Consumer Behaviour Assignment 1

/in /by

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.

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Case Discussion Connecting With Consumers: Black & Decker

/in /by

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.

1

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

2

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

3

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.

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

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!”

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

6

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

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

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.

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.

 

 

59 5-

05 7

–

8-

Fi gu

re E

B la

ck &

D ec

ke r

Pr od

uc t A

ss es

sm en

t

R A

N K

P O

R T

F O

LI O

19 90

S IZ

E ($

m ill

io ns

) W

E A

K /

U N

D E

V E

LO P

E D

C O

M P

E T

IT IV

E LE

A D

E R

S H

IP

C O

R D

LE S

S D

R IL

LS

C IR

C U

LA R

S A

W S

C O

R D

E D

D R

IL LS

M IT

E R

S A

W S

F IN

IS H

IN G

S A

N D

E R

S

A N

G LE

G R

IN D

E R

S

R E

C IP

R O

C AT

IN G

S A

W S

R O

U T

E R

S /T

R IM

M E

R S

S C

R U

G U

N S

B E

LT S

A N

D E

R S

JI G

S A

W S

H A

M M

E R

S /D

R IL

LS

C H

O P

S A

W S

IM PA

C T

W R

E N

C H

E S

1 2 3 4 5 6 7 8 9 10 11 12 13 14

$6 7 58 56 44 36 23 21 19 16 16 12 11 11 7

P R

O F

E S

S IO

N A

L P

O W

E R

TO O

L P

R O

D U

C T

A S

S E

S S

M E

N T

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

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 . . .”

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

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:

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

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.

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

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%

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

13

Exhibit 3 Piranha Sub-Brand

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.

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Marketing ECA 1

/in /by

Question Requirements:

 

1. Please refer to Boost Juice Article for the background of the case study, and the attached word document for the questions.

 

2. Please conduct secondary research to substantiate answers.

 

3. Please use APA style referencing (including in text and end of text referencing)

 

4. Please do not explain an overview of levels and types of Market Segmentation for question 1a, a brief overview will suffice.

 

5. Keep answer to within 300 word limit for question 1a, and 400 word limit for question 1b.

 

ASIAN CASE RESEARCH JOURNAL, VOL. 18, ISSUE 1, 175–197 (2014)

© 2014 by World Scientific Publishing Co. DOI: 10.1142/S0218927514500072

acrj

This case was prepared by Dr. Jane L. Menzies and Professor Stuart C. Orr of Deakin University, Australia, as a basis for classroom dis- cussion rather than to il- lustrate either effective or ineffective handling of an administrative situation.

Please address all correspon- dence to Dr. Jane L. Menzies, Deakin Graduate School of Business, Deakin University, 221 Burwood Hwy, Burwood, VIC 3125, Australia. E-mail: [email protected]

Internationalization of Boost juice to Malaysia

IntroductIon

Janine Allis, the founder and managing director of Boost Juice, sat in her Melbourne-based head office, at Chadstone “The Fashion Capital”1, and pondered the achievements made by Boost Juice in Malaysia. Since 2009, Boost Juice has opened 11 stores, with exciting plans for two more stores in the not too distant future.2 By 2014, a total of 30 stores are planned for opening. She wondered, would the economic fall-out from the European debt crisis have an effect on her Malaysian plans? Was the choice of Master Franchisees the right deci- sion for Boost Juice in Malaysia, and has the process of inter- nationalization for Boost Juice in Malaysia been successful thus far?

Background

Walk into a Boost Juice outlet and you will hear the music pumping, see the staff bopping to the rhythm of making you a fruit juice and you will understand what is meant by the “customer experience” at Boost Juice3; it’s fun, loud and designed to develop a unique relationship with customers.

The Boost Juice Company commenced operations in Adelaide, South Australia, in 2000; established and run by the entrepreneur, Janine Allis, who wanted to bring healthy fruit juices to Australia.4 Allis was aware of the popularity of juice bars across the globe. She had visited many juice bars in

S0218927514500072.indd 175 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

176 ACRJ

 

the United States where the industry was much more devel- oped than in most other countries.5 Allis built the organi- sation up from its modest beginnings in the Melbourne suburbs where she started mixing up some “wicked juice and smoothie blends” in her own garage, she then opened her first retail outlet in Adelaide in 2000.6 In 2004, Janine Allis was awarded Telstra’s Businesswoman of the Year award for her entrepreneurialism.7 Since then, Boost Juice has become an incredible franchising success story and, accordingly, has been awarded a multitude of awards in the Australian business community.8

By 2005, Boost Juice had expanded to 180 retail juice outlets across Australia and its brand awareness had risen to 94%.9 Allis’s success in the Australian market (see Exhibit 1) provided her with much of the motivation to internationalize to other countries and Malaysia. Since 2004, Boost Juice has embarked on an international expansion program and, in 2012, now operates over 240 retail outlets in 15 countries, plus Australia.10 Boost Juice’s turnover was approximately A$135m in 2011.11 In 2007, Boost Juice acquired a majority holding in the Australian Mexican Food chain, Salsa.12 Then, in 2010, Boost Juice sold a majority stake to a US private equity company, The Riverside Company, for A$65m.13 The purpose of this was to raise the much-needed capital to finance Boost Juice’s further international expansion plans. See Figure 1 for Boost Juice’s development timeline.

