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Kimberly Tucker, Deo Sanders, Ray Walsh
Marketing Plan
11/01/2010
Marketing Management 6800 Section 004
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I. Review of financial & market performance:
A) Market Position:
Powers Incorporated is a computer company that is currently competing in two
segmented markets, with two major brands. The target markets in which we are competing are
the Work Horse and the Cost Cutter. The Stallion II brand targets the Workhorse segment while
our Golden Saddle targets the Cost Cutter segment. In terms of salespeople, we currently have
nine employees in London (5 Workhorse, 2 Cost Cutter, 1 Mercedes, and 1 Support), four in
Berlin (2 Workhorse, 1 Cost Cutter, 1 Support), six in Toronto (3 Workhorse, 2 Cost Cutter, 1
Support), and four in Rio de Janiero (2 Cost Cutter, 1 Workhorse, 1 Support).
Our rationale for entering into these geographic markets centers on the line of thinking
that the other competitors, such as Refined IT, i3, and NGC Next Generation Computers, would
pursue the low hanging fruits of the geographic market area of The United States. For example,
every computer company, except for Powers Inc., initially entered the U.S.A. based on the
market research concerning the 12-month potential demand (market size) and the price people
are willing to pay. The United States had the highest potential demand for Cost Cutter and Work
Horse. Also, the price people are willing to pay in the Cost Cutter Segment are highest in three
areas: New York, LA, and Chicago. Atlanta is Fifth. Additionally, the Work Horse Segment has
four of the top seven cities in the U.S.A market in terms of price willing to pay.
Conversely, the European market, in terms of price willing to pay, was less in the Cost
Cutter and the Work Horse segments than the United States market. Also, the 12-month
potential demand for Cost Cutter was higher in the United States. However, for Work Horse, the
12-month potential demand was higher in London than any other U.S.A city. Based on these
findings in the international business environment and the information found in the available
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market segments (figure 1.1), we have chosen Work Horse and Cost Cutter to gain a strategic
advantage grounded on unconventional thinking.
Figure 1.1: Available Market Segments
Available Market Segments
(Market Structure)
Mercedes
Traveler
Innovator
Performance
Work
Horse
Cost Cutter
Price
Copyright 2006 Ernest R. Cadotte
Out of the five potential segments, Cost Cutter and Work Horse present a balance of price and
performance, which allows for the greatest opportunity.
Additionally, an initial consultation with the C.E.O., Dr. Bobbitt, supported our decision
to pursue the target segments of Work Horse and Cost Cutter. We rationalized this decision
based on underdeveloped technology and initially low market demand at the beginning stages of
the simulation process. More specifically, research and development were unavailable to pursue
the higher end clientele, such as the Mercedes segment.
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Figure 1.2: Geographic Markets
In Quarters 3 & 4, Powers Inc. geared their geographic markets, Europe, Canada, and
Brazil, toward two target market segments: the Work Horse and Cost Cutter. We focused on the
European market, specifically London, because they had the highest demand for Work Horse.
We have since expanded our geographic market and brand to Berlin. The 12-month potential
demand was forth for Cost Cutter and fifth for Work Horse in the Canadian market, i.e. Toronto.
Both the Work Horse and Cost Cutter segments are in the top ten for potential demand in the
Brazilian geographic market. Essentially, consistent with our unconventional strategies, we
targeted substantial markets that were less appealing based on initial research.
B) Market Performance:
In the Cost Cutter segment, at the end of Quarter 3, we commanded a 72% market share
with a demand of 63 out of a total of 87. At the end of Quarter 4, we commanded a 78% market
share with a demand of 410 out of 524. There was a positive change in demand from quarter to
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quarter of 367. There was also an increase in market share of about 6%. We held the lead for
both the market share and market demand in the Cost Cutter segment for both Quarters 3 and 4.
Please refer to Figures 1.3 and 1.4.
Figure 1.3: Market Share
Figure 1.4: Market Demand
In the Work Horse segment, at the end of Quarter 3, we commanded nearly 57% of the
market with a demand of 75 out of 132. Similarly at the end of Quarter 4, we commanded
almost 59% of the market with a demand of 991 out of a total demand of 1684. The change in
demand between the two quarters was a positive 916 with an increase in market share of about
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2%. We held the lead for both market share and market demand in the Work Horse segment for
these two quarters
Figure 1.5: Market Share
Figure 1.6: Market Demand
In terms of total market share and market demand for every segment, we lag behind NGC
because of their superior brand judgments, strategic locations, and target segment (Traveler).
Powers Inc.’s brand judgments are three to twelve points away from reaching a grade of 70 in
Europe and Canada for both the Cost Cutter and Work Horse segments. However, in terms of
the top eight brands, Powers Inc. holds the top two brand judgments. According to price
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judgments in Canada and Europe, the Cost Cutter and Work Horse brands are doing exceedingly
well in all five target segments. However, the Stallion II brand is underperforming in the Cost
Cutter segment. Still, this discrepancy is due to the fact that this brand is not geared toward the
Cost Cutter clientele. These brand and price judgments suggest an average to below average
performance. To make up for this loss, we should improve both of our Work Horse and Cost
Cutter brand judgments to above 70%. To date, only NGC has been able to complete this
minimal requirement. Accordingly, we should augment all of our brands in an effort to achieve
this threshold.
Figure 1.7: Total Market Share
Figure 1.8: Total Market Demand
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C) Financial Performance:
According to our 4th Quarter sales performance, we sold a total of 1,428 units for both the
Work Horse (Stallion II - 656) and the Cost Cutter (Golden Saddle - 772) brands. Our Stallion II
brand brought in 1,930,878 in sales revenue and our Golden Saddle brought in 1,461,829. This
equaled a total of 3,392,707 in sales revenue. Additionally, we allotted a total of 22,200 in
rebates. The total cost of goods sold was 2,373,487. When you take the cost of goods sold, plus
the rebates, and subtract them from the total revenues we have a total gross margin of 997,020.
Please refer to figures 1.9, 1.10, and 1.11 for more details.
