Geoff Fripp

Jul 202012
 

For this exercise, which is based on a recent media release, you will review Sports Direct (a major UK sports retailer) and the impact of its attractive staff bonus on sales and profitability. But while profits are up, your task is to identify any concerns that they need to manage?

 

ACTIVITY/TASK

SportsDirect.com is a large sporting goods retailer based in the UK. Founded in the late 1970’s, it is now the UK’s largest retailer of sports clothing and accessories. The centerpiece of their marketing strategy is based around aggressive sales promotion tactics, using significant discounting on well-known brands such as Adidas, Nike and Reebok.

In July 2012, Sports Direct released details of a highly effective staff bonus scheme, which was helped the firm generate record profits. The very attractive bonus scheme introduced by Sports Direct is predicted (by the firm) to enable 2,000 of its 18,000 employees to each earn about £15,000 next month and a likely £36,000 next summer. According to Sports Direct chief executive Dave Forsey had been a “game-changer” and motivated staff to work harder.

In addition, its online sales had increased dramatically (by 82%), which prompted them to announce that their physical future would be “bigger but fewer” Sports Direct stores in the UK.

 

QUESTIONS

  1. Explain why a staff bonus scheme is related to marketing.
  2. Do you think that it is a good idea to publicly announce the money value of this scheme to the public? Do you think that some customers would prefer lower prices or perhaps start questioning the motivation of Sports Direct staff when they recommend products to them?
  3. What is the likely impact of 16,000 out of 18,000 employees NOT participating in the bonus? Will these employees become more or less motivated?
  4. Other than the bonus scheme, what other factors need to be present to help motivate staff?

 

Jul 202012
 

In this task, students review the results of a recent online market research survey undertaken by a firm. Given the survey was conducted online and was optional, your task in this exercise is to determine how valid the results are likely to be.

 

ACTIVITY/TASK

For this exercise, let’s assume that a bank wanted to conduct a customer satisfaction survey with its customers. They decided to implement an online survey. To highlight the survey to their customer base, they had messages placed on their website and on their internet banking system. As an incentive to complete the survey, respondents were offered the chance to win one of 10 iPads.

The bank knows, from an analysis of its customer database, that their customers have the following levels of relationships with the bank:

Use the bank daily (heavy user)

25%

Use the bank weekly/monthly (medium user)

25%

Use the bank every few months (light user)

10%

Use the bank one a year (very light user)

20%

Have not used the bank for more than a year (inactive)

20%

 

As you can see, the bank was around 50% of its customers quite engaged with the bank, but the remaining 50% are light or inactive users of the bank. These latter customers are likely to provide a growth opportunity for the bank, if they could be more successfully connected with.

The results of the banks online customer satisfaction survey were:

Very satisfied

75%

Quite satisfied

15%

Somewhat satisfied

5%

Dissatisfied

5%

20% of the bank’s customers participated in the survey

This result highlights that 90% of the respondents are quite or very satisfied. That is fantastic, but doesn’t necessarily make sense when compared to the bank usage data above.

 

QUESTIONS

  1. Given the methods used to communicate the survey and to encourage customers to participate, in terms of customer relationships (that is, light/medium/heavy user), which customers were more likely to participate in the research?
  2. Given your answer in Q1, how accurate is the 90% customer satisfaction score as a reflection of ALL the bank’s customers?
  3. As one of their goals is to grow through increased engagement of inactive/light users, how helpful would the findings of this research be (keep in mind that the questionnaire was broader than just customer satisfaction questions)?
  4. What research method would you suggest to get the view of inactive/light users? Would this be worthwhile anyway? (That is, should the bank pursue them for growth or look to attract new customers instead?
Jul 202012
 

In this video-based mini-case, you will review two in the highly successful Blendtec collection. These YouTube videos are among the most successful viral campaigns; can you identify the reasons for their success?

 

ACTIVITY/TASK

YouTube is one of the most popular internet sites in the world. It has a vast collection of video ranging from entertainment to music to TV commercials to information to corporate promotional material, and so on.

With so much content available, it is perhaps surprising that one of the more successful viral video campaigns is for a company that makes blenders. The Blendtec series of YouTube videos have received around 200 million views across their “Will it Blend?” campaign.

