CORE COMPUTERS
Report to the Executive Board
The Think Tank
Camden Cilento, Sean Collins, Blake Galmarini, Brett Mathias, Jordan Weinberg
Marketing Management
Tuesday and Thursday 4:30 – 5:45
Table of Contents
Executive Summary....................................................................................................................................... 2
Review of Performance................................................................................................................................. 2
Financial .................................................................................................................................................... 2
Market....................................................................................................................................................... 4
Marketing Plan .............................................................................................................................................. 6
Brand Strategy .......................................................................................................................................... 6
Pricing Strategy ......................................................................................................................................... 6
Advertising Strategy .................................................................................................................................. 7
Sales Channel ............................................................................................................................................ 7
Business Strategy and Performance ............................................................................................................. 8
Situation Analysis .......................................................................................................................................... 9
Strengths ................................................................................................................................................... 9
Weakness ................................................................................................................................................ 10
Conclusion ................................................................................................................................................... 10
The Future of Core Computers ............................................................................................................... 10
Lessons Learned ...................................................................................................................................... 12
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Executive Summary
In Quarters 5 through 8, Core Computers has been able to reach substantial profitability while
keeping our marketing efforts true to our mission statement. As a start-up company in a new market with
five other direct competitors, we have used these efforts to succeed in a difficult marketplace. Our
company has reached the third highest level of profitability in the personal computer market. This isn’t
quite as high as we projected, but we have created a lot of opportunity for Core Computers to gain a
sizable market share and eventually lead the market. Our team has implemented a marketing strategy
that has put us in this prime position. Throughout this report we will detail our efforts, and how we have
put Core Computers on the map and a position to succeed.
Review of Performance
Financial
An overall analysis of our financial performance in Quarters 5 through 8 reveals to us many figures
that can be used to assess Core Computers. An important measurement to begin with is the total cost of
goods sold for the company. This was $4,425,493. The cost of goods sold is directly related to the number
of units sold. In total 2,606 units were sold. Our computers were available in all regions of the world and
the regional sales were as follows: 1,731 in the Americas, 350 in APAC, and 525 in EMEA. We were much
more successful in the Americas, therefore that is where we targeted most of our efforts. Each of the final
four computers sold also offered individual statistics that will be used to judge their future place in Core
Computers. The Seed 1000 sold a total of 250 units, the Photosynthesis - 441 units, the Beanstalk - 1,129
units, and the Redwood 2 sold 786 units.
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Core Computers’ gross margin totaled $3,310,801 with the majority of that coming from the
Americas at $2,201,677. APAC
generated
the
lowest
gross
margin of $440,853, and EMEA
produced $668,271. It is valuable
for Core Computers to look at the
individual
contributions
from
each computer brand as well. The
gross margin gained from sales of the Beanstalk was $1,279,912, being the top seller. The Redwood 2, our
second highest producer of gross margin, grossed $886,337, and the Photosynthesis generated $839,799.
The smallest contribution to gross margin came from the Seed 1000 at $304,754. Our company had a
negative
operating
profit
in
Quarters 5 and 6, but we were
able to increase that to over
$1,000,000 in Quarters 7 and 8.
This was directly affected by our
financial
contributions
to
research and development. In
Quarter 5, Core Computers allocated $4,548,111 to research and development in order to keep up with
demand and give our target segments exactly what they were looking for in a personal computer. Our
research and development hit a speed bump with our investment in R&D in Quarter 6. We put $657,334
into R&D expecting to be able to continue this through Quarters 7 and 8. However, after a slow Quarter
6, our accountant notified us that we were unable to go forward with the R&D we began without
extending the timeline to complete in Quarter 9. This did not meet our goal of bringing the new technology
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to market in Quarter 8, so we chose to cancel the research and development in order to stop the potential
loss of over $400,000 per quarter. This helped our company to increase our operating profit for Quarters
7 and 8.
