Case Analysis for Culinarian Cookware

2006-2010
Submitted By: Andrei Grechko
Shane Johnston
Nakia Lape
y!e "c#anie!
e$in Niehaus
%repared &or Ned Jackson' "( 62)
"arch 2*' 2010
Table of Contents
Executive Summary
Situational Analysis
A. Environment
I. Economic conditions and trends
As e$idenced by the case materia!' the +S cook,are market e-perienced .ro,th by .eneratin.
appro-imate!y /0106 bi!!ion in re$enues &rom 2002 to 20061 2o,e$er' due to economic recession o&
the recent years 3200*-present4' cook,are market &aced ne, cha!!en.es and opportunities1
(he &o!!o,in. de$e!opments appear to create se$era! opportunities &or cook,are manu&acturers1
#ue to s!o, economy and unemp!oyment' consumers cut back on dinin. out and de&er back to
home mea!s1 Accordin. to 5ook,are "anu&acturer6s Association 35"A4' consumers ha$e re-
disco$ered their kitchen durin. 20071 (hus' $isits to restaurants' carry-outs and &ro8en entrees ha$e
been rep!aced by mea!s prepared in the home kitchen1 (his trend hi.h!i.hts the possibi!ity o&
increased demand on cook,are products1 9n the &oreseeab!e &uture' economists predict .ro,th in
pri$ate and commercia! rea!-estate markets 3by 201041 (his potentia! de$e!opment cou!d boost
demand &or cook,are ,hen consumers' &or e-amp!e' start to mo$e in to ne,!y bou.ht houses1
2o,e$er' the demand &or cook,are products ,ou!d not mo$e in the same direction &or a!! price
ran.es1 #ue to e!astic demand &or hi.h-end and !u-urious products' it is reasonab!e to e-pect that
consumers ,i!! try to either buy !ess o& premium priced items' or try to shi&t their pre&erences to !ess
e-pensi$e mode!s a!to.ether1 (his &act cou!d burden some companies in the industry that re!y
most!y on manu&acturin. and distribution o& premium priced products1
#espite s!o, economy' current and &uture economic en$ironment pro$ides potentia! opportunities
&or p!ayers ,ho cou!d ad:ust their marketin. strate.y to meet chan.in. demands o& consumers1
5u!inarian 5ook,are cou!d ser$e its tar.et markets by &ocusin. ad$ertisin. e&&orts on their !ess
e-pensi$e product !ines' e1.1 #;1 and 5;11
%otentia! threats to the cook,are market inc!ude .ro,in. unemp!oyment and prospects o& hi.her
in&!ation in the near &uture1 5urrent unemp!oyment has c!imbed o$er 10< in 2007 3see =-hibit 14'
,hich reduced the purchasin. po,er o& many +S househo!ds1 Accordin. to the +1S1 Bureau o&
Labor Statistics' consumer price inde- 3in&!ation4 has .ro,n pretty steadi!y in the recent years 3see
=-hibit 241 Additiona!!y' many economists predict hi.her in&!ation in the comin. year 3primari!y due to
increase in the monetary base' hi.h de&icits' and under&unded !iabi!ities4 that ,i!! &urther reduce the
purchasin. po,er o& consumers i& the ,a.es and sa!aries do not keep up ,ith the pace 3"arks'
Gene ' >Stayin. 5oo! 9& 9n&!ation 2eats +p?' Business @eek' 06A26A2007'
http:AA,,,1business,eek1comAsma!!bi8AcontentA:un2007Asb20070626B70*02)1htm' accessed "arch
10' 201041 (hese potentia! threats cou!d si.na! to 5u!inarian 5ook,are that consumers mi.ht be
more price-conscious in the near &uture' hence stipu!atin. the company to re-e$a!uate its marketin.
mi-1
Exhibit 1 Labor Corce Statistics &rom the 5urrent %opu!ation Sur$ey
Series Id: LNS1D000000
Seasona!!y Ad:usted
Series title: 3Seas4 +nemp!oyment Eate
Labor force status: +nemp!oyment rate
Type of data: %ercent or rate
Age: 16 years and o$er
ear !an "eb #ar Apr #ay !un !ul Aug Sep $ct %ov &ec
'((( D10 D11 D10 01* D10 D10 D10 D11 017 017 017 017
'((1 D12 D12 D10 D1D D10 D1) D16 D17 )10 )10 )1) )1F
'((' )1F )1F )1F )17 )1* )1* )1* )1F )1F )1F )17 610
'(() )1* )17 )17 610 611 610 612 611 611 610 )1* )1F
'((* )1F )16 )1* )16 )16 )16 )1) )1D )1D )1) )1D )1D
'((+ )10 )1D )12 )12 )11 )10 )10 D17 )10 )10 )10 D17
'((, D1F D1* D1F D1F D16 D16 D1F D1F D1) D1D D1) D1D
'((- D16 D1) D1D D1) D1D D16 D16 D16 D1F D1F D1F )10
'((. )10 D1* )11 )10 )1D )1) )1* 611 612 616 617 F1D
'((/ F1F *12 *16 *17 71D 71) 71D 71F 71* 1011 1010 1010
'(1( 71F 71F
Source: +1S1 Bureau o& Labor Statistics' #ata e-tracted on: "arch 10' 2010
http:AAdata1b!s1.o$A%#GAser$!etASur$eyHutputSer$!et
Exhibit ' 5onsumer %rice 9nde-
Series Id: 5++E0000SA0
Not Seasona!!y Ad:usted
Area: +1S1 city a$era.e
Item: A!! items
0ase 1eriod: 17*2-*DI100
Source: +1S1 Bureau o& Labor Statistics' #ata e-tracted on: "arch 10' 2010
http:AAdata1b!s1.o$A%#GAser$!etASur$eyHutputSer$!et
II. 2ultural and Social values and trends
A &e, trends in the cu!tura! and socia! areas ha$e become $isib!e in the recent years1 (hese
chan.es are and ,i!! continue to a&&ect the cook,are market1 #ue to increasin. obesity epidemic in
the country and risin. hea!thcare costs' the nation as a ,ho!e has become more hea!th conscious1
(his chan.e resu!ts in the emer.ence o& numerous diet and hea!th p!ans1 "ost diets emphasi8e the
importance o& and re!iance on home cookin. as the means o& achie$in. success&u! resu!ts and as a
conseJuence !eadin. to a better hea!th1 (hus' as more consumers opt to cook more mea!s at home
as part o& a diet p!an or other reason' the demand &or cook,are ,ou!d increase1 A!so' consumers
ha$e become more en$ironmenta!!y &riend!y o$er the recent years1 5ustomers continue to scrutini8e
the Jua!ity and hea!th ha8ards o& many products' inc!udin. cook,are1 5onsumers are increasin.!y
becomin. more interested in products that are e-hibitin. en$ironment-&riend!y traits' and those
products that are deemed or pro$en to be !ess harm&u! to one6s hea!th1
(here is no ne, in&ormation that cou!d su..est that these trends ,i!! not continue into the &uture1
5ook,are industry needs to reco.ni8e the &act' and &ocus on pro$idin. consumers ,ith products
that satis&y their hea!th and en$ironmenta! standards1
III. 1olitical and legal issues
(he po!itica! and !e.a! en$ironment in the cook,are market is characteri8ed by the presence and
en&orcement o& !a,s and re.u!ations imposed on the use o& certain materia!s in the cook,are
manu&acturin. process1 (his is especia!!y true ,hen it comes to materia!s that are used in contact
,ith &ood1 +nited States Cood and #ru. Administration 3C#A4 is responsib!e &or re.u!atin. these
materia!s1 C#A conducts sa&ety e$a!uations o& a!! materia!s that are proposed by the industry &or use
in &ood contact app!ications1
Hne o& the most &reJuent!y cited in$esti.ations is the one re!ated to sa&ety o& nonstick coatin.s used
on cook,are 3=%A Seekin. %CHA Eeductions' 01A2)A2006'
http:AAyosemite1epa1.o$AopaAadmpress1ns&A6*b)&2d)D&0ee&d2*)2)F01)00)1F&b&A&d1cb0a0F)67FaaD
*)2)F101006a&bb7KHpen#ocument41 (he +1S1 =n$ironmenta! %rotection A.ency 3=%A4 is re$ie,in.
