Hellmann's Case Study: Selling Price And Sales Volumes

Selling price and Sales volumes

Our strategy is to drive sales through penetration marketing, using competitive pricing. Gourmet Selects will do this by utilizing Hellmann’s brand equity and offering an all natural product, in which we will command a higher price. Our competitors in the spreads category, with the same target demographic, average a selling price of $8 for a 4-6oz jar. They are smaller niche brands that do not have the brand recognition and supply chain as Hellmann’s. We feel that we have a competitive advantage and will be able to price our products at a lower price. Based on our current manufacturing operations and variable cost, we predict that we can price Gourmet Selects for roughly $5.99 for a 9 ounce jar. This will place

With high sales volumes through units sold, we will steal market share from our competitors. Our target consumer will be Millennials age 25-34, who primarily live in urban areas with an annual income of $55k per year. There are currently 273 million people living in urban areas in the United States. Of this population, 90 million have an income of $55,000 per year, but only 41 million are between our target age of 25-34. Based on our survey, 46% of the respondents are the acceptors of our concept, reducing our available market for 18.9 million. With 40% retail distribution, we have a total available market of 7.5 million. First year trial is 30%, further reducing our available consumers to 2.3 million. With a frequency rate of 3, we expect to sell 6.8 million units at $4.19 a jar, for a total first year sales revenue of $28.6 million. This represents 1.4% of the mayonnaise category and 43% of Hellmann’s sales. Based on projected category growth, we anticipate sales to follow this trend and increase 5% year over year (yoy) through

In recent years we have seen a resurgence of the “Mason Jar.” According to the New York Times, Jarden Home Brands a major manufacturer of Mason Jars has doubled its sales since 2001; the drive behind the craze are Millennials. Millennials tend to go for products that are in glass jars and locally grown/crafted. Consumers looking for better quality all-natural products tend to go for glass jars; because it maintains the quality, flavor, and purity of the food. Last but not least the glass jar also fits Unilever’s sustainability goals. Over all glass is stronger, reusable and easier to recycle versus plastic. However using recycled glass is more expensive than regular glass, making the cost .30 cents per unit. Gourmet selects hopes to work with local governments on ways to drive down the cost of glass recycling programs. The cost of producing our packaging label is .02 cents per unit. Our distribution cost is 7% of our sales, making the total cost $.02 cents per unit. Our total packaging cost is $0.34 cents per unit. Direct labor and overhead is 30% of what the cost of our raw materials are, which are approximately $0.30 per