Culinarian Cookware: Pondering Price Promotion
Case Analysis
Culinarian Cookware: Pondering Price Promotion
Situation Summary
As a market leading brand primarily focusing in designing, manufacturing, distributing and marketing premium cookware, Culinarian Cookware takes pride in its outstanding product quality, advanced performance technology and the strong dealership with retail stores established throughout the years, which Donald Janus, the VP of Marketing believes makes Culinarian stands strong in its competitive industry. In regardless of Culinarian’s usual practice of avoiding price discounting, an official price promotion program was launched in 2004, which was later concluded by a consultant firm that these promotions had a negative impact on profits. There are different views toward the price promotion strategies and the corresponding report in the senior management: Janus felt price promotions were unnecessary, potentially damaging to the brand image, and possibly encouraged retailer hoarding; Brown believed the promotions strengthened trade support, improved brand awareness, and stimulated sales from both new and existing customers. While Janus trusted the report results, Brown believed the study assumptions were flawed and required further analysis, suspected the promotions had actually produced positive results. In November of 2006, debates among the senior management team had been going on regarding the pros and cons of price promotions for the company's premium cookware products. A decision is needed to be made in terms of how price promotion can be utilized in Culinarian’s marketing strategy.
Key Issue
The urgent and key question is whether to run a price promotion in 2007 and, if so, to determine what merchandise to promote and on what terms. The broader issue is what strategy Culinarian should pursue to achieve its sales growth objective, and what role, if any, price promotion should play.
Clearly there are attractive advantages and draw-backs with significant consequences for a price
Culinarian Cookware: Pondering Price Promotion
Situation Summary
As a market leading brand primarily focusing in designing, manufacturing, distributing and marketing premium cookware, Culinarian Cookware takes pride in its outstanding product quality, advanced performance technology and the strong dealership with retail stores established throughout the years, which Donald Janus, the VP of Marketing believes makes Culinarian stands strong in its competitive industry. In regardless of Culinarian’s usual practice of avoiding price discounting, an official price promotion program was launched in 2004, which was later concluded by a consultant firm that these promotions had a negative impact on profits. There are different views toward the price promotion strategies and the corresponding report in the senior management: Janus felt price promotions were unnecessary, potentially damaging to the brand image, and possibly encouraged retailer hoarding; Brown believed the promotions strengthened trade support, improved brand awareness, and stimulated sales from both new and existing customers. While Janus trusted the report results, Brown believed the study assumptions were flawed and required further analysis, suspected the promotions had actually produced positive results. In November of 2006, debates among the senior management team had been going on regarding the pros and cons of price promotions for the company's premium cookware products. A decision is needed to be made in terms of how price promotion can be utilized in Culinarian’s marketing strategy.
Key Issue
The urgent and key question is whether to run a price promotion in 2007 and, if so, to determine what merchandise to promote and on what terms. The broader issue is what strategy Culinarian should pursue to achieve its sales growth objective, and what role, if any, price promotion should play.
Clearly there are attractive advantages and draw-backs with significant consequences for a price