Reliance Baking Soda

Sales Promotion | Group-1

Shruti Singhal D054 | Udbhav Bhaniramka D010 | Rishika Bothra C015 |
Vanshika Sureka C060
Prakhar Agrawal D064 | Sumit Kapoor D026| Ankit Mahajan D033
Case Scenario
Stewart Corporation, founded in 1915 is compromised of
four divisions: Household, Beauty, Foods, and
International.

RBS has a high distribution penetration, with 90% of

grocery stores and mass merchandisers, 85% of
warehouse clubs, and 80% of drug stores stocking at
least one size, 8 oz., 1 lb. and 5lb.

The household division of Stewart was responsible for

Problem

Anna Regnante, the new Domestic Brand Director for

Reliance Baking Soda must determine the effectiveness
of past promotional strategies in order to select a
promotional strategy which will contribute towards a 10%
increase in profits for 2008 specifically through marketing
expenditures in advertising, consumer promotion, and
trade promotion.
She must develop a 2008 budget P&L that will show the
resulting 10% increase in profits from the marketing
expenses.
 Reliance Baking Soda
Strengths

Excellent brand awareness among the customers as well as the brand

loyalty Trusted Brand

RBS has become market leader in the category of the baking soda
with 70% market share

RBS enjoy high distribution penetration

Variety of uses that include baking soda, window cleaners, drain

cleaners
 Reliance Baking Soda
Weakness

Reliance Banking Soda has low advertising recall

No direct control over the way the trade manage its inventory as well
as how trade priced its product

It is considered low traffic and boring by the trade

The majority of the products sold during the period of trade

promotion
Opportunities
Reliance Baking Soda
The most important opportunity for the RBS is to create out -of the
-box uses for the product

Modification and reintroduction of the packaging Twin Packs etc

Another opportunity is the development for the effective advertising

and promotion strategies. As RBS has low advertising recall so it will
help the product to reach larger potential customers for multiple
use
 Reliance Baking Soda
Threats

Threat of substitute products Specialised cleaning products

Increase in competition from the Private label brands as due to the

lower pricing of the Private label brands customers are purchasing
their product as compare to RBS

Because of the introduction of the self-rising flour and instant cake

mixes the importance of the Reliance Baking Soda is declining.
2. Analyze the effectiveness of past RBS consumer and trade
promotional events.
Consumer Promotion

Month Budget Allocated Incremental

(2006) ($) Contribution ($) ROI Promotion
$2 cash refund for purchase of RBS plus 4
January 398580 63582 15.95% other Household division brands
April 174643 22785 13.04% Sets of Coupons
June 253390 50615 19.98% Twin pack refund offer of $1
$1.50 refund for proof of purchase from 3
September 253390 60820 24% Household division brands; Sweepstakes

Total 1080003 197802 18.31%

Consumer promotion in September were more effective than others, ROI is

the highest at 24%
Budget allocated for the months of June and September were same; yet
better ROI for September suggests that refund offer is better than twin pack
refund offer in June.
Some credit for Higher ROI in September may also be attributed to the
Kitchen appliances sweepstakes.
Trade Promotion

Actual
Manufactur Variable Contribu Suggeste Retail Retailer Retaile Number Manufactu Retailer
er Selling Cost tion d Retail price per Selling r Profit of cases rer Total total
Case Price per Margin price per box price per per sold in profit Profit
Size (2007) Case per Case box (90%) case case 2017 (2007) (2007)
8 oz 7.2 3.38 3.82 1 0.9 10.8 3.6 714000 2727480 2570400
1lb 12.02 5.58 6.44 1.67 1.503 18.036 6.016 1226000 7895440 7375616
1759449
5lb 54.28 24.8 29.48 7.54 6.786 81.432 27.152 648000 19103040 6
2754051
2588000 29725960 2

2006 2007 Trade promotion in June, 2006 resulted in $215,729 worth

Incremental incremental contribution whereas consumer promotion
Contributio 135029 during this period yielded incremental contribution of
n 8 765319
Budget 593800 550500
only $ 50,615. (Exhibit 9)
Allocated 0 0 During the same period, trade promotion was availed on
ROI 22.74% 13.90% Case with 8 oz but consumer promotion was offered on
1lb.
 3. Compare the relative merits of a push vs. pull
strategy for the marketing of a low-involvement (low
price) grocery item in a mature market setting.

Helps in generating sales immediately

Push Increases channel involvement and increases availability
Strategy Helps push products with low brand loyalty and little
differentiation

Helps to lure customers from competition

Pull Attracts the price sensitive customer and hence increases
Strategy trials
Keeps the customer involved and increases awareness

RBS is in its mature stage in the product life cycle. The product itself has not undergone
any major changes over the past century. Hence, advertising in short periods might not
be very effective to generate sales but would definitely help in highlighting the wide
variety of uses for the product in other categories.
 4. What is your recommendation for how Regnante can
achieve her 2008 profit target? What if any changes
should be made to trade and consumer promotions to
make them more effective
Sales in 2007 dipped as the consumer and trade promotion budget were
reduced. To achieve back the sales figures in line with 2006 the company
should allocate more money for sales promotional activities
Also advertising budget should decreased as RBS already has strong brand
recall
Trade promotions have been more effective than consumer promotion so more
money should be budgeted for it
Same SKU should not be discounted in very close interval. October 2006 trade
promotion failed because the traders must have bought the products in
advance during the August-September trade promotion
Trade and consumer promotion should not occur at the same time as it will give
the power to the retailer to manipulate price which if kept high will result in loss
of price sensitive consumers and if kept very low will make more consumers
 4. What is your recommendation for how Regnante can
achieve her 2008 profit target? What if any changes
should be made to trade and consumer promotions to
make them more effective
Promotion Plan:
January-March: Trade Promotion (1 w/10 twin pack + 5% ad on all sizes because
we need the trade to promote our offers and distribute coupons)

April-June: Consumer Promotion (feature Ads in women magazines talking about

other utilities of baking soda to keep their homes fresh during summer)

July-September: Trade Promotion (1 w/10 twin pack + 5% ad on all sizes because

we need the trade to promote our offers and distribute coupons)

October-December: Consumer Promotion accompanied by Advertising (TV, Print,

Internet)
Thank-You