Reliance Baking Soda:

Optimizing Promotional

Spending

Q1. What are the strengths and weaknesses of the RBS brand?

Q2. Analyze the effectiveness of past RBS consumer and trade promotional events. How have the promotions strategies impacted sales volumes? What kind of return on investment is the company getting for consumer promotions and trade promotions?

Q3. 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.

• for low-involvement, impulse products• Use sales force, trade promo to induce

intermediaries to carry, promote and sell products to end-users

• Helps in generating sales and increasing the topline of the company

• main objective is to create an immediate sale and not to create product involvement

Push strategy

• For high-involvement, differentiated offers• Use advertising, consumer promotions

and other forms of communication to persuade consumers to demand the product from intermediaries

• It lures customers from competitor’s products’ by differentiated positioning & consumer promotions

Pull strategy

Low involvement products

• Relatively inexpensive• Pose a low risk to buyer• Consumer is not actively searching for

information or alternatives

Q4. 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? Develop a pro forma income statement and be prepared to address the long-term strategic implications of your decisions. 

Key Points

Increase in Manufacture price by 5% - contribution to world food programme.

Required to sustain the consumer promotion and trade promotions

An increase by 5% across categories to maintain the 28:47:25 ratio

An increase of 0.01 based on predictions of no change mentioned in the case

Advertising

As seen in exhibit 3, there is a 95% recall of the brand reliance for baking soda, hence knowing of product is not a problem

A small increase in total budget to continue the advertising, majorly to support the promotions.

An increase in Print advertising to target magazines read by women in age of 35-55 who buy the product

No change to PR budget

Promotions

Consumer Promotion

Only 70% people buying the product when the recall is 95% of brand name, means we need to break on display barrier

An increase in consumer promotion to encourage the consumer to use RBS rather than competitor( even though they are cheaper)

Promotions

Trade Promotion

Continue to support Trade Promotion to stop Trade partners in piling up the competitors cheaeper product.

Due to higher margin, RBS can provide due to its higher cost and margin can be used to overcome price gap in trade

The high buying of product only during promotion period can be countered by smaller promotion period or limiting promotion stock