Their videos have the cheesy appeal of a 1960s TV show. Despite this, and despite the subject matter, these videos have proved very popular. Here are just two examples, but there are more on YouTube.

 

QUESTIONS

  1. After reviewing these two videos, outline the reasons why you think that they have proved popular.
  2. While they have had around 200 million views, is their message reaching the right target market? Would these videos be having a significant impact on their blender sales?
  3. What non-YouTube marketing activities would BlendTec need to implement to capitalize on the popularity of their videos?
  4. What are the advantages of a viral campaign over other forms of promotion?
  5. Given this viral campaign success for a blender, what other types of firms/products could consider YouTube as a viable promotional channel?
Jul 202012
 

In this video-based mini-case, you will review the repositioning efforts of Coca-Cola in Australia with their energy drink branded “Mother Energy”. But was this the right choice: should they have moved to introduce a new brand instead?

 

ACTIVITY/TASK

Coca-Cola launched their new Mother Energy brand into the Australian market in 2006. The firm was struggling to compete in the growing and now lucrative energy drink market against the dominant competitors of V and Red Bull. Coke planned that Mother Energy would be able to win a substantial market share, even though it was a late entrant.

The launch campaign was very professional. The TV commercial had similar elements of the Madagascar movie (which was current at the time), Coke leveraged their retailer relationships and achieved a high level of retailer up-take for the new product along with significant in-store promotion.

The product itself was designed to appeal to the youth culture. The packaging of the can resembled a tattoo and the brand name “Mother” was designed to sound tough, being a variation of a popular swear word in movies.

However, the sales of Mother Energy were disappointing for Coca-Cola. Despite a good initial period of sales, the level of repeat sales was not as strong. After investing in market research to identify the consumer barriers, the company decided to relaunch and reposition the product in 2008.

This followed a complete reinvention of the taste/formula. Apparently the most significant issue with the target market was that the drink was not very tasty.

As part of the relaunch and repositioning, Coca-Cola had to shift the product from the target market’s inept set and encourage them to re-trial the product. This required an open two-sided message approach, as highlighted in the following relaunch TV commercial. The new can, which doubled in size, carried the message “New Mother, Tastes Nothing Like the Old One”.

 

QUESTIONS

  1. Other than deciding to improve and reposition their product, Coke could have decided to withdraw the brand and introduce a new brand. Outline the advantages and concerns of each approach.
  2. Why do you think that Coke decided to persist with the Mother Energy brand, particularly when it had been placed in the inept set by many in the target market?
  3. Once a product is placed in the inept set by the majority of a target market, how can a firm move it back to the evoked set (that is, what tactics should it employ)?
  4. Review their relaunch TV commercial. How important is it that their communication adopted a two-sided message approach? How important was it to use humor? Is this a suitable ad, or would there be an alternative approach?
Jul 112012
 

In this mini-case, you will review the efforts of the J.C. Penney department store to more efficiently compete on price, primarily underpinned by a cost-cutting program. But is this the best approach?

 

ACTIVITY/TASK

The J.C. Penney department store chain is currently through a major cost-cutting program, associated with its transformation strategy. The firm’s goal is to cut expenses by $900m in two years, with $200m in savings from its corporate headquarters, $400m from store operating expenses, and $300 million in advertising cuts.

As part of its transformation strategy, the department store is overhauling every aspect of its operations, from a new pricing plan to new brands to how it produces its goods.

But it is the new pricing plan, which cuts hundreds of sales events in favor of everyday pricing, has turned off shoppers used to big discounts. Unfortunately, the change in the pricing approach has failed, as yet, to deliver results, with a 20 percent drop in revenue in the first quarter after the pricing plan was implemented.

“One of the most challenging tasks for any leadership is to reorganize a company,” said Ron Johnson, Penney’s new CEO and a former Apple Inc. executive, in a statement. During an address to investors last month, Johnson continued to back his new pricing strategy. He said that the problem was the chain improperly communicated the change to shoppers. It’s now clarifying the savings for shoppers under the three-tier plan, which calls for reducing prices by 40 percent from a year ago, offering deeper month-long discounts and clearance events.

In reaction to the revenue fall, the company has now started adding clearance events to their marketing calendar in addition to the first and third Fridays of the month. It is now using the term “best clearance” instead of “best prices”.