Boost Juice entered Malaysia in 2009, with its first retail outlet in Suria, Kuala Lumpur (see Exhibit 2). By 2012, it had expanded to 11 retail outlets (mainly located in the Klang Valley, with one in Penang at Gurney Plaza)14. Locational decisions made by Boost Juice are usually based on sound research, foot-traffic, and demographic analysis.15 All Boost Juice outlets in Malaysia have been established in high-end shopping centres. These locations were selected because the

Fig. 1. Boost Juice Company Development Timeline.

S0218927514500072.indd 176 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 177

 

volume of foot-traffic in shopping centres is high, and there is a belief that customers would be willing to pay a premium for juice and other juice products in shopping centres. These are also locations where it is “cool” for young people — a major segment of the juice bar market — to hang out. Boost Juice plans to continue to expand in Malaysia and have 30 outlets operating there by 2014.16 The company’s international expansion is driven by Boost’s global brand strategy; “To become to juice, what Starbucks is to coffee”.17

Industry

The juice bar industry structure in Malaysia is fragmented, incorporating many small single owner/operator businesses. While sophisticated juice bars are becoming more common in Malaysia, especially in shopping malls and new urban areas, Boost Juice must also compete with the local Malaysian road- side drinks and juice stalls that service more than 50% of the market.18 The juice bar industry in Malaysia is in the early stages of development and is characterized by high growth. The two critical influences that apply to the juice bar industry in Malaysia are the economic and socio-cultural forces (Table 1). The economy is performing strongly and there is an increasing need for consumers to be health and weight conscious, thereby driving the consumption of healthy prod- ucts such as fruit juice. These two factors make the juice bar industry in Malaysia attractive.

The juice bar industry is relatively new in Malaysia — juice bars have been popping up over Malaysia since around 2005. Before that, juices tended to be “do it yourself” (DIY), supermarket bought products, or were bought on the side of the road and in hawker centres. Therefore the juice bar industry in Malaysia has a large number of new market entrants. All new entrants, including Boost Juice, have to invest substantially in promoting the juice bar concept to develop the market, especially since juice bars usually charge a premium for their products. In Malaysia, there are a number of branded juice bar competitors for Boost Juice,

S0218927514500072.indd 177 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

178 ACRJ

 

which include “For Fresh People”, “New Zealand Natural”, “Juice Works”, “Juice Bars”, “Bobalicious Smoothies”, “Sharing Planet,” “Desserts Bar” and “Black Canyon”.19 These competi- tors mainly operate in the same locations as Boost Juice — shopping centres, and high-end urban centres. There are a number of unbranded competitors, which include juice stalls on the side of the road or in hawker centres. An analysis of the competitors in Malaysia suggests that Boost Juice has the most brand awareness.

The degree of rivalry between competitors is quite low and Boost Juice benefits from their size, resources and skills in developing the market. The other rivals competing in a similar manner to Boost Juice are comparable in size and economies of scale, being either a small chain of franchises or just a single independent juice bar. The single independent juice bars do not generate the same level of brand awareness as chains such as Boost Juice. The product ranges and basis of competition are similar for all of the juice bars in this segment of the market; they compete by offering quality to a broad

Table 1. PESTEL Analysis of Boost Juice’s International Environment

Macro-environmental

Force

Intensity Reason

Political forces Low Government support is strong for FDI

and business development

Economic forces High Malaysia has a relatively positive

economic situation, with moderate

growth, low interest rates, and optimistic

outlook

Socio-cultural forces High Malaysian consumers are becoming more

health-conscious

Technological forces Low Technology has a limited role to play as

the product is produced to demand and

often customized

Natural environment

forces

Low The industry’s environmental impact is

low so it is easily able to comply with

current expectations

Legal forces Medium Franchisees each require a food retail

licence

S0218927514500072.indd 178 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 179

 

market. Competitors do not aggressively use pricing strate- gies to attract a greater market share because of the rapidly developing market opportunities. Customers make frequent low-value purchases (possibly buying a juice every day), or when they visit a shopping centre during the weekend.

The threat of market entry is high as barriers (mainly set-up costs) are low. For example, a Boost Juice fran- chise investment costs between A$240,000 and $300,00020 in Australia, with predicted lower costs in markets such as Malaysia, because of lower factor costs. Furthermore, estab- lishment costs would be significantly lower for independent operators. The barriers to exiting the industry are also low, reflecting the low set-up costs. Malaysian government policy is strongly supportive of the entry of either local or foreign new businesses into its markets.21 Economies of scale are less important to juice bars, except in the area of purchasing and transportation of the fruit. The cost of the raw materials is fairly low, compared to the overall operating costs (site rental, power and labour costs), so economies of scale in purchasing and transportation offer only limited benefits. Otherwise, products are highly customized and, therefore, little benefit results from increased economies of scale in the juice bars themselves. There would be slight product differentiation between competitors, as competitors offer different flavours and blends.

Juice bars rely on a regular and dependable supply of fresh fruit and on the local labour force. The tropical climate contributes to the low cost of fruit in Malaysia where both fruit and vegetables are inexpensive and readily available. As the agricultural industry in Malaysia is fairly fragmented and comprises many small growers22, the range of suppliers avail- able to meet the relatively modest demands of a juice bar is extensive.