a$ai!ab!e in&ormation on %CHA' a chemica! used in manu&acture o& &!uoropo!ymer resins ,hich in
turn are used in non-stick cook,are sur&ace app!ications1 =%A is in$esti.atin. sources o& human
e-posure to these chemica!s because o& some c!aims o& $arious harm to human6s hea!th1 =$en
thou.h the studies o& this chemica! are sti!! continuin.' =%A Administrator Stephen L1 Johnson
stated that >1 1 1 to date =%A is not a,are o& any studies speci&ica!!y re!atin. current !e$e!s o& %CHA
e-posure to human hea!th e&&ects? 3Short Statement on Nonstick 5ook,are Sa&ety' 5ook,are
"anu&acturer6s Association 35"A4' "ay 26' 2006 http:AA,,,1cook,are1or.Asa&etyBstatement1php'
accessed "arch 0)' 201041
9t is important &or the cook,are industry to continue &u!! cooperation 3as has been the case4 ,ith
C#A and =%A e$a!uations o& a!! materia!s ,ith Juestionab!e sa&ety records1 Cor 5u!inarian' it is
important to continue uti!i8in. sa&e materia!s in the manu&acturin. process and promotin. the Jua!ity
o& its products to satis&y increasin.!y hea!th conscious and en$ironmenta!!y a,are consumers1
I3. Summary of environmental opportunities and threats
As indicated abo$e' si.ni&icant opportunities and threats are &!oatin. in the &uture o& the cook,are
industry in the comin. years1 (hose companies that &ind a ,ay to capita!i8e on those opportunities
and to reduce potentia! threats' shou!d be ab!e to maintain or .ro, their re$enues and e-pand their
market share1
3. Implications for strategy development
5urrent state o& the economy makes it di&&icu!t to predict ho, e-act!y consumers are .oin. to react
to the prospects o& hi.her in&!ation or unemp!oyment1 9& consumers continue to cut back on
restaurant dinin. and pre&er to prepare more mea!s themse!$es' it ,ou!d present a c!ear opportunity
to 5u!inarian to capture more customers1 2o,e$er' is this a!so .oin. to mean that due to decrease
in disposab!e income consumers ,i!! try to seek $a!ue $ersus Jua!ity and brand ima.eL 9& so'
5u!inarian because o& its &ocus on hi.her-end premium priced .oods' mi.ht &ind itse!& in a di&&icu!t
situation ,here tradeo&&s mi.ht need to be made bet,een its brand ima.e and pricin.Apromotion1
H$era!!' current state o& the en$ironment and &uture prospects ,i!! pose cha!!en.es to 5u!inarian
and ,i!! reJuire ad:ustments in company6s marketin. mi-1
0. Industry Information
I. Industry $vervie4
5u!inarian 5ook,are is in the &abricated meta! product' pot M pan' and kitchen utensi!
manu&acturin. industry1 (he NA95S code &or this industry is 00221D1 5u!inarian is one o& *0
manu&acturers in this industry' ,ith increasin. demand comin. &rom Southeast Asia' competin. &or
pro:ected domestic demand o& /212 bi!!ion1 (he *0 manu&acturers in this industry emp!oy o$er 6'000
emp!oyees ,ith a..re.ate annua! payro!! e-ceedin. /216 mi!!ion1
(he industryNs re$enue &or the year 200* ,as appro-imate!y /11F bi!!ion +S#' ,ith an estimated
.ross pro&it o& 011F0<1 5ompetition &rom D2 countries imported /600 mi!!ion o& supp!y in 200*
compared to +1S1 e-ports o& /2)10 mi!!ion to *6 countries1
II. Industry Trends
#ec!inin. Lon.-(erm #emand
+1S1 kitchen utensi! and cook,are production has !a..ed the rest o& the economy1 Crom 177) to
200)' ,hi!e +S manu&acturin. output .re, 0) percent' cook,are and cut!ery production &e!! 20
percent1 Corei.n competition and the increasin. comp!e-ity o& autos and other de$ices - ,hich
discoura.es consumer tinkerin. - ha$e b!unted industry .ro,th1 (his has resu!ted in dec!inin. !on.-
term demand1
Ana!ysis o& this industry a!so re$ea!s a !ar.e dependency on persona! consumption1 (he
recessionary e&&ects on consumer consumption p!ay a !ar.e ro!e makin. strate.ic pricin. and
marketin. decisions1 5heaper imports are attracti$e to consumers ,ith !ess discretionary income'
&orcin. cook,are and cut!ery manu&acturers to increase automation1
S!o, Gro,th in %rices
5ook,are prices ha$e increased on!y modest!y in the past decade1 S!o, demand and &orei.n
competition ha$e kept ,ho!esa!e price increases be!o, the in&!ation rate1 Crom 2000 to 200)'
,ho!esa!e cook,are prices increased 11 percent' se$era! points be!o, the in&!ation rate1
Simi!ar Hperatin.A"arketin. Strate.ies
5ook,are manu&acturers ha$e used (O &amous che&s' ,ho ha$e become cookin. sho, hosts' to
endorse their products and appea! to consumers1 (hey a!so ha$e appea!ed to consumers by se!!in.
product to bi. bo- stores 3e1.1 @a!-"art and (ar.et4 and reduced prices to &it into consumers6
bud.ets1
III. 1orter5s "ive "orces
(hreat o& Substitute %roducts - 2i.h
#emand &or sma!! app!iances is connected to the .ro,th in the economy and housin.1 (he
cook,are industry has seen an increase in substitute products due to the increase in sma!!
app!iances o$er the past &i$e years1 (his threat o& substitution &or cook,are manu&acturers is
current!y hi.h' ho,e$er' ,e ,ou!d e-pect a decrease in substitution threat as the recession !in.ers1
(hreat o& Ne, =ntrants - Lo,
(here are *0 manu&acturers in this industry ,ith a dec!inin. !on.-term demand1 @e ,ou!d not
e-pect to see ne, entrants but ,ou!d rather !ook &or mer.ers and acJuisitions to dominate the
competiti$e !andscape mo$in. &or,ard to .enerate increased economies o& sca!e1
Bar.ainin. %o,er o& Buyers - 2i.h
Buyers ha$e u!timate buyin. po,er ,ith no s,itchin. costs numerous options &rom competitors and
substitute products1 Buyers a!so on!y buy cook,are sporadica!!y and are there&ore not typica!!y !oya!
to one brand1 (he case states that demand increases seasona!!y due to ho!iday and ,eddin. .i&ts1
Buyers then may be more !ike!y to !ook .i$e more consideration to cost $s1 brand pre&erence1
Bar.ainin. %o,er o& Supp!iers P Lo,
(he inputs to manu&acturin. are basic commodities 3e1.1 stee!' copper4 and are not specia!i8ed or
techno!o.ica!!y ad$anced1 Gi$en this understandin. o& the products bein. supp!ied ,e can asses
that supp!ier po,er is !o,1
Ei$a!ry Amon. 5ompetitors P 9ntense
(he competiti$e &orces 3do,n,ard pressure on prices' dec!inin. demand' increased imports4 are
causin. increasin. ri$a!ry amon. competitors' inc!udin. &orei.n competition1
I3. Industry Associations
ey competitors in this industry are members o& se$era! pro&essiona! or.ani8ations1 (he primary
association is the 5ook,are "anu&acturers Association1 (his association has ser$ed both the pub!ic
and its members ,ith in&ormation' statistics and standards &or cook,are' bake,are and
kitchen,are1 (here are se$era! key associations many manu&acturers in this industry are members
o&:
5ook,are "anu&acturers Association
2ome Curnishin.s 9nternationa! Association
9nternationa! 9nterior #esi.n Association
Nationa! 2ome Curnishin.s Association
3. 6ey 2ompetitors
A!!-5!ad "eta!cra&ters
5a!pha!on 5orp1
=a.!e,are "anu&acturin. 5o' 9nc1
Li&etime Brands
"eyer 5orp1
Nordic @are
(ramontina +SA 9nc1
(-Ca!
