Consumer Behaviour Assignment 1

Assignments

Assignments

Each of the four assignments in this course includes specific guidelines for completing the assignment and Final Project. Some general guidelines for satisfactory completion of the assignments and Final Project are described below.

Assignment Content

· Link theory and practice by explaining what you have learned as a result of the readings, dialogue with your fellow students, feedback, reflections, and practical application of skills.

· Make specific references to readings, feedback, ideas, and theories that prodded you to re-think your experiences and helped to increase your awareness of your marketing skills.

· Provide examples to support your comments and observations. Be specific and concrete. Tell a complete story. Avoid generalizations. Support a statement with a specific example that would demonstrate your understanding and skill.

· Share your thoughts and ideas about your own experiences and about the readings. Do not be afraid to challenge or disagree with the readings. Share what makes sense for you and what you have questions about. Be a critical reader.

· Go beyond general descriptions. Be thoughtful and critical in your analyses.

Assignment Structure

Remember, you will be judged by the quality of your work, which in this case are your assignments. To ensure the quality of your written work, keep the following in mind when preparing your assignments:

· Set up a cover page with your name, assignment number, and due date for each assignment in MS Word.

· Organize your assignments with clear headings to identify subsections. For example, depending on the assignment, headings might include: introduction, description of the topic under discussion, analysis and evaluation of the topic under discussion, learning for next time, and summary.

· Use 1.5 line spacing in your document to improve readability for your Open Learning Faculty Member.

· Use an 11-point or 12-point font.

· Number the pages.

· Use spell checker to eliminate spelling errors.

· Use grammar checking to avoid grammatical errors such as run-on sentences.

· Write in a formal manner suitable for business, rather than as a letter to a friend.

· Do not use red as your Open Learning Faculty Member’s comments will be in that colour.

· Please do not exceed the required length for each assignment. Communications should be clear and concise.

· Proofread your work. Not just on the screen while you write it, but the hard copy after it is printed. Fix the errors before submitting the report to your Open Learning Faculty Member.

· Restating of course material is not included in the format of the assignment reports, nor is it considered part of analysis. Anyone reading your report will be familiar with the case, and you need only to mention those facts relevant to your analysis and recommendations.

· Reference all quotations appropriately (author, date, title, publisher, page number) and, where possible, a web URL to the content or original web reference. This course uses APA citation style. Refer to the APA Citation Style guide located on the TRU Library website at  http://libguides.tru.ca/apa .

· Common sense and logical thinking can do wonders for your valuation.

· Proofread your work one last time. Have someone else read it, particularly if English is not your first language. This second pair of eyes will give you an objective opinion of how well your report holds together.

Remember, being clear and concise is important to good communication.

Assignment Submission

Please take a few minutes to review the assignment submission guidelines below:

· Before submitting your assignment, ensure that you have answered all parts of each of the assigned questions.

· Name your Word file as follows: Course_lastname_assignment number. Thus, if your name is Jan Smith and you are submitting the assignment for Module 2, you would name it MKTG3471_Smith_Assign2.

· Follow the instructions given in the Assignments folder in Blackboard to submit your assignment.

Deliverables and Grading Criteria

Grading will be based on:

· Understanding of the concepts contained in the course materials

· Ability to connect your own experiences and opinions with the course material and any other outside sources

· Referencing of the course materials and any outside sources

· Ability to clearly express your opinions

Many of the assignment questions will ask for your opinion on certain topics. Use these questions to talk about your own experiences and then connect these experiences to the course materials.

Note

Your deliverables are the formal assessments—the quizzes, assignments, and final project, which you submit to your Open Learning Faculty Member for grading and for which you receive marks.

Informal activities are not submitted for grading; however, they are still very important parts of your learning in this course and may contribute indirectly to your graded work.

 

 

 

 

ASSIGNMENT 1

 

Assignments

Assignment 1: Analysis and Research

In this module, you have been introduced to the field of consumer behaviour and the impact of the digital revolution on consumer behaviour. You have also explored the basic research tools used for studying consumer behaviour and discussed the basic elements of marketing strategy. You will now apply your knowledge to practical marketing situations.

Assignment 1 is organized in four sections; this contributes 10% towards your final grade. Each of the four sections carries the marks as stated, for a total 100 marks. While this assignment is only worth 10% of your final grade, the effort you put into it will pay off to a much greater extent in the final project.

Note

Assignments 2 and 3 have more comprehensive activities, which are worth more marks than assignments 1 and 4.

Instructions

Section 1: Choosing a Product or Product Category (10 marks)

Pick a product to research throughout the course. You should look ahead through all the modules to see whether your choice is suitable to complete later assignments. You will need to check with your Open Learning Faculty Member to determine if the product is suitable. You should select an existing product that is widely available and well-known consumer good.

Create a 1-page summary (approximately 250 words) about your proposed product. Include in the summary the product name, product category, sources for finding relevant information, and why you want to study this particular product or brand. Provide brief background information about your chosen product.

Note

Stuck for ideas? One suggestion is to scan the popular business press. One excellent article that you may find helpful is “Luxury for the Masses,” appearing in Harvard Business Review, 81(4) (April 2003) (accessible through the article databases at TRU library).

Section 2: Consumer Research and Trends (50 marks)

Segmentation and targeting is an important aspect of consumer behaviour. In this section, you will analyze the trends in demand for your product and define market segments, targeting, and positioning, which will provide some insights into what would motivate potential customers to choose your product offering).

· Conduct a secondary research by summarizingtwo or three relevant articles discussing trends in demand for your product. You may research TRU electronic library resources, consumer reports, trade journals, and/or demographic information about your chosen product. You may also refer to Figures 2-2 and Figure 2-3 of your textbook. Remember to provide the references for the articles/resources to which you refer.

· Perform a small focus group, or a few in-depth interviews, of potential users of your product. You may consider using two different ethnic groups.

· Using your own experiences, secondary researches, and exploratory research methods (interviews or direct observations), profile the primary market segment(s) for your product. Referring to the segmentation bases on page 55 of the textbook, develop a segmentation approach for the market of your product and provide rationale for why this approach is a good one. You may refer to the Rich Market Profile Questions. Concentrate on the first 2 questions: (a) What do they want to buy, and (b) Who are they?

· Provide insights into targeting and positioning of the product.

· Make an estimate of the size of the target market for your product. Identify the market size, growth, and trends within the given market. Use business data published by Statistics Canada (www.statcan.gc.ca), Chamber of Commerce, and other relevant statistical data. Explain how you arrived at your answer and state any assumptions you have made and why.

Section 3: Use of Internet (20 marks)

· The Internet can “inform” a consumer when making purchase decisions. What might a typical consumer do online when considering making a purchase of your chosen product?

· Identify the marketing opportunities that the digital revolution offers marketers of your product.

Section 4: Comparative Analysis (20 marks)

In this section, you will carry out a comparative analysis. Choose a competitive brand of your chosen product. For example, if your chosen product is a digital camera made by Sony you may choose one competitor such as Kodak, Canon, or Nikon.

Assess the two companies’ marketing approaches by comparing and contrasting the two brands’ target markets and corresponding strategies (not the products).

Completion Guidelines

Submit your assignment by uploading it in the Assignments area in Blackboard. Be sure to save your assignment as a Word document and name it: MKTG3471_Lastname_Assign1.

Reminders before submitting assignment:

· Did you put your name and student number on the front page of the document?

· Did you complete all of the required elements?

· Did you use information and terminology learned in this course?

· Did you support your statements with specific examples?

· Did you cite references, using correct APA referencing format?

· Did you ensure that there are no spelling mistakes?

· Is your report grammatically correct, clear, and well organized?