News Source: BusinessWeek

 

QUESTIONS

  1. What are the main advantages and disadvantages associated with an ‘everyday low prices’ approach?
  2. Why have customers not reacted overly positively to the department store’s ‘everyday low prices’ approach? Should the firm continue with this approach? Why?
  3. What does the CEO mean by “the chain improperly communicated the change to shoppers”? In what ways could they have communicated the change? What impact would the reduction in advertising budget had in this regard?
  4. Will using “best clearance” instead of “best prices” make a significant difference in your view? What other pricing tactics could they implement?

 

Jul 112012
 

From Bricks and Mortar to Online Retailing

In this exercise, you need to review the key findings from recognized industry forecasting firm regarding the potential impact of online retailing on traditional shopping centers and retailers. The challenge is to determine the best way forward for these traditional retailers.

 

ACTIVITY/TASK

Traditional shopping centers (shopping malls) are under significant pressure to adapt to a changing macro-environment, as shoppers demand more attractive experiences and increasingly move online.

This prediction was made by property market forecaster BIS Shrapnel who expect that shopping centers be challenged as online retailing takes a larger share of total shopping dollars, and as competition between established stores increases.

According to Senior Project Manager at BIS Shrapnel, Maria Lee, “If you’ve got a much lower level of turnover growth and you’re getting the internet taking share away, then it is a lot more difficult to cope with and certainly some shopping centers are going to get squeezed. We’ll see a gradual change in the tenancy mix and, hopefully, see shops becoming a little bit more exciting, in trying to create a point of difference between shopping in a physical store and shopping online.”
However, Ms Lee said, shopping centers were beginning to adapt, highlighted by the growth in beauty stores, cafes and restaurants at the expense of book stores, CD and DVD stores.

BIS Shrapnel’s Retail Property Market Forecasts and Strategies 2012 to 2022 report predicts growth in retail turnover to be 2.9% over the next five years.  The report also indicates that online shopping would continue to take market share from bricks and mortar shops, peaking at around 15 to 20 per cent of total retailing.

 

News Source: Adelaide Now
QUESTIONS

  1. What are the main macro-environmental forces in the above news item?
  2. Do these forces/changes represent opportunities or threats for firms? Why?
  3. Why are some retail formats growing (e.g. beauty stores), whereas others are declining (e.g. book stores)?
  4. What is meant by “see shops becoming a little bit more exciting”? Is this a financially feasible option for firms already under increasing competitive pressure?
  5. If you worked for a major retailer, what would be your recommendations in order to survive and prosper in this new environment?

 

 

Jul 072012
 

This mini case study profiles the successful launch of Winkiwoo, a new division of a photo printing firm, which has successfully tapped into the new internet and digital world, with an innovated Facebook related photo product.

 

ACTIVITY/TASK

A company from regional Australia (called Winkiwoo) has experienced tremendous success with their innovative Facebook photo books product. Surprisingly, the new-to-the-world product, which was only launched five months ago, has already reached 80,000 in sales to customers in over 80 countries.

Basically the product allows consumers to utilize the photos they have put on Facebook to produce a tailored and attractive physical book.

Customers using the service simply install the Winkiwoo Facebook application and then select which of their Facebook photos they want to include in the book and place the order online. The book is then printed and sent back to the customer.

The firm saw an unmet market need and developed a new-to-the-world product solution. According to the general manager of its innovation division, Brendon Watson, “with digital photos, more photos are being taken than ever but (in ratio) less photos are being printed than ever … until now there wasn’t a way to take your memories from Facebook and put them in a nicely presented photo product. It allows the customer to create and physically touch their memories rather than just having them sitting on the Facebook servers forever.”

The product would have great appeal to regular Facebook users and in the gift market.

Winkiwoo, is a division of Eastmon, which is a company used to run a chain of stores specialising in developing film photographs – an industry that has all but died out along with analog film technology. Over the last several years it has shut down all of these stores and the company is now the largest printer of digital photos in Australia.

When a consumer orders a digital print or photo book from a leading retailer in Australia (such as, Harvey Norman, Bing Lee, Dick Simth, Big W, Camera House or Snapfish), it is likely that it is  printed by Eastmon.