2. $rgani7ation
I. $b8ectives and 2onstraints
5u!inarian 5ook,are has &our strate.ic priorities in 2006: 314 ,iden its distribution net,ork' 324
increase its market share o& the premium cook,are se.ment' 304 preser$e its presti.ious ima.e'
and 3D4 continue to capture re$enue .ro,th o& at !east 1)<' ,hi!e maintainin. preta- earnin.s o&
/121) mi!!ion1
(he achie$ement o& these ob:ecti$es depends pro&ound!y on 5u!inarian6s marketin. strate.y1 (he
marketin. department is e-p!orin. the risks and opportunities o& price promotion as a strate.ic and
tactica! marketin. too! in 200F1 (hrou.h Juantitati$e ana!ysis they hope to e$a!uate the &inancia!
impact o& a price promotion usin. di&&erent cost and sa!es assumptions1 (he most $ita! .oa! is to
determine i& a price promotion is necessary and then to de$e!op the detai!s o& a price promotion
po!icy that is consistent ,ith the company6s o$era!! strate.ic ob:ecti$es1
(here are se$era! constraints that cou!d !imit 5u!inarian &rom de$e!opin. a price promotion and
u!timate!y its abi!ity to meet its strate.ic priorities1 (he preser$ation o& brand eJuity cou!d pre$ent
5u!inarian &rom considerin. a price promotion' &earin. that it ,ou!d cheapen the products6 ima.e1
%ercei$ed ne.ati$e impacts &rom a price promotion o&&ered in 200D are hea$i!y in&!uencin. the
decisionQ ho,e$er' in reana!ysis it may be &ound that the promotion ,as in &act bene&icia!1 Cina!!y'
the company is $ery se!ecti$e in ho, merchandise is distributed' ,hich !imits the market in ,hich
the products are so!d1
II. "inancial 2ondition
5u!inarian 5ook,are is in a market that e-perienced attracti$e .ro,th &rom 2002 to 2006 ,hen it
.enerated more than /0106 bi!!ion in re$enues1 9ndi$idua!!y' 5u!inarian 5ook,are has .enerated
more than /10D
1
mi!!ion in re$enue in 2006' representin. appro-imate!y 011< o& tota! market
re$enue1
1
Revenue amounts for 2006 were estimated, as 2006 was the current year for this case study.
5u!inarian 5ook,are has sho,n inconsistent annua! re$enue .ro,th rates &rom D1)7< to 2)17F<
,ith an a$era.e .ro,th rate o& 1F16D< annua!!y1
9n 2006' 5u!inarian has &orecasted to capture re$enues o& /10D mi!!ion ,ith preta- earnin.s o&
/121) mi!!ion and has a!!otted /D mi!!ion 3D< o& sa!es4 &or ad$ertisin. e-penses1 9& this &orecast is
success&u!!y met' this ,i!! &u!&i!! one o& the strate.ic priorities &or 20061
III. #anagement 1hilosophy
(he mana.ement phi!osophy at 5u!inarian 5ook,are seems to be paterna!istic1 "ana.ement
3#ona!d Janus4 consu!ts emp!oyees 3Oictoria Bro,n4 o$er issues and !istens to their &eedback and
opinions1 (he man.er ho,e$er makes the actua! decisions1 (his mana.ement sty!e brin.s more
t,o-,ay communication ,hich in turn moti$ates ,orkers1 5on$erse!y' this phi!osophy does tend to
s!o, do,n decision makin. and sti!! be Juite dictatoria!1
I3. $rgani7ational Structure
5u!inarian6s departments are &orma!!y structured by &unction1 =$eryone en.a.ed in one acti$ity or
se$era! re!ated acti$ities are brou.ht to.ether in one department1 Cor e-amp!e' 5u!inarian has
separate departments &or marketin.' sa!es' and manu&acturin.1
(his structure makes e&&icient use o& specia!i8ed resources and makes super$ision easier1
+n&ortunate!y' this structure can a!so make it di&&icu!t to .et Juick ans,ers' determine accountabi!ity'
and it can be di&&icu!t ,orkin. ,ith other departments in a uni&ied ,ay to achie$e the or.ani8ation6s
.oa!s1
(he &o!!o,in. or.ani8ation chart can be in&erred &rom those indi$idua!s identi&ied in the study:
3. $rgani7ational 2ulture
5u!inarian 5ook,are has a stron. or.ani8ationa! cu!ture1 (he cu!ture takes pride in ha$in.
unpara!!e! product Jua!ity' the most ad$anced per&ormance techno!o.y and stron. dea!er support1
(he company has been bui!t on brand eJuity and has no intention o& !o,erin. its status1 9n &act'
a!most e$ery decision takes into account the preser$ation o& 5u!inarian6s presti.ious name and
ima.e1
3I. Summary of Strengths and 9ea:nesses
Potential Resource Strengths and Competitive Capabilities
5!ear strate.ic direction1
5ore competencies in Jua!ity and per&ormance techno!o.y1
Stron. brand name ima.eAcompany reputation1
Stron.er dea!er re!ationships than key ri$a!s1
Leader in meta!!ur.y techno!o.y1
%ro$en product inno$ation capabi!ities1
Good mana.ement phi!osophy1
=mp!oyees are moti$ated1
A stron. &inancia! condition1
A distinct competence in uti!i8in. interna! and e-terna! consumer research1
Business decisions are hi.h!y scrutini8e be&ore imp!emented1
Potential Resource Weaknesses and Competitive Deficiencies
@eak ad$ertisin. and promotion1
Losin. market share because o& attachment to brand name ima.e1
C!a,ed data ana!ysis by a third-party consu!tant1
Limited distribution channe!s1
"ana.ement is cautious to pursue bo!der price promotion1
3II. Implications for Strategy &evelopment
(he &o!!o,in. issues cou!d cause comp!ications &or strate.y de$e!opment:
(he preser$ation o& brand eJuity cou!d pre$ent 5u!inarian &rom considerin. a price promotion'
&earin. that it ,ou!d cheapen the products6 ima.e1
%ercei$ed ne.ati$e impacts &rom a price promotion o&&ered in 200D are hea$i!y in&!uencin. the
decisionQ ho,e$er' in reana!ysis it may be &ound that the promotion ,as in &act bene&icia!1
(he company is $ery se!ecti$e in ho, merchandise is distributed' ,hich !imits the market in
,hich the products are so!d1
@eak ad$ertisin. and promotion po!icies1
&. #ar:eting Strategy
I. #ar:eting $b8ectives
5u!inarian 5ook,are6s marketin. ob:ecti$es ,ere set by 5=H Audrey Eou- ro!! out o& the &our main
priorities &or the company: 314 ,iden its distribution net,ork' 324 increase its market share o&
premium cook,are se.ment' 304 preser$e its presti.ious ima.e' and 3D4 continue to capture
re$enue .ro,th at 1)<' ,hi!e maintainin. preta- earnin.s mar.in o& 12< 3141
Eou-6s priorities &or 5u!inarian 5ook,are &a!! in !ine ,ith the or.ani8ation6s ob:ecti$es1 (he &irst o&
Eou-6s ob:ecti$e is to ,iden its distribution net,ork' ,ith ma:ority o& distribution comin. &rom mass
merchandise out!ets and department stores1 5u!inarian 5ook,are has the opportunity to ,iden their
distribution net,ork by e-pandin. the number o& mass merchandise out!etsAdepartment stores they
o&&er their di&&erent !ines o& bo- setAopen stock cook,are products1 9ncreasin. the number o& stores
that product !ines are o&&er' ,i!! increasin. the product e-posure &or ne, customers1 @ith more than
ha!& o& the 2000 purchases bein. .i$en as .i&ts or purchases &or the intent o& bein. a .i&t' the ne,
e-posure o& increase distribution' ne, customers are more !ike!y to make a purchase1 (o ha$e the
.reatest success' 5u!inarian 5ook,are shou!d turn to $enues that o&&er a simi!ar settin. as the
mass merchandise out!ets and department stores1 (hey need to make sure they are sendin. the
correct !ines throu.h the correct channe! o& distribution 3i1e1 #;1 and 5;1 throu.h ,a!!-mart'
%EH;1 throu.h @i!!iam Sonoma41
(o increase market share o& premium cook,are se.ments must !ook at ,hat competitors are doin.
