GIANT CONSUMER PRODUCTS

Situation Analysis

Giant Consumer Product has to maintain its above average growth in a profitable manner

Frozen Foods Division(FFD) contributing one third of the total revenue($600 million currently) has not performed as per the
expectation

Byron Flatt, VP Sales suggested a sales promotion for short term sales lift of FFD products

Allan Capps, CEO is concerned about its negative impacts such as brand equity erosion, cannibalization of other products, forward
buying and issues related to retailers etc.

He needs to be convinced that required results would be achieved without affecting long term health of the brands

A decision has to be made about the type of promotion to be run if so and on which product line
Q1) Describe the competition, key target segments, consumer and shopper behaviour for
the products (a) Dinardo’s 32-ounce packages, (b) Dinardo’s 16-ounce packages,
and (c) Natural Meals.

Consumer’s Typical Product Selection Hierarchy

Type of Meal (eg, Italian, Mexican, Meat & Potatoes, etc.)

Brand (Dinardo’s, Natural Meals, Manly Meals, etc.)

Variety (eg, noodles, ravioli, etc.)

Q1) Describe the competition, key target segments, consumer and shopper behaviour for
the products (a) Dinardo’s 32-ounce packages, (b) Dinardo’s 16-ounce packages,
and (c) Natural Meals.

Dinardo’s 32-ounce packages

Competition: Daft (Manly Meals) and other producers;

Restaurants

Key Target Segments: For a family of four having dual careers

Consumer and Shopper Behaviour: Price-conscious

consumers;Conventional Palate; Did not buy private-label
goods as they perceived them to be sub-par
Q1) Describe the competition, key target segments, consumer and shopper behaviour for
the products (a) Dinardo’s 32-ounce packages, (b) Dinardo’s 16-ounce packages,
and (c) Natural Meals.

Dinardo’s 16-ounce packages

 Competition: Takeaways; Early Bird Dinner

 Key Target Segments: Empty nesters, Busy professional

couples without kids

 Consumer and Shopper Behaviour: Wanted something

sufficient for two people; Simple and easy to prepare,
but tasty at the same time
Q1) Describe the competition, key target segments, consumer and shopper behaviour for
the products (a) Dinardo’s 32-ounce packages, (b) Dinardo’s 16-ounce packages,
and (c) Natural Meals.

Natural Meals 16-ounce packages

Competition: Daft (launching Healthy Options);

Natural Foods Retailers like Whole Foods

Key Target Segments: Health-conscious

consumers, “California types”

Consumer and Shopper Behaviour: Did not have

time to prepare meals but wanted to lead a
healthy lifestyle; Sophisticated palate; ready to
pay a premium
Q2) How was GCP handling the marketing of three product lines? What were their
motivations behind each strategy?

Dinando’s 32 Ounce Dinando’s 16 Ounce Natural Meals

• A mass produced brand which provides • Great tasting , organic frozen food
• Addresses the requirement of newly
superior quality and seasoning
formed customer segments – such as
• Low in fat, no unnecessary additives/
the “empty nesters” and busy
• Ideal for a family of four preservatives
professionals who look for an easy
convenient way to cook food
• Well suited for families who even though price • Packaging: folksy colour palette and
conscious will not accept sub par quality imagery
• Packaging similar to 32 ounce
Dinando’s
• Packaging – outer cardboard and inner foam • High appeal to health conscious
tray for easy heating customer-willing to pay price premium
MOTIVATION
GCP delivered on the promise of good quality food at a reasonable price to • While marketing for natural – GCP was able
growing customer base- they had a working relationship with the retailers to gather shelf space due to the clout it had
across countries with retailers
• Easily and quickly warmed food • Positioned as a organic product – helped
• Array of freshly prepared, Convenient to consume food drive customers to supermarkets
• Time Savvy consumers • Came up with products more suited to
• Healthy quality food with required ingredients sophisticated palates – such as eggplant
• Entire product range for all type of consumers ravioli- which was in line with the TG
• Lucrative market share without any national sales promotion
Q3) Improve upon Exhibit 2 in the case and draw up an exhaustive list of typical costs
incurred in a sales promotion.

