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Marketing Management

GIANT CONSUMER PRODUCTS CASE STUDY

Submitted by:
Abhishek G Thrilok (61510649)
Nitish Barbaria (61510824)
Raghav Dasson (61510725)
Ramashis Biswas (61510121)

Contents
Five Cs Analysis for GCP..................................................................................4
1.

Company...................................................................................................... 4

2.

Competitors.................................................................................................. 4

3.

Customers.................................................................................................... 5

4.

Collaborators................................................................................................ 5

5.

Context......................................................................................................... 6

Advice to Sanchez:............................................................................................. 6
Should GCP promote brands:...........................................................................8

Five Cs Analysis for GCP


1. Company

The Frozen Foods Division at GCP has two major brands: Dinardos and Natural

Meals.
Dinardos
o Dinardos is positioned as an inexpensive mass brand that delivers quality. The
assortment of flavors in Dinardos is in line with this positioning.
o Dinardos is preferred by consumers as they taste better than competing
alternatives due to GCPs use of quality ingredients and seasonings.
o Dinardos 16 and Dinardos 32 are the major package sizes of the Dinardos
Brand. Other smaller package sizes are available, but are primarily targeted at
serving a retailers entire consumer base.
o Dinardos 32 was initially positioned as a low-cost option to feed a family of
four. Dinardos 16 was launched in order to cater to the needs of smaller

families and working couples.


Natural Meals
o Natural Meals is a niche premium brand that targets health conscious
consumers with a more sophisticated palate. This is evident from their flavor
assortment.
o Natural Meals is priced as a super-premium product and is the clear leader in
the healthy but edible segment. It also offered greater margins to retailers.
o Natural Meals grew by over 15% per year over the last two years. This was
despite little promotions on Natural Meals, as GCP did not want promotions to
tarnish the premium brand image that the product enjoyed.
o FFD has a 43% national market share in the Italian Frozen Dinners and Entre
offerings subcategory and due to this dominant position GCP could exert a
great deal of influence on the retailers.

2. Competitors

The closest competitor for GCP is Daft with a market share of around 25%.
Majority of Dafts volume is generated by the Manly Meals brand.
Draft is currently test marketing a brand called Healthy Options to target the health

conscious customer.
It is a possibility that Daft could increase the incidence and/ or depth of its own

promotions if GCP initiated national promotions.


Also, restaurants present a formidable competition to supermarkets, as they account
for almost half of all consumer dollars spent on food.

In addition, some retailers have introduced fresh, convenient already prepared foods.
These are, however, twice as expensive as frozen dinners.

3. Customers
Consumers have increasingly less time available for preparing meals, and this has led

to the emergence of frozen foods as an alternative to home-cooked meals.


Increasingly deal conscious: a portion of consumers buy only when an item is on

promotion.
The above behavior, however, requires customers to be open to switching brands,

sizes and flavor varieties.


Some customers are also prone to stockpiling discounted goods. However, most

households do not have a large enough freezer to make this a sustainable strategy.
Price conscious customers are not keen on buying private label goods as these are

considered to be sub-par in their packaging and product quality.


There has been evidence that consumer preferences are changing and the demand for
organic and healthier frozen foods is on the rise, particularly amongst health
conscious California types.

4. Collaborators

GCP mainly sells its frozen products through supermarkets, in the frozen foods aisle.
Retailers need to carry an assortment that is able to cater to their entire customer base.

This constrains producers to have all basket sizes available.


Annual promotion plans developed by GCP are generally communicated by GCPs
Key Account Management team to the retailers, who in turn choose which programs

they want to participate in.


For promotions, GCP funds retailers for providing an end aisle display, offers a
temporary price reduction to consumers and features the lower PTC in the retailers

weekly insert/ circular.


Retailers are supposed to bear the loss for any FFD products that go unsold.

5. Context
The Frozen Meal and Entre category had grown steadily at 2.8% (CAGR) between
2003 and 2007. Since 2007, growth had been lower due to increased competition from

restaurants.
In the current scenario, GCP is falling behind its August target by 3.9% (volume) and
faces questions regarding the sustainability of its above average growth rate.

