Rbs – Case Study Example

Case Study Example partitioning I Summary of Background and Facts creed cook hot Soda was detect by James Stewart Augusta in 1915. He c exclusivelyed it the miracle compound. It was founded to serve as a leavening agent in baked goods to let them grind away properly. With the invent of self-rising flour and instant cake mixes, bake sodium carbonate ashs original hire importance declined. With this decline, Stewart Corporation started promoting baking soda for a myriad of other utilizes, which include household cleaner, laundry aid, and deodorizer.Reliance baking soda holds a 70% market share. They produce cardinal incase sizes, 8oz, 1lb, and 5lbs. The 1lb box holds almost 50% of the gross revenue volume. Reliance has excellent brand sentiency and customer loyalty. Stewart Corporation is comprised of four divisions. Reliance Baking Soda (RBS) is in the household division. Anna Regnante was promoted Domestic Brand Director for RBS. She was placed in blossom of increasi ng Reliances good by 10% in 2008. The Household socio-economic class is planning to introduce two new growth launches in 2008.According to Chris Dale, Managing Director for Stewarts Household Products Division, they need the incremental meshwork accession from RBS to fund the market launch expenses for the new intersection pointions. (Quelch & Beckham, 2009, p1) Regnante needs to routine out how she thunder mug generate the required gelt growth for the old-fashi hotshotd, lynchpin reaping of baking soda. plane section II Statement of the core problems Regnantes core problem is figuring out what marketing mix to use to ontogenesis Reliance Baking Sodas profit by 10% in 2008. nonpareil of the main problems with RBS is the current lack of advertizing.Regnantes predecessor had cut the consumer forward motion bud conk out in half. Advertising is a key component in making sure the brands product is marketed to its consumers. RBS did non properly advertise the signifi bu tt jointce for what each baking soda could be employ to do, which includes outdoor cleaning, baby care, pet care, and a myriad of other things. RBS had established brand awareness and loyalty with customers but, they require to educate the customers and position the brand with advertisements which can give RBS much of a competitive advantage. Decreasing the amount of money allocated owards advertize was non a wise choice, e circumscribedly, when the company needed to vamp how baking soda was marketed. The clientele promotions were effective in moving the product however, they accounted for round 73% of total sales. This led to the company only selling around 25% of RBS at regular prices, which could be leaving RBS a lot less(prenominal) profitable. The vocation was overbuying during the promotional periods, which caused in inhabitencies in regular purchasing patterns of the product. some other moment was with the cooperative advertise program.Regnante was concerned tha t RBS was non getting sufficient advertisement in exchange for the slyness promotions. In item, she found that Advertising throw support for RBS is much lower than our branded competitors. (Quelch & Beckham, 2009, p. 5) RBS also rarely publicize in sell stores, magazines, or television commercials. If RBS was more diverse with advertising, then, they would be able to capture their target audience in other ways. Section III Secondary Problems Reliance Baking Soda lacked in providing contrastive promotional discounts to grocery stores.By not providing promotional discounts for grocery stores, the store managers did not throw a creative way to attract customers into the store to obtain baking soda. Grocery store chains thought that the Reliance Baking Soda needed to market their products better because baking soda was a boring product. Reliance Baking Soda does not manufacture for unavowed label brands. Therefore, their market share decreased. This lack of going after the s nobbish label market has caused the RBS to lose 5% of its market share to closed-door label brands.Reliance Baking Soda was the market leader, so, if they were able to manufacture privy labels brands they would have not loss 5% market share and its boilersuit market share could have increase. Also, a problem existed with trade promotion events due to the fact that the company did not negotiate or clan a price with the trade on what to sale its products for when they were purchased during a trade promotion. By not having set promotional retail prices, the trade was allowed to rake up on inventory at reduced prices. They did not have to extend the savings to the consumer.This ultimately caused a loss in profit for RBS. To make matters worse, these trade promotions often overlapped with consumer promotions. Therefore, it is hard to tell what the actual accepted incremental profits for the promotions were. Section IV Constraints and Limitations Besides the problems listed in the p