Presentation on theme: "Group 5: Andrei Grechko Shane Johnston Nakia Lape Kyle McDaniel"— Presentation transcript:
1 Giant Consumer Products, INC: The sales promotion Resource allocation decision Group 5:Andrei GrechkoShane JohnstonNakia LapeKyle McDanielKevin Niehaus
2 Primary Question for GCP How should Giant Consumer Products (GCP) structure a sales promotion so that it is a “win” for all parties involved?
3 Secondary 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?
5 Organizational Structure Allan CappsCEOByron FlattVP, SalesMary DavidsonFFD General ManagerMike SanchezFFD Director of Marketing
6 Organizational 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
7 Management 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
8 Organizational 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
10 Objectives 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
11 Most 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
12 Secondary QuestionsWhat environmentalforces are at work?
13 Economic 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.
14 Cultural 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.
15 Political 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
16 Secondary QuestionsWhat’s going on in theFrozen Food industry?
17 Industry 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
18 Industry 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
19 Major Competitors Daft The Schwan Food Company Argilink Foods Vegetable CompanyArden International Food Company
20 Industry Overview Porter’s five forces: Threat of substitute products HIGHBargaining powerof suppliersHIGHRivalry amongexisting competitorsIntenseBargaining powerof buyersMIDThreat ofnew entrantsLOW20
21 Porter’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
22 Secondary QuestionsWhat are the FFD’scurrent constraints?
23 Constraints Consumer Buying habits Pressure from GCP and Wall Street Possible implications from a sales promotion:CannibalizationBrand equity erosionForward buyingStock pilingBrand switching
26 Who is the Target Market? Secondary QuestionsWho is the Target Market?
27 Dinardo’s Target Market FamiliesConventional palatePrice conscious but will not accept sub-par quality
28 Natural Meals Target Market Health conscious consumersSophisticated palateWilling to pay premium pricing
29 The Sizes 32 ounces – Families 16 ounces* – Two people 6-8 ounces – Single servings*Natural Meals brands are only offered in a 16 ounce size.
30 What are the Strengths and Weaknesses of the FFD’s marketing strategy? Secondary QuestionsWhat are the Strengths and Weaknesses of the FFD’s marketing strategy?
31 Potential 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.
32 Potential 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.
33 Secondary QuestionsWhat will affect GCP’s decision?
36 Strategic 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
37 How should FFD implement the selected alternative? Secondary QuestionsHow should FFD implementthe selected alternative?
38 Recommendations Continue traditional marketing of Dinardo 16 or 32oz Discontinue Dinardo “Other” itemsBrand Awareness campaign for Natural Meals
39 Recommendations 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%
40 Recommendations 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%
41 Recommendations 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%
42 Recommendations Brand Awareness Coupon Offering Pay for Performance In-store Product PlacementRepackaging for Natural Meals 32 oz portionsBrand Recognition/Brand Loyalty