Market
The market for personal computers was unlike any market we had ever seen before. Beginning in
Quarter 1, there were five other start-up companies that entered the market with the indifferent
technology. As a team, Core
Computers has broken past barriers
in the market to secure the third
position, and we are only just
beginning. The total demand for
personal computers worldwide was
31,365. This is an extremely high
number, providing for many opportunities in the future. Core Computers was able to secure 2,606 of that
total demand. Although that is not as high as we would prefer, our company will continue to stay true to
our mission and provide top of the line computers at a competitive price.
The market can be
broken
down
into
five
separate
segments;
Costcutter,
Innovator,
Mercedes, Workhorse, and
Traveler.
Each
segment
provides unique strengths
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and demands. The demand for Costcutter is the largest at 9,300, and Core Computers have secured only
42 orders. We do not view this as a problem however, because Costcutter was our least targeted and
desired segment. Innovator was our top sales priority and we were able to secure 1,104 out of the total
7,086 orders. The demand for our products in this segment is getting traction, and we feel the Innovator
segment has embraced our brand and products. The Mercedes segment spends the most money of any
consumer, and Core Computers attained 138 out of the possible 2,400 in demand. The Workhorse
segment was our secondary target market, leading to our second highest share of demand in a segment.
We sold 738 out of a possible 6,417 computers. The Traveler segment closely resembles the Innovator,
but are looking for slightly different key components. We were able to successfully infiltrate this segment
by selling 584 of a total 6,162 computers; the large majority of these sales coming from laptops.
Through our investments in market research in each quarter we had the opportunity to evaluate
the market’s judgment of our brands and our prices. These are very important to research because they
show not only the current climate of the market, but opportunities for advancement. Although we failed
to enter the top eight in terms of brand judgement in the Costcutter segment, we were able to have at
least one brand in each of the other segments in the market. The Innovator had two of our brands,
Mercedes had two, Workhorses had one, and Travelers had three in the top eight. By looking at this
information we know that we need to invest more to develop our brands in terms of what the Workhorses
want, and perhaps create a lower priced model to gain a share of the Costcutter segment. Price judgement
evaluates each segment’s perception of our pricing model by a 1-100 rating. A score of 100 means the
pricing model has been totally accepted and embraced. Like the brand judgement, we failed to reach the
Costcutters with our pricing strategy. None of our products obtained a score of 100. This can be addressed
by the above strategy of creating a discounted brand to achieve a sizable share of the Costcutter market,
much like Apple has done with the iPhone 5c. We are proud to report that each of the remaining segments
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have scored at least one of our four products at 100. This shows that with our variety of options there is
a choice for each consumer market to purchase a Core Computer that meets their desires and needs.
Marketing Plan
Brand Strategy
Core Computers strives to provide the highest quality desktop and laptop computers to
consumers who value innovation and technological advancement. Our brand hopes to bring the world
into the future by consistently pushing the limits of what we know as possible. Through innovation,
research, and development we give our customers the tools they need to change the world. Our cutting
edge brands do not cater to any one target segment, but ultimately are made for anyone who dares to
invest in the best.
Pricing Strategy
Our top priority computer, Photosynthesis, is priced at $3,699.00 with a $300 rebate in the
Americas and is available for $3,399.00 with $50 rebate in the other regions. We realized the demand was
greater for this computer in the Americas compared to APAC and EMEA, so a higher price was warranted.
The Beanstalk, our second priority model is priced significantly lower at $2,899.00 and has a rebate of
$200 for the Americas and a $50 rebate for other regions. In this case the demand was similar throughout
all three regions so we offer the same price point across the globe. The Redwood 2, our third priority
comes with a price tag of $3,199.00 with $200 rebate for the Americas and $3,099.00 with a $50 rebate
for all other regions. We decided to reduce the price for this model in APAC or EMEA because our market
research indicated that the demand in these regions would not support a higher price point. Finally, The
Seed, our most reasonably priced model costs $2,499.00 and a $100 rebate in the Americas and costs
$2,399 with a $50 rebate for the other regions. This model’s price was reduced when we took it to the
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APAC and EMEA markets to create higher demand. All models other than the Seed have point of purchase
displays everywhere they are sold.
