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Marketing Essentials Short Cases CAPON’S Marketing Essentials Short Cases www.wessexlearning.com 2 SECTIONCAPON’S MARKETING1 MARKETING ESSENTIALS AND THE • FIRM INSTRUCTOR'S MANUAL Capon’s Marketing Essentials SECTION 1: MARKETING AND THE FIRM CHAPTER 1 Introduction to Managing Marketing CHAPTER 2 The Value of Customers SECTION 2: FUNDAMENTAL INSIGHTS FOR STRATEGIC MARKETING CHAPTER 5 TRANSITION CHAPTER 3 CHAPTER 4 Insight about TO STRATEGIC Market Insight Customer Insight Competitors, Company, MARKETING Complementers SECTION 3: STRATEGIC MARKETING IMPERATIVE 1 IMPERATIVE 2 Determine, Recommend Which Markets to Address Identify, Target Market Segments CHAPTER 6 CHAPTER 7 Identifying, Choosing Opportunities Market Segmentation, Targeting IMPERATIVE 3 Set Strategic Direction, Positioning CHAPTER 8 CHAPTER 9 CHAPTER 10 Market Strategy – Integrating Firm Managing through the Life Cycle Managing Brands Efforts for Marketing Success SECTION 4: IMPLEMENTING THE MARKET STRATEGY IMPERATIVE 4 Design the Market Offer Part A: Providing Customer Value CHAPTER 12 CHAPTER 11 CHAPTER 13 Managing Services, Managing the Product Line Developing New Products Customer Service Part B: Communicating Customer Value CHAPTER 14 CHAPTER 15 CHAPTER 16 Integrated Marketing Mass Communications, Directing, Managing Communications Digital Marketing Field Sales Efforts Part C: Delivering Customer Value Part D: Getting Paid for Customer Value CHAPTER 17 CHAPTER 18 Distribution, Retailing, Wholesaling Critical Underpinnings of Pricing Decisions IMPERATIVE 5 IMPERATIVE 6 Secure Support from Other Functions Monitor, Control Execution/Performance CHAPTER 19 CHAPTER 20 Ensuring the Firm Implements Monitoring, Controlling the Market Offer as Planned Firm Performance, Functioning Table of Contents 1. Sonik CD .................................4 13. Newlines Airways .........................16 (Chapter 2) (Chapters 7, 8) 2. ICI Fibres Ltd ..............................4 14. Madison Industries ........................17 (Chapters 4, 8, 16) (Chapter 16) 3. The Arden Company .......................5 15. Merck ...................................19 (Chapters 5, 8, 9, 18) (Chapters 4, 16) 4. Unipro Inc. ................................6 16. Citibikes .................................21 (Chapters 16, 8, 18) (Chapters 1, 8, 9) 5. Hausser Food Products Company ............6 17. Sotheby’s Auction House ...................21 (Chapter 16) (Chapters 10, 14, 18) 6. The Mass Transit Railway in Hong Kong .......8 18. ABC Symphony Orchestra. .22 (Chapter 12) (Chapters 5, 8) 7. Social Marketing Company, Bangladesh ......10 19. William Chung ...........................22 (Chapters 1, 6, 8, 11) (Chapter 14) 8. Energy World, Inc. ........................13 20. Centaur Consulting .......................23 (Chapter 20) (Chapters 7, 8, 14) 9. Software Consulting, Inc. ...................15 21. John Andrews ............................23 (Chapter 16) (Chapters 1, 5) 10. Contact, Inc.. .15 22. Top City Movie Theaters ...................24 (Chapter 17) (Chapters 13, 18) 11. Jack Adams ...............................15 23. Gorgeous Gardens ........................24 (Chapters 16, 20) (Chapter 17) 12. Production, Inc. ...........................16 24. Buckstar .................................24 (Chapter 17) (Chapters 13, 17) 3 4 CAPON’S MARKETING ESSENTIALS • SHORT CASES 1. Sonik CD1 2. ICI Fibres Ltd. Sonik CD was a wholesale buying club for classical, jazz, Malcolm Hand contemplated his recently established goals and blues enthusiasts. Annual membership was $40. Sonik for sales of Terylene® polyester fiber into the tarpaulin scoured distributors and independent retailers to find hard- market. Tarpaulins are breathable waterproof covers to-get and out-of-print releases. (allowing the passage of water vapor) used mainly in the trucking industry. The British market was believed to be At $10.95 per CD, Sonik’s prices were lower than average substantial but Terylene had made little headway. retail prices; average cost to Sonik was $10.50 per CD. Subscribers paid $4.00 per package shipping and handling; Terylene was a strong, low-stretch, patented fiber, resistant average cost to Sonik was $0.50 per package. On average, to water damage and sunlight degradation, important subscribers purchased 19.9 CDs annually, mostly through properties in coverings for outdoor use. Most tarpaulins are Sonik’s website. Annual subscriber retention rate was 90 made of woven cotton fabrics that are proofed by dipping in percent. Sonik accumulated CDs from various suppliers and latex or similar liquid. The maker-up cut the proofed fabric fulfilled its own orders. Annual fixed costs of fulfillment to appropriate sizes, sewed pieces together, added eyelets were $400,000; shipments averaged 3.7 CDs per package. and ropes, and