Graves Enterprises Communication Plan Scenario:
Scenario Summary:
Continuing with Graves Enterprises and its floor care products from Week TWO, both business units are doing well. They have been focused on expansion and have developed new users of their products. While the decision to expand is part of the charter of a company, the strategic moves the company makes have implications across the three key functions - finance, marketing, and operations.
With this is mind, you want to focus more efforts now in developing the consumer products area, recognizing that integrated marketing communications (IMC) will be central to its success. Next week, you are expected to share a promotional plan with your CEO in time for the quarterly Board meeting. The CEO is interested in the marketing communications plan, but is most interested in the impact this is expected to make on the business and its profits.
This is the focus of this exercise.
Your Role; As Vice President of Marketing, you ask to meet with your Marketing Director of Consumer Products in order to gather more information. After your meeting, you will need to summarize your findings by creating a written report.
From Joshua in marketing:
As you know, year to date, Graves Consumer Products' sales have appreciated, with a 150% increase in overall business profits across all consumer products. We are most proud of this achievement, but recognize this is only the beginning. Therefore, we propose the following marketing communications plan. At the same time, we seek advice as some ideas require a considerable investment in resources. For example:
We wish to develop a comprehensive television and print advertising campaign. The print advertising will buy space in "Good Housekeeping" and secure the "Good Housekeeping" Seal of Approval. The estimated cost will be $25 million dollars, and this is expected to sell ONE MILLION additional units this year at a gross profit of $2.00 per unit. Although this is a sizable investment, via an aggressive pull strategy, it is expected to secure retail shelf space, while attracting 500,000 new users at a retention rate of 47%.
The next idea is to offer co-operative advertising with a 2X payout if product is displayed on an end cap display. The estimated cost will be $1M, and we expect to sell TWO MILLION additional units this year at a gross profit of $2.00 per unit. Though this is a sizable investment, it will pay for itself in guaranteed sales. Co-op advertising dollars are based on wholesale product purchases. Again, it is expected to secure retail shelf space via this aggressive pull promotion strategy, while attracting 500,000 new users at a retention rate of 47%.
We want to create an on-package instant coupon to promote immediate purchase for the comparison shopper at the point of sale. We will limit the on-packs to every four bottles, thus managing the cost and seeing if there is an impact to this promotion. We will trial and track - As you know, year to date, Graves Consumer Products' sales have appreciated, with a 150% increase in overall business profits across all consumer products. We are most proud of this achievement, but recognize this is only the beginning. Therefore, we propose the following marketing communications plan. At the same time, we seek advice as some ideas require a considerable investment in resources. For example:
We wish to develop a comprehensive television and print advertising campaign. The print advertising will buy space in "Good Housekeeping" and secure the "Good Housekeeping" Seal of Approval. The estimated cost will be $25 million dollars, and this is expected to sell ONE MILLION additional units this year at a gross profit of $2.00 per unit. Although this is a sizable investment, via an aggressive pull strategy, it is expected to secure retail shelf space, while attracting 500,000 new users at a retention rate of 47%.
The next idea is to offer co-operative advertising with a 2X payout if product is displayed on an end cap display. The estimated cost will be $1M, and we expect to sell TWO MILLION additional units this year at a gross profit of $2.00 per unit. Though this is a sizable investment, it will pay for itself in guaranteed sales. Co-op advertising dollars are based on wholesale product purchases. Again, it is expected to secure retail shelf space via this aggressive pull promotion strategy, while attracting 500,000 new users at a retention rate of 47%.
We want to create an on-package instant coupon to promote immediate purchase for the comparison shopper at the point of sale. We will limit the on-packs to every four bottles, thus managing the cost and seeing if there is an impact to this promotion. We will trial and track this promotion in our top ten geographies (MSA's). The estimated cost will be $3M, and it is expected to attract ONE MILLION additional units this year at a gross profit of $2.00 per unit.
We also want to develop a trial size to be used as a co-promotion with new carpet installation of Dupont Premium Carpets.
We will seek the implied endorsement of Dupont to position the product as a premium product and the recommended 'cleaner of choice'. The estimated cost will be $2 million dollars, and it is expected to attract 200,000 additional units this year at a gross profit of $2.00 per unit.
Finally, we want to develop an aggressive public relations campaign that capitalizes on eco-friendly, safe products, while touting our "Good Housekeeping" Seal of Approval. A $200,000 investment will fund such a campaign.
We recommend an integrated marketing communications (IMC) campaign that will incorporate all of these elements, and we seek your approval moving forward."
Rena Morales, Marketing Director: Commercial Products
After the meeting with the Marketing Director of Consumer Products, you received a call from Rena Morales, Marketing Director: Commercial Products:
"In talking with Joshua, I understand that his plan has great potential in the consumer market. However, I have concerns about the impact this will have on our cash cow, the commercial products. Given the recent budget constraints, I am questioning if this is the right investment. I appreciate that consumer products is in keeping with the future direction of the company. However, I am concerned that reducing our promotional efforts in the commercial markets will deeply erode this value business."
You decide to contact Abby Buzwelda, Financial Analyst, requesting an independent review of the impact on both business units, as a whole. Her analysis shows a breakeven for the consumer products at Year TWO if the entire campaign is conducted. The report further shows that there may be media cost savings leveraging the campaigns for both business groups, targeting advertising agency fees, media buying costs, and production expenses. However, it would require both business groups to utilize a single advertising and media buying agency. Currently, they use independent agencies. Discuss the development of an integrated and cost effective marketing communications campaign. Do the following:
1) Given what you read, what questions and concerns do you have for the Marketing Director of Consumer Products?
2) Which of the proposed approaches would you support? Which ones would you not support?
3) As a result of this exercise, what did you personally learn about communication planning and product sales?