The Questions in this Extra-Credit Exercise are based on the following case scen
ID: 329475 • Letter: T
Question
The Questions in this Extra-Credit Exercise are based on the following case scenario:
As 2012 draws to an end, Prince Sports is looking to increase sales of its tennis products and its profitability through gaining market share in both the domestic and international markets. Your marketing firm has been retained to assist the company in developing a marketing plan to achieve this 'directional’ strategy. The following should be taken into consideration prior to constructing the plan:
21st century trends in the environmental forces (social, economic, technological, competitive, and regulatory) that work for and work against the success of Prince Sports in the tennis industry;
possible promotional activities the company can use to reach recreational and junior players;
actions Prince Sports can take to gain broader distribution and sales in mass merchandisers and specialty tennis shops; and
criteria for selecting countries and actions Prince can undertake to reach these foreign markets.
View the following for an overview of the company’s marketing challenges: 'Click Here'
The company was founded in 1970. Over the next 42 years, Prince Sports became synonymous with tennis through its mission statement of ‘continually challenging the status quo, pushing the game forward by equipping athletes at all levels with unique products and support programs designed to take their game to the next level’. From the beginning they established themselves as innovators through their development of the first synthetic gut string and later the first oversized head which became the market face of the brand. In subsequent years Prince continued to prove themselves as an industry leader in tennis racquets and equipment and helped transformed the game of tennis through their innovations. Throughout its existence the company has stayed committed to continuous innovation, continual commitment to helping players play better, continual and meaningful support of industry partners and the
continual commitment to the integrity of the game of tennis itself.
SITUATION ANALYSIS In 2012 the company filed for bankruptcy after its debts ($77 million) exceeded its book value ($55.2 million). Soon after it was acquired by Authentic Brand Group LLC and under its new CEO Mike Ballardie began to chart a new direction. Mr. Ballardie cited a number of factors that pushed Prince into bankruptcy.
Poor Corporate Focus One was being too insular with respect to technology. Mr. Ballardie was quoted as saying “Prince kind of lost its way, focusing too much on its technology. It’s a great technology, but it isn’t for everybody.”
Poor Segmentation In the mid-2000s, Prince introduced its O3 technology, which features oversized string holes, known as “O-Ports,” on the side of racquets. The O-Ports improve aerodynamics and, in turn, racquet speed. By the end of the decade, Prince sold only O-Port racquets. Ballardie said tennis players who preferred more traditional racquets were forced to turn to other manufacturers.
Poor Forecasting of Trends The downturn in the economy also slammed Prince. “Prince is, and has always been, a premium brand,” Ballardie said. “Our products are in the upper echelons of the market. Our performance-line racquets, which is what we sell in pro specialty shops, were priced at $250 to more than $300 over the last four or five years. We saw a decrease in the number of racquets being sold across the whole market but an increase in the number of re-strings. People were reconditioning their racquets rather than buying new ones.” In addition to this economic downturn was the continued downturn in the popularity of tennis. In 2013, ESPN estimated that tennis was the seventh most popular sport among American adolescent boys, as only eight percent played it. Ahead of tennis were football, basketball, baseball, soccer, track, and wrestling. A similar study has not been done in Europe, but tennis is believed to be the continent’s second most popular sport, behind, of course, soccer. Not only was the market dwindling, but it was becoming more homogeneous and less diversified.
Poor Competitor Analysis Competition had increased dramatically. In particular, a new competitor, French racquet-maker Babolat, also played a role in Prince’s struggles, with its push into the United States. This plus the market being near saturation presented strong competitive pressures on the company.
Poor Strategy A few years earlier the company released a racquet with "0 Port' holes that was supposed to improve racquet speed. The idea was to differentiate itself from the marketplace, but it wasn't necessarily what the market wanted" Despite Mr. Ballardie’s own earlier observation, they again put all their faith into this new development and lost focus on the other products that made them who they were.
MARKETING CHALLENGE
After the bankruptcy and reorganization Prince Sports once again was faced with a challenge to reinvent themselves to meet the demands of 21st century tennis players. It made the strategic decision to allocate its new found resources to build or rebuild its Tennis Unit SBU. Given all of the 21st century market changes, technology and social media were two major tools the company though it could use to create some competitive advantage. .First with respect to technology, the company felt that in order to reverse its earlier mistakes, it needed to develop and release a new product types. Ones that met the demand of the new emerging market while still paying attention to their older market to continue growth without losing consumers. They attempted to achieve this by directly contacting consumers and seeing what they wanted or felt they were missing in a tennis racquet.
Specifically it sