Culinarian Cookware: Pondering Price Promotion

Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.

While it is true that Ms. Forthright had always exceeded her budgeted sales, the extent to which she diverts away from the managers projections does not necessarily means that she is violating honesty and integrity. Her decision on what her budgeted sales for the year is highly relevant to the data available to her. Her projections tends to lie between the field manager and the marketing manager’s predictions, which can be reasonable because in the past years, the field manager’s projections tend to be over what the actual sales of the year will be.

This initial cost of the startup of this program will be a minimal impact on Kudler Fine Foods. The initial advertisement effort will be done via social media; the companies Facebook page and Twitter account, email and word of mouth. Allowing for a reward system for costumer referrals can be used for current and new customers as the programs is employed and continues to grow. Rajiv and bell argue “customer retention costs are generally lower than customer acquisition costs, companies are better of focusing attention on their more loyal customers especially since the top 20% of customers account for 80% of revenues and often more than 100% of profits” (p. 180, 2003). Kudler Foods could reduce their marketing expenses by using a customer loyalty system through the use of rewards. The sales increase from this program should be reflected by the increase of new customers and the increased returning customers increased spending. The use of seasonal promotions only available to costumers enrolled into the frequent buyers program could also help in increased sales profits.

A major issue is since reducing the price 20% reduces the profit margin to 15%, to maintain the same profit while reducing the price, the sales must be $28 million for this year. This is an increase of 233% in one year to justify reducing the price this much. This is a highly unlikely target.

To provide a satisfying marketing-mix, companies must set a price that is acceptable to target market members (Pride and Ferrell, 2011). Price is the value paid for a product or service in the market, it is a key element in the marketing-mix and one that generally is the only variable that can be quickly changed to react to market changes such as competitor actions or demand variations, for example Burger King mainly targets little kids. By offering toys in Big Kid Meals at Burger King, kids are more likely to want to eat at Burger King. Because our society is focused upon pleasing children, parents give in and bring their children to Burger King for breakfast, lunch, or dinner. In addition, Burger King targets those individuals who work often

However we feel that this strategy also has several weaknesses. Compared to the first option presented by the VP of Advertising, we would still need to advertise that our product is coming down in price. If we don’t advertise, the consumer is still going to be drawn to our competitors because they will remain unaware of the new parity in pricing. Also, if we

This is because, when the condition of the current market is not doing well, some strategy in considering the increase in the foods price, introducing a new dish should be limited due to the less or limited spending of the customers. The best option to secure and have a constant business growth during these time is to have more promotions and value set meal to attract the customers.

1. It is a fact that item 345 has lost market share and as the product manager I would be concerned about it. By retaining FF20 price I can gain market share only if competition increases their price to FF20. At the outset this seems unlikely because competition has

As previously mentioned, no analysis is given for the regression model, so we shall at least attempt to ask the appropriate questions needed to make an intelligent decision. We begin by looking at the structure of the regression model prior to performing the diagnostic procedures. First, we must understand why the consultants chose to model the revenue in the markdown period as a product of the observed performance in the regular period, the PL effect, Department effect, the promotions effect, and a constant. If there are no PL effects, department effects, or promotions effects, then the revenue is simply a function of the overserved performance in the regular price period. This is logical, as adding in an “effect” simply scales the revenue.

After analyzing the results from the previous quarter, it was determined that the prices set for each segment were not sufficient. Product sales priority were also not properly adjusted. With the R&D investments, sales priorities needed to be changed for the main focus to become the most profitable market segments. Prices were not competitive which in turned decreased revenue, market share, and profitability. To become more competitive we altered the prices in each market segment. The Workhorse product was the first to change, the price was lowered to $2500 in an attempt to increase sales; at this price Team 4 was still making a profit on this product, as well as making the price much more competitive. The Workhorse sales priority was also lowered to 3rd in Americas and 4th in APAC and EMEA. This product was not selling as well as we had hoped, and was no longer as profitable as it once was which led to this decision. Next, the Innovator product’s price was adjusted; this involved a price increase to $4100. This price was adjusted to include the new

EXECUTIVE SUMMARY COMPANY ORIENTATION COMPANY PORTFOLIO ISSUES TREATED PROMOTION OR NO PROMOTION? CANNIBALIZATION BRAND EQUITY EROSION FORWARD BUYING PASS-THROUGH STOCKPILING ENGEL’S LAW GENERAL REASONS TO CONDUCT A SALES PROMOTION PROMOTION FOR WHICH ITEM FINANCIAL ANALYSIS THANK YOU NOTE

In September there was another offer of a $1.00 cash refund, with the proof of purchase for two 5 lb. boxes, which lead to an increase in gross sales of RBS, too. The $2 cash refund for the purchase of RBS plus four additional Household Division brands in January 2006 increased the gross sales even by more than 100% from $9.3mio to $20.6mio, a total net incremental contribution of $619,562. These coupons were advertised in women’s magazines, in a Sunday newspaper supplement, on the company website, and in point-of- purchase material the latter of which has a relatively high response rate of 2%. The event in June, that included a shrink wrapped twin pack of the 1 lb. boxes and a $1.00 cash refund inside the pack with proof of purchase from two 1 lb. boxes encouraged consumers to keep one box in the fridge and one in the bathroom, so that most of them bought two boxes of RBS which led to rising sales volumes Considering the significant increase in sales, RBS should focus on investing in print and online advertisement by increasing their budgets by 10% in this sector. To conclude and thinking long-term, budgets for consumer promotion should be raised by 10% to ensure that RBS continues selling high volumes. Due to missing information of the response rate of advertising in TV, RBS should maintain the budget in this sector constant.

penetration pricing strategy. All indications are that sales will continue to grow. In response to a

In week 12, sales of Rocket Soup had drastically increased to 16,113 due to the excessive discount on their product. Rocket Soup had launched a promotion with feature and display and charged for 0.02, which is over 97.5% discount on their average price. Although the sales had drastically increased, it is not possible to argue whether this excessive demand was from the promotion or low pricing.

When marketers talk about what they do as part of their responsibilities for marketing products, the tasks associated with setting price are often not at the top of the list. Marketers are much more likely to discuss their activities related to promotion, product development, market research and other tasks that are viewed as the more interesting and exciting parts of the job.