I. Consumer Behavior
Culinarian cookware is sold through retailers and directly to consumers. Culinarian has carefully cultivated relationships with its limited retail network, comprised of three upscale kitchen specialty chains, two department store chains, and 75 local specialty stores. Direct-to-consumer sales are made through Culinarian’s website or its catalogs. Because Culinarian relies on a variety of intermediaries to sell its products through retail channels (see Exhibit A for details), it must be careful how any planned promotions will change incentives for those intermediaries. For example, price discounts offered by Culinarian may not be passed on to end users. Thus, although end users ultimately drive sales of Culinarian …show more content…

It seems very likely that the decreased demand we see before and after the promotional periods can be attributed to the cannibalization of full price sales by the discounted units sold during promotions.
Another strong reason why we recommend against price promotions is that no other premium cookware manufacturer engages in these promotions. Part of cultivating a high-end brand image is making sure that products are priced accordingly, and making sure that consumers are able to distinguish between lower-end and premium products. Price can be an important indicator of quality, desirability, and status in this regard. Culinarian is extremely careful about maintaining its premium brand image, and offering regular price promotions along with lower-end producers such as Star Chef and Kitchen Select would likely erode the brand positioning that Culinarian had developed.
However, we have developed two alternative recommendations to price promotions that may help strengthen Culinarian’s distribution network and increase sales. First, we recommend that Culinarian strengthen the point system currently in place to reward retail salespeople with Culinarian cookware. Emphasizing this alternative incentive would help maintain good retailer relationships, and would increase the motivation of salespeople to sell Culinarian. Second, we recommend that Culinarian continue its free gift promotion in slightly