Giant Consumer

Products
- The Sales Promotion Resource
Allocation Decision

A039 PRATEEK NANDA

D019 TANVEER GAGNANI
F014 HANISH CHHABRA
F019 RITU GOYAL
F030 ARPIT KUKREJA
F043 ABHISHEK NANDAN
1. Describe the competition, key target segments, consumer and shopper
behaviour for the products (a) Dinardo’s 32-ounce packages, (b)
Dinardo’s 16-ounce packages, or (c) Natural Meals.

Consumer’s Typical Product Selection Hierarchy

Type of Meal (eg, Italian, Mexican, Meat & Potatoes, etc.)

Brand (Dinardo’s, Natural Meals, Manly Meals, etc.)

Variety (eg, noodles, ravioli, etc.)

 Dinardo’s 32-ounce packages

 Competition: Daft (Manly Meals) and other producers; Restaurants
 Key Target Segments: For a family of four
 Consumer and Shopper Behaviour: Price-conscious consumers; Did not buy private-label goods as they
perceived them to be sub-par
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1. Describe the competition, key target segments, consumer and shopper
behaviour for the products (a) Dinardo’s 32-ounce packages, (b)
Dinardo’s 16-ounce packages, or (c) Natural Meals.
 Dinardo’s 16-ounce packages
 Competition: Takeaways; Early Bird Dinner
 Key Target Segments: Empty nesters, Busy professional users
 Consumer and Shopper Behaviour: Wanted something sufficient for two people; Simple and easy to
prepare, but tasty at the same time

 Natural Meals
 Competition: Daft (launching Healthy Options); Natural Foods Retailers like Whole Foods
 Key Target Segments: Health-conscious consumers
 Consumer and Shopper Behaviour: Did not have time to prepare meals but wanted to lead a healthy
lifestyle

There is also a categoric competition from “Heat and Eat”.

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2. How was GCP handling the marketing of the three product lines?
What were their motivations behind their strategies? Critically discuss
GCP’s approach.

Dinardo32 Dinardo16 Naturals

An inexpensive mass brand that
delivers quality
Feed family of four
Addresses requirement of several
Great tasting , organic frozen food
emerging consumer niches
Empty nesters and busy Low in fat, no unnecessary
professional couples without kids additives/ preservatives

Packaging and product quality: Packaging: folksy colour palette

sub-par with private label goods and imagery
• Easily and quickly warmed food
• Convenient to consume High appeal to health conscious
• Time Savvy consumers customer
• Healthy food with required ingredients
• Entire product range for all type of Penne al’Arrabiata
consumers
• Lucrative market share without any Eggplant Garden Pesto
national sales promotion Ravioli Tagliattelle
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3. Improve upon Exhibit 2 in the case and draw up an exhaustive list of
typical costs incurred in a sales promotion.

 Marketing margin is given as:

 Revenue

Marketing  Incremental Volume generated by

Revenue Cost
margin sales promotion
 Price to Retailer (PTR)

 The typical list of costs incurred in a sales promotion

are:
 Direct Expenses  Indirect Expenses
 Promotional allowance  Cannibalization
 COGS  Decrease in Brand value
 Distribution  Post promotion dip
 Cost of holding excess inventory
 Cut in margins due to promotions
 Advertising cost
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4. Was Capps right in raising his concerns regarding trade promotions (cannibalization,
brand equity erosion, forward-buying, pass-through, and consumer stockpiling)? How
much should this effect the promotional decisions for GCP’s products?

Cannibalization Brand Erosion

• Promoting one item and having any incremental • Implementing a “price-off” deal on a super–
volume come at the expense of another item premium brand without tarnishing its premium
• Cross cannibalization: If sales promotion is image
provided on Dinardo 32, it will push the . • Nature food is positioned as premium organic food
customers of Dinardo 16 to buy a bigger pack category product Brand erosion is a sure thing here
and save, and vice versa since its customer base is the health-conscious,
• Promotion on Dinardo won’t have much impact elite crowd who will see any discount as quality
on nature food sale as the customers are more compromise
health conscious but discount on nature food • Dinardo’s consumers are price sensitive and
might attract a few innovators but the impact promotion on it would increase the customer base
wont be significant because of difference in and there would be no significant brand erosion
consumer profiles
Pass Through
Forward Buying
• Retailers not passing PTR discount to customers,
• Retailer purchases at discounted Price-to-
unchanged PTC
Retailer to sell at regular prices when the
• May lead to drop in sales in post-promotion months
promotion expires
• GCP has enough clout with retailers to enforce
• Leverage clout with retailers by ensuring
binding conditions
compliance with promotion by enabling
checks/audits
Consumer Stockpiling
• Consumer buy large quantities at low prices and store for future use
• Might cause drop in sales post-promotion
• Sanchez not much concerned for Frozen Foods – average freezer size not
large enough to stock larger quantities 6
5. Do you advise Sanchez to run a national sales promotion? If so, to
which one of the items should the funds be allocated: (a) Dinardo’s 32-
ounce packages, (b) Dinardo’s 16-ounce packages, or (c) Natural Meals?

Running a National Sales Promotion Running a Sales Promotion on Different Brands

PROS CONS PROS CONS

Increase in short-term Cannibalisation Dinardo - Inexpensive way to Brand equity erosion
sales - Eat into the 32 feed a family of four as it is already a well-
- More attractive market share of - Appealed to price- established product
value proposition other products conscious consumers
for consumers Dinardo - Appeal to niche
Improved top-line Brand equity erosion 16 consumers – empty
revenue and margins - Tarnishing the nesters and busy
- High potential super-premium professional couples
market for healthy image Natural - Organic - Price war
foods Meals - High appeal for health- - Brand equity
- Consumers willing conscious consumers erosion
to spend more - Minimal cannibalization
Stockpiling by - Higher margins
consumers
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5. Do you advise Sanchez to run a national sales promotion? If so, to
which one of the items should the funds be allocated: (a) Dinardo’s 32-
ounce packages, (b) Dinardo’s 16-ounce packages, or (c) Natural Meals?
Dinardo's 32 Dinardo's 16
ROMI 0.19 (0.12)
     
     
Dinardo's 32 Dinardo's 16
Total Brand Impact from Promotion on Top-line Revenue
Total Effect of D32 Promotion (1,197,277.97)  
Total Effect of D16 Promotion   2,775,636.80
     
Total Brand Impact from Promotion on Marketing Margin
Group_4_Giant
Total Effect of D32 Promotion (4,646,752.90)   Consumer Products
Total Effect of D16 Promotion   (2,496,224.38)
ROMI (1.21) (0.58)
     
     
Natural Meals  
ROMI 0.12  

 According to the calculations, Dinardo 32 and Dinardo 16 both give negative returns on marketing
investment for promotion
 Natural Meals offer a positive return on marketing investment

 So, Sanchez should not run a promotion on Dinardo products

 In case of Natural Meals, as the cannibalization effect is not that significant. Hence, a small size national
promotion on Natural Meals can be run 8
THANK YOU