SALES PROMOTION

CULINARIAN COOKWARE:
PONDERING PRICE PROMOTION

HARSHIT KATHURIA (A031)

SHIKHA PANDE (A041)
MELVIN JOSE (B027)
AARTI KHATWANI (B031)
ADITYA NADIMPALLI (B038)
PRAVEEN RAJAGOPALAN (B047)
APOORV SINGHAL (B054)
ANKUR SRIVASTAVA (B055)

Group 4
 Q.1 Describe consumer behaviour in the cookware market. How is
cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?

 Generated $3.36 billion in revenues in 2006

 Could be classified on the basis of :
 Price
 Quality
 Material(Aluminium, Stainless Steel, Porcelain – on – iron, cast iron, copper)
 Copper was the most expensive and most preferred by professional chefs due to superior
heat conductivity
 Manufacturers had to balance the need for performance, time saving features, and
aesthetics with price
 Growing trend :
 Offering a coloured designer cookware that matched the kitchen decor and
 Product lines endorsed by and branded with a name of a widely recognized television celebrity chef
 Type of purchase –
 By piece(open stock) or
 In a boxed set( ranging from 5 to 14 pieces)
 5 piece set comprised – a 10 inch fry pan, a 2 quart sauce pan wid lid, a 4 quart
stockpot with lid
 Q.1 Describe consumer behaviour in the cookware market. How is
cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?

 Retail distribution outlets:

 Kitchen speciality chains ( Williams Sonoma)
 Local speciality stores, department stores (Macy’s)
 Mass Merchandisers (Walmart)
 Grocer Stores(Kroger)
 Direct TV Sales( Home Shopping Network)
 Online Retailers (Amazon)
 Catalogues(Manufacturers direct mailings)
 Sales were seasonal – High during May-June(Weddings), November – December(Christmas)
 Top players –
 Star Chef ( Mid level and low end products) – 18%
 Kitchen Select (Mid level and low end products) – 14%
 Culinarian(premium products) – 6.5 %
 Le Gourmand(premium products) – 4%
 Robusto(premium products) – 3%
 Q.1 Describe consumer behaviour in the cookware market. How is
cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?

 Some important findings from the Orion Market Research Study of households with income over
$75000, June 2003:

 50 % owned atleast 5 pieces, 25 percent owned more than 12 pieces

 Mass merchandiser – 32%,Department store – 29%,Kitchen Speacilty store – 24%,Others –
15%
 30 % felt price as most important criteria, 10 percent felt price was the least important criterion
 25% looked for cookware that matched the current decor
 Most important – Quality, Features, Price, Brand Name
 Least important – Colour Asethetic Design, professional looking pieces, shape
 50% favoured a brand they recognized
 30% - drawn to displays, 25% - drawn by well informed staff, 10% - drawn by TV advertising
 55% received cookware as a gift or purchased it as a gift
 30% would be motivated to buy new cookware because of a price discount, 20% motivated to
buy it because of a free gift with the purchase
 Implications of Culinary’s marketing strategy

 Widen distibution network :

