Rbs – Case Study Example

Case Study Example plane section I Summary of Background and Facts conviction Baking Soda was disc wholly overed by James Stewart Augusta in 1915. He called it the miracle compound. It was founded to serve as a leavening agent in baked goods to let them rise properly. With the invent of self-rising flour and minute legal profession mixes, cook poppings original use importance declined. With this decline, Stewart Corporation started promoting bake soda for a myriad of other uses, which include habitation cleaner, laundry aid, and deodorizer. confidence baking soda holds a 70% market portion out. They produce three box sizes, 8oz, 1lb, and 5lbs. The 1lb box holds almost 50% of the sales volume. Reliance has magnificent brand awareness and customer loyalty. Stewart Corporation is comprised of four divisions. Reliance Baking Soda (RBS) is in the abode division. Anna Regnante was promoted Domestic Brand Director for RBS. She was located in charge of increasing Reliances do good by 10% in 2008. The Household Division is planning to introduce two new fruit launches in 2008.According to Chris Dale, Managing Director for Stewarts Household Products Division, they need the incremental gain ground enlarge from RBS to fund the market launch expenses for the new intersections. (Quelch & Beckham, 2009, p1) Regnante needs to figure out how she can generate the required profit egression for the old-fashioned, mainstay product of baking soda. voice II Statement of the core tasks Regnantes core problem is figuring out what marketing mix to use to increase Reliance Baking Sodas profit by 10% in 2008. One of the main problems with RBS is the current lack of advertizement.Regnantes forerunner had cut the consumer publicity bud wee in half. Advertising is a key component in reservation true the brands product is marketed to its consumers. RBS did not properly advertise the significance for what all baking soda could be used to do, which includes outdoor cleanup position, baby care, pet care, and a myriad of other things. RBS had set up brand awareness and loyalty with customers but, they needed to educate the customers and position the brand through ads which can crack RBS more of a competitive advantage. Decreasing the amount of money allocated owards advertising was not a rash choice, e specificly, when the ships company needed to revamp how baking soda was marketed. The backup promotions were effective in moving the product however, they accounted for around 73% of do sales. This led to the company only selling around 25% of RBS at symmetrical prices, which could be leaving RBS a lot less profitable. The patronage was overbuying during the promotional periods, which caused inconsistencies in regular purchasing patterns of the product. Another issue was with the cooperative advertising program.Regnante was concerned that RBS was not getting sufficient advertising in exchange for the trade promotions. In fact, she found t hat Advertising trade support for RBS is much swallow than our branded competitors. (Quelch & Beckham, 2009, p. 5) RBS in addition rarely advertised in retail stores, magazines, or television commercials. If RBS was more divers(a) with advertising, then, they would be able to capture their target audience in other ways. Section III standby Problems Reliance Baking Soda lacked in providing different promotional discounts to marketplace stores.By not providing promotional discounts for grocery stores, the store managers did not have a creative way to attract customers into the store to purchase 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 conciliate for nonpublic enounce brands. Therefore, their market share decreased. This lack of going after the private label market has caused the RBS to endure 5% of its market share to private label bra nds.Reliance Baking Soda was the market leader, so, if they were able to manufacture private labels brands they would have not loss 5% market share and its overall market share could have increase. Also, a problem existed with trade promotion typefaces due to the fact that the company did not perform or set 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 stock 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 real incremental profits for the promotions were. Section IV Constraints and Limitations Besides the problems listed in the above sections, Reliance Baking Soda is constrained and limited by the fact that baking soda is in the m ature part of its life cycle. When a product reaches maturity, on that point is no room for traditional growth. The product must discover new uses.RBS is not a screaming product that can be categorized as a necessity therefore, it must be offensive in its advertising in order to stimulate further purchase. The product was old-fashioned and needed slightly refurbishment to make it attractive 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 very big setback for RBS, as the market leader and the largest provider of the miracle compound. Randall Todd, an Account 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 to the consumer. It was a very unwind moving product, which needed a lot of push marketing to stimulate trad e interest. (Quelch & Beckham, 2009, p. 2). Randall further observe that it was not a natural traffic builder, it does not have high expelover, 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 localise 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 negative 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-place limitation is that RBS being a mature product is sold on the push system. The crime syndicate sales force is paid based on quarterly sales quotas. This allows the sales staff to tarry 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 grind 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 batting cage advertising reimbursement system. At this time retailers are not promoting the product with the same size ads of RBSs competitors. RBS prolongs a 5% of invoice incentive for any ad. RBS should offer 50% of the ad cost up to a certain percentage of the invoice for a purchase made within 45 d ays of the ad. The ad also needs to be submitted for approval prior to the ad being placed.RBS needs to make sure that their henhouse advertising plan states what an acceptable ad size is. This give encourage the retailers to do local advertising for RBS. The third option would be to increase the advertising and consumer promotions through termination advertising. With this option, RBS could focus on important events like Earth Day. They could create a whole marketing campaign around this event and others like it. Another option would be to mount an internet campaign on the alternative uses of baking soda. This alternative would not involve huge cash outlays.RBS could create blogs on websites as well as have a complete interactive website devoted to helping the consumer understand the myriad of uses for baking soda. The final option is to focus on pushing the product through trade promotions. RBS could offer 10-15% off total invoice price several times during the year to make su re that our product is being shipped. With this change magnitude trade promotion, RBS could list a lower suggested retail price on the promotional packages, so that stores bequeath have to pass 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 take a holistic marketing get along and incorporate a marketing plan that uses trade promotions, consumer promotions and advertising in conjunction with one another. This go on 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 focusing on Eco-friendly products, RBS can showcase baking soda as being a one stop wonder.RBS should first mate 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 sixer weeks starting the first of March.This promotion should consist of buy eleven cases, get one free. During this time RBS should also beef up television, print and internet advertising, which all should include the environmental aspect 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 attributable the RBS product, up to 5% of a total invoice purchase within 45 days of the advertisement thi s promotion would run through the entire month of April.Other events that could be marketed include the galvanize 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, inhabit 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 fires. The company should focus on fire safety and streak during the month of October.RBS could put a pamphlet and a $. 25 coupon in the bags that children traditionally turn home from school during this month. The pamphlet should focus on key fire safety initiatives and highlight RBS payload 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 across the country 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 contest 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 extendin g the usage rate and move 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 noesis will drive 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 Profit 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 red ink Budget is listed as Exhibit 1. This budget was prepared based upon historical cost and sales data to gauge the response level of both the trade and consumer promotions. Exhibit 1 Reliance Baking SodaProfit and deprivation 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. Gross Sales 55,051 60,585 Variable Manufacturing Cost 25,325 27,896 Gross Margin 29,726 32,690 Advertising TV 3,815 4,300 affect 694 1,000 Internet 248 300 Total Advertising 4,757 5,600 PR/Media Production Cost 198 297 Consumer furtherance 551 839 Trade Promotion 5,505 4,980 Total Marketing Expense 11,011 11,716 Profit before SG&A, Overhead and taxes $ 18,715 $ 20,974 Works Cited Shaeffer, Lee. (2009, October 14). Maximize Product profitability as the Market Matures. Product Management Library of Knowledge. Retrieved October 1, 2010, fr om http//www. aipmm. com/html/newsletter/archives/000359. php