receding(prenominal) sections, Reliance Baking Soda is constrained and limited by the fact that baking soda is in the mature part of its life cycle. When a product reaches maturity, there is no room for traditional growth. The product must discover new uses.RBS is not a wow product that can be categorized as a necessity therefore, it must be aggressive in its advertising in order to stimulate get ahead purchase. The product was old-fashioned and needed some refurbishment to make it seductive to the target market. The need for RBS nose-dived, following the introduction of self-rising flour and instant cake mixes. Naturally, it would be cheaper for bakeries to move to baking soda and reduce costs. This was a real big setback for RBS, as the market leader and the largest provider of the miracle compound. Randall Todd, an accounting Manager, for several of the major grocery chains, stated that even though the product was physically placed on the store shelves, it was not visible t o the consumer. It was a very slow moving product, which needed a lot of dig marketing to stimulate trade interest. (Quelch & Beckham, 2009, p. 2). Randall further observed that it was not a natural traffic builder, it does not have high turnover, and it is boring. (Quelch & Beckham, 2009, p. 2). RBS needed promotional methods which would turn the tide in their favor. According to Exhibit 3, RBS had low advertising recall. There was greater need to re concentrate on marketing communication efforts. Another limitation was the continual price increase for baking soda over the last 5 years. The price changes were not good because it had a shun impact on the numbers of cases that were shipped to the stores. This could lead to stores choosing a competitors brand or selling more of its private label brand. The last(a) limitation is that RBS world a mature product is sold on the push organisation. The household sales force is paid based on quarterly sales quotas. This allows the sal es staff to wait on trade promotions to sell the product.Therefore, they are not concerned with the day to day sales of RBS. Section V Alternative Solutions Reliance Baking Soda must increase profit in its household division by 10% in 2008. In deciding how to do this, Regnante must decide what to do about the trade promotions, consumer promotions and advertising. Since baking soda is a mature product, a push system has been implemented at RBS using a quarterly quota system. In order to deal with the problem of 73% of factory shipments being sold using trade promotions, a new monthly quota system could be placed in service.This would make the sales force focus on selling baking soda all throughout the year, not just when promotions are in place. Another option is to totally revamp the hencoop advertising reimbursement system. At this snip retailers are not promoting the product with the same size ads of RBSs competitors. RBS murderers a 5% of broadsheet inducing for any ad. RBS should offer 50% of the ad cost up to a certain percentage of the invoice for a purchase made inwardly 45 days of the ad. The ad also needs to be submitted for commendation prior to the ad being placed.RBS needs to make sure that their co-op advertising plan states what an acceptable ad size is. This will supercharge the retailers to do local advertising for RBS. The third option would be to increase the advertising and consumer promotions through event advertising. With this option, RBS could focus on important events similar hide Day. They could create a whole marketing crowd around this event and others like it. Another option would be to mount an earnings running play on the alternative uses of baking soda. This alternative would not embarrass huge cash outlays.RBS could create blogs on websites as well as have a complete interactive website devoted to helping the consumer gain the myriad of uses for baking soda. The final option is to focus on button the product thr ough trade promotions. RBS could offer 10-15% off total invoice price several times during the year to make sure that our product is being shipped. With this increased trade promotion, RBS could list a lower suggested retail price on the promotional packages, so that stores will have to good-by the savings along to their customers. This would alleviate the problem of purchasing simply to increase revenue.Section V Implementation of Best Alternative The best solution is to follow a holistic marketing ascend and incorporate a marketing plan that uses trade promotions, consumer promotions and advertising in conjunction with one another. This approach should focus on event marketing for its major advertising expenditures. One such event that lends itself to the promotion of the different uses for baking soda is Earth Day. With more and more of the American population snap on Eco-friendly products, RBS can showcase baking soda as being a one stop wonder.RBS should partner with Earth Day events and hand out 2oz samples with pamphlets on how baking soda is an environmentally safe cleaning agent. It should list all of the possible uses of the eco-friendly baking soda. The pamphlet could, also, reference RBSs Eco-pack, which will include a $1. 