Figure 1.9: Total Sales
Sales - Total
Brand
Number of Units Sold
Sales Revenue Rebates Cost of Goods Sold
Gross Margin
Stallion II
656
1,930,878
10,412
1,167,055
753,411
Golden Saddle
772
1,461,829
11,788
1,206,432
243,609
1,428
3,392,707
22,200
2,373,487
997,020
Total
For an in depth analysis of our geographic market sales performances, see the
following tables:
Figure 1.10: Sales in Canada
Sales - Canada
Brand
Number of Units Sold Sales Revenue Rebates Cost of Goods Sold Gross Margin
Stallion II
122
378,078
6,100
217,044
154,934
Golden Saddle
196
362,404
4,900
306,296
51,208
Total
318
740,482
11,000
523,340
206,142
Figure 1.11: Sales in Brazil
Sales - Brazil
Brand
Number of Units Sold Sales Revenue Rebates Cost of Goods Sold Gross Margin
Stallion II
123
319,800
1,230
218,823
99,747
Golden Saddle
125
231,250
1,250
195,342
34,658
Total
248
551,050
2,480
414,165
134,405
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Figure 1.12: Sales in Europe
Sales - Europe
Brand
Number of Units Sold Sales Revenue Rebates Cost of Goods Sold Gross Margin
Stallion II
411
1,233,000
3,082
731,188
498,730
Golden Saddle
451
868,175
5,638
704,794
157,743
Total
862
2,101,175
8,720
1,435,982
656,473
According to the 3rd and 4th Quarters’ marketing division of profitability, our operating
profits are trending in a positive direction. Although our operating profits are currently in the
negative, a 50% reduction for our operating profit has been seen from Quarter 3 (-525,963) to
Quarter 4 (-205,902).
II. Assessment of current situation and the market:
A) Competitor Profile:
The companies competing in Quarter 5 are Powers Inc., Refined IT, NGC, and i3. Our
primary competitors are Refined IT and NGC. Refined IT has recently entered the London
market. Besides Powers Inc, they are the only other company competing in the European
market. They have a sales force in Europe of five people who are already targeting the Cost
Cutter and Traveler segments. One brand, Avalanche 1, is doing particularly well because of
superior price judgments due to a lack of competition in the European Traveler segment (figure
1.13). Also, this brand holds the number one position for ad judgments in the Work Horse
segment (figure 1.14). They seem to be targeting the Traveler market segment due to price
judgments and market share research. Per 4th Quarter results, Refined IT’s Cost Cutter market
share is 10.8%. For the Work Horse, it is 5.6%. Their market demand in Cost Cutter is 57 out of
a possible 524. Their demand in Work Horse is 95 out of a possible 1684. One of Refined IT’s
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strengths is their above average demand and market share in the traveler segment. Another
strength of this company is that they have a brand judgment grade of 66 out of 70 in the United
States and European markets for the traveler segment. Although their target area (traveler) is
different from ours (Cost Cutter and Work Horse), we have strategically identified that if they
improve their brand judgments in the Cost Cutter and Work Horse segments, they will prove to
be more of a threat to us in this geographic market in Quarter 5. Their price and ad judgments
already put them in the position of being a formidable foe. Please see figures 2.1 and 2.2 below
for these judgments.
Figure 2.1: European Price Judgments
Price Judgment - Europe
Company
Brand
CostCutter
Refined IT
World.
Refined IT
Avalanche.1
Powers Inc.
Powers Inc.
Innovators
Mercedes
Work Horse
Traveler
58
100
100
88
100
100
100
100
100
100
Golden Saddle
95
100
100
100
100
Stallion II
60
100
100
91
100
Figure 2.2: Top Ad Judgments for Work Horse
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Our second major competitor is NGC. NGC boasts an astounding total market share of
43%, compared to Powers Inc.’s 33% (see figure 2.3). They hold one of the top three positions
in almost every segment in terms of market share, market demand, brand judgment, ad judgment,
and price judgment. Further analysis illustrates that this company commands the leading market
share position in several target market segments. These market share leads are Mercedes
(82.8%), Innovators (68.8%), and the Traveler (57.2%). NGC also has the highest market
demand for the Traveler segment (1,026 out of 1,792), Innovators segment (126 out of 183), and
Mercedes segment (29 out of 35). They are even the second major competitor in the Work Horse
segment for market demand.
Figure 2.3: Total Market Share
According to brand judgments, two of NGC’s brands, TC 22X and AWC 22, are the top
two brands for the Traveler segment with a grade of 75. Their WorkLoad XL brand is the top
brand for the Innovators segment and the Mercedes segment. This brand is also the second
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highest brand for the Work Horse segment and third highest for the Cost Cutter segment. In both
the Work Horse and Cost Cutter segments NGC’s brand is in direct competition and second only
to Powers Inc in brand judgments. Please see figures 2.4 and 2.5 for brand judgments in the
Work Horse and Cost Cutter segments, the market segments pursued by Powers Inc.
Figure 2.4: Top 8 Brand Judgments for Work Horse
Figure 2.5: Top 8 Brand Judgments for Cost Cutter
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NGC also has impressive price and advertising judgments. Their ad judgments place
them in 2nd and 3rd place in the top eight advertisements for the Cost Cutter segment, right behind
Powers Inc. They also closely follow Powers Inc. in the Work Horse segment for ad judgments
because their ad judgment grade is a 55, compared to Powers Inc.’s 59. NGC has even achieved
a grade of 100 in price judgments in the United States for the Work Horse and Cost Cutter
segments. The following figure, figure 2.6, illustrates how Refined IT and NGC are Powers
Inc.’s primary competitors.
Figure 2.6: Competitor Highlights
Competitor Tactical Highlights
Total Demand
Number of Sales Offices
Total Sales Force Last Quarter
Number of Brands for Sale
Average Price
Total Local Inserts
Current Quarter Balanced Scorecard
Powers Inc.
