It's a case about Reynolds company..

Essay by usuaggiesUniversity, Master'sB, September 2005

download word file, 5 pages 0.0

Reynolds is considering a transition from off-invoice allowances to Marketing Development Funds (MDF) in order to efficiently implement category management. Category management is an industry-wide initiative designed to improve the effectiveness of marketing dollars through efficient promotion, distribution and shelf replenishment, product assortment and new-product introduction. Off-invoicing offers per case discounts to distributors and remains a standard marketing practice that consumes most of the marketing budget. These discounts are usually never seen by the end-users since retailers pocket the savings. MDF is a more efficient practice for utilizing marketing dollars through manufacturer supportive retail merchandising activities, rather than per case discounts.

Reynolds will undergo some transition internally and externally, but as a result will effectively achieve its category management goal; reduce inventory costs by more than $17 million; increase profits by more than $26 million; improve its value to its end-users and distributors; and revolutionize marketing practices in the food wrapping industry (Appendix A).


Reynolds is one of the most recognized and respected brands in the world, ranking 7th in brand quality perception among 200 consumer products brands (Exhibit 5). This brand awareness also appears in the redemption rates of its coupons, which is 3.7% higher than the industry average. Reynolds' brand image is the key differentiator in this highly commoditized market.

Reynolds Consumer Products Division (CPD) has suffered recent losses in market share because of increased aluminum prices, but Reynolds' strong brand has allowed it to persevere. The right marketing plan will allow it to recover quickly.

Reynolds, as a market leader, can dictate change in the food wrapping market such as category management. Financially, it can afford to be a risk-taker in the consumer products market, because most of its revenue comes from industrial products. Furthermore, Reynolds has built its brand equity...