Culinarian Cookware Case Analysis Essay

Culinarian cooking utensil has a prestigious band image, is a leader in subvention cookw are commercialize, and delivers an outstanding harvest-festival. With this said, in that location are still areas in which the notice could improve, as it still has a much lower daub sensation and food trade appoint than industry leaders sense datum Chef and Kitchen Select. We moot that bingle way in which Culinarian could combat these issues and push towards completing its strategic objectives is to die hard a damage advancement in 2007.Though there was deviation as to whether the onward motion of 2004 was remunerative, due to our analysis of the 2004 promotion and the present-day(prenominal) offer of the cookware merchandise we entrust that there is room for a equipment casualty promotion within Culinarians strategic objectives. First and foremost, we believe that Ms. brown is subdue in her calculations of the profitable nature of the 2004 sale. Ms. brownnesss calcul ations resist from those of the consultants on two basic points the way in which they projected the gross gross revenue for the CX1 sticker during the sales promotion and the contri exception perimeter which they attributed to each unit.The consultants consider that, jibe to the sales numbers of the previous year, the projected sales of the CX1 model should have been 119504. Ms. browned disagrees, saying that due to the fact that sales were cumulus 24% during the first some months of 2004, the projected sales for the period should be much lower than what the consultants calculated. She says that the projected sales calculations should be 59871. According to scupper 1, which outlines the retail sales of cookware across the US, sales for cookware were implement 2% during 2004. This information is in line with what Ms.Brown employ in her calculations, as she argued that the projected sales for March through May of 2004 should be significantly lower than usual due to a m ajor devolve in sales during the first few months of 2004. Not further were sales for the year guttle, but according to Exhibit 2, March, April and May are not higher than average months for sales in 2005. According Exhibit 2, during 2005 6. 9% of sales were in March, 7% of sales were in April and 9. 4% of sales were in May. This information is telling in that it shows that the months that the ales promotion ran in there is no reason to expect higher than average sales.This is important because, if Ms. Brown is correct in that sales were good deal 24% during the first few months of 2004, then there is no reason to expect that sales would moldiness(prenominal)er significantly from March to May. The second point in which Ms. Browns numbers differed from that of the consultants was the way in which they calculated the contribution delimitation for each unit of CX1. We found that there was little evidence to hold in either Ms. Browns costing method or the consultants. However, as long as Ms.Brown was correct in her sales projections, the worth promotion would have been profitable even if the consultants were more than accurate in their costing method. By multiplying the positive sales numbers (184987) by the actual contribution margin that the consultants calculated (10. 35), then subtracting the conventionalism sales that Ms. Brown calculated (59871) multiplied by the normal contribution margin according to the consultants (19. 95) we found that there would still be a profit of 720189 dollars. This path that even if the consultants were correct in the cannibalization impact costs and the contribution margin calculations, as long as Ms.Brown was more correct in her sales projections then there would still have been a significant net profit. Therefore due to the fact that we find Ms. Browns projections of the sales for the period to be more consistent with the information provided for us in Exhibits 1 and 2, we too find that she is likely more correc t in saying that the price promotion was profitable for the society. Not merely would the price promotion be profitable regardless of costing method, but the consultants cannibalization impact estimation seems unfounded as there was still a 21% plus in growth of the DX1 product sales from Spring 2003 to Spring 2004.This is merely about 3% down from the growth rate from 2002 to 2003, which lead us to believe that a major cannibalization impact from the sales promotion was improbable. This evaluation of Ms. Browns profitable calculations, the strategic objectives the Ms. Roux outlines for Culinarian and our analysis of the cookware market lead us to believe that a price promotion in 2007 would be a thoroughly endure for Culinarian. As we will discuss below, Ms. Rouxs strategic priorities for the bon ton included not only growing revenue but similarly aintaining the prestigious brand image and increasing its share of the superior cookware market segment.We would argue that r avelning an other price promotion during 2007 would be the first step in achieving all of these strategic objectives. The price promotion run during 2004 was, according to our calculations, profitable and was able to drastically increase sales for that period in the CX1 model. According to Exhibit 4, sales of the CX1 model rosebush 57% from the spring of 2003 to the spring of 2004. This is a huge increase, especially when compared to a 30% increase from spring of 2002 to spring of 2003.According to surveys done afterward the price promotion, 70% of clients who bought the CX1 said that the promotion was important in their sting decision. This information, coupled with the Orion study which concluded that 30% of cookware buyers would be motivated by a price discount to buy cookware, tells us that many cookware consumers are highly interested in price promotions. Though customers are highly interested in the price promotion, to breach understand how the promotion would fit into Cu linarians overall strategic objectives we must look at how the cookware market functions as a whole.The U. S. cookware industry is divided into categories of low-end, mid-level, and premium products based on price, quality, and material. The market is gum olibanum segmented based on several demographic, socioeconomic, and psychographic variables. But primarily the market is segmented based on age, occupation, gender, and most importantly income. commercialize research conducted by Culinarian found that of its own customers 75% were between the ages of 30 and 55, 82% were women, 70% had household incomes over $75,000 annually, and 60% of previous customers considered cooking to be their favorite hobby.Cookware is purchased either in sets of between 5 to 14 pieces or open stock by piece. Consumers in the cookware home almost always make planned purchases according to responses from the Orion Market Research Study. If there were to be an unplanned purchase it would generally be a s ingle piece, opposed to a boxed set, and motivated because of a discount or promotion. According to the survey, in households with income over $75,000 only 30% of respondents were swayed by price discount and a