen as relevant to the consumer.
14Cultural and Social Trends Dual Career families (less time for meal preparation)Increased awareness of ingredient quality (artificial ingredients, pesticides, hormones, food origin, and of course, caloric content.)Higher focus on healthy living.Return to family style dining.
15Political and legal issues If GCP were considering rolling out a specialty product nationally, they would need to be wary of the risk they assume when greater public awareness is gained.Concern is growing as to the validity of organic certifications and consumer expectations will almost always exceed governmental expectationsGovernmental mandates on healthy eating and living…obesity as cost factor
16Secondary QuestionsWhat’s going on in theFrozen Food industry?
17Industry Overview Frozen Food Production Industry NAICS code: 311412 GCP is one of 411 American playersFor 2009, Industry was approximately $16 BillionWith an estimated profit of %32.38
18Industry Profitability Bulk Packaging: Products offered in bulk or bulk style packaging are easier to distribute to different channelsEconomies of Scale: The more channels a producers can distribute through the lower their over all costsProduct Mix: more product variety, the more their products will appeal to different marketsEfficient Operations: The company model must be one of best practices
19Major Competitors Daft The Schwan Food Company Argilink Foods Vegetable CompanyArden International Food Company
20Industry Overview Porter’s five forces: Threat of substitute products HIGHBargaining powerof suppliersHIGHRivalry amongexisting competitorsIntenseBargaining powerof buyersMIDThreat ofnew entrantsLOW20
21Porter’s Five Forces Factor Analysis Impact Threat of substitute productsConsumers have multiple substitute products (Many brands, styles/types of food)Consumers have a wide Varity of options to choose fromBargaining power of suppliersHigher quality ingredients lead to high quality product for consumersSupplies are able to bargain more , because producers want the best qualityBargaining power of buyersFrozen meal purchases are frequent, consumers tend to be loyal to products unless similar products offer price promotionLoyalty in target market will be easy to buildCompetitive rivalryOver 400 domestic manufacturers and increased competition from foreign competition. Also, introduction and competition for similar target marketDownward pressure on pricesThreat of new entrantsWell established playersBrand value will be key!21
22Secondary QuestionsWhat are the FFD’scurrent constraints?
23Constraints Consumer Buying habits Pressure from GCP and Wall Street Possible implications from a sales promotion:CannibalizationBrand equity erosionForward buyingStock pilingBrand switching
26Who is the Target Market? Secondary QuestionsWho is the Target Market?
27Dinardo’s Target Market FamiliesConventional palatePrice conscious but will not accept sub-par quality
28Natural Meals Target Market Health conscious consumersSophisticated palateWilling to pay premium pricing
29The Sizes 32 ounces – Families 16 ounces* – Two people 6-8 ounces – Single servings*Natural Meals brands are only offered in a 16 ounce size.
30What are the Strengths and Weaknesses of the FFD’s marketing strategy? Secondary QuestionsWhat are the Strengths and Weaknesses of the FFD’s marketing strategy?
31Potential Resource Strengths and Competitive Capabilities Short-term marketing strategy objectives are well defined.Strong brand image for the Dinardo’s brand.Better quality product than competitors.Efficiency gains for Natural Meals brand due to scale economies.Natural brands has untapped growth potential in a developing market.43% of national market share (by revenues) for sub-category.
32Potential Resource Weaknesses and Competitive Deficiencies No clear long-term strategic direction for marketing.Weak brand image and reputation for the Natural Meals brand.Overall weak advertising and promotion.Threat of cross-brand cannibalizationShifting consumer habits.
33Secondary QuestionsWhat will affect GCP’s decision?
36Strategic Alternatives Traditional sales promotion for Dinardo Brands (based on math)National sales promotion for Natural FoodsDrop Dinardo’s single servings and offer a new 32 ounce family size to Natural Meals brands
37How should FFD implement the selected alternative? Secondary QuestionsHow should FFD implementthe selected alternative?
38Recommendations Continue traditional marketing of Dinardo 16 or 32oz Discontinue Dinardo “Other” itemsBrand Awareness campaign for Natural Meals
39Recommendations Traditional Marketing – Not a win for FFD Total Brand Impact from Promotion on Top-line RevenueTotal Effect of D32 Promotion$ (1,197,278.37)Total Effect of D16 Promotion$ ,775,636.96Total Brand Impact from Promotion on Marketing Margin$ ,576,012.75$ (879,443.14)ROMI-33%64%
40Recommendations Dinardo “Other” Category – Severely underperforming Sales Volume – down 8.6%Gross Revenues – down 8.6%Gross Margin down – down 9.6%Marketing Margin – down 11.9%
41Recommendations Brand Awareness campaign – Natural Meals Average Monthly Incremental Volume for Natural Meals705,252Average % Store Promoting for Natural7.61Average Monthly Incremental Volume /Promo Point92,674Incremental Volume from 25% Promo Points2,316,859Revenue change from promotion$ ,718,892Variable Cost change from promotion$ ,085,173Promotion Cost change from promotion$ ,125,425Marketing Margin Change from promotion$ ,294ROMI165%
42Recommendations Brand Awareness Coupon Offering Pay for Performance In-store Product PlacementRepackaging for Natural Meals 32 oz portionsBrand Recognition/Brand Loyalty