Marketing Margin = Revenue - Cost

Incremental Volume Price to Retailer Total Cost Associated with Undertaking Sales Promotion
• Direct Expenses
Generated by Sales (PTR) • Promotional Allowance
Promotion X • Slotting and Stacking Allowance
• Advertising Cost
• Printing and Inventory Cost
• Sales Force
• Retailer Incentive
• Shelf life and expiry date management
• COGS
• Variable Cost
• Repacking Cost
• Distribution
• Freight
• Transportation as the product is frozen foods
• Indirect Expenses
• Cannibalization
• Reference Point lowering and Brand Dilution
• Administrative expense
Q4) Was Capps right in raising his concerns regarding trade promotions (cannibalization, brand
equity erosion, forward-buying, pass-through, and consumer stockpiling)? How much should this
effect the promotional decisions for GCP’s products?

1) Dinardo’s & Natural Meals and both had a very distinct & non-overlapping positioning
2) Dinardo was about Italian entrees focussing high quality ingredients & Natural Meals were organic meals
Cannibalization without additives
3)If D16/D32 were to be promoted, the health conscious consumers would not be too interested in it &
minimal cannibalization would occur
4) If Natural Meals was promoted, some cannibalization might occur as it is healthier & super-premium
product, some consumers might switch seeing it as a better product

1) Might occur if Natural Meals is on promotion as it being a niche brand, its super-premium image might
Brand Equity get eroded
Erosion 2) Erosion is less likely for D32 & D16 as they are more focussed on price-conscious consumers & serving
everyone from a family of 4 to single consumers
 1) Retailers could buy product during promo in bulk to earn future benefits
2) Possible but not very extensively as it storing bulk FFD products requires significant cold storage facilities,
which might not be readily available to many retailers
Forward-buying
3) The products nearing expiry are discarded by sales representatives of GCD
4) Also as promotion is being run suddenly & so late in the year, retailers wouldn't be able to plan the forward
buying

1) Retailers sometimes receiving products at discounted prices - don't pass them along to the consumer fully
2) As GCD had a strong position in the category, it was able to exert influence over retailers
Pass-through
3) Because of it’s clout, it could secure compliance & pass through of discounts on PTR to PTC

1) Not prevalent in frozen foods

Consumer 2) Consumers didn't have large enough freezers to store large quantities for long periods of time
Stockpiling
3) Hence purchase was reflective of immediate demand
 5. Do you advise Sanchez to run a national sales promotion? If so, to which one of the items should the funds
be allocated: (a) Dinardo’s 32-ounce packages, (b) Dinardo’s 16-ounce packages, or (c) Natural Meals?

Considering promotion impact on promoted

Dinardo's 32 Dinardo's 16  Dinardo 32 and Dinardo 16 both give
item
ROMI 0.19 -0.12 negative returns on marketing investment
for promotion.
Considering within brand cannibalization effects
Dinardo's 32 Dinardo's 16
of promotion
 Sanchez should not run a promotion on
Total Brand Impact from Promotion on Top-line
Revenue Dinardo products.
Total Effect of D32 Promotion -11,97,277.97
Total Effect of D16 Promotion 27,75,636.80  Natural Meals offer a positive return on
Total Brand Impact from Promotion on Marketing
marketing investment.
Margin
Total Effect of D32 Promotion -46,46,752.90  Cannibalization effect on Natural Meals is
Total Effect of D16 Promotion -24,96,224.38
not that significant. Therefore, a small size
ROMI -1.21 -0.58
national promotion on Natural Meals can
Natural Meals be run.
ROMI 0.12
Presented By : Group 7

Raghav Bansal
Gagandeep Singh
Abhishek Khemka
Pratyusha Peesapati
Ritam Khanna
Aarzu Wadhwa
Saurabh Yadav