Refined IT
NGC Next Generation Computers
1428
606
1831
4
3
3
23
15
20
2
2
3
2387
2605
3000
32
4
35
0
0
5
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B) SWOT:
Internal
External
Strengths
Opportunities
Market Share (Workhorse, Costcutter)
Market Demand
Sales Office Locality
European Market Dominance
Travel Segment Europe
Traveler Imitator position in the US Chicago
More European Sales Offices
STALLION II Price Judgments
Weaknesses
Threats
Poor Brand Judgments
Limited Brands
Segmentation penetration
United States penetration
Ad Judgment
NGC Brand crossover
Refined IT market Entrance
Economic Downturn
An internal analysis of Powers Inc. reveals that the company’s strengths are founded on
their command of the market share and market demand in the Work Horse and Cost Cutter
segments. We have also dominated the European, Canadian, and Brazilian markets. This gives
us a strategic advantage in the location of our sales offices. On the other hand, below average
brand judgments and ad judgments (judgments that have not received a grade of 70 or above)
and a limited number of brands and advertisements constitute the weaknesses of Powers Inc.
Our other weakness revolved around the fact that we have not yet penetrated the geographic
market of the United States.
An external analysis of Powers Inc. brings to light our opportunities and threats. Our
opportunities center on us being in a position to pursue the Traveler segment in Europe and
expand our geographic market to the United States, where we can also focus on the Traveler
segment. The other opportunities for our company are our ability to expand our sales offices in
the European market and improve our Stallion II price judgments. However, we have several
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critical threats that include NGC’s possible brand crossover, Refined IT’s entrance into our
European market, and the downturn in the economy.
C) Goals of the Firm:
Powers Inc.’s mission statement states that “Powers Incorporated is a European computer
company who is devoted to being the computer industry’s leading innovator, supplier, and
profitable consumer - oriented company. We believe in delivering the highest quality and most
reliable computing products and customer services.” We initially laid out certain strategies and
goals in order to stay ahead of the competition. Powers Inc.’s focus is on large markets with
highly competitive segments, even if they are more expensive. We pride ourselves on
controlling the geographic markets that are in the middle of the cost/size continuum. Our
competitive posture centers on building a market position and defending it, taking the lead and
keeping it, and being a fast follower by imitating smart, competitive moves. Two distinctive
competencies that have separated us from our competition are being one of the lowest providers
in the market and being the market share leader.
Currently, our goal to focus on large geographic markets has been achieved, although
competitors in these markets are lagging behind what is seen in the United States. The markets
we have chosen to compete in, Europe, Canada, and Brazil, are optimal in terms of the cost/size
continuum, and we have been able to control these geographic markets so far. For example, in
the Work Horse segment, Toronto is fifth in the 12-month potential demand and eighth in the
price customers are willing to pay. Consistent with our initial goals, this moderate cost and
demand has been realized. We have been able to build up a strong market position in each of our
geographic locations in terms of our target segments. Based on market research and strategic
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improvements, we are poised to defend our market dominance. As you will see in our Quarter 5
marketing strategy roadmap, we will be heavily targeting the Traveler segment, as well as having
a small vested interest in the Mercedes segment. Based on NGC’s success with the Traveler
segment, the creation of a similar brand geared toward this segment will springboard Powers Inc.
in the direction of being a fast follower. While we are currently the market share leader in the
both the Cost Cutter and Work Horse segments, we have not been efficient in terms of offering
the lowest prices. In an effort to reverse this, we will be altering our pricing strategy for the next
Quarter.
III. Marketing Strategy Road Map:
A) Customer Profile:
In Quarter 5 we will continue to target the Work Horse and Cost Cutter segments. We
will also begin to target the Traveler and Innovators segments. The customers who purchase our
Work Horse brand are typically financial managers, office administrators, and corporate
managers. The functions they usually look for in a computer product are bookkeeping and
budgeting, word processing, and communication with other computers. The justification for
demanding these applications lies in their desire to streamline the business process in terms of
document creation and preservation. In order to achieve this streamlining process, the Work
Horse clientele has to have a product that is secure and gives them peace of mind, is easy to use,
is a low price, easy on the eyes, and available in all local markets. Please refer to figure 3.1 for a
list of the wants and needs for the Work Horse segment.
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Figure 3.1: Work Horse Customer Wants and Needs
Customer Needs And Wants
.
Work Horse
'Peace of mind-safe,secure,no hassle
125
'Easy to use
122
'Computers are lowest priced
120
'Easy on eyes
120
'Available in all local markets
119
'Fast service response time
119
'Fast computer to computer links
119
'Established brand name
118
Our Stallion II brand targets the Work Horse segment. Based on the market research of
what our Work Horse clientele demands, this brand focuses on offering a wide variety of office
and bookkeeping software. The Stallion II provides peace of mind and security through antivirus
software. This brand also delivers a product that is easy on the eyes by offering a 17” monitor
and an expanded keyboard with hot keys. For a complete review of the Stallion II brand, please
refer to figure 3.2.
Figure 3.2: Stallion II brand
Stallion II
Base components
X
Standard desktop design
X
Digital video disk (DVD) read/write drive
X
High capacity hard drive
X
Office software-word, spreadsheets
X
Accounting/bookkeeping software
X
Business graphics software
X
Presentation software
X
Database software
X
17" monitor for desktop
X
High performance processor
X
Expanded keyboard with hot keys
X
Antivirus software
X
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Expansion slots for adding new devices
X
Standard network/Internet connection
X
Windows for professionals
X
Even though this brand offers some key customer wants and needs, there is still room for
improvement. Since we have a brand judgment of 67, this suggests only small alterations in our
brand design need to be considered. In Quarter 5 we plan to make these adjustments by offering
windows for professionals with high security protection and web design software to provide
more security and diversify our product’s functionality and meet the threshold of 70. This
modified brand will be entitled the Stallion III.
In Quarter 5, we will also create a new Work Horse brand called the Thoroughbred
because the success of the Work Horse segment in terms of market share and 12-month potential
demand has lead us to create a similar brand with upgraded features. In addition to having the
same features as the Stallion II, the Thoroughbred will offer a rugged portable design with
standard battery because business professionals seem to prefer the freedom a laptop provides.
