1. Suppose that a particular firm (call it AUtex) competes with varying degrees of success, in four different Strategic Markets. For our purposes we will
refer to these as markets A, B, C and D. The firm faces competition within each of these markets from an
array of competitors. AUtex's offering in Market A has annual sales of $100000000 and holds 14% of the market.
At 9.0%, Market A's annual growth fares favorably with the national average of 7.5% per year. The leading competitor
in this market holds a 22% market share.
In Market B AUtex has just introduced a product. Sales have been very low, $50000 (within an industry with $5000000 in annual sales)
but given the fact that the product
has only been on-the-market for six months, it shows considerable promise. This market is new and growing at an annual
rate of 13%. The dominant player here has annual sales of $1000000.
Market C is dominated by AUtex's product. The next largest product holds a 24% share compared with AUtex's share of 36%.
The total Industry's sales in this market is $45000000. Annual growth is slightly less than 6%.
The last market, market D, is a general disappointment for AUtex. Their product with annual sales of only $5000000 has a relative share
of only .333. Additionally the market has been at level growth for the past 3 years.
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In the Portfolio Matrix below, position each of AUtex's products, label each in the BCG's scheme, annotate each axis and give appropriate numerical values to the cornors and mid-points of the matrix. Also draw each product's Venn (circle) in proper proportion to those of the other products. |
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2. During our in-class analysis of the RNB case we measured the "at risk"
amount to be $7575300 (given the current earnings on invested funds of 7.5%).
We then proceeded to measure the impact of various combinations of RNB
actions against potential competitors' actions. The basic conceptualization
that we assumed in this analysis was that Dallas depositors would behave
rationally and seek the highest yields or minimum cost in their checking (or NOW)
accounts. At the end of this exercise we acknowledged that this analysis
could be improved upon by factoring in less-than-rational consumption
behaviors.
Suppose that you have reliable marketing research that indicates that
consumers within this service category have loyalty toward their current
financial instution (or at least inertia against change) such that 40% of
the market will refuse to change even if a financially
better alternative exists elsewhere. Also assume that your market intellengence
indicates that all of your competitors (Banks, S&Ls and Thrifts) will offer
Now accounts at 5% without restrictions in their competitive packages.
Given this information, determine the exact impact of the introduction of
Nows if you (RNB) offer Nows at 5% to accounts with minimum balances of
$5000 and at 2.5% for accounts with minimums of $500 to $4999. Given your
heavy concentration of below Breakeven accounts you elect not to offer
Nows to accounts with balances of less than $500.
3. Several assumptions were implicit in the way in which we handled the segment
assignment analysis that we performed in-class using the general Wharton
Marketing Audit procedure. First we assumed that in selecting a brand using
the compensatory model that every member of a segment behaved in the same
exact fashion. That is we manipulated the data as if they were deterministic
and no variance existed in customer's belief structures or importance
ratings. Additionally we assumed that each customer's objective function
was to maximize weighted average benefits. Lastly we implicitly assumed
that the perceived risks with this purchase was sufficient enough to warrant
extended decision making.
Obviously we have been rather heroic in our assumptions. How do real world
violations of these assumptions complicate any attempts to perform this
kind of market share projection?
4. Discuss Maytag's tactical program that was designed to accomplish the
stated objective to have a full line within the major appliance category.
Be certain to describe their actions within the strategic framework
that we have developed over the past three or four lecture periods. (NOTE:
This task is one of translating what appeared to be simply a common sense
approach to a changing environment into a solid strategic effort by a premier
"Marketing" firm.)
5. Complete the following Pro-Forma Income Statement for 1986 given the current strategy. This is the "status quo" analysis cell.
| Statement Item | Mexican Dip | Cheese Dip |
Sour Cream Dip | Total Dips |
|---|---|---|---|---|
| Net Sales | _________ | _________ | _________ | _________ |
| Gross Margin | _________ | _________ | _________ | _________ |
| Marketing Expenses: | ||||
| Selling Expense | _________ | _________ | _________ | _________ |
| Freight Charges | _________ | _________ | _________ | _________ |
| Consumer Advertising | _________ | _________ | _________ | _________ |
| Consumer & Trade Promo | _________ | _________ | _________ | _________ |
| Total Marketing Expenses | _________ | _________ | _________ | _________ |
| General & Administrative Expenses | _________ | _________ | _________ | _________ |
| Profit Contribution | _________ | _________ | _________ | _________ |
7. Contrast the proposed penetration strategy via line Extension with the proposed market development strategy via a franchise extension