and adapt a simi!ar strate.y1 "a:or market share ho!ders' such as Star 5he& and itchen se!ect
o&&er mid-!e$e! and !o,-!e$e! cook,are and uti!i8e the same means o& distribution1 @ith a tar.et
market that ,ants the best Jua!ity and most &eatures' &or the best price' i& 5u!inarian 5ook,are
,ants to .ain more market share in the o$er a!! cook,are arena' than they must &ocus on more than
:ust premium cook,are1 9& they ,ant to stay so!e!y a premium cook,are supp!ier' they ,i!! be
competin. &or a $ery sma!! portion o& the cook,are market share1 9& they ,ant to compete &or the
!ar.er market share' they ,i!! ha$e to introduce either a !o,-!e$e! or mid-!e$e! product to compete
,ith the !eaders o& the cook,are market share1
Eou-6s &ina! t,o priorities' preser$e its presti.ious ima.e' and continue to capture re$enue .ro,th at
1)<' ,hi!e maintainin. preta- earnin.s mar.in o& 12< are rea!istic ,ith the company6s .ro,th and
brand1
II. #ar:eting 2onstraints
A ma:or constraint that 5u!inarian 5ook,are needs to be cautious o& is market o$er saturation1 By
o$er e-pandin. their distribution' they run the risk o& competin. a.ainst themse!$es1 @hen price is
an acti$e $ariab!e in the decision process o& the tar.et market' the consumer cou!d .o &rom a hi.her
end product 3%EH;1 or S;14 to a !o,er end product 3#;1 or 5;14 because o& the cost di&&erence'
!eadin. to a !oss in sa!es1
A!on. ,ith o$er saturation' 5u!inarian 5ook,are shou!d be cautious about ho, many ce!ebrity
chie&s they associate their cook,are ,ith1 2a$in. too many &aces on bo-es cou!d con&use a
consumer durin. their decision makin. process1 (hou.h to some it may appear that a!! o&
5u!inarian 5ook,are6s products are top notch since many ce!ebrities choose their products' it
!ea$es the consumer ,onderin. ,hich ce!ebrity to !isten to1 @ho is betterL (hou.h' ,hen it comes
to other competin. p!ayers' 5u!inarian 5ook,are must make sure that their ce!ebrities are ab!e to
compete a.ainst the ce!ebrities o& other companies1 @ith the consumer identi&yin. they are more
!ike!y to purchase a product they reco.ni8e' 5u!inarian 5ook,are shou!d make sure that their
ce!ebrities are .oin. to ,in ,hen compared to competin. products
Another constraint ,ou!d be the distribution center as partners1 @ith o&&erin. premium products'
distributin. them throu.h mass merchandiser out!ets such as @a!-marts' consumers cou!d become
con&used due to the disconnect bet,een hi.h end products bein. so!d throu.h' ,hat the consumer
cou!d percei$e as a !o,er end retai!er1 (hou.h' 5u!inarian 5ook,are shou!d be care&u! not to
e-c!ude their consumers that are more !ike!y to purchase products throu.h a mass merchandiser
out!et or department store as a .i&t &or someone e!se1
III. #ar:et Share Analysis
5u!inarian 5ook,are at a premium !e$e! is the !eader in premium cook,are1 5u!inarian 5ook,are
is at 1D< o& the cook,are market share1 (he c!osest p!ayer to 5u!inarian 5ook,are is Le Gourman
at 61)<' and then Eobusto at D<1 (he !eaders in o$er a!! cook,are market share o&&er di&&erent
!e$e!s o& cook,are 3i1e1 !o,-!e$e! or mid-!e$e!41
I3. Target #ar:et Analysis
(he 5u!inarian 5ook,are tar.et market is a mi- bet,een men and ,omen o& househo!ds that ha$e
an income o& F)'000 p!us1 (he a.e ran.e o& the tar.et .roup tends to be bet,een a.es 00 to ))1
"a:ority o& the .roup recei$ed their products as either a .i&t &rom someone or purchased the product
as a .i&t &or someone e!se1 (he .roup tends to care more about ,hat the product can do rather
than ho, it !ooks1 (he .roup a!so has a !ar.e !ike!y hood o& ,atchin. cookin. sho,s and then
purchasin. cook,are ,ith &ami!iar names o& cookin. ce!ebrities or brands used by those seen on
sho,s1
9n the resu!ts o& the 200D company Juestionnaire' ,omen ,ere identi&ied as bein. the ma:ority
purchaser o& 5u!inarian 5ook,are1 (heir c!aim &or purchasin. the cook,are ,as that cookin. ,as a
number one hobby o& theirs1 (hou.h' ,hen men' makin. up thirty percent o& the purchases'
purchase they tend to make decisions about ,hat !ine o& cook,are products they ,ant to >arm?
themse!$es ,ith ,hen cookin.3241
Crom a distribution standpoint' the tar.et market is more !ike!y to purchase cook,are at a !ar.e
mass merchandise out!et or department store ,here they are ab!e to see cook,are disp!ayed a!on.
