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Graves Enterprises Scenario

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Scenario: Analyzing Buyer Behavior scenario
Marketing for Graves Enterprises Scenario
You are the new Vice President of Marketing for Graves Enterprises, makers of consumer and commercial grade floor care products. You have two marketing directors that report to you, each of who is in charge of either the consumer market or the commercial market. Graves Floor Care Products are currently priced comparable to their direct competitors in both markets. They are also distributed through the same distribution channels, although there is no real incentive for the distributors or retailers to carry Graves Floor Care's products over those offered by the competition. The sizes and packaging of Graves products and those of the competition are similar, yet there are distinct competitive differences that are not effectively promoted. Some differences include a unique, proprietary chemical cleaner that cleans "dry" (and does not clean "wet"), which helps to reduce mold. In addition, the Graves products reduce mold. Graves products utilize environmentally friendly chemistry, contain â??Scotchgardâ? for continued stain protection. In addition, they are hypoallergenic, and offer a pleasant citrus aroma for up to three months after used.
As the new Vice President of Marketing, YOU are tasked with doubling sales in both the consumer and commercial markets within the next year.
You have requested your marketing directors to review the various primary and secondary market research available for their respective markets. They are to summarize their findings by creating a written report.
They are also to provide the initial aspects of a new marketing plan, which is to include a definition of their target markets, an analysis of their primary competitors, a pricing position, and a distribution strategy. They are encouraged to think creatively, using their innovation to open new markets for their products.

A week later you hold a meeting with your Marketing Directors, and this is what they offered:
From Joshua Edwards, Marketing Director, Consumer Products:
From the research, we are learning that our target market is as follows: homeowners, females 29-59, with a household income of $75 - $150K. Our primary competitors are rented carpet steam cleaners, Kleen Floor Spray 'n Vac and Kleen Floor Spot Cleaner, and folks who do nothing to clean carpets. Most steam cleaning machines are rented through grocery stores. Kleen Floor products are sold in grocery and mass merchandisers such as Wal-Mart. The research suggests that we are just cannibalizing Kleen Floor products and not growing the market. To grow the market, the Graves Consumer Products Group proposes the following:
1. We suggest the development of a new product line that is promoted as "safe, effective, and eco-friendly." We will price it at 1.5X the price for the eco-friendly aspect. We will also manufacture our container packaging from recycled plastics, which costs less and complements the overall eco-friendly unique selling proposition. This should net a 2X profit increase.
2. We also suggest developing a private label of this new line that will be offered for sale by Walmart and K-Mart, selling more proprietary chemistry and leveraging this offering for premium shelf position of the branded product. We will limit them to 25% of the core chemistry so we can claim more powerful action cleaners in the brand by formulating at 50% core chemistry. This private label endeavor will also create another competitor for the market to share advertising costs to broaden the category of consumer carpet cleaning products.
3. We suggest expanding into other retail outlets with the entire product line. New retailers could include Advance Auto Parts (car carpet cleaner) and a website for online sales.

From Rena Morales, Marketing Director: Commercial Products:
â??After extensive research, we realize that our current market leadership positions in schools, retail, and office buildings is secure and we suggest that we continue with our original plan. We see the growth of our brand in developing a full antibacterial product line that is specific for hospitals and nursing homes. We will price it at twice the cost of our current line, given this added feature. Since the antibacterial additive has a citrus aroma, we will use this as part of the unique selling proposition. We also suggest repackaging our Skid-No-More floor wax that is currently sold in our retail markets, and selling it into hospitals and nursing homes as a fall prevention floor wax. By repackaging into our Specially formulated for Healthcare product line, once again we can charge twice the price of our current product line. 
From Edward Matthews, ES Associates: Marketing Research Consultant:
After conducting five focus group sessions and conducting/ analyzing a mail survey, we found that consumers were happy with their current floor cleaning products. They ranked eco-friendly attributes as the least influential to their purchase decision. Price was ranked number one, followed by cleaning efficacy of the product.
After conducting a trade and competitive analysis, retailers were very interested in having a private label floor cleaner. However, they wanted price parity and cleaning efficacy for side by side consumer comparisons. Yet, when consumers were offered the choice of a formulation driven by price or efficacy, they choose a price position.
The research conducted for the commercial sector supported healthcare as an untapped opportunity. However, when hospitals and nursing homes were surveyed, price position was noted as the key purchasing decision.
The paper has to use the information above in a two to three page report with at leat 300 words per page in APA format. You are analyzing the consumer and business buying behavior.

1. Knowing NOW what you do about consumer behavior and purchase patterns, as shared by Kotler, what are the Consumer Products Proposal? Will it work? Why or why not?

2. Knowing NOW what you do about business purchasing and decision making processes within a business organization, as shared by Kotler, the Commercial Products Proposal? Will it work? Why or why not?

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1. Knowing NOW what you do about consumer behavior and purchase patterns, as shared by Kotler, what is the Consumer Products Proposal? Will it work? Why or why not?
The consumer products proposal is in three parts. First a new product line will be promoted as safe effective and eco-friendly. The second part of the proposal is that a private label of this line will be marketed through Wal-Mart and K-Mart and will increase the distribution of the new product. The third part of the proposal is that Graves Enterprises will start selling the entire product line through new retail outlets like Advance Auto Parts. The important part about the proposal is that Graves Enterprises will sell the products through the company website also.
There are two points that need to be noted that the safe, effective and eco-friendly positioning of the product will be supported by a premium price of 1.5X and the private labels will be limited to 25% of the chemistry so that the branded product has 50% of the chemistry. Now the attributes of safe, effective and eco-friendly is bound to create a favorable (KotlerP, Keller.K, Brady. M, Goodman.M, & Hansen. T ...