This rationale is based on the fact that NGC has two brands that offer this feature and
subsequently have a brand judgment of 75. We will also offer an eye-popping 19” monitor to
make it easier on the eyes. In addition to these changes, we will supply a product with a very
high capacity hard drive for more storage and windows for professionals with high security
protection for added peace of mind. These new features are consistent with the Work Horse
clientele’s wants and needs. To cover the costs of these additions, we will slightly raise the price
to 3,099 in the European Market with no rebate and 3,199 in the Canadian market with a 100
rebate. This employs an odd pricing strategy in which our product is priced just below whole
dollar amounts. The rationale for this strategy is that costumers will feel as if they are getting a
bargain. Please see figure 3.3 for a table of this new brand.
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Figure 3.3: Work Horse Thoroughbred brand
Thoroughbred
Base components
X
Rugged portable design
X
Digital video disk (DVD) read/write drive
X
Very high capacity hard drive
X
Office software-word, spreadsheets
X
Accounting/bookkeeping software
X
Business graphics software
X
Presentation software
X
Database software
X
Web design software
X
19" high resolution monitor for desktop
X
High performance processor
X
Expanded keyboard with hot keys
X
Antivirus software
X
Expansion slots for adding new devices
X
Standard network/Internet connection
X
Standard battery for portable
X
Windows for professionals with high security protection
X
In addition to the Work Horse segment, we also targeted the Cost Cutter segment.
Similar to the Work Horse brand, the Cost Cutter brand focuses on office administrators and
corporate managers. However, data processors are key clientele for this segment. In terms of
application, they favor word processing, bookkeeping and budgeting, and data managementaccounts for inventory. The justification for demanding these applications lies in their desire to
streamline the business process in terms of document creation and preservation. These functions
also allow them to efficiently manage data accounts and inventory. Thus, the Cost Cutter
clientele has to have a product that is secure and gives them peace of mind, is easy to use, is easy
to setup, is a low price, and has minimal complexity for its operators.
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The Golden Saddle brand targets the Cost Cutter segment. Based on the market research
of what our Cost Cutter clientele demands, this brand focuses on offering a wide variety of
office, bookkeeping, and database software. Because this brand is not doing well in terms of
brand judgments and profitability, we will modify the Golden Saddle brand. It has a brand
judgment of 61 and only has a brand profitability of 127 dollars, which signify a need for
improvement. In order to modify this brand accordingly, we will offer windows for
professionals with high security protection for peace of mind, a rugged portable design with a
standard portable battery for more freedom. This modified brand will be named the Golden
Saddle I. Prices will remain the same (on average 1,875) because of superior price judgments.
Figure 3.4: Cost Cutter modified brand
Golden Saddle I
Base components
X
Rugged portable design
X
Compact disk (CD) read/write drive
X
High capacity hard drive
X
Office software-word, spreadsheets
X
Accounting/bookkeeping software
X
Presentation software
X
Database software
X
17" monitor for desktop
X
Mid-range processor
X
Expanded keyboard with hot keys
X
Antivirus software
X
Standard network/Internet connection
X
Standard battery for portable
X
Windows for professionals with high security protection
X
Consistent with our goals to be a fast follower that imitates smart, competitive moves,
Powers Inc. will create two new brands targeting the Traveler and Innovators segments. NGC
has been the most successful company in terms of brand, ad, and price judgments for the
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Traveler segment. However, there reluctance to enter the European market provides us with an
opportunity to create a similar brand that capitalizes on the untapped traveler segment. The
Traveler clientele, which is composed of sales people, corporate managers, and engineers,
demand presentation, word processing, and business software, portability. They also need a
product that is easy on the eyes and can communicate with other computers. In order to comply
with these demands, our Traveler brand, Pegasus, will offer the following features listed in
figure 3.5:
Figure 3.5: Pegasus brand
Pegasus
Base components
X
Rugged portable design
X
Digital video disk (DVD) read/write drive
X
High capacity hard drive
X
Office software-word, spreadsheets
X
Accounting/bookkeeping software
X
Business graphics software
X
Presentation software
X
Database software
X
Web design software
X
15" monitor for desktop
X
High performance processor
X
Standard keyboard
X
Antivirus software
X
Standard network/Internet connection
X
Standard battery for portable
X
Windows for professionals with high security protection
X
Based on the price Travelers are willing to pay in the European market, our brand will be priced
at 3,299.
In terms of market share, market demand, and brand judgment, NGC and i3 command the
Innovators segment. NGC dominates the Innovators market demand with 126 out of 183. I3 is
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second with a demand of 43. NGC also holds 68.8% of the Innovator market share. In the
United States, these two companies hold the top two positions in terms of brand judgments for
the Innovators segment, with NGC achieving a grade of 44 out of a minimum of 70 and i3
achieving a grade of 38. However, Powers Inc. is a close third with a grade of 32. This is due to
the fact that neither NGC nor i3 have entered the European or Canadian markets. Yet, according
to the 12-month potential demand, London and Berlin are the third and fourth most important
geographic locations for the Innovators clientele. Still, no other company has entered this market
except for Powers Inc. Given this information, Powers Inc. has a great opportunity to target the
Innovators segment in the European market.
The Innovators clientele consists of engineers, managers, and data processors. In order to
streamline their business and be more efficient managers and engineers, they demand a product
that has web design and management applications, technical graphics, and statistical analysis
software. This clientele also insists on having a computer product that has fast access to
graphical images, is ultra fast and can handle large tasks, is quick to response to commands, and
has fast computer to computer links. Please see figure 3.6 for a complete list.
Figure 3.6: Innovator wants and needs
Customer Needs And Wants
.