 

 

 

 

 

Assignment 2:

Assignments

Assignment 2: Analysis of Internal Influences (Factors) on Consumer Behaviour

In this module, you have explored a variety of internal influences on consumer behaviour. You will now apply what you have learned by analyzing and investigating internal factors or influences on consumer behaviour to practical marketing situations.

Assignment 2, worth 10% of your final grade, is organized in six sections. Each of the six parts carries the marks as stated for a total of 100 marks.

Instruction

You will continue to focus on your chosen product and market for the course. In this assignment, you will examine various aspects of internal factors/influences and their implication to a marketer. Follow the specific instructions to each part of the assignment and complete all sections as required.

Section 1: Motivation and Involvement (20 marks)

Using the product that you have chosen to research, produce a 3–4-page report examining the level of motivation and involvement that a typical customer would display in the purchase of your product.

Consider the following:

1. Select one level of from Maslow’s Hierarchy of Human Needs that can be used to segment the market and position your chosen product. Explain your choices. Justify the application of Maslow’s need hierarchy for segmentation and positioning of your product.

2. Identify possible motivational conflicts that a prospective consumer of your chosen product may have. Discuss how the marketer can reduce or resolve these motivational conflicts.

3. Develop an involvement profile for a typical consumer of your chosen product and discuss any key issues that would be relevant to a marketer. Use Figures 3-5 and 3-6 from your textbook in assessing the level of involvement that a prospective customer of your chosen product may have.

Section 2: Personality (15 marks)

Produce a 1–2-page report answering the following questions:

1. Given your thinking on your product thus far, select two theories or traits from Figure 4-9 in the textbook that should prove helpful in targetting, branding, and related strategies. Provide examples of print ads (with URL, in-text citation, scan or attachment) that would appeal to those with similar personalities/traits. (Note: The ads do not have to be for your chosen product.) Explain your choices.

2. Using the concept of brand personality, describe a personality for your chosen product.

Section 3: Perception and Positioning (20 marks)

Produce a 2–3-page report answering the following questions:

1. Draw an attribute-based perceptual map for your chosen product. Include the main competitive brands and discuss any opportunity for repositioning. (You may refer to page 165 of your textbook.)

2. What extrinsic and intrinsic cues would be used in assessing the perceived quality of your chosen product, and how would you as a marketer use extrinsic cues to improve the perceived quality of your product? Also, comment on the price-quality relationship in general and of your chosen product.

3. Comment on the type and degree of perceived risks likely to be associated with your chosen product.

Section 4: Reinforcing Consumer Learning (10 Marks)

How would you apply the concept of “shaping” (step-wise operant conditioning) to reinforce desired pre-purchase behaviour and attract customers?

Section 5: Consumer Attitude Formation/Change (15 marks)

Explain the strategies you would use to change consumer attitudes towards a particular brand of your chosen product by:

1. Changing beliefs about the brand

2. Changing beliefs about competing brands

3. Changing the relative evaluation of attributes

4. Adding an attribute

Do you think the “foot-in-the-door” technique (page 230 of your textbook) is applicable to your chosen product?

Section 6: Communication and Consumer Behaviour (20 marks)

Using Figure 8-3 from your textbook, recommend two advertising media for your product and explain your choices.

For the objective of promoting sales, what type of message structure, presentation style, and appeal would you use? Would you use a comparative message?

Completion Guidelines

Submit your assignment using the Assignments function in Blackboard. Be sure to save your assignment as a Word document and name it: MKTG3471_Lastname_Assign2

Reminders before submitting assignment:

· Did you put your name and student number on the front page of the document?

· Did you complete all of the required elements?

· Did you use information and terminology learned in this course?

· Did you support your statements with specific examples?

· Did you cite references, using correct APA referencing format?

· Did you ensure that there are no spelling mistakes?

· Is your report grammatically correct, clear, and well organized?

 

Assignment 3”

 

Assignments

Assignment 3: Analysis of External Influences on Consumer Behaviour

In this module, you have explored a variety of external influences (factors) on consumer behaviour. In this assignment, you will apply what you have learned by investigating and analyzing the external factors/influences discussed on consumer behaviour to practical marketing situations.

Assignment 3, worth 10% of your final grade, is organized in five sections. Each of the five parts carries the marks as stated, for a total of 100 marks. Remember that this assignment will subsequently be combined and summarized as part of your Integrative Report.

Instructions

You will continue to focus on your chosen product and market for the course. In this assignment, you will examine various aspects of external influences/factors and their implication to a marketer. Follow the specific instructions to each part of the assignment and complete all sections as required.

Prepare a 10–12-page doubled-spaced report containing the following.

Section 1: Cultural and Value Analysis (35 Marks)

In this section, you will conduct a cultural and value analysis of your product by answering the following questions.

1. Focusing on your chosen product, answer the following.

a. Find two different print advertisements for your chosen product in two magazines that are targetted to different audiences. Provide the URL, a scan, screen capture, or other visual for each.

a. For each advertisement, analyze the contents in terms of the written and pictorial aspects, utilizing the core values discussed in this module (and in Chapter 9 of your textbook).

a. How are these values portrayed to the target audience?

1. Focusing on your chosen product, produce an analysis of cultural influences by answering the following questions.

b. Identify the core values most relevant to the purchase and use of your product.

b. Determine whether these values encourage or discourage use or ownership.

b. Discuss whether these core values are shifting upward, or downward.

b. Create a print advertisement for your product. (The result is not expected to be of publishable quality; just do your best.) Show how you would use your knowledge of cultural values to develop an advertising message. How would you portray these values to your target audience?

b. What symbols would you use in your advertisements? Discuss their effectiveness in conveying the desired product image or characteristics.

Section 2: Subculture and Social Class Analysis (35 marks)

1. Discuss multi-cultural marketing strategies that you would use to market your product that would successfully target consumers in several different racio-ethnic subcultures?

2. Identify two other subcultures and discuss various strategies you would apply to reach specific groups in your target market.

3. What is the significance of social class to you as a marketer? How would the difference in social class influence the marketing of your chosen product in terms of the following?

c. Product lines and styles

c. Advertising media selection

c. The copy and communication style used in advertisement

c. Payment policy

Section 3: Analysis of Reference Groups and Family (10 marks)

1. With your chosen product in mind, who would your target market consider their reference groups?

2. Consider choosing a superstar or celebrity to promote your chosen product. Who would that be? Discuss the reference group factors that you would raise when negotiating the hiring contract with the superstar or celebrity.

Section 4: Analysis of Consumer Influences and the Diffusion of Innovation (10 marks)

Why is an opinion leader a more credible source of product information than an advertisement for the same product? Are there any circumstances where information from advertisements is likely to be more influential than word of mouth?

Section 5: Virtual Communities (10 marks)

1. Visit and provide the URL of a virtual site where loyal customers of your chosen product help one another to evaluate the quality of choices in the marketplace.

2. How are these virtual communities shaking up the ways businesses are operating?

3. For your chosen product, provide recommendations for a promotional campaign.

Completion Guidelines

Submit your assignment by uploading it in the Assignments area of your course Home Page. Be sure to save your assignment as a Word document and name it: MKTG3471_Lastname_Assign3.

Reminders before submitting assignment:

· Did you put your name and student number on the front page of the document?

· Did you complete all of the required elements?

· Did you use information and terminology learned in this course?

· Did you support your statements with specific examples?

· Did you cite references, using correct APA referencing format?

· Did you ensure that there are no spelling mistakes?

· Is your report grammatically correct, clear, and well organized?

