BU362 Study Guide - Summer 2018, Comprehensive Midterm Notes - Break-Even, Personal Selling, Marketing
BU362
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Main Issues/Problems
• Increase sales, increase market share
• Low brand awareness
• Over-dependence on large distributor (mixed blessing)
• Insufficient personal selling
Decision
• Whether or not to run their FIRST ad-apaig, fousig o Godo’s o ad
Objective
• Increase sales (market share), especially in fast growing market segments
• Maintain the good relationship with big distributors (especially Excelsior)
• Improve IMC tools (more channels)
• Emphasize the point of differentiation (i.e., light weight)
o In order to let customers, identify the product
• Increase brand awareness (related with customer behaviours)
Timeframe
• Immediate urgency vs. long term issues
o Raising brand awareness is urgent ifeed fo ustoe’s deisio poess o page 7
o Maintaining good relations with distributor is important
Stakeholders - direct impact on decisions; especially if there is conflicting interest
• Gordon (owner): his own company, sales, brand equity, brand awareness, expenses, good relationship
with distributors
• Excelsior and other major distributors: maximize their own sales, increase their own market share
• Summit: want business from a new account, long term relationship with GPT
• Kevin: want to prove himself, brand awareness
• Conflict with Excelsior
Internal Analysis
• Target Market:
o In general: homeowners (growing), loggers (stable) and other professionals
o No specific descriptions of target market
o DIY homeowner segment is growing fast
• Positioning
o No specific positioning (recall: target segment, frame of reference, point of difference)
o Potential positioning: safety, lightweight
• 4Ps
o Product:
▪ Shopping product => product features are important:
• In general, safety, weight, warranty
• Specific: light weight, variety
o Price:
▪ $350 out of $500 (typical in the industry, power of distributors)
▪ 30% discount to distributors
▪ COGS: 70%
find more resources at oneclass.com
find more resources at oneclass.com
o Promotion:
▪ Agriculture fairs, contest sponsorship, personal selling (phone calls)
▪ No ad campaigns so far
▪ Personal selling: very important but insufficient (19/53)
o Place
▪ Ontario and Quebec
▪ Distributors are critical
▪ Heavily on private label (distributor store brands), especially Excelsior / Harter;
HomeMart
▪ Main channel: Excelsior (49% of sales) => mixed blessing
• Current financial position (i.e., break even)
o Market share of 15% (4th in the market)
o Breakeven = Total Fixed Costs / Unit Contribution = Total Fixed Costs / (Unit Price – Unit
Variable Cost) = 294,000 / 105 = 2800
o Current sales = 3870 (38.2% above breakeven) => robust and safe
• Strengths
o Strong relationship with distributors (in the short term)
o Healthy financials, resources for ad campaign
o Chainsaws are profitable
o Product features: as good as othe poduts is this good eough? / light eight is uiue, …
• Weaknesses
o Low brand awareness: low control. Low margin, bad for long term growth
o STP:
▪ Target segment not clear
▪ Lack of clear positioning: makes it easier for customers to find your products and helps
you deal with competitors – hard for customers to identify GPT products, bad for
opetitio…
▪ Hard to differentiate their products with product feature of light weight
o Over dependence on Excelsior (make GPT vulnerable, especially if GPT is small for Excelsior)
o Lack of resources:
▪ HR (lack of people; lack of experience for marketing manager)
• not enough people to contact everybody
▪ Money (=1.6% increase in market share: tall order)
• lack of financial resources
o Not enough personal selling (HR hire somebody?)
External Analysis
Environmental trends and market trends
• Homeowner market: fast growing
• Logger: cyclical demand
• Need for light weight product:
o Important for pressionals
o Important for homeowners
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Increase sales, increase market share: low brand awareness, over-dependence on large distributor (mixed blessing) Decision: whether or not to run their first ad-(cid:272)a(cid:373)paig(cid:374), fo(cid:272)usi(cid:374)g o(cid:374) go(cid:396)do(cid:374)"s o(cid:449)(cid:374) (cid:271)(cid:396)a(cid:374)d. Increase sales (market share), especially in fast growing market segments: maintain the good relationship with big distributors (especially excelsior, emphasize the point of differentiation (i. e. , light weight) In order to let customers, identify the product. Immediate urgency vs. long term issues: raising brand awareness is urgent (cid:894)i(cid:374)fe(cid:396)(cid:396)ed fo(cid:396)(cid:373) (cid:272)usto(cid:373)e(cid:396)"s de(cid:272)isio(cid:374) p(cid:396)o(cid:272)ess o(cid:374) page 7(cid:895, maintaining good relations with distributor is important. Environmental trends and market trends: homeowner market: fast growing, logger: cyclical demand, need for light weight product: Opportunities: homeowner market, use more personal selling to tap untapped market potential, tap untapped market potential, use more personal selling / promotion to retailers (especially homemart, use ad campaign to raise brand awareness, more geographical areas. Threats: cyclical demand for loggers, tarnish relationship with excelsior, competitions, competing for attention, wallet, etc. , 15% market share.
