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Culinarian Cookware Presentation

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by

Shap Malek

on 22 November 2013

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Transcript of Culinarian Cookware Presentation

Culinarian Cookware Case :
Pricing and Promotion Strategy

Background
How to Evalutate the Effectiveness of 2004 Promotion ?
Success of Promotion Factors
Three Research Studies Conducted
Pros of Price Promotion
Culinarian Cookware designs, manufactures, distributes, and markets premium top performance cookware for serious cooks
. Cookware is sold by the piece or in boxed sets that range from 5 to 14 pieces.
They focus on advanced performance technologies for cookware.
In the premium market segment, they are at 6.5% of the total cookware market.
Sales in 2006 were approximately $3.36 billion in revenues.
Sales of CX1 went up only during the promotion period and did not remain high after the promotion.
The discount did make retailers happy as they were able to sell products to customers, but only 30 % of customers who buy cookware shared that price is the most important criterion.
Price discount does dilute the company's image when the company has a desire to compete with superior product offerings.
\
.• Premium producers Le Gourman and Robusto never ran price promotions.
• Star Chef and Kitchen Select ran regular price promotions (mid-level to lower end)
• 2004 price promotion lost $469,489 in contribution.

Cons of Price Promotion
Shaparak Abdul-Malek
Barbara Adkerson
Bob Hunzler

Four Strategic Priorities Established by CEO , Audrey Roux
Widen Culinarian Cookware distribution network.
Increase its market share in the premium cookware segment
Preserve its prestigious image
Continue to capture revenue growth at 15% while still maintaining pretax earnings margin of 12 %.
Donald Janus, VP of Marketing, believes price promotion cheapens a product's image and is unnecessary.
The assessment of the price promotion conducted by the external consultants found a negative impact on Culinarian's profit with a promotion loss of $469, 489 in contribution.
Victoria Brown, Senior Sales Manager, disagrees with the negative outlook on price promotion and believes it to be profitable.
Comparison of Consultants' And Brown's Study of Price Promotion
1 complaint from sales force from trade account is lack of consistent and meaningful price discount event
Increase commitment and support from trade
Boost overall brand awareness
New customers
Encourage current customers to get additional pieces
2004 price promotion was profitable
70% felt price discount was important in purchasing decision and 15% would consider upgrading
2003 – By outside research company- Orion – See Exhibit #3
2004 – questionaires form 1500 customers- warranty cards from over 5 years of customers – product performance and durability were most important features
2005 Telephone survey
Cookwware
Culinarian Cookware is available in:
aluminum
stainless steel
porcelain on iron ( POI)
cast iron
copper ( which is the most expensive and used by top chefs)
Manufacturers of cookware are constantly trying to balance performance, time saving features and asthetics with PRICE.
Market Analysis
Seasonality of Sales
Increase in May and June for wedding gifts & November and December for Christmas gifts
Competitor Analysis
Research Findings
Households with income over $75,000
- Based on Orion’s Market Research
50% owned at least 5 pieces of cookware
24% owned 12 pieces or more
In order of importance, respondents chose:
Quality
Features
Price
Brand
Ease of Use
Shape
Professional looking
Aesthetic Design
Color

Based on Culinarian’s current customers 75% were 30 to 55 years of age, 82% were women, 70% had household incomes over $75,000 and 60% considered cooking to be their number one hobby.
The U.S cookware market experienced attractive growth from 2002 to 2006 when it generated approximately $3.36 billion in revenues.
This was highly fueled by the thriving real estate market and booming economy during this timeframe
U.S. homeownership rate peaked with an all time high of 69.2 percent. - US Census Bureau.
SWOT
QUESTIONS
Distribution
The retail outlets for cookware include kitchen specialty chains, local specialty stores, mass merchandisers, department stores, grocery stores, catalogs, direct TV sales, and online retailers.
Culinarian is very selective in choosing retail outlets to be partners.
Currently, Culinarian products are distributed through three a network of three specialty chains, 75 local specialty stores, and the Bloomingdale and Neiman-Marcus department stores.
Competition
Competitors of Culinarian in the premium end on cookware include Robusto and Le Gourmand.
Other top players in the cookware market include Star Chef and Kitchen Select which concentrate on low level to mid-level cookware.
Culinarian Cookware Lines
Culinarian currently offers four product lines:
The Tyro Collection(CX1)
The Classic Collection(DX1)
The Advanced Chef Collection(SX1)
The Professional Grade Collection(PROX1)
Sales and Profits

Retailers are able to to capture a higher level of profitability with Culinarian products then with the competitor.
Average gross margins are 52% versus 48% with the competitors.
Sales volume consists of 36% from the three upscale specialty chains, 32% from the Bloomingdale’s and Neiman-Marcus chains, 27% from the local specialty stores and only 5% from direct sales off of the company website and through catalogs.
Recommendation One
Culinarian Cookware should consider the creation of a new level of cookware (Med or lower) to offer consumers under a new name/company/brand so that premium image is not hurt.
This multibranding method has been adapted by other companies (I.e. McDonalds, GAP), to introduce different products under different brands.
Then Culinarian Cookware could gain market share in the culinary cookware market. Currently, they lead the premium market, with the introduction of a lower quality brand. Culinarian Cookware could try to gain up 30-40% as the competitor who offers multiple levels of cookware do.
Multibranding idea of creating a new product under a new brand works with Culinarian Cookware marketing strategy
Culinarian Cookware could create a lower quality cookware line that has many features similar to mid/lower level lines of competitors at the price consumers want to pay for their cookware.
With price as one of the top three deciding factors in consumer decision making, a new mid/lower level product line with a new brand name, not to hurt or lower the premium feel of current products, could be exactly what Culinarian Cookware needs to succeed in the future.
Recommendation Two
Recommend for Culinarian to continue price promotion but only limiting it to its low end product lines.
Price promotions for low end products should be offered during seasonal peak sales months rather than in the spring
Strengthen advertising to increase brand awareness with potential advertising of well made commercials on food network and food magazines. No current brand recognition.
They should consider partnering with a celebrity chef spokesperson to aid in brand awareness and sales.
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