hand applied proofing liquid at any spots In the year just ended, marketing expenses were $230,000; where it had rubbed off in the making-up process. Sonik spent 90 percent on acquiring new subscribers and 5 Because they were unproofable, fabrics made directly percent on subscriber retention. Currently, Sonik has 40,000 from Terylene fiber could not be used for tarpaulins. ICI’s customers; it gained 21,100 during the previous year. Sonik’s solution was to use a Terylene fiber core for strength and cost of capital was 12 percent. It was considering three spin cotton around it. This was a difficult process but growth options for immediate implementation: ICI believed that several cotton spinners could become a. Continue the Niche Strategy. Sonik believed it could competent by specially adapting existing cotton-spinning acquire 20,000-30,000 new customers per annum for the machines. ICI was working with Eckersley Mills to perfect next several years without major new investment. Sonik the core spinning process; Angus and Dunbar Mills had also believed that spending $0.5 million per annum also expressed an interest. Eckersley, Angus, and Dunbar would increase customer retention to 95 percent. were traditional cotton-spinning mills. b. Mass-Market Strategy. Abandon the subscription ICI sold Terylene yarn to Eckersley at $2:50 per pound. Jack model, add many other music genres, and build a mass- Haffey was ICI’s sales representative to cotton spinners; key market brand. Sonik estimated it would need an initial personnel at Eckersley were Alasdair MacLean (purchasing investment of $1-2 million to build brand awareness, plus manager), Jack Philips (mill manager), and Bill Foulkes an additional $0.5 million per annum for distribution (national sales director). ICI technical representative and warehousing. Sonik believed it could add 40,000- Pauline Smyth also spent time with spinning technicians 50,000 new subscribers per quarter at a subscriber acqui- Doris, Enid, and Bruce. sition cost of $12.50; annual margin, $15; and 60 percent customer retention rate. Foulkes told Haffey about Eckersley’s efforts with Terylene/ c. Distribution Strategy. In addition to CDs, Sonik distrib- cotton core spun yarn. He said the three salespeople uted products for other online retailers. AmeriNet Radio responsible for selling this product were meeting resistance operated 43 radio stations in the southeast U.S. and sold from weaving mills. The problem was lack of technical CDs though its stations’ websites. It approached Sonik competence in weaving the Terylene/cotton core spun yarn. for an exclusive arrangement. Sonik would close its retail The weaving process tended to strip cotton away from the operations and become the sole distributor for all CDs Terylene. Hence, the proofing process was not completely sold through AmeriNet’s websites, charging its normal successful, and the finished tarpaulins leaked. handling fee. Sonik’s price per CD would be $13.25 – it Foulkes said Waterside Mill was a good example of the would pay AmeriNet $1.50 per CD sold. AmeriNet had problem. Owner/manager T.A.T. Wheeler wanted to weave 25 million listeners. Research suggested that 5 percent a specialized fabric that would earn higher margins than of its listeners bought CDs online and that 10 percent of his major business, conveyor belt fabric. Mill manager Mike these would buy from Sonik. A typical customer would Smith had run weaving trials and sent the fabric to Johnson buy twice a year, averaging two CDs per order. Sonik Systems for proofing. Waterproofing tests conducted by would incur additional fixed costs of $0.5 million per Waterside Mill were not successful. Since the tests coincided annum. with an upturn in conveyor belt business, Wheeler shelved Based on these data, which option should Sonik take? What the project. are the risks of each option? Foulkes said that Jackson Mills had also conducted weaving and proofing trials. These trials were somewhat more successful after the Jackson mill manager discussed different proofing formulations with the proofer’s factory manager. Smithson Mills was the most successful weaver. After sev- 1 Thanks to Professor Sunil Gupta for permission to use this case eral attempts, Smithson’s fabric was successfully proofed by study. Grouch Mills, made up by MacLean Tarpaulins, and tested SHORT CASES • CAPON’S MARKETING ESSENTIALS 5 by Carter Paterson, a major trucking company. Final test As he contemplated the task of developing a market strategy results were not in but preliminary feedback was encour- for Arden, Alberto knew that he had to have a clear grasp of aging. The tarpaulins were waterproof, and drivers liked the scope of the challenge. He broke the task into four steps: them because they were considerably lighter and easier
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