CYRUS SMARTPHONE

Cyrus phone Ltd is a smartphone manufacturer of Indonesia established in 2010. It is

sold under the brand name „Cyrus‟. Until 2013, their market was limited only to
Indonesian. However, their reputation for high quality at a low price has made their
sales to increase steadily over the 3 years since they were established. Cyrus is
considering their marketing strategy with a view to expand their sales into the
international market to neighboring countries such as Singapore, Malaysia, Thailand
and Vietnam. Alternatively, they could extend their product range into tablet and
laptops, and so increase their market share. Due to the significant market growth,

Cyrus smartphone is able to survive in the market despite intense competition.

Cyrus is planning to have a market research to identify relative market shares and the
trends in competitor‟s sales. On the other hand, Cyrus outsources their smartphone to
a manufacturer in China. They hence use a competitive pricing strategy to undercut
the prices of most of the major competitors.

The smartphone market is an extremely competitive one. A huge appetite of Indonesian

consumers towards the smartphone has been the major reason for many smartphone
companies to expand their market in Indonesia.

20 marks, 30 minutes

(a) Define the term market share. [2 marks]

(b) Explain one advantage and one disadvantage for Cyrus phone Ltd of having market
research. [4 marks]

(c) Explain two benefits of branding that may be important for marketing of Cyrus
smartphones. [4 marks]

(d) Evaluate the possible opportunities and threats which Cyrus could face when
expanding their market internationally. [10 marks]

34

Business Management Case Studies – Marketing

 THE CLASSIC WATCH COMPANY

The Classic watch company was in trouble. Sales had fallen for each of the last three
years. The founder of the company, Harry Brainch, could not understand the reasons
for this. His business had been making the Classic Ladies wrist watch for the last 20
years. The current model had been updated but was still essentially the same design
as the original watch. Consumers had been attracted to its simple, robust design and
good value. These were very important qualities during the economic crisis that the
country had suffered from for much of the last few years.

More recently, consumer incomes had started to rise. Old

manufacturing industry had been replaced by service sector
businesses that offered many supervisory and managerial
jobs. Youth unemployment, in particular, had fallen and
young consumers had much more money to spend than
previously. Both men and women were becoming much
more fashion conscious as their consumer tastes changed
with higher incomes. Harry knew his business had to
change, but he did not know which new styles of watches to
introduce. He almost wished a return to the good old days
when shoppers were happy to buy a recognized design at a
reasonable price.

20 marks, 30 minutes

1. Is the Classic Watch Company product or market oriented? Explain your answer. (4
marks)

2. Analyse why Harry‟s original marketing strategy no longer increases sales.

(8 marks)

3. Outline three ways in which Harry might separate or segment consumers into
different groups, producing watches for these groups, in order to increase
overall sales. (8 marks)

32

Business Management Case Studies – Marketing

 LE SPORTIF HEATH AND SPORTS CLUB

Le Sportif is a health and sports club located in Paris. The club has performed well
over the last two years but now faces competition from two clubs, Wellness and
Glides, which have just opened. Wellness has been particularly successful and has
attracted a number of customers from Le Sportif.

The management of Le Sportif conducted some extensive market research to find

out more information about their customers. They used a serried of focus groups
to find out about customers views on Le Sportif and a questionnaire to provide
them with more precise data about the way customers used the club.

Le Sportif has responded positively to its market research by adopting the

following strategies:

-Introducing a family member ship scheme

-Introducing a range of family-based classes to encourage health and
fitness - Opening a coffee shop

The management of Le Sportif believes that this new customer-oriented approach,

which targets health and fitness for the whole family, will give the club a unique
selling point and will enable it to stand out from the competition.

15 marks, 25 minutes

1. Define the following terms:

a. Market research
b. Unique selling point (4 marks)

2. Explain the way focus groups could have been used to provide Le Sportif with
market research information. (4 marks)

3. Evaluate the advantages and disadvantages of Le Sportif using market

research to guide its new strategy of targeting the family market. (7 marks)

33

Business Management Case Studies – Marketing

 TOSHIBA DROPS HD DVD AFTER PROMISING START

The battle for the high-definition (HD)

DVD formats between Sony Blu-Ray and
Toshiba HD DVD has finally been won
by Sony. Despite a promising early sales
performance, Toshiba has

admitted defeat and withdrawn its rival product from the market many years before it
was expected to experience sales decline. This defeat is costly. Toshiba spent millions
of dollars developing the product and promoting it, so cash flows from it have been
negative. Marketing analysts see this as a classic situation where a „problem child
product fails to grow up‟. The unexpected acceptance of all major international film-
producing companies, such as Disney and MGM, of the Sony Blu-Ray format and their
refusal to release films on Toshiba‟s rival system was the final factor behind the
company‟s decision to withdraw it from the market. Toshiba‟s management felt
the strength of the Blu-Ray had made it very difficult
for competing technologies in this highly competitive
market.

