Catalina Marketing Corporation

SUBMITTED BY GROUP: SUBBA REDDY SHREYANSH BATIA E005 VENKATESH G SANDHYA PATIL E042 NIKITA SINGLA E055 RICKY SUNDRANI E056

Q1. How cost effective for manufacturers is Catalinas 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 Catalinas coupon system relative to FSIs

Avg Coupon redemption rates taken from Exhibit 2

Advantages to manufacturers when using this system

Information Captured
Catalina System generated detailed information through reports As compared to FSIs 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.

Cost Effective

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

Targeted

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

High Redemption Rates

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.

Continued
Lesser media cost for the manufacturer Were 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 timeliness Avoids 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 orders Broader 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
Effective promotion
Greater flexibility Reduced wastage as coupons are printed when needed Higher redemption rates Sharing consumer purchasing information with manufacturer No category overlap Brand switching can be induced Increased footfall 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

Product turnover increases

Customer loyalty enhanced Efficient management Fillip to private labels

Ease of use (automated) as tied to main billing system Low clutter and ease of display and management Information captured can be used for further analysis and planning Cooperative advertising

Q3.What Should Catalina do next?

Options Available
Expanding the Cycle or Product Capacity:
Opportunities: Current network is running at 12% capacity room for growth Challenges: 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 world Challenges : Most of Major super markets are covered under existing Network Technological and operational Challenges

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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 Business

Advantages: 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 Challenges

Advantages: Tackling challenges helps in removing bottlenecks for expansion

Phase-3:
Expand into National and Overseas markets Improve Cycle/ product capacity of the existing Network

Advantages: Full Scale expansion resulting in strong growth for Firm