MKTG 402 -Final Exam
Question
This is the final exam for my Marketing Strategy class. You will find all the necessary information in the document "MKTG 402 Final Exam". Please analyze and answer all questions precisely, you may also use charts/graphs/tables to support your arguments. Please answer the questions on the SAME document I sent you and send me back the completed version. You may indicate your references at the last page/s. I also uploaded course content from lectures for you to analyze before writing the paper, for you to have a better understanding about the concept. Please take a look at them first and try your best to use the course language. This final exam will be analyzed throughly for plagiarism , so PLEASE DO NOT PLAGIARIZE (I also asked for a plagiarism report but wanted to underline this.) Thank you very much for the effort!
College of Administrative Sciences and
Economics
MKTG 402 – Marketing Strategy
Spring 2021 – Exam I
LAST NAME:
____________________________
FIRST NAME:
____________________________
I certify that:
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 3 essay questions worth 40
points total in this exam.
GOOD LUCK!
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):
I II III
Attractive stores 4.6
4.5 7.2
Can quickly special order books not in stock
3.5 7.9
4.8
Events where authors read from their books
and poetry 2.6 7.8
7.2
Low prices 8.2 3.3
5.7
Staff knowledgeable about books 5.7 8.5
5.2
Lots of books on sale 8.4 4.3
4.8
Lots of chairs and tables to read in 5.2 6.7 8.3
Free gift wrapping 7.5 2.8
6.1
A good coffee and snack bar 4.7
2.6 8.1
i.
Using these study results, identify and profile
the market segments in the Washington, D.C. bookstore market based on their
importance ratings (3 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 (one-sentence) recommendations on strategies for
gaining sustainable competitive advantage in these markets (3 points).
Value Priority I:
Value Priority II:
Value Priority III:
iii.
Ink & Paper now needs to communicate with consumers
in the chosen target segment. Beltway Research could have carried out research
to identify demographic instead of benefit segments. Describe and justify to
the Pages the most important advantages of using benefit segmentation instead
of demographic segmentation, with respect to designing a communications
strategy (8 points).
2. Illustrate the differences between a market orientation company
and a marketing myopic company. Use two companies (one for each
concept) from the list of cases we have discussed in class to exemplify the differences
between the concepts (10 points)
3. In a
consumer survey for a new personal coffee machine design, three features are
tested in a conjoint analysis: (1) availability of espresso brewing; (2)
capacity, (3) price. The average value system scores of the features (a ranking
of 1 indicates the best choice, while 8 indicates the worst) are summarized in
the following table (10 points)
Design |
Feature 1 |
Feature 2 |
Feature 3 |
Ranking |
A |
With
espresso brewing |
12
oz. capacity |
Price
level above $70 |
7 |
B |
W/o
espresso brewing |
6
oz. capacity |
Price
level lower than $30 |
5 |
C |
With
espresso brewing |
12
oz. capacity |
Price
level lower than $30 |
1 |
D |
W/o
espresso brewing |
6
oz. capacity |
Price
level above $70 |
6 |
E |
With
espresso brewing |
6
oz. capacity |
Price
level above $70 |
3 |
F |
W/o
espresso brewing |
12
oz. capacity |
Price
level lower than $30 |
4 |
G |
With
espresso brewing |
6
oz. capacity |
Price
level lower than $30 |
2 |
H |
W/o
espresso brewing |
12
oz. capacity |
Price
level above $70 |
8 |
Compare the
consumers’ choice decisions across the difference levels of the three
attributes of the coffee machine, and interpret the tradeoffs as perceived by
the consumers? Support your answer with numerical calculations.
CALCULATIONS:
Features: |
Categories |
Average Rankings |
Attribute difference between averages |
Share of attribute difference within total difference |
Espresso Brewing |
With |
|
|
|
Without |
|
|||
Capacity |
6 oz. |
|
|
|
12 oz. |
|
|||
Price |
Low (Lower than $30) |
|
|
|
High (Above $70) |
|
|||
TOTAL |
|
Total Average: |
Total Difference: |
|
CONCLUSION:
A customer is willing to exchange ________________(least
preferred attribute) for ____________________(most preferred attribute).
4. A manufacturer of electrical components for
industrial applications has four strategic business units (SBUs), shown in the
following table (10 pts).
i.
Using the Boston Consulting Group model,
evaluate the strength of the company's current condition by placing each SBU
onto the portfolio matrix.