Advertising Strategy
In the Americas, our strategy was to aggressively target potential consumers through appealing
regional media outlets such as business newspapers, computer magazines, leading trade journals, new
venture magazines, and leisure and entertainment. In APAC we decided to target potential consumers
through general news and executive business magazines, and in EMEA we utilized general news magazines
and daily newspapers. Through diversification of our advertising outlets we were able to hit a higher
number of potential consumers. Each of the ads placed in media outlets were specifically designed to
highlight the attributes and benefits of each product, and also to attract attention from the most
profitable and demanding segments.
Sales Channel
In the beginning, we decided it would be a crucial to minimize costs and test out our market. We
achieved this by staying in Chicago for our first year until we had the sales to justify expansion. We opened
a store in Toronto initially, then once sales began to take off we expanded into Sao Paulo, Sydney, and
Abu Dhabi. Putting our brand in various sales channels around the world, while purchasing marketing
research in each market, has given Core Computers a clear vision of market demand. Each region has its
own strengths and weaknesses, and our sales strategies in each reflect them accurately. With a global
presence, Core Computers has successfully created worldwide brand awareness. This will help to take our
company further, into many more sales channels in the future.
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Business Strategy and Performance
Our original marketing plan was to create a computer which would be a premium, top-of-the-line
product that was second to none. It was going to have everything consumers desired for a high but fair
price. The actual actions we took toward creating our introductory computers were to market toward the
Innovator and Workhorse sector of the market. We wanted the consumers who were looking to make a
difference in the world to have a top notch computer that they could always rely on and would be able to
accommodate every need. Since the Innovator and Workhorse consumers are looking for the best
computers, not really looking too deep into the price, we made the price mid to high range showing that
we had a good reliable product.
There was a key departure from our marketing plan in that we needed to drop a product and R&D.
The computer we had created called The Root was made thinking it was going to meet the needs of our
customers. Unfortunately we were dumping too much money into the product and not getting nearly
enough return compared to our other computers. By doing this we cut costs dramatically and our revenue
quickly increased. The reason for dropping our Research and Development Program was that our advisors
made us aware that it cost too much money in the long run. Are accountant would not let us move forward
with it either since the R&D would not pay off until after Quarter 8 when all of our numbers and gains
were going to be finalized. So we dropped the program and saved money.
As our company Core Computers progressed through the stages, there were multiple events that
affected our decisions and how to sell to the different markets. On the positive side of the different events
that took place, we had many computers that allowed us to grow and prosper in the market. The
Beanstalk, Redwood and Photosynthesis were all in the top three computers compared to other
competitors in different markets which produced significant amounts of profit for our company. However,
there were events that affected us negatively. In the beginning of the year of Quarter 5 and 6 the demand
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for certain types of computers were low. This led our company to exterminate the creation of a computer
that was only costing us money and not making any profit from it.
Situation Analysis
Throughout this project we have learned how to read the audience and develop computers based
on what they want. We were able to get ahold of the simulation and really cater to our target market and
captivate the consumer in a way that would encourage them to buy the computers that we were
producing. With that being said we are currently sitting in third place in our division but I feel that we have
far surpassed our goals and expectations as a team. After much deliberation and trial and error, we
currently have four computers on the market reaching a variety of demographics. Our best computer right
now is the Beanstalk, which has brought in over 1.2 million dollars in gross profit. This was our third most
expensive computer selling for $2,899 with a rebate of $200. The other second and third place computers
made close to the same, at a little over $800,000 in gross revenue. Our last computer was strictly there to
reach an inexpensive target market, in which it did so but with little revenue margins.
