Marketing

Implementation case

study analysis

2013

SUBMITTED BY:

NIPUN SHAMA SHETTY (80303120050)

NMIMS (HYDERABAD)

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Case overview:

“The purpose of this article is to develop an approach for evaluating the benefits of trade

shows”

This case describes how upper management of national mine service company looks at trade

shows and the selling and non-selling benefits it can derive out of such shows. It also deals with

the different products the company has to offer and how trade fairs can influence potential

customer acquisition and customer retention. Here the importance of monetary returns as per

the investment in trade fairs by the organization are analyzed and also different methods,

matrix to determine where proper investment has to be done are discussed. Marketing

communication techniques that can help fetch results out of expensive trade shows are

discussed in the case. Traditional thinking of organizations about trade fairs is that being in

trade fair is important because competitor is there which is not correct .Here the importance of

trade fair as excellent place to meet customers and new prospects from overseas is also

highlighted. The case discusses that national mine service company should look beyond image

building and concentrate more on launching new products, boosting morale of younger

executives and also its sole objective.

National mine service company:

The national mine service company is U.S based mine equipment seller with its headquarters in

Chicago’s McCor-mick place. The company was organized into three major divisions: the mining

machinery division (MMD); distributor’s product division (DPD); Hydraulics division (HD).

Approximately 90% of the sales were from the U.S coal industry and remaining substantial sales

from domestic and foreign countries.

Personal selling was headed by Mr. William Hennessey (VP sales) and dealed in major capital

equipment sales such as continuous miners. The salesperson job here was to generate interest

at the mine level among mine superintendents, maintenance officers and machine operators.

The DPD maintained a broad product line containing 27000 products. The HD wing used a

different sales and service approach called driver-salespeople where they visited mines with

pickup trucks to deliver new mine hydraulic machines and pick up hydraulic machines meant

for servicing.

Trade shows: National mine Service Company

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The coal mining industry is a close fraternity where buyers or manufacturers grew up in

business and formed relations and are generally resistant towards trade fairs which has

potential to attract new customer base. The competition is low in coal mine equipment

manufacturing industry. Equipment standardization and operation dominance was more visible

in smaller mines as compared to large mines

Trade fair:

National mine service company took active participation in annual trade shows and expositions,

but majorly concentrated on much important ‘American mining congress international coal

show’ which was held once in four years and attracted exhibitors and potential customers

worldwide. This trade show exhibited and promoted various mine machineries, coal processing

equipment, transporting equipment, supplies or services. This trade fair is not for profit

educational activity where selling is prohibited and booth sales personal where allowed

information gathering and giving about new advances in technology, machine design and new

products.

National mine service found this trade show to be a perfect and special place to launch its new

product ‘Marietta 2460 Drum miner’. But the problem was the fading interest of upper

management towards efficiency and potentials of these trade shows. This perspective needs to

be looked by a new angle of profitability and customer awareness.

Trade shows facilitated three major marketing communication activities: Personal selling, trade

exhibition and advertising/promotions. This trade show .NMS spent highly on sales promotions

and gifting to existing and potential customers.60% of advertising budget was spent on MMD

products. Objective of NMS’s marketing communication was to maintain companies image and

gain access to decision influencer’s not available to company’s sales force easily.

Upper Managements take on trade fairs:

Mr. Mac Vean: Though attendance is lower the desired amount of buyer awareness for

complete product line and 2460 miner is achieved. He also believed in Paretos rule that 80% of

the customers contributed to 20% sales of the NMS and 20% contributed to several millions

worth of equipment sales per year.

Mr. Mc Elhattan: The organization visits the Show because the competitor is there and you

cant afford not to be there and also because such trade shows are image builders to portray

company as one which services needs of customer and introduces new and improved products.

There is a mix of opinions and perspective about trade shows and its future in upper

management of NMS. Senior VP believes that trade shows are terribly expensive and of limited

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value for business versus the money spent. But he also maintains that management decision of

backing out of trade show in past years made customers believe that NMS was in financial

turmoil and thus couldn’t participate. This affected reputation of the company in a negative

way. On other side few optimistic upper management officials in NMS believed that trade show

gives a competitive edge and also exposes junior officials to company’s key accounts, builds

image among customers and also gives platform to launch new products.

