Resource Allocation

Giant Consumer Food s- Resource Allocation

Presentation

Frozen food division (FFD) is the key contributor to Giant Consumer Product's (GCP) profits which have successfully grown over the past 30 years. The company has two main products lines, a range of Italian frozen dinners called “ DinardoTM”, and a selection of organic frozen foods “Natural mealsTM ”. However, recently FFD has encountered a shortfall in sales volume and gross revenues. Now, Allan Capps the CEO of GCP is hesitant about running a trade sales promotion with retailers. If, having examined all of the options, he decides to proceed, which brand should the marketing funds be allocated to?

Extract

Capps has gathered his team in order to decide whether to go for a national sales promotion or not. Believing that this approach could cheapen the brand, he has outlined several concerns:

1. Cannibalization: is a phenomenon that results when a firm develops a new product or service that steals business or market share from one or more of its existing products. Thus one product may take sales from another offering in a product line.

It is the decreased demand for an existing product that occurs when its vendor releases a new and similar product. Thus, resulting in the reduction in the sales volume revenue or market share of one product as a result of the introduction of a new product by the same producer. ex: if Coca Cola wants to introduce a similar product (ex: Diet coke) this new product takes some of the sales share of the original coke