This action might not be possible to undo. Are you sure you want to continue?
Case Analysis MKT 4210 A02 Professor Malcolm Smith #6842183
Problem Statement Jim Wells, the creator of Shoes for Moos, a specially designed type of footwear for cows to aid the cure of foot and hoof infections. With little capital and experience in the industry, Jim must decide whether to proceed and invest in this new venture. He must analyze the competitors; determine his selling price, and potential target market. With all of these factors established, Wells must decide how to promote his new product and choose a strategic distribution plan.
Situation Analysis Entrepreneur Jim Wells saw a need for a type of footwear exclusively designed for cattle, including dairy, beef, and research and show cows. Cows, such as dairy cows often suffered from terrible hoof infections, to the point of hindering their milk production due to the use of antibiotics. In some cases, Beef cows had to be put down due to their poor foot conditions. Jim then designed rubber shoes to minimize and deter these frequent infections, but has yet to settle on a proper marketing strategy, and distribution plan. In addition, although this bovine shoe appears to be a first mover in the market, Jim must have it priced strategically so it is of value but reflects its superior quality. Jim has done sufficient research already, but now must decide if he should invest in the product or not.
and potential and current markets in order to be successful. This can hurt the company financially if Wells fails to implement proper pricing and promotional strategies. Jim did not consider how the shoes would hold up if worn year-round. customer base.Jim Wells’ product Shoes for Moos provides support during the healing stage of an infected cow’s foot also acting as a deterrent from initial infection. but stop it altogether. Two notable competitors exist in the industry. Using Shoes for Moos. as well as the total milk production in a cow’s milking life span. most common during the spring and early winter months. it can be calculated a farmer loses $87. In a severe cases. Jim has little knowledge of the cattle industry regarding bovine footwear. Using the information from Exhibit 3.50 a week plus the additional cost of antibiotics already exceeds $100. a feature unique among the competition. Wells has not created a company vision and mission statement and a marketing strategy for his product. The case states an ill cow can not only decrease its milk production.00. these losses can be cut dramatically. In addition. with three different sizes and two frames . allowing them to roam without risk of the shoe tearing or falling apart. These shoes offer solutions for farmers and cows. The rubber exterior helps block moisture and dirt from getting into crevasses or open wounds on a cow’s foot. a local veterinarian. With the help of Murrel Bauman. costing anywhere from $15. Exhibit 1 shows the average milk production per cow per day. one being a Hoof Shoe sold individually. Hoof infections frequently occur during the wet and cold seasons. in order to be profitable at year end. some cows require antibiotics. but the product is not completely sound. but he does have the appropriate resources to ensure his product is attractive and of value to consumers. they will lessen the days of milk production lost each year due to foot contamination. and Kaufman footwear. In the case of dairy cows. The Moo shoes also sit securely on the cow’s feet. Wells’ product is adjustable.00 and a loss of at least a week’s worth of production. Since these shoes also act as a deterrent of foot problems. External Environment Wells must analyze his competitors. so the product faces a seasonal demand. but this shoe offers six varieties. they were able to create a high quality and durable shoe ideal for cow’s hooves. Using the information from both Exhibit 2 and Exhibit 3 the information given shows how an individual cow can drastically affect a farmer’s daily revenue.00-$30. Jim specifically designed his shoes to help cure infected hooves. Although durable.