20 marks, 30 minutes
1. With reference to Toshiba , explain what is meant by a „problem child‟
(4 marks)

2. Explain the new product development stages a product like Toshiba DVD
would go through before it is launched. (6 marks)

3. Evaluate the usefulness of models Boston Matrix to firms like Toshiba.

(10 marks)

35
Business Management Case Studies – Marketing
 DELL TO CONTINUE PRICE CUTS AS PC SALES SLOW DOWN

It‟s only a price war if you are losing money and

losing market share.‟ Dell computers, one of the
world‟s largest computer makers, promised to
continue its price-cutting offensive (some industry
insiders describe this as destroyer or predatory
pricing). This is bad news for other, smaller,
computer manufacturers.
The company pledged further cuts in the price of laptops and desktop PCs, storage
units and computer servers to increase its share of the slowing US PC market. It said
low stock levels enabled it to pass on price falls in microchips faster than rivals in the
industry; recently, there have been profit warnings from Gateway, Apple and Hewlett-
Packard. Dell has dismayed some analysts by reducing profit margins though
discounting its prices. But Michael Dell, chairman and chief-executive, said the move
was intended to undercut high-margin rivals, such as EMC and Sun Micro systems.
You have not seen the last of our price-cutting, Mr. Dell said yesterday. It‟s only a
price war if you are losing money and losing market share. We are gaining market
share and increasing sales revenue.‟

25 marks, 35 minutes

1. Explain the following terms:

a. Predatory pricing
b. Sales revenue
c. Price war (6 marks)

2. Explain the impact a reduction in the price of computers might have on the
demand for computer software. (6 marks)

3. Analyse one reason why the demand for Dell computers might be price elastic.
(6 marks)
4. Discuss the advantages and disadvantages to Dell of reducing the price of its
computers to increase market share. (7 marks)

36

Business Management Case Studies – Marketing

 OLYMPUS TARGETS YOUTH WITH I-SNAP

Olympus, the camera maker,

made its first venture into
the youth market
with the launch of a colorful kids‟
camera, the i-snap. Olympus did
not actively advertise the camera,
which is which is white with pink
or green trim, until several months
after it was launched. Marketing
director SaraCubitt hoped that the
camera‟s unusual design, high
profile packaging and point-of-sale
displays would set it apart from its
rivals. As well as window and in-
store displays, point-of-sale
promotions included floor stickers
directing customers to the
cameras, which were priced at
around $40.

20 marks, 30 minutes

1. Explain the term of „point-of-sale displays‟. (2 marks)

2. Do you think it was a good idea not to use „above the line‟ promotion in the
first few months after the launch of this product. Explain your answer.
(8 marks)

3. Assume that a similar camera is launched in the UAE. Prepare a fully

justified recommendation to Olympus for the promotional mix it should
use.
(10 marks)

37

Business Management Case Studies – Marketing

 COKE CHIEF’S LATEST DAFT IDEA – A COLA TAP IN EVERY HOUSE

It may be just a pipe dream, but Douglas Daft, the chief executive of Coca-Cola, is
planning to compete with water by channeling Coke though taps in customers‟
homes. The business has created a system to mix carbonated water with Coke‟s
secret syrup and pipe it around houses.

It would be mixed inside homes rather than pumped in from an external source.
Daft does not see Pepsi as his main competitor and will be happy only when people
are turning on taps in their homes to drink Coke rather than water. This idea is not
yet ready to be launched, Mr. Deft said. The syrup would be sold as a concentrate
in sealed containers directly by Coca Cola, over the internet.

“You would have water mixing automatically with the concentrate and then connect it
all up so that when you turn on your tap you have Coke at home. There‟s a lot more
to it than that to ensure quality and it has to be a sealed unit so people can‟t alter the
formula to destroy the value of the brand,” he said. Businesses already have closed
systems. Cafes and branches of McDonalds, the burger chain, have stored the raw
materials in basements and produced Coke on the spot for years.