 

 

 

 

 

 

 

Assignment 4:

 

Assignments

Assignment 4: Influencing Purchase Decisions

In this module, you have explored a variety of factors that influence the consumer decision-making process and outcome. The consumer’s decision whether to purchase a product is an important moment for most marketers since it denotes whether a marketing strategy has been effective or missed the mark and whether a marketing plan has been successful.

In this assignment, you will refer back to some of the activities you completed throughout the module. You will apply what you have learned so far by analyzing how consumers make decisions about a product and the implications for you as a marketer when developing marketing strategies for your chosen product.

Assignment 4 is organized in two sections here (five small sections in the rubric) and is worth 10% of the final grade. Each of the parts carries the marks as stated for a total of 100 marks.

Instructions

You will continue to focus on your chosen product and market for this course. In this part of the assignment, as a marketer of your chosen product, you will demonstrate how your understanding of the behaviour of a typical consumer during the five stages of the decision-making process will influence your marketing strategy and the development of a successful marketing plan.

Follow the specific instructions to each part of the assignment and complete all sections as required.

Section 1: Consumer Decision Making —Process

Prepare a 5–6-page, doubled-spaced report addressing the following questions:

1. As a marketer, do you have the ability to control desires or create a need for your product? (Include an example.)

2. Identify the specific characteristics of your product that would make intensive pre-purchase search likely. Using your chosen product, investigate the various types and sources of information available to a consumer. How would you as a marketer improve the types of information and sources of information available to potential customers for pre-purchase searches? Discuss perceived risks associated with the purchase decision, and strategies for mitigating those risks.

3. During your research you would have come across a number of brands. Demonstrate your understanding by identifying brands within your product category and classifying them into your own evoked set, inept set, and inert set. As a marketer what strategies would you use in an attempt to place a product in a consumers evoked set after it has already been rejected?

4. Comment on why evaluation criteria used by customers is important to a marketer of your chosen product? How can marketers influence the rating of their products?

Section 2: Consumer Decision Making —Outcome

Prepare a 3–4-page, doubled-spaced report containing the following answers.

1. How significant is the choice of brand or outlet to the marketer of your chosen product?

2. What might lead to customer satisfaction or dissatisfaction with your chosen product? Outline how you would manage consumer dissatisfaction and provide positive reinforcement to consumers after the purchase of your product to reduce their dissonance? How would you determine whether a consumer is satisfied with your product and whether there will be a repeat purchase?

3. As a marketer of your chosen product, describe how you would develop trust and a long-term relationship with your customers?

Completion Guidelines

Submit your assignment by uploading them in the Assignment folder. Be sure to save your assignment as a Word document and name it: MKTG3471_lastname_Assign4.

Reminders before submitting assignment:

· Did you put your name and student number on the front page of the document?

· Did you complete all the required elements?

· Did you use information and terminology learned in this course?

· Did you support your statements with specific examples?

· Did you cite references, using correct APA referencing format?

· Did you ensure that there are no spelling mistakes?

· Is your report grammatically correct, clear, and well organized?

 

 

 

 

Assignment 5:

 

There are two parts to the final project:

· Integrative Report (worth 30% of the final mark)

· Reflective Summary (worth 10% of the final mark)

Integrative Report—Consumer Behaviour

As a marketer, it is important to consider a wide range of consumer behaviour implications prior to developing a marketing plan. You have covered materials that will help you as a marketer to define the market and identify threats and opportunities to a product brand and to recommend strategies to improve marketing programs. You will complete your analysis and research into the market and consumer behaviour of your chosen product by producing a report (roughly 10 pages or 3000 words) reflecting key concepts that you have covered. Provide suggestions or recommendations on strategies that should be focused on in the development of any future marketing programs. You should write the report as if you are a marketing consultant advising the marketing and product managers of a client firm. Include the following in your report. (You should find most sections in the module assignments relevant to this task; however, do not copy and paste what you have written previously, rather edit and synthesize.)

1. What trends in consumer behaviour can you identify within your chosen market? Discuss how consumers learn about the products from their environment and how they use this information to direct their behaviour. (Module 1)

2. How would you segment the product market? Develop a Rich Market Profile chart for your product. (You may refer to the Rich Market Profile Questions Exhibit 2 and Rich Market Profile Exhibit 1

3. Identify and discuss the primary key internal factors that would influence consumers of your product. Justify your choices and suggest appropriate strategies for your choices. (Module 2)

4. What tools will help you better understand consumers’ attitudes and behaviour? (Module 2)

5. Identify and discuss the primary key external factors that would influence consumers of your product. Justify your choices and suggest appropriate strategies for your choices. (Module 3)

6. What strategies would you develop and implement to enable customers to choose your product brand over others. What strategies would you develop to satisfy and retain customers? (All modules)

7. What advertising strategy would you adopt for your product? Include strategies that you would develop to tap into the growth in environmental awareness and opportunities in creative disposal of your chosen product. (All modules)

8. What kind of marketing activities would you adopt to coincide with each of the five stages of the consumer decision making process? (Module 4)

9. Conclusions and recommendations.

Reflective Summary

The Reflective Summary requires you to look back at your online discussions and journalling and to reflect on your course experience. As a distance learner, much of your interaction in this course may have come from participation in the online discussions. Write 3 to 4 pages (roughly 1000 words) reviewing your contribution to the discussions in the course and your journalling activity.

1. Did the contribution of other learners influence you and help enrich your knowledge of consumer behaviour?

2. Did you agree with everything others posted to the online discussions?

3. Did the ideas and information presented in the articles have a significant influence on your understanding or perspective on consumer behaviour?

4. Did your ideas and views shift as you progressed through the course?

5. Include two or three of the reflective questions and what you have learned from them.

6. Document your best contribution to the discussions and describe briefly what you have learned from the postings of other learners.

7. Include highlights from the other activities and the course in general.

 
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Case Discussion Connecting With Consumers: Black & Decker

CASE STUDY ATTACHED TO THIS POST .. USE REFRENCES APA STYLE

  • Please read the case and analyze it by answering these case analysis questions.
  • You may answer each case discussion question in each paragraph and separate different paragraphs for different questions. You don’t have to copy the discussion questions in your answer.
  • Although quantity is not quality, however I do not accept 1-2 sentence answers to each question. Please make a thorough case analysis, post 300 to 500 words’ case analysis (roughly 1.5-3 pages double spaced with12-font),

 

Case Discussion questions need to b answered in the paper

1. What is the cause of B&D’s 9% share vs. Makita’s 50%?
2. How does the buying behavior of the tradesman impact the situation?
3. What is Makita’s competitive strategy and what role does Milwaukee (the #2 brand in the segment play)?
4. Which action alternative should B&D pursue?

Harvard Business School 9-595-057 Rev. March 30, 2001

Professor Robert J. Dolan prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Certain non-public data have been disguised.

Copyright © 1995 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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The Black & Decker Corporation (A): Power Tools Division

Joe, I like you guys. But, look, I give Makita 10 feet of space. I give you 10 feet of space. They outsell you 8 to 1. What are we going to do about that?

In January 1991, statements like this no longer surprise Joseph Galli. Black & Decker’s (B&D) vice president of sales and marketing for power tools had heard similar sentiments expressed by many trade accounts. Makita Electric of Japan had practically taken over the professional power tools for tradesmen business since it entered the United States market a decade ago. “Tradesmen” was one of the three major segments of the power tools business—the others being “Consumer” and “Industrial.” “Consumer” represented “at home” use, while both “Tradesmen” and “Industrial” covered professional users. The distinguishing characteristic of the Tradesmen segment was that these buyers, such as a carpenter, bought tools for their own use on a job site. In Industrial, the buyer was generally a corporation purchasing tools for use by employees. By late 1990, Makita’s success in the Professional-Tradesmen segment was such that it held an 80% share in cordless drills, the single largest product category, and a 50% segment share overall. B&D had virtually created the portable power tools business in the United States beginning in the early 1900s. While it maintained the #1 market share position in the Consumer and Professional-Industrial segments, its entry in the relatively new Professional-Tradesmen segment held only about a 9% share.