News Source: Sydney Morning Herald

 

QUESTIONS

  1. This is an example of a firm finding an opportunity in a changing environment. Do you think that most established firms look at environmental change as an opportunity or a threat?
  2. How could this firm protect itself against ‘copy-cat’ competitors?
  3. Do you see this business venture as having long-term viability or do you think it is probably a fad? Why?
  4. Explain where this venture is on the product life cycle (PLC), as compared to where their traditional printing business would be on the PLC.

 

Jul 072012
 

The table below contains the standard top-level website metrics that every marketer needs to be familiar with. Your task is to assess the relative performance of these websites.

 

ACTIVITY/TASK

Site A Site B Site C
Visitors 10,000 100,000 200,000
Visits 40,000 120,000 400,000
Pageviews 200,000 150,000 2,000,000
CPC budget $5,000 $40,000 $100,000
Bounce rate 20% 80% 50%

 

QUESTIONS

  1. What is the different between visits and visitors? What does CPC stand for?
  2. Based on these results, which website has performed the best? The worst?
  3. Which website has spent their CPC budget well?
  4. What general advice would you have for each of them?
Jul 072012
 

The table below contains some top-level online results of a few websites that has invested in Google advertising. Your task is to determine how well they have performed and whether they should continue.

 

ACTIVITY/TASK

Site A Site B Site C
Impressions 10,000 10,000 10,000
CTR 10% 5% 1%
Site visitors 1,000 500 100
Conversion rate 1% 5% 10%
Actions completed by visitors 10 25 10

 

QUESTIONS

  1. Why does Site A and Site C have the same number of actions completed, yet their other metrics are quite different? What are their respective strengths and weaknesses?
  2. Based on these results, which website has performed the best? The worst?
  3. What general advice would you have for each of them?

 

Jul 072012
 

The table below highlights a firm that has dramatically increased its profitability in a few years. But they have focused on a short-term, not long-term, basis and you need to determine what impact this may have.

 

ACTIVITY/TASK

Year 0 Year 1 Year 2 Year 3
Sales 20m 19.50m 18.6m 16m
Costs 5m 4.75m 4.6m 4m
Operating profit 15m 14.75m 14m 12m
New product development 2m 1m 0.5m 0m
Promotional expenditure 4m 3m 2.5m 1m
Sales force commissions 2m 1.75m 1.5m 1m
Total ‘future’ investment 8m 5.75m 4.5m 2m
Net profits 7m 9m 9.5m 10m

 

QUESTIONS

  1. Based on the bottom-line net profits figure only, how happy would the firm be with these results?
  2. Essentially, how has the firm been able to deliver these profit results?
  3. What concerns do you have for the firm? Do you see their profitability continuing to increase?
  4. What advice would you have for the management of this firm?

 

Jul 072012
 

Allocating fixed costs to products, in order to more fully assess product profitability, can be determined in different ways with different outcomes. In the following example, the firm was allocated its fixed costs equally each of its products – what impact does this have?

 

ACTIVITY/TASK

Product  A Product  B Product  C Product D TOTAL
Gross profit $4m $1m $2m $3m $10m
Share of fixed costs $1.5m $1.5m $1.5m $1.5m $6m
Net profit $2.5m -$0.5m $0.5m $1.5m $4m

 

QUESTIONS

  1. In the above table, Product B is unprofitable when taking into account fixed costs. What should the firm do with this product; keep it or withdraw it?
  2. If the firm was to withdraw Product B, how would that affect its overall profitability and the profitability of each product?
  3. Other than allocating fixed costs equally, what other approaches could be used? What approach would you recommend in this case?
Jul 072012
 


In this activity, you need to review the recent new product launch results across different firms. How well did their respective launches go? Can you get a sense of their relative strengths/weaknesses from these results?

 

ACTIVITY/TASK

Firm A

Firm B

Firm C

Firm D
Target market size

     1m

     1m

     1m

  1m
Trial %

                      20

                   40                      20                    10
Repeat %                       40                    20                      60                    50
Penetration %

          8%

          8%

          12%

          5%

Average quantity                       20                    25                      30                    10
Average frequency                         3                      3                         4                      2
Volume – units         4,800,000     6,000,000      14,400,000      1,000,000
Average price                         5                      6                         4                    10
Volume – $’s       24,000,000   36,000,000      57,600,000   10,000,000
Retailer penetration                       10                    60                      40                    20
Launch spend         2,000,000   20,000,000      10,000,000      2,000,000

 

QUESTIONS

  1. Based on these results, which firm achieved the best launch results?
  2. Review the results and highlight a positive and a negative aspect of the results for each firm.
  3. Can you get a sense, from the numbers, of the quality/value of their product and how well they executed their launch campaign?
  4. What top-level recommendation/s would you have for each firm?
Jul 072012
 

The following points are Apple’s own description of aspects of their corporate strategy, as presented in one of their public documents. Review the points in order to identify the role of their strategic capabilities.