side other competin. products1 (he tar.et pre&errin. to purchase the hi.hest Jua!ity ,ith the most
&eatures is most !ike!y .oin. to compare competin. brands' so they pre&er stores that disp!ay
products &or easy comparisons1 (he tar.et market is !ike!y to turn to specia!ty stores 3i1e1 @i!!iam
Sonoma4 and on!ine stores i1e1 Ama8on4 ,hen they need to purchase in an open stock &ashion
(purchasing cookware piece by piece)
Crom a price standpoint' the tar.et market' !ike many ,ant to ha$e the bi..est >ban.? &or their
do!!ar1 (hey are !ike!y to purchase more i& there is a promotiona! price &or products' andAor i& there is
a &ree promotiona! item .i$en a,ay ,hen a purchase is made1 Eated number three behind Jua!ity
and &eatures on the 2000 Hrion "arket research study' %rice o& products' indicates that the tar.et
market considers price a ma:or &actor ,hen makin. a decision to purchase or not1 @ith the tar.et
market purchasin. ma:ority o& products throu.h mass merchandisin. out!ets and department stores'
some o& the tar.et market ,i!! not make a purchase ti!! a discountedApromotiona! price is o&&ered1
3. Sales ; 1rofitability Analysis
(he sa!es &or 5u!inarian 5ook,are ha$e an a$era.e o& 1)< .ro,th per year since 20021 @hi!e the
200D promotion .a$e a sma!! boost' sti!! be!o, a$era.e at a percenta.e o& )<' to the %remium
35ast 9ron' %H9' and 5ooper4' and an a$era.e .ro,th increase o& 1)< &or the Stain!ess Stee!
products' 5u!inarian 5ook,are6s a!uminum product sa!es took a 1F< hit due to the 6 month o&
disrupted shipments1 9n 200)' the premium !ine be.ins to increase at a rate o& D*< 3 continuous
e!pectation is inferred in "##$ forecasting4' the Stain!ess Stee! !ine continues on at an a$era.e o&
1)< 3lso e!pected in "##$ forecasts4 (he a!uminum !ine made a 1)< reco$ery in 200) tryin. to
recoup &rom the !ar.e dec!ine durin. 200D1 3 slow down in growth is forecasted for "##$)
(he 5u!inarian 5ook,are sa!es a!so &o!!o, a seasona! sa!es trend1 #urin. the &irst Juarter sa!es sit
bet,een 6-F<' and then be.in to peak durin. the second Juarter' hit their mid year hi.h durin.
June6s ,eddin. season1 #urin. the start o& the third Juarter the sa!e be.in to dec!ine back to the 6-
F< ran.e1 Cina!!y startin. o&& the &ourth Juarter at a$era.es c!ose to the &irst Juarter' sa!e Juick!y
increases as customers be.in shoppin. &or the ho!iday seasons1 Near the end o& the &ourth Juarter
sa!e hit the annua! hi.h' and then return to the 6-F< a$era.e at the be.innin. o& a ne, year1
@ith the a$era.e .ro,th o& 1)< 5u!inarian 5ook,are has had a track record ,ith increasin. the
need &or their product1 @ith increasin. unit orders each year and increasin. their ad$ertisin. spend
to ensure they are reachin. their tar.et market1 @ith the 200D price promotion' 5u!inarian
5ook,are actua!!y hurt them1 (he price promotion caused con&usion in the consumers' and made
them purchase &rom the 5;1 or #;1 !ine instead o& the %EH;1 or S;1 !ines1 9n case e-hibit D'
durin. the sprin. o& 200D' consumers purchased a hi.her Juantity o& 5;1 products1 @hi!e
e$erythin. e!se stayed at a constant .ro,th' then durin. the 200) &a!! period 3a&ter the promotion4
.ro,th dropped o&& &or the %EH;1' S;1' and the 5;1 !ines' ,hi!e the #;1 !ine6s .ro,th s!o,ed1
5u!inarian 5ook,are6s price promotion hurt their sa!es .ro,th1 #urin. the promotion trade rese!!ers
bou.ht up product and then reso!d the product a norma! cost &or a .ain1 5u!inarian 5ook,are since
2002 seen a constant 1)< .ro,th in sa!es' and shou!d not o&&er a price promotion 3discounted
sa!es price4 un!ess their .ro,th &a!!s be!o, the a$era.e1 9& they ,ant to attack ne, or returnin.
customers they shou!d o&&er a &ree .i&t ,ith the purchase o& a certain amount o& product1 (his ,i!!
satis&y their customers' ,ho ,ant to see the most &or their money' and s,ay the customer to buy
no,1
3I. #ar:eting #ix 3ariable Analysis
Products
(he products that 5u!inarian o&&ers' ,hi!e a!! re!ati$e!y hi.h-end' are reasonab!y distributed in price
and techno!o.y1 (hey ha$e care&u!!y desi.ned their !ine to appea! to the amateur' no$ice and e-pert
che&s' a!i.nin. themse!$es as Jua!ity cook,are makers ,hose users ,ou!d proud!y disp!ay their
products on their sto$etops1 (he !ine-up' ,hich consists o& &our !ines' inc!udes the (yro 5o!!ection
35;14' the 5!assic 5o!!ection 3#;14' the Ad$anced 5he& 5o!!ection 3S;14' and the %ro&essiona!
Grade 5o!!ection 3%EH;141
(he on!y de!ineators bet,een the $a!ue propositions o& each !ine are the materia!s used in
construction1 (he %EH;1 uses a proprietary copper construction' and represents the most
e-pensi$eAad$anced product o&&ered' costin. on a$era.e 320064 /0001 Ne-t do,n the !ist' and
appea!in. to those customers ,ho do not ha$e the penchant &or &ine copper cook,are is the S;1
and #;1Q both are made o& a!uminum e-cept ,ith the S;1' a stain!ess stee! e-terior is used1
A$era.e cost in 2006 is /2)0 and /200 respecti$e!y1 Last!y' at the bottom most tier o& 5un!inarian6s
product o&&erin. is the 5;91 (he 5;1 o&&ers the !east amount o& techno!o.ica! &eatures and the
a$era.e cost o& /1)0 re&!ects it1
A!! &our products o&&ered are bracketed /)0 apart yet an o$er,he!min. percenta.e o& sa!es are
carried by the !o,est o& the t,o o&&ered1 9t ,ou!d stand to reason that the %EH;1 and 5;1 e-ist &or
the thri&ty and pro&!i.ate a!ike but they a!so ser$e the purpose o& dri$in. sa!es to the midd!e o& the
road' benchmarkin. the customer6s decision &or them1 (his is certain!y represented in the sa!es data
as the /200 #;1 !ine so!d 206'0)0 units compared ,ith its cheaper brother' the 5;1 at 166'6001
(his additiona! <D1 percent in sa!es can be direct!y attributed to both promotiona! initiati$es 3as it
did not e-ist prior to the promotion4 and to the costAbene&it ana!ysis o& customers ,hen shoppin.1
(his' in co.niti$e science circ!es is kno,n as the decoy e&&ect 3asymmetric dominance e&&ect41 (his
phenomenon ,as tri..ered ,hen an in&!u- o& consumer perception &or 5u!inarian products ,as
acti$ated by the promotion o&&ered in 200D1
Distribution
Eetai!ers are the backbone o& 5u!inarian6s distribution chain1 5u!inarian has' &or the most part' a
success&u! re!ationship ,ith its retai! partners because o& the hi.h mar.in it o&&ers 3)2< $ersus the
D*< a$era.e &rom Le Gourmand and Eobusto41 (here is ho,e$er a $ariance in the types o&
retai!ers 5u!inarian conducts retai! acti$ities throu.h1 06< o& trade orders come &rom a net,ork o&
three upsca!e kitchen chains that specia!i8e in hi.h Jua!ity products that per&ect!y match the brand
eJuity o& 5u!inarian1 +psca!e department stores a!so represent a re!ati$e!y hi.h proportion o& trade
orders at 02< and 2F< comin. &rom !oca! specia!ty retai!ers1 Hn!y )< o& orders came &rom the
company6s on-!ine store and direct mai!ers1
(he stron. re!ationship bet,een retai!ers and 5u!inarian is most certain!y due to the e-pertise o& the
personab!e and intimate sa!es &orce emp!oyed by 5u!inarian1 (he &orce' consistin. o& * e-perienced
account mana.ers ,ho had a!! been ,ith the company &or a considerab!e amount o& time 3FR
years4' ,ou!d routine!y $isit ma:or account ho!ders to o&&er hands on trainin. and in$entory
mana.ement su..estions 3the direct competition made account $isits around ha!& as much41 (hus'
these account mana.ers became the &ace o& 5u!inarian' .i$in. it the persona!ity o& one ,ho is
passionate' attenti$e and carin. &or those char.ed ,ith distribution o& its products1
2o,e$er' in the study by Hrion "arket Eesearch' key &indin.s indicate that more peop!e buy 3or
,ou!d be ,i!!in. to buy4 5u!inarian cook,are in cata!o.s and on!ine retai!ers 31)<41 (his presents a
uniJue opportunity &or 5u!inarian to e-pand its distribution into those areas and at a potentia!!y
.reater mar.in 3direct sa!es41 (he &indin.s a!so sho, that many 3))<4 ha$e recei$ed or purchased
5u!inarian cook,are as a .i&t1 =-pandin. distribution into the boom on!ine retai!ers are e-periencin.
