Catalina Marketing Corporation: Developing a Retailer Value Proposition

This case tracks the relationship between Catalina, a provider of customized coupons for consumer packaged goods manufacturers, and the Meijer Stores supermarket chain. An optional instructor-only multimedia product is available featuring top company executives talking about the co-creation of this new product with a major customer. Class discussion centers on the challenges of executing a co-creation initiative in business-to-business settings. Suitable for both MBA and executive learners, it prompts students to identify the criteria for selecting a co-creation partner and debate the best team structure for co-creating products. Should Catalina co-create the cardless loyalty program with Meijer? Who would bear the expenses of developing this new service? Catalina's CEO must retain Meijer as a member of its network of retailers that print customized coupons at checkout. Meijer's departure could prompt other retailers to follow, thereby affecting Catalina's value proposition to CPG manufacturers. One option is to help Meijer develop a cardless loyalty program. But Catalina has no prior experience with that type of program. Still, its customized-coupon skills are potentially portable to a cardless loyalty program. Excerpt UVA-M-0764 Catalina Marketing Corporation: Developing A Retailer Value Proposition In February 2005, Dick Buell, chief executive officer (CEO) of Catalina Marketing Corporation (Catalina), a marketing services company, walked to the VIP guestroom at his headquarters in St. Petersburg, Florida. He was about to meet with Jeff Handler and Michael Ross, marketing executives from Meijer, a retail chain based in Grand Rapids, Michigan, and one of Catalina's key business partners. Meijer, which was one of Catalina's top-five retail partners, had indicated displeasure with Catalina's value proposition and was considering ending its long relationship with Catalina. Buell, who had joined Catalina fewer than 10 months earlier, knew this meeting could prove to be a defining moment in his tenure as chief executive. Catalina Marketing History To the five friends sailing off of Catalina Island, California, in 1983, the problem was clear. There was no effective method of targeting the correct subset of customers using traditional coupons. Manufacturers ended up either subsidizing people who had previously bought the product, or not offering enough to generate a trial. Furthermore, there was a no way of providing any program feedback in a timely manner. It was anyone's guess who actually redeemed the coupons. . . .