Problem: Rosser’s problem is not the trade system’s problem. Rosser’s problem is allocating funds for the overall strategy and specific tactics aimed at increasing share and margins within systems that work and in which all his competitors currently play. He’s considering taking a bold step into the nebulous world of category management where the potential profit is surreal, but where the challenges are very real.
Decision: Recommend that Rosser share marketing funds, primarily advertising and special promotion funds, from one product (Reynolds Wrap) to another (Reynolds Crystal Clear Plastic Wrap) in an effort to increase market share and profitability. The proposed shift to 100% MDF places substantial category market share and sales at risk and requires abrupt changes to buying and selling practices from the manufacturer, wholesaler, third-party jobber, retailer, and to a lesser extent, the end consumer.
Evaluation: Evaluating an all MDF program would require the cooperation of the entire supply chain, but measuring the sales to profit to category performance of plastic wrap is inherently simple. Measuring the consumer value is straightforward as well and RMC already has a number of research vehicles for identifying that value.
Justification: Reynolds plastic wrap product has high ratings and customer appeal and, importantly, has much higher margins and significant upside within its market. Strategically, although the plastic wrap holds a sizable share of total market purchases in its category (47%), its penetration within households is quite a bit lower at seven percent. Improving sales for this product does have the potential to cannibalize sales of others in the line, but take would come primarily from competing plastic wraps or from competitor and other RMC products equally.
Tactically, the marketing staff should employ at least two measures. First, marketing should more aggressively use off-invoice discounts and MDF to promote plastic...
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