SUBMITTED BYGROUP:

SUBBA REDDY SHREYANSH BATIA E005

VENKATESH GSANDHYA PATIL E042NIKITA SINGLA E055

RICKY SUNDRANI E056

Catalina Marketing Corporation

Q1. How cost effective for manufacturers is Catalina’s coupon system relative to FSIs? (Table B provides a good start.) What are other advantages to manufacturers of this system?

Sample FSI coupons

Cost effectiveness for manufacturers due to Catalina’s coupon system relative to FSIs

Avg Coupon redemption rates taken from Exhibit 2

Advantages to manufacturers when using this system• Catalina System generated detailed information

through reports • As compared to FSI’s where information was available

only 3-6 months after the program ended, Catalina system enabled providing information within a few weeks

• It generated detailed information about the usage of coupons including supermarket.

Information Captured

•Coupons printed only as needed•Hand delivered to the customer•Eg: Shopping List product of Catalina generated sales equal to those by FSI’s at one third the cost

Cost Effective

•It helped target the promotion to the correct customer directly and on the basis of the intended purchasing behavior

Targeted

•Catalina coupons had high redemption rates of nearly 11.2% whereas the redemption rates for other coupons were close to 3-4%•It increased sales volumes for the manufacturer.

High Redemption

Rates

Continued

Lesser media cost for the manufacturerWere exclusive to a category unlike the FSIs where

the same category coupons were printed in the same newspaper.

Increased trials and brand switching which was the main aim of the manufacturers

Fast, cheap and cost effective for the manufacturers as well as hassle free for the retailers

Easy for the customer and could be targetted at the right time according to the usage pattern of the consumer when the consumer was likely to make the next purchase.

Q2. Are retailers and consumers better off with this system?

CUSTOMERS

Coupons score well on relevance and timelinessAvoids clutter as not bombarded with multiple offers Instant gratification incase of Quick Cash, Shopping List

(incentives for volume customers), etc.Personalized attention and customization to customers

on the basis of past ordersBroader consideration owing to discounts and samples

WHAT ELSE CAN BE DONE?

Redemption should be made easier; system should obviate the need for the customer to store the coupon for redemption at a later stage

RETAILERS

• Greater flexibility • Reduced wastage as coupons are printed when

needed • Higher redemption rates • Sharing consumer purchasing information with

manufacturer

Effective promotion

• No category overlap• Brand switching can be induced• Increased footfall

Product turnover increases

• Customer data is managed and promotions are tailor made

• Increased retention as coupons are given at the end of the purchase

• Loyalty schemes can be redeemed only at the store

Customer loyalty enhanced

• Ease of use (automated) as tied to main billing system

• Low clutter and ease of display and management

Efficient management

• Information captured can be used for further analysis and planning

• Cooperative advertising

Fillip to private labels

Q3.What Should Catalina do next?

Options Available

Expanding the Cycle or Product Capacity:Opportunities: Current network is running at 12% capacity room for growthChallenges: Existing system is not able to cope up with increased capacity

Targeting National and Overseas Markets:Opportunities : About 25% of supermarkets are covered in existing Catalina

Network Opportunities in countries around the worldChallenges : Most of Major super markets are covered under existing Network Technological and operational Challenges

Continued

Additional Marketing Services & Expanding Services to new type of retailers:

Opportunities: Existing setup can be utilized for augmenting services it is providing to its

clients Could expand to other Industries i.e Non-grocery store retailers

CIR Venture:Opportunities: Program was well received by both retailers and manufacturers in Test Phase Significant benefits for both manufacturers and retailers

Expanding Operations into Redemption Area of Coupon Business:Opportunities: Existing infrastructure and Know-How can be utilized and can make easy

transition into Coupon Redemption Process Already present in this in a limited scale

Way Forward

Phase-1: Implement additional marketing services to existing customers Expand operations into Redemption of the Coupon BusinessAdvantages: Can leverage on Existing Infrastructure and technology with out much

investment

Phase-2: Implement CIR venture, a program which is having strong prospects Focus on Tackling Technological and Operational ChallengesAdvantages: Tackling challenges helps in removing bottlenecks for expansion

Phase-3: Expand into National and Overseas markets Improve Cycle/ product capacity of the existing NetworkAdvantages: Full Scale expansion resulting in strong growth for Firm