( + ) Distribution partners need to be increased and they are bound to join and be loyal if
adequate trade support is provided
 Increase Market share of the premium segment :
( + ) Direct competitors like Le Gourmand and Robusto never ran price promotions; this could be a
differentiator and increase sales and thus market share
 Preserve prestigious image :
( - ) Even the VP of Marketing, Janus, had the view that price discounts would dilute the brand image
( + ) Customer and retailers believed that this would strengthen the brand and bring in new
customers to the premium category ( 15% customers were willing to upgrade as well )
 Capture revenue growth of atleast 15% :
( - ) Price promotions will increase the number of orders significantly, most probably leading to
increase in revenue
CX1 Orders 2002 2003 2004
( + ) There would be a significant dip in sales in March-may 91247 78778 184987
the months after the price promotions % growth - -13.66 134.8
 Q.2 What are Culinarian’s strengths and weaknesses?
Why has the company been successful?
Superior product quality and
STRENGTHS
WEAKNESSES
performance technology
Strong dealer support due to high
margins
Desired brand perception of being
a high quality product
Favoured and endorsed by experts
Favourable market trends: Copper
cookware, premium cookware
matching kitchen décor
Advertising and marketing spend
focussed and lean due to selective
marketing channels
Constant pressure of promotions
from other manufacturers
throughout the year
Low penetration in low to middle
income customers due to premium
image and selective channel
distribution
Low brand awareness in lower
income households and low
advertisement recall
Cannibalization amongst brands
due to price difference
Control over advertising mediums:
Culinarian products and promotions
seldom advertised by the trade
Owned manufacturing unit; Difficult
inventory control during promotion
Q.2 What are Culinarian’s strengths and weaknesses?
Why has the company been successful?

 Company success factors:

 Maintaining retail relationships:
 Monthly field visits by the account managers for providing information
and consultation
 Retail merchandising incentive programs
 High retail margins
 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
Q.3 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?

 Net loss due to the promotion as per the consultants: $ 529,282

 Profit due to the promotion as per Browns estimates: $2,397,994

Our calculation:
 We have considered the normal sales projection for the months of Mar-May 2004
as 64834, based on the 17% decline in sales of aluminum cookware from 2003
 We have considered the cannibalization costs and inventory savings(Consultants
figures)
 Profit due to the promotion as per our estimates: $2172637

L
The promotions in 2004, were profitable as they were able to shoot up the
demand for CX1, which otherwise were projected to be less
Customer Profitability
Q.4 Should Culinarian run a 2007 price promotion? If so, what should be the
specifics of such a promotion (e.g., product scope, discount rate, timing,
communication)?

 No, it should not run a 2007 price promotion

 Reasons:

1. Flaws in Brown’s analysis

 24% dip in sales of Jan-Feb 2004 as compared to 2003
cannot be extrapolated to March-May because:
 November-December being peak-sales period, people would have
done their cooking-ware purchases then
 May being a part of wedding-season, sales are expected to increase
during this period rather than decreasing
 No quantitative data quoted for not accounting inventory and
cannibalization costs
Q.4 Should Culinarian run a 2007 price promotion? If so, what should be the
specifics of such a promotion (e.g., product scope, discount rate, timing,
communication)?

2. Trends in the premium products industry

 No price promotions done by competitors

3. In order to meet strategic objectives, price promotion of 30% is not

feasible
 Damages the prestigious image
 Revenue growth becomes negative instead of a steady 15% increase
 0.5% loss ($ 529371/104152000) instead of 12% profit margin

4. Previously in May 2005 the plant was not able to handle the surge
in demand during the 20% price promotion which was accompanied
by trade overbuying during promotion period to pocket the
difference later.
 Q.4. If a price promotion is not suitable, think about another type of sales
promotion (e.g., manufacturer rebate program, gift with purchase,
sweepstakes, product placement, etc.) to recommend.

 Gifts with Purchase:

 It should offer Gift Promotions for High end products or with a bundled purchase
(for example, 2 or more items on a cookware set purchase) as it would increase
sales by an average of 15% without compromising on the margins
 Because retailers do not appreciate the space wasted by the gifts, the gifts can
be mailed to the customer after s/he returns his/her warranty card with a
conveniently attached survey
 Furthermore, gifts can be offered at non-peak time periods because retailers
prefer non-overlapping promotions from the vendor lines they carry
 Product placement in cooking shows, to increase awareness
 Vouchers can be given to customers on purchase of CX1 & DX1, which can be
redeemed on purchase of high end SX1 or PRO1. This will help in Upselling.
 Cooking events with chefs and customers in shopping malls, to induce trials
 Celebrity endorsements through high-profile chefs, to appeal to customers through
opinion leaders
THANK YOU