Impex Kitchen Appliances is planning its year-end sales promotion. It has two options - a direct response advertising in the Times of India newspaper or a replication of the previous year's promotion of collaborating with distributors and retailers. This case study analyzes the advantages and disadvantages of these two options.
Keyoor Purani; Krishnan Jeesha
Harvard Business Review (W17145-PDF-ENG)
March 07, 2017
Case questions answered:
- Why did Chenengadan choose the kitchen appliance category for the year-end promotion scheme to improve sales of Impex products?
- What break-even volumes would be required to cover the advertising costs of the Reader’s Offer based on the various options (e.g., all Times of India editions versus only the South Indian Times of India editions, Impex delivery versus the Times of India delivery, one insertion versus three insertions)?
- What sales volume can be achieved through the Times of India offer? How would the Times of India offer compare with the March 2014 year-end scheme?
- Should Impex opt for the Reader’s Offer? Why or why not? If Impex decides to opt for the Reader’s Offer, which option should it choose: single insertion or three insertions, Impex delivery or the Times of India delivery, all the Times of India editions, or only South Indian Times of India editions? Should it promote all three products in one ad or promote one product at a time?
- Compare and contrast the thinking patterns of Kodakkadan and Ravindran. How do they differ in their approach to sales performance?
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Impex Kitchen Appliances: Evaluating the "Reader's Offer" Case Answers
This case solution includes an Excel file with calculations.
1. Why did Chenengadan choose the kitchen appliance category for the year-end promotion scheme to improve sales of Impex Kitchen Appliances products?
Fairoos Kodakkadan, Impex Kitchen Appliances management executive, was unsure why year-end consumer promotion schemes to boost its sales in March had been his responsibility every year.
In contrast, his counterparts in the household and entertainment divisions were not assigned this task.
Probable reasons for this were:
- Kodakkadan’s analytical and profit-planning skills, which had often been acknowledged by Chenengadan
- More sales volumes were generated in a fairly consistent manner throughout the year from the kitchen appliance division
- Typical margins were given to retailers and distributors by Impexin, the kitchen appliance segment, which was 40% and 12% of the retail price, respectively. These were higher than the market average, making these products attractive and suitable for a year-end promotion scheme.
2. What break-even volumes would be required to cover the advertising costs of the Reader’s Offer based on the various options (e.g., all Times of India editions versus only the South Indian Times of India editions, Impex Kitchen Appliances delivery versus the Times of India delivery, one insertion versus three insertions)?
Exhibit 5: The TIMES OF INDIA ADVERTISING RATES OFFER TO IMPEX
Exhibit 3: PRODUCTS PROPOSED FOR THE TIMES OF INDIA READER’S OFFER (ONE OF THE FOLLOWING MUST BE CHOSEN)
Breakeven Volumes (All India Edition)
Breakeven Volumes (South India Edition)
3. What sales volume can be achieved through the Times of India offer? How would the Times of India offer compare with the March 2014 year-end scheme?
EXHIBIT 4: SALES RESPONSE FOR THE PREVIOUS TIMES OF INDIA READERS’ OFFER CAMPAIGNS
FORECASTED SALES VOLUME
Sales Volume as per TOI is calculated by using the Regression Equation.
COMPARISON BETWEEN TOI OFFER & 2014 MARCH END SALE
4. Should Impex opt for the Reader’s Offer? Why or why not? If Impex decides to opt for the Reader’s Offer, which option should it choose: single insertion or three insertions, Impex delivery or the Times of India delivery, all the Times of India editions, or only South Indian Times of India editions? Should it promote all three products in one ad or promote one product at a time?
If Impex decides to opt for the Reader’s Offer, which option should it choose: single insertion or three insertions, Impex delivery or the Times of India delivery, all the Times of India editions, or only South Indian Times of India editions?
- Past data suggest at least three ads were required to create the desired impact and response.
- Three insertions will give the advantage of future relationship opportunities open for Impex.
- Impex delivery-
- Fix 10% commission charged by the vendor, whereas ToI was charging between 10% to 20%
- They should go for the South India edition because if they go for all ToI additions, Impex must provide an after-sale service that would be difficult for Impex.
Should it promote all three products in one ad or promote one product at a time?
- By calculating each product’s revenue, we will choose the ceramic combo because it generates the highest revenue among all products.
- An idea behind choosing one product is that we give an idea of how impact ToI advertisement is working in the market and whether it is achieving the assumed/expected target.
5. Compare and contrast the thinking patterns of Kodakkadan and Ravindran. How do they differ in their approach to sales performance?
Additional File:
Excel Spreadsheet. Download here.
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