Giant Consumer

Products: The Sales

Promotion
Resource Allocation
Decision Group 05
Atharva Patankar
Mudit Sailot
Ankusha Patil
Vanshikha Sangidwar
Rahul Jain
Himanshu Goyal
Case Background
• The focus of the case is on the Frozen Food Division (FFD) of Giants Consumer products
company which is a consumer packaged goods company
• They have witnessed above industry growth and had a strong financial position in the past,
however FFD had seen disappointing results recently due to which analyst are wondering
whether GCP could maintain its Growth Rate or not
• The FFD’s sales volume (in units) was 3.9% behind plan, and gross revenue was under plan by
3.6%
• Their marketing margin which was considered internally to be the most critical metric for
evaluating businesses at GCP, was also under plan by 4.1%
• With this decline, the financial stature of GCP is becoming a question mark and investors may
begin to lose confidence in the company if things don’t turn around soon.
• The FFD must now decide whether a national sales promotion should be introduced for one of
its brands, with the goal of the promotional campaign being to stimulate consumer demand and
ultimately to increase the sales volume of its frozen food products
Industry Background
• Supermarkets are concentrating on managing categories such as ready-to-eat morning
cereals, carbonated soft drinks etc.
• Between 2003 and 2007, the "frozen meal and entrée" category, one of the largest in
the frozen foods industry, saw moderate growth, with an compound annual growth rate
of 2.8 percent
• However, category growth had been significantly slower since 2007 than prior 5 years,
when it had garnered over half of all consumer spending and had established itself as
a viable competitor to supermarkets
• Some foresighted shops, on the other hand, had aggressively worked to divert traffic
away from restaurants by selling a variety of fresh, convenient, high-quality, previously
prepared items
• While these "heat-and-eat" options were more convenient and less expensive than
eating out, they cost twice as much as frozen dinners
Company Context
• FFD took great pride in the customer-centric management team in the frozen foods
industry

• FFD delivered the promise of convenient, good-tasting food at a reasonable price

• FFD had a 43% national market share (by revenues) in the “Italian frozen dinners and
entrée offerings” subcategory

Dinardo’s Nature Meals

• Key contributor to FFD’s bottom line
• Generated over $425 million in revenues
annually
• Featured traditional favorites as Spaghetti &
Meatballs, Lasagna, and Chicken Cacciatore
• packaged in a thin cardboard box, with a
picture of the particular entrée on the box
cover
• An inner pack consisting of a foam tray with a
removable plastic cover slid out of the box
• Available in 3 sizes- 32 ounce, 16 ounce, 6-8
ounce
• Accounted for roughly 25% of the frozen food
division’s revenues
• Great-tasting, organic frozen foods that were low
in fat and did not contain unnecessary additives
or preservatives
• Similar packaging as Dinardo’s but imagery
differed
• Appealing to health-conscious consumers
• Had become the clear leader in the “healthy but
edible” segment
Promotional Planning and Execution at FFD

01 First
To begin, senior
02
management established
overarching top-line and
profitability targets for
GCP to meet in order to
attain its target stock price
Second
The management team
03
and all of the product
marketing divisions then
define specific annual
targets for important
indicators for each division
Third
The division head
(Davidson) and the brand
teams then negotiated and
agreed on annual targets
for the same key indicators
for each FFD brand

• The duration of promotion was usually one week

• Determined by factors, such as seasonality, purchase frequency, and production capacity
• In the retailer's weekly insert/circular, highlight the decreased price to customer (PTC).
• Retailers would bear the loss for any FFD products that went unsold.
What should Sanchez do?

● From Exhibit 1, we can see the difference between the

actual and planned on various metrics, like gross
revenue, net revenue, marketing margin etc.
● Traditional marketing won’t work well
● We have four options to choose from, i.e., Dinardo’s
32, Dinardo’s 16, Dinardo’s other and Natural Meals.
● After evaluating the Total Brand Impact from various
metrics, we find that Dinardo’s 16 is quite favorable to
choose as its Marketing margin is lowest among all the
options (33%) and it’s return on marketing investment
is quite better compared to other options.
● Sanchez should choose Dinardo’s 16 for the marketing
promotions along with brand awareness campaign for
Natural meals 4
The Allocation Decision
• Dinardo 32 ounce and Dinardo 16 ounce SKUs both gave negative return
on marketing investment for promotion.
• Natural Meals offers a positive return on marketing investment
• So, Sanchez should not run a promotion on Dinardo products
• Under the assumption, as mentioned in the case, that Dinardo’s customer
base would not be enticed to Natural Meals, even if Natural Meals is on
promotion, there will be no significant cannibalization effect of a promotion
for Natural Meals on Dinardo product sales.
• So Sanchez can run a national promotion on Natural Meals.
Thank You
We are open for Questions?