Consumer Sales Promotions Case Study

By: Ananta Reddy F 01 Apurv Narang F 15 Gopal Bharti Manoj TL Darryl Lewis Shashank Kalucha Khushakl Juneja Pratham Karkare

Amcrew Styling Gel:

Case Prob : To check whether the Sales Promotion Scheme of free sample is effective in a cost beneficial manner. Quantitative Analysis

2 As per the data given, we can compare both the scenarios:

Column1 Demand for 150 gm bottle Per unit revenue Demand for 300 gm bottle Per unit revenue Total Revenue Promotional Expenses Trade Discounts Profits (65% of revenue)

Without Promotion 5450*24 = 130800 3.29 5450*12 = 65400 5.99 822078 0 0 534350.7

With Promotion 7500*24 = 180000 3.29 7500*12 = 90000 5.99 1131300 94500 113130 527715

The profit decreases from $534,350.7 to $527,715 i.e a decrease of 1.26%

Qualitative Analysis Pros o o o o Cons o Similar type of free sample cannot be given with both type of SKU like the 150 and 300 gm Increasing short term volume sold Build trade inventories Load the customer Trade discount also used to obtain display activity and cooperative advertising.

In wake of other benefits that the promo bring in, it is advisable to go ahead with the promo scheme.

SkipTree Peanut Butter :

Case Problem : To increase sales during a dull month without providing trade discount

Normal Demand : 700000 kgs

3 SKU 0.5 1 1.5 2 Percent 4 40 40 15 Packs in a case 24 12 12 6 Quantity 28000 280000 280000 42000 No of cases 2333 23333 15555 3500

With Promotion incremental demand : 300000 Promo expense per case 5000 12500 5000 12500 37500 12500

SKU 0.5 1 1.5

percent 20 50 30

packs in a case 24 12 12

quantity 60000 150000 90000

Share

Additional Promotion expense = 15000+45000 = 60000 Total Expenditure = 60000 + 62500 = 122500 Contribution without promotion for 700000 kilograms = (.56 * 700000) = 392000 Contribution with promotion for 1000000 kilograms =((.56 *1000000) (122500)) = 437500 Increased Profit = 11.6 percentage Pros Sales based promo effect and helpful in pushing certain SKUs Cons Without trade discount , the retailer may not push or place appropriately the brand Since Skiptree is not the market leader ,if Kraft comes with another scheme this will be affected It is advisable to go ahead with the promo scheme.

Silhouettes Custom Plus Disposable Razors:

Comparing the existing and the new schemes:Expense Side

4 Normal price for 5 razors Normal price per razor Discounted price for 7 razors Margin per razor Price per razor for Silhoutte Effective Discount per new pack (using margin) Promotional allowance per case Packages per case Promotional allowance per pack Artwork costs per pack Total sales promotion cost incurred per new pack No of new packs to be sold Incremental Expense $3.59 $0.72 $3.59 $0.25 $0.47 $0.94 $2 20 $0.10 $0.25 $1.29 22500 $28935

Revenue Side Sale without promotion Revenue from sales without promotion Sale of regular packs under promotion Sale of new packs under promotion Revenue from sales under promotion Incremental Revenue

24000 $86160 10000 22500 $116675 $30515

Incremental Profit = Incremental Revenue Incremental Expenses = $1580

Pros Filling the gap and customizing the consumer offering to be seen as value offer Cons The perception of marginal benefit as seen by customers.

Not advisable to go ahead with the promo scheme.

TOTAL RINSE ORAL ANTISEPTIC

The promotion scheme given in the case has a large no. of advantages and hence can be effectively implemented for Total Rinse antispetic 1. Increase in profit percentage as compared to previous profits

5 2. Very less competitive promotional schemes 3. This scheme will have a lot of support from the distribution channel members. The following analysis entails costs incurred and changes in profits using the data given: Expense Side Analysis

Coupon Redemptions Case allowances (<=300 orders) Case allowances (>300 orders) Incremental Expenses

$60,000 $30,093 $24,076 $114,169

Revenue Side Estimated sales without promotion Average retail price without promotion Revenue from sales without promotion Estimated sales during promotion Average retail price for 1l pack Revenue from 1l pack sales Revenue from regular pack sales Total revenue under promotion $160000 $3.65 $584,000 325000 $3.49 $756,168 $395,415 $1,151,583

Old profit New profit Incremental Profit

$175,200 $284,982 $109,782