Marketing Management

The parent company’s brand “R&H” and the sub-brand “ClearSpray” are both fictitious brands. Read the following text very carefully and then answer Q1 and Q2. In October 2014, R&H’s household products division was faced with a decision regarding its “ClearSpray” household surface cleaner. Unfortunately, sales of ClearSpray in Saudi Arabia dropped in recent years. A PESTLE analysis focusing on the Saudi-Arabian market revealed critical developments in customers’ needs for seeking to minimize both packaging waste and carbon footprints. In response to these growing environmental concerns among Saudi Arabian customers, ClearSpray’s brand management was considering three different options it hoped would increase ClearSpray’s decreasing sales volume. One option would be to introduce a new packaging of the “ClearSpray” product with a 100% recyclable bottle. Notably, a market research study has revealed that 40% of the customers do not believe such claims made by companies, even though R&H has hired new staff for research and development as well as for their production facilities to develop the expertise required to offer a 100% recyclable bottle. A second option is the introduction of a stronger version of its “ClearSprayConcentrate” (4:1 vs. 2:1 concentrate) designed specifically to refill 0.5-liter bottles of their ClearSpray product. This refill concentrate would greatly reduce packaging materials as it comes in a water-soluble packet that dissolves completely when mixed with water. Actually, R&H had developed this stronger version a few years ago but put its production on hold because they felt environmental issues were not a priority. In addition, the ClearSpray brand management team has developed a concept for providing a plastic bottle recycling service “ClearTruck”. This service will target environment-friendly customers and will follow a premium-price strategy. As a bonus, however, for each purchased bottle of ClearSpray, every customer will receive a plastic bag to collect empty plastic bottles (either by ClearSpray or by any other brands and products). Once the bag is full, customers can have it picked up by ClearTruck for free to bring it to a ClearTruck recycling station. The concept has been tested in regional markets and has been approved by the head of ClearSpray brand management. However, to roll this service out to all regions in Saudi Arabia, they must acquire or partner up with a transportation service because their management lacks the required expertise to run such logistics professionally. An advantage of the ClearTruck service is that it represents a stand-alone service and can be also used as a value-added service for other R&H product lines such as their laundry detergent or their kitchen cleaner spray. The market for recycling services in Saudi Arabia is slowly growing and ClearTruck would have to position itself against two established recycling services. Additionally, ClearSpray has a lot of experience in waste management because they have switched to sustainable production processes in 2010 by constructing recycling facilities for plastic in the vicinity of their production factories. The capacities of these recycling facilities can be increased at low cost. In contrast, the existing players in the market depend on external waste management facilities owned by other private companies to recycle the plastic waste they are collecting from their customers. Interestingly, after pitching this concept to the R&H board, the director of the product line “ClearDrink” approached the ClearSpray management to gain insights on their plastic bottle recycling processes. Please answer the following question: Q: Classify the three options for expanding the “ClearSpray” product mix given in the case study. Explain why you came to these conclusions. Page 3 of 7 Note: The parent company’s brand “P&MC” and the sub-brand “ClearTooth” are both fictitious brands. Read the following text very carefully and then answer Q1 and Q2. In 2017, P&MC household products division has introduced its “ClearTooth” brand which offers a “ClearToothClassic” toothpaste, a mint-flavored toothpaste that provides excellent protection against plaque, gingivitis, stains, tartar and cavities and is positioned in the medium price segment. Unfortunately, ClearToothClassic still struggles to maintain its position the SaudiArabian dental care products market and sales are only slowly increasing. A PESTLE analysis focusing on the Saudi-Arabian market revealed critical developments in customers’ needs for seeking to minimize both packaging waste and carbon footprints. In response to these growing environmental concerns among Saudi Arabian customers, ClearTooth’s brand management was considering three different options it hoped would strengthen ClearTooth’s market position and boost its market share. One option is the introduction of a mouthwash product called “ClearWash” which is offered in 0.5-liter bottles. Each bottle comes with a refill packet that would greatly reduce packaging materials as it is water-soluble and dissolves completely when mixed with water. Actually, P&MC had developed this dissolvable packet two years ago but put its production on hold because they felt environmental issues were not a priority. A second option would be to introduce another toothpaste called “GreenToothPolish”, a toothpaste which offers the same benefits as ClearToothClassic but additionally contains organic micropolishers and charcoal for even brighter teeth and comes in a 100% recyclable tube. Notably, a market research study has revealed that 80% of the