SBU # |
Sales ($m) |
Sales of top three
competitors ($m) |
Market growth
rate (%) |
||
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.
According to the BCG portfolio model, what
strategies should it consider to improve its future position?
|
Dimension (2
pts): High
Low |
|
Dimension (2
pts): High Low |
SBU #: BCG Label (2 pts): Strategy (2 pts): |
SBU #: BCG Label (2 pts): Strategy (2 pts): |
SBU #: BCG Label (2 pts): Strategy (2 pts): |
SBU #: BCG Label (2 pts): Strategy (2 pts): |
Use the following perceptual map to answer
question 5 (8 points):
II |
I |
III |
IV |
5. Select the best
quadrant (I, II, II and/or IV) for a new product-market entry. Discuss.
II. Use the following explanation to answer question 6 (10 points):
Xerox 914, introduced in 1959, which truly revolutionized
the copying industry. The first plain-paper copier, it was easy to use and
operated at seven copies per minute. The 914 was responsible for the number of
copies made in the United States increasing from 20 million to 9.5 billion in
only ten years. Major strategic thrust for Xerox in the 1970s, was the ‘‘Office
of Future.’’ This concept recognized that the copier was only one instrument of
office productivity, and Xerox wanted to be a leader in the broader playing
field.
Savin was a small
company obsessed with participating in the copier market and frustrated by the
patent chokehold of Xerox. Finally, with the help of an Australian inventor and
a consortium of firms from the United States, Germany, and Japan, Savin
developed a liquid-toner approach that avoided Xerox patents. Its breakthrough
became the Savin 750, manufactured by Ricoh in Japan and introduced in 1975 at
$4,999, less that the (then) annual lease price of a Xerox machine. Instead of
a direct sales force, Savin sold through dealers who could contact Xerox
customers with an attractive alternative when their contracts expired. Dealer
service was feasible because the machine was relatively small and reliable; the
Savin 750 averaged 17,000 copies between failures. It made twenty copies per
minute, the first in less than five seconds, a pace far superior to Xerox
efforts at the low end. By 1977, Savin placed more copiers in the United States
than Xerox. Meanwhile, Ricoh captured the top market share in Japan, as
measured in units.
Kodak entered the
market in 1975 with its Ektaprint 100, a plain-paper copier that soon became
the industry standard for reliability in the mid-volume market. The firm then
developed a series of high-end machines that were by many measures the
best in the industry. Kodak moved slowly, however, making sure the products
were reliable, carefully building a strong service and marketing organization,
and avoiding building capacity too quickly. Kodak was still able to move into third
place in copier sales by 1985 because of its technology, reputation, and resources-and
because Xerox was not successful in developing comparable products.
6. Identify and evaluate the strategies of Savin and Kodak. How did
they overcome Xerox’s entry barriers?
III. 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 (Luna) 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
ten-year 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 sweet-tasting 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.
7. Write
a value proposition for Luna products linking it to customer motivations. (7 points)
Follow the
form: To (target group & need), our
(Brand) is (concept) that (differentiation point)
8. What product
developed by BarM is a new market entry (i.e., innovation)? Explain what type of an innovation it
corresponds to (9 points).
9. Identify PowerBar’s competitors. Indicate two
direct and two indirect competitors at the brand or firm level (6 points).
10. 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:


Solution
College of Administrative Sciences and
Economics
MKTG 402 – Marketing Strategy
Spring 2021 – Exam I
LAST NAME:
____________________________
FIRST NAME:
____________________________
I
certify that:
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 3 essay questions worth
40 points total in this exam.
GOOD LUCK!
I. Analysis
Questions:
1. Ink & Paper, a small independent
bookseller in 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):
I II III
Attractive stores 4.6
4.5 7.2
Can quickly special-order
books not in stock 3.5
7.9
4.8
Events where authors read from
their books and poetry 2.6 7.8
7.2
Low prices 8.2 3.3
5.7
Staff knowledgeable about
books 5.7
8.5
5.2
Lots of books on sale 8.4 4.3
4.8
Lots of chairs and tables to
read in 5.2
6.7 8.3
Free gift wrapping 7.5 2.8
6.1
A good coffee and snack bar 4.7
2.6 8.1
i.
Using these study results, identify
and profile the market segments in the Washington, D.C. bookstore market
based on their importance ratings (3
points).
(HINT: For example, a profile for the pet food market would be “pet
lover”).
Segment I: Book lovers
Segment II: Knowledge lovers
Segment III: Stationary lovers
ii.