3Ama8on has seen 2F6< sa!es .ro,th &rom 200D P 200* a!one4 ,ou!d be the &or,ard thinkin. thin.
to do ,ithout compromisin. brand eJuity in the process1
Promotion and dvertising
%romotions are a bit o& a hot topic at 5u!inarian as the Oice %resident o& "arketin.' #ona!d Janus'
and the Senior sa!es "ana.er' Oictoria Bro,n are at an impasse re.ardin. the success o& a 200D
price promotion and ,hether to mo$e &or,ard ,ith another promotion &or 200F1 Janus be!ie$es that
5u!inarian is a stron. brand producin. Jua!ity products and shou!d stand by its retai! price1 2e cites
o$era!! sa!es &or 2006 sho,in. 21< .ro,th in re$enue and a 200D consu!tin. report' ,hich sho,s
that the promotion had a ne.ati$e a&&ect on pro&its1 Bro,n' in a!!' &e!t stron.!y that promotions had a
ne.ati$e a&&ect on the brand and cheapened their reputation as a hi.h Jua!ity cook,are company1

Bro,n on the other hand &e!t they needed to embrace promotions as a method o& brand bui!din.1
She &e!t that 5u!inarian needed to be bo!der ,ith promotiona! o&&ers as &eedback &rom sa!es teams
indicated that retai!ers ,ere unhappy that there ,ere no >consistent and meanin.&u! price
discounts1? Bro,ns contention is that promotions and discounts >increase commitment and support
&rom the trade and ,i!! boost o$era!! brand a,areness1?

@hen !ookin. at the data re.ardin. the 200D promotiona!' it becomes apparent that 5;1 did
underper&orm a&ter the promotiona! period but sa!es &or the #;1 more than made up &or any de&icit
in sa!es1 (he trend comin. o&& o& the promotiona! period indicates a sustained !i&t in the #;1 sa!es
,ith a!! other !ines &!at !inin. ,ith moderate increases intermittent!y1 (hese &i.ures a!so are
representati$e o& the subseJuent promotions o&&ered by 5u!inarian in 200) and the year!y
promotion' ,hich o&&ered a &ree #utch o$en ,ith the purchase o& more than /)00 o& merchandise1
(he &ree .i&t direct!y re&!ect marketin. data indicatin. that <20 ,ou!d be moti$ated to buy i& o&&ered
a &ree .i&t1

(his ,as not the opinion o& the consu!tants brou.ht in to ana!y8e the e&&ecti$eness o& the
promotion1 (hey &e!t the 200D price promotion had an o$era!! ne.ati$e a&&ect on pro&its1 (hey
conc!uded that durin. the promotiona! period sa!es underper&ormed by /D67'D*71 A!so' they
be!ie$ed that the #;1 ,as >canniba!i8ed? as sa!es did not meet &orecasts &or the sprin. period
3Sprin. sa!es ,ere o&& around )'000 units41 Bro,n &e!t that the study ,as &!a,ed in its assessment o&
the !osses in three ,ays1 She sa, that the &irst &e, months o& 200D underper&ormed the &irst &e,
months o& 2000 by <2D' thus' pro:ections &or "arch P "ay orders shou!d be ro!!ed back by 2D<1 9&
this ad:ustment ,ere made' Sa!es ,ou!d ha$e e-ceeded pro:ections' indicatin. sa!es &i.ures that &it
,ith the sort o& !i&t associated ,ith price promotions1 Bro,n a!so &e!t that the mar.in &or statistica!
error on canniba!i8ation costs &or the #;1 !ine ,as too hi.h and thus shou!d not ha$e been inc!uded
in the study1
9t ,ou!d then appear then that the promotion ,as success&u! in creatin. brand a,areness1 "ore
important!y' the interaction a&&ect bet,een the !ines shou!d be considered ,hen makin. an
assessment on the e&&ecti$eness o& any promotion1
Ad$ertisin. by 5u!inarian &o!!o,s a steady trend o& spendin. 3around <D o& re$enue4 statistica!!y
identica! to their competition1 2o,e$er' competitors at the !o,er end o& the product spectrum'
itchen Se!ect and Star 5he&' both out-spent 5u!inarian by )0< - F0< in 20061 (he ma:ority o&
5u!inarian6s ad bud.et ,ent to,ards ad$ertisin. in ma.a8ines that tar.eted hi.h-income markets
3Bon Appetit' 5ook 9!!ustrated' "artha Ste,art Li$in.' etc14 and ne,spapers 3+SA today14
5u!inarian6s cooperati$e ad$ertisin. on!y tar.eted retai!er cata!o.s and direct mai!ersQ none ,ent to
supportin. retai!ers ad$ertisin. on (O' ne,spapers or other ma.a8ines that ,ere not a!ready
ad$ertised in1
9t ,ou!d ser$e 5u!inarian ,e!! i& they ,ere to a!i.n ad$ertisin. strate.y ,ith their promotiona!
acti$ities as those that ,ou!d ha$e purchased the 5;1 !ine ,hi!e on promotion do not re.u!ar!y
purchase or &o!!o, the o&&erin. o& 5u!inarian1 (hey shou!d' momentari!y' cheapen the brand and
ad$ertise in those areas that itchen Se!ect and Star 5he&1 9& the price is ri.ht' and a broader
spectrum o& peop!e are a,are o& the promotion' 5u!inarian may then dri$e sa!es to,ards its
products and a,ay &rom !o,-end competitors1 A!so' to de$ote the better portion o& /D'000'000 to
those ad$ertisin. mediums' ,hich are s!o,!y &adin. &rom the pub!ic consciousness' is a
misa!!ocation o& ad$ertisin. resources1 5u!inarian shou!d be !ookin. into ad$ertisin. out!ets
tar.etin. the mass market ,ith !o,er p!acement costs and hi.her $isibi!ity1 =$en a partnership ,ith
popu!ar cookin. te!e$ision sho,s ,ou!d &u!&i!! the need to di$ersi&y ad spendin. ,hi!e keepin. the
5u!inarian brand >e!ite?1
3II. Summary of #ar:eting Strengths and 9ea:nesses
#espite the promotiona! dispute ,ithin the company' 5u!inarian is in a re!ati$e!y stron. p!ace1 Sear
o$er year they are .ro,in. and' in turn' spendin. more on ad$ertisin. 3/D mi!!ion in 200641 (hey
ha$e a decent spectrum o& products' a!! on the hi.her end o& Jua!ity and pricin. in the market1
5u!inarian a!so has a stron. sa!es &orce that makes more retai!er $isits durin. the year than their
competitors and' in turn' 5u!inarian has stron. re!ationships throu.hout its distribution net,ork1
(heir consumers eJuate the 5u!inarian name ,ith Jua!ity and hi.h techno!o.y1
(hese characteristics are comp!ete!y in !ine ,ith the market that they dominate 3the hi.h end
cook,are market4 ,ith an o$era!! <1D cook,are market share1 (his is about <)) more than their
c!osest competitor LeGourmand ,ho ho!ds <61) o& the cook,are market and Eobusto' ,ho ho!ds
<D o& the cook,are market1 5u!inarian is keen!y a,are o& their dominance and its mana.ement
,ishes to maintain the brands reputation1 (hey are hesitant to make a mo$e that ,ou!d potentia!!y
cheapen the brand or one that ,ou!d increase sa!es at the e-pense o& brand eJuity1 (his' a!! e!se
aside' is a .reat stren.th &or 5u!inarian1 (heir mana.ement cares about the ima.e o& the company1
(hey are sensiti$e to consumer perceptions and ho!d their retai!ers in hi.h esteem1 (his a!! comes
&rom a stron. and e-perienced mana.ement team1
(his same stren.th is' parado-ica!!y' 5u!inarian6s .reatest ,eakness1 (hey are so incredib!y
trepidacious in re.ards to maintainin. brand eJuityQ they &ai! sometimes to meet &undamenta!