The trade was asking for advertising allowances and rebate money on B&D’s Tradesmen products and profitability in this segment was near zero. B&D’s senior management resolved to put an end to this “no win” game, and Galli set about developing and gaining corporate support for a viable program to challenge Makita for leadership in this segment. He could not help but see the irony of a 9% Tradesmen segment share and no profitability against the results of two recent research studies: one showing B&D to be among the powerful brand names in the world, and the second establishing B&D’s professional tools to be the highest quality in the industry.

Black & Decker

In 1910, Duncan Black and Alonzo Decker, Sr., started a machine shop and, in 1917, received a patent on the world’s first portable power drill with pistol grip and trigger switch; 73 years after receiving its first patent, B&D was the world’s largest producer of power tools, power tool accessories, electric lawn and garden tools, and residential security hardware. Headquartered in

For the exclusive use of M. Vyas, 2019.

This document is authorized for use only by Megha Vyas in MBA646-AP-2019-02B taught by SHIRLEY YE SHENG, Barry University from Jun 2019 to Aug 2019.

 

 

595-057 The Black & Decker Corporation (A): Power Tools Division

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Towson, Maryland, B&D’s sales reached $4.8 billion in 1990, with nearly 50% of product revenues from outside the United States. Alonzo G. Decker, Jr., was honorary chairman of the company and a member of the board of directors. He had been chairman of the board and chief executive officer from 1968 to 1975. Prior to his becoming CEO, the CEO post had always been held by his father or co-founder Black. From its roots in power tools, B&D began a move “from the garage to the house” in 1979 with the introduction of the very successful Dustbuster® hand-held vacuum. This “into the house” thrust led to the purchase of General Electric’s Housewares Division in 1984 for $212 million. As part of the sale agreement, B&D could use General Electric’s name on products only until 1987.

Nolan Archibald, a Harvard Business School graduate and a former group president at Beatrice, became president and CEO in 1986. The early 1980s had been volatile years at B&D. It began the decade with a 19% net revenue increase to $1.2 billion in 1980, but sales stagnated at this level through 1983. In 1985, with net revenues at $1.7 billion, B&D posted a $215.1 million restructuring cost and a $158.4 million loss. For the 5-year period from 1981 through 1985, the company lost money. B&D’s $2.8 billion acquisition of Emhart Corporation in 1989 more than doubled B&D’s revenues and brought new strong brands, including Kwikset® locks and Price Pfister®

faucets, but raised the company’s long-term debt to $4.2 billion, representing about 84% of total capital. Figure A shows the growth in B&D sales and net income since Archibald became CEO.

Figure A Black & Decker Revenues and Operating Income, 1986-1990

1986 1987 1988 1989 1990 1986 1987 1988 1989 1990 1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

1

50

100

150

200

250

300

350

400

450

500

550

$ in Millions$ in Billions

The five largest product groups and their percentage of B&D’s 1990 sales were:

• Power Tools and Accessories 29%

• Household Products 15%

• Information Systems and Services 11%

• Outdoor Products 9%

• Security Hardware 9%

For the exclusive use of M. Vyas, 2019.

This document is authorized for use only by Megha Vyas in MBA646-AP-2019-02B taught by SHIRLEY YE SHENG, Barry University from Jun 2019 to Aug 2019.

 

 

The Black & Decker Corporation (A): Power Tools Division 595-057

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Household products included hand-held vacuums, irons, mixers, food processors and choppers, coffee makers, and toasters and toaster ovens. The well-known Dustbuster and Spacemaker® (under-the-cabinet appliances) brands were part of this group. The B&D franchise was especially strong in cordless vacuums, irons, and toaster ovens, each holding over a 50% market share in the United States. In 1990, 29 new household products were introduced, including the Power Pro™

Dustbuster® heavy duty cordless vacuum. The household products line was heavily supported with media advertising.

The B&D name enjoyed substantial equity in both the United States and Europe. An independent survey of 6,000 brands showed Black & Decker’s brand-strength ranking to be #7 in the United States and #19 in Europe.1 This put Black & Decker in the company of Coca-Cola, Campbell’s, Walt Disney, Pepsi-Cola, Kodak, NBC, Kellogg’s, McDonald’s, and Hershey—the other firms rounding out the U.S. top ten.

Power Tools Market

In 1990, portable power tools in the United States was a $1.5 billion market. Products ranged from an electric screwdriver for the consumer who might use it once a year at home to heavy-duty miter saws used continually throughout the day at construction sites. Segmentation of the market was as shown in Figure B.

Figure B Segmentation of the U.S. Power Tools Market

Nonprofessional users accounted for $530 million or 35% of the market. In this Consumer segment, consumers bought tools at mass merchants, such as Wal-Mart and Kmart, and hardware stores for their own home use. The “for work” market was divided into a Professional-Industrial segment and a Professional-Tradesmen segment. The $550 million Professional-Industrial segment was made up primarily of commercial contractors working on large projects (e.g., office buildings,

 

1Landor Associates Survey.

For the exclusive use of M. Vyas, 2019.

This document is authorized for use only by Megha Vyas in MBA646-AP-2019-02B taught by SHIRLEY YE SHENG, Barry University from Jun 2019 to Aug 2019.

 

 

595-057 The Black & Decker Corporation (A): Power Tools Division

4

bridges, etc.) and company assembly lines (e.g., automobile plants). In this segment, distributors (of which W.W. Grainger of Skokie, Illinois, with over 300 branch offices, was by far the largest) played an important role in providing technical expertise and service. For a given job, the distributor could both specify the contractor’s tool requirements and recommend specific brands. Grainger stocked more than 32,000 items to provide prompt delivery. In the Professional-Industrial segment, tools were typically purchased and owned by the company rather than the individual users.

The Professional-Tradesmen segment was targeted largely at tradesmen such as electricians, plumbers, carpenters, framers, roofers, and general remodelers working in residential construction. These tradespeople were expected to show up at the job site with their own necessary tools of the trade in working condition. These buyers tended to patronize newly emerging retail distribution channels including home centers such as The Home Depot and Lowe’s, in addition to the traditional hardware stores, such as Ace. While the smallest of the three segments in 1990, at $420 million (28%), Professional-Tradesmen was growing fastest at 9% compared with a 7% growth rate for Consumer and no growth for Professional-Industrial. Some “heavy do-it-yourselfers” bought tools in the Professional-Tradesmen segment, but this segment primarily comprised people who made a living with their tools.

B&D participated in all three segments. Black & Decker®-brand power tools held nearly a 30% share of the U.S. market overall.2 To serve these segments, B&D offered three separate lines and brand designations all under the Black & Decker family name, as follows:

Approximate

U.S. Market Segment Brand Logo Product Color

B&D Segment

Share 1990

B&D Segment

Revenues 1990

Professional-Industrial

• Size = $550MM

Charcoal Grey 20% $110 MM

Professional-Tradesmen

• Size = $420MM

Charcoal Grey 9% $35 MM

Consumer

• Size = $530MM

Black 45% $250 MM

In the Professional-Industrial segment, B&D’s share was near parity with Milwaukee Electric of Brookfield, Wisconsin. Founded in 1924, Milwaukee was a privately held firm, selling only in the high end of the market at a rate of approximately $200 million per year worldwide. The second tier suppliers in the Professional-Industrial segment were Bosch, Porter Cable, and Makita. The very knowledgeable purchase decision influencers in the Professional-Industrial segment viewed B&D as offering high-quality, differentiated products and excellent service. At the other end of the performance spectrum, in the Consumer segment, B&D’s brand recognition and image helped it attain the #1 position in the marketplace with nearly a 50% share over suppliers such as Skil, Craftsman, Wen, and various private label products.