Customers in this industry are able to switch easily to another juice bar or substitute products such as fruit juices purchased from supermarkets. From a socio-cultural per- spective, however, Malaysians are becoming more health conscious. One of the reasons for this health-consciousness is reflected in a 2006 national Health and Morbidity Survey

S0218927514500072.indd 179 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

180 ACRJ

 

finding that 43% of Malaysian adults are either overweight or obese.23 Health concerns, therefore, are probably significant motivators for many customers of juice bars such as Boost Juice.

There are many alternatives to fresh fruit juice, including packaged fruit juice, milk drinks, soft drink, alcohol and coffee/tea, although fresh juices are more strongly dif- ferentiated from the health perspective. The threat of substi- tutes varies considerably as the preferences of the customers change, whereas other features of the industry change more slowly. Although the threat of substitutes is not as strong, it is difficult to react to because Boost Juice has a considerable investment in their juice bar systems, franchise and assets. There are a number of brands for fruit juices in Malaysia, which are mainly sold in supermarkets or convenience stores. In 2010, the major brands of fruit juices in Malaysia were Malaysia Milk’s well-known Marigold and Peel Fresh Brands, which have 23% of the market share, and F&n Dairies which have 18% of the market with their Sunkist and Fruit Tree Fresh Brands.24

At present, there is only limited competition in the industry, but many new juice bars are being established. It can be expected that competition will continue to increase in the industry in response to demand for juice bars and because of their profitability. In the short term, Boost Juice will need to keep their customers interested through constant product innovation to make their products more attractive than the substitutes, such as soft drinks. To achieve this, Boost Juice will need to expand its marketing and product innovation skills.

As the industry matures and the rivalry with new entrants increases, Boost Juice will have to respond to the actions of its competitors to maintain its market share. These competitors are also likely to develop their marketing and product innovation skills and will, therefore, be directly com- petitive with Boost Juice. It is also likely that, as the market matures, rivalry will move to predominantly price-based competition and profit margins will reduce. This will require Boost Juice to become more cost-efficient and to utilize more of its internal resources to respond to competitor actions.

S0218927514500072.indd 180 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 181

 

resources

A number of Boost Juice’s strategic resources have enabled them to internationalize successfully. The framework of people, product, marketing and brand characteristics will be utilized to analyse the resources that Boost Juice has available to transfer to its Malaysian operations.

People

Human resources are an important resource for Boost Juice. For example, the founder and director of Boost Juice, Janine Allis, has extensive business experience both in Australia and abroad in Hong Kong. Allis has been successful in interna- tionalizing Boost Juice to many other international locations thus far. The knowledge developed from these experiences has been a useful resource for both the establishment of the Malaysian operations, and for the advice given to Boost Juice Master Franchisees in Malaysia.

Master Franchisees are usually individuals, an organi- zation or partnership that has had previous retail experience operating multiple outlets. A Master Franchisee also needs to commit to an agreed number of retail outlets to be opened in a country over a period of time, referred to as a development schedule.25 The Master Franchisees in Malaysia for Boost Juice are a husband and wife team who had become fans of the famous Australian smoothies and juices when they lived and worked in Melbourne.26 The husband, nick Tiernan, who is English and his wife, Dr. Soraya Rahim Ismail, a Malay- sian national, decided they wanted to bring Boost Juice to Malaysia when on their honeymoon — which is an indication of their enthusiasm for the product! They then successfully applied to become a Master Franchisee.27

The background, experience and knowledge of both nick and Soraya are valuable resources for Boost Juice’s inter- nationalization to Malaysia. nick is highly creative and has been a director in the retail industry. His enthusiasm and ideas are important motivators for Boost Juice’s Malaysian

S0218927514500072.indd 181 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

182 ACRJ

 

operations.28 Both nick and Soraya had worked at Accenture in the United Kingdom (UK) and had been a consultant to multinational organisations across many countries including Europe, Japan, US and Australia.29 Furthermore, Soraya’s valuable understanding of Malaysian culture and informal institutions is critical for the successful management of staff and development of strategies for the Malaysian market.30

Boost Juice also goes out of its way to develop a com- petitive advantage in its juice bar employees. It selects employees on the basis of their customer service skills, moti- vation, and enthusiasm and they refer to those motivated individuals as a Boostie.31 The employees working at Boost Juice need to be able to function well in a team, provide exceptional customer experiences and have fun along the way.32 Given the power of the customer in this industry, having service staff able to provide a positive customer expe- rience is important in attracting back customers who could easily switch to other juice bars or substitute products.

Product

Obviously, having a “good product” is a key requirement for sales in both domestic and international markets. Boost Juice has a healthy, nutritious and good-tasting product range. The range includes fresh fruit juices, crushes and delicious smoothies made with their top secret TD4® (To Die For) low-fat frozen yoghurt.33 Boost Juice also produces and sells complementary snacks and yoghurt at their retail outlets, and has a supermarket range, which is currently stocked in Aus- tralia, but not yet in Malaysia. These products are a healthy alternative to fast food. Table 2 displays the range of Boost Juice products.