Negative aspects of trade shows:

Unknown effectiveness and difficulty in measuring efficiency (no surity of customers)

High and rising cost of participation

Top managements cost of time lost is not taken into account for participation in trade

shows

For heavy machinery organizations the buying process is long and selling is prohibited in

trade shows. Only information gathering and giving is allowed

Positives aspects of trade shows:

Expositions are open to public which is of less use to such heavy machine manufacturing

organizations

Trade shows are meant for focused and invited target group like current and

prospective customers, suppliers, business associates and press

Trade shows provides successful and low cost face -to -face trade show contacts with

potential customers

Helps attract potential buyers easily

Helps company know about its competitors product and technological innovations

Approach to be followed for effective trade shows:

Set preshow objectives and goals to be achieved from trade shows i.e. introducing new

product, generating sales lead etc. The managers should look to trade shows as tool to maintain

relationships with key customers or tool to gather needed competitive intelligence gathering

rather than mass personal selling platform. Measuring efficiency of trade show is not

dependent on traditional wisdom rather it is dependent on satisfying complex selling and non-

selling marketing functions. Selling objective can be selling to new clients and also identification

and access to potential clients. It may also include getting information about how existing

products are performing in market and also what potential and existing customer need in the

new products. Such information’s are difficult to get other than trade shows. Non selling

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activities like image building, gathering intelligence, enhancing corporate morale and product

testing can be achieved through effective trade shows.

Trade shows can serve the major purpose of the organization to boost the morale of staff

members and gives opportunity for sales members to rub shoulders with top management.

Trade shows are meant to be decided by company on two objectives: what is the target

audience? and what kind of trade shows are available for the desired results?

Thus targeted marketing communication can ensure effectiveness and can meet broad range of

different objectives simultaneously.

Conclusion:

Establishment or maintenance of trade show program only for image strengthening or for

intelligence gathering or for servicing current accounts is a bad investment. Rather companies

should look at marketing communication mix to satisfy its selling and non-selling objectives.

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Case overview:

The case discusses the various trends followed in highly competitive car rental business and

also explains the reason behind Hertz to implement highly risky but highly potential pricing

strategy of ‘no-mileage rentals’ across the board to all customers. The major objective of the

case is to portray how Hertz managed to come to number one position in car rental industry

inspite of tough competition in the industry.

Hertz background:

Hertz Corporation was founded in 1924 and was a $1.3 billion company. It was known as far

And away the most profitable car rental firm in the world and was engaged principally in

business of renting and leasing automobiles and trucks to customers in USA(81%) and 19% of

foreign countries. It is head quartered in New York and is wholly owned subsidiary of RCA

corporation. RCA is among one of nation’s largest industrial Corporation known for its high

Technology electronics, communications, television and radio broadcasting and vehicle renting

and leasing.

Hertz Corporation has the reputation throughout the industry for being a well-managed

company with lean organization management with respect to personnel. They do least

paperwork to avoid wastage of valuable time. Hertz believed in involvement of representatives

of all departments in decision making process to yield best results for the organization. It was

believed that these principles of company ensured people working hard together to increase

the productivity.

Hertz car rental operations were conducted primarily at major airports and at downtown

locations in major cities. The predominantly company owned structure allowed locations to

maintain a consistent public image distribution structure of Hertz gave flexibility to implement

corporate policy changes quickly. It used cars which were produced in that country for its fleet

and also maintained fuel efficient car fleet to manage energy shortage issues. Management

believed that the profitability of the firm depended on ability of the firm to judge and react to

public’s interest in cars.

Pricing: The Hertz Corporation

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Hertz market consisted of leisure, commercial (large and small) and individual business

customers with small business segment contributing to the major revenue of company.

The Hertz company is organized functionally with Bennett Bidwell as CEO and president, Hal

Bingaman as VP of marketing and Craig Koch as GM of rental car division.

Industry analysis:

The automobile rental industry represented approximately $2.5 billion worth of business

annually and is highly competitive in terms of pricing and services offered. After 1981 the car

rental market became stagnated due to energy crisis and lagging economy.

Car rentals had a complementary demand as per air industry situation. Due to airline industry

getting affected in 1981 due to PATCO strike and low air travels even the car rental had to

suffer losses and low revenues.

The customer target segments are as following:-

Leisure users: rent cars for vacations, holidays, emergencies

Business users: corporates or individuals who rent cars for business trips

The major revenue to the car rental companies came from car rental companies located in

Downtown areas of most cities and major airports.

The four major players in the industry comprised of Hertz, Avis, National and budget rent-a-

Car.

Avis is number two car Rental Company and mostly operated through licensees. Avis mainly

concentrated its efforts on gaining wider distribution through franchising and also it obtained

three quarters of its business at airports. National car rental was in third place with market

share of 20.1% out of which 50% was licensee operated. National stressed on quality and

service in the company advertisements. Budget rent a car has 12% market share and was totally

a franchising operations. It had fastest rate of growth in volume and profits and became a

tough competitor with military like strategy and research based marketing. They believed in

quality service and stressed on the customers being their number one preference.

