Cookware memo

Business memo

to:	Donald janus
from:	victoria brown
subject:	recommendation for promotion
date:	xx/xx/2006
cc:

Recommendation:

After analyzed the 2004 promotion, I will still highly recommend setting promotion on our products for 2007. And we can set price discount on fast-moving pieces. Meanwhile, we can set buy 500+ for gift on slowest-moving products consistently.

Analyzing the 2004 promotion:

I believe that normal sales we mentioned were too high. Based on sales in March-May 2003, which were totaled 78,778 units. The estimation of sales during the promotion is supposed to be 59,871 units. That is to say, the contribution of promotion to sales is much greater than what we mentioned before. The overhead of manufactory should not be included in variable cost. The calculation of cannibalization is not precise enough and there is not significant evidence that can support to make the calculation reasonable.

Recommendation support:

Based on the analysis of 2004’s promotion, we have significant sales boost, even the retailers cannot handle it. We have reason to believe the volume of sales will surge in the same way. It indicates that people cannot wait to buy our products, especially for the out-performance product lines. It helps drive our brand awareness significantly. And the effect will be compounding. Based on the survey we made, 30% people cares about price the most. We can compete with Star Chef and Kitchen Select to increase our market share.

Once people bought some piece of our products, they will have intention to buy more. Because a lot of people want their cookware to match the décor in kitchen. We care about the life time value of every single customer. The promotion will bring us more.

Risk mitigation:

We notice that there are about 50% retailers not passing along the full discount. In the plan of next year, we need to put the discount on both Ads and package.

To mitigate the sales peak, we can set the promotion on October and April. In this way, the manufactory will feel smoother and our products can be differentiated by customers.

Our advertisement awareness is extremely low. We should re-plan our Ads strategy and increase the promotional Ads in early April and October.

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