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Scenario Summary
Continuing with Graves Enterprises and its floor care products from Week TWO, both business units are doing well. They have been focused on expansion and have developed new users of their products. While the decision to expand is part of the charter of a company, the strategic moves the company makes have implications across the three key functions - finance, marketing, and operations.

With this is mind, you want to focus more efforts now in developing the consumer products area, recognizing that integrated marketing communications (IMC) will be central to its success. Next week, you are expected to share a promotional plan with your CEO in time for the quarterly Board meeting. The CEO is interested in the marketing communications plan, but is most interested in the impact this is expected to make on the business and its profits.

This is the focus of this exercise.
Your Role; As Vice President of Marketing, you ask to meet with your Marketing Director of Consumer Products in order to gather more information. After your meeting, you will need to summarize your findings by creating a written report.

From Joshua in marketing:

As you know, year to date, Graves Consumer Products' sales have appreciated, with a 150% increase in overall business profits across all consumer products. We are most proud of this achievement, but recognize this is only the beginning. Therefore, we propose the following marketing communications plan. At the same time, we seek advice as some ideas require a considerable investment in resources. For example:

We wish to develop a comprehensive television and print advertising campaign. The print advertising will buy space in "Good Housekeeping" and secure the "Good Housekeeping" Seal of Approval. The estimated cost will be $25 million dollars, and this is expected to sell ONE MILLION additional units this year at a gross profit of $2.00 per unit. Although this is a sizable investment, via an aggressive pull strategy, it is expected to secure retail shelf space, while attracting 500,000 new users at a retention rate of 47%.

The next idea is to offer co-operative advertising with a 2X payout if product is displayed on an end cap display. The estimated cost will be $1M, and we expect to sell TWO MILLION additional units this year at a gross profit of $2.00 per unit. Though this is a sizable investment, it will pay for itself in guaranteed sales. Co-op advertising dollars are based on wholesale product purchases. Again, it is expected to secure retail shelf space via this aggressive pull promotion strategy, while attracting 500,000 new users at a retention rate of 47%.

We want to create an on-package instant coupon to promote immediate purchase for the comparison shopper at the point of sale. We will limit the on-packs to every four bottles, thus managing the cost and seeing if there is an impact to this promotion. We will trial and track - As you know, year to date, Graves Consumer Products' sales have appreciated, with a 150% increase in overall business profits across all consumer products. We are most proud of this achievement, but recognize this is only the beginning. Therefore, we propose the following marketing communications plan. At the same time, we seek advice as some ideas require a considerable investment in resources. For example:

We wish to develop a comprehensive television and print advertising campaign. The print advertising will buy space in "Good Housekeeping" and secure the "Good Housekeeping" Seal of Approval. The estimated cost will be $25 million dollars, and this is expected to sell ONE MILLION additional units this year at a gross profit of $2.00 per unit. Although this is a sizable investment, via an aggressive pull strategy, it is expected to secure retail shelf space, while attracting 500,000 new users at a retention rate of 47%.

The next idea is to offer co-operative advertising with a 2X payout if product is displayed on an end cap display. The estimated cost will be $1M, and we expect to sell TWO MILLION additional units this year at a gross profit of $2.00 per unit. Though this is a sizable investment, it will pay for itself in guaranteed sales. Co-op advertising dollars are based on wholesale product purchases. Again, it is expected to secure retail shelf space via this aggressive pull promotion strategy, while attracting 500,000 new users at a retention rate of 47%.

We want to create an on-package instant coupon to promote immediate purchase for the comparison shopper at the point of sale. We will limit the on-packs to every four bottles, thus managing the cost and seeing if there is an impact to this promotion. We will trial and track this promotion in our top ten geographies (MSA's). The estimated cost will be $3M, and it is expected to attract ONE MILLION additional units this year at a gross profit of $2.00 per unit.

We also want to develop a trial size to be used as a co-promotion with new carpet installation of Dupont Premium Carpets.

We will seek the implied endorsement of Dupont to position the product as a premium product and the recommended 'cleaner of choice'. The estimated cost will be $2 million dollars, and it is expected to attract 200,000 additional units this year at a gross profit of $2.00 per unit.

Finally, we want to develop an aggressive public relations campaign that capitalizes on eco-friendly, safe products, while touting our "Good Housekeeping" Seal of Approval. A $200,000 investment will fund such a campaign.

We recommend an integrated marketing communications (IMC) campaign that will incorporate all of these elements, and we seek your approval moving forward."

Rena Morales, Marketing Director: Commercial Products

After the meeting with the Marketing Director of Consumer Products, you received a call from Rena Morales, Marketing Director: Commercial Products:
"In talking with Joshua, I understand that his plan has great potential in the consumer market. However, I have concerns about the impact this will have on our cash cow, the commercial products. Given the recent budget constraints, I am questioning if this is the right investment. I appreciate that consumer products is in keeping with the future direction of the company. However, I am concerned that reducing our promotional efforts in the commercial markets will deeply erode this value business."

You decide to contact Abby Buzwelda, Financial Analyst, requesting an independent review of the impact on both business units, as a whole. Her analysis shows a breakeven for the consumer products at Year TWO if the entire campaign is conducted. The report further shows that there may be media cost savings leveraging the campaigns for both business groups, targeting advertising agency fees, media buying costs, and production expenses. However, it would require both business groups to utilize a single advertising and media buying agency. Currently, they use independent agencies. Discuss the development of an integrated and cost effective marketing communications campaign. Do the following:

1. Given what you read, what questions and concerns do you have for the Marketing Director of Consumer Products?
2. Which of the proposed approaches would you support? Which ones would you not support?
3. As a result of this exercise, what did you personally learn about communication planning and product sales?

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