Culinarian Cookware: Pondering Price Promotion

1. Culinarian Cookware:Pondering Price Promotion Group 5: Team Case Number One Andrei Grechko Shane Johnston NakiaLape Kyle McDaniel Kevin Niehaus

2. Environment Economic Conditions and Trends Cultural and Social Values and Trends Political and Legal Issues Summary of Environmental Opportunities and Threats Implications for Strategy Development

3. Economic Conditions &Trends • Economic Recession (2008-present) • Slow Economy • Unemployment (>10% in 2009) • Predictions • Growth in Private and Commercial Real Estate Markets (2013) • Prospect of Higher Inflation

4. Cultural and Social Values &Trends • Cooking TV Shows & Celebrity Chefs • Obesity Epidemic (rising healthcare costs) • Home Cooking (healthier food, diet plans) • Environmentally-conscious Consumers

5. Political and Legal Issues • Rules & Regulations on Use of Materials in the Cookware Manufacturing Process • FDA Safety Evaluations of all Materials in Food Contact Applications • EPA • PFOA, fluoropolymer resins) • Non-Stick Coatings • Continued Cooperation

6. Summary of Environmental Opportunities and Threats • Opportunities • Home Cooking Trend • Real Estate Revival • Threats • Growing Unemployment • Inflation • Substitute Products

7. Implications for Strategy Development • Consumers’ reaction in the months/years ahead • Cut back on dining out? (Opportunity to capture more customers) • Further decrease in disposal income? (Customers will be more price cautious; will look for substitutes) • Overall, environmental situation indicates that adjustments to company’s marketing mix are desirable

8. Organization Objectives and Constraints Financial Condition Management Philosophy Organizational Structure Organizational Culture Summary of Strengths and Weaknesses Implications for Strategy Development Target Market Analysis Alterative Selection

9. Four Strategic Priorities in 2006 Objectives • Widen distribution network • Increase market share of the premium cookware segment • Preserve prestigious image • Continue to capture revenue growth of at least 15%, while maintaining pretax earnings of $12.5 million.

10. Most Imperative Goals • Determine if a price promotion is necessary. • Develop the details of a marketing strategy that is consistent with the company’s overall strategic objectives.

11. Constraints • The preservation of brand equity • Perceived negative impacts from the 2004 price promotion • Highly selective distribution channels

12. Financial Condition

13. Financial Condition

14. Management Philosophy Paternalistic Positive: Two-way communication, which motivates workers. Negative: Slows down the decision making process.

15. Organizational Structure Structured by Function Positive: Makes efficient use of specialized resources and makes supervision easier. Negative: Difficult to get quick answers, determine accountability, and may be difficult working with other departments in a unified way to achieve the organization’s goals.

16. Organizational Structure

17. Organizational Culture • Pride. Pride in having unparallel product quality, most advanced performance technology, and strong dealer support. • Built on brand equity. Every decision takes into account the preservation of Culinarian’s prestigious name and image.

18. Culinarian’s Strengths and Weaknesses

19. Potential Resource Strengths and Competitive Capabilities • Clear strategic direction. • Core competencies in quality and performance technology. • Strong brand name image/company reputation. • Stronger dealer relationships than key rivals. • Leader in metallurgy technology. • Proven product innovation capabilities. • Good management philosophy. • Employees are motivated. • A strong financial condition. • A distinct competence in utilizing internal and external consumer research. • Business decisions are highly scrutinize before implemented.

20. Potential Resource Weaknesses and Competitive Deficiencies • Weak advertising and promotion. • Losing market share because of attachment to brand name image. • Flawed data analysis by a third-party consultant. • Limited distribution channels. • Management is cautious to pursue bolder price promotion.

21. Implications for Strategy Development • The preservation of brand equity could prevent Culinarian from considering a price promotion, fearing that it would cheapen the products’ image. • Perceived negative impacts from a price promotion offered in 2004 are heavily influencing the decision; however, in reanalysis it may be found that the promotion was in fact beneficial. • The company is very selective in how merchandise is distributed, which limits the market in which the products are sold. • Weak advertising and promotion policies.

22. Target market • Men and woman between ages 30 to 55, • With a household income of 75k + • The group tends to care more about what the product can do rather than how it looks.   • A large likely hood of watching cooking shows and then purchasing cookware with familiar names of cooking celebrities or brands used by those seen on shows.   • Consumer wants to compare brands and products • Want to have the biggest “bang” for their dollar.

23. Brand Extension Strategic Alternative Selection

24. Brand Extension • Benefits: • Would be able to offer other premium culinary products to complement their cookware • Use the new support products as “gifts” during promotional events • Increase the prestigious brand image • Costs: • Would need to understand: • What materials would be needed • How to produce new products outside their expertise • How to market the items