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The car renting companies applied different selling strategies to leisure customers and the

corporate segments. Leisure customers were obtained via travel agent suggestions, advertising

and promotional events whereas rental companies usually employed a Salesforce to obtain

corporate accounts.

Challenges involved in entry to this sector:

New entrants had to deal with lack of airport parking space due to major players

utilizing 90% of space as per FTC decree

Large capital was needed to finance and maintain car fleet

Government controls related to price, labor matters, charge card operations,

environmental protection and used vehicle sales

Pricing policies adopted in industry:

Car rental rates were historically charged on basis of time and mileage. Special holiday or

weekend rates were offered on no-mileage charge to spur off-peak demand. Pricing policies

depended upon the frequency of rentals and the volume generated by the corporate accounts.

Larger the volume, larger the discount rates the corporate received. Most large companies had

discount arrangements with several different car rental companies due to which the car rental

companies had to maintain competitive pricing strategy.

Events that forced Hertz to change its pricing policy:

In 1980 Hertz raised its large commercial account rates by 25% to increase the profit margins.

But this in turn gave an upper hand to its competitors like national. National went on to

increase its market share by servicing major commercial accounts with low pricing strategy.

National, Avis and budget also took advantage of the situation and increased the advertising

budgets and upgraded their fleets and improved their facilities and airport distribution. Hertz

suffered a market share slip of 40% during 1980.Hertz got a negative feedback and repute of

being ‘low value for money’ service.

National and Avis further detoriated the conditions for Hertz by announcing new flat rate

programme (no –mileage charge) for smaller commercial accounts.

Hertz pricing strategy (bounce back):

Hertz went on to became the first company to offer no mileage rentals across the board to all

customers. It took the risk of implementing this strategy with the contingency plan that it will

creatively go back to its old time plus mileage pricing strategy if new pricing policy backfires in

market. The pricing strategy was implemented to make sure Hertz remains as number one in

market. Bidwell, Koch and Bingman believed that Hertz needed to make an innovative move.

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But they had a tough time deciding whether to follow the leader strategy (i.e. no mileage

pricing with conditions) or innovate pricing strategy. Hertz came up with guaranteed pricing

strategy (no mileage pricing with no stipulations to all customer segments) with increased

advertisements and promotions to ensure publicity.

New pricing comprised of three parts:

It offered customers flat rate based on the number of days cars would be used without

mileage charge

Flat charge for one-way rental based on differential between rentin and checkin cities

The no frill no mileage pricing was available to all major customer segments.

Outcomes of implementing no-mileage charge strategy:

New pricing strategy increased the ease to customers wherein they could calculate how

much the rental would be in advance.

Ease of administration because of simple calculations

Company could predict their travel budgets in advance due to flat pricing

Improved service quality

Hertz came back to number one position

Makes selling easier for travel agents

Waiting time reduced for customers

Challenges of new pricing strategy:

Customer can exploit the pricing strategy by extreme usage of car

Lower margins possible

Worn autos

No enough cars to meet the demand

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Case overview:

The case discusses about the failure of ‘project shopping cart’ program by NAPLC even after

successful test marketing and potential market status. It describes how new Norelco light bulb

launched by the organization failed in its main objective of establishing a substantial shelf space

in grocery stores.

NAPLC company profile:

NAPLC had been manufacturing lights since 1891 and sold over 40000 lamp types through 70

organizations in 59 countries. NAPLC was the fourth largest lighting manufacturer in USA.

NAPLC was a division of NAPC (North American Philips corporation and affiliated with N.V

Philips of Holland, the world’s largest lighting manufacturer. NAPC ranked among the 150

largest industrial companies in USA.NAPLC focused its efforts in field of consumer electronics

which included sub-brands like Magnavox, Philco, Genie, Anchor Brush.

The product mix includes incandescent, fluorescent and HID (high density discharge) lighting

fixtures, miniature and optic projection lamps.

Type A: General purpose household bulbs like Norelco (for grocery, department stores and

drug stores)

Type B: candle bulb used in candelabra

Type C: Straight and show widow lamp bulbs

Type D: bowl reflector silvered top bulbs

Type E: Tubular special purpose lamp bulbs

Type F: frosted or colored lamps

Norelco was ‘Type A’ category and was the major product which NAPLC planned to launch in its

project shopping cart targeted mainly towards grocery shops.

