Marketing-L&N

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Feb 20, 2024

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Marketing: Case summary VP of comms and marketing at L&N needs to make a recommendation about L&N's 2020 promotional spending. Land & Nature Jerky has forecasted the operating profit for 2020 to be 5.2% of sales, which is much less than the 7% target for the company. L&N's CEO, Tim Ryan, wants her to calculate different scenarios using historical data to determine which option to recommend. Specifically, Ryan wants Ayers to recommend one of the three options: 1. reduce the promotion budget by 30%, or 2. increase spending on consumer promotions by $200,000, or 3. increase spending on trade promotions by $200,000. Ryan's goal is to achieve an operating profit of at least 7% of L&N's sales in 2020. To make a recommendation, Ayers must first evaluate the effectiveness of past consumer and trade promotions and then determine how to allocate promotional spending to achieve Ryan's operating profit goal. Strengths: - Great brand awareness- one of the top 5 brands among all-natural artisan jerky and meat snacks - Differentiating fact is their focus on sustainability and eco friendly products. Only brand to have AGW (a greener world) certification. - Unlike competitors managed its own production facilities, help to lower production costs and improve quality - Great relationship with distributor KB holdings, did their distribution for 10% (industry standards were 15% to 30%) Weakness: In 2017 Land and Nature made some decisions to increase their revenue including reducing package sizes, selling in resealable pouches, and offering fewer discounts on strips. These decisions were not based on any data according to the case study. Because of this they have one of the highest price-per-ounce MSRP, making them less competitive. Another weakness is that they do not have control on how their partners manage inventory or stock products, even though they have fewer out-of-stock problems and higher inventory turn-over rates - In 2017 they made some decisions to increase their revenue including reducing package sizes, selling in resealable pouches, and offering fewer discounts on strips. Because of this they have one of the highest price-per-ounce MSRP (manufacture suggested retail price), making them less competitive. - Another weakness is that they do not have control on how their partners manage inventory or stock products, even though they have fewer out-of-stock problems and higher inventory turn-over rates Opportunities: - In 2020 they finished negotiations with a company to outsource a portion of their paid and owned media that would deliver marketing content using marketing automation, AI, and machine learning. This would be a huge opportunity for the company to utilize new technologies and would also reduce their media budget by $200,000. - They also have opportunities to market through social media campaigns. One contest they invested in allowed participants to earn money that would be donated to a sustainable non profit organization. These promotions and opportunities would generate revenue for the company. - According to analysts, beef jerky revenue will decline in the future. To gain a competitive advantage and increase sales, they could focus on expanding their product lines to include Threats - The biggest threat to Land and Nature is their competition based on price quality, channel relationships, and innovation differentiation. - Other meat snack companies have more product lines. For example, their competitor EPIC sells 4 flavors of traditional jerky, 6 flavors of meat steaks, and 12 flavors of meat bars with 9 different meats. Land and Nature only sells two lines with four flavors. - The majority of consumers are also price sensitive. Land and Nature offered competitive pricing similar to other brands, but other companies had more products.

