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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.
some cows require antibiotics.00. they will lessen the days of milk production lost each year due to foot contamination. In the case of dairy cows. 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. customer base. one being a Hoof Shoe sold individually. The case states an ill cow can not only decrease its milk production.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. The Moo shoes also sit securely on the cow’s feet. 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. so the product faces a seasonal demand. Jim specifically designed his shoes to help cure infected hooves. a local veterinarian. This can hurt the company financially if Wells fails to implement proper pricing and promotional strategies. Since these shoes also act as a deterrent of foot problems. Jim did not consider how the shoes would hold up if worn year-round. with three different sizes and two frames .50 a week plus the additional cost of antibiotics already exceeds $100. and Kaufman footwear. In addition. but stop it altogether. they were able to create a high quality and durable shoe ideal for cow’s hooves. and potential and current markets in order to be successful. Exhibit 1 shows the average milk production per cow per day. but the product is not completely sound. With the help of Murrel Bauman. in order to be profitable at year end. Two notable competitors exist in the industry. allowing them to roam without risk of the shoe tearing or falling apart. Wells has not created a company vision and mission statement and a marketing strategy for his product. Wells’ product is adjustable. but he does have the appropriate resources to ensure his product is attractive and of value to consumers. Although durable. The rubber exterior helps block moisture and dirt from getting into crevasses or open wounds on a cow’s foot. Jim has little knowledge of the cattle industry regarding bovine footwear. but this shoe offers six varieties. costing anywhere from $15.00-$30. these losses can be cut dramatically. In a severe cases. External Environment Wells must analyze his competitors. a feature unique among the competition. These shoes offer solutions for farmers and cows. Using Shoes for Moos. Using the information from Exhibit 3. Hoof infections frequently occur during the wet and cold seasons.00 and a loss of at least a week’s worth of production.
These shoes specifically addressed hoof structural problems and are advertised using direct mail. The other product is much more sophisticated as it uses hydrotherapy.80 US. enabling further promotion across the country and abroad. This may be an opportunity. worsening infection.99 and $59. to massage strained foot muscles in the animal. research and show farmers. and retaining a reputable brand image through promotion. Wells must price appropriately to reflect the superior quality and value of the shoes while maintaining a strong contribution margin. complete with suspenders. Wells can target veterinarians. He must properly position his Moo shoes so they are readily available and valuable to customers. but it also poses a threat. the product targets horses more so than cows. Also.1 million dairy cows living in Canada. This can be further broken down into meeting the following criteria. foot and hoof problems will become more frequent. increasing demand. The number of dairy farms across Canada is decreasing. beef farmers. There are over 1. Criteria Wells decision to invest in the project or not will come from market analysis. competitor analysis. but they allow moisture to get into the wound. dairy cow farmers. with just over 70% of them living in Ontario and Quebec.99 in order to be competitive. With a higher concentration of livestock in a smaller area. . Wells’ shoes are far superior in value and are a greater solution to the ailments that face cattle. They have an attractive price of $21. 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. but is not aimed at reducing hoof infection. Wells should also attribute 20% of sales to the growing numbers of beef cattle who also face hoof infections. hoses and a compressor. his promotional strategy will be too broad and may not grasp as many customers. but their size is growing dramatically. and consumer analysis. These boots become inefficient for cows to use and are priced very high at $400 US per pair. Cows must be isolated in a separate pen.700 dairy farms in Ontario and Quebec. he would generate very high revenues. which reduces their grazing time required to obtain essential nutrients for milk production. If Wells could properly target much of the 16. If he chooses to target all of these consumers. maintaining at least a 40% contribution margin. flat or elevated. ensuring a shoe price between $39. However. or all of the above.to choose from. since the cows cannot wear the device and walk around.