Advice to Sanchez:
The following images are the screenshots of the calculations based on her templates:
Table 1
Dinardos 32
Average Monthly Volume For:

Dinardos 16

When The Item is on Promotion

10,460,942.50

6,210,220.40

When The Item Is Not on


Promotion

6,816,235.00

3,088,564.63

When Nothing Is on Promotion

7,174,738.60

3,798,942.40

Incremental Volume From


Promotion

3,286,203.90

2,411,278.00

Revenue Change From Promotion

6,901,028.19

5,787,067.20

2,431,790.89

2,001,360.74

3,757,213.25

4,307,862.57

712,024.06

(522,156.11)

Variable Cost Change From


Promotion
Promotion Cost Change From
Promotion
Marketing Margin Change From
Promotion

The first part of the Sanchezs solution (Table 1) shows an increase in marketing margin for
D32 promotion, and a fall for D16 promotion.
But, a consideration of inter-brand cannibalization (Table 2) helps understand the real picture.
Heavy cannibalization of D16 is seen when D32 is being promoted. This results in a drop of
overall revenues and margins to a great extent.

A promotion of Dinardos 32 results in a monthly total (D32 + D16) sales volume


drop of about 88,000 lbs, total revenue drop of $1.2M and marketing margin drop of

$4.7M.
On the contrary, promotion of D16 results in total (D16 + D32) sales volume increase
of approx. 977,000 and revenue increase of $2.8M. However, it results in a marketing
margin drop of $2.5M.
Table 2
Dinardos 32

Dinardos 16

Average Monthly Volume


When the other Dinardo's is on Promotion

5,740,724.20

424,648.00

When Nothing is on Promotion

7,174,738.60

3,798,942.40

Volume Change From Promotion of Other Item


Revenue Change From Promotion of Other
Variable Cost Change From Promotion of
Other
Promotion Cost Change From Promotion of
Other
Marketing Margin Change From Promotion of
Other

(1,434,014.40
(3,374,294.40)
)
(3,011,430.24) (8,098,306.56)
(1,061,170.66
(2,800,664.35)
)
(5,099.28)

74,210.57

(1,945,160.30
(5,371,852.77)
)

Total Brand Impact from Promotion on Top


Line
Total Effect of D32 Promotion

(1,197,278.37
)

Total Effect of D16 Promotion

2,775,636.96

Total Brand Impact from Promotion on


Marketing Margin
Total Effect of D32 Promotion

(4,659,828.72
)

Total Effect of D16 Promotion

(2,467,316.41)

Thus, a promotion of either of Dinardos 32 or Dinardos 16 is a bad idea for Sanchez and,
hence, should not suggested to GCP.
On the contrary, a promotion of Natural Foods (Table 3) leads to increased revenues and
marketing margin. This may be a good option for Sanchez to recover some of the loss
numbers from previous Dinardos promotional activities.

Table 3
Impact of Natural Foods Promotion
Average Monthly Incremental Volume
Average % Store Promoting For Natural
Average Monthly Incremental Volume/ Promo
Point
Incremental Volume from 25% Promo Points

705,251.96
7.61
92,643.94
2,316,098.39

Revenue Change From Promotion

6,716,685.32

Variable Cost Change From Promotion

2,084,488.55

Promotion Cost Change From Promotion

4,125,425.00

Marketing Margin Change From Promotion

506,771.77

Should GCP promote brands:


Based on the historical data provided, National promotions on Dinardos 32 and Dinardos 16
have hurt the overall top line and marketing margin numbers. Promotions on these brands
also cause significant cannibalization of the other brand.

Change in Total Sales Volume due to Promotions

Dinardo's 32 Total Volume

Dinardo's 16 Total Volume

Natural Meals Total Volume

As seen in the graph above, all the peaks in D32 and D16 lines correspond to a promotion by
GCP. A peak in the total sales figure for one product is associated with a sharp fall
(cannibalization) of the other product. Also, note that the Natural Meals sales is relatively
growing at a constant pace and is not affected by activities related to the Dinardos brand.
Hence, neither D32 nor D16 must be promoted, as the resulting revenue increase does not
substantiate the expenses on marketing and promotions.
As mentioned earlier, the customer base for Natural Meals is insulated from any changes to
the Dinardos brand. We also know that this is a niche segment and GCP is concerned about

brand dilution and brand equity erosion. Hence, promotional activity for GCPs products may
not be a good option for the long run.
Further, GCPs major competitor Daft may increase the incidence and/or depth of its
promotional activities in case GCP fielded any promotional activities. Hence, GCP should
look at other avenues, such as ATL advertising, for marketing and promoting Dinardos and
Natural Meals and thereby driving growth over the long run.