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Culinarian Cookware
Culinarian Cookware Case Discussion
Group No. 3
Culinarian Cookware
Q. 1. Describe consumer behavior in the cookware market. How is cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?
Culinarian Cookware
Consumer Behavior in Cookware Market
The Cookware Market• Witnessed attractive growth from 2002-06 ($3.36
billion market)• Cookware classified by: Price, Quality and Material• Manufacturers can be distinguished based on the
product portfolio they offered: Low-end/mid-level products or Premium Products
• Aluminum cookware formed a major chunk of the cookware sales followed by Stainless Steel and Copper, POI, Cast Iron
Culinarian Cookware
Consumer Behaviour in Cookware Market
The Buying Pattern• Consumers either purchased by the piece or as boxed set• The buying pattern was seasonal in nature with peaks
seen during May-July (Wedding Season) and November-December (Holiday Season)
• A huge chunk of cookware that was bought was gifted• Quality and Features ranked higher than price and brand
name when it came to buying cookware• Brand awareness played a vital role when consumers
went to purchase cookware
Culinarian Cookware
Consumer Behaviour in Cookware Market
The Selling Pattern• Cookware was sold in either of:
• Kitchen specialty stores (24%)• Department stores (29%)• Mass Merchandisers (32%)• Others: Local Specialty stores, Grocery Stores, Direct TV sales,
internet and catalogs (15%)• Manufactures divided on the basis of their product offerings• Premium manufacturers rarely launched price promotions but
offered regular gift promotions• Low/Mid level manufacturers introduced plenty of price promotions
especially during peak seasons
Culinarian Cookware
Consumer Behaviour in Cookware Market
The Premium Cookware Consumer• Consumers of premium cookware were now moving
towards colored designer offerings that matched their kitchen décor
• Consumer behaviour was also positively influenced by endorsements by celebrity chefs
• Majority of the consumers were from the households having income of more than $75,000
• Women naturally formed the biggest buyers of premium cookware
Culinarian Cookware
Consumer Behaviour in Cookware Market
Implications for Culinarian’s Marketing Strategy• Culinarian is a premium performance cookware manufacturer,
focused on advanced performance technology • CEO’s Strategic priorities:• 1) widen its distribution network, • 2) increase market share in premium cookware segment, • 3) preserve its prestigious image, and• 4) continue to capture revenue growth of at least 15%,
while preserving pre-tax earnings margins of 12%.
Culinarian Cookware
Consumer Behaviour in Cookware Market
Implications for Culinarian’s Marketing Strategy• Given the consumer behaviour and Culinarian’s strategic intent of being the
premium brand, it’s target group is largely the households with more than $75,000 annual income
• Due to its intent on maintaining a prestigious image, its distribution channel needed to have some kind of exclusivity
• Due to the advanced technology that it used, the sales force had to be trained enough to put forth the value proposition
• To maintain the brand image, it had to use the forms of media which reached its TG (Cookery shows, elite newspapers and magazines)
• Price promotions always was a tricky game given the premium nature of its offerings
• However, a fine balance was also expected so that neither retailers nor consumers felt left out
Culinarian Cookware
Q. 2. What are Culinarian’s strengths and weaknesses? Why has the company
been successful?
Culinarian Cookware
Strengths
Market Leader in Premium Segment
• With a 6.5% overall market share, Culinarian was the market leader in the premium segment
Strong Revenue Growth
• Company already on track to achieve a 21% y-o-y growth in 2006
Strong Brand Equity
• Culinarian enjoyed a strong brand awareness of providing unparalleled quality with highly advanced performance technology• Company was leader in metallurgy innovation and as the first manufacturer to provide the benefits of copper cookware with effortless cleaning and maintenance
Extremely Robust Sales Force
• Culinary provided comprehensive training programs to its retail clerks• Sales force included 8 experienced account managers who visited major accounts once every month, more than any other cookware company
Culinarian Cookware
Weaknesses
Retailers Demands
• Although, Culinarian enjoyed strong relationships with its retailers, most of the trade channels demanded price promotions which wasn’t handled well by the company
The Distribution Network
• Although the company’s aim was to increase its distribution network, it did not make concrete efforts to address this aim
Failed Price Promotions
• Culinarian’s price promotions so far remain debatable when we look at its market share
Flawed Advertising Expenditure
• Trade was hardly supported through its advertising expenses and celebrity chefs which are a major influencer while buying premium products remained untapped
Culinarian Cookware
Reasons for Success
Strong Brand Equity
• Culinarian enjoyed a strong brand awareness of providing unparalleled quality with highly advanced performance technology• Company was leader in metallurgy innovation and as the first manufacturer to provide the benefits of copper cookware with effortless cleaning and maintenance
Extremely Robust Sales Force
• Culinary provided comprehensive training programs to its retail clerks• Sales force included 8 experienced account managers who visited major accounts once every month, more than any other cookware company
Strong Retailer Relationships
• Culinarian’s distribution channels were limited giving it exclusivity which helped its premium brand image, moreover it was made available largely at high end stores• Company enjoyed strong relationships with the dealers and each of them carried all of its product lines, moreover the profit margin that Culinarian provided (52%) was unmatched by its competitors (48%)
Advertising and promotions
• 10% revenue spent on Advertising with focus only on the Target Group of high income audience• The gifting promotion every year also helped boost the sales of the targeted product
Culinarian Cookware
Q. 3. Was the 2004 promotion profitable? Calculate the profitability using Brown’s logic
and then calculate profitability using the consultant’s model. How would you calculate
profitability?