Strengths
As far as our market and the demographics we were able to reach, our company successfully
expanded to Toronto, Chicago, and Sao Paulo in the Americas. We also reached Sydney in the APAC
market and Abu Dhabi in the EMEA market. It was apparent that our company was able to take advantage
of much of the research and developments that was offered and really target our audience to cater there
exact needs. This helped us in many cases gain more of the market share that we did not have before.
Another strength that we found was that in order to expand to these different areas we needed to hire a
lot more sales representatives. This proved to be advantageous when we realized that with more territory
came more growth and profitability. We were able to gain somewhat of an early mover advantage in that
we first had too many sales representatives for not enough territories but once we gained more territories
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we were able to spread out the sales representatives and concentrate them on the market better. Upon
this realization we had some of our best profits from then on.
Weakness
The few weaknesses that we did have we tried to adapt and solve the problems as they arose for
each quarter. One weakness in particular that kept coming up was our ad campaigns. For every quarter
we had to change the ads to meet the changing markets and we couldn’t seem to get the results we had
hoped for. When creating an ad we tried to find the key words that each market was looking for and place
them in the order of importance in which they appeared. This proved to be harder than we thought
because there were many times that when we went to submit that round we were told to go back and
verify all the info in our campaign to make sure it matched the needs of the people. Another weakness
that we did not foresee was that we did not target the largest “Costcutter” market. This proved to be a
weakness because this market had the largest demand for the cheapest computer. Although there was a
large demand in this market it would not have been profitable for us to pursue this outlet. The computer
in which they demanded had an almost dismal profit margin and therefore did not seem worth our efforts.
Looking back on it, it might have been beneficial to place a computer in this market just to gain some sort
of market share. Even though our other computers did very well in their respective markets, it could have
helped us a little to have something in this market to further or profit margins.
Conclusion
The Future of Core Computers
In order to prepare us, Core Computers, for what the foreseeable future holds, our team has
exploited every opportunity possible in order to get our feet wet within each different facet of this
unpredictable world of business. Core Computer’s top personnel used their distinctive and unique traits
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to uncover the secrets that lie within this marketplace rollercoaster. We believed in everything we set our
minds to, challenging each other during every step of the process. Although some tough decisions needed
to be made, and debates sprouted within our fruitful ventures, all of the “shortcomings” we endured has
prepared us for the future. In the coming paragraphs, we will explain why.
In preparation, we constantly rebranded our products to adhere to a more viable and volatile
market. The rebranding process was implemented during quarter 4. During this progression, we learned
that it isn’t always optimal to follow the competition as well as to strictly target one specific demographic,
such as the Innovator and Workhorse. After quarter four concluded, we continued to focus our efforts
on all other markets such as Mercedes, Traveler, and Costcutter. We believe this diversity of markets,
upon commencement of quarter 5, has prepared us for quarters 5-8 and any future endeavors beyond.
We believe our successes are due to selling products that have been constructed with emotion.
To elaborate, we have placed our products within the highest garnering traffic when referring to
advertising spots. Consequentially, our brand and our products were receiving a significant amount of
‘consumer eye’. When this happens, you tend to imprint an image of your brand within the consumer’s
mind. Ultimately, they refer back to us when a problem arises and are somewhat “forced” to purchase
our product. What separates us from the competition is that we deliver our products with emotion delving
deep into our core, thinking beyond the actual product. Referring back to advertising, our ads and
promotional space are how we accomplished this feat. Delivering what we promise, based on our
promotions, and leaving the customer feel satisfied and overly content. This has prepared us for any
geographical or demographical area that presents itself because, dissimilar to the opposition, Core
Computers can adapt.