customers have an increased willingness to pay for organic and recycable dental care products that help them whitening their teeth. Thus, P&MC has hired new staff for research and development as well as for their production facilities to develop the expertise required to offer the new GreenToothPolish toothpaste and plan to introduce it at a premium price. As a third option, the ClearTooth brand management team has developed a concept for providing a plastic waste recycling service “ClearPickUp”. This service will target environment-friendly customers and will follow a premium-price strategy. As a value-added service, however, for each purchased tube of ClearTooth, every customer will receive a plastic bag to collect plastic waste (either by ClearTooth products or by any other brands and products). Once the bag is full, customers can have it picked up by ClearPickUp for free to bring it to a ClearPickUp recycling station. The concept has been tested in regional markets and has been approved by the head of ClearTooth brand management as well as all the P&MC executives. Further, to roll this service out to all regions in Saudi Arabia, they will rely on the resources and logistics know-how of an P&MC in-house transportation service. This in-house collaboration will support ClearTooth management to gain the required expertise to run such transportation logistics professionally. Another advantage of the ClearPickUp service is that it represents a stand-alone service and can be also used as a value-added service for other P&MC product lines such as their hair and body care products. The market for recycling services in Saudi Arabia is slowly growing and ClearPickUp would have to position itself against two established recycling services. Additionally, ClearPickUp can draw on experienced employees in waste management because they have acquired a young company that is known for their expertise in establishing sustainable production processes and operates several recycling facilities across the country. One challenge is that all the recycling facilities for plastic are not in the vicinity of the ClearTooth production factories. Thus, increasing the capacities of these recycling facilities may require high costs, which may inhibit quick and flexible growth. However, the existing players in the market depend on external waste management facilities owned by other private companies to recycle the plastic waste they are collecting from their customers. Interestingly, after pitching this concept to the P&MC board, the director of the product line “ClearDrink” approached the ClearTooth management to gain insights on their plastic waste recycling processes. Please answer the following question: Q: Classify the three options for expanding the “ClearTooth” product mix given in the case study. Explain why you came to these conclusions. Page 5 of 7 College of Business MBA 512 Marketing Management Midterm 2 Preparation Faculty: College of Business ASSESSOR Model Q: Preference Model: Calculate Ez, M1, M2, and M for all products based on the table of purchase probabilities below. Give one example of your calculation method for each of the values. That is, one for Ez, M1, M2, and M each. Round up to three decimals. What is the prediction of the short-term market share of 7Down? Purchase Probabilities Including new product "7Down" Excluding new product "7Down" Participant HillDew Spright Popsi Fanti 7Down HillDew Spright Popsi Fanti 1 0.315 0.285 0.225 0.175 0.375 0.325 0.300 2 0.365 0.135 0.255 0.245 0.385 0.245 0.370 3 0.145 0.390 0.465 4 0.445 0.220 0.165 0.17 0.455 0.240 0.305 5 0.345 0.285 0.318 0.052 0.345 0.323 0.332 6 0.155 0.225 0.620 0.455 0.545 7 0.355 0.345 0.300 0.385 0.615 8 0.485 0.240 0.275 9 0.245 0.225 0.530 M1 M2 M Q: Trial & Repeat Model: You are planning to distribute 7Down in different hypermarkets so that it will be available to 40.3% of the customers in the target group. The advertising agency that you hired is promising that the campaign for 7Down generate a brand awareness of 32.1% and that 44.7% of the customers in the target group will receive a digital coupon. Further, your market research department provides you with the following (unfortunately, partly incomplete; see yellow highlights) information: • First purchase probability = 0.349 • Probability of using the product after receiving a free sample = 0.511 • Product transition matrix of customers in the target group: t+1 t „7Down“ Established Products „7Down“ ??? 0.485 Established Products ??? 0.468 Please predict the long-term market share using the Trial & Repeat Model. In doing so, indicate the calculated values of the trial rate T and the repeat purchase rate S. Demonstrate your complete calculation method for each of the values. Round up to three decimals. Q: Final Market Share Please reconcile the outputs from the preference and trial and repeat models to calculate the final market share. Page 7 of 7 College of Business MBA 512 Marketing Management Midterm 2 Preparation Faculty: College of Business ASSESSOR Model Calculate Ez, M1, M2, and M for all products based on the table of purchase probabilities below. Give one example of your calculation method for each of the values. That is, one for Ez, M1, M2, and M each. Round up to three decimals. Purchase Probabilities Including the new product "Z" Excluding the new product "Z" Participant A B C D "Z" A B C D 1 0.225 0.122 0.133 0.155 0.365 0.260 0.155 0.245 0.340 2 0.105 0.200 0.255 0.440 3 0.285 0.100 0.225 0.090 0.300 0.200 0.210 0.350 0.240 4 0.155 0.255 0.255 0.335 5 0.205 0.795 6 0.325 0.120 0.150 0.405 0.215 0.295 0.490 M1 M2 M