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College of Administrative Sciences and Economics MKTG 402 – Marketing Strategy Spring 2014 – Exam LAST NAME: ____________________________ FIRST NAME: ____________________________ I certify that: 1. I will not use any un-authorized materials (i.e., "cheat sheets," a classmate's test, etc.) in completing this exam, and; 2. Should I engage in such unethical activities, I accept all the consequences which can range from failing this class to suspension from KU. Signature: ___________________________________ There are seven essay questions worth 100 points total in this exam. GOOD LUCK! 1 I. Analysis Questions: 1. Ink & Paper, a small independent bookseller in the Washington, D.C., is owned by the Page family. To reverse a declining sales trend, the Pages feel they must redesign its bookstores and product offerings to appeal to a specific target segment. Hence, they hired a market research firm, Beltway Research, to undertake a benefit segmentation study of book consumers in the D.C. metropolitan area. Beltway Research surveyed 1000 consumers by mail. One part of the survey asked consumers to rate how important each of the following bookstore attributes is to them, using a scale where 1 = not at all important and 10 = very important. Beltway Research has taken the results of this survey and grouped the consumers to form three benefit segments: I, II, and III. The mean importance ratings of consumers in each of these segments are (the higher the importance rating, the higher the segment’s expectation regarding the bookstore attribute): Attractive stores Can quickly special order books not in stock Events where authors read from their books and poetry Low prices Staff knowledgeable about books Lots of books on sale Lots of chairs and tables to read in Free gift wrapping A good coffee and snack bar i. I 4.6 3.5 2.6 8.2 5.7 8.4 5.2 7.5 4.7 II 4.5 7.9 7.8 3.3 8.5 4.3 6.7 2.8 2.6 III 7.2 4.8 7.2 5.7 5.2 4.8 8.3 6.1 8.1 Using these study results, identify and profile the market segments in the Washington, D.C. bookstore market based on their importance ratings (6 points). (HINT: For example, a profile for the pet food market would be “pet lover”). Segment I: Segment II: Segment III: ii. Based on the results of the analysis, identify the specific value priorities the Page family should focus in serving these three segments. Provide them with (onesentence) recommendations on strategies for gaining sustainable competitive advantage in these markets (12 points). Segment I: Segment II: Segment III: 2 2. A manufacturer of electrical components for industrial applications has four strategic business units (SBUs), shown in the following table. i. Using the Boston Consulting Group model, evaluate the strength of the company's current condition by placing each SBU onto the portfolio matrix (16 points). Sales ($m) 1 1.0 1.5 1.5 1.0 15 2 4.8 3.2 3.2 2.0 20 3 6.5 3.2 1.6 1.4 4 4 0.75 3.0 2.5 2.0 4 ii. Sales of top three competitors ($m) According to the BCG portfolio model, what strategies should it consider to improve its future position? (8 points) Dimension: Dimension: Market growth rate (%) SBU # SBU #: SBU #: BCG Label: BCG Label: Strategy: Strategy: SBU #: SBU #: BCG Label: BCG Label: Strategy: Strategy: 3 II. Read the case below and answer the following questions: THE ENERGY BAR INDUSTRY In 1986, PowerBar, a firm in Berkeley, California, single-handedly created the energy-bar category. Positioned as an athletic energy food, it was distributed at bike shops and events that usually involved running or biking. The target segment was the athlete who needed an efficient, effective energy source. Six years later, seeking to provide an alternative to the sticky, dry nature of the PowerBar, a competitor, also located in Berkeley, developed an energy bar with superior taste and texture and branded it the Clif bar. About the same time, another competitor introduced the Balance bar, which offered a blend of protein, fat, and carbohydrates based on the nutrition formula associated with the "Zone diet." Faced with these challengers, PowerBar responded with Harvest (a bar with a much more accessible taste and texture) and ProteinPlus (an entry into the high-protein subcategory closely related to that defined by Balance). The makers of the Clif bar observed that many women were athletes and many more were involved in fitness. They further observed that this half of the population had unique needs in terms of vitamins and supplements, and that the energy bar industry had yet to recognize or fill them-a classic case of unmet needs. As a result, they introduced Luna as the first nutritional (not energy) bar for women, using media and promotions targeting active females. The bar had a light crunchy texture, came in flavors like "lemon zest" and chai tea, and contained nearly two dozen vitamins, minerals, and nutrients. The target market consisted of time-strapped women who wanted both taste and nutrition and would appreciate a bar tailored to their needs. Both in reaction to Luna's success and to expand the segments for which the category was relevant, PowerBar studied why women did not buy its products. One answer was that the calorie hit from any member of the PowerBar family was simply too great. In response, the firm created the almost-indulgent, Pria. With only 110 calories, Pria was designed to respond to Luna while attracting new users into the category. In addition to the major brands, challengers from a variety of small and large firms advanced subcategories by positioning themselves around such factors as age (bars for seniors and kids) and health (products to fit dairy-free, diabetic, and heart-conscious diets). Over a tenyear period, some 450 products were introduced. New products in the category are going in several directions. The popularity of low-carbohydrate diets has prompted a host of food bar entries, including Atkins Advantage, which gained a substantial market share that peaked in 2003 and fell off sharply thereafter. A trend toward indulgent icings, coatings, and coverings has led some to morph toward candy bars. Others went the opposite way: The makers of the Clif bar also have introduced a Mojo line of salty snack bars to provide alternatives to sweettasting bars and the Clif Nectar bar, an entirely organic nut and fruit bar. Power Bar introduced Nut Naturals, a low glycemic index bar. Currently, there are market positioning opportunities involving natural, sugar-free, and organic bars, those containing no preservatives and no genetically altered ingredients. The energy bar category has gone mainstream, moving from the bike shops to the grocery stores and exploding from just over $100 million revenue in 1996 to an estimated $2 billion or more a decade later. Along the way, the market became large enough to attract the attention of major packaged goods firms. In 2000, Nestle purchased PowerBar, which has remained the leading player. 4 3. Write a value proposition for PowerBar linking it to customer motivations. (9 points) Follow the form: To (target group & need), our (Brand) is (concept) that (differentiation point) 4. Identify PowerBar’s competitors. Indicate two direct and two indirect competitors (8 points). Direct Competitors: Indirect Competitors: 5. What product developed by PowerBar would support a new market entry (i.e., innovation)? Explain what type of an innovation it would correspond to (10 points). Innovation: Type: Why: 5 6. At what stage is the energy bar market relative to the product-life cycle in 2000? Identify and explain the strategies should be used by PowerBar given the life cycle stage and PowerBar’s position in the market? (16 points) Stage of the energy bar market: Position of Power Bar: Market objective of Power Bar: Pick one strategic approach Power Bar should implement, and briefly explain: 7. Develop a positioning (brand or perceptual) map (using attributes/ dimensions illustrated in the case). Place Power Bar and its direct competitors on the map. Based on your map, note if there are any obvious customer needs that are currently not being met. HINT: In the case it is stated that: “Currently, there are market positioning opportunities for natural, sugar-free, and organic bars, those containing no preservatives and no genetically altered ingredients” (15 points). Attribute / Perceptual dimension Attribute / Perceptual dimension 6