Building upon sales channels, we were slow to the races. During quarters 5-8, we opened three
additional sales channels, pursuing all three regions: The Americas, APAC, and EMEA. The locations are as
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follows, respectively: Sao Paulo, Brazil, Sydney, Australia, and Abu Dhabi. When opened, we had five sales
channels working simultaneously. Now, don’t get us wrong, our sales increased exponentially, especially
when we learned to hire the optimal amount of employees to man their stations at each location. But,
moving forward into the future, we believe it’s best to make our presence known in as many locations as
possible and to maximize our exposure. Of course that means efficiently allocating our budget and to not
step on anyone’s shoes, but if done correctly, we’d be on our way to global domination.
We invested heavily into research and development to provide our clients with the greatest
products possible. We thoroughly studied the market and its residents, as if we were holding a magnifying
glass above an interactive, topographical map. This map provided us with a bird’s eye view of The
Americas, APAC, and EMEA, all of which we invested heavily in. For the future, market research will
consistently provide us with a sense of urge and desire to access penetrable markets. We were motivated
by our discoveries and we will continue this determination moving forward.
Ambitious is an understatement, and doesn’t even begin to describe our efforts put forth. We set
out on a route that had lofty goals and high standards. What we came back with, at the end of our trip,
was a sense of renowned acknowledgement and that’s all we could ask for. Moving forward, we will use
the strategies we conducted over the last few quarters, as well as our lessons learned (which we will
discuss next) to etch our brand in the market’s tombstone – because we will be the only ones
remembered.
Lessons Learned
The lessons realized in Quarters 5 through 8 were similar to a child in a candy shop – you can’t
have it all. That’s what we were aiming for throughout the entire process, to achieve notorious success.
We were willing to stop at nothing to attain this triumph, putting forth a great deal of effort to smother
the competition. We wanted access to every market, we wanted the most lavish qualities within our
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products, and we attempted to advertise like a bat out of hell (thank you Meat Loaf). In doing so, here are
some of the lessons we absorbed.
Simply put, you can’t have access to every market but we did our best to accomplish this feat.
Throughout the last few quarters, we learned that it isn’t always best to target many areas simultaneously.
It’s worthwhile to focus on one area, perhaps a couple, of interest to exploit the opportunities that
underlay this region, completely dominating that sector. Hence, this would leave no room for the
competition. When you create lofty goals, your efforts are inclined to result in a lackadaisical, not as robust
conclusion. As the saying goes, quality over quantity.
When designing our products, we originally focused on making our products paramount. We did
this by constructing them with the highest quality advancements at our disposal. Because of this, we had
to price our products somewhat higher than the competitions. They were appropriate prices because the
consumer was getting what they sought and we had to obtain a decent return on investment. The lesson
learned here was not to get carried away with the product attributes, or candy per say. The most luxurious
isn’t always the best and we discovered that. For the future, our computers will provide the customer
with a suitably initial price establishing our brand values, benefits, and message, all in one package. As
Howie Mandel would say, “DEAL! “
Lastly, advertising was a key component to our success. We established presence in every market
through our use of gorilla marketing. We were uncovering great success with how prominent our brand
was becoming. To continue these efforts, we took whichever tactic worked in one area of the world, and
took that technique with us, used it as the blueprint, and then built upon that strategy in another market,
or area of the world. Now, there’s a viable lesson to be learned here. Because we had such an eminence
in every market, and our advertising resembled a dreamer’s spontaneity, we stumbled across an
inevitable issue – Clutter. We had a plethora of marketing campaigns circulating the world, in which we
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forgot to be consistent. We simply wanted our advertising campaigns as soon as humanly possible, make
a profit, and erect our brand image. Alas, we had competing messages throughout separate markets that
brought upon confusion and a misunderstanding amid the masses.
These lessons have allowed us to grow and mold into the businessmen we are today. We believe
it’s important to make the mistakes we did, to get hit more times than we can hit because that’s how
winning is done. Victory doesn’t turn the boy into the man, failure does. It’s a learning process, just like
everything else in this world. And we should remember that just like kids we need to choose our candy
wisely, because every company needs to learn to live on a budget.
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