2012H149216 Vinay Amdhare

Reliance Baking Soda: Optimizing Promotional Spending

Introduction
Anna recently was promoted from Stewarts house hold division to domestic brand director for reliance baking soda. She, as brand director, is provided target to increase profit by 10%. In order to do that, she has to take many steps, like increasing advertising budget to create a pull. This step will also help in getting rid of inventories. In addition to that, she will have to increase consumer promotion and cut budget for trade promotion as trade promotions are long term activities. She will have to decrease the amount of product and might have to increase prices to catch up with the target provided. The income statement of RBS shows that a lot of income was spent on promoting the product .As compared to the 2207 first quarter the sales in year 2006 in the second quarter did not fall very much. Stewart Corporation had four divisions i.e. Household, Beauty, Foods and International. In 2006 the company generated $150 million in net income and $558 million in profit. Household division was responsible for $400 sales and included baking soda, laundry detergents, window cleaners and disinfectant, wipes.

Problem Statement and Issues:

He issues the case highlights are as follows: the issue of limited advertising on internet: the trend today is that many potential consumers have access to PC and smart phones and RBS has not yet explored this option only advertising on the company website seems to be a poor decision. Other issue highlighted is the poor consumer protection RBS offers consumer protection but making them difficult to obtain a hassle to redeem. There are also very inadequate sales for cue and it is meagrely paid. The 150 person force covering all retail and wholesale divisions, they cannot make the full use of the potential sales. Moreover salary which is less makes them feel demotivated. Incentives are not offered in trade. As the case states that RBS needs push marketing to make best out of its sales potential it does not have a high sales turnover, same product line which remains unmodified.

Issue analysis:
Thus marketing mix considerations i.e. the distribution, advertising, consumer protection and trade promotions are the issues to be analysed.

2012H149216 Vinay Amdhare Distribution: There was a high distribution penetration. Selling Prices of RBS increased 3 times in previous 5 years. This is something not desirable. There was a Price increase on all product sizes in 2006-2007and this price increases were due to increase in raw material cost by 11 %. Maximum distribution by one lb box and varies by channel. There was a small sales force of 150 person sales team to manage retail and wholesale accounts. Moreover the Sales-force incentivized by a quota system with quarterly volume quotas as the result most compensation to salesperson came from bonuses pricing.

Advertising: In 2006 many RBS products moved in the market so there was a need felt to deplete the inventory and to increase the sales. The advertising is focussed on the new uses of the product. There is a need to put RBS in realm of pet care, baby care, pool care outdoor care and the advertising focus on non toxic benefits of the product.

Consumer Promotion : There was a need to be more aggressive in promotion in last 3 years, since 2005 2006 consumer promotion had 4 partsThe first event was launched in January $2 cash refund for purchase of RBS and 4 additional household brands. Advertisements were made in womens magazine, Sunday newspaper and company website. In April set of coupons for 5 household brands was included in 6 million boxes of Brilliance Laundry detergent. In June shrink-wrapped twin pack of 1 lb boxes and a $1 cash refund inside the pack with proof of purchase of 2 1 lb boxes. 2 page advertising supplement launched in September in top 4 womens magazine.

Trade promotions: In case of promotions discount was offered on invoices for cases ordered in promotion period. Free cases with a purchase of a minimum order. There were performance discount incentives for providing verifiable merchandising and advertising support. A temporary discount used to promote sales was done and the trade promotions lasted 3 to 6 weeks. Past data about trade promotions show that lot of discount given and the advertising trade support much lower than that of competitors 2

2012H149216 Vinay Amdhare

Decisions and recommended actions:

Hire a larger sales force and giving them a better pay and incentives. It would certainly increase the amount of potential sales which RBS has. With more sales force there is more of push marketing and the product is sold more. A better pay will motivate the sale force to perform better and sell predicts better. people who visit website so it should market its product on the internet and gain the advantage of many potential consumers. Internet and social media advertising will make consumers aware if the prodict benefiting their sales.

Improvisation in consumer protection is important as well. They can think of coupon system or cash back one customer loyalty plan which could offer their customers better and attractive benefits. This would also generate a customer loyalty

Trade incentives should be made better. It is seen that RBS does not have a better control over the pricing of its products. It is therefore e difficult to give any pricing benefits to its consumers. 260 competing products ads have made rbs difficult to compete. With better trade incentives they may get more ads run in favour of competing products.

Better advertising strategy: they can advertise on internet as baking soda a seen as a commodity. There are very few .