Innovators
Fast access to graphical images
129
Ultra fast, handle large tasks
125
Quick response to commands
124
Fast computer to computer links
124
Can see, work on multiple programs
123
Fast processing and output
123
Want high performance over price
121
Able to tailor to individual needs
121
Easy to tie into local area network
120
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In order to meet these customer demands, we will create a new Innovators brand that will
target the European market, as well as the Canadian and Brazilian markets. This new brand, the
Mustang, will offer several key features demanded by the Innovators clientele. Some of the
features included in this brand are graphic, statistical analysis, engineering, and web design
software. All of the components in the Mustang brand can be found in figure 3.7. Also, since the
price the Innovators clientele are willing to pay in the European market ranges between 3,500
and 3,780, we will price our Mustang brand at 3,619.
Figure 3.7: The Innovator brand - Mustang
Mustang
Base components
X
Rugged portable design
X
Digital video disk (DVD) read/write drive
X
Very high capacity hard drive
X
Office software-word, spreadsheets
X
Accounting/bookkeeping software
X
Business graphics software
X
Presentation software
X
Database software
X
Statistical analysis software
X
Engineering graphics software
X
Web design software
X
19" high resolution monitor for desktop
X
High performance processor
X
Expanded keyboard with hot keys
X
Antivirus software
X
Expansion slots for adding new devices
X
Standard network/Internet connection
X
Standard battery for portable
X
Windows for professionals with high security protection
X
Current market research has shown that, although NGC has their product priority
emphasizing the Travel segment and then the Work House, they have been successful in other
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segments, such as the Innovators, Cost Cutter, and the Mercedes segments. This is mainly due to
product feature spillover. For example, both the Mercedes and the Innovators segments value
fast access to graphical images, as well as computers that are ultra fast and can handle large
tasks. Due to these feature similarities, when customers from different segments view each
product’s components, they will often choose products not necessarily consistent with their
segmentation.
Our Work Horse, Traveler, and Innovator brands do just that. The consistency of our
product offerings across all segments allows each of our brands to reach consumers in different
target segments. For instance, when customers seek peace of mind, our Thoroughbred, Mustang,
Stallion III, and Pegasus brands offer both Antivirus software and Windows for professionals
with high security protection. Similar the Thoroughbred and the Mustang boast standard
network and Internet connections. This overlap between the Work Horse and Innovator
segments offer the clientele exactly what they demand, specifically fast computer to computer
links.
Powers Inc. also seeks to have key advantages over both external competition and
internal cannibalization. In order to minimize internal cannibalization we have instituted key
differences in our brands that allow for differentiation amongst our segments. The Stallion III
for example is the only standard desktop design that we will be featuring in Quarter 5. This key
difference will allow our immobile customers albeit for business or personal reasons, the
availability of a stationary setup. Another key difference among our segments is the absence of a
Digital Video Disk (DVD) drive for the Cost Cutter segment. Since this clientele wanted the
lowest price and minimal complexity for their operators, the Compact Disk (CD) was more
suitable.
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A) Marketing Mix Elements:
In the Customer Profile section, we outlined our rationale for product development in
terms of the target segment, brand design and augmentation, and the rationale for these
decisions. We identified the Work Horse as our primary segment. In doing so, we first created
the brand Stallion II. However, the brand judgment for this product was lower than the required
grade of 70. Thus, we decided to modify the Stallion II by offering more security and software.
This modified brand is called the Stallion III. In order to provide the Work Horse segment with
more features and benefits, we created the Thoroughbred brand. This will be our first rugged
portable design computer product, with Traveler segment crossover potential.
The Cost Cutter segment has been our secondary target. We first created the Golden
Saddle brand to focus on the needs of this clientele. This brand offered a lower cost and peace of
mind through high security protection because this segment valued inexpensive products and
security without hassle. We decided to modify this brand due to the fact that the Golden Saddle
had a brand judgment of 61, which is below the minimum of 70. The augmented brand, Golden
Saddle I, offered more security and freedom through a portable product. Besides this modified
brand, we did not create a new Cost Cutter brand because we have decided to shift our secondary
focus from the Cost Cutter segment to the Traveler segment.
Based on market research, in Quarter 5 we have decided to pursue the Traveler segment.
The rationale for doing so is due to low market product realization for the brands of the Refined
IT Company. Additionally, the current market leader in the United States, NGC, has been
reluctant to provide the Traveler clientele with a product in the European market. Thus, we
designed a Traveler brand that would focus on the European Traveler segment. Based on the
wants and needs of this segment, we created the Pegasus brand. This brand offers presentation,
25
word processing, and business software, as well as portability, because the Traveler clientele is
primarily composed of sales people, corporate managers, and engineers.
The last brand we developed for Quarter 5 was the Mustang, which is aimed at the
Innovators segment. The rationale behind this move is identical to our decision to pursue the
Traveler segment in that the product demand for the Innovators segment in European market has
been ignored by other companies. In order to fulfill the needs and wants of the Innovators
segment, the Mustang offers web design and management applications, great graphics, and
analysis software.
Our pricing strategy in previous quarters has been the average of the price people are
willing to pay in each geographic market. For example, in Europe, we determined the price
people were willing to pay in both London and Berlin for a specific segment, Work Horse. We
then took the average of those prices and as the cost for our product in that geographic market
and for that particular target segment. Essentially, we tried to provide the lowest cost for each
segment while still making a profit. In Canada, our Stallion II brand was priced at 3,099 with a
rebate 100 dollars. In the same geographic location, our Golden Saddle brand was priced at 1,849
with a rebate of 50 dollars. In this market, the Stallion II was identified as the first priority
because this geographic area had more of a demand for the Work Horse segment. In the
Brazilian market, the Stallion II sold for 2,600 with a 20 dollar rebate. Additionally, the Golden
Saddle sold for 1,850 with a 20 dollar rebate. We decided to have the Golden Saddle as the first
priority in this geographic market because there was more of a demand for the Cost Cutter
segment. In the European market, we priced our Stallion II brand at 3,000 with a rebate of 15
dollars. The Golden Saddle brand was priced at 1,925 with a rebate of 25 dollars. In this
geographic market, the Work Horse brand, Stallion II, was identified as the first priority.
26
Figure 3.8: Pricing for Powers Inc.
Competitors` Price and Priority - Canada
Company
Brand
Price
Rebate
Priority
Point of Purchase Display
Bonus Gift
Powers Inc.