 

2In addition, it manufactured some professional power tools under the Craftsman label for Sears, which held an additional 4% of the Professional-Tradesmen segment.

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The Black & Decker Corporation (A): Power Tools Division 595-057

5

B&D’s strengths in the Professional-Industrial and Consumer segments did not transfer to the Professional-Tradesmen segment, where the approximate share positions in 1990 were as shown in Table A.

Table A Power Tools, Professional-Tradesmen Approximate Segment Shares, 1990

Makita ~50%

Milwaukee ~10%

Black & Decker ~9%

Ryobi ~9%

Skil ~5%

Craftsmana ~5%

Porter-Cable ~3%

Bosch ~3%

aManufactured in part by B&D and marketed by Sears.

Three product types—drills, saws, and sanders—represented nearly 80% of the total sales in the Professional-Tradesmen segment. The top three manufacturers offered broad product lines at approximately 175 SKUs each. Since its entry into the market in 1978, Makita had staked out leadership positions in virtually all products and distribution types within the Professional- Tradesmen segment. Exhibit 1 shows approximate shares for Makita, Milwaukee, and B&D for the largest categories in the segment. Exhibit 2 shows shares of Makita and B&D by the five major outlet types: (i) Two-Step (sales through distributors to independent retailers, such as Ace and ServiStar), (ii) Home Centers, (iii) Warehouse Home Centers, (iv) Membership Clubs, and (v) Farm Outlets.

Professional-Tradesmen revenues of approximately $35 million in 1990 for B&D translated into about $3 million in operating income. Gross margins ran about 35%, but SG+A costs were about 25%.

These numbers had become even more vivid for Galli in a recent Monday morning conversation with his boss, Gary DiCamillo, B&D’s president of Power Tools for the United States, who recounted this story:

Joe, yesterday, I stopped by that new Home Depot. It was a nice afternoon; lots of people around. They had one of those woodworking guys out on the sidewalk giving demonstrations for a couple of hours. He was using all Skil saws, and he was just packing up to go home when I came by at about 4 o’clock.

I said to him “What do you think of the Skil saws?” “Pretty good,” he said. So, I said, “Who else do you like?” He said “Oh, Milwaukee makes a nice reciprocating saw; Ryobi’s got some okay things.” “What about Makita?” I said. He said, “Oh, they’re okay—they’re all pretty good really—you just have to stay away from that Black & Decker!”

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595-057 The Black & Decker Corporation (A): Power Tools Division

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Black & Decker and the Professional Segment Buyer

While the “just got to stay away from that Black & Decker” view was perhaps extreme, Galli understood that B&D’s strength as a consumer brand was not necessarily beneficial for the Professional-Tradesmen segment. Some tradespeople viewed all B&D products as for use at home rather than on the job; and, conversely, there had been instances of a B&D product designed for at home use being subjected to the demands of the job site and failing.

The typical plumber, electrician, or general remodeler working in residential construction had about $3,000 invested in 10 or so “tools-of-the-trade.” He or she bought tools when a replacement was needed, spending on average $1,000 per year. Tools and their performance were a constant topic of conversation at the job site. Generally, tradespeople were satisfied with the tools available—the perception being that Makita provided a good baseline option in all major categories, and other suppliers had particular product strengths, e.g., Skil in circular saws.

As noted above in Exhibit 2, this buyer bought most frequently in independently owned stores served by distributors, i.e., the Two-Step in Exhibit 2. However, the Home Centers noted in Exhibit 2 were growing in importance. For example, the largest single outlet of Professional- Tradesmen tool sales in 1990 was The Home Depot at approximately $5 million; second was Home Club at $3.5 million, compared to the largest of the Two-Steps, Ace and ServiStar, at $2 million each. The Home Depot was the largest of the rapidly growing collection of home improvement chain stores. With 145 stores and $3.8 billion in 1990 sales, The Home Depot’s strategy was to stock 30,000 items in a 100,000 square foot location, with prices about 30% less than the traditional hardware store, while also providing superior customer service. Makita’s rise to marketplace dominance was aided by the rapid development of this new type of distribution.

B&D’s research on tradespeople’s perceptions of suppliers’ quality showed four tiers in the marketplace, as shown in Figure C.

Figure C Brand Perceptions of Professional-Tradesmen Segment Buyers

Highest Lowest

—Makita —Bosch —Black & Decker —Wen

—Milwaukee —Hitachi —Ryobi

—Porter Cable —Skil

—Panasonic —Craftsman (Sears)

Both Milwaukee and Makita priced at premiums over B&D, averaging 10% and 5%, respectively. Despite the price premium over B&D, Makita’s prices on some products were less than half of what the product sold for in Makita’s home market, Japan, where Makita was #2 in market share to Hitachi.

While Makita’s position with tradespeople was strong, retailers were not uniformly positive toward Makita. Some regarded it as “arrogant and dictatorial.” Makita offered no channel protection, selling the same products throughout a range of outlets including the discount oriented Membership Clubs, which B&D had decided not to include among its distributors of Professional- Tradesmen tools (see Exhibit 2). Some believed Makita to be “trading-down” its offerings by, among other things, positioning them as appropriate for Father’s Day giving.

While no tradesperson would explicitly note “product color” as a key attribute in the purchase decision, color was generally regarded as a significant product differentiator. Consumer tool manufacturers had largely followed B&D’s 1981 lead of making consumer tools black or charcoal

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The Black & Decker Corporation (A): Power Tools Division 595-057

7

grey. B&D’s policy was to use black as its consumer grade color and charcoal grey for its Professional-Industrial and Professional-Tradesmen grades. Competing brands of professional tools were more highly differentiated in color, as shown in Figure D.

Figure D Color Differentiation: Professional End Users

• Makita – Teal • Milwaukee – Red • Bosch – Dark • Hitachi – Green • Black and Decker

– Charcoal Grey

Professional Grade

Consumer Grade

Black/ Charcoal Gre y

• Black and Decker • Craftsman • Skil

• Wen • Private LLabel

Products

Black & Decker Product Research

Product development had been a B&D focus since 1985 and B&D tools were highly regarded in the demanding Professional-Industrial segment, so Galli believed that the source of B&D’s share problem in the Professional-Tradesmen segment was not inherent product quality. This belief was tested in two ways. First, B&D conducted laboratory tests on its own and competitive products to assess performance, reliability, and durability. Figure E summarizes the results for the 14 major Professional-Tradesmen products. B&D’s offerings were characterized on a scale ranging from weak/undeveloped to competitive to leadership.

Second, B&D did extensive field tests. All identifying marks and colors were removed from products (both B&D and competitors). The products were then used in actual work situations for one month. Users provided comments on product performance and their interest in buying the product when a replacement was needed. This user testing supported the findings of the laboratory tests of Figure E, i.e., B&D’s product quality was very strongly competitive in the large majority of product categories.

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The Black & Decker Corporation (A): Power Tools Division 595-057

9

Research on Brand Awareness and Perceptions

Telephone surveys and B&D’s annual Image Study provided data on brand awareness, relative perceived quality, and ratings on specific attributes. Overall awareness of the major brands among the Professional-Tradesmen segment end users are shown in Table B.

