Question
Topic: Strategy
Flagship Products, Promotions & Commoditisation
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Your NPD team tell you they've developed a best in category product, speed and durability.
It's independently tested and proven it’s the best
It's launched 12 months ago with a money back guarantee on the first 5000, its the best or your money back. 1 claim made.
It has code breaking product packaging and is supplied in a merchandiser. Competitors now following the merchandiser route.
It grows to be your best selling product in category
You have protected yourself that if customers and consumers migrate from your other products in category you will be more profitable.
Combined sales now give you about 5% of the total market with 6 branded competitors and massive own label proliferation.
This Financial year category sales are ahead 20% of budget and continue to grow at 5% per quarter.
The only promotions undertaken have been to secure additional listings (proof of product) with multi pack deals. All have resulted in on going listings. All key distribution has been secured or in the in the process of being secured.
The business overall is behind in its sales budget.
The sales solution to address sales is to promote this product, buy 2 and get a free gift. To support the promotion we now need to remove the high impact merchandiser and supply in a brown box. It is argued the merchandiser is usually thrown away.
This type of promotion is what all other competitors do and the sales argument is we need to do the same. Weight of opinion at senior level is this is a good thing to do. Marketing person in minority of 1 - it could be a bad thing.
Key concerns/considerations
The replacement cycle is approximately every 2 weeks
The basic financial risks for this promotion are minimal - similar profitability
Users tend to be habitual purchasers, they stick with what they know hence getting them to trial is fundamental to the conversion process
Are we just encouraging buy forward with our stockists?
Are we encouraging stock piling with current users?
Are we just getting back on the treadmill of commoditisation having just got out of it?
Are we devaluing what the brand stands for – best in class?
Will the promotion encourage new users as it has been argued?
I am looking for reasoned arguments for doing this promotion or not doing this promotion or an alternative promotion. I believe the objective should be to convert competitor users to our product at a faster rate than currently being achieved so we secure greater underlying demand.
As with all questions there will be more questions. Please avoid the why are you behind in other areas, it would just take too long.