Reliance Baking Soda: Optimizing Promotional Spending (Brief Case) Harvard Case Solution & Analysis

SWOT Analysis

Strengths

  • Reliance Banking Soda (RBS) has the excellent brand awareness among the customers as well as the brand loyalty.
  • RBS has become market leader in the category of the baking soda with 70% market share.
  • RBS enjoy high distribution penetration ranging from 80% to 90%.
  • Reliance Banking Soda promoted to variety of uses that include household cleanser, laundry aid and deodorizer.
  •  Reliance Banking Soda (RBS) in the industry consider ads the substitute for specialized cleaners, air fresheners and laundry detergents as these products price are higher as compared to RBS.
  • Main weakness of the Reliance Banking Soda (RBS) is the low advertising recall.
  • Reliance Banking Soda (RBS) has no direct control over the way the trade manage its inventory as well as how trade priced its product.
  • Another weakness of the RBS is that it is considered low traffic and boring by the trade.
  • The majority of the products sold during the period of trade promotion.
  • Reliance Banking Soda (RBS) is an old fashioned mainstay product.
  • Cannibalization of the baking soda market by the new and specialized product.
  • RBS has lost 5% of its market share in the last decade.
  • The most important opportunity for the RBS is to create out -of – the -box uses for the product such as cleaning garage equipment.
  • Modification and reintroduction of the Twin pack.
  • Another opportunity is the development for the effective advertising and promotion strategies. As RBS has low advertising recall so it will help the product to reach larger potential customers for multiple use.
  • Threat of substitute products.
  • Increase in competition from the Private label brands as due to the lower pricing of the Private label brands customers are purchasing their product as compare to RBS.
  • Because of the introduction of the self-rising flour and instant cake mixes the importance of the Reliance Banking Soda (RBS) is declining.

Weaknesses

Opportunities

Threats

Problem Statement

The main challenge for Anna Regnante is to identify the ways to optimize promotional spending for the Reliance Banking Soda (RBS). Furthermore, Anna Regnante also needs to develop the budget (Income statement) for the year 2008 that would result in a 10 % increase in the profit over the estimates of 2007.

Alternatives & Evaluation

The alternatives for the Anna Regnante to optimize the promotional spending that increases the growth and profit for the Reliance Baking Soda are given below:

Alternative 1: Product Customization

The first alternative for the Anna Regnante in optimizing the promotional spending is to modify the product specification according to the needs and wants of the customers. This means that Anna Regnante has need to introduce more new and innovative uses of the Reliance Baking Soda (RBS) as it will help to enhance the profitability and growth for the Reliance Baking Soda. Furthermore, by creating out -of – the -box uses for the product, Anna Regnante will be able to generate the desirable results for the Reliance Baking Soda (RBS). Anna Regnante can include several new uses of the RBS such as cleaning garage equipment that may include cleaning batteries, cleaning and deodorizing of cars, cleaning grills and remove oil and grease stains based on customer demand. This also requires Anna Regnante to develop and implement effective advertising and promotional activities for the Reliance Baking Soda (RBS).

Alternative 2: decrease the price of the Reliance Baking Soda (RBS)

The second alternative for Anna Regnante optimize the promotional spending is to reduce the prices of the Reliance Baking Soda (RBS) as the competition in the industry is growing, creating the threat  of reduction in the market share for the Reliance Baking Soda (RBS). Moreover, it will also provide an opportunity to overcome the increasing threats from the private label brand as these private label brands priced 30% below of their baking soda as compared to the RBS. In addition to this, by introducing the low prices, RBS will be able to target different market customer towards buying the product for the multipurpose uses.

Alternative 3: Vertical Integration

The third alternative for Anna Regnante to optimize promotional spending is to introduce vertical integration by opening its own retail store for the product instead of depending upon other retailers. Although, the distribution penetration for the RBS is very high........................

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