Reference no: EM133345157

Topic: Newman's Own Organics: Sales Promotions and Retail Relationships

Jason David had recently been promoted to director of sales promotions for Newman's Own Organics. He was excited to find ways to expand product offerings into a wider variety of retail stores. His assignment was to fine-tune both the consumer and trade promotions that would be offered in various markets.

Newman's Own Organics is a spin-off from the original Newman's Own company. In the 1980s, celebrity actor Paul Newman and his friend, writer A. E. Hotchner decided to concoct a batch of salad dressing to be given to their friends for the Christmas holiday season. The dressing became so popular that the two created the Newman's Own company to sell the item. The two agreed that proceeds and profits would be given to charity.

Newman's Own sold over 10,000 bottles of the salad dressing in its first 2 weeks on the market. In the first year, Newman's Own made a profit. The company slowly expanded to a wider variety of salad dressings and then to salsa, marinara, steak sauce, pizza, and even wine.

Among the more famous charities supported by Newman's Own is the Hole in the Wall Camps, which brings together children with serious and terminal illnesses for a free summer camp experience. The Newman's Own Foundation had given over $250 million to various charities prior to Paul Newman's death. The figure now approaches $300 million.

Newman's Own Organics was founded by Nell Newman, Paul's daughter, in 1993. She became the sole proprietor in 2001. The product line for Newman's Own Organics includes pretzels, chocolate bars, Fig Newmans, Champion Chip Cookies, Chocolate Cups, Newman O's, Pop's Corn, Alphabet Cookies, coffee, dried fruit, olive oil and balsamic vinegar, pet food, mints, tea, and soy crisps.

The company's products are certified to be genuinely organic by Oregon Tilth. This means that the ingredients are grown on farms that have not used artificial fertilizers or pesticides for 3 years or more. The farms and processors have been certified by an independent third party. Kosher certification is made by the Union of Orthodox Jewish Congregations.

Newman's Own Organics is described as the "second generation." The company is for a profit, with a royalty paid to the Newman Foundation based on sales and profits. In this way, the organization is able to capitalize on the popularity of Paul Newman, the strong relationship to charitable giving, and the niche market of organic foods.

Jason's responsibility was to find and develop retail outlets for Newman's Own Organics products. Large retailers that sell food products, such as Target and Wal-Mart, constitute one major marketplace. Small grocery stores that are more upscale and feature organic foods are a second. Third would be any specialty stores that offer organic products.

Prospects might be developed by identifying the stores that carry Newman's Own products. Further, the Internet offers the potential to sell products directly to consumers without a retail store but also to direct consumers to stores that carry the items. The Newman's Own Organics website could promote various types of promotions for the products and various charities, including the Hole in the Wall Camps.

Jason knew that he had the advantage of a strong brand, plus connections to the original company that would give him inroads into meeting with prospective retail customers. He also knew that it would take more than a name to persuade retailers to make room on the shelves for the products. Beyond simple placement, the ultimate goal was to develop bonds and relationships that would lead retailers to feature the products in advertisements and promotions over time.

Discuss the following questions about the case. Separate each of your answers by using a heading based on the question.

1. What types of consumer promotions would be best suited to end-users of Newman's Own Organics products? Why would they work?

2. What types of trade promotions should Jason offer to retailers? Why would it work?

3. Would you expect Newman's Own Organics products to sell at a higher price than competitors', match competitor prices, or compete by lowering prices in various ways, including using sales promotions? Explain your reasoning.