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Situation Analysis
Giant Consumer Products (GCP) is a highly recognized player in the stock
market. The company has seen growth in the past 5 consecutive years in
their frozen foods department yielding a 43% market share (Bharadwaj 3).
Part of this is because of a shift from restaurants to family style in home
dining, focus on healthier living, increased awareness of ingredient quality,
and dual career families. Unfortunately performance has begun to slow and
the products are not performing up to par. Chief Executive Officer Allan
Capps will meet with various other colleagues to discuss the possibility of
fielding a promotion to get performance back on track. Capps will have to
keep in mind cross brand cannibalization, and which product lines to have
promotions.

Problem Definition
GCP essentially needs to appease stockholders and perform at an anticipated
level. GCP must produce an increased demand for the frozen foods division
(FFD) with little to no cross brand cannibalization and without negatively
damaging the long term health of GCPs products. The tool to accomplish
this will be the use of a national promotion. However, another issue, which
spawns from this course of action, is that of stock piling and of the retailer
pocketing the savings from the promotion.

Options

Option 1: Do Nothing
Pros: By following the status quo and creating a new promotion, GCP will be
able to save money from the cost of implementing a new national
promotion. In addition, GCP will not have to worry about cannibalization nor
the issue of stock piling by consumers or the retailer not passing savings
from the promotion to the consumer.

Cons: This course of action does not bring to light the issue of sup par
performance. If this is an industry wide theme, competitors may take
advantage of this time to throw a promotion. Since this market is very price
oriented and elastic, the consumer will sway towards the cheaper brand
which offers the most value for their buck.

Option 2: National sales promotion for Dinardos 32oz. serving
Pros: Upon following Exhibit 3 par 2 provided in the case, utilizing a sales
promotion for the 32oz serving has a positive effect on the 32ozs marketing
margin change from promotion and return on marketing investment - where
as it provides a negative consequence for the 16oz product. Additionally
turning attention to total brand impact from promotion on top-line revenue,
having a promotion for the 32oz will not yield a negative affect on the 16oz
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product, however if reversed, the 16oz product will have a negative effect on
the 32oz product. Therefore the later option will cannibalize the 32oz
product. Finally the cost of promotion per incremental pound is much
cheaper with the 32oz vs the 16oz. The later costs $2.08 with a Marketing
Margin of 33% whereas the 32oz costs $1.11 yielding a marketing margin of
42% (Bharadwaj 8)

Cons: The national promotion will cost a lot more money. There is still the
possibility that other companies or even restaurants will provide a promotion
which gives greater value to the consumer. Additionally this option only
focuses on 1 target market.

Option 3: Run a national promotion for Natural Meals through a pay for
performance plan.
Pros: Natural meals has its own target market which will not cannibalize
into Diunardos consumers. However there is a growing trend to be healthy,
other companies such as Daft is aware of this and will therefore be creating
a healthier product in the future. Hence, it is imperative to 1. Lock in as
many consumers to Natural Meals before there is pressure from other
opposition. 2 Foster an incentive for GCP consumers to try the Natural Meals
product by pricing it lower however not lower than the 32oz Dinardos to
keep the image of Natural Meals being of premium quality.
Additionally utilizing pay for performance will ensure savings will be
transferred to the consumer and encourage retailers to participate due to
increase traffic. The price on the product will not be reduced, instead the
retailer will be reimbursed for discounts offered to the consumer. This will
also detract consumers from looking for products to be available at a
discount during future purchases. Moreover, Natural Meals provides a larger
margin which will provide retailers with substantial revenue increase while,
again still passing the savings on to the consumer.

Cons: A single promotion may not be enough to aid the entire FFD
department performance. In addition a promotion on GCPs prestige brand
may tarnish its brand.


Decision
Appendix C, illustrates that whenever there is a promotion for a Dinardos
product, it cannibalizes the other Dinardos product. Therefore running a
Natural Meals only promotion will help encourage retailers to sell the
healthier option to its respective target market due to the attractive revenue
margins. Additionally, the cost of running just one promotion will be cheaper
than running several. Also, considering that Daft will be launching a simlar
product in the future it is imperative to lock down more people from the
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Californian target market. Finally the pay for performance plan will ensure
that the savings is transferred to the consumer. Therefore this course of
action will increase performance in terms of volume, revenue, and ROMI; not
support cannibalization; and finally ensures that the retailers are not taking
advantage of the promotion in terms of pocketing the savings.
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Appendix A:
Short Cycle Preparation Process
Who
Allan Capps CEO
Mike Sanchez - Director of Marketing
Mary Davidson - Frozen Foods GM
Byron Flatt - Vice President Sales

What
Organization is behind in sales volume, gross revenue, and marketing
margin.

Where United States

Why Category growth had been much lower than anticipated since 2007

When September 4th 8:00am

How
Analyzing promotional options for product lines and determining if
promotions will positively effect each product lines performance.


Appendix B:

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Appendix C:
The red and blue lines in the graph shows that there is a bit of a
cannibalization occurring when one product has a promotion.
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Promotion and Sales Volume
(Sept 06 - Aug 08)
Dinardos 32
Dinardos 16
Dinardos Other
Natural Meals
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Works Cited
Bharadwaj, Neeraj. Giant Consumer Products: The Sales Promotions
resources Allocation Decision. (April 17, 2012)