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    Alex Kuriakose
    Reliance Baking Soda is an established product that needs to increase profits 10% in 2008. Past promotions have significantly impacted sales, with 73% of sales occurring during trade promotions. Alternative strategies are proposed, including spreading promotions throughout the year instead of concentrating them and reducing advertising spending given high brand awareness. A proposed 2008 marketing budget allocates funds across advertising, promotions and expenses while aiming to increase profits 3% over 2007 levels.

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    Synopsis

    Uploaded by

    Alex Kuriakose
    152 views2 pages
    Reliance Baking Soda is an established product that needs to increase profits 10% in 2008. Past promotions have significantly impacted sales, with 73% of sales occurring during trade promotions. Alternative strategies are proposed, including spreading promotions throughout the year instead of concentrating them and reducing advertising spending given high brand awareness. A proposed 2008 marketing budget allocates funds across advertising, promotions and expenses while aiming to increase profits 3% over 2007 levels.

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    Reliance Baking Soda is an established product that needs to increase profits 10% in 2008. Past promotions have significantly impacted sales, with 73% of sales occurring during trade promotions. Alternative strategies are proposed, including spreading promotions throughout the year instead of concentrating them and reducing advertising spending given high brand awareness. A proposed 2008 marketing budget allocates funds across advertising, promotions and expenses while aiming to increase profits 3% over 2007 levels.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    152 views2 pages

    Synopsis

    Uploaded by

    Alex Kuriakose
    Reliance Baking Soda is an established product that needs to increase profits 10% in 2008. Past promotions have significantly impacted sales, with 73% of sales occurring during trade promotions. Alternative strategies are proposed, including spreading promotions throughout the year instead of concentrating them and reducing advertising spending given high brand awareness. A proposed 2008 marketing budget allocates funds across advertising, promotions and expenses while aiming to increase profits 3% over 2007 levels.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    RELIANCE BAKING SODA: OPTIMIZING PROMOTIONAL SPENDING Analysis by Group 1 (Anvesh, Sameer, Rajat, Alex, Arun) OBJECTIVE Reliance

    e Baking Soda is Stewart Corporation's oldest and most established product. The new Domestic Brand Director needs to create a 2008 marketing budget that delivers a profit increase of 10% over 2007 levels. She must first evaluate the effectiveness of past consumer and trade promotions and determine if a price increase will have net bottom line benefits. Then she must decide on the optimal allocation of her marketing budget, taking into account the brand's apparent "cash cow" role in the Household Division of Stewart Corporation. The following approaches need to be adopted 1. Evaluate the respective roles of price, advertising, consumer promotion, and trade promotion in marketing a mature product. 2. Develop quantitative analysis skills needed to evaluate consumer and trade promotion expenditures. 3. Explore different approaches to marketing expenditure allocations and consider the implications of those decisions. Specific Inferences& facts from the case: 1. RBS has 95% brand awareness & 70% market capture. 2. A price rise in baking soda doesnt affect its demand significantly. 3. 40% people have more than one box of baking soda at home this implies that when required, people dont simply search around and just go & purchase a fresh box. 4. In case of ads RBS ads not remembered & are insignificant in communicating or pushing the sales. 5. Sales dependency on trade promotions is huge; secondly in 2006 a lot of efforts made in this foray and impact can be seen clearly in rise of profits to $15,815 even when marketing expenses rose by whopping 52%. 6. Point of purchase an ad plays a major role in creating a desire to go in for a purchase and is a cost-effective method too to boost sales. Moreover ads can be used at specific places like grocery stores and warehouse club where sales contribution is most. SWOT Analysis STRENGTHS 1. 95% brand awareness 2. Market share of 70% 3. Substitute for higher priced household cleaning products 4. Consistent demand throughout the year. OPPURTUNITIES 1. New uses of baking soda can be investigated. 2. Minimum advertising expenditure required 1. 2. 3. 4. 1. 2. 3. 4. WEAKNESSES Requires lot of push marketing Perceived to be a boring product Promotions not performance based 73% of factory sales happen during trade promotions. THREATS Price increase of 13% Private label eating into market share Cannibalization of baking soda by other household products High inventory in stores from 2006 promotions.

    Alternative Strategies:
    1. It is seen that trade promotions and consumer promotions take place simultaneously throughout the year. In

    2006 promotions took place for 193 days in the year. This resulted for 73% of the sales. The remaining 172 days accounted for only 27% of sales from the factory. If trade promotions are given during 127 days when

    there are no, consumer promotions the retailers will push the product into the market since the promotions are incentive based. Also, consumer promotions can be given for the remaining 172 days of the year when there are no trade promotions. This will result in a pull from the consumer side and increase sales. Thus, now there would be better sales throughout the year and an increase in volume. 2. There is only a 20% brand recall through advertising, still there seems to be 95% brand awareness. Hence there could be a reduction in the advertising budget. This can help divert funds for the new products launch.

    Proposed Budget for 2008


    Manufacturer's Price per case 8 oz 1 lb 5 lb Factory Shipments (in 000s of cases) 8 oz 1 lb 5 lb Variable Manufacturing Cost Per case 8 oz 1 lb 5 lb Gross Sales Variable Manufacturing Costs Gross Margin $ $ $ 2005 6.18 10.33 46.63 $ $ $ 2006 6.37 10.64 48.03 $ $ $ 2007E 7.20 12.02 54.28 % Change from 2006 13% 13% 13% $ $ $ 2008 7.20 12.02 54.28 % Change from 2007 0% 0% 0%

    640 1099 581

    793 1362 720

    714 1226 648

    -10% -10% -10%

    714 1430 630

    0% 15% -3%

    $ 3.02 $ 4.98 $ 22.12 $ 42,399.90 $ 20,257.54 $ 22,142.36 52%

    $ 3.05 $ 5.03 $ 22.34 $ 54,124.69 $ 25,354.31 $ 28,770.38 53%

    $ 3.38 $ 5.58 $ 24.80 $ 55,050.76 $ 25,324.80 $ 29,725.96 54%

    11% 11% 11% 2% 0% 3% 2%

    $ 3.38 $ 5.58 $ 24.80 $ 56,525.80 $ 26,016.72 $ 30,509.08 54%

    0% 0% 0% 3% 3% 3%

    Advertising TV Print Internet Total Advertising PR/Media Production Costs Consumer Promotion Trade Promotion Total Marketing expenses Profit before SGA, Overheads & Taxes

    $ 2,862.00 $ 687.00 $ 76.00 $ 3,625.00 $ 191.00

    $ 4,453.00 $ 950.00 $ 238.00 $ 5,641.00 $ 297.00

    $ 3,815.00 $ 694.00 $ 248.00 $ 4,757.00 $ 198.00

    -14% -27% 4% -16% -33% -49% -7% -15% 18%

    $ 3,500.00 $ 665.00 $ 200.00 $ 4,365.00 $ 148.00

    -7% -3% -20% -7% -17% 50% -15% -6%

    $ 424.00 $ 4,240.00 $ 8,480.00 $ 13,662.36 32%

    $ 1,080.00 $ 5,938.00 $ 12,956.00 $ 15,814.38 29%

    $ 551.00 $ 5,505.00 $ 11,011.00 $ 18,714.96 34%

    $ 1,090.00 $ 4,600.00 $ 10,203.00 $ 20,306.08 36%

    10%

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