Boost Juice has an innovation focus and develops new products and tastes to remain ahead of the competition. The products are the result of a sophisticated development process, which is another of Boost Juice’s competitive advan- tages. A Boost Juice nutritionist assists in the development of all products and everything is at least 98% fat-free and does not contain any artificial flavouring or colours.35 Not only

S0218927514500072.indd 182 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

internationalization of boost juice to malaysia 183

 

does the product serve as a source of competitive advantage, the customer experience is also influential, as Soraya explains:

“boost is not just another juice bar — the brand is based on the entire Boost Experience, which takes place every time a customer enters a store.”36

therefore, this broader experience is designed to develop a relationship with customers and ensure that they return, as Soraya further elucidates: “It is a combination of a fantastic product, served by positive and energetic people who greet you with a smile and are polite enough to call you by your first name, with a bright and colourful store environment to match”.37 this

table 2. the range of boost juice Products34

Products

Low-Fat Smoothies

Mango Magic

Strawberry Squeeze

All Berry Bang

Passion Mango

Janine’s Favourite

Blueberry Blast

Banana Buzz

Tropical Storm

Super Smoothies

Energy Lift

Green Tea Mango

Mantra

Gym Junkie

Brekkie to go-go

Skinny Smoothies

Mini-Me Mango

Berry Berry Light

Skinny Minnie

Melon

Indulgence

Smoothies

Raspberry Ripe

King William

Chocolate

Juices

Two & Five Juice

Energiser Juice

Wild Berry Juice

Immunity Juice

Create Your Own

Juice

Choose from a variety

of fruits

Crushes

Mango Tango

Crush

Berry Crush

Lemon Crush

Watermelon Crush

Tropical Crush

Boosters

Vita Booster

Immunity Booster

Energiser Booster

Protein Booster

Complementary

Product Banana Bread

Wraps

Yoghurt

Fruit

Muesli Bars

Supermarket Range

Bottled Juice

Frozen Yoghurt

Healthy Snacks

 

S0218927514500072.indd 183 12/8/2014 9:05:31 AM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

184 ACRJ

 

relationship is an important source of competitive advantage for Boost Juice. Therefore, as a result of the development of innovative products and customer service to match, Boost Juice is able to compete successfully in the Malaysian market.

Marketing and Branding

Boost Juice marketing and branding is also a source of competitive advantage. It has made a name for itself with brightly-coloured stores, packaging and advertising; per- ceived to be “cool” and “fun” by young consumers. The company has successfully built a well-recognized brand through public relations exercises, the media including radio and television, and it also has a vibrant and exciting website.38 It also approximately eight campaigns per year in the stores to boost the profile of Boost Juice, attract customers and develop the customer experience. They also have an active Facebook page, with a dedicated Boost Juice Malaysia site where they promote various campaigns, specials and offers. Through social media, Boost Juice aims to connect with its customers and assist in developing the customer experi- ence. Promotions tend be fun, for example, a recent promo- tion has been “the name game”, where Boost offer a “Free Boost” to people with a particular name every weekday for a period of four weeks. Generation Y and X customers are par- ticularly responsive to this type of marketing, branding and promotions. The brand profile is used to Boost Juice’s com- petitive advantage in its marketing activities.39

The development of Boost Juice’s brand in Malaysia has been necessary for it to continue to innovate its product lines. Introducing innovative products such as “All Berry Bang” and “Mango Tango”, “Brekkie to go-go” and “Energy Lift” has provided Boost Juice with a significant portion of its differentiation from its competitors. It would not be possible to introduce these innovations, however, without a highly enthusiastic customer base. The introduction of such unusual products could easily backfire on Boost Juice if the customers were not already expecting and enthused by this type of innovation.

S0218927514500072.indd 184 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 185

 

InternatIonalIzatIon strategy for MalaysIa

Boost Juice took a planned approach to establishing their operations in Malaysia, deciding that it was the “right time to bring Boost to Malaysia”.40 This decision-making process was very consistent with the idea that local conditions in Malaysia must offer an advantage to Boost Juice, and that some of its home country competencies must be available to create a competitive advantage in the local market. Allis considers the relative merits of each potential international market from this perspective as part of Boost Juice’s overall international- ization expansion plans:

“We were delighted to open stores throughout Europe and South America, but Asia in particular holds so much potential for a brand and product like ours, so we’re really looking forward to working with nick and Soraya to make this venture a huge success.”41

The high growth of the juice bar industry in Asian markets offers opportunities to innovative businesses such as Boost Juice. The relative proximity of Malaysia to Australia, and time zone similarities (Kuala Lumpur is only 3,000 km from Darwin and is in the same time zone as Perth), combined with the strong trade relationships between Australia and Malaysia, simplified transferring valuable competencies from Boost Australia to Boost Malaysia.

the Process of franchising

Boost Juice was able to expand rapidly in Malaysia through franchises. Sharing the financial load and risk with fran- chisees enabled Boost Juice to expand more rapidly than would have been possible if it had had to rely purely on its own resources and access to capital. The rapid rate of expansion in a number of countries, including Malaysia, has enabled it to build first-mover advantages, with the result that Boost Juice is now a highly internationalized organisa- tion with little evidence of a home country bias.42 To assist

S0218927514500072.indd 185 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

186 ACRJ

 

in internationalization, Boost Juice works with an experi- enced US-based consultancy firm, which assisted Subway and Gloria Jean’s to enter China.43 Boost Juice operates in Indonesia, Singapore, Malaysia, China, Thailand, Hong Kong, Macau, Kuwait, Chile, Brazil, South Africa, the UK, Estonia, Lithuania, Germany, United Arab Emirates (UAE) and South Korea (Figure 2).44 In 2012, Boost Juice also has plans to open five stores in India, with a total of 30 over the next five years.45 Boost Juice has also aimed to be locally-orientated when internationalizing to different countries, which gives them a better understanding of the local market. For example, choosing Soraya Rahmin Ismail as a Master Franchisee offers Boost Juice two advantages. The first advantage is that because Soraya is a Malaysian national, she understands the Malaysian environment and culture well, and second, having worked and lived in the UK, she also has an international perspective.