or all of the above. If he chooses to target all of these consumers. With a higher concentration of livestock in a smaller area.1 million dairy cows living in Canada. but is not aimed at reducing hoof infection. maintaining at least a 40% contribution margin. increasing demand. The number of dairy farms across Canada is decreasing. Jim has many opportunities to make his Moo shoes a major success in the farming community as he is a potential first mover in the market if he positions his product right. Cows must be isolated in a separate pen. worsening infection. Wells can target veterinarians. enabling further promotion across the country and abroad. flat or elevated. They have an attractive price of $21. competitor analysis.700 dairy farms in Ontario and Quebec.99 and $59. dairy cow farmers. These boots become inefficient for cows to use and are priced very high at $400 US per pair. Wells should also attribute 20% of sales to the growing numbers of beef cattle who also face hoof infections. and consumer analysis. and retaining a reputable brand image through promotion.80 US. He must properly position his Moo shoes so they are readily available and valuable to customers. Wells must price appropriately to reflect the superior quality and value of the shoes while maintaining a strong contribution margin. This can be further broken down into meeting the following criteria. the product targets horses more so than cows. The other product is much more sophisticated as it uses hydrotherapy. beef farmers. with just over 70% of them living in Ontario and Quebec. Wells’ shoes are far superior in value and are a greater solution to the ailments that face cattle. research and show farmers. but it also poses a threat.99 in order to be competitive. since the cows cannot wear the device and walk around. but they allow moisture to get into the wound. which reduces their grazing time required to obtain essential nutrients for milk production. ensuring a shoe price between $39. his promotional strategy will be too broad and may not grasp as many customers. . This may be an opportunity. These shoes specifically addressed hoof structural problems and are advertised using direct mail. If Wells could properly target much of the 16. There are over 1. However. Criteria Wells decision to invest in the project or not will come from market analysis. hoses and a compressor. to massage strained foot muscles in the animal. he would generate very high revenues. Also. but their size is growing dramatically.to choose from. foot and hoof problems will become more frequent. complete with suspenders.
also identifying other magazine costs. the distribution strategy through dealers. Wells must use proper promotional plans to capture superior quality of his shoes. simultaneously creating some consumer uncertainty since they have little to compare the product to. Exhibit 9 calculates Wells’ contribution margin. being through direct mail or designated dealers. along with its break-even point if he chooses to use a direct mail distribution system.99 but to remain competitive in this market a moderate price of less than $59. Exhibit 7 shows the minimum and maximum costs spent on Trade Shows per year within Wells’ recommendation of attending five trade shows. Trade shows are also promotional executions that already attract a specific customer base. Since the dealer requires a 40% mark-up.Exhibit 4 details the small costs associated with using the Foundation for the Mentally Handicapped to mail and ship all shoes to customers. Using magazine advertisements allow a high frequency of ads reach relevant customer segments. each in Ontario and Quebec. it has become more difficult to reach the declining target consumer. For further financial analysis. should Wells further expand his print promotions. he will be surrounded by hundreds of potential customers that fit his target market. Exhibit 8 breaks down the given costs of two major provincial magazines. Wells would spend approximately $6035. Exhibit 5 shows the contribution margin of an estimated selling price of a direct mail distribution system. These Moo shoes are very innovative and are considered a first mover in the industry. it is far more attractive than the given breakeven point on Exhibit 10. Another attractive use of promotional expenditures is targeted magazine advertising.00 on trade show related expenses per year. it causes the price to exceed beyond the selling price of $59. is not attractive in Wells’ favor. Based on Exhibit 5 and Exhibit 6. Colored flyers are another option for displaying a brand’s image. Focusing on the break-even level. Wells did state the shoes could be priced up to $79. Wells’ break-even point is more than ten times larger than his break-even point using a direct mail approach. Flyers are considered inexpensive and can reach a high volume of .99. while Exhibit 6 in turn shows the contribution margin of a dealer distribution strategy. With a decreasing number of dairy farms across Canada. Due to the high fixed costs associated with this strategy. satisfaction guaranteed and form it into a message consumers can become attracted too.99 is more realistic. With the analysis of these marketing expenses. the value-added. A third important criterion to consider is a strong brand image. Looking at the two main distribution options. If minimal costs were spent. it may not be the ideal plan for Wells’ initial investment into this potential company. With Jim Wells’ participating in farm tradeshows. Although a dealer approach may reach more customers. which outlines Wells’ financials and break-even point for a dealer distribution strategy.
