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SALES PROMOTION

CULINARIAN COOKWARE:
PONDERING PRICE PROMOTION

VARUN PANDYA (A041)

SOURAV DEY (A014)
RAHUL TIWARI (A063)
SUBHAM MOHTA (D033)
SUKRUT PARIKH (D038)
AANAL SHAH (F049)
ASHISH GUPTA (B020)

Group 1
 Q.1 Describe consumer behaviour in the cookware market. How is
cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?
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 Main factors considered by customers were price, quality and material

 Seasonal market with Apr-May and Nov-Dec with higher sales
 Rising demand for coloured cookware to match kitchen décor
 More than by piece, 5 or 10 piece sets called boxed sets for sold
 Copper was the best conducting metal for cookware and the most expensive one
too and hence used by top chefs

Kitchen Specialty Mass

Local departmental Grocer stores
Chains (William Merchandizers
stores (Macy’s) (Kroger)
Sonoma) (Walmart)

Online Retailers
Direct TV sales Catalogues
(amazon)
 Q.1 Describe consumer behaviour in the cookware market. How is
cookware bought? How is it sold? What are the implications for
Culinarian’s marketing strategy?
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Implications for Culinarian’s marketing strategy:

 Widen Distribution Network: Culinarian had very good relationships with
its retailers and for more growth it needed more dealers to sell their
products
 Increase Market Share of the premium segment: Since there were 2 main
competitors, Le Gourmand and Robusto, which never ran price promotions
 Preserve prestigious image: Since it was in the premium category, it is very
important that the brand name is not tarnished by marketing activities
 Revenue growth of 15%: this was to be done while maintaining a pre-tax
earning of 12% but also considering facts that drop in sales in further
months should be also accounted
 Q.2 What are Culinarian’s strengths and weaknesses?
Why has the company been successful?
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Strengths:
 Strong research and development
 Industry leader in cookware technology
 Clear strategic direction
 Consistent marketing image and message
 Strong brand name in quality and highest
product quality
 Strong customer feedback loop
 Industry leader in retailer relationships
 Clear and strong management philosophy
 Highly scrutinized business before
implementation
 Highly motivated employees
 All products under one brand name
Weaknesses:
 Infrequent campaigns and lack of
consistent product promotion
 Management differences on price
promotions
 Advertising and lack of brand
awareness
 Poor inventory planning during
promotion times
 Seasonal sales swings
 Loss of market share due to brand
awareness
 Limited distribution channels
 Q.2 What are Culinarian’s strengths and weaknesses?
Why has the company been successful?
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Reasons behind success:

 Culinarian was the leader in metallurgy technology and was the first
manufacturer to provide the benefits of copper cookware with effortless
cleaning and maintenance.
 The company had very strong relationships with retailers, and therefore
each retailer carried all four product lines.
 Retailers were enthusiastic because they could capture a higher level of
profitability with Culinarian products versus competing products.
 Account managers visited major accounts once per month to highlight new
products, offer retail sales training on product technology and features, and
provide inventory management suggestions.
 Culinarian’s account managers also oversaw a unique retail merchandising
incentive program built around a point system that rewarded exceptional
retail clerks with free 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?
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 Net loss due to the promotion as per the consultants: $ 529,282

 Profit due to the promotion as per Browns estimates: $2,397,995
L
The promotions in 2004, were profitable as they were able to shoot up the
demand for CX1, which otherwise were projected to be less
 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)?
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 No, it should not run a 2007 price promotion

Reasons:
1. Flaws in Brown’s analysis
 24% dip in sales of Jan-Feb 2004 as compared to 2003 cannot be
extrapolated to March-May because:
 November-December being peak-sales period, people would have
done their cooking-ware purchases then
 May being a part of wedding-season, sales are expected to increase
during this period rather than decreasing
 No quantitative data quoted for not accounting inventory and
cannibalization costs
 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)?
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2. Trends in the premium products industry

 No price promotions done by competitors

3. In order to meet strategic objectives, price promotion of 30% is not feasible

 Damages the prestigious image

 Revenue growth becomes negative instead of a steady 15% increase

 0.5% loss ($ 529371/104152000) instead of 12% profit margin

4. Previously in May 2005 the plant was not able to handle the surge in
demand during the 20% price promotion which was accompanied by trade
overbuying during promotion period to pocket the difference later.
 Q.4. 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.
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 Gifts with Purchase:

 It should offer Gift Promotions for High end products or with a bundled purchase
(for example, 2 or more items on a cookware set purchase) as it would increase
sales by an average of 15% without compromising on the margins
 Because retailers do not appreciate the space wasted by the gifts, the gifts can
be mailed to the customer after s/he returns his/her warranty card with a
conveniently attached survey
 Furthermore, gifts can be offered at non-peak time periods because retailers
prefer non-overlapping promotions from the vendor lines they carry
 Product placement in cooking shows, to increase awareness
 Vouchers can be given to customers on purchase of CX1 & DX1, which can be
redeemed on purchase of high end SX1 or PRO1. This will help in Upselling.
 Cooking events with chefs and customers in shopping malls, to induce trials
 Celebrity endorsements through high-profile chefs, to appeal to customers through
opinion leaders
 THANK YOU
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