Franchising offers Boost Juice an advantage in Malaysia relative to many of the competitors who are not utilising franchising to reduce the amount of capital outlay and risk. Franchising has also been very effective in introducing good quality front-line management, and the development of

Fig. 2. number of Boost Juice Operations across the Globe.

S0218927514500072.indd 186 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 187

 

greater efficiencies than could be achieved by using central- ized staff management practices typical of company-owned juice bars.

Boost Juice aims to select its Master Franchisees from a variety of backgrounds and industries to ensure franchises are varied by personal and professional interests.46 Master Franchisee selection is based on a number of factors, which include prior significant retail experience, previous owner- ship and operation of a successful businesses, experience in driving teams, and exposure to leasing, supply chain man- agement, marketing, sales, training and operations.47 In addi- tion, they need to also share the values of Boost Juice. Master Franchisees are required to have sufficient financial resources to properly support their franchise — a net worth of US$2 million and liquidity of at least US$1 million.48

Boost provides extensive support to its Master Fran- chisees, including a dedicated International Field Support (IFS) team, on-going access to Boost Juice marketing and promotional material, a training and induction program, an operating system and operations manuals, substantial group buying power, and a long-established supplier network.49 A Master Franchisee has exclusive rights to open an agreed number of Boost Juice retail outlets over an agreed time period in their given market. They also have a number of responsibilities50:

1. They are required to own and operate a number of Boost Juice retail outlets (although they are able to grant sub- franchises to third parties for some outlets).

2. They are required to establish infrastructure to support their franchise network in the chosen country, which includes training, marketing, leasing, design and develop- ment, and supply chain management operations.

Master Franchisees are charged a fee, based on the minimum number of retail outlets to be opened in a given market, which is mutually agreed by Boost Juice and the Master Franchisee.51 There is also an on-going royalty fee that ranges between 4% and 6% of gross monthly turnover for the Master Franchise-owned retail outlets.52 Sub-franchise retail outlets

S0218927514500072.indd 187 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

188 ACRJ

 

also generate an on-going royalty fee, which is shared equally between the Master Franchisee and Boost Juice. In addition, there is an International Marketing Levy, which is 3% of gross monthly turnover for the Master Franchise-owned retail outlets.53 One per cent (1%) of this levy is repatriated to Boost Juice Australia, and the 2% balance is to be spent by the Master Franchisee in increasing the brand awareness of Boost Juice in their local market.54 Average retail outlet establish- ment costs in Australia are A$240,000–300,000, although the costs are lower in Malaysia, reflecting the lower costs of mate- rials and equipment. These costs include the signage, fit-out and equipment.

The General Manager and the Training Manager of each Master Franchisee are required to complete a minimum six-week training program prior to opening their first retail outlet. This ensures that the overall management practices associated with operating the franchise network and indi- vidual retail outlets are transferred from Boost Juice to the Master Franchisee. The majority of this training is con- ducted in Australia, and an International Field Consultant (IFC) assists later on when the first retail outlet is opened.55 On-going support is provided by the IFC, and they are a key point of contact for questions, training, support and opera- tional needs. The IFC also visits the Master Franchisee’s retail outlets twice during the first year of operation. Through the IFC, each Master Franchisee has access to Boost Juice’s cen- tralized support departments, which include finance, fran- chising, marketing, training, design and development, leasing, operations and purchasing.56

Internationalization through franchising has brought many benefits to Boost Juice. It is not exposed to the full risk nor the capital investment required for wholly-owned foreign subsidiaries. In addition, the franchisees provide Boost Juice with local market knowledge and contacts. These features have enabled Boost to internationalize quickly across the world and in countries such as Malaysia, which has allowed it to rapidly establish economies of scale in its operations there.

S0218927514500072.indd 188 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 189

 

PerforMance

Boost Juice has performed strongly over its 11 years of operation, with an annual turnover of AUD$135m in the 2011 financial year.57 In addition, Boost has been the fastest- growing juice and smoothie bar chain in the Southern Hemisphere, and their achievements have been recognized with a multitude of awards over the years.58 Some notable awards include AMEX Franchisor of the Year in 2005, PWC Franchisor of the Year in 2005, and BRW Fastest-Growing Franchise in 2004.59

a Blended future for Boost juIce

Boost Juice has a relatively aggressive international expansion plan, with The Riverside Group recently purchasing a major stake in the Boost Investment Group, named the Retail zoo (see Figure 3).60 Allis’s vision for the group is to be the next global phenomenon, and it needed the financial backing and expertise of Riverside to do this.

Despite the backing of Riverside, Boost Juice faces a number of threats in the future, which it must learn to deal with. The first of these is the threat of increased local compe- tition in its various markets. For example, Boost Juice’s local marketing efforts and the visual appeal of its retail outlets

Fig. 3. Organisational Chart for Boost Juice.

