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Culinarian Cookware: Pondering Price Promotion

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Submitted By nareksisi
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Culinarian Cookware: Pondering Price Promotion
1)
Consultants Nonpromotion %20 promotion Unit 119,504 184,987
Price 72 62,4
Variable Cost 52.05 52.05
Profit Contribution 2,384,105 1,914,615 -469,489 (sales profit loss) -99,332 (cannibalization) 39,54 (inventory saving)
Mrs.Brown -529,281 Nonpromotion %20 promotion
Unit 59,871 184,987
Price 72 62.4
Variable Cost 38.64 38.64
Profit Contribution 1,997,297 4,395,291 2,397,994 (sales profit)

I think that 2004 promotion was not profitable. Following reasons can be considered when deciding whether is it profitable or not besides calculations; -The promotion made retailers happy because they did not have to store free gifts and they were able to sell more products to the customers but I dont think it made customers that much happy because only %30 of the customers sets price as their first priority when they make purchase decision.
- CX1 sales only increased in promotion period and it was not that high after the promotion.
-Price discount might have damage brand image since it is aim is to compete in higher segment.
-When it comes to cannibalization; I believe we do not have enough data. There may be negative effects of cannibalization in promotion’s success but we need more data to take into consideration.
-The data also shows that price discounts are better attract cost sensitive customers but not quality and brand sensitive customers
-This promotion was more helpfull to attract first time buyers not old ones.

2) Here are some suggestions on potential promotion strategies,
First of all new promotion strategy may be aligned with company strategies that are mentioned below;
1. Widen the distribution network
2. Increase market share of the premium cookware segment
3. Preserve company image
4. Continue to capture revenue growth of at least 15%

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