Eric Garcia-Medel
Student Number: 1807
Reliance Baking Soda Case Study
Marketing Planning
1.
What are the strengths and weaknesses of the RBS brand? How have promotion
strategies impacted sales volumes?
The RBS brand has many strengths which allow it to remain very competitive in its
product
category. Firstly, it is a market leader in the baking soda category with 70% of the market
share. In
addition, it has very high distribution penetration, wtih at least 80% penetration in many of
its
distribution outlets.
In addition to its market size and penetration, RBS enjoys a great collaboration with many
many
retailers, such as grocery stores, mass merchandisers, warehouse clubs and drug stores. In
addition,
RBS has strong collaborations with its raw material suppliers.
It can compete with products outside the baking soda category, such as surface cleaners
and air
fresheners. This widens its market reach and makes it a competitive substitute for products
that may
be more expensive. RBS also has excellent brand awareness.
One of the greatest weaknesses of RBS is that it does not have any viable substitutes or
alternatives,
making it very vulnerable to product cannibalization from new and specialized products.
Also, it is
30% more expensive than its main competitors- private label brands. It’s heavy
users/primary
consumers are a very specific and small demographic group: 35-55 year old women. It was
also
said that RBS has a low advertising recall.
It has no direct control over how the trade manages inventory or prices the product.
When analyzing the RBS brand income statements between 2005-2008, you can see that
gross sales
increased to $54,125 in 2006 from just $42,400 in 2005 (all monetary values mentioned
are $000s).
However, in 2007, sales growth declines and was just $55,051. Accordingly, total
shipments (in
cases of 8oz, 1 and lb boxes) from 2005 to 2006 increased from 2,320 to 2,875, whereas it
decreased to 2,588 in 2007. I believe that the increase between 2005 and 2006 can be
attributed to
the more aggressive promotion strategy during this time frame. In particular, in 2005, there
were 3
different consumer promotions, while in 2006, there were 4, one of which included an
advertisement.
Between 2006 and 2007, the consumer promotion budget was cut in half (from $1,080 to
$551),
whereas the trade promotion budget remained pretty much the same. In contrast, it was
more than
doubled between 2005 and 2006 from $424 to $1080. During this time period, gross sales