Boost Investment Group

(Reg. Bus Name:

The Retail Zoo)

Boost Foundation (Charitable)

Salsa (Mexican Restaurant Chain)

Boost Juice

Supermarket product lines

Retail (Franchised) outlets

S0218927514500072.indd 189 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

190 ACRJ

 

has done much to develop the markets in various countries. This leaves the gates open to increasing competition from rivals offering competitive products in a similar manner. The limited reliance of Boost Juice’s subsidiaries on the Austra- lian headquarters makes its operations in other countries easy to imitate. Boost Juice will need to find new ways of coun- tering competition in all of its international markets and in Malaysia. Further, can Boost Juice continue with its fran- chising approach in Malaysia, or will too many franchisees cause it to lose differentiation?

Weak economic conditions as a result of the global financial crisis (GFC) and the European debt crisis in many of its markets are another issue that it must grapple with. For much of its development phase, Boost Juice has relied on the positive economic conditions in its international markets to support the establishment of its franchised subsidiaries. This was a satisfactory approach leading up to the GFC in the years 2008 and 2009, but may not be suitable for today’s envi- ronment, especially if there is another global economic down- turn as a result of the European debt crisis. Will Boost Juice need to find new approaches to continue its global devel- opment? How will it accomplish its global vision if there is another world recession?

references

1. Chadstone is a shopping centre in the south eastern suburbs of Melbourne, Australia. It is claimed to be the largest shopping centee in the southern hemisphere, and it is labeled “The Fashion Capital” as a majority of the stores are fashion based. Chadstone also has office towers where Boost Juice’s head office is located.

2. Boost Juice, 2011a. Boost Juice in Malaysia, retrieved on 08/03/12 at http://www.boostjuicebars.com.my/Default.aspx#/ about-boost/our-history/.

3. Boost Juice, 2011b. About Us, retrieved on 10/05/11 at http:// www.boostjuicebars.com.my/Home-boost-malaysia.html#/ about-boost/our-history/.

4. Ibid. 5. Loc. cit., Boost Juice, 2011b. 6. Loc. cit., Boost Juice, 2011b.

S0218927514500072.indd 190 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 191

 

7. Telstra Businesswoman Awards, 2004. Janine Allis — Founder and Managing Director of Boost Juice, retrieved on 20/05/11 at http://www.telstrabusinesswomensawards.com/assets/pdf/ winnerbooklets/janine%20allis.pdf.

8. Boost Juice, 2012a. national Awards, retrieved on 22/05/11 at http://www.boostjuice.com.au/national-awards.

9. Loc. cit., Boost Juice, 2011b. 10. Boost Juice, 2011. About Us, retrieved on 08/03/12 on http://

www.boostjuice.com.au/about. 11. Boost Juice, 2012b. Boost Global, accessed on 08/03/12 at http://

www.boostjuice.com.au/boost-global. 12. Smartcompany, 2007. new look Boost Juice ready to expand,

11 September 2007, retrieved on 30/08/11 at http://www. smartcompany.com.au/retail/new-look-boost-juice-ready-to- expand.html.

13. Greenblat, E., 2010. Boost Juice sells majority stake for $65m, The Sydney Morning Herald, retrieved on 14/06/11, at http:// www.smh.com.au/small-business/franchising/boost-juice-sells- majority-stake-for-65m-20100502-u1ez.html.

14. Loc. cit., Boost Juice, 2011a. 15. Boost Juice, 2012c. Investment & FAQ, retrieved on 08/03/12 at

http://www.boostjuice.com.au/investment-faq. 16. Loc. cit., Boost Juice, 2011a. 17. Facebook, 2011. Boost Juice Bars Malaysia, retrieved on 20/05/11

at http://www.facebook.com/boostmalaysia?sk=info. 18. Gan, I., 2011. Personal Communication on 14/05/11. 19. Euromonitor International, 2011. Consumer Food Service

in Malaysia, retrieved on 08/03/12 at http://www. euromonitor.com/consumer-foodservice-in-malaysia/report; Che Wan, R., 2010. Juice Up, Boost Up, retrieved on 15/05/11 at http://thestar.com.my/metro/story.asp?file=/2010/ 2/28/sundaymetro/5749918.

20. Loc. cit., Boost Juice, 2012c. 21. Personal communications with Malaysian small-business

operators, 4/07/11. 22. Economist, 2011. Country Report Malaysia, August 2011. 23. Samy, F. A., 2010. Malaysians getting obese — by eating too heavily at

night, The Star, retrieved on 27/07/11 at http://thestar.com.my/ news/story.asp?file=/2010/4/11/nation/6034589&sec=nation.

24. Euromonitor, 2011. Fruit/Vegetable Juice in Malaysia, http:// www.euromonitor.com/fruit-vegetable-juice-in-malaysia/report, accessed on the 08/03/12.

S0218927514500072.indd 191 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

192 ACRJ

 

25. Boost Juice, 2011c. International Franchising, retrieved on 15/05/11 at http://www.boostjuicebars.com/#/franchising/ international-franchising.