Program management: North American

Philips Lighting Corporation

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The target market includes retail, industrial, commercial and original equipment manufacturer

(OEM) in United states. Consumer lighting company also manufactured and packaged bulbs

under Norelco’s name and also did private labelling. NAPLC successfully implemented private

labeling marketing program in 1974 which accounted for approximately 40% of consumer

group sales.

There are four main manufacturers like GE, Westinghouse, Sylvania and Norelco competing for

light bulb representation in grocery market

Reason for implementation of project shopping cart:

When Norelco management first confronted the issue of developing a new light bulb program,

the major market share (approx. 57%) was from the grocery store segment. Grocery stores

contributed to much larger bulb sales as compared to non -food stores. Norelco management

believed that this private label had potentially vulnerable position to grow. No product of

NAPLC till 1977 had a shelf space in grocery stores and the growth was quite slow as there was

tough competition by market monopolist GE.GE dominated the light bulb market in terms of

brand awareness and product shelf space. The attributes which consumers associated with GE

brand were high quality, long lasting and better for eyes. Thus without a program management

like project shopping cart it was difficult for Norelco to attain its desired market share mainly in

grocery stores. NAPLC believed that one way of increasing the reach and distribution of product

was to launch private labels which also helped in moving the inventory at a faster rate. This

strategy was never used by competitors which Norelco could use. Norelco believed that there

was no real consumer advertising awareness for light bulbs and a low level of interest in

consumers. Company believed that manufacturer’s sales representatives can attract the target

audience required.

Managements ground research before implementation:

The upper management found out that women were the primary purchasers of ‘type A’

products and mostly bought it from supermarkets and groceries. The major problem with

consumer’s perception due to which newer brands did not get a chance to showcase its brand

was that they thought that light bulbs are all the same and brand does not matter. This

revealed consumers lack of knowledge and information about new light products.GE remained

as monopoly in this market due to its breadth of distribution and brand awareness. NAPLC

upper management believed that bulbs were purchased on basis of need rather than brand

preference. Lighting products were categorized into planned purchase and impulse purchase.

The wholesalers and distributors made quantity purchases and then sold the bulbs in smaller

quantities to retailers.18 percent of grocery stores accounted for 75% of sales.

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Challenges faced in implementation:

Grocery channel sells bulb for suggested retail price (low price) and is the only segment that

does this. They work on low margins and the manufacturer has to use pull strategy to influence

consumers so that the retailer’s stock the product. For grocery store shelf space the

manufacturer has to again use consumer advertising, couponing and rebates. Push based which

is easy can be used for hardware and discount stores. The grocery stores are highly dependent

on margins from bulbs and it contributes to major profit here. The grocery stores are very

happy with high margins, and product which sells always no matter what the brand is.GE

maintained a high price which yielded low margins to grocery stores who generally kept only

one brand which was mostly GE. Thus buying process or trade decisions for new products in

grocery stores was more complex than it was needed. The buying and shelf space decisions

were authorized by buying committee where buyer had no say.

Project shopping cart:

Although grocery total sales increased, the light bulb share of market declined whereas the

non- food segment had a steady growth. As per the conditions in market Norelco came up with

strategy that their sales would increase for type A products only if they can successfully

convince grocery channels that reason for loss of market share is due to high retail pricing of GE

and lack of other brand bulbs form which customers can choose. Norelco planned to become

second brand name bulb that these stores carried.

Norelco designed new, different and creative approach in packaging and merchandising of bulb.

Survey was done to implement the customers most soughted attributes. They switched from

cardboard to plastic packages, up to date look, more eye appealing color, closed ends to ensure

added protection, more information, color coding of wattage information.

Retailers preferred merchandising the bulb via self- service racks. They thought that rack held

more products and encouraged impulse buying. Thus Norelco offered racks to retailers which

increased the sales. This racks where designed such that SWP and SW bulb would be at

consumer’s eye level.

This program was also promoted through food market institute trade shows and special

Olympics. NAPLC drilled down on each detail before finalizing the strategy as previously

Westinghouse even with brilliant free standing merchandizing and packaging idea failed with its

newly launched Turtle lite product.

The pricing strategy for shopping cart was to stay with policy pricing (not more than 58% to 63%

from list price)

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Failure of project shopping cart:

Even though the company spent on merchandising, promotions and packaging and expected

that this would appeal customers, it failed.

The program did not meet the goals as the grocery retailers were not ready to take risk to put

up Norelco along with GE. They though that GE is the only company which is and will always be

the market leader in bulb. The major problem was also that bulb industry had just few areas to

differentiate its product from its competitors.

