Reliance Baking Soda Case Study
_IN T E R O F F IC E M E M O R A N D UM
TO: DR. MICHAEL PREIS – VICE PRESIDENT OF HUTCH CORPORATIONS
FROM: MAXIMILIAN PAHN – SENIOR CONSULTANT
SUBJECT: EXECUTIVE SUMMARY
DATE: 02/10/2013
Executive Summary:
1) Since Hutch Corporations is targeting the lower-middle, middle-income range and no specific ethnic group, the two possible locations Dalton and Hinesville seem to be the good match for a new store according to Exhibit 2. Hutch´s target market of women between the ages 18 and 40 years, fits very good to the data that is given about these two cities. As you can see the biggest shares of inhabitants is from the age of 21 to 44. Even the relatively low percentage of women, living in these cities does not diminish this because the area is still growing. Population is expected to rise in the next years, which goes accordingly with a higher number of women in this area. Due to the fact that the majority does not go to college, so has no high school diploma, or has only finished high school, the income range will remain in the lower-middle range, which means that Hutch targets the biggest segment of potential customers.
2)
Our primary objective moving forward involves increasing the profit by 10% before SG&A, overhead and taxes by either a) reallocate budgets for promotion and advertisement, b) change trade promotion strategy, or c) increase the price of our product.
a) Since baking soda is not a natural traffic builder it needs push marketing to stimulate trade interest. To keep RBS on top of the customers mind, the advertising strategy should continue to emphasize out-of-the-box uses for the product because new specialized products are appearing on the shelves that can cannibalize the baking soda market. As we can see in exhibit 7, consumer promotion has a high redemption rate, especially for the coupons (4%) and the refund offers (7%). Therefore RBS should concentrate on these types of promotion. Due to a 20-cent cross ruff
TO: DR. MICHAEL PREIS – VICE PRESIDENT OF HUTCH CORPORATIONS
FROM: MAXIMILIAN PAHN – SENIOR CONSULTANT
SUBJECT: EXECUTIVE SUMMARY
DATE: 02/10/2013
Executive Summary:
1) Since Hutch Corporations is targeting the lower-middle, middle-income range and no specific ethnic group, the two possible locations Dalton and Hinesville seem to be the good match for a new store according to Exhibit 2. Hutch´s target market of women between the ages 18 and 40 years, fits very good to the data that is given about these two cities. As you can see the biggest shares of inhabitants is from the age of 21 to 44. Even the relatively low percentage of women, living in these cities does not diminish this because the area is still growing. Population is expected to rise in the next years, which goes accordingly with a higher number of women in this area. Due to the fact that the majority does not go to college, so has no high school diploma, or has only finished high school, the income range will remain in the lower-middle range, which means that Hutch targets the biggest segment of potential customers.
2)
Our primary objective moving forward involves increasing the profit by 10% before SG&A, overhead and taxes by either a) reallocate budgets for promotion and advertisement, b) change trade promotion strategy, or c) increase the price of our product.
a) Since baking soda is not a natural traffic builder it needs push marketing to stimulate trade interest. To keep RBS on top of the customers mind, the advertising strategy should continue to emphasize out-of-the-box uses for the product because new specialized products are appearing on the shelves that can cannibalize the baking soda market. As we can see in exhibit 7, consumer promotion has a high redemption rate, especially for the coupons (4%) and the refund offers (7%). Therefore RBS should concentrate on these types of promotion. Due to a 20-cent cross ruff