26. Loc. cit., Boost Juice, 2011a. 27. Loc. cit., Boost Juice, 2011b. 28. Loc. cit., Boost Juice, 2011b. 29. Loc. cit., Boost Juice, 2011b. 30. Loc. cit., Boost Juice, 2011b. 31. Boost Juice, 2012d. What’s a Boostie? Retrieved on 08/03/12, at

http://www.boostjuice.com.au/whats-a-boostie. 32. Loc. cit., Boost Juice, 2011c. 33. Loc. cit., Boost Juice, 2011a. 34. Boost Juice, 2012d. Study Kit, retrieved on 08/03/12, at http://

www.boostjuice.com.au/study-kit. 35. Loc. cit., Boost Juice, 2011b. 36. Loc. cit., Boost Juice, 2011b. 37. Loc. cit., Boost Juice, 2011b. 38. Loc. cit., Boost Juice, 2012d. 39. Loc. cit., Boost Juice, 2012d. 40. Loc. cit., Boost Juice, 2011b. 41. Loc. cit., Boost Juice, 2011b. 42. Sammartino, A., 2011. International business and strategy blog:

A juicy tale of international expansion, retrieved on 20/05/11 at http://internationalbs.wordpress.com/2009/01/23/a-juicy-tale- of-international-expansion/.

43. Loc. cit., Boost Juice, 2011c. 44. Loc. cit., Boost Juice, 2011c. 45. Boost Juice, 2012e. Global news: Boost to launch in India

2012, accessed 11/03/12, at http://www.boostjuice.com.au/ global-news-2.

46. Loc. cit., Boost Juice, 2011c. 47. Loc. cit., Boost Juice, 2011c. 48. Loc. cit., Boost Juice, 2011c. 49. Loc. cit., Boost Juice, 2011c. 50. Loc. cit., Boost Juice, 2011c. 51. Loc. cit., Boost Juice, 2011c. 52. Loc. cit., Boost Juice, 2011c. 53. Loc. cit., Boost Juice, 2011c. 54. Loc. cit., Boost Juice, 2011c. 55. Loc. cit., Boost Juice, 2011c. 56. Loc. cit., Boost Juice, 2011c.

S0218927514500072.indd 192 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 193

 

57. Greenblat, E., 2010. Boost Juice sells majority stake for $65m, The Sydney Morning Herald, retrieved on 14/06/11, at http:// www.smh.com.au/small-business/franchising/boost-juice-sells- majority-stake-for-65m-20100502-u1ez.html.

58. Loc. cit., Boost Juice, 2012d. 59. Loc. cit., Boost Juice, 2011b. 60. Loc. cit., Boost Juice, 2011b. 61. Datamonitor, 2010. Australia Country Analysis Report — In-

Depth PESTLE Insights, Datamonitor. 62. DFAT, 2011. Australia — Economic Factsheet, retrieved on

02/11/2011, at http://www.dfat.gov.au/geo/fs/aust.pdf. 63. DFAT, 2008. Australia in Brief: A stable and competitive

economy, retrieved on 02/11/2011, at http://www.dfat.gov.au/ aib/competitive_economy.html.

64. Austrade, 2011. Austrade, retrieved on 02/11/2011, at http:// www.austrade.gov.au/.

65. Loc. cit., Datamonitor, 2010. 66. Loc. cit., DFAT, 2011. 67. The Australian, 2011. Aussie hits parity with US dollar, retrieved

on 02/11/11, at http://www.theaustralian.com.au/business/ aussie-hits-parity-with-us-dollar/story-e6frg8zx-1225939430116.

68. RTT news, 2011. AUD/USD Slides After Topping 1.10 Level — Westpac, retrieved on 02/11/11, at http://www.rttnews.com/ ArticleView.aspx?Id=1611446.

69. Loc. cit., DFAT, 2011. 70. Loc. cit., Datamonitor, 2010. 71. Datamonitor, 2010. Malaysia Country Analysis Report — In-Depth

PESTLE Insights, Datamonitor. 72. Ibid. 73. Department of Foreign Affairs and Trade, 2011. Malaysia

Country Brief, retrieved on 2/11/11, at http://www.dfat.gov. au/geo/malaysia/malaysia_brief.html.

74. Loc. cit., Datamonitor, 2010. 75. Loc. cit., DFAT, 2011. 76. Loc. cit., Datamonitor, 2010. 77. Loc. cit., Datamonitor, 2010. 78. Loc. cit., DFAT, 2011. 79. Loc. cit., Datamontior, 2010.

 

S0218927514500072.indd 193 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

194 ACRJ

 

Exhibit 1

Country background — Australia

Australia is a developed and stable economy with a Parliamentary democracy.61 Its business sector is primarily export-based, and Aus- tralia has traditionally been labelled “the lucky country” because of its huge deposits of natural resources such as coal, iron ore, gold, and petroleum.62 The Australian government realizes that Australia should not be dependent on natural resources, and heavily pro- motes a “knowledge-based economy” (which reflects Australia’s significant export of education services and education to interna- tional students in Australia).63 Australia has embraced globalization in the past 30 years, as it has a strong export sector and it encour- ages foreign direct investment (FDI) in and outside of Australia. Austrade, the Government’s foreign trade department, actively pro- motes internationalization and supports Australian organisations operating internationally, on a number of levels (i.e., advice, edu- cation, financial assistance, support offices).64 Australia has a small population of 22.4 million and has high GDP per capita ($64,351 in 2011 in real prices).65

Australia has been able to weather the most recent global financial crisis, and currently has a positive economic growth rate, stable and moderate inflation of around 2–3%, low unemployment (6.1%) and its business outlook and confidence is good.66 Australia’s ability to dodge the true effects of the GFC has been attributed to its natural resource export arrangements with China, the fact that the Australian economy maintains good economic fundamentals, and the economic weaknesses associated with the US and European countries. In 2011, the Australian dollar surpassed parity with the US dollar67, and achieved an all-time high, since it was floated in 1983, of A$1.10 against the greenback.68