Norelco got a chance to get placed in shelves of Kroger chain and ShopRite supermarket but

campaign had no significant impact on sales. Even reduction in price would not help the

situation.

The company lost 630000$ and had an excess inventory of 300000 packaged light bulbs. Two

objectives were achieved i.e. product mix had improved and Norelco got on shelf space. But the

main objective of penetrating the grocery segment was not met .Thus even after proper

program management, the project shopping cart failed.

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Case overview:

The major issue discussed in this case is whether Alcan should start setting up industry new

vinyl capacities along with its existing Aluminium siding products, against company’s mission of

maximizing aluminum production. The case discusses how delaying the decision to enter into

vinyl BPD (building product division) at right time caused problems for Alcan. The case amplifies

the John Edwards dilemma in taking decision wherein he had to align to Alcan’s mission to

maximize aluminum sales and at the same time being president of Building products

division(BPD) take care of the increasing sales and profit for company in tough market

conditions where the New vinyl products were slowly eating away aluminum demands.

ALCAN overview and industry analysis:

ALCAN is a Montreal (Canada) based company incorporated on may 31, 1928. Alcan was

recognized as one of the low cost producers of Aluminium due to ownership of hydroelectric

plants. These plants also powered many Canadian smelting operations. Alcan’s distribution cost

was however higher than its competitor Alcoa whose smelting operations were close to market.

Alcan management felt that company’s strength resided in its diversified international base and

management; its well-balanced raw materials position; its market access as experienced ingot

seller and fabricator.

Aluminum is a versatile material with applications ranging from kitchen foil wrap to tanker

armor. It was produced in two stages where the first stage was chemical process refining

bauxite into alumina followed by electrolytic process converting alumina into Aluminum ingots.

Companies like Alcan who could locate its smelting operations close to low cost power

benefited in the market. Aluminium gained importance during World War 2 when defense and

armament demands increased. This segment grew a lot due to heavy demand in containers and

transportation, Aluminium cans, light weight automobile manufacturing where steel was used

instead of Aluminium. Aluminium competed on cost effectiveness over steel and copper.

From program to policies: Alcan Aluminium

corporation – building products division

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Aluminium was majorly used in siding BPD industry but gave up to increasing demand of vinyl

siding products.

Alcan’s principal products were bare, embossed, coated aluminum sheet and coil, plates, rural

and commercial building products.

Five operating divisions included building products (BPD); Alcan cable, Alcan ingots and

powders, metal goods; Alcan sheet and plates.

ALCAN BPD was one of the major producers of residential aluminum siding market. Vinyl siding

was cheaper than Aluminium due to which few members in Alcan suggested that they open up

vinyl capacities to stay number one and a competitive force in BPD market, but they ignored

the importance of setting up Vinyl capacity due to which Alcan suffered in sales. Alcan also

fabricated and converted Aluminium to end products like sheet, plate, foil, wire and rods. They

also served other firms with aluminum ingots.

ALCAN BPD distribution channel:

Independent

Manufacturer – owner

Others

Problems faced due to delayed decision:

Vinyl was making inroads in BPD especially in residential siding industry as compared to

diminishing demand of aluminum. Vinyl manufacturers enjoyed higher gross margin due to low

cost of production. The other problem was that independent distributors preferred buying vinyl

directly from manufacturers in bulk volume as the cost would further reduce as compared to

aluminum. Salesforce could not convince independent dealers. Alcan’s marketing myopia

(short sightedness) that setting up vinyl capacities will cannibalize their own aluminum siding

BPD, dealt a heavy blow to them as they suffered low aluminum product sales and late entry

into vinyl BPD products gave the Salesforce a tough time to penetrate into much advanced and

flourishing vinyl market in terms of both new customers and existing customers. The existing

influence and position in market was fading for Alcan which they had built on aluminum BPD

superiority. Independent distributors were not ready to stock Alcan vinyl sidings as the variety

was low. Moreover the competitors provided much better co-operative advertisement

schemes.

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Improvements recommended:

More variety in vinyl products in terms of colors, designs. Better distribution channels over

independent distributors. Making use of aluminum distribution channel if needed. Better sales

strategy and promotions to penetrate the BPD market through its vinyl products. Coming up

with better vinyl quality that does not expand under normal heat. Making changes to products

and process leads to competitive edge in market place. Alcan should try to concentrate on huge

orders rather than independent distributors. Salesforce should be properly guided with regards

to the process required to sell vinyl sidings.

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