Case Study- Culinarian Cookware

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 direct sales is necessary. * A large share of cookware is sold in 75 local specialty stores (27%), and we need to reduce the sales of this channel. * Target customers should be women from 30-55 with household income over $75,000. 2. What are Culinarian’s stre ngths and weaknesses? Why has the company been successful? Strengths| Weakness| Strategy| Advertising|Very clear four strategic priorities| A fraction of Competitors| Product| Promotion| Unparalleled product quality| Lack of consistent and meaningful price discount events | Advanced performance technology| | Leader in metallurgy technology | | First manufacturer to provide the benefits of copper cookware with effortless and maintenance. | | Sales and Distribution | Market share| Very strong relationships with retailers| Low compared to other competitors (6. 5%)| Eight experienced account managers| | The success of Culinarian lies in the following aspects:Above all, the company has very clear four strategies priorities. Furthermore, good execution is very important. Strategies play like a guideline, and all marketing and sales activities are launched under this guideline. Then, the company did a good job on preserving its brand image with unparalleled product quality and advanced tec hnology. Building strong relationships with retailers is another factor. 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. 4 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*119504-993 32+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 unitsI 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? If so, what should be the specifics of such a promotion (e. g. , product scope, discount rate, timing, communicate) Culinarian should run a 2007 promotion. First of all, in 2006, Culnarian’s CEO established four strategies for the company. The 2007 price promotion would be a very good implementation of the strategy.Moreover, 2005 telephone survey shows that unaided brand awareness for Culinarian are 15% with household income under $75000 and 25% with hous ehold income over $75000 ( this figure is lower than its competitor Le Gourmand and Robusto). Finally, the cookware market in U. S. had been increasing year on year, so had been Culinarian’s products, so there must be a great potential on sales growth. Details of the promotion Product Scope They should run promotion on product DX1 and CX1. First, SX1 and PROX1 are for advanced and professional chefs, so they are very high-end with smaller shares of the revenue.Then, DX1 and CX1 take a lion share of the total revenue. Finally, discount on DX1 and CX1 would not affect brand image as they are relatively low-end products with low price and technology. Timing They should choose April, May and June as spring sales and October, November and December as winter sales. May and June are weddings seasons, while November and December are Christmas time. According to the survey, 55% of the respondents received or purchased cookware as a gift. So I suggest there should be two price promotio ns in spring and winter. Communications:Commercial advertisement on cook channels (39% watch television cooking shows and 18% purchase cookware seen on television cooking shows) Direct support to retail stores such as displays and sales staff (30% stated that they would be drawn to stores with attractive displays, and 25% preferred a full- service store) Enhance channel communication with mass merchandise outlet (32% of respondents bought cookware in mass merchandise outlet) Traditional channels, including TV, radio, newspapers and cook magazines. (10% said they might respond to TV, radio, magazine, or newspaper advertising) Discount rate :20%