Marketing Management MT631
Second Examination

This exam is an open-book, open-notes exercise. You have already had the opportunity to work on many of the questions in the first section. As a consequence you are expected to have more fully developed answers than normal for a two and a half hour exam. To make grading manageable, however, I will evaluate only the response given in the space allowed below each question/problem. Thus some of your effort is best focused on condensing and transcribing concise answers from your prepared work to the exam. The examination is divided into two sections. The first section covers Mr. Rane's presentation and the cases that are summarized in lecture outlines 7-11. The second section is directed at the South Delaware Coor's case.

You must work two (2) of the three (3)drill problems in the first section. Each of these responses is worth twenty points. You must answer two (2) of the three (3) brief essay questions, also in the first section. Each of these responses is worth twenty-five (25) points. Everyone must work and answer the problem/question given in section two. This response is worth sixty (60) points. It is important to remember to limit your responses to the space provided. Do not write on the back of the paper.Also answer only five (5) questions/problems in total.

Place your name on the back of the exam. DO NOT put your name on any page where it can be seen while the paper is being graded.

SECTION #1
Drill Problems

Ms-Tique
At its root, the problem with the stated situation for Ms-Tique is more of a pricing error than a packaging problem. Compute the retail price for the 5.5 oz. aerosol can that would eliminate the negative cannibalization between the two different 5.5 oz. packages. FOR THIS DRILL, INCLUDE BOTH RETAILER AND JOBBER MARGINS.

Ms-Tique
Factor the retail price for the 11 oz. aerosol can by the same proportional increase as for the 5.5 oz. aerosol in the preceeding problem and then recompute the incremental profit contributions that you would expect for the "low demand" condition. You must assume that unit demands are unchanged by these price changes. FOR THIS DRILL, INCLUDE BOTH RETAILER AND JOBBER MARGINS.
Manor Memorial Hospital
Given the survey results on intentions to visit the DHC, the current capture rate for personal illness/exams is only 39.4% within the 5 block area. Assume that without any additional services, total visitors for next year increases by fifty percent and that the proportion intending to use the DHC and the expected frequency of visits by individuals remain unchanged. What would the mix between personal illness/exams and all other types of visits need to be for the capture rate to increase to 60%? Note also that you will expect the same basic growth in the total number of workers to be as predicted in the case.
SECTION #1
Brief Essay Questions

Visiting-Executive-in-Residence
During his presentation, Jimmy Rane discussed the competitive and environmental events that led to the substantial restructuring of the pressure treated wood industry. Additionally in class we mentioned the need to shift away from creosote as a preservative. These changes contributed significantly to reduced margins for treated wood products. It is often assumed that as volumes increase, production economies insure lower costs and thereby higher margins. Obviously this assumption is in error here. Why?
Morgantown Furniture
The percent-of-sales method reflects an "earn-it-before-you-spend-it" logic. Suppose that logic were extended to the merger with Lea-Meadows in the following manner. Management reasons that they could take the money "already earned" in commissions currently paid to manufacturers reps and convert these to funds that could be used to hire additional company salespeople. (We are assuming that they elect to absorb the Lea-Meadows line into the Morgantown line.) Besides the commission savings, management identifies additional saving in the sales management costs that are eliminated by abolishing the Lea-Meadows line. Assume that these "earned" monies are sufficient enough to hire five new salespersons. Forgetting for the moment the problems associated with the held franchise, what is the expected impact on the sales management issues?
Club Med Espana
A target market penetration of 10 percent of the estimated "premium priced package holidays" was established for Club Med Espana, to be accomplished within a five year period. In the pro forma analysis this goal was used to set not only the number of members but the amount of revenue, and by extension several of the other income statement items. Thus the approach was one of guesstimating the results and then manipulating the means by which one might achieve those outcomes. Describe the obvious flaw in this logic and then outline a conceptually sound solution.
SECTION #2
South Delaware Coors

South Delaware Coors, Inc.
On the following six pages you will find supposed results for the nine studies (A-I) that were proposed in this case. You were told that you would be asked to use this data to determine if the potential Coors beer distributorhip is feasible for the two county area. You are required to answer this question from Larry Brownlow's perspective. You will get 5% credit for your Go-No Go answer and 95% credit for your supporting analytic argument. Limit your response to the space provided below.