Table B 1990 Total Awareness of Power Tool Suppliers Among Tradespeople

Awareness

Black & Decker 98% Hitachi 77% Milwaukee 95% Hilti 73% Skil 93% Porter Cable 67% Makita 90% Ryobi 50% Bosch 87%

Respondents were also asked to state their level of agreement with the statement, “Brand X is one of the Best.” The data on percentage of respondents “agreeing” or “strongly agreeing” with the statement are in Table C.

Table C ”One of the Best” Agreement Data

Milwaukee 80% Makita 67% Black & Decker 44%

The Image Study provided the same agree/strongly agree data at the level of specific attributes. In particular, Table D segregates those expressing a preference for Makita and those expressing a preference for Milwaukee and compares perceptions of those brands to perceptions of B&D.

Table D Percent Agreeing with the Statement

Those Who Prefer Makita

Those Who Prefer Milwaukee

Makita B&D Milwaukee B&D

Makes High-Quality Tools 82% 51% 91% 43% Makes Durable/Rugged Tools 71% 48% 91% 42% Proud to Own 78% 43% 86% 36% Easy to Get Service 44% 67% 68% 66% Stands Behind Products 56% 61% 69% 52%

As Galli reflected on the research data, he recalled some of the comments made to him by two tradesmen during site visits:

“. . . Black & Decker makes a good popcorn popper, and my wife just loves her Dustbuster, but I’m out here trying to make a living . . .”

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595-057 The Black & Decker Corporation (A): Power Tools Division

10

“. . . On the job, people notice what you’re working with . . . if I came out here with one of those Black & Decker gray things, I’d be laughed at.”

Galli knew that a copycat strategy, e.g., paint it blue and spend some advertising dollars on a “Black & Decker as appropriate for the tradesmen” theme, would not receive internal support. Three options presented themselves:

Option 1. Harvest Professional-Tradesmen Channels

In this strategy, B&D would focus on the Consumer and the Professional-Industrial segments. In the Professional-Tradesmen segment, the focus would be on profitability even at the expense of market share.

Option 2. Get Behind Black & Decker Name with Sub-Branding

While there had been several half-hearted attempts to rebuild the B&D name in the Professional-Tradesmen segment, they had not been successful. One new aspect which might offer promise, though, was the sub-branding strategy, which had been so successful with the Spacemaker line and which Galli had used earlier in his career in the accessories business. Specifically, he had transitioned replacement saw blades from “Black & Decker” brand to “Piranha® by Black & Decker.” (See Exhibit 3.) In 1990, B&D had introduced the Sawcat™and Super Sawcat™ circular saws with some success. An intense sub-branding program could be developed in an integrated fashion.

Option 3. Drop the Black & Decker Name from the Professional-Tradesmen Segment

Galli imagined what internal reaction would be to such a proposal. Everyone had taken great pride in the #7 “brand power” position of the B&D name. As one of his colleagues commented to him, “Joe, it can’t make sense to pull the name of the creator of the power tools industry from a power tool. You’d be saying that B&D can’t make it in power tools. Besides, if General Electric can put its name on everything from jet engines to telephones, why can’t we?”

If he were to propose dropping the B&D name, he would need an alternative. One possibility was to develop a new brand name free of any negative associations, similar to Toyota’s creation of the Lexus brand. The other would be to use some other name already in B&D stable of brands. One of these possibilities was the DeWalt® brand from a line of stationary woodworking equipment. DeWalt was founded in 1918 and bought by Black & Decker in 1960. DeWalt was a leader in sales of large radial arm saws permanently installed at lumber yards. While sales of DeWalt products had reached $70 million annually at one time under B&D, the company had recently deemphasized the line due to the amount of product liability exposure that came with large, stationary woodworking equipment. The DeWalt name had never been used on a portable power tool.

The DeWalt name had been included in the awareness research described in Table B above. It received a 70% awareness rating, and most of those who knew DeWalt were positively disposed to it. Surprisingly, it had achieved an “Is One of the Best” agreement percent of 63% from tradesmen as compared to B&D’s 44% (Table C). Further research on the DeWalt brand showed that 51% of tradespeople would have some “purchase interest.” The “level of endorsement” by B&D impacted the “purchase interest” score. Specifically:

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The Black & Decker Corporation (A): Power Tools Division 595-057

11

Identified As % Purchase Interest

• DeWalt 51% • DeWalt–Serviced and Distributed by Black & Decker 58% • DeWalt–Manufactured, Serviced and Distributed by Black & Decker 53%

Galli felt that any plan involving investing to build market share—Option 2 or Option 3— would have to provide for a minimal objective of doubling B&D’s Professional-Tradesmen segment share from under 10% to nearly 20% within three years, with major share “take-away” from Makita. Operating income would be expected to improve steadily from under 10% to at least 12%. He also knew that the Membership Clubs, which represented about 10% of segment sales for the industry were and would continue to be off-limits. Thus, he would not be able to attack the 85% share Makita held within that channel.

He wondered what type of reaction to expect from Makita if he pursued a “build share” option. Finally, he considered the risk. On the one hand, B&D was not making much money in the Professional-Tradesmen segment anyway, so financial risk was limited. On the other hand, there might be implications for the other two segments and embarrassment in the retail channels.

One of the color options he was considering was a bold “Industrial Yellow”—a familiar job site color associated with safety, but not yet used by any power tool brand. But, if the strategy was not success, Galli could not think of anything good that could come from his product being the same color as a lemon.

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595-057 The Black & Decker Corporation (A): Power Tools Division

12

Exhibit 1 Market Shares of Professional-Tradesmen Tools by Product Type—1990

Approximate Shares

Product Approximate % of Market Makita Milwaukee B&D

• Drills (30%) – Cordless Drivers – Corded

16% 13%

80% 50%

<5% 20%

<10% 25%

• Saws (35%) – Circulara

– Miter – Reciprocating – Jig – Chop

14% 11%

<10% <5% <5%

55% 45% 30% 25% 50%

15% –

30% 15% <5%

<10% 15% 25%

<10% 20%

• Sanders (>15%) – Finishing – Beltb

<10% <5%

60% 20%

<5% –

<10% –

aSkil held approximately 20% of Circular Saws. bRyobi held approximately 45% of Belt Sanders.

Exhibit 2 Market Shares of Professional-Tradesmen by Channel Type—1990

Approximate Shares Within Channel Type

Approximate % of Professional Segment Sales in This Channel

Makita Share

B&D Share

Two-Step 40% 55% <10% Home Centers 25% 45% <10% Warehouse Home Centers 15% 45% 20% Membership Clubs 10% 85% 0% Farm Outlets 5% 45% 15%

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The Black & Decker Corporation (A): Power Tools Division 595-057

13

Exhibit 3 Piranha Sub-Brand

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BAS 2826 Pre-Test Spring 2014

Question 1
1. In a newspaper release, Corning, Inc. announced it had received a favorable ruling from China’s Ministry of Commerce on allegations that it was selling its fiber more cheaply in China than in other countries. Corning was falsely accused of:

dumping

offloading

boycotting

repatriating

crossdocking
4 points
Question 2
1. When Britain refused to buy bananas from South America, the U.S. government, as a means of helping its trade partners, legislated taxes on some imported British-produced goods. These taxes included a nearly 100 percent _____ on Scottish wool products.