Stallion II
3,099
100
1
Yes
0
0
Powers Inc.
Golden Saddle
1,849
50
2
Yes
0
0
Competitors` Price and Priority - Brazil
Company
Brand
Price
Rebate
Priority
Point of Purchase Display
Bonus Gift
Powers Inc.
Stallion II
2,600
20
2
Yes
0
0
Powers Inc.
Golden Saddle
1,850
20
1
Yes
0
0
Competitors` Price and Priority - Europe
Company
Brand
Price
Rebate
Priority
Point of Purchase Display
Bonus Gift
Powers Inc.
Stallion II
3,000
15
1
Yes
0
0
Powers Inc.
Golden Saddle
1,925
25
2
Yes
0
0
The price judgments of these two brands for our target segments have been excellent. For
example, our European Stallion II brand received a judgment of 91 in the Work Horse segment
and a 100 in the Traveler, Mercedes, and Innovators segments. This suggests crossover potential.
While this brand received a grade of 60 for the Cost Cutter segment in the European market, it
was not geared to this segment. In Canada, the Cost Cutter brand, Golden Saddle, received a
judgment of 96 and a 100 for all remaining segments. While the Stallion II made a 57 in the Cost
Cutter segment, it was geared toward the Work Horse segment of this geographic market, in
which it received a price judgment of 84. Based on these findings, the prices for our modified
Work Horse and Cost Cutter brands, Stallion III and Golden Saddle I, will remain the same.
However, the price of the Stallion III brand will be reduced to 2,899 with a 50 dollar rebate
because we had it overpriced for this geographic market.
27
Figure 3.9: Price Judgments
Price Judgment – Canada
Company
Brand
CostCutter
Innovators
Mercedes
Work Horse
Traveler
Powers Inc.
Golden Saddle
96
100
100
100
100
Powers Inc.
Stallion II
57
100
100
84
97
Price Judgment – Europe
Company
Brand
CostCutter
Innovators
Mercedes
Work Horse
Traveler
Powers Inc.
Golden Saddle
95
100
100
100
100
Powers Inc.
Stallion II
60
100
100
91
100
However, both the new Work Horse, Traveler and Innovators brands will have new
prices. In the Canadian market, the new Work Horse brand, the Thoroughbred, will have a retail
price of 2,999 with a 50 dollar rebate. This brand will have first priority in this geographic
market. This price was determined through research on the price people are willing to pay in this
market and the cost of goods already sold for this segment in this market. Since the Work Horse
is the first priority in the Canadian market, we only have point of purchase displays for these two
brands. Again, based on market research, our Traveler brand for this market, the Pegasus, will be
priced at 3,054 with no rebate and our Innovators brand, the Mustang, will have a price of 3,580
with a 50 dollar rebate.
In the Brazilian market, the Thoroughbred brand will be priced at 2,585 with a 20 dollar
rebate. The Traveler brand, Pegasus, will have a price of 3,058 with a 15 dollar rebate. The price
of the Mustang brand will be 3,512 with a rebate of 50 dollars. These prices were determined
based on a competitive analysis of what these segments were willing to pay in the Brazilian
28
market. Our top two priorities are focused on the Thoroughbred and Golden Saddle I brands.
They also contain the point of purchase displays because the demand is higher for the Work
Horse and Cost Cutter segments.
Finally, in the European market, the new Work Horse brand, the Thoroughbred brand
design will be priced at 3,099 with a 30 dollar rebate. The price of the Traveler brand, Pegasus,
will be 3,449 with a rebate of 25 dollars. The Innovators brand, the Mustang, will have a price of
3,619 with a 50 dollar rebate for this geographic market. Again, these pricing decisions were
based on a competitive analysis of what the Innovators, Traveler, and Work Horse segments
were willing to pay in the European market. The Traveler and Work Horse brands were our top
two priorities. The rationale for this priority decision is based on the 12-month potential demand.
For this geographic market, we had three point of purchase display groups: the Thoroughbred,
Pegasus, and the Mustang. The findings in the 12-month potential demand research are also the
rationale behind our point of purchase decisions.
Figure 3.10: New Quarter 5 Prices
Canada
Brand
Available for Sale Retail Price Price Rebate Sales Priority Point of Purchase Display
Stallion III
X
2,899
50
2
Golden Saddle I
X
1,849
50
4
Thoroughbred
X
2,999
50
1
Pegasus
X
3,054
0
3
Mustang
X
3,580
50
5
X
X
Brazil
Brand
Available for Sale Retail Price Price Rebate Sales Priority Point of Purchase Display
Stallion III
X
2,600
20
3
Golden Saddle I
X
1,850
20
2
X
Thoroughbred
X
2,585
20
1
X
Pegasus
X
3,058
15
4
Mustang
X
3,512
50
5
29
Europe
Brand
Available for Sale Retail Price Price Rebate Sales Priority Point of Purchase Display
Stallion III
X
3,000
15
2
Golden Saddle I
X
1,925
25
5
Thoroughbred
X
3,099
30
1
X
Pegasus
X
3,449
25
3
X
Mustang
X
3,619
50
4
X
In terms of promotional activities, Powers Inc. tried to design advertisements that
persuaded each target segment to buy a particular brand of our product by creating the right
message and placing it in the right geographic market. However, according to the International
Advertising Federation, all advertisements across all segments have received a very poor rating.
In previous quarters, our Cost Cutter ad (Stallion II) received a grade of 52, the highest in this
segment. We held the second and third places in the Work Horse segment (Stallion II and
Golden Saddle respectively), with a grade of 60 and 59.
Figure 3.11: Ad Judgments
Ad Judgment – Canada
Company
Ad
CostCutter
Innovators
Mercedes
Work Horse
Traveler
Powers Inc.
Golden Saddle
43
48
44
59
39
Powers Inc.
Stallion II
52
45
46
60
49
Ad Judgment – Europe
Company
Ad
CostCutter
Innovators
Mercedes
Work Horse
Traveler
Powers Inc.