 

ACTIVITY/TASK

Aspects of Apple’s corporate strategy, in their own words:

  • The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative design.
  • As part of its strategy, the Company continues to expand its platform for the discovery and delivery of third-party digital content and applications through the iTunes Store.
  • The Company’s strategy also includes expanding its distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.
  • To remain competitive, the Company believes that continual investment in research and development and marketing and advertising is critical to the development and sale of innovative products and technologies.

 

QUESTIONS

  1. In your own words, how would you describe ‘capabilities’, (in a strategic sense)?
  2. From a review of the above information, plus your own knowledge of Apple, what capabilities do they have in the marketplace?
  3. How easy/difficult is it for Apple’s competitors to copy/duplicate these particular capabilities?
  4. Therefore, what competitive advantages can a firm gain from developing its capabilities?
Jul 072012
 

This activity highlights the top level results from an attitudes/image market research study, comparing four different fast food chains. Your task here is to review the brand’s performance and see what the survey results have revealed.

 

ACTIVITY/TASK

Results in %’s Brand A Brand B Brand C Brand D
Lots of locations 5 15 50 30
Good menu range 70 50 20 10
I like their food 65 50 30 10
Great value 20 30 50 30
Eat there weekly or more 15 10 30 10
Never go there 25 10 40 10
Good corporate citizen 10 20 70 10
My preferred choice 50 20 20 10

 

QUESTIONS

  1. Based on these results, which brand appears to be performing best?
  2. Review the results and highlight a positive and a negative aspect of the results for each brand.
  3. What top-level recommendation/s would you have for each brand?
Jul 072012
 

This activity highlights the top level results from an awareness and advertising recall market research study. Your task here is to review the brand’s performance and see what the survey results have revealed.

 

ACTIVITY/TASK

Results in %’s Brand A Brand B Brand C Brand D
Top-of-mind 5 15 50 0
Unprompted – other 20 20 40 10
Total unprompted 25 35 90 10
Aided awareness 20 30 5 30
Total awareness 45 65 95 40
Unprompted advertising awareness 5 10 30 0
Aided advertising awareness 5 10 40 10
Total advertising awareness 10 20 70 10
Able to recall ad message(of those aware of the ad) 50 30 30 10

 

QUESTIONS

  1. Based on these results, which brand appears to be performing best?
  2. Each brand has at least one strength and one weakness; scan through the results and highlight a positive and a negative for each.
  3. Which brand do you think is presented with the best opportunity to improve its position?
  4. What other questions needed to be asked in this market research survey to help provide more insightful information?
Jul 072012
 

The following statement was released by Tim Cook, the CEO of Apple. Although it was not described as a mission statement, it has been effectively framed as one. Your task here is to review it and determine what it indicates about Apple and their future direction.

 

ACTIVITY/TASK

The statement made by Tim Cook of Apple:

We believe that we’re on the face of the earth to make great products and that’s not changing. We’re constantly focusing on innovating. We believe in the simple, not the complex.

We believe we need to own and control the primary technologies behind the products that we make and participate only in markets where we can make a significant contribution.

We believe in saying no to thousands of projects so that we can focus on the few that are meaningful to us. We believe in deep collaboration and cross pollination in order to innovate in a way others cannot.

We don’t settle for anything other than excellence in any group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

 

QUESTIONS

  1. What is the role of the mission statement, that is, why do firms have one?
  2. What are the key components of any good mission statement?
  3. After reviewing the above statement from Apple, is it effectively a mission statement, or are their core components missing?
  4. Do you get a clear sense of Apple’s strategy from the statement? If so, describe Apple’s strategy, based on this statement alone, for the next 5 to 10 years.
Jul 072012
 

The promotion of a brand is just ONE aspect of building brand equity. Achieving strong brand equity requires many components, but it can create significant value in the marketplace. The following exercise contains a number of checklist points for you to discuss regarding the building of, and the return on, brand equity.

