GROUP 11 Ques: Using the data available in Exhibit 1 & 4 (available in excel spreadsheet in case supplementary material folder)

develop solution templates in the case exhibits 3 for Sanchez. How would this help in solving his problem? Answer:

Marketing academics recommend that the precise amount required is what should govern the budget. Commercial concerns override. Unfortunately, unless you know what works, its exact cost and that it gave value for money, you are stymied. In principle, budgeting precisely what you need is the right way to do it. The only justification for spending money on promotional activity is that it will achieve marketing objectives that contribute to long-term growth in profits. From the exhibits, it is clear that the impact of a promotion cannot be considered in isolation. On the whole, the promotion has resulted in a loss instead of a profit for the Dinardo range of products. Considered in isolation a promotion on Dinardo 32 may look attractive but overall its a loss-making proposition. Ques : Do you advise Sanchez to run a national sales promotion? If so, which one of the items should the funds are allocated to: Dinardo 32, Dinardo 16 or Natural Meals? Evaluation of pros and cons of national sales promotion PROS Increase in short-term sales More attractive value preposition for consumer Improved top-line revenue and margins High potential market for health foods Consumer willing to spend more

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CONS Cannibalization Eat into market share of same brand, other product Brand equity erosion Tarnishing the super-premium image Stockpiling by consumers

We also look at the pros and cons of the different brands under question Brand Pros Cons Dinardo32 PROS CONS Already well-established product Inexpensive way to feed family of four Appealed to price-conscious consumer

Dinardo16 PROS CONS Developed to cater to operational needs of market Serve entire consumer base of retailer Appeal to niche consumer categories Attractive for empty nesters and busy professional couples

Natural Meals PROS Organic in nature High appeal for health-conscious consumers growing market Minimal threat of cannibalization Appeals to different segments Greater margins

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CONS Offering promotion may spark price war with competitor Tarnish brands premier image

Question 3: Prepare Sanchez for additional strategic/ tactical questions that he anticipates from Flatt given at the end of case. Answer: The following are the strategic/ tactical questions that need to be addressed: 1. Would the promotion end up being a win for not only FFD, but also for retailers and consumers? The promotion would end up being a win for FFD, retailers and the consumers. The benefits for all 3 are shown below FFD There would be an increase in overall consumption (market growth) Purchase time acceleration over short-term Increase reach of Natural Meals offering Reduced marketing margin

Retailers Increased margins as Natural Meals is a premier product offering high margins It will provide healthy Meals offering wider variety on shelf

Consumers Wider variety on offer including healthy alternatives Promotions for Healthy Meals premier product now made affordable

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2. How should FFD structure the promotion? The 3 alternatives are 1. Off-invoice pricing Manufacturer reduces price-to-retailer for specified time period Allows retailers to purchase in the quantity desired2. 2. Pay for performance approach Retailers compensated for actual amount sol. Verified data through registered scanners3. 3. Target based approach Compensate retailers only in case they hit a pre-specified target Recommendation: a) The promotion of Natural Meals would be a win for FFD, the retailer as well as the consumer. FFD gains due to a positive increase in marketing margin due to the promotion. For the retailer, the benefit will be on account of the increased spending by FFD for promotional activities. The margins on Natural Meals are higher for retailers and an increase in volumes would directly have a positive impact on retailers revenues. The consumer benefits due to the reduced prices from the promotion. b) FFD should go with the pay for performance approach for promotion of Natural Meals. The price on the box of the product should not be reduced and instead a discount must be offered at the time of billing. The retailer should then be reimbursed for the discounts offered to customers. This would help retain the premium positioning of FFDs products and avoid customers from looking at the products to be available at a deal during subsequent purchases