Culinarian Cookware
Calculation of ProfitabilityCategory Consultant’s view Victoria Brown’s view
Sales Forecast Forecasted sales for 2004
should have been 119504 units using the computer generated model
Forecasted sales for 2004 should have been 24% below the 2003 sales which would have been 59871
Variable Cost
Variable costs includes labor, raw materials, manufacturing overhead, 5% advertisement, 7% selling expenses
Variable costs must include only labor and raw materials which totaled 38.64
Cannibalization Loss
Products in DX1 line were cannibalized and loss was calculated to be $99,332 and Culinarian saved $39,540 in inventory costs
Cannibalization calculations are erroneous and so are unreliable
Culinarian Cookware
Calculation of Profitability
The consultant’s sales projection was based on 10 years forecast model, which seemed more reliable than a simple comparison of first two months sales by Brown.
The Variable cost should include only raw materials and labor. Advertising cost should be treated as a fixed cost. Hence, variable cost estimated by Brown (which is $38.64) is correct.
Regarding cannibalization of DX1, we cannot say that the decrease of sales in DX1 are not completely because of the promotions on CX1. Hence, we should not use these costs.
Culinarian Cookware
Calculation of Costs Consultant Victoria Brown Actual Estimate
No Promotion
20% Promotion
No Promotion
20% Promotion
No Promotion
20% Promotion
Units 119504 184987 59871 184987 119504 184987Price 72 62.4 72 62.4 72 62.4
Total Revenue 8604288 11543188.8 4310712 11543188.8 8604288 11543188.8Variable Cost 52.05 52.05 38.64 38.64 38.64 38.64
Total Variable Costs 6220183.2 9628573.35 2313415.44 7147897.68 4617634.56 7147897.68
Contribution Generated 2384104.8 1914615.45 1997296.56 4395291.12 3986653.44 4395291.12
Profit/Loss -469489.35 2397994.56 408637.68
Culinarian Calculations
Hence, 2004 promotion was profitable for Culinarian Cookware.
Culinarian Cookware
Pros and Cons of 2004 Promotion
Pro’s• 80% is from existing owners, which
meant that there were about 20% from new customers.
• 70% felt price was important, which meant that the pricing promotion stimulates purchase.
• 15% would consider upgrading to higher series for the next purchase.
• The trade should be happy by generating more profits
• Boost overall brand awareness• Helps Retailers preserve floor space• Advertising was through retailers
Cons’• The trade would always look for
promotion. • Limited advertisement may constrain the
scope of target audience. • Promotion was just before time of
historical peak seasons, if the program was during the peak seasons, it might be even more effective.
• Some retailers put the discount in their pocket.
• May Have negative brand effect on premium products – PROX1 and SX1
Culinarian Cookware
Q. 4. Should Culinarian run a 2007 price promotion? If so, what should be the specifics of such a promotion (e.g., product scope, discount rate, timing, communication)? If a price
promotion is not suitable, think about another type of sales promotion (e.g., manufacturer rebate program, gift with
purchase, sweepstakes, product placement, etc.) to recommend.
Culinarian Cookware
2007 Promotion
o Limit price promotion to low end product lines (CX1, DX1) in order to preserve the premium image of the Brand
o Reduce Trade Margins from 52% to 48% only on fast moving product lines(SX1 and PROX1) where trade can be assured of volumes. Volume will compensate for their reduced margins
o Keep the promotions in the months just before the peak sales ( April, May, October, November)
o Communication should not only target high income audience but look at communicating to mid level income audience for low end product lines
Culinarian Cookware
Other Promotion Strategies
o Since 55% of the respondents buy/receive cookware as gift items, increase the point of sales to gift shops and online gifting portals
o Make low end product lines available in mass merchandise outlets since 32% purchase cookware from there
o Run volume discounts where a customer purchasing more than 5 pieces will get a discount. This will ensure capturing larger market share
o Associate with the cooking show to increase awareness about brand and influence the purchasing decision
o Conduct a contest where best recipe will wino Run a bundled promotional offer where in fast moving and slow moving
product lines can be clubbed togethero Offer rebates on high end product lines rather than discountso Have attractive in-store promotions and displays to influence buying
Culinarian Cookware
Group No. 3
o Prashant Bankar (A007)o Mahesh Kollipara (A033)o Meera Malekandathil (A035)o Bhagyashree Sathe (A048)o Vinodini C (B013)o Anurag Choudhary (B014)o Ninad Karandikar (B030)o Priyanka Garg (C019)