quota

export duty

boycott

tariff

WTO violation
4 points
Question 3
1. Marlin manufactures 22 caliber rimfire rifles. It is designing advertisements and planning the promotional mix for marketing in eastern Europe, South Africa, India, and Brazil. The advertising manager should expect all of the following to cause problems EXCEPT:

media availability

government regulations

exchange control

cultural differences

translation problems
4 points
Question 4
1. FedEx entered into an alliance with Chronopost Internationale, a subsidiary of the French post office. Under this alliance, FedEx will transport French international shipments in its aircraft, and the French postal service will deliver FedEx packages across Europe. This is an example of:

contract manufacturing

a trade bypass

licensing

a joint venture

service exporting
4 points
Question 5
1. An English manufacturer of cricket equipment sells directly to Georgia-based Universal Sports, which markets the products in the United States and Canada. Universal Sports is an example of a(n):

franchisee

contract broker

export agent

franchisor

contract manufacturer
4 points
Question 6
1. According to an article in the Financial Times, bringing Coca-Cola to the Chinese market presented a special challenge to the soft drink manufacturer. This challenge most likely had to do with which element of the marketing mix?

production

direct marketing

distribution

pricing

sales promotions
4 points
Question 7
1. Computer SalesA price war began in Japan in the personal computer market when Dell, Inc. introduced PCs at prices 25 to 60 percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the company’s preferred name for mail order and its main avenue for PC sales in the United States. Japan is the world’s second-largest market for personal computers and had been ruled by NEC Corporation, which maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its U.S. method of operations in which the company assembles the PC to customer specifications, loads it with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market, but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in computer-related magazines and newspapers.
Refer to Computer Sales. The fact that Japanese consumers do not buy through the methods typically used by Dell is an example of how the _____ environment influences global marketing.

legal

economic

technological

natural

cultural
4 points
Question 8
1. Jim Beam Distillery launched a Pan-European campaign across 28 markets from Russia to Scandinavia and into southern Europe to reposition its bourbon. It focused on finding men in bars and featuring them in local print ad campaigns as “real friends” of Jim Beam. Such an ambitious ad campaign could be threatened by which of the following changes in the legal environment?

negative changes in how Europeans perceive alcohol

an inflationary period, which makes drinking expensive American bourbon a luxury item

the enactment of a quota limiting how much Jim Beam can be imported

the development of a fad for clear liquor like vodka

a dramatic increase in the number of alcoholics in Europe
4 points
Question 9
1. Alabama Adventure, an amusement park in Birmingham, offers reduced rates on weekdays and higher prices for those who want to attend on weekends. It also offers lower prices for patrons who enter the park after 4 p.m. This is a way to contend with the service characteristic of:

variability

perishability

intangibility

inseparability

simultaneous production and consumption
4 points
Question 10
1. Smithsonian Children’s ExhibitA children’s exhibit at the Smithsonian Institution’s International Gallery was titled, “Microbes: Invisible Invaders . . . Amazing Aliens.” The 5,000-square-foot interactive exhibit uncovered a mysterious and virtually invisible universe of microscopic organisms–from those that sustain life to those that threaten our health. Its purpose was to show children that microbes are basically germs. The exhibit shows how researchers and others fight infection worldwide. The exhibit had hands-on activities, including a model kitchen where children learned about good and bad microbes. A virtual reality game with holograms and 3-D animations let participants combat deadly viruses. The long-term objective of the exhibit was to ensure the world’s supply of microbiologists in the upcoming decades.
Refer to Smithsonian Children’s Exhibit. The visitors to the exhibit represent the Smithsonian Institution’s:

service entity

promotional tools

target market

benefit strength

benefit complexity
4 points
Question 11
1. Smithsonian Children’s ExhibitA children’s exhibit at the Smithsonian Institution’s International Gallery was titled, “Microbes: Invisible Invaders . . . Amazing Aliens.” The 5,000-square-foot interactive exhibit uncovered a mysterious and virtually invisible universe of microscopic organisms–from those that sustain life to those that threaten our health. Its purpose was to show children that microbes are basically germs. The exhibit shows how researchers and others fight infection worldwide. The exhibit had hands-on activities, including a model kitchen where children learned about good and bad microbes. A virtual reality game with holograms and 3-D animations let participants combat deadly viruses. The long-term objective of the exhibit was to ensure the world’s supply of microbiologists in the upcoming decades.
Refer to Smithsonian Children’s Exhibit. The _____ makes it difficult for the Smithsonian to prioritize its objectives and evaluate its performance.

creation of a benefit strength

lack of a financial objective

inability to promote the exhibit

absence of service qualities

presence of intangible factors
4 points
Question 12
1. Many people would like to sell and buy on eBay, the most popular of the current Internet auction sites, but they have questions about the process and how to sell and price their merchandise. A company called Keen.com has set up a directory of specialists to whom you can address questions. When you choose a name and click on the “Call Now” button, the specialist is contacted and will personally call and answer your questions. Keen.com charges a per-minute fee to the person who contacts its specialist. Keen.com would be classified as a:

good

tangible resource

tangible product

service

nonprofit organization
4 points
Question 13
1. Rejection HotlineHas someone who was definitely not your type ever kept asking for your phone number and wouldn’t take “no” for an answer? A lot of people seem to have had this experience. Now when that annoying individual asks for your phone number, you can give this bothersome individual the number for the Rejection Hotline, which will explain to the individual that he or she is “dumb, short, fat, ugly, annoying, arrogant, or a general loser.” There is no charge for this service, which is available in 14 major cities and in Ireland. The Rejection Hotline handles about 150,000 calls weekly.
Refer to the Rejection Hotline. Because the Rejection Hotline does not rely on humans, each time a person calls he or she will receive an identical prerecorded message. This means that unlike many service products, the Rejection Hotline is:

tangible

not perishable

consistent

not produced and consumed simultaneously

not responsive
4 points
Question 14
1. Boutique HotelsIn an industry where guests are tired of cookie cutter hotels, some consumers are looking for personalized service, which can be found in boutique hotels. Boutique hotels cater to their guests’ sense of their personal image as being discriminating, more sophisticated, and more hip. Frequently, these guests don’t want to be where the crowds are. This is a small but growing market niche. There are no generally recognized rules for boutique hotels, but they tend to be small and service oriented, with high-style decor and top-notch restaurants. Employees are called cast members. Amenities include cordless phones, CD players, Aveda brand bath and hair products, and down comforters and pillows.
Refer to Boutique Hotels. To evaluate the quality provided by boutique hotels, customers would most likely depend on _____ qualities.

experience

relational

credence

search

synergistic
4 points
Question 15
1. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. Participants in the team-building exercises would use a(n) _____ quality to evaluate TeamBuilds.

credence

search

information

appraisal

experience
4 points
Question 16
1. Marriott Hotels, as well as Hyatt Regency and Adam’s Mark Inns, have expended many resources in developing Web sites that allow prospective customers to learn all that is necessary before selecting a hotel destination. The sites then allow individuals to make reservations at the hotel that best satisfies their requirements. Which of the following reflects the distribution strategy used by these hotel chains?

considerations of the storage of the service

the development of a long channel of intermediaries

the decision to use direct distribution

intensity of distribution

the physical appearance of your particular outlet
4 points
Question 17
1. Ian Trent has an MBA and is being recruited by an investment banking firm as a sales representative. He has had ten years of experience in selling industrial supplies. He was quite successful in this job but is worried that selling investment strategies may be more difficult. What factor would be the major reason for this worry?

Services are intangible and, therefore, different from his previous experience.

His services and the products he sells are inseparable.

The marketing program of investment strategies is inconsistent.

The cost inventory management system of reimbursing him may cause a problem when he makes investments.

The extensiveness of distribution is unimportant when selling an investment service.
4 points
Question 18
1. _____ was the technique used to suggest that a customer who wanted to buy a $29 shirt would also be a likely prospect for a cigar humidor.