promotional incentive, such as free gift with purchase, only affected the purchasing decisions of 20%.In addition to being planned, sales of cookware are often seasonal because it is frequently purchased as gifts for weddings and holidays. The implications for a push versus buck system in the cookware industry depend on the category of product (low-end, mid-level, or premium) and the brands history and image (how long have they been in the cookware industry and its positioning). The pull strategy should be used when nerve-racking to recruit clean consumers, expand market share, or publicize a promotion.Premium brands often experience more success with the pull strategy than low-end and mid-level brands do, which often requires that they use a combination of the pull and push strategy with consumers and distributors and their approach will change with the growth of the brand. The push strategy is substantial in getting tender channels to stock a clubs products, so if the go withs goal to enter a juvenile distribution channel or to let out its distribution net income the push strategy should be implemented.But Culinarian Cookware and other high-end brands that are very selective in their distribution can use the pull strategy with both consumers and their distribution base. Consumers of the Culinarian brand regarded product performance and lastingness as the most important features in selecting cookware. By creating demand and obedience amongst consumers, retailers will continue to request to sell the product. The corporate objectives suggest that the company has a strong business that tailors itself to the segments that we found above.The first objective is to widen its distribution network, which is always a great way to create new distrib ution channels and to grow for the company. The push strategy would be used to add-on more distribution channels. Right now, Culinarian only has three curiosity stores by widening its distribution they would branch out and increase their customer base. By increasing their customer base, Culinarian could segment their customers more efficiently and overly increase their segment base. The pull strategy would be used for new products and for take a shiting a larger customer base.The second objective is to increase the market share of the premium cookware segment. Le Gourmand their main competitors possesses 4% temporary hookup Robusto has only 3%. Even though, Culinarian already has a 6. 5% of the market, they are behind the mid to low level manufacturers as Star Chef has 18% and Kitchen Select obtains 14%. By increasing the market share Culinarian would increase their revenue and also acquire a stronger brand arouse in the market. This leads to the next objective, every strong bu siness posses a magnanimous image.As a leader in the premium cookware market Culinarian wants to preserve its prestigious image. Its customers are high income and 50% of them favor a brand that they recognize, which means in edict for Culinarian to attract the high-income customers the company must maintain the strong brand and the prestigious image it possesses. Lastly, in order for Culinarian to thrive and be a successful business it must apportion cost and capture a revenue growth of 15% while maintaining the pre-tax earnings of 12%.According to this information about the cookware market, we believe that if Culinarian ran a similar price promotion to the one it ran in 2004 on the CX1, while changing the timing and distribution method, then it would help Culinarian gain greater revenue and market share while not damage their brand image. The CX1 model seems like the best model to run a promotion on because by ravel a promotion on the cheapest and lowest quality line of produc ts, Culinarian would be more likely to gain new consumers while still maintaining its brand image.The CX1 model has a normal retail price of 150 dollars, making it significantly cheaper than any other product line that Culinarian offers. By reducing this price by the same 20% that was offered in 2004, the price drops to 120, which would make it 40% cheaper than the next cheapest model, SX1. We detect that this drop in price is ideal as it was obviously decent to lead to a huge increase in sales in 2004 while still making the product line profitable.Though we would run the promotion on the same product line with the same price reduction, we would change the timing and distribution method of the price promotion. We believe that running the promotion in the fall, from August to October, would be more practiced to the company as it represents a time when normal sales are down after the summer months and forward those of the holidays. If Culinarian ran promotions during this period, it might be able to buoy sales and allow them to gain a stronger hold on the market just before the holiday season.During the 2004 promotion 20% of customers who bought the CX1 model were new to the Culinarian brand. An increase in new customers might be most beneficial before the Holiday season, as according to exhibit 3, 55% of pile surveyed in the Orion Market Research study said that they either bought cookware as a gift or received it as a gift. Exhibit 3 also mentions that 50% of consumers are more likely to buy a brand that they recognize, which shows that increasing brand sensation during the time before the biggest cookware buying season could be fabulously beneficial to boost sales.Another change that we would make to the price promotion is the way in which the promotion was distributed. According to the case, only about half(prenominal) of the retailers passed the full sale on to the customers. This represents a major problem for Culinarian, as they want customers t o receive the full sale to entice more current customers to buy and more new customers to switch brands. Our recommendation would be to enunciate coupons available online by putting coupon codes in their advertisements in magazines and newspapers.In those advertisements they could publicize the price promotion and urge consumers to get coupons online to buy in stores. This would make the retailers pass the full sales discount onto consumers. Not only would this method of delivery allow customers to get the full discount, but it would also increase traffic to the Culinarians site. As of now, only about 5% of sales come from the companys website, which shows a major miss of traffic. By putting the price promotion coupon online, the company could get more web traffic and increase the sales through their site. indeed a well done price promotion could help Culinarian move towards meeting many of its major strategic objectives. Not only would it increase revenue by buoying sales and inc reasing brand awareness before the Holidays, but, through increased sales, it could also help them capture more of the premium cookware market. By running the price promotion infrequently and only on the lowest quality product line, there would be no damage to the brands prestigious image. This price promotion would miss the brand into more consumers consideration set and allow them to expand their brand toward the future.