Based on the results of the
analysis, identify the specific value priorities the Page family should
focus on serving these three segments. Provide them with (one-sentence)
recommendations on strategies for gaining sustainable competitive advantage in
these markets (3 points).
Value Priority I: Development
of the customers’ and preferences and therefore develop the required value and
quality of the product that attracts them. For example, increasing the number
of books produced and supplied
Value Priority II: Ensure high
levels of quality and service delivery.
Value Priority III: The
business model should be developed in a manner that the value proposition is
achieved, by maximizing the stationery stocks
The Page family should adopt
differentiation as a key strategy where they should create products with
superior products as compared to their competitors as a way of sustaining a
competitive advantage.
iii.
Ink & Paper now need to
communicate with consumers in the chosen target segment. Beltway Research could
have carried out research to identify demographic instead of benefit segments.
Describe and justify to the Pages the most important advantages of using
benefit segmentation instead of demographic segmentation, concerning designing
a communications strategy (8 points).
First of all, benefit segmentation classifies the target
customers by the values received from the commodities or services offered to
them. Demographic segmentation is a classification of the target customers
based on some features such as age, sex, and level of education. In this
segmentation, firms can understand their consumer needs and preferences.
However, when developing a communication strategy, benefit
segmentation is preferred over demographics for some reasons.
First, the benefit segmentation strategy helps the
organization to know the group of customers who will benefit the most and that
which will benefit less. In such scenarios, they can communicate, provide
feedback and deliver the goods in the right quantities. In this case, the firm
will be able to know if the goods that were delivered were of the designated
value and quality if the clients deliver positive feedback.
2. Illustrate the differences
between a market orientation company
and a marketing myopic company. Use two
companies (one for each concept) from the list of cases we have discussed in
class to exemplify the differences between the concepts (10 points)
Marketing orientation refers to a scenario where a company
is focused upon evaluating the consumer needs and ensuring that they are met
while a marketing myopic firm focuses on accomplishing the firm’s needs rather
than promoting the business to meet the customer's requirements. A typical
example of marketing orientation is Coca-Cola and Facebook companies. An
example of a marketing myopic company is Sony Walkman and Kodak companies.
In marketing orientation, the goods and service are designed
based on the qualities and preferences desired by the clients while the
marketing myopia companies prefer prioritizing and mainly focusing on the
promotion of the current commodities by developing the key characteristics that
could increase the sales volumes
Marketing orientation
determines all the organizational processes such as sales, market, product, and
societal approaches while marketing myopia is only concerned with narrow-end
strategies meant to manage the products and firm’s growth.
Marketing orientation ensures
high consumer levels and thus shaping the consumer behavior as well as their
retention while marketing myopia leads to potential loss of good customers
because their product specifications are not met as expected.
3. In a consumer
survey for a new personal coffee machine design, three features are tested in
conjoint analysis: (1) availability of espresso brewing; (2) capacity, (3)
price. The average value system scores of the features (a ranking of 1
indicates the best choice, while 8 indicates the worst) are summarized in the
following table (10 points)
Design |
Feature 1 |
Feature 2 |
Feature 3 |
Ranking |
A |
With espresso brewing |
12 oz. capacity |
Price level above $70 |
7 |
B |
W/o espresso brewing |
6 oz. capacity |
Price level lower than $30 |
5 |
C |
With espresso brewing |
12 oz. capacity |
Price level lower than $30 |
1 |
D |
W/o espresso brewing |
6 oz. capacity |
Price level above $70 |
6 |
E |
With espresso brewing |
6 oz. capacity |
Price level above $70 |
3 |
F |
W/o espresso brewing |
12 oz. capacity |
Price level lower than $30 |
4 |
G |
With espresso brewing |
6 oz. capacity |
Price level lower than $30 |
2 |
H |
W/o espresso brewing |
12 oz. capacity |
Price level above $70 |
8 |
Compare the
consumers’ choice decisions across the different levels of the three attributes
of the coffee machine, and interpret the tradeoffs as perceived by the
consumers? Support your answer with numerical calculations.