retai!er and consumer desires1 (he report by Hrion "arketin. has sho,n that <00 o& consumers
,ou!d be moti$ated by a price discount 3a &i.ure re&!ected in sa!es data durin. the promotion4 and
it6s o,n retai!ers ha$e e-pressed &rustration1 9& anythin.' they shou!d be makin. more price
promotions durin. those times' around No$ember and #ecember' ,here many peop!e 3<))
accordin. to the market study4 are .i$in. cook,are as .i&ts1 (he competition at the !o,er end o& the
market are runnin. promotions durin. this period' (hus' 5u!inarian may do ,e!! to &o!!o, suit1
A &ai!ure to de$e!op a stron. direct mai!Aon-!ine presence is a!so a ma:or ,eakness &or 5u!inarian1
(o do so ,ou!d be the eJui$a!ent o& i.norin. a ma:or potentia! market 3and a rapid!y .ro,in. one4
and subseJuent!y missin. a ma:or .ro,th opportunity as ,e!!1 (he perception on 5u!inarian6s part
,ou!d be that make a !ar.e portion o& its sa!es on!ine ,ou!d be ana!o.ous to se!!in. in a @a!-mart o&
sorts and they ,ou!d u!timate!y !oose the abi!ity to re.u!ate the prices1 2o,e$er' they ,ou!d in &act
be ab!e to re.u!ate prices to their !ikin. and may e$en be ab!e to e!iminate the trickery that retai!ers
ha$e emp!oyed 3o$er stockin. durin. a promotiona! period then se!!in. items bou.ht durin. the
promotion at a re.u!ar price41 %!enty o& companies ha$e success&u!!y brou.ht their products to the
on!ine market throu.h reputab!e retai!ers !ike Ama8on1com ,hi!e maintainin. their brand6s ima.e
3LL Bean' Bodum' A!!en =dmonds etc14 5u!inarian o$era!! su&&ers &rom o$er-protecti$e-mother-
syndrome and ,ou!d do ,e!! to di$ersi&y itse!& in promotions' ad$ertisin. and distribution1
3III. Implications for Strategy &evelopment
As 5u!inarian .oes &orth and de$e!ops &uture market strate.ies it may be ,ise to consider the
&o!!o,in. ideas be&ore de$e!opin. ne, .ro,th strate.ies1
@e ha$e seen thus &ar that 5u!inarian is $ery protecti$e o& its brand1 Hne method o& .ro,in. as a
business ,ithout chan.in. its brand strate.y is to de$e!op a ne, product !ine aimed at !o,er
markets ,hich it does not ser$e 3those current!y ser$ed by Star 5he& and itchen Se!ect4 but
marketed under a di&&erent name1 (his ,ou!d .i$e them the opportunity to tap into the <*01) o& the
market they do not current!y ser$e ,hi!e preser$in. the eJuity o& the 5u!inarian name1
A!on. the same !ines' the ad$ertisin. strate.y o& 5u!inarian is in horrib!e shape1 (hey are behind in
the times in the mediums they choose to ad$ertise in and are unnecessari!y strin.ent in choosin.
,hich a$enues o& brand communication to use1 (hey are sti!! di$ertin. the ma:ority o& ad$ertisin.
resources to ma.a8ine ad$ertisements and cooperati$e retai! pieces1 A creati$e approach must be
used to market their products e&&ecti$e!y in a rapid!y chan.in. media en$ironment1 @ebsites are
per&ect!y capab!e o& maintainin. the standards o& 5u!inarian6s ad needs ,hi!e a!so .i$in. them a
more ad impressions and 3somethin. that may be ne, &or 5u!inarian4 interacti$ity1 (hey cou!d
essentia!!y ha$e a con$ersation ,ith their consumers rather than a !inear re!ationship ,ith them and
de$e!op a !astin. !oya!ty ,ith those ,ho ha$e bou.ht 5u!inarian products in the past1
Another point' and possib!y an ans,er to the Juestion posed by the case' is that promotions' ,hen
used correct!y' do not hurt the 5u!inarian brand but actua!!y enhance it1 (his ,ou!d .o a.ainst the
instinct o& any e-perienced marketer but the most important thin. a promotiona! does it create
a,areness &or the brand and respect &rom the consumer side that a presti.ious brand' such as
5u!inarian' ,ou!d .i$e >me? the opportunity to purchase their products1 (his is $ery po,er&u! &rom
the consumer6s perspecti$e1 (he price o& the promotion 3<204 indicates that this is simp!y an
opportunity' not a b!o,out &ire sa!e1 9t says that ,e care and ,ant you to e-perience our ,onder&u!
products1
9n essence' the imp!ications &or &uture de$e!opment o& marketin. strate.y are hu.e1 (hey ha$e
many opportunities to ree$a!uate their position but are not pressed to do so as they dominate the
hi.h-end portion o& the market1 @hate$er mo$e 5u!inarian makes shou!d be done thou.ht&u!!y but
bo!d!y' e!se' they run another risk' becomin. sta!e1
Problems in Situation Analysis
Strategic Alternatives for Solving Problems
9n re$ie,in. 5u!inarian 5ook,are6s current prob!em' there are three a!ternati$es that shou!d be
considered1 (he three a!ternati$es consist o& 5u!inarian 5ook,are creatin. ne, opportunities &or
market share' create and introduce a !o,er !e$e! o& cook,are under a di&&erent name' and &ina!!y'
introduce a brand e-tension' ,here 5u!inarian 5ook,are cou!d introduce other cook,are items
needs &or cu!inary success under the 5u!inarian 5ook,are name1
2reate #ar:et Share
5u!inarian 5ook,are has an opportunity to &ind untapped tar.et markets to create need &or their
current products1 %ossib!e areas consist o& schoo! ca&eterias' sma!! restaurantsAcaterin.
