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Section II: Statement of the core problems

Regnante's core problem is figuring out what marketing mix to use to increase Reliance Baking Soda's profit by 10% in 2008. One of the main problems with RBS is the current lack of advertising. Regnante's predecessor had cut the consumer promotion budget in half. Advertising is a key component in making sure the brand's product is marketed to its consumers. RBS did not properly advertise the significance for what all baking soda could be used to do, which includes outdoor cleaning, baby care, pet care, and a myriad of other things. RBS had established brand awareness and loyalty with customers; but, they needed to educate the customers and position the brand through advertisements which can give RBS more of a competitive advantage.

Decreasing the amount of money allocated towards advertising was not a wise choice, especially, when the company needed to revamp how baking soda was marketed. The trade promotions were effective in moving the product; however, they accounted for around 73% of total sales. This led to the company only selling around 25% of RBS at regular prices, which could be leaving RBS a lot less profitable. The trade was overbuying during the promotional periods, which caused inconsistencies in regular purchasing patterns of the product.

Another issue was with the cooperative advertising program. Regnante was concerned that RBS was not getting sufficient advertising in exchange for the trade promotions. In fact, she found that "Advertising trade support for RBS is much lower than our branded competitors."(Quelch & Beckham, 2009, p.5) RBS also rarely advertised in retail stores, magazines, or television commercials. If RBS was more diverse with advertising, then, they would be able to capture their target audience in other ways.

Section III: Secondary Problems

Reliance Baking Soda lacked in providing different promotional discounts to grocery stores. By not providing promotional discounts for grocery stores, the store managers did not have a creative way to attract customers into the store to purchase baking soda. Grocery store chains thought that the Reliance Baking Soda needed to market their products better because baking soda was a boring product.

Reliance Baking Soda does not manufacture for private label brands. Therefore, their market share decreased. This lack of going after the private label market has caused the RBS to lose 5% of its market share to private label brands. Reliance Baking Soda was the market leader, so, if they were able to manufacture private labels brands they would have not loss 5% market share; and its overall market share could have increase.

Also, a problem existed with trade promotion events due to the fact that the company did not negotiate or set a price with the trade on what to sale its products for when they were purchased during a trade promotion. By not having set promotional retail prices, the trade was allowed to stock up on inventory at reduced prices. They did not have to extend the savings to the consumer. This ultimately caused a loss in profit for RBS. To make matters worse, these trade promotions often overlapped with consumer promotions. Therefore, it is hard to tell what the actual real incremental profits for the promotions were.

Section IV: Constraints and Limitations

Besides the problems listed in the above sections, Reliance Baking Soda is constrained and limited by the fact that baking soda is in the mature part of its life cycle. When a product reaches maturity, there is no room for traditional growth. The product must discover new uses. RBS is not a "wow" product that can be categorized as a necessity; therefore, it must be aggressive in its advertising in order to stimulate further purchase. The product was old-fashioned and needed some 'refurbishment' to make it attractive to the target market.

The need for RBS nose-dived, following the introduction of self-rising flour and instant cake mixes. Naturally, it would be cheaper for bakeries to move to baking soda and reduce costs. This was a very big setback for RBS, as the market leader and the largest provider of the "miracle compound." Randall Todd, an Account Manager, for several of the major grocery chains, stated that even though the product was physically placed on the store shelves, it was not "visible" to the consumer. It was a very slow moving product, which needed "a lot of push marketing to stimulate trade interest." (Quelch & Beckham, 2009, p.2). Randall further observed that it was "not a natural traffic builder, it does not have high turnover, and it is boring."(Quelch & Beckham, 2009, p.2). RBS needed promotional methods which would turn the tide in their favor. According to Exhibit 3, RBS had "low advertising recall." There was greater need to refocus marketing communication efforts.

Another limitation was the continual price increase for baking soda over the last 5 years. The price changes were not good because it had a negative impact on the numbers of cases that were shipped to the stores. This could lead to stores choosing a competitor's brand or selling more of its private label brand.

The final limitation is that RBS being a mature product is sold on the push system. The household sales force is paid based on quarterly sales quotas. This allows the sales staff to wait on trade promotions to sell the product. Therefore, they are not concerned with the day to day sales of RBS.

Section V: Alternative Solutions

Reliance Baking Soda must increase profit in its household division by 10% in 2008. In deciding how to do this, Regnante must decide what to do about the trade promotions, consumer promotions and advertising. Since baking soda is a mature product, a push system has been implemented at RBS using a quarterly quota system. In order to deal with the problem of 73% of factory shipments being sold using trade promotions, a new monthly quota system could be placed in service. This would make the sales force focus on selling baking soda all throughout the year, not just when promotions