Predictive modeling

Customer segmentation

Market aggregation

Recency-frequency-monetary analysis

Data interpolation
4 points
Question 19
1. According to the CEO of Allied Office Products, “We’re a head-count business: I know that if you have a 60-person office, you should buy $300 worth of basic office supplies—paper, pens, staples—from us with each order, but if that’s all we get, we stagnate. For us to grow, we have to convince the customer, who already likes our products and service, to buy more than just basic supplies; we have to increase the order by 10, 20, or 30 times.” Allied’s salespeople are trained to push the company’s less traditional, higher-margin lines such as coffee and refreshments, printing and forms management, and office furniture. Allied’s salespeople are engaging in:

cross-selling

trading up

buyer empowerment

alliance building

bundling
4 points
Question 20
1. Blood ServicesAs flextime, consulting, telecommuting, and downsizing make it more difficult for people to donate blood at the workplace, Brooklyn/Staten Island Blood Services has launched a CRM marketing campaign to boost awareness and repeat donations. Early in the campaign it went to its listings of previous donors and pulled out those with birthdays in February, March, and April. These donors were sent a birthday card with the greeting, “On the anniversary of your life, would you consider saving another’s life?”
Refer to Blood Services. The organization used CRM marketing to:

cross-sell other products

design targeted marketing communications

increase effectiveness of its distribution strategy

define customer service

do all of these things
4 points
Question 21
1. Blood ServicesAs flextime, consulting, telecommuting, and downsizing make it more difficult for people to donate blood at the workplace, Brooklyn/Staten Island Blood Services has launched a CRM marketing campaign to boost awareness and repeat donations. Early in the campaign it went to its listings of previous donors and pulled out those with birthdays in February, March, and April. These donors were sent a birthday card with the greeting, “On the anniversary of your life, would you consider saving another’s life?”
Refer to Blood Services. What technique did the organization use to analyze its donor information?

data identifying

recency-frequency-monetary analysis

niche marketing

predictive modeling

customer segmentation
4 points
Question 22
1. Hattie is a thirty-something executive. When she went to the phone to place a catalog order for a humidor for her father, she was pleased when the operator suggested that she might also be interested in a subscription to a magazine targeted to cigar lovers. The operator was using _____–a method commonly used to leverage customer information.

data mining

cross-selling

trading up

database enhancement

a database channel
4 points
Question 23
1. The first Nokia flagship store opened in the United States in 2005. The 2,000-square-foot store has minimalist displays stretched along the walls with interactive visuals that consumers can change or add text messages to via the products nestled below. ” Experience Areas” feature phones connected to photo printers, speakers, notebook computers, and Bluetooth headsets to demonstrate the interactivity and full range of features available on the cell phones. These “Experience Areas” are examples of _____ where customers can interact with the technology and provide information to Nokia.

touch points

focus areas

data mining

information search periods

experimental points
4 points
Question 24
1. New-Jersey based Foremost Manufacturing makes lighting reflectors and other fabricated metal products. Foremost Manufacturing recognizes that being “good enough” just isn’t good enough. With this in mind, Foremost has embarked on a program to transform itself into a manufacturing enterprise with an unwavering focus on customer service. In other words, Foremost has adopted a(n):

ethnocentric perspective

demand-based focus

sales orientation

supply-based focus

customer-centric focus
4 points
Question 25
1. In a speech, David Poirier, chief information officer of Hudson’s Bay Company, a Canadian retailer, said, “We [Hudson’s Bay Company] had all kinds of data in different places. We didn’t have a single view of the customer until we focused on finding one method to manage relationships with our customers.” Hudson’s Bay would use a _____ to profile customer segments for better CRM marketing efforts.

data mart

customer information system

data warehouse

decision support system

data cluster

 

 
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Case #8 Nucor 100 Points

Operating assumptions

Exhibit 12B
Modernized Unmodernized
Thin-slab Minimill Integrated Mill Integrated Mill
HR CR HR CR HR CR
Operating assumptions
Labor / hour $20.00 $20.00 $23.50 $23.50 $23.50 $23.50
Scrap / ton $90.00 $90.00 $80.00 $80.00 $80.00 $80.00
Man hours / ton 1.75 2.65 2.85 4.50 3.90 5.85
Capacity Utilization 90.00% 90.00% 90.00% 90.00% 75.00% 75.00%
Operation costs / ton
Labor $35.00 $53.00 $67.00 $105.50 $91.50 $141.00
Ore 0 0 51 54 52 56
Coal 0 0 35 37.5 38 40.5
Energy 24 38 9 23 9.5 25
Scrap 100 102 13.5 9.5 19.5 15.5
Materials and supplies 56 72.5 71 93 72.5 95.5
Maintenance & repairs 10 17.5 15 26.5 17 29.5
Total costs / ton $225.00 $283.00 $261.50 $349.00 $300.00 $403.00
Revenue / ton $306.50 $390.50 $326.00 $454.50 $325.00 $453.00

CF analysis-thin slab

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%
Thin Slab Minimill
0 1 2 3 4 5 6 7 8 9 10 11 12
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Capacity(million of tons of steel) 0 0 0
Shipments (12A)
– Hot-rolled sheets (HR) (12A) 0 0 0 0.25 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
– Cold-rolled sheets (CR) (12A) 0 0 0 0.175 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
Revenue / ton
– Hot-rolled sheets (HR) (12B) 306.5
– Cold-rolled sheets (CR) (12B) 390.5
Total revenue (shipment*rev/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Operating costs / ton
– Hot-rolled sheets (HR) (12B) 225
– Cold-rolled sheets (CR) (12B) 283
Total operating costs(shipment*cost/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Depreciate over 10 years 0.00
Income
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Total income
Taxes
Add back depreciation 0.00
Subtract capital expenditures
Subtract startup costs 30.00
Subtract working capital costs 30.00
Cash flow
Internal rate of return (IRR)
Discounted cash flow
Sum of discounted cash flow
Investment criterion: 25% ROA by year 5? Year 5 CF:
Year 5 Assets:
Year 5 ROA:

CF analysis – Modernize

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%
Modernized integrated mill
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Capacity(million of tons of steel) 0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2
Shipments (12A)
– Hot-rolled sheets (HR) (12A) 0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1
– Cold-rolled sheets (CR) (12A) 0 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35
Revenue / ton
– Hot-rolled sheets (HR) (12B) 326
– Cold-rolled sheets (CR) (12B) 454.5
Total revenue (shipment*rev/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Operating costs / ton
– Hot-rolled sheets (HR) (12B) 261.5
– Cold-rolled sheets (CR) (12B) 349
Total operating costs(shipment*cost/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Depreciate over 25 years 0
Income
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Total income
Taxes
Add back depreciation 0
Subtract capital expenditures
Cash flow
Internal rate of return (IRR)
Discounted cash flow
Sum of discounted cash flow
Investment criterion: 25% ROA by year 5? Year 5 CF:
Year 5 Assets:
Year 5 ROA:

CF analysis – Unmodernized

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%
Unmodernized integrated mill
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Capacity(million of tons of steel) 0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2
Shipments (12A)
– Hot-rolled sheets (HR) 0 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68
– Cold-rolled sheets (CR) 0 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08
Revenue / ton
– Hot-rolled sheets (HR) (12B) 325
– Cold-rolled sheets (CR) (12B) 453
Total revenue (shipment*rev/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Operating costs / ton
– Hot-rolled sheets (HR) (12B) 300
– Cold-rolled sheets (CR) (12B) 403
Total operating costs(shipment*cost/ton)
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Depreciate over 25 years (no expenditure to dep.) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Income
– Hot-rolled sheets (HR)
– Cold-rolled sheets (CR)
Total income
Taxes
Add back depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Subtract capital expenditures 0
Cash flow
Discounted cash flow
Sum of discounted cash flow
 
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