Giant Consumer Products: The Sales Promotion Resource Allocation Decision

Group 10 Souraya KESSARIA kessarias16@iimk.ac.in Mohamed ANAS mohamedas16@iimk.ac.in Deepak JANGJID - deepakj16@iimk.ac.in Namrata PAI P - namratapp16@iimk.ac.in Preethi P - preethip16@iimk.ac.in

Key Facts
Giant Consumer Product, Inc has to maintain its above average growth Frozen Foods Division(FFD) which is one of the major contributor to the revenue has shown a decline in sales volume Promotional strategy has been proposed to improve the sales of Dinard and Natural products of FFD It can have various negative impacts such as brand equity erosion, cannibalization of other products etc.

Mr. Allen Capps asked for a detailed analysis of the previous promotion impact so that they can decide for next year promotional strategy

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Exhibit 3
Average Sales Volume For Average Monthly Incremental Volume for Natural 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 Promotional cost change from promotion Marketing Margin Change from Promotion Natural 751799.14 7.57 99247.52 2481188.02 7195445.25 2233069.21 4125425.00 836951.03 Average Sales Volume For When Item is on promotion When Item is not on promotion When nothing is on promotion Dinardo 32 12156109.53 8617646.01 8896880.26 Dinardo 16 5959175.78 3361452.06 3929552.64

Natural

Incremental Volume from promotion

3259229.26 6844381.45 2411829.65 70051.48

2029623.14 4871095.54 1684587.21 94253.93

Dinardo

Revenue change from promotion Variable cost change from promotion Promotional cost change from promotion Marketing Margin Change from Promotion

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4362500.32

3092254.41

Exhibit 3- Dinardo
Average Sales Volume For When the other Dinardo item is ON promotion When nothing is on promotion Volume change from promotion of other item Revenue change from promotion Variable cost change from promotion Promotional cost change from promotion Dinardo 32 8617646.01 8896880.26 -279234.25 -586391.93 -206633.35 -191223.00 Dinardo 16 3361452.06 3929552.64 -568100.57 -1363441.37 -471523.47 -182485.00

Marketing Margin Change from Promotion

-188535.59

-709432.90

Total Brand Impact from promotion on Top-line Revenue Total Effect of D32 Promotion Total Effect of D16 Promotion 5480940.08 4284703.61

Total Brand Impact from promotion on Marketing Margin Total Effect of D32 Promotion Total Effect of D16 Promotion 3653067.42 2903718.82

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Impact of Promotion
Particulars Impact on Top-line Revenue Dinardo 32 5480940.08 Dinardo 16 4284703.61 Natural 7195445.2 5

Impact on Marketing Margin

3653067.42

2903718.82

836951.03

The top-line revenue values are all high for all the three products (highest for Natural and least for Dinardo16) Marketing margin is also good for all three products (highest for Natural and least for Dinardo 16) The analysis suggest that all the three products should be promoted as all the three will provide Integrated Marketing Communication 5 positive return

Effect of Promotion
Promotion will prove to be profitable for FFD

The promotion strategy will be beneficial for the retailers as margin for these products are high
Moreover the profit can be maximized when both the retailers and manufacturer is benefited By going for pay for performance we can ensure that the promotion strategy will be passed to the consumers

Therefore both consumers and retailers will be benefited

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Promotion Structure
Off invoice Pricing

Pros Immediate sales increase

Cons Can lead to forward buying Retailer could raise the price to customer after intended period of promotion and pocket the difference Retailers could sell it at low price even after the intended period condition customer to expect well trusted brands on deal Non- complaince by retailers Stock piling by consumers
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Promotion Structure
Pre-established target

contn..
Pay for performance

Pros

Cons

Pros

Cons

Go for pay for performance promotional structure

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Thank You

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