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 ³win´ for all parties involved?

I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII.

Who is Giant Consumer Products? What are GCP¶s objectives? What environmental forces are at work? What¶s going on in the Frozen Food production industry? What are FFD¶s current constraints? What are the key metrics? Who is the target market? What are the strengths and weaknesses of FFD¶s marketing strategy? What is their current market position? What are the current market trends? What is affecting GCP¶s decision? How should FFD implement the selected alternative?

Giant Consumer Products Company Overview

Sales Mary Davidson FFD General Manager Mike Sanchez FFD Director of Marketing .Organizational Structure Allan Capps CEO Byron Flatt VP.

Organizational Structure Positive Each business unit have defined and measurable goals Promotes Accountability Negative Difficult to get quick answers Structure might be too rigid and not flexible enough Difficult to work across divisions to achieve 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. y Premium product quality. The most customer-centric management team in the frozen food industry. Company is striving to take into account the preservation of GCP¶s brand name and image in every decision that it makes . strong relationship and support from retailers y Helps company stay on top of consumer behavior trends y Promotes long-term thinking € Built on brand equity.

What are GCP¶s objectives? .

Objectives € GCP Priorities in second half of 2008 y Generate much needed demand in the Frozen Foods Division (FFD) without undermining the long-term health of GCP's brands y Increase GCP's revenues to a point where they at least reach the low end of Wall Street's expectations .

and ultimately consumers.Most Important Objectives Sales Promotion ‡ Can a sales promotion help GCP meet its organizational goals? ‡ Which product should be selected for promotion? ‡ Determine impact on key metrics and long-term health of brands Marketing Strategy ‡ Develop the details of a marketing strategy that results in a win-win for the company. ‡ The strategy has to be consistent with the overall goals of the company and ensure preservation of brand image . retailers.

What environmental forces are at work? .

Economic conditions and trends y FFD had steady 2. . y Sales promotions are a must in order to be seen as relevant to the consumer. likely to decrease as a result of economic conditions.8% growth rate between 2003 and 2008 in spite of larger economic downturn. y 50% of consumer dollars spent at restaurants (2007).

) y Higher focus on healthy living. food origin. . y Return to family style dining. and of course. hormones. caloric content. pesticides.Cultural and Social Trends y Dual Career families (less time for meal preparation) y Increased awareness of ingredient quality (artificial ingredients.

they would need to be wary of the risk they assume when greater public awareness is gained. y Concern is growing as to the validity of organic certifications and consumer expectations will almost always exceed governmental expectations y Governmental mandates on healthy eating and living«obesity as cost factor .Political and legal issues y If GCP were considering rolling out a specialty product nationally.

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 2009.38 € . Industry was approximately $16 Billion With an estimated profit of %32.

the more their products will appeal to different markets € Efficient Operations: The company model must be one of best practices € Bulk Packaging: Products offered in bulk or bulk style packaging are easier to distribute to different channels € Economies of Scale: The more channels a producers can distribute through the lower their over all costs .Industry Profitability € Product Mix: more product variety.

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 of suppliers HIGH Rivalry among existing competitors Intense Bargaining power of buyers MID Threat of new entrants LOW .

introduction and competition for similar target market Well established players Downward pressure on prices Loyalty in target market will be easy to build Competitive rivalry Downward pressure on prices Threat of new entrants Brand value will be key! . because producers want the best quality Bargaining power of buyers Frozen meal purchases are frequent. Also. styles/types of food) Consumers have a wide Varity of options to choose from Bargaining power of suppliers Higher quality ingredients lead to high quality product for consumers Supplies are able to bargain more . consumers tend to be loyal to products unless similar products offer price promotion Over 400 domestic manufacturers and increased competition from foreign competition.Porter¶s Five Forces Factor Analysis Impact Threat of substitute products Consumers have multiple substitute products (Many brands.

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 subpar 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. Natural brands has untapped growth potential in a developing market. Efficiency gains for Natural Meals brand due to scale economies. Better quality product than competitors. . 43% of national market share (by revenues) for sub-category. Strong brand image for the Dinardo¶s brand.

Potential Resource Weaknesses and Competitive Deficiencies € € € € € No clear long-term strategic direction for marketing. Weak brand image and reputation for the Natural Meals brand. Threat of cross-brand cannibalization Shifting consumer habits. . Overall weak advertising and promotion.

What will affect GCP¶s decision? .

000 0 Sep '06 Nov '06 Jan '07 Mar '07 May '07 Jul '07 Promo Promo Dinardo's 32 Dinardo's 16 Dinardo's Other Natural Meals .000 Promo 6.000.000 Promo 8.Aug 2007 12.000 2.000.000 Promo 10.000.000.000.000.Sales Promotions and Volumes Sept 2006 .000 4.

000.000.Aug 2008 12.000 8.Sales Promotions and Volumes Aug 2007 .000.000 2.000 Promo Promo 10.000.000.000 0 Aug '07 Oct '07 Dec '07 Feb '08 Apr '08 Jun '08 Aug '08 .000 Promo Dinardo's 16 Dinardo's Other Natural Meals 4.000 Promo Dinardo's 32 6.000.

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? .

443.775.197.37) $ 2.14) -20% $ (1.576.636.Recommendations € Traditional Marketing ± Not a win for FFD Total Brand Impact from Promotion on Top-line Revenue Total Effect of D32 Promotion Total Effect of D16 Promotion Total Brand Impact from Promotion on Marketing Margin Total Effect of D32 Promotion Total Effect of D16 Promotion ROMI 71% $ 2.96 .278.75 $ (879.012.

Recommendations € Dinardo ³Other´ Category ± Severely underperforming y Sales Volume ± down 8.6% y Gross Revenues ± down 8.9% y Marketing Allocation ± down 15.6% y Gross Margin down ± down 9.2% .6% y Marketing Margin ± down 11.

859 $ $ $ 6.718.Recommendations € Brand Awareness campaign ± Natural Meals 705.252 7.294 165% Average Monthly Incremental Volume for Natural Meals Average % Store Promoting for Natural Average Monthly Incremental Volume /Promo Point Incremental Volume from 25% Promo Points Revenue change from promotion Variable Cost change from promotion Promotion Cost change from promotion Marketing Margin Change from promotion ROMI .085.61 92.674 2.425 $ 508.316.125.892 2.173 4.

Recommendations € Brand Awareness y Coupon Offering y Pay for Performance y In-store Product Placement y Repackaging for Natural Meals 32 oz portions y Brand Recognition/Brand Loyalty .

Questions? .

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