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Approach to Marketing

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- Provide a brief overview of the product or service.
- Discuss your Core Strategy and make sure to connect it to your Mission & Objectives.
- Include a discussion on Product/Service Positioning.

MARKETING CONFERENCE

We need to continue developing this strategic marketing plan so that it comes together in a few more weeks. Successful ventures have their own unique identities and carefully conceived value propositions.

- Discuss your Value Proposition (which should take into consideration the Target Market & Competition).
- Connect this with your Product Positioning and Core Strategy (developed earlier).

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Step 1
The product is a phone that releases perfumes. It releases different perfumes in accordance with the tasks performed on the phone. Apps can modify the manner in which different perfumes will be released. The perfumes are designed to make the customer happy, joyful, and peaceful. The phone that releases perfumes is designed to improve the performance of the owner throughout the day. The mission of the company that makes the phone that releases perfumes is to become the largest seller of phone that releases perfumes in the US. The objective is to capture $3 billion market by 2014. If the market of such a large size is to be captured the core strategy ...

Solution Summary

This posting gives you a step-by-step explanation of the marketing process of a new product. The response also contains the sources used.

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See Also This Related BrainMass Solution

Compare the ratio of the fundamental value per share that you computed in the previous question to Palm's market price per share (for February 23, 2001).

3. Compare Palm's market P/E on February 23, 2001, with the fundamental P/E you derive.

4. Analyze the approach that Palm's CFO took in trying to ascertain whether or not Palm was fairly valued in February 2001.

See attached worksheet.

In 2000, the firm 3Com spun out its personal digital assistant division as Palm Inc. On February 23, 2001, the financial services firm Telerate reported the following information about Palm.

The closing price for a share of Palm was $21.69.
Palm had 565,946,000 shares outstanding.
Its book value of equity was $1,110,640,000.
It held $742,888,000 in cash.
Its trailing P/E was 181.
Palm was an all-equity financed firm and had no debt.

During a presentation to investors, Palm's CFO Judy Bruner was asked two questions. (1) What is Palm's cost of capital? (2) What is Palm's return on equity likely to be over the next several years? Palm's CFO responded by saying that she thought that the firm's cost of equity was 16 percent and that her best estimate for ROE was 26 percent per year for the next six years.

The length of the horizon during which the expected ROE exceeds the required return on equity is called the CAP (an acronym for competitive advantage period). Assume that Palm's managers plan to maintain its dividend payout ratio at zero for six years, the length of the CAP.

The CFO of Palm also remarked that in view of recent volatility in the price of Palm stock, her firm was trying to understand how the market values Palm, relative to the right factors to value Palm. Its current price of about $22 was below the offer price of $38 that prevailed when Palm had gone public a year earlier.

Palm's CFO indicated that she focused on trailing P/E and price-to-sales, noting that these may send conflicting signals. For example, she indicated that the market assigned Palm a high P/E ratio (145 at the time) but, relative to other firms such as Handspring, a low price-to-sales ratio (8 at the time). (In 2001, Handspring was a separate firm, which competed with Palm. Palm acquired Handspring in 2003. Subsequently, the firm split itself into two, becoming PalmOne and PalmSource.)

Case Analysis Questions

1. On the basis of the data presented in the case, use the textbook techniques to compute the fundamental value of Palm on February 23, 2001. The file Chapter 2 answer template.xls (available on the book Web site, www.mhhe.com/shefrin) is a spreadsheet that is set up along the lines of the textbook valuation of eBay's stock.

2. Compare the ratio of the fundamental value per share that you computed in the previous question to Palm's market price per share (for February 23, 2001).

3. Compare Palm's market P/E on February 23, 2001, with the fundamental P/E you derive.

4. Analyze the approach that Palm's CFO took in trying to ascertain whether or not Palm was fairly valued in February 2001.

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