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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?
Who is Giant Consumer Products? What are GCPs objectives? What environmental forces are at work? Whats going on in the Frozen Food production industry? What are FFDs current constraints? What are the key metrics? Who is the target market? What are the strengths and weaknesses of FFDs marketing strategy? What is their current market position? What are the current market trends? What is affecting GCPs decision? How should FFD implement the selected alternative?
Organizational Structure
Allan Capps CEO
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 divisions 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.
y Premium product quality, 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. Company is striving to take into account the preservation of GCPs brand name and image in every decision that it makes
Objectives
Frozen Foods Division (FFD) without undermining the long-term health of GCP's brands
y Increase GCP's revenues to a point where
Marketing Strategy
Develop the details of a marketing strategy that results in a win-win for the company, retailers, and ultimately consumers. The strategy has to be consistent with the overall goals of the company and ensure preservation of brand image
restaurants (2007), likely to decrease as a result of economic conditions. y Sales promotions are a must in order to be seen as relevant to the consumer.
preparation)
y Increased awareness of ingredient quality
(artificial ingredients, pesticides, hormones, food origin, and of course, caloric content.) y Higher focus on healthy living. y Return to family style dining.
specialty product nationally, 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 livingobesity as cost factor
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 product variety, 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
Major Competitors
Daft The Schwan Food Company Argilink Foods Vegetable Company Arden International Food Company
Industry Overview
Porters five forces:
Threat of substitute products HIGH
Supplies are able to bargain more , because producers want the best quality
Frozen meal purchases are frequent, consumers tend to be loyal to products unless similar products offer price promotion Over 400 domestic manufacturers and increased competition from foreign competition. Also, introduction and competition for similar target market Well established players Downward pressure on prices
Competitive rivalry
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
Families Conventional palate Price conscious but will not accept subpar quality
The Sizes
What are the Strengths and Weaknesses of the FFDs marketing strategy?
Short-term marketing strategy objectives are well defined. Strong brand image for the Dinardos 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.
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.
8,000,000
Promo Dinardo's 32
6,000,000 Promo
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 Dinardos single servings and offer a 6 & 8oz portion of Natural Meals brands National sales promotion for Natural Foods
Recommendations
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% $ 2,576,012.75 $ (879,443.14) -20% $ (1,197,278.37) $ 2,775,636.96
Recommendations
Recommendations
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
Recommendations
Brand Awareness
y Coupon Offering y Pay for Performance y In-store Product Placement y Repackaging for Natural
Questions?