00 on trade show related expenses per year. he will be surrounded by hundreds of potential customers that fit his target market. Wells would spend approximately $6035. the value-added. it is far more attractive than the given breakeven point on Exhibit 10. These Moo shoes are very innovative and are considered a first mover in the industry. With Jim Wells’ participating in farm tradeshows. A third important criterion to consider is a strong brand image. Wells’ break-even point is more than ten times larger than his break-even point using a direct mail approach. Exhibit 7 shows the minimum and maximum costs spent on Trade Shows per year within Wells’ recommendation of attending five trade shows. Based on Exhibit 5 and Exhibit 6.99 is more realistic. along with its break-even point if he chooses to use a direct mail distribution system.99. should Wells further expand his print promotions. Flyers are considered inexpensive and can reach a high volume of .Exhibit 4 details the small costs associated with using the Foundation for the Mentally Handicapped to mail and ship all shoes to customers. it has become more difficult to reach the declining target consumer.99 but to remain competitive in this market a moderate price of less than $59. Colored flyers are another option for displaying a brand’s image. it may not be the ideal plan for Wells’ initial investment into this potential company. Wells must use proper promotional plans to capture superior quality of his shoes. Exhibit 8 breaks down the given costs of two major provincial magazines. being through direct mail or designated dealers. which outlines Wells’ financials and break-even point for a dealer distribution strategy. With the analysis of these marketing expenses. Since the dealer requires a 40% mark-up. simultaneously creating some consumer uncertainty since they have little to compare the product to. satisfaction guaranteed and form it into a message consumers can become attracted too. With a decreasing number of dairy farms across Canada. If minimal costs were spent. Due to the high fixed costs associated with this strategy. Exhibit 9 calculates Wells’ contribution margin. Exhibit 5 shows the contribution margin of an estimated selling price of a direct mail distribution system. Using magazine advertisements allow a high frequency of ads reach relevant customer segments. Although a dealer approach may reach more customers. is not attractive in Wells’ favor. while Exhibit 6 in turn shows the contribution margin of a dealer distribution strategy. also identifying other magazine costs. it causes the price to exceed beyond the selling price of $59. Another attractive use of promotional expenditures is targeted magazine advertising. Looking at the two main distribution options. Trade shows are also promotional executions that already attract a specific customer base. Wells did state the shoes could be priced up to $79. each in Ontario and Quebec. For further financial analysis. Focusing on the break-even level. the distribution strategy through dealers.
Jim also has full control of the operation. and magazine advertisements. However. Establish direct sales to dealers in Ontario and Quebec to advertise and sell product. Wells’ is considering in providing a money-back guarantee to further strengthen brand image incorporating a value-added attribute for consumers. Further brand promotion done through accessible flyers in stores. 2. both venues face high competition and often become lost in the clutter of different brands. Although magazine and trade show promotion reaches a larger audience. This strategy allows Wells’ to easily manage his store since Kaufman Footwear handles the inventory levels. and the Foundation would take care of all the shipping and postage. Customers would have trouble judging product quality. and can absorb the cost of shipping as part of the selling price to advertise a single price to potential customers. while marketing the product with the use of magazine advertisements and trade show attendance and participation. the brand’s product is not fully justified on paper since it is only a twodimensional picture. 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. products. Use direct mail through the use of the Mentally Handicapped Foundation to ship to customers. allowing convenience to be another competitive advantage. Alternatives 1. causing Wells’ to add in a product guarantee. PROS: . PROS: This approach is cost-effective and allows Wells to establish one-on-one customer relationships. consumers would pay a lower price for receiving the product at home. With an attractive contribution margin giving a higher return.consumers. and services.
00. Further examining Exhibit 11 shows the expenses still give Wells room to spend more dollars on distribution and advertising. able to sell his product in large quantities. This increase in selling price radically increases the break-even point with the combined promotion plans. The number of farms is dissipating. and poses a lower contribution margin. 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. 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. With mandatory inventory order sizes.By using this strategy Shoes for Moos can gain wide exposure in a short amount of time with dealers’ actively promoting product in-store. 3. knowledge of the with little room to grow incurred during the first month in-law’s $25.99.000. A small cost of $0. .00 Wells would be mailing list has the potential to surrounding 500 outlets in Ontario and Quebec. venture. By starting it up. Instead of spending additional hours on his Shoes for Moos potentially make money buy selling to a buyer with more experience and industry. drastically raising the price of the shoes.000. 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. surpassing a competitive price of $59. Jim has opportunity to become extremely profitable in his new venture. shown in Exhibit 10. he can $100. 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 also has the option of growing it and then selling it for an even larger price than its original worth.
his product should have a “priority mailing” option that brings the product to the consumer’s door in less than three business days. 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. To hold a competitive position in the market. To further please his customers.00 and Exhibit 11’s total expenses of $14. Wells must create a company mission and vision.536. it brings it to a total of $22. still less of Wells’ investment budget. Throughout the year Wells’ attendance in trade shows will help him better understand the industry and further learn about his future competitors.870.406. 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. 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. giving him more control on advertising. . and product. To ensure the product reaches the customer before the infection has gotten better or worsened.Recommendation By analyzing the potential market. and it is the most manageable alternative for Wells since he already runs his own clothing store. Alternative 1 is the most attractive for Jim. This alternative also allows Wells to create long-term relationships with customers. Wells must purchase the patent and mould for his product to give competitors a larger barrier to entry.88. Plan of Action In the first three months of business. Furthermore this decision has the greatest return on investment.58. Using the fixed costs given in Exhibit 9 amounting to $7. as well as finalize promotional material design. given financials.
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