JVS

JVS is a successful manufacturer of designer clothing. A marketing expert described JVS’s brand name, Izzys, as one of the business’s major strengths. Because of its market orientation approach, JVS spends significantly more on market research than its competitors.

JVS’s products are:
• Izzys, a range of high-quality fashion jeans, which contributes 70 % towards JVS’s revenue and profit. The market for this range is not growing.
• IzzDen, a range of denim jackets, which is near the end of the product life cycle. Manufacturing of this product will cease later this year.

Izzys and IzzDen are sold through high-end independent retailers throughout countries in Europe. JVS uses a price leadership strategy for these two products. Consumers perceive JVS as fashionable. They also believe that JVS’s products are worth the premium price.

JVS is considering launching a new product, a range of fashionable shorts – Izzless – aimed at the 15–19 age group. With this product, JVS would reach a different, but highly competitive, market. Focus groups revealed that many low-income young consumers want to purchase fashion shorts. JVS would sell the new shorts to mass market discount retail stores. Consumers would also be able to order online for next-day delivery.

High Plains PLC (HP)

High Plains PLC (HP) owns 600 budget hotels. It operates in a rapidly growing market and has a 60 % market share of the budget hotel market.

Recent secondary market research on the hotel industry revealed:

• guests of luxury hotels are brand loyal
• 80 % of guests of budget hotels respond positively to a price reduction
• the budget hotel market is growing rapidly
• detailed statistics and information on all hotel chains.

HP’s directors aim to increase occupancy rates in HP’s hotels from the current 65 % to 80 % by the end of 2024. Each of HP’s hotels has 400 rooms. People on business trips account for only 15 % of the hotels’ bookings.

HP is considering two options.

Option 1: Price discounts on 100 of the rooms in each of HP’s hotels

The discounts would undercut prices charged by its major competitor, Kampfort Inns (KI), by 10 %. HP would also offer a price match guarantee, which means that it would match any lower price charged by KI for any room.

Option 2: Upgrade 100 of the standard rooms in each of HP’s hotels

Upgraded rooms, called HP+, would have improved IT facilities, new décor, a coffee machine and a better shower. HP+ rooms would be $20 per night more expensive than standard rooms. Estimated upgrade costs are $1500 per room, and the upgrades would take two years to complete. The HP+ rooms are targeted both at the business traveller market segment and at customers willing to pay slightly more for an enhanced hotel experience.

Adventures for All (A4A)

Tama Toki founded Adventures for All (A4A), which owns four adventure parks employing 342 people. The parks offer adventure activities such as high wire and mountain biking. A4A_’_s target market is teenagers and adults. A4A’s mission statement is “safety and affordability at A4A are the most important reasons for a great time for all”.

A4A uses predatory pricing. Its competitors are theme parks and adventure centres. However, social trends are
changing. Many teenagers prefer social networking rather than adventure activities. A4A’s sales revenue and profits are falling.

Tama discussed with senior managers two possible growth strategies:

Option 1. Through extensive promotion, attract children and adults with disabilities and access requirements to the parks. This approach would require specialized training for existing staff. No modifications to the parks would be required.

Option 2. Offer corporate team-building activities. A4A would develop specially designed programmes for senior leadership teams to spend three days in newly built conference centres located at the parks. Corporate teams would engage in adventure activities together and then discuss strategic options for their organizations.

Option 2 could be highly profitable. A4A could charge high prices for these programmes. However, some of Tama’s senior managers argued that A4A should continue to provide “adventures for all” and not just to a group of highly paid senior leadership teams.

The two options created major disagreements. Two senior managers, working with Tama since the creation of A4A, threatened to resign if Option 2 was implemented. Two other senior managers argued that without Option 2 many jobs at A4A were under threat.

The Burnt Tomato (BTO)

In 2003, Ben opened a street-food stall selling vegan food. The food stall was successful. Ben spent little on marketing, mainly advertising on the food stall itself and relocating it to places or events where many consumers would pass by.

In 2008, Ben used the profits from the food stall to open a restaurant, The Burnt Tomato (BTO), which initially employed 16 people. In the following years, labour turnover was low. Employees received an annual bonus, which increased with each year of employment.

In 2015, Ben created a website and began to use social-media marketing. Customers were encouraged to rate their BTO experience online. Their reviews consistently rated BTO’s experienced staff highly and showed that they thought the food was exceptional value. Ben replied to all reviews. Many BTO customers also joined a BTO social media group and communicated with each other and BTO regularly. For many customers, the total BTO experience of vegan food and social networking was like being in a club.

Unfortunately, high labour costs, reasonable profits and the use of high-quality ingredients meant that BTO’s gross and net profit margins were below industry averages.

Aware of the growing demand for vegan food, Ben borrowed money from a family member in 2018 and opened two more _BTO_s in different cities, hiring 32 new employees. However, in January 2019, a long-time customer of the original BTO ate at one of the new restaurants and wrote a negative review. The review went viral and sales at all three _BTO_s declined.

Music Mania (MM)

Music Mania (MM) is an independent store selling new and used music compact discs (CDs), DVD films and music vinyl records. It is a sole trader business owned by André, who has 25 years of experience in the retail and music business. MM has loyal customers but its total revenue is falling. The store currently has a low market share in DVDs and vinyl records.

André decided to conduct some primary and secondary market research, as the entertainment industry is changing rapidly. He discovered that:

• the market for DVDs is in rapid decline
• CD sales are declining slowly but new releases still sell well
• MM has had to stock computer games, which are selling out very quickly, and the sales of new vinyl records are growing slowly.

André is accustomed to variations in sales but the current sales forecasts are, in his experience, the most worrying. He has decided to create an e-commerce website to increase his sales of new and used vinyl records and CDs. André is also aware that new free online music streaming and gaming sites are being launched.

André has only limited internal sources of finance to set up the website. Two new tactics to ensure future success for MM being considered are:

• to stop selling DVDs
• to increase below-the-line promotional spending on vinyl records.