 

ACTIVITY/TASK

Factors that may contribute to (or detract from) the building of strong brand equity:

  • Product range
  • Relative product quality
  • Points of differentiation
  • Retailers used
  • Retailer prominence
  • CEO profile
  • Media (mainstream and blogs/forums)
  • Word-of-mouth
  • Use of celebrities
  • Other brand associations
  • Visibility of the product
  • Social media ‘connection’
  • Social ‘status’ of the product
  • Entertainment or self-identity product
  • Market share (extent of popularity)
  • Perceived innovation
  • Perceived integrity
  • Success of new products
  • Sales + service staff
  • Target markets
  • Market coverage (global?)
  • Time in market
  • Competitive set
  • B2C or B2B only
  • Social responsibility
  • Competitor’s actions
  • Employee behavior

 

Potential benefits that may be gained from strong brand equity:

  • Increased sales
  • Price premium
  • Customer loyalty
  • WOM and promoters
  • Perceived popularity and real visibility
  • More effective social media
  • Mainstream media attention
  • Retailer appeal
  • Point-of-sale merchandise uptake
  • Supplier bargaining power
  • Staff recruitment and retention
  • More energetic corporate culture
  • More skills and resources and capabilities
  • New product success
  • More product line extensions
  • Easier market development
  • Strategic alliances
  • More efficient marketing spend
  • Significant competitive advantage
  • Reduces threat of new entrants
  • Increased profits and stability of cash flows
  • Borrowing/capital raising
  • Stable cash flow and easier planning
  • Economies of scale
  • Improved price/earnings ratio

 

QUESTIONS

  1. Review the list of factors that may contribute to building positive brand equity (list one). Which factors do you think would be the main contributors to a firm’s brand equity?
  2. Now review the second list of brand equity benefits. Which ones do you consider to be the main benefits?
  3. Looking at the two lists, do you think that there is a relationship between the two? That is, does a strength/performance in one list contribute to a better result for a similar factor in the other list? (Example, a strong brand can be built by social media, yet strong brands will generally have a greater social media presence and uptake.)
  4. One of the fastest growing firms, in terms of its brand equity, in recent years has been Apple. Identify the factors on both lists and has contributed to the increase in its brand equity and the benefits they have gained from this increased position in the marketplace

 

Jul 072012
 

In 2005, Coca-Cola introduced Coke Zero, a zero calorie version of their flagship product. This product did extraordinary well, but what launch and implementation challenges did they face?

 

ACTIVITY/TASK

Coca-Cola first ventured into the diet soft drink market in the 1960’s with their Tab brand. In 1982 they broadened the Coke brand for the first time and launched Diet Coke, which proved to be an enormously successful product.

Both of these products had a very clear diet and weight loss positioning and many of their communications tended to be mainly focused at a female market.

In 1993, their main head-to-head competitor, PepsiCo, introduced an additional product to their range – Pepsi Max. Pepsi Max was also a diet cola, but what was unusual about this was that the firm already had Diet Pepsi in their portfolio.

Like Coke’s approach, Diet Pepsi generally had a diet/weight loss and female-oriented positioning. In order, to differentiate the product, Pepsi Max was positioned quite strongly as a drink for young adult males who enjoy an adventurous lifestyle.  They did not mention the word ‘diet’ in their communications, instead highlighting the ‘no sugar’ product attribute.

Despite Pepsi entering the market with this style of ‘non-diet’ positioned sugar-free cola, it was not until 2005 Coca-Cola introduced their compatible product, branded as Coke Zero.

Like its Pepsi Max predecessor, Coke Zero did not emphasize the diet aspect of their drink, instead using the word zero to indicate zero calories/sugar. It is also likely that the word zero was used because it is essentially an opposite of the word maximum, which is what Pepsi uses in its communications to indicate the maximum taste of Pepsi Max.

Probably the most significant difference between Pepsi Max and Coke Zero in the marketplace is that Coke Zero targeted a much broader market. Pepsi Max had a clear young male target market, whereas Coke Zero was broadly positioned as an alternative to the traditional Coca-Cola, thereby essentially targeting existing Coke drinkers of all demographics.