00 off rebate. RBS can package 1 lb boxes of baking soda in twin packs called Eco-packs. The packaging should have new ideas of how to use baking soda in environmental friendly ways. Since this is a special packaging product, RBS should offer a trade promotion on the twin pack only for the six weeks starting the first of March.This promotion should consist of buy eleven cases, get one free. During this time RBS should also skreak up television, print and internet advertising, which all should include the environmental looking at of the product. To coincide with the companys marketing efforts, RBS should offer an incentive for the trade to promote RBS through advertising. RBS could pay for 50% of the advertisement cost tra ceable the RBS product, up to 5% of a total invoice purchase within 45 days of the advertisement this promotion would channel through the constitutional month of April.Other events that could be marketed include the Start of Summer, Fire Prevention month and the Holiday Season. For the start of summer, RBS should focus its advertising efforts on its uses for outdoor cleaning, pool, camp and weed removal. This is not a traditional high volume time therefore, they should also use their trade partners by offering the same advertising incentives that were offered during the Earth Day promotion during the months of May and June. Since RBS can be used to put out certain chevvys. The company should focus on fire safety and prevention during the month of October.RBS could put a pamphlet and a $. 25 coupon in the bags that children traditionally bring theatre from instruct during this month. The pamphlet should focus on key fire safety initiatives and shine up RBS commitment to fire prevention and uses of RBS in fire situations. During the first three weeks in October, RBS should offer a trade promotion of 10% off invoice prices on all sizes. This will help the trade partners get ready for the upcoming holiday season. The final event marketing campaign of the year should focus on the holiday season and getting your home in tip-top shape for the holidays in a health conscious manner.RBS should again partner with other Household Division products to advertise nationally how to get your home ready for the holidays. This ad should run in the October/November editions of top Womens magazines. It should also offer a engagement for a $10,000 kitchen makeover. This contest will be open to the purchasers of the products advertised in the magazines. This will also be advertised on the internet and through POP displays in the stores. During the months of October and November, RBS should offer its co-op advertising promotion as defined in the Earth Day section.Section VI Justification Since Reliance is in the maturity stage of its life cycle, it is important for them to focus on extending the usage rate and repositioning itself in the market. According to Shaeffer (2009), As a market matures, the customer buys solutions and not products. Therefore, it becomes more vital to focus advertising efforts on new ways of using baking soda. By focusing on event marketing, Reliance can help the consumers understand all the possible uses of traditional baking soda.This increased knowledge will reason the sale of baking soda to the levels needed to meet the 10% profit increase of the household division. To increase the profit by 10% the loot before SG&A, Overhead and Taxes needs to be $20,587,000. The event marketing campaign proposed will increase the profit to $20,974,000, which well exceeds the 10% increase. The 2008 Profit and privation calculate is listed as Exhibit 1. This budget was prepared based upon historic cost and sales data to gauge the respo nse level of some(prenominal) the trade and consumer promotions. Exhibit 1 Reliance Baking SodaProfit and Loss Budget For the Year Ended December 31, 2008 2007E 2008 Manufacturers Price Per Case 8oz 7. 2 7. 2 1lb. 12. 02 12. 02 5lb. 54. 28 54. 8 Factory Shipments (in 000s of cases) 8oz 714 883 1lb 1226 1531 5lb 648 660 Variable Manufacturing Cost Per Case 8oz. 3. 38 3. 38 1 lb. 5. 58 5. 58 5 lbs. 24. 8 24. flagrant Sales 55,051 60,585 Variable Manufacturing Cost 25,325 27,896 Gross Margin 29,726 32,690 Advertising TV 3,815 4,300 Print 694 1,000 Internet 248 300 Total Advertising 4,757 5,600 PR/Media outturn Cost 198 297 Consumer Promotion 551 839 Trade Promotion 5,505 4,980 Total Marketing write off 11,011 11,716 Profit before SG&A, Overhead and taxes $ 18,715 $ 20,974 Works Cited Shaeffer, Lee. (2009, O ctober 14). Maximize Product advantageousness as the Market Matures. Product Management Library of Knowledge. Retrieved October 1, 2010, from http//www. aipmm. com/html/ newssheet/archives/000359. php