MARKETING II

Cullinarian Cookware: Pondering Price Promotion

SUBMITTED BY: SECTION -A GROUP -13












AABHAS PARIK 2013PGP003
ANIMA SHARMA 2013PGP039
GAURAV GUPTA 2013PGP142
PRATEEK BAGGA 2013PGP284
PYDIPALA SHAMANTH KUMAR 2013PGP298
SHAJI S 2013PGP363
1. Describe the Consumer Behaviour
Culinarian gauged consumer behaviour through three consumer research studies.
Following are the key results of the studies conducted on Culinarians consumers:
75% were 30 to 55 years of age
82% were women
70% had household income above $75000
60% considered cooking their number one hobby
Unaided brand awareness Income under $ 75000 Income above $ 75000
Culinarian 15% 25%
Le Gourmand 17% 30%
Robusto 14% 28%
Star Chef and Kitchen Select 35% 45%

Key findings of study conducted on Households with income over $75000
Purchase Patterns:




32%
29%
24%
15%
Purchase Patterns- Store
Prefrences
Mass Mercandise
Outlet (Walmart)
Department Store
(Macy's)
Kitchen Speicality Store
Others- Internet,
catalog etc
30%
25%
25%
10%
Purchase Patterns-Purchase
Reasons
Attractive Displays in
Stores
Full-Service Store and
trained staff
SALE
TV, Magazine Advertizing
2. How is cookware bought? How is it sold?
Copper cookware which was the most expensive category is bought by most
professional chefs due to superior heat conductivity. There is also a growing trend in
premium cookware where the offering of coloured designer cookware matched
kitchen dcor. Cookware was generally bought either by piece (open stock) or in a
boxed set (ranging from 5 to 14 pieces). Most of the cookware was purchased for
wedding and Christmas gifts. It was also observed that majority of cookware was
bought during gifts and price promotions.
Cookware was sold through variety of distribution outlets. Retail distribution outlets
included kitchen specialty chains (e.g. Williams Sonoma), local specialty stores,
department stores (e.g. Macys), mass merchandisers (e.g. Wal-mart), grocery stores
(e.g. Kroger), direct TV sales (e.g. Home Shopping Network), Online Retailers (e.g.
Amazon), and catalogues (e.g. Manufacturers direct mailings).
Culinarian products were mainly sold through a network of three upscale kitchen
specialty chains, the Bloomingdales and Nieman Marcus department store chains,
and 75 local specialty chains. Very few orders were through direct sales via company
website and catalogues sent to existing customers twice per year.

3. What is Culinarian good at? What is it bad at?
Good:
Unparalleled product quality
Most advanced performance technology in the industry
Leader in metallurgy technology
Strong dealer support
Positioned as elite brand
Market leader in premium cookware category with 14% share
Strong relationships with retailers
Well trained sales staff
Selective distribution network to maintain the status of the brand
Bad:
Brand Awareness- only 4% recalled Culinarian advertisements(2005
telephonic survey) and 50% in Orion market research they would buy the
brand they recognize
Apprehension in the company regarding price discounts despite of the fact
that 30% households said they would be motivated and 20% by free gift
purchase(Orion Market Research- Exh3)
Restricted Distribution channel- buying cookware can sometimes be
impulsive decision
Lack of innovative methods to reach target customer
Restrictive promotion policies
4. Evaluate the Price Promotion Policy
The objective of price promotion was not only to appease the trade, but to broaden
its customer base. Costing and demand forecasting method used by Consultant and
Brown were different. Due to the following reasons consultants method seems to
be more valid. According to Consultant price promotion program was ineffective in
generating more profit.
1. The consultants sales projection was based on 10 years forecast model, which
seemed more reliable than a simple comparison of first two months sales by
Brown. Brown followed 24% decrease in first two months sales to forecast the
following months.
2. Brown didnt allocate overhead cost to variable cost. Part of the manufacturing
overhead needs to be allocated variable cost because its linked to production
volume.
Profitability of CX1 according to consultant:
According to Consultants method loss in contribution due to promotion (20%) was
529281.35 and price promotion was ineffective. Profitability of CX1 according to
consultant:

Brown

Promotion Without Promotion
Sales (Mar-May)(Units) 184,987 59,872
Price ((CXI) 62.4 72
Variable Cost 38.64 38.64
Unit Contribution 23.76 33.36
Total Contribution 4395291.12 1997329.92
Contribution gain/loss due to promotion 2397961.2

Cannibalization

Savings in Inventory

Net gain/loss

2397961.2
According to Browns method gain in contribution due to promotion (20%) was 2397961.2
and price promotion was effective.
Consultant
Promotion (20%) Without Promotion
Sales (Mar-May)(Units) 184,987 119,504
Price ((CXI) 62.4 72
Variable Cost 52.05 52.05
Unit Contribution 10.35 19.95
Total Contribution 1914615.45 2384104.8
Contribution gain/loss due to promotion
-469489.35

Cannibalization -99332

Savings in Inventory 39540

Net gain/loss

-529281.35