S0218927514500072.indd 194 21/7/2014 5:06:47 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 195

 

Table 3. Australia’s Economic Characteristics.69

Annual Data 2011

Population 22.4 million

GDP Growth Rate 3%

GDP (Billions US$, Market Exchange Rate) 1,448.2

GDP (Billions US$, PPP) 918.5

GDP per capita (US$, Market Exchange Rate) 64,351

GDP per capita (US$ PPP) 40,86

Inflation 3.00%

Current Account Balance (Millions US$) −5,529

Unemployment 6.1%

Interest Rates (Cash Rate) 4.50

Table 4. Australia’s Economic Outlook 2012–2014.70

Annual Data 2012 2013 2014

Population (million) 22 22.3 22.5

GDP Growth Rate 3.6% 3.2% 3.0%

GDP (Billions US$, PPP) 545.1 563.1 580.1

GDP per capita (US$ PPP) 24,782 25,295 25,774

Inflation 2.7% 2.9% 2.7%

Unemployment 5.9% 5.9% 6.0%

S0218927514500072.indd 195 21/7/2014 5:06:48 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

196 ACRJ

 

Exhibit 2

Country background — Malaysia

Malaysia has had a relatively stable political climate and is ruled by the United Malays national Organisation (UMnO).71 The polit- ical environment is usually described as a democracy, although there are rules that do impinge on free speech and the media.72 The most recently-elected Prime Minister, najib Razak, has set out a number of reforms which are aimed at liberalising the service sector. Malaysia is classified as a high middle-income, export-ori- ented economy, with per capita GDP (in market price) of US$8,235 in 2010. Malaysians have a life expectancy of 74 years.73 Economic growth in Malaysia dropped to 1.4% in 2009; however, the Malay- sian economy has rebounded from the GFC in 2010, supported by a spike in export and import activity with China.74 The Malay- sian government reported a growth rate of 5.5% in 2010.75 In 2010, Malaysia faced a high debt to GDP ratio, which suggests that government spending needs to be reduced otherwise this could severely affect Malaysian business competitiveness.76 Malaysia’s future strategies and targets, stated in its Vision 2020, are to “move up the value chain”, and as a result it has developed attractive FDI policies to attract technology intensive businesses in response. Malaysia’s outlook looks good, with growth expected to average around 5–6% for the next three years.77

 

Source: CIA Factbook, 2011.

Figure 4. Map of Malaysia.

S0218927514500072.indd 196 21/7/2014 5:06:48 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 

 

InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 197

 

Table 5. Malaysian Economic Characteristics.78

Annual Data 2011

Population (million) 28.3

GDP Growth Rate 5.5%

GDP (Billions US$, Market Exchange Rate) 247.8

GDP (Billions US$, PPP) 442.0

GDP per capita (US$, Market Exchange Rate) 8,624

GDP per capita (US$ PPP) 15,385

Inflation 2.7%

Current Account Balance (Millions US$) 28,231

Unemployment 3.4%

Interest Rates (Cash Rate) 3.0

Table 6. Malaysian Economic Outlook 2011–2014.79

Annual Data 2012 2013 2014

Population (million) 27.1 27.5 28

GDP Growth Rate (%) 5.6 5.9 6.0

GDP (Billions US$, PPP) 165.0 174.7 185.2

GDP per capita (US$ PPP) 6,096.3 6349.1 6621.9

Inflation 2.3% 2.5% 2.5%

Unemployment 3.3% 3.3% 3.3%

S0218927514500072.indd 197 21/7/2014 5:06:48 PM

A si

an C

as e

R es

. J . 2

01 4.

18 :1

75 -1

97 . D

ow nl

oa de

d fr

om w

w w

.w or

ld sc

ie nt

if ic

.c om

by S

IM U

N IV

E R

SI T

Y o

n 04

/1 7/

16 . F

or p

er so

na l u

se o

nl y.

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Global Brand Marketing

/in /by

Assignment 6.2

 

 

1. Select a brand. Try to do an informal brand value chain analysis. Can you trace how the brand value is created and transferred?  What is the role of the multipliers?

 

 

2. Pick a product category. Can you profile the brand personalities of the leading brands in the category using Aaker’s brand personality inventory? An example of this is automobiles  and I could select a model for each category.

Sincerity (Down-to-earth, honest, wholesome, and cheerful)

Excitement (Daring, spirited, imaginative, and up-to-date)

Competence (Reliable, intelligent, and successful)

Sophistication (Upper class and charming)

Ruggedness (Outdoorsy and tough)

Note: since an automobile was used as an example, do not use it. Thank you.

 

 

3. Daily Deal Email Exercise

–  Select a specific company and provide a brief description. Coupon sites cannot be chosen.

– Is the company currently offering some type of Deal of the Day? If so, discuss current promotions.

-Create a Deal of the Day promotion for five consecutive days (Monday through Friday). Each daily deal has to be unique. Some natural things to consider are product and price but you can be creative. Make sure the deals are realistic for the company chosen.

-Design a message for the email subject line that varies

-Provide the company URL

Please note: this is not a lengthy assignment but much thought needs to go into it. Do not repeat current deals. Set up as follows:

Day 1 Email Message subject line:

Deal of the Day:

Day 2 Email Message subject line:

Deal of the Day:

(Repeat for day three through five)

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"