The customers prefer brewing without Espresso at an average
of 5.75 as compared to Brewing with the machine
With Espresso: 7+1+3+2= 13/4= 3.25
Without Espresso: 5+6+4+8= 23/4= 5.75
CALCULATIONS:
Features: |
Categories |
Average Rankings |
Attribute difference between averages |
Share of attribute difference within total difference |
Espresso Brewing |
With |
3.25 |
2.5 |
10.25 |
Without |
5.75 |
|||
Capacity |
6 oz. |
4 |
3 |
7 |
12 oz. |
7 |
|||
Price |
Low (Lower than $30) |
3 |
2.25 |
5.25 |
High (Above $70) |
5.25 |
|||
TOTAL |
|
Total Average:28.25 |
Total Difference:7.75 |
|
CONCLUSION:
A customer is willing to exchange ________$30________(least
preferred attribute) for _______________$ 70_____(most preferred attribute).
4. A manufacturer of
electrical components for industrial applications has four strategic business
units (SBUs), shown in the following table (10
pts).
i.
Using the Boston
Consulting Group model, evaluate the strength of the company's current
condition by placing each SBU onto the portfolio matrix.
SBU # |
Sales ($m) |
Sales of top three
competitors ($m) |
Market growth
rate (%) |
||
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.
According to the BCG
portfolio model, what strategies should it consider to improve its future
position?
|
Dimension (2
pts): High
Low |
|
Dimension (2
pts): High Low |
SBU #: 3 BCG Label (2 pts): Cash Cows Strategy (2 pts): ✔
All the money and
resources are supposed to be direct to maximizing the sales volumes, which
would increase the profits of the firm. ✔
Maintaining market
dominance by controlling the prices of products and improving technological
systems in the production processes. |
SBU #: 4 BCG Label (2 pts): Dogs Strategy (2 pts): ✔
Liquidation of the
pets ✔
Diversification and
repositioning of the dogs. ✔
Retrenchment |
SBU #: 2 BCG Label (2 pts): Stars Strategy (2 pts): ✔
Investment in the
stars for the future, conduct market penetration, and development ✔
Initiate product
development and vertical and horizontal integration |
SBU #: Question Marks BCG Label (2 pts): 1 Strategy (2 pts): ✔
Applying cost-saving
strategies to achieve the level of cash cows where the firm increases its
sales and profits ✔
Growth
strategy-focusing on both product and business development goals to turn into
a star. |
Use the following
perceptual map to answer question 5 (8 points):
|
|
|
|
5. Select the
best quadrant (I, II, II, and/or IV) for a new product-market entry. Discuss.
Market entry
as a strategy is the introduction of new products to a new target market
Segment III is
the best quadrant for the product-market entry strategy. Segment III does not
have any competition since it only has Buick as the only car dealer. Therefore,
the introduction of a new car product would face lesser barriers to entry as
compared to the other quadrants where there are stiff competitors like have
Volvo and Honda, and IV has Mercedes and Lincoln. Quadrant II would have also
proved as ideal but BMW is a strong and well-established brand that is hard to
compete with because of its high spheres of influence and have a loyal customer
base would prove almost difficult to breaks.
II. Use the
following explanation to answer question 6 (10 points):
Xerox 914, introduced in 1959, truly revolutionized the
copying industry. The first plain-paper copier was easy to use and operated at
seven copies per minute. The 914 was responsible for the number of copies made
in the United States increasing from 20 million to 9.5 billion in only ten
years. A major strategic thrust for Xerox in the 1970s was the ‘‘Office of
Future.’’ This concept recognized that the copier was only one instrument of
office productivity, and Xerox wanted to be a leader in the broader playing
field.
Savin was a small
company obsessed with participating in the copier market and frustrated by the
patent chokehold of Xerox. Finally, with the help of an Australian inventor and
a consortium of firms from the United States, Germany, and Japan, Savin
developed a liquid-toner approach that avoided Xerox patents. Its breakthrough
became the Savin 750, manufactured by Ricoh in Japan and introduced in 1975 at
$4,999, less than the (then) annual lease price of a Xerox machine. Instead of
a direct sales force, Savin sold through dealers who could contact Xerox
customers with an attractive alternative when their contracts expired. Dealer
service was feasible because the machine was relatively small and reliable; the
Savin 750 averaged 17,000 copies between failures. It made twenty copies per
minute, the first in less than five seconds, a pace far superior to Xerox
efforts at the low end. By 1977, Savin placed more copiers in the United States
than Xerox. Meanwhile, Ricoh captured the top market share in Japan, as
measured in units.
Kodak entered the
market in 1975 with its Ektaprint 100, a plain-paper copier that soon became
the industry standard for reliability in the mid-volume market. The firm then
developed a series of high-end machines
that were by many measures the best in the industry. Kodak moved slowly,
however, making sure the products were reliable, carefully building a strong
service and marketing organization, and avoiding building capacity too quickly.