companies' or sma!! hote! restaurants' areas that current!y ha$e a need &or hi.h Jua!ity cook,are1
(hese areas a!so p!ay into 5u!inarian 5ook,are6s hi.h Jua!ity specia!ty brand ima.e1 9& the
commercia! areas used 5u!inarian 5ook,are products' this ,ou!d add to the brand ima.e'
5u!inarian 5ook,are cou!d &urther position their products as &a$ored by the ne, commercia! areas1
5u!inarian 5ook,are has an opportunity to cross o$er into a more commercia! market1 5urrent!y'
they tar.et a more pri$ateApub!ic consumer market1 5reatin. ne, market share ,ou!d a!!o,
5u!inarian 5ook,are to .ain market share in other areas o& the cook,are industry1 (he ne, areas
,ou!d a!so a!!o, the sa!es team ne, opportunities to distribute the products1
(his a!ternati$e &a!! !o.ica!!y ,ith the company6s marketin. priorities and ,ou!d be the easiest &or
5u!inarian 5ook,are to adapt1 (o take ad$anta.e o& this a!ternati$e' 5u!inarian 5ook,are ,ou!d
on!y ha$e to research the need o& the possib!e ne, areas1 (he current product !ines cou!d be
o&&ered' and packa.ed in a ,ay that is better suited &or the commercia! needs1
(he costs to 5u!inarian 5ook,are ,ou!d inc!ude more than market research1 5u!inarian 5ook,are
,ou!d ha$e to ensure that commercia! areas are a $iab!e market to try to enter1 5u!inarian
5ook,are ,ou!d a!so ha$e to ensure that the sa!es team ,ou!d be ab!e to co$er the ne, areas and
demand the e-pansion ,ou!d reJuire1 (hey ,ou!d a!so ha$e to market the brand in a ne, !i.ht1
@ith product &eatures as a ma:or Jua!i&ier &or decision makin.' 5u!inarian 5ook,are ,ou!d ha$e to
identi&y the needs o& the commercia! market and &ocus marketin. materia! in a ,ay that disp!ay the
products as the best so!ution &or the commercia! needs1
2reate ne4 product line under ne4 name<brand 3 %ultibranding 4
5u!inarian 5ook,are second a!ternati$e to consider is the creation o& a ne, !e$e! o& cook,are 3"ed
or !o,er4 to o&&er consumers under a ne, nameAcompanyAbrand so that premium ima.e is not hurt1
(his mu!tibrandin. method has been adapted by other companies 391e1 "c#ona!ds' GA%4' to
introduce di&&erent products under di&&erent brands1 5u!inarian 5ook,are cou!d introduce a ne, !ine
o& cook,are o& a midA!o,er !e$e! Jua!ity to o&&er consumers under a ne, brand name1 (hen
5u!inarian 5ook,are cou!d .ain market share in the cu!inary cook,are market1 5urrent!y' they !ead
the premium market' ,ith the introduction o& a !o,er Jua!ity brand1 5u!inarian 5ook,are cou!d try to
.ain up 00-D0< as the competitor ,ho o&&ers mu!tip!e !e$e!s o& cook,are do1
"u!tibrandin. has ,orked &or companies such as "c#ona!d6s1 "c#ona!d6s created the "c5a&e
brand to o&&er espresso sty!e drinks in competition to the standard b!ack co&&ee o&&ered ,ith
break&ast1 "c5a&e ,as introduced in 5anada as a co&&ee shop1 Later' "c#ona!d6s marketed the
espresso drinks as somethin. o&&ered in standard restaurants1 (he espresso drinks ,ou!d be
o&&ered durin. a!! hours the restaurants ,ere opened' $erse the ima.e o& re.u!ar co&&ee 3to ,hom
most consumers on!y consume durin. the mornin. hours4' 9n this case' "c#ona!ds ,anted the
"c5a&e to be seen as a premium brand and ,anted to appea! to those consumers that ,ou!d see
"c#ona!ds as a !o,er brand' but "c5a&e as a premium co&&ee ,orthy o& a stop1
Like (he pre$ious a!ternati$e' the "u!tibrandin. idea o& creatin. a ne, product under a ne, brand
,orks ,ith 5u!inarian 5ook,are marketin. strate.y1 (he or.ani8ation ,ants to reach ne, markets
and .i$e peop!e ,hat they ,ant1 Ses' the "c5a&e brand has the !e.endary T"c6 in the brand names
te!!in. peop!e that the item is a "c#ona!d product' but the idea o& creatin. the "c5a&e brand to
promote and market their co&&ee house sty!e espresso drink as a premium brand1 5u!inarian
5ook,are cou!d create a !o,er Jua!ity cook,are !ine that has many &eatures simi!ar to midA!o,er
!e$e! !ines o& competitors at the price consumers ,ant to pay &or their cook,are1 @ith price as one
o& the top three decidin. &actors in consumer decision makin.' a ne, midA!o,er !e$e! product !ine
,ith a ne, brand name' not to hurt or !o,er the premium &ee! o& current products' cou!d be e-act!y
,hat 5u!inarian 5ook,are needs to succeed in the &uture1
(his a!ternati$e o&&ers ne, cha!!en.es &or 5u!inarian 5ook,are1 (he ma:or concerns consist o&
5u!inarian 5ook,are6s abi!ities to create the ne, !e$e! o& products1 5u!inarian 5ook,are does not
ha$e the kno,!ed.e o& the proper resources' the en.ineerin. o& the ne, product' or ho, to market
it as a !o,er product1 5u!inarian 5ook,are has success in the premium cook,are market' and the
adaptation into the ne,er !o,er markets cou!d pro$e to be di&&icu!t1 @ith the proper research and
de$e!opment 5u!inarian 5ook,are shou!d be ab!e to create such a !ine' but it ,i!! cost the company
a !ar.e amount o& &unds in consumer market research so they can ensure a success1
Introduce other culinary needs 3Brand e-tension4
Simi!ar to introducin. a ne, !o,er !e$e! cook,are product' 5u!inarian 5ook,are cou!d tap into the
cu!inary needs market and be.in to o&&er premium cook,are items that comp!ement their premium
cook,are 3i1e1 ni$es' cut!ery' and measurin. bo,!s41 (his brand e-tension strate.y ,ou!d a!!o,
5u!inarian 5ook,are to e-pand upon their premium brand name and break into a !ar.er market to
compete in1 5u!inarian 5ook,are ,ou!d become a more comp!ete so!ution such as the itchen Aid
brand1 5onsumers ,i!! be more !ike!y to purchase comp!ementary products under the same
premium brand' than a comp!ementary item to .o ,ith premium cook,are1
Like the t,o pre$ious a!ternati$es' the brand e-tension p!ays into 5u!inarian 5ook,are marketin.
priorities1 (he brand e-tension idea ,ou!d a!!o, &or 5u!inarian 5ook,are to market them as a
comp!ete cu!inary so!ution1 5u!inarian 5ook,are ,ou!d be ab!e to o&&er both premium cook,are but
a!so premium support items to comp!ement the cook,are items they purchased1 (he e-tension
,ou!d a!so a!!o, 5u!inarian 5ook,are to compete in ne,er markets and &ree them o& the $ery ti.ht
cook,are market1
(he cost o& the brand e-tension is simi!ar to that o& the mu!tibrandin. a!ternati$e1 5u!inarian
5ook,are ,ou!d ha$e to do intensi$e research to ensure they understood ho, to produce the other
cu!inary products1 +n!ike the second a!ternati$e' 5u!inarian 5ook,are ,ou!d ha$e to understand
e$en more about the di&&erent industries and ho, to produce products that can compete ,ithin
those di&&erent industries1 (his a!ternati$e ,ou!d ha$e hea$ier &ront !oaded e-penses' but has the
bi..est chance to ha$e hi.h returns &or the company in the end1 5u!inarian 5ook,are ,ou!d a!so
need to e-pand their kno,!ed.e o& the materia!s needed to produce the other support items and
,here best to purchase said materia!s1
Selection of Strategic Alternative and
Implementation
Summary
Work Cited