Group 5:

Andrei Grechko
Shane Johnston
Nakia Lape
Kyle McDaniel
Kevin Niehaus
How should Giant Consumer Products
(GCP) structure a sales promotion so
that it is a “win” for all parties involved?
I. Who is Giant Consumer Products?
II. What are GCP’s objectives?
III. What environmental forces are at work?
IV. What’s going on in the Frozen Food production industry?
V. What are FFD’s current constraints?
VI. What are the key metrics?
VII. Who is the target market?
VIII. What are the strengths and weaknesses of FFD’s marketing
strategy?
IX. What is their current market position?
X. What are the current market trends?
XI. What is affecting GCP’s decision?
XII. How should FFD implement the selected alternative?
Giant Consumer Products
Company Overview
Organizational Structure
Allan Capps
CEO

Byron Flatt
VP, Sales

Mary Davidson
FFD General Manager

Mike Sanchez
FFD Director of Marketing
Organizational Structure
Positive
Each business unit have defined and measurable goals
Promotes Accountability

Negative
Difficult to work across
Difficult to get quick Structure might be too rigid and not flexible
divisions to achieve
answers enough
organizational goals

Ultimately
Need to make sure division’s objectives always align with overall
strategic goals of the company
Management Philosophy
In general fairly conservative management practices and
approach in every division/business unit
Positive:
Standardized practices promote
efficiency and result in economies of
scale
Careful decision-making process

Negative:
Slows down the decision making
process if the decisions are to be
made quickly
Might be difficult to accept change
Organizational Culture
 Pride. The most customer-centric management team in the
frozen food industry.
 Premium product quality, strong relationship and support from retailers
 Helps company stay on top of consumer behavior trends
 Promotes long-term thinking

 Built 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
What are GCP’s objectives?
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
brands
 Increase GCP's revenues to a point where
they at least reach the low end of Wall
Street's expectations
Most Important Objectives

• Can a sales promotion help GCP meet its

organizational goals?
Sales • Which product should be selected for promotion?
Promotion • Determine impact on key metrics and long-term
health of brands

• Develop the details of a marketing strategy that

results in a win-win for the company, retailers, and
ultimately consumers.
Marketing • The strategy has to be consistent with the overall
Strategy goals of the company and ensure preservation of
brand image
What environmental
forces are at work?
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.
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.
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 expectations
 Governmental mandates on healthy eating
and living…obesity as cost factor
What’s going on in the
Frozen Food industry?
Industry Overview
Frozen Food Production Industry
 NAICS code: 311412

 GCP is one of 411 American players

 For 2009, Industry was approximately $16

Billion

 With an estimated profit of %32.38

 Industry Profitability
 Product Mix: more  Bulk Packaging:
product variety, the more Products offered in bulk or
their products will appeal bulk style packaging are
to different markets easier to distribute to
different channels

 Efficient Operations:  Economies of Scale:

The company model must The more channels a
be one of best practices producers can distribute
through the lower their
over all costs
Major Competitors
 Daft

 The Schwan Food Company

 Argilink Foods Vegetable Company

 Arden International Food Company

 Industry Overview
Porter’s five forces:
Threat of
substitute products
HIGH

Bargaining power Rivalry among Bargaining power

of suppliers existing competitors of buyers
HIGH Intense MID

Threat of
new entrants
LOW
 Porter’s Five Forces
Factor Analysis Impact

Threat of substitute Consumers have multiple substitute products Consumers have a wide Varity
products (Many brands, styles/types of food) of options to choose from

Supplies are able to bargain

Bargaining power of Higher quality ingredients lead to high quality
more , because producers want
suppliers product for consumers
the best quality

Frozen meal purchases are frequent,

Bargaining power of Loyalty in target market will
consumers tend to be loyal to products unless
buyers be easy to build
similar products offer price promotion

Over 400 domestic manufacturers and

increased competition from foreign Downward pressure on
Competitive rivalry
competition. Also, introduction and prices
competition for similar target market

Well established players

Brand value will be key!
Threat of new entrants Downward pressure on prices
 What are the FFD’s
current constraints?
 Constraints
 Consumer Buying habits
 Pressure from GCP and Wall Street
 Possible implications from a sales
promotion:
○ Cannibalization
○ Brand equity erosion
○ Forward buying
○ Stock piling
○ Brand switching
What are the key metrics?
Key Metrics for FFD
Who is the Target Market?
 Dinardo’s Target Market

 Families

 Conventional palate

 Price conscious but

will not accept sub-
par quality
Natural Meals Target Market

 Health conscious consumers

 Sophisticated palate

 Willing to pay premium pricing

 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.
What are the Strengths and
Weaknesses of the FFD’s
marketing strategy?
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.
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 cannibalization
 Shifting consumer habits.
What will affect GCP’s decision?
 Sales Promotions and Volumes
Sept 2006 - Aug 2007
12,000,000

Promo
10,000,000
Promo

8,000,000
Promo
Dinardo's 32
6,000,000 Dinardo's 16
Promo Promo
Dinardo's Other
Natural Meals
4,000,000

2,000,000

0
Sep '06 Nov '06 Jan '07 Mar '07 May '07 Jul '07
 Sales Promotions and Volumes
Aug 2007 - Aug 2008
12,000,000
Promo
Promo
10,000,000

8,000,000
Promo

Dinardo's 32
6,000,000 Dinardo's 16
Promo Dinardo's Other
Natural Meals
4,000,000

2,000,000

0
Aug '07 Oct '07 Dec '07 Feb '08 Apr '08 Jun '08 Aug '08
 Strategic Alternatives
 Traditional sales promotion for Dinardo
Brands (based on math)

 Drop Dinardo’s single servings and offer

a 6 & 8oz portion of Natural Meals
brands

 National sales promotion for Natural

Foods
How should FFD implement
the selected alternative?
 Recommendations
 Traditional Marketing – Not a win for FFD

Total Brand Impact from Promotion

on Top-line Revenue

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 $ 2,576,012.75

Total Effect of D16 Promotion $ (879,443.14)

ROMI 71% -20%
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%
 Marketing Allocation – down 15.2%
Recommendations
 Brand Awareness campaign – Natural Meals

Average Monthly Incremental Volume for Natural Meals 705,252

Average % Store Promoting for Natural 7.61
Average Monthly Incremental Volume /Promo Point 92,674
Incremental Volume from 25% Promo Points 2,316,859
Revenue change from promotion $ 6,718,892
Variable Cost change from promotion $ 2,085,173
Promotion Cost change from promotion $ 4,125,425
$
Marketing Margin Change from promotion 508,294
ROMI 165%
 Recommendations
 Brand Awareness
 Coupon Offering
 Pay for Performance
 In-store Product Placement
 Repackaging for Natural
Meals 32 oz portions
 Brand Recognition/Brand
Loyalty
Questions?