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Group 5

SALES PROMOTION

CULINARIAN COOKWARE: PONDERING PRICE


PROMOTION

KARTIK BANSAL E008


FENIL GANDHI E024
LAKSH BAHUKHANDI A006
NUPUR ANAND A002
DESCRIBE CONSUMER BEHAVIOR IN THE COOKWARE
MARKET. HOW IS COOKWARE BOUGHT? HOW IS IT SOLD?
WHAT ARE THE IMPLICATIONS FOR CULINARIAN’S
MARKETING STRATEGY?
Key Consumer Characteristics:

 Customer spread across all income levels with customers inclined more towards
aesthetics of the cookware eg. designer cookware matching the kitchen etc.
 Professional chefs were inclined towards buying copper based cookware because
of superior heating technology
 Price sensitive customer
 Product quality & durability are key factors while buying cookware
 Cookware was majorly a gift item as 55% either received cookware as a gift or
purchased it as a gift so its sales were seasonal in nature
 Major motivators: 30% would be motivated to buy new cookware because of a
price discount; 20% would be motivated to buy because of a free gift with
purchase.
 Customers attracted by attractive displays, well informed sales staff, sales, adv.
Channels for selling:

 Retail distribution outlets for cookware included


o kitchen specialty chains (e.g. Williams Sonoma) Cookware was purchased
o local specialty stores either by the piece or in a
o department stores (e.g., Macy’s) boxed set (ranging from 5 to
o mass merchandisers (e.g., Wal-mart) 14 pieces). A typical 5-piece
o grocery stores (e.g., Kroger) set included a 10-inch fry
 direct TV sales (e.g., Home Shopping Network) pan, a 2-quart sauce pan
 online retailers (e.g., Amazon) with lid, and a 4-quart
 catalogs (e.g., manufacturers’ direct mailings) stockpot with lid.

Implications for Marketing Strategy:


• Culinarian Cookware’s prime customer were with income level greater than $75000,
still their awareness in this segment was just 4%.
• Besides maintaining great channel partner relationship, they need to attract
customers by regularly advertising and increasing their brand awareness
• Trade advertising & Sales staff availability at retail outlets is a must for
increasing sales
WHAT ARE CULINARIAN’S STRENGTHS AND WEAKNESSES?
WHY HAS THE COMPANY BEEN SUCCESSFUL?

Strengths
Weakness
Competitive advantage in the form of
first mover advantage and patented Constant pressure of promotions from
technology other manufacturers throughout the year
Strong dealer support due to high The unaided brand awareness for
margins Culinarian was lesser than its main
competitors Le Gourmand and Robusto
Desired brand perception of being a
high quality product Low penetration in low to middle income
customers due to premium image and
Favoured and endorsed by experts selective channel distribution
Favourable market trends: Copper Cannibalization amongst brands due to
cookware, premium cookware price difference
matching kitchen décor
Control over advertising mediums:
Double the visits by account managers Culinarian products and promotions
to major accounts and retail seldom advertised by the trade
merchandising incentive program.
WHAT ARE CULINARIAN’S STRENGTHS AND WEAKNESSES?
WHY HAS THE COMPANY BEEN SUCCESSFUL?

 Company success factors:


 Creating a successful brand and marketing mix
 Premium cookware favoured by experts and chefs
 Focus on product quality, performance and durability
 Selective channel distribution and advertising to corroborate
premium brand image
 Skilled company personnel
 Comprehensive training for retail sales clerks
 Experienced account managers with incentive-driven pay
 Maintaining retail relationships:
 Monthly field visits by the account managers for providing
information and consultation
 Retail merchandising incentive programs
 High retail margins
Q3 WAS THE 2004 PROMOTION PROFITABLE? CALCULATE THE
PROFITABILITY USING BROWN’S LOGIC AND THEN CALCULATE PROFITABILITY
USING THE CONSULTANT’S MODEL. HOW WOULD YOU CALCULATE
PROFITABILITY?

Profitability Analysis

Actual Sales Normal Sales

Consultants Brown Consultants Brown

A CX1 Unit Sales (March-May 2004) 184987 184987 119504 59871

B Average Unit MSP 62.4 62.4 72 72

C Average Unit Variable Costs 52.05 38.64 52.05 38.64

D Average Unit Contribution 10.35 23.76 19.95 33.36

E Total CX1 Sales Contribution (A*D) 19,14,615 43,95,291 23,84,105 19,97,297

Consultants Brown

F Actual Sales Contribution less normal sales contribution (4,69,489) 23,97,995

G Cannibalisation impact (99,332)

H Inventory carrying costs 39,540

I Net Profitability Impact (F-G-H) (5,29,281) 23,97,995


 Assumptions -
 Variable cost to include only direct labour and
material cost
 Cannibalisation cost to be neglected

 Inventory cost to be neglected


NEW METHOD
Profitability Analysis

Actual Sales Normal Sales NEW METHOD

Consultants Brown Consultants Brown actual sales normal sales

CX1 Unit Sales (March-May 2004) 184987 184987 119504 59871 184987 119504

Average Unit MSP 62.4 62.4 72 72 62.4 72

Average Unit Variable Costs 52.05 38.64 52.05 38.64 38.64 38.64

Average Unit Contribution 10.35 23.76 19.95 33.36 23.76 33.36

Total CX1 Sales Contribution (A*D) 19,14,615 43,95,291 23,84,105 19,97,297 43,95,291 39,86,653

Consultants Brown NEW METHOD

Actual Sales Contribution less normal sales contribution (4,69,489) 23,97,995 4,08,638

Cannibalisation impact (99,332) 0

Inventory carrying costs 39,540 0

Net Profitability Impact (F-G-H) (5,29,281) 23,97,995 4,08,638


 Culinarian lacks brand recall – specified by market
research.
 To increase brand recall Culinarian should stick with the
price promotion for their CX1 and DX1 lines. This way the
premium image would not be lost and the customer base
can also be increased by trail.
 A 15% discount in the months of peak purchases
(Nov/Dec and May/June). This is more suited with the
image of the company.
 The retailers would also not hoard the supplies because
their loss in margin would be less.
 From exhibit 4, the promotion should be aimed at people
who are price conscious. This will induce trials.
Respondents ranked quality as the first criteria for
purchasing and Culinarians is known for quality. Television
and POP displays should be the preferred mode of
communication.
 50% respondents preferred a brand they recall, so this will
help them make the purchase.
THANK YOU