Advance Marketing Research

GIANT CONSUMER PRODUCTS CASE STUDY

Submitted by:
Arjab Sarkar
Ajit V Pillai
Archit Abhishek
Nischal Upreti
Prateek Goyal
QUANTITATIVE ANALYSIS
The following images are the screenshots of the calculations based on her templates:

Table 1
Dinardo’s 32 Dinardo’s 16
Average Monthly Volume For:
When The Item is on Promotion 10,460,942.50 6,210,220.40
When The Item Is Not on
6,816,235.00 3,088,564.63
Promotion
When Nothing Is on Promotion 7,174,738.60 3,798,942.40
Incremental Volume From
3,286,203.90 2,411,278.00
Promotion
Revenue Change From Promotion 6,901,028.19 5,787,067.20
Variable Cost Change From
2,431,790.89 2,001,360.74
Promotion
Promotion Cost Change From
3,757,213.25 4,307,862.57
Promotion
Marketing Margin Change From
712,024.06 (522,156.11)
Promotion

The first part of the Sanchez’s 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 Dinardo’s 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
Dinardo’s 32 Dinardo’s 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 (1,434,014.40) (3,374,294.40)

Revenue Change From Promotion of Other (3,011,430.24) (8,098,306.56)

Variable Cost Change From Promotion of
(1,061,170.66) (2,800,664.35)
Other
Promotion Cost Change From Promotion of
(5,099.28) 74,210.57
Other
Marketing Margin Change From Promotion of
(1,945,160.30) (5,371,852.77)
Other

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 Dinardo’s 32 or Dinardo’s 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 Dinardo’s promotional activities.
 Table 3
Impact of Natural Foods Promotion
Average Monthly Incremental Volume 705,251.96

Average % Store Promoting For Natural 7.61

Average Monthly Incremental Volume/ Promo
92,643.94
Point
Incremental Volume from 25% Promo Points 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 Dinardo’s 32 and Dinardo’s 16
have hurt the overall top line and marketing margin numbers. Promotions on these brands also
cause significant cannibalization of the other brand.

As seen in the sales figure, 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 Dinardo’s 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
Dinardo’s 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 GCP’s products may not be
a good option for the long run.

Further, GCP’s 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 Dinardo’s and Natural
Meals and thereby driving growth over the long run.