Golden Saddle
43
48
44
59
39
Powers Inc.
Stallion II
52
45
46
60
49
30
Our advertisement decisions were based on the needs and wants of our target segments.
Like the brands we created, the benefits we chose to stress and prioritize in our ads were
determined by what needs, features, and components were most important to the particular
segment our ad was targeting. Our Stallion II ad was geared toward the Work Horse segment.
Because this segment valued a product that gave them peace of mind, was easy to use and easy
on the eyes, and had bookkeeping and work processing software, we decided to emphasize these
things in our advertisement. Please see figure 3.12 for the benefits and the prioritization of those
benefits offered in our Work Horse, Stallion II ad. We geared our Golden Saddle ad toward the
Cost Cutter segment. This target segment valued a computer product that gave them security,
was easy to use, easy to setup, and gave the clientele minimum complexity. They also demanded
a product that was priced at a lower cost but could still perform a variety of tasks and functions.
We designed this Cost Cutter advertisement around these wants and needs. Figure 3.13 illustrates
the benefits we chose to stress and prioritize in this Golden Saddle ad. In order to make our ads
more visually appealing, we added a picture or two.
Figure 3.12: Stallion II Advertisement
Stallion II
[Stallion II]
Mention brand name
6
Manufacturer`s rebate
1
High speed/execution time
3
Easy to use, simple design
4
Easy on eyes with larger screen
5
Ready to use, bundled software
2
Picture people in travel setting
7
31
Figure 3.13: Golden Saddle Brand
Golden Saddle
[Golden Saddle]
Mention brand name
1
Manufacturer`s rebate
5
High speed/execution time
4
Do variety of tasks
3
Easy to use, simple design
2
Easy on eyes with larger screen
6
Ready to use, bundled software
7
Picture business professionals
8
2
2
We justified the media placement of these two ads based on the 12-month potential
demand. We ran both the Stallion II and Golden Saddle ads seven times in the Canadian market
because the Work Horse and Cost Cutter segments both had a high potential demand in this
geographic location. In Brazil, we only ran the Stallion II ad because the Work Horse had a
higher potential demand. In Europe, we concentrated on running the Stallion II and Golden
Saddle ads in the city of London because both the Work Horse and Cost Cutter segments had a
high potential demand in this geographic location.
Figure 3.14: Advertisement Placements
Local Advertising – Canada
City
Company
Ad
Number of Inserts
Toronto
Powers Inc.
Stallion II
7
Toronto
Powers Inc.
Golden Saddle
7
Local Advertising – Brazil
City
Rio de Janeiro
Company
Powers Inc.
Ad
Stallion II
Number of Inserts
1
32
Local Advertising – Europe
City
Company
Ad
Number of Inserts
Berlin
Powers Inc.
Stallion II
1
London
Powers Inc.
Stallion II
10
London
Powers Inc.
Golden Saddle
6
The placement of these advertisements and the number of times will largely remain the
same for Quarter 5. However, the number of times they will run in their perspective geographic
markets will increase. Please see figure 3.15 for the specific numbers.
Figure 3.15: Quarter 5 Allotted Ads for Stallion II and Golden Saddle
Canada
Number of times ad should run in market
City
Cost
Toronto
Stallion II
Golden Saddle
3,500
6
5
Brazil
Number of times ad should run in market
City
Cost
Rio de Janeiro
Stallion II
Golden Saddle
3,500
4
4
Europe
Number of times ad should run in market
City
Cost
Stallion II
Golden Saddle
Berlin
6,000
7
4
London
7,000
10
4
Besides increasing the numbers for the advertisements that have already been created and
have already been running in the market, we will also modify the Work Horse and Cost Cutter
ads because they have low ad judgments. We will also develop two new ads in Quarter 5. These
new advertisements will be geared toward the Traveler and Innovators segments. Due to
extremely low ad judgments, we modified our Work Horse ad. This Stallion III ad now
33
emphasizes that Powers Inc. is the highest rated Work Horse brand. It also emphasizes the
software the Work Horse clientele has demanded. Please see figure 3.16 for a full description of
our modified Work Horse advertisement. Besides the Stallion III, we have also modified the
Golden Saddle ad in the hopes of raising our ad judgments. Based on market share research and
the wants and needs of the Cost Cutter segment, which this ad is targeting, we have modified the
Golden Saddle ad accordingly. In the modified ad, Golden Saddle I, we have emphasized that
our company has the highest rated Cost Cutter brand. Like the Work Horse ad, this ad also
emphasizes the software applications provided in our Cost Cutter brand. Please refer to figure
3.17 for a full description of our modified Cost Cutter advertisement.
Figure 3.16: Modified Stallion III Ad
Stallion II
[Stallion III]
Mention brand name
8
Manufacturer`s rebate
1
Do variety of tasks
4
Bookkeping/budgeting applications
5
Word processing application
6
Easy to use, simple design
3
Easy on eyes with larger screen
7
Ready to use, bundled software
9
Figure 3.17: Modified Golden Saddle I Ad
Golden Saddle
[Golden Saddle I]
Mention brand name
1
Manufacturer`s rebate
6
Do variety of tasks
5
Bookkeping/budgeting applications
4
Word processing application
2
Data management application
7
34
Easy to use, simple design
8
Highest rated brand-Cost Cutter
3
In addition to modifying these two ads, we have also decided to develop two new
advertisements for our newly created Traveler and Innovators brands. The rationale behind this
move is so that we can get the word out for these two new products. Based on the feature
demands and the wants and needs of the Traveler segment, we designed our Traveler ad,
Pegasus, to emphasize that this product is easy on the eyes, has a rugged design, is ready to use,
and has high speed and execution time. Please refer to figure 3.18 for our Pegasus advertisement.
Figure 3.18: Traveler Ad, Pegasus
Pegasus
[Pegasus]
Mention brand name
2
Manufacturer`s rebate
9
High speed/execution time
7
Presentation application
8
Easy on eyes with larger screen
4
Ready to use, bundled software
3
Rugged design for portability
5
Link PC to local network/Internet
6
Picture people in travel setting
1
In addition to creating a Traveler ad, we also designed an Innovator ad, entitled the
Mustang. In order to determine the benefits and the prioritization of those benefits that this ad
will emphasize, we researched the feature demands and product wants and needs of this segment.
