Giant Consumer Products: The Sale

promotion Resource Allocation Decision

By Group K1
 Issues
• Should there be any national promotion for FFD?
• Would the promotion will be beneficial for all the
stack holder?
If yes,
• How the promotion be structured?
 Off invoice pricing
 Pay for performance
• Should FFD compensate retailer only if they hit
some pre-established target?
 Considering promotion impact on promoted
item
Dinardo 32 Dinardo 16
When that item is on
promotion 10,460,943 6,210,220.36
When that item is NOT ON
promotion 6816234.948 3088564.553
When Nothing is on
Promotion 7,174,738.58 3,798,942.32
Incremental Volume from
promotion 3,286,204.09 2,411,278.04
Revenue change from
promotion 6,901,028.59 5,787,067.30
Variable Cost change from
promotion 952,999.19 795,721.75
Promotion Cost change from
promotion 3,752,779.97 4,291,408.93
Marketing Margin Change
from promotion 2,195,249.43 699,936.62
 Within Brand Cannibalization
Dinardo 32 Dinardo 16
When that item is on promotion 5,740,724 424,647.92
When Nothing is on Promotion 7,174,738.58 3,798,942.32
Volume Change from promotion of
other item (1,434,014.52) (3,374,294.40)
Revenue change from promotion of
other item (3,011,430.50) (8,098,306.56)
Variable cost change from
promotion of other item (415,864.21) (1,113,517.15)
promotion cost change from
promotion of other item -1912.23 (75,555.82)
marketing margin change from
promotion of other item (2,593,654.06) (6,909,233.59)
Total Brand Impact from promotion
on TOP-LINE Revenue
Total effect of D32 Promotion (1,197,277.97)
Total effect of D16 Promotion 2,775,636.80
Total Brand impact from promotion
on marketing margin
Total effect of D32 promotion (4,713,984.16)
Total effect of D16 promotion (1,893,717.43)
 Promotion impact on Natural
Average Monthly Incremental Volume
for Natural 705,252
Average %store Promoting for Natural 7.6
Average Monthly Incremental
Volume/promo point 92477.43895
Incremental Volume from 25% Promo
points 2311935.974
Revenue change from promotion 2,045,231
Variable cost change from promotion 275,048
promotion cost change from promotion 4,125,425
Marketing Margin change from
promotion (2,355,243)
 Recommendation
• Since the Marketing Margin is negative for all
the three product, the organization should not
run the national level promotion for any one
of this product.