more innovative flavors and using healthier ingredients. Business model: - L&N positions itself as an artisanal heritage brand that produces high-quality, all-natural jerky. - Emphasis on better-for-you ingredients, sustainability, and eco-friendly practices. - Certification from AGW (A Greener World) for Certified Grassfed, Certified Non–GMO, and Animal Welfare Approved products. - Targeted towards health-conscious consumers, including those who prioritize natural ingredients, sustainability, and specific dietary preferences (e.g., paleo, keto) - Presence in supermarkets, convenience stores, and independent grocers. - Main revenue sources include sales of traditional beef jerky and meat strips. - Processing traditional meats (beef, turkey, and pork) in-house What is consumer promotions? - Consumer promotions are targeted directly towards the consumers of the product. It is used to encourage and influence buying of the product amongst consumers. It is designed to attract, engage, and retain customers. This is usually offered in the form of discounts, coupons, loyalty programs, contests, free samples. What is trade promotions? - Trade promotions are targeted towards members of the distribution channel this includes wholesalers and retailers. In this you provide incentive to your channel partners to promote and sell your manufactured products - Examples of trade promotions include: - Offering discounts to retailers for purchasing larger quantities of the product. Providing funds for retailers to run local advertising campaigns. - Offering temporary price reductions for retailers during a promotional period. - Coordinating joint promotions with retailers to boost sales. - Providing display racks or other merchandising support for retailers. What is return on marketing investment (ROMI)? - ROMI= (Net Profit from Marketing / Marketing costs ) ×100 - ROMI is the amount of profit that you can directly attribute to your marketing, while considering the cost of that marketing, It’s the type of metric that tells you [about] the return on your investment, but ROMI is unique in that it focuses solely on marketing investments rather than sweeping investments. What is incremental revenue to cost? - Incremental Revenue-to-Cost Ratio = Incremental Revenue / cost of investment - This ratio specifically measures the relationship between incremental revenue generated and the cost of a particular initiative or investment. - Example: Incremental Revenue-to-Cost Ratio = 200,000 / 500,000 = 2.5 - This means that for every dollar invested in the campaign, the company is generating $2.50 in incremental revenue. Land & Nature Jerky has forecasted the operating

profit for 2020 to be 5.2% of sales, which is much less than the 7% target for the company. Land & Nature Jerky has forecasted the operating profit for 2020 to be 5.2% of sales, which is much less than the 7% target for the company. Land & Nature Jerky has forecasted the operating profit for 2020 to be 5.2% of sales, which is

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much less than the 7% target for the company Using the spreadsheet provided on Canvas Learn Download Canvas Learn, analyze the effectiveness of L&N’s consumer and trade promotions in 2018 and 2019. What is the incremental revenue-to-cost? What is the return on marketing investment (ROMI)? - In both 2018 and 2019, the incremental revenue to cost was higher from trade promotions (4.65) than consumer promotions (3.64). Indicating the company is generating more revenue from trade promotions. Marketing strategy in 2018 and 2019: - In 2019 goal was to to build preference for the products and likelihood of purchase. Their main target was their existing customers, but also targeted customers who expressed interest in jerky and meat snacks online - Their paid media included social media ads, search ads, and image rich display ads. They had mobile friendly website, and media content that shared info about sustainability as well as funny animal pictures - Outsourced a portion of their paid and owned media - Consumer promotions : used pull marketing communications. Used digital coupons, instant saving stickers, social media contests. Offered consumer promotions during even months - Trade promotions : used pushed marketing. Included discount of invoice prices, free cases with minimum orders, shelf talkers. Offered trade promotions during odd months Evaluate Ryan’s proposed options. Which do you believe Ayers should recommend? - Answer : - After careful consideration of the three options proposed by CEO Tim Ryan, I recommend increasing L&N's consumer promotions by $200,000. - Consumer promotions have a direct impact on sales, which will ultimately contribute to achieving our 2020 Operating Profit goal. With increasing competition in the market, we need to invest in strategies that will attract and retain customers, and consumer promotions have proven to be effective in achieving this. - Explanation: - Kathy Ayers, VP of Marketing and Communications, recommends increasing L&N's consumer promotions by $200,000 to reach the 2020 Operating Profit goal of $544,000. - Step 2 - Reducing L&N's total promotion budget by 30% would lead to a significant reduction in marketing efforts, which could result in a decrease in sales and market share. On the other hand, increasing L&N's trade promotions by $200,000 may not have a direct impact on sales as it primarily targets the trade customers, rather than the end consumers. - Furthermore, by increasing consumer promotions, we can also create brand awareness and loyalty, which will benefit L&N in the long run. It will also help us to differentiate ourselves from our competitors, which is essential for sustainable growth. - In conclusion, increasing L&N's consumer promotions by $200,000 is the best plan, strategically and financially, for the company to reach our 2020 Operating Profit goal. It will have a direct impact on sales, create brand awareness and loyalty, and differentiate us from our competitors. - Explanation: - This option has a direct impact on sales, creates brand awareness and loyalty, and differentiates the company from its competitors.

Marketing-L&N

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