Case Study- Culinarian Cookware Essay

874 Words Nov 21st, 2012 4 Pages
1. Describe consumer behavior in the cookware market. How is cookware bought? How is it sold? What are the implications for Culinarian’s marketing strategy?

Cookwre was bought either by piece or in a boxed set. Below are two graphs about how cookware is bought and sold.

How is cookware bought:

How is cookware sold:

Implications:

* There is a big potential in mass merchandise outlet, which has not been explored yet. * Enhance cooperative relationships with department store, because this is a very important sector with a large share in both purchasing and selling. * Direct sales doesn’t have a large share (only 5%), and the percentage that people buy through this channel is almost zero, so we need to consider if
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The company offers a higher margin to retailer than other competitors, which stimulates the retailer to push the sales. Finally, Culinarian is quite clear about their target customers, who have high-income, so their advertising is very effective that they focus on magazines and newspapers targeted at high income audience.

3. Was the 2004 promotion profitable? Calculate the profitability using Brown’s logic and then calculate profitability using the consultant’s model. How would you calculate profitability?

My conclusion is the 2004 promotion was profitable.

Using Brown’s logic
Actual units = 184987
Forecast units = 59871
Variable costs = 38.64
Incremental contribution impact = (62.4-38.64)*184987-(72-38.64)* 59871 = 2397995

Using consultant’s model
Actual units = 129386
Forecast units = 119504
Variable costs = 52.05
Incremental contribution impact = 10.35*129386-19.95*119504-99332+39540 = -1104752

My method
Conclusion: the promotion is profitable
Promotion period
March to May
Variable cost
Both overhead cost and advertising cost should not be included in the variable cost, so my variable cost should be 38.64-(52.05*7%)= 35
Forecast units
I use consultant’s figure by the computer-generated model, which is 119504
Actual units
Actual orders from March to May in 2004, which equals 184987 (47191+89423+48373) (62.4-35)*184987-(72-35)*119504=646995

4. Should Culinarian run a 2007 price promotion?

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