M II

CHETAN SARUP ROHILLA

MBA07190 B 30/11/2021

MARKETING MANAGEMENT - II

Prof. Vikas Kumar

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1. I have submitted faculty feedback 30 minutes prior to appearing in the End-Term Exam.
2. any other sources.

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Ans1) Strengths of Sagacity:

Since Sagacity is Vermont based company, its New England roots itself can be
considered a strength. It has a strong presence among “Locavores” (consumers who prefer their
food and beverages that are produces within 100 miles of where they are sold. Also, Steve
Benton’s unique techniques is another of the key strength and is probably its core competency
as a brand. His technique combines both European and East Asian tea brewing methods which
further attracts the people of United States. Also, the ingredients used are organic which makes
attracts the market of highly educated and environment conscious millennials. The strong Social
Media presence is another strength for Sagacity. Benton hosts various Facebook Live events
which further helps team to be exposed to many people across the nation. With the continuous
focus on its advertisement, the company will thrive especially if it is conscious of the
environment and its customers’ wants and needs.

Weakness of Sagacity:

One of the major weaknesses of the company is that even though the project has been
long established in China and Japan, it is not very known in United States. Although the
company was established 10 years ago, the product is not very well known because of limited
market penetration. Since their online sales constitute of only 5% of total sales, it represents a
limitation for expansion as not many people are aware of the product and hence not many visit
the company’s website. They also lack financial resources due to which they have not been able
to achieve their goal of national distribution. They also need to invest in human capital as they
have relied on three part-time sales employees, which only focuses on regional sales. Benton
also needs to stop handling the minor tasks himself and focus on the strategic aspects of the
business.

Ans2) At first glance, trade promotions seem excessive for a company just to enter into CPG
market. However, this is what everyone who is participating must accept in order to participate.
It helps in introducing a product to new consumers and helps in increasing sales for established
ones. It also helps in securing a more premium shelf position in different stores which further
increases the sales and margin.

As seen in the case of Sagacity, the CPG demanded hefty upfront marketing payments, retailer
discounts, coupon deals and slotting fee in addition to the 5% commission on the net invoices
price of each sold case. Even thought this business model might work, it makes almost
impossible for new entrants to enter the market as most of them are small sized firms with
limited financial resources. These small firms then need to find significant investments to get
their products in front of the consumers or they need to find an alternative. Their success and
failure all depends on who has the deepest pocket to control the CPG’s shelves. The ultimate
losers in all this are the consumers as it inhibits their choice. People are not able to pick and
choose what they want. Trade promotion kills product diversity which ultimately represses the
desires of the consumers.

While trade promotions benefit large companies which have a diverse product market the small
companies need to find alternative methods by capturing a more niche market areas create
their own distribution channels. New entrants, like Sagacity can get in touch with the local
representatives to get more market penetration. They can also capitalize on digital platform as a
push to direct a higher flow to a company’s website will likely pay for itself several times over in
not only sales, but also brand recognition.

Ans3) For deciding which channels to use for expansion, Moran and Benton should consider the
alternative which provides a larger ROI. They also need to consider whether the company will be
able to handle in terms of fulfilling orders. Although it will be a good investment decision to sell
its product on a major online retailer like Amazon, Sagacity Tea needs to have the required
production capacity to meet the demand from these large-scale retailers. If they are not able to
do that. It will be susceptible to negative customer reviews from the online customers and it
may also affect its core loyal customer base. Their first priority should be to keep their loyal
customers happy so that they continue to be repeat buyers. They also need to consider whether
to change the packaging or not as switching from glass to any other material might allow them
to improve their production levels and meet the demands of the online retailer but it might be a
big turn off for its existing customers who are drawn towards the brand for its unique and
environmentally friendly packaging. Since Sagacity already has its own website, it will be wiser
to invest in it instead of knocking the door of a big online retailer. They can try to invest in
google AdWords as it will direct more traffic to their website and in turn push the sales and
margins up a notch.
Ans4) Economics of Broker Model:
Considering sales of 10,000 cases as mentioned in the case,

For Online Model:

Considering sales of 97542 cases as sold in year 2017 from the case,

Hence, we can see that the ROI is much better in case of online mode.