Marketing Promotions and Annie’s Organic Pizzas

What are marketing promotions used for? Getting people who are consumers to take action. We know that people respond to incentives. This is macro economics 101. However promotions in marketing help motivate our audience through an incentive for a given period of time. These are usually and mostly time bound unless these are promotions done to support brand building promotions. Advertising on the other hand is another marketing tool that gives consumers a reason to buy the product. Promotions give the consumer a reason to buy the product or service immediately now or within or until a specific time frame in future. Images drive association with a certain belief in advertising. Promotions would be give aways or sampling that would entice and invite the consumer to try the product. Promotions help add value, generate growth and elevate brand. Promotions can be divided into equity promotion and price promotion.

A framework for promotions is CTRL. Another simple framework for determining what promotion should be is the Right Incentive, Right Consumer, Right Vehicle and at Right Time. The most popular method of consumer promotions is the coupon method. However the disadvantage of this method is that the promotions need to acheive a certain number of return coupons to acheive profitability. Let’s say thes number of coupons were “x”. Anything more than “x” or less than this “x” would cause a decrease in profitability. This causes the coupon promotions to be fine tuned and tricky. Other kinds of promotions are FSIs, Direct Mailer rebates, Catalina whic are basically register coupons and Price Promotions on Packaging. Promotions can be of two types. Trade promotion (offering shelf space and incentives to retailers, which is more of a B2B promotion) and consumer promotion (which is a direct benefit to the end consumer).

I looked at a particular scenario where Annie’s wanted to launch frozen pizza. The case was complicated because Annie’s was traditionally a brand that had built associations with its core group of consumers who were health conscious mothers who were stay at home who wanted to keep the family away from “bad food”. Mac and Cheese was a product that had grown the brand from a household to a leader in the category. However there was a new group of customers to whom the frozen pizza would appeal to. The Prime Prospects group of customers are working moms and will thus tend to be more influential in their word of mouth. These customers are also high spending and look for convenience and the idea of health along with convenience will appeal to these new customers. As we address this new segment the existing segment of our core customers would be willing to come along because they are willing to pay a premium price for good product that focuses on health. Annie’s should try to educate the customer about how convenient can be organic and healthy at the same time. In the past frozen pizza has generally meant “bad food” but Annies stepping into this category can change the reputation of frozen pizza.

Convenience of meals does not mean the consumer needs to sacrifice health and nutrition. Using this message Annie’s should be successful playing in this category of a new product. Something the company will need to focus on will be that they will now need to focus more on the mothers and less on promotions that are kid-driven. The group of customers called prime prospects are less focused about decisions around kids. Focusing further on the nutritional value and sourcing of components for which Annie’s is popular will help differentiate in a category which in general is lacking in traditional packaged food. Further at the time of the case a +7.5% growth in private label indicates that the consumers are brand agnostic and more focused on getting products quickly and cheaply. Again these views are preliminary and I will add to these views more later.

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