20 marks, 30 minutes

1. Explain the importance of the Coca-Cola brand name to the company.

(4 marks)

2. This is an example of direct selling from the manufacturer to the consumer.

Discuss the advantages and disadvantages of this channel of distributing
Coca-Cola from the point of view of both the company and consumers.
(10 marks)

3. Outline three other methods Coca-Cola could use to „place‟ or distribute its
product to more consumers more often. (6 marks)

Business Management Case Studies – Marketing

 THE FRANCHISING PATH TO INTERNATIONAL MARKETING

Dunkin Donuts, a US-based coffee and baked goods franchise, has opened its
50th United Arab Emirates (UAE) store. Continental Foods is the UAE-based
business that owns the master franchise for Dunkin‟ Donuts in this country.
Michale Cortelletti, Dunkin Donuts International Director for the Middle East, said,
“UAE is an important growth market for the brand and has seen ground breaking
innovation, such as the opening of the first drive-through.‟

Cartridge World, the ink-cartridge filling business, founded in South Australia in 1988,
is set to continue its Asian expansion. It already has franchised outlets in India and is
aiming to launch stores in Nepal, Sri Lanka, Bangladesh and Bhutan through
international franchising. Without the quick growth offered by franchising and the
local market expertise offered by local franchisees, the business would not have
been able to grow over 1300 branches in 36 countries so rapidly.

Yogun Fruz, a Canada-based frozen yoghurt chain, has signed franchise deals for
Argentina and Peru with Fresco Chile SA. This company already owns and operates
Yogen Fruz franchises in Chile. Argentina has one of the fastest growing economies of
Southern America and has a high GDP per head. The President if Yogen Fruz said,
“we needed a locally based company with experience of the region to introduce our
brand in these other countries.” Yogen Fruz does not have to pay the high capital
costs of setting up its own subsidiaries in these other countries.

20 marks, 30 minutes

1. Explain two likely reasons why these companies are all operating in
international markets. (6 marks)

2. Analyse three differences one of these franchisor companies might

experience from selling goods in international markets compared to their
home market. (8 marks)

3. Assess reasons why all three companies have decided to enter international
markets though franchising. (6 marks)
39

Business Management Case Studies – Marketing

 E-TAILING ON THE INCREASE

Online retailing is becoming an increasingly important part of e-

commerce. Online sales have increased by 32% in 2008 compared
to high-street sales growth of 1.2%, according to industry analyst
Verdict Research. E-tailing now accounts for almost 7% of total
retail spending and this share could double to 14% by 2015. 74% of
consumers surveyed by Verdict said the internet was better for
cheaper goods and 67% agreed that it is better for comparing
prices. Typical of the move to e-tailing was the decision by Dixons,
the electrical goods retailer, to:

- Close many of its high-street stores

- Move the Dixons brand completely online.

The strategy cost £7 million, but was expected to increase sales as well
as deliver administration cost savings of £3 million annually.

“I am very excited about the prospects for the Dixons brand as a pure e-retailer,” said
the chief executive of Dixons. “Consumer buying behaviors are developing with the
market growth in broadband and we constantly innovate to support how our
customers shop.”

E-tailing is now an indispensable part of the fashion industry too. Yoox.com is a virtual
boutique that saw over 3 million visitors per month in 2008. When another site, Net-a-
Porter, partnered with fashion label Halston, one dress sold out in 45minutes after the
launch of the site. There is also potential for young new designers keen to enter the
industry to show off their styles to a huge online audience. However, when consumer
spending fell in 2009, online traders reported a lower „conversion rates‟ (online
shoppers actually buying) and there were signs of customer resistance. Tesco withdrew
its clothing ranges from Tesco Direct after its initial claim of selling online will enable us
to reach a greater number of customers eager to buy items from out collections‟ was
not supported by sales figures.

There are familiar customer complaints about „difficult to use sites‟, delays in postal
deliveries‟ and it was not as too seemed on screen‟, so perhaps high-street shops are
not doomed after all. „The high street will not die,‟ said Neil Saunders, director of
Verdict Research. “Internet retailing is set to become more significant, but shopping is a
tactile process and for many people it is a leisure activity – e-retailing does no really
deliver these two things.

40

Business Management Case Studies – Marketing

20 marks, 30 minutes

1. Define the following terms: a.

E-commerce
b. Market growth (4 marks)

2. Explain two factors that might have led to the rise in the number of consumers
shopping online. (4 marks)

3. Analyse two ways in which a high-street retailer might be able to compete

effectively with online retailers. (6 marks)

4. Discuss the advantages and disadvantages to retailers of selling their products

online. (6 marks)

41

Business Management Case Studies – Marketing