Based on these findings, our Mustang ad will emphasize engineering and business software, web
design tools, and a product that can tackle really big problems. Please refer to figure 3.19 for a
full description of this Innovator advertisement.
35
Figure 3.19: Innovator Ad, Mustang
4
Mustang
[Mustang]
Mention brand name
9
Manufacturer`s rebate
8
High speed/execution time
7
Tackle really big problems
6
Engineering design application
2
Business graphics application
3
Web design tools
4
Link PC to local network/Internet
5
Picture engineering setting
1
4
We justified the media placement of these two new ads in Quarter 5 based on the 12month potential demand. While we have every segment ad running in each of our geographic
markets, these research findings prompted us to concentrate our Work Horse, Stallion II ad and
our Traveler, Pegasus ad in the European Market. In Brazil, we concentrated on running our
Stallion II and Golden Saddle advertisements. In the Canadian market, we focused on running
our ads for the Work Horse, Cost Cutter, and Traveler segments. Again, the rationale in
determining the prioritization of which geographic market would concentrate on running which
ad and its corresponding target segment was based on the demand of each segment in each
geographic location. Figure 3.20 provides the number of times the Pegasus and Mustang ads
should run in a specified geographic market.
Figure 3.20: Allotted Ads for Pegasus and Mustang
Canada
Number of times ad should run in market
City
Toronto
Cost
3,500
Pegasus
Mustang
6
3
36
Brazil
Number of times ad should run in market
City
Cost
Rio de Janeiro
Pegasus
Mustang
3,500
2
2
Europe
Number of times ad should run in market
City
Cost
Pegasus
Mustang
Berlin
6,000
11
4
London
7,000
14
4
Also, in figure 3.21 there is a full description of the number of times each ad should run
in each geographic market and in which media outlet. We determined the media placement of
each advertisement based on the consumer characterisctics of each target segment and the
geographic placement of each ad based on the 12-month potential demand. For example, the
Work Horse clientele is composed of financial managers, office administrators, and corporate
managers. Thus, in the European market we placed our Work Horse ad in executive business
magazines, daily newspapers, general news magazines, general business magazines, and business
newspapers. However, the media placement of every ad is not the same due to the fact that
Powers Inc. would like to cover all its bases. Essentially, we placed some of the same segment
advertisements in different media outlets in order to figure out which combination is more
appealing to our target segment and which one can reach our target segment more effectively.
Figure 3.21: Media Placement of each Ad in each Geographic Market
Canada
Number of times ad should run in market
Media
Cost
Stallion II
Golden Saddle
Pegasus Mustang
Business newspapers
19,000
1
0
2
1
General business magazine
13,500
1
0
0
0
37
Computer magazines
4,300
1
1
0
0
General news magazines
6,900
1
1
0
0
Leading trade journals
6,300
1
1
1
0
New venture magazines
7,800
1
1
0
0
Sports magazines
21,500
0
0
0
0
Executive business magaz
25,000
0
0
2
0
Science & technology mag
13,300
0
0
0
0
7,000
0
1
1
2
16,600
0
0
0
0
Daily newspaper
Leisure & entertain mag
Brazil
Number of times ad should run in market
Media
Business newspapers
Cost
Stallion II
Golden Saddle
Pegasus Mustang
12,000
1
1
1
1
General business magazine
8,500
1
0
0
0
Computer magazines
3,000
0
0
0
0
General news magazines
4,500
1
1
0
0
Leading trade journals
4,000
0
0
0
0
New venture magazines
4,300
0
0
0
0
Sports magazines
13,000
0
0
0
0
Executive business magaz
15,000
0
0
0
0
Science & technology mag
7,000
0
0
0
0
Daily newspaper
4,300
1
2
1
1
Leisure & entertain mag
7,500
0
0
0
0
Europe
Number of times ad should run in market
Media
Cost
Stallion II
Golden Saddle
Pegasus Mustang
Business newspapers
20,000
3
0
4
0
General business magazine
14,000
3
0
0
0
Computer magazines
4,500
0
0
5
0
General news magazines
7,000
5
0
3
0
Leading trade journals
6,500
0
0
7
0
New venture magazines
8,000
0
0
0
0
Sports magazines
22,000
0
0
0
0
Executive business magaz
26,000
3
0
0
0
Science & technology mag
14,000
0
0
0
0
8,000
3
0
6
0
17,000
0
0
0
0
Daily newspaper
Leisure & entertain mag
38
Finally, Powers Inc. will expand their sales operations in the European market place in
Quarter 5. Based on the success in both London and Berlin, we have decided to open up
additional sales offices in Paris and Rome. Our sales people will focus on three segments: Work
Horse, Travel, and the Innovators. From the aforementioned market research both the 12-month
potential demand and price willing to pay, these markets present a huge chance for success. For
instance, in Paris the 12-month potential demand is 4578 compared to Berlin’s potential of 4928.
This closeness and vacancy of this geographical market makes both Paris and Rome appealing.
In terms of salespeople with the inclusion of our two new brands we will now extend to 5
new sales people in London, focusing on our Pegasus brand and 3 in Berlin focusing on this
same segment. Additionally, to take advantage of our new Innovators brand, the Mustang, we
will extend new salespeople in the same geographical markets, London and Berlin. In both these
markets we will add 4 new salespeople for each segment, bring our new total to 16 in London
and 12 in Berlin.
In the Canadian marketplace we will be adding two new salespeople to each of our new
segments, the Innovators and Travelers brand. This will bring our new total of Canadian
salespeople to 10 total salespeople.
In our Brazilian market we will also increase our salespeople to meet the demand and
launch our two new brands. We will have 1 person selling the Innovators brand, Mustang and 2
selling our Travelers brand, the Pegasus. This will bring our new Brazilian total to 7
salespeople.