Reportedly, the Coke Zero launch became Coca-Cola’s most successful new product since Diet Coke.

 

QUESTIONS

  1. Why do you think that Coca-Cola waited 12 years to match the Pepsi Max product?
  2. Given that the firm already had a successful product in Diet Coke, what risks did they face with introducing Coke Zero?
  3. Is it likely that they considered targeting the same market segment, that is young males, as Pepsi Max in order to engage in head-to-head competition, or do you think they tried to avoid confronting Pepsi Max directly in the marketplace?
  4. Is it likely that, sometime in the future, we may even see another no-sugar variation of Coca-Cola brought to market, with an even more precise product positioning?
Jul 072012
 

The following food retailer has experienced significant top-level growth over the past few years. But underpinning their results is a significant increase in franchised stores/outlets, so are the results as good as they appear?

 

ACTIVITY/TASK

Here are some top-level financial figures for a food retailer growing primarily through a franchise system:

Year 1

Year 2

Year 3

Year 4

Revenues

$1.00b

$1.10b

$1.21b

$1.33b

Profits

$200m

$220m

$242m

$266m

No. of Stores

2,000

2,400

2,880

3,450

Advertising Spend

$100m

$105m

$110m

$115m

 

QUESTIONS

  1. What percentage growth has the firm achieved in revenues and in profits over the period above? Has the firm improved these two metrics each year?
  2. Therefore, based on your response in Q1 only, are these generally good growth results?
  3. What is the firm’s revenue and profit on a PER store basis for each year? How has this metric been tracking?
  4. What has been the contribution of the additional 1,450 stores in terms of extra revenue and profit? (That is, profit per store in year one versus increased profit/additional stores by year four.)
  5. Therefore, based on your responses in Q2 and Q3, how well is the firm growing?
  6. How insightful is ‘drilling down’ slightly and becoming more analytical?
  7. Given their overall store numbers and their franchising model, can you think of any logical reasons why these results are being delivered?

 

Jul 072012
 

A travel agency, with more than 100 outlets throughout Australia, views a direct and/or online marketing approach as a great opportunity to hold more clients, win new business and increase overall sales. However, they cannot agree on which particular tools to use – refer to excerpts of their manager’s meeting below – can you help them decide?


ACTIVITY/TASK

Justin:

I think that we all agree that it’s time that we broaden our promotional mix beyond just various forms of advertising. There are many other promotional alternatives for us. Today I’ll like to hear your views on which approach we should take.

Jake:

I’m a big fan of direct mail because it’s so visual and it’s physical. If we used an attractive postcard mailing that promoted the latest special deals, then that’s something that could be put on the notice board at home. That way all the family will see it over a period of a few weeks, which is important as holidays are a family decision usually made over a period of time.

Jane:

I like the general idea of direct mail, but I think there’s value in knowing more about our customers. That’s why I would recommend regular telesales. We could call customers and find out when and where they are planning to take their next. We could then contact them when they are ready to book with special deals on their preferred destinations. That way we are providing a value-added service, rather than just sending out generic letters.

John:

Well you could use both approaches – telesales first to find out more about their future needs, followed by a tailored direct mail offer at the appropriate time.

Julie:

I suppose we could do everything, but we do have a limited budget and telesales is quite expensive. That’s why I favor an internet-based approach. We could use our website to promote special deals, have more images, set up a chat room or a message board and then encourage our customers to visit the site through regular emails or an e-newsletter.

Jennifer:

All these ideas are fine, but they only target our existing customers – not new customers. So let’s use late night infomercials? We could get the material from hotels – so the production cost of the ads will be minimal. I’m sure that many people watching TV late at night in winter will be attracted by images of beautiful beaches. All we would need to do is to promote a toll-free phone number and have staff answering the phone to close the deal.

Joe:

Sure that’s an option, but to be successful you need to trigger their need recognition. Let’s go after people who are already in the information search stage and are looking on the internet for holidays. That means investing in internet ads, sponsored links on Google, being on holiday comparison sites, and so on.

 

QUESTIONS

  1. Outline the various direct marketing activities that are outlined in the above discussion.
  2. In addition to the promotion techniques discussed above, are there any other suitable tools that you can add?
  3. If you were part of the management team, what would be your recommendation? Why?
  4. What sort of results would you expect from these additional promotional efforts?