Jim also has full control of the operation. and the Foundation would take care of all the shipping and postage. Wells’ is considering in providing a money-back guarantee to further strengthen brand image incorporating a value-added attribute for consumers.consumers. However. both venues face high competition and often become lost in the clutter of different brands. Use direct mail through the use of the Mentally Handicapped Foundation to ship to customers. PROS: This approach is cost-effective and allows Wells to establish one-on-one customer relationships. and services. Further brand promotion done through accessible flyers in stores. PROS: . Alternatives 1. Customers would have trouble judging product quality. causing Wells’ to add in a product guarantee. while marketing the product with the use of magazine advertisements and trade show attendance and participation. With an attractive contribution margin giving a higher return. This strategy allows Wells’ to easily manage his store since Kaufman Footwear handles the inventory levels. 2. the brand’s product is not fully justified on paper since it is only a twodimensional picture. Establish direct sales to dealers in Ontario and Quebec to advertise and sell product. and magazine advertisements. and can absorb the cost of shipping as part of the selling price to advertise a single price to potential customers. CONS: Jim must ensure he sets up a speedy delivery service so the product reaches the customer before the hoof or hooves have healed themselves. Although magazine and trade show promotion reaches a larger audience. products. consumers would pay a lower price for receiving the product at home. allowing convenience to be another competitive advantage.
This increase in selling price radically increases the break-even point with the combined promotion plans. surpassing a competitive price of $59. With mandatory inventory order sizes.000.00. The majority of the expenses Wells would incur can be attributed to the necessary hire of a salesperson for a cost of per year. he can $100. he also has the option of growing it and then selling it for an even larger price than its original worth. knowledge of the with little room to grow incurred during the first month in-law’s $25. Exhibit 11 shows the fixed start-up costs to be of business using a large majority of Wells and his brotherCONS: As a first mover of this type of product in the marketplace. The number of farms is dissipating. By starting it up. drastically raising the price of the shoes.00 Wells would be mailing list has the potential to surrounding 500 outlets in Ontario and Quebec. Do not invest in the new business and sell intellectual property and rights to Kaufman Footwear PROS: This alternative would save Wells large amounts of capital and allow him to focus on his current business at his store.000. Further examining Exhibit 11 shows the expenses still give Wells room to spend more dollars on distribution and advertising.By using this strategy Shoes for Moos can gain wide exposure in a short amount of time with dealers’ actively promoting product in-store. shown in Exhibit 10. 3. and poses a lower contribution margin. venture. . Instead of spending additional hours on his Shoes for Moos potentially make money buy selling to a buyer with more experience and industry. Jim has opportunity to become extremely profitable in his new venture. showing a declining market in the near future.10 per serve Wells a great return if he secures many of the CONS: This plan of action requires dealers to have a 40% margin on sales. A small cost of $0.99. able to sell his product in large quantities.
as well as finalize promotional material design.58. . Alternative 1 is the most attractive for Jim. it brings it to a total of $22. Throughout the year Wells’ attendance in trade shows will help him better understand the industry and further learn about his future competitors.88. his product should have a “priority mailing” option that brings the product to the consumer’s door in less than three business days.00 and Exhibit 11’s total expenses of $14. Wells must coordinate with the Foundation for the Mentally Handicapped a delivery process that takes no longer than six business days to reach a Canadian customer’s door. Furthermore this decision has the greatest return on investment.870. To hold a competitive position in the market. Using the fixed costs given in Exhibit 9 amounting to $7. giving him more control on advertising. given financials. Wells must create a company mission and vision. Shoes for Moos has the potential to be largely successful in the market for it addresses and is the solution to the growing dilemma of treating cows’ hooves without hindering milk production. This alternative also allows Wells to create long-term relationships with customers. To ensure the product reaches the customer before the infection has gotten better or worsened. and product. With growing sales Wells will be able to expand his marketing budget and have the capital to hire an employee to further grow the business in the next three years.406. Wells must purchase the patent and mould for his product to give competitors a larger barrier to entry. Plan of Action In the first three months of business.536. and it is the most manageable alternative for Wells since he already runs his own clothing store.Recommendation By analyzing the potential market. To further please his customers. still less of Wells’ investment budget.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.