Kodak was still able to move into third place in copier sales by 1985 because
of its technology, reputation, and resources-and because Xerox was not
successful in developing comparable products.
6. Identify and
evaluate the strategies of Savin and Kodak. How did they overcome Xerox’s entry
barriers?
Savin’s Strategies
Savin used innovation through the help of and Australian and
other companies in the US, and Japan to come up with a product that would outdo
the competition posed by Xerox 914.
Another strategy applied by Savin was outsourcing.
Outsourcing is a strategic plan where a firm hires another agent to perform
some internal functions on its behalf. In most cases, the strategy is used to
create spheres of economies and reduce costs. In this case, Savin marketed and
sold their products through agents or dealers.
Besides, the dealers contacted Xerox’s clients with lucrative contracts
whenever they expired.
Kodak
Again, this company made innovation the key strategy for
success. For example, Kodak invested in the development of a multitude of
high-end machines until they got the best in the industry. They achieved this
by improving their technologies which produced high-quality products hence
building its reputation on the market.
Another strategy was concentrating on service quality and
marketing plans. Kodak invested much in product promotion and marketing
strategies in terms of its value proposition, branding, and ensuring that its
potential customers have the requisite information about the products.
III. 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 challenges, Power Bar responded with Harvest (a
bar with a much more accessible taste and texture) and Protein Plus (an
entry into the high-protein subcategory closely related to that defined by
Balance).
The makers of the Clif bar (Luna)
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 Power Bar 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 ten years, 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 sweet-tasting 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 in 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 Power Bar,
which has remained the leading player.
7. Write a value proposition for Luna products
linking it to customer motivations. (7
points)
Follow the form:
To (target group & need), our (Brand)
is (concept) that (differentiation point)
Luna
offers its customers an energy bar. The majority of the customers are athletes,
and therefore the products offered have low calories and substantially high
nutritional values. The bar ensures that the stock goods meet their consumer
preferences and tastes: high nutritional
levels and less intake of calories. Therefore, the bar manufactures highly
differentiated products that meet every customer’s needs.
8. What product developed by BarM
is a new market entry (i.e., innovation)?
Explain what type of innovation it corresponds to (9 points).
Pria was a new
market entry innovation developed by Power Bar in response to the competition
it faced from the other bars. Such a type of innovation is called disruptive
innovation because it comes with new technologies and processes in the current
industry’s market. The technology is stealthy and superior to the other
existing firms. The fact that the new technology used in developing Pria is
expensive and difficult to use, the other bars cannot easily copy. Therefore,
Power Bar can fend off competition from its rivals.
9. Identify PowerBar’s competitors. Indicate two
direct and two indirect competitors at the brand or firm level (6 points).
Direct Competitors
Power Bar’s rivals are the energy
Bars. The bars were operating in the same demographic settings in which Powe
Bar was located. They are Clif Bar and Balance Bar.
Indirect Competitors
These are commodities the same as
the ones of the energy bars. The indirect rivals are candy, diet granola, and
breakfast bars. The shown entities offer the same value and quality of
commodities provided by the energy bar. However, there might only be a few
variations in terms of the taste, components, targeted market, and demography.
10. At what stage is the energy
bar market relative to the product life cycle in 2000? Identify and explain the
strategies that should be used by Power Bar given the life cycle stage and
Power Bar’s position in the market? (16
points)
Stage of the energy bar market
The market of the energy bar is
at maturity. That is when relating it to the product-life cycle. Moreover, the
marketplace is full of rivals producing and offering similar products to their
customers. Therefore, the firms’ profitability values have seriously dropped.
The increase in the number of energy bars in that area is attributed to the
ever-changing consumer tastes and preferences.
Position of Power Bar:
The bar is a market leader since
it innovated a counter product to fend off the competition posed by the other
rivals.
The market objective of Power Bar:
To evaluate and incorporate new
customer segments
Reducing the prices for its
energy bars to fight its rivals
Designing Pria Bar to be meant
for only women
Introduction of other
differentiated commodities with diverse names for clients who are preservative
in terms of calorie intake.
Pick one strategic approach Power Bar should implement, and briefly explain:
The main strategic approach that the Power Bar can implement is Brand Differentiation. That is because several competitors are offering similar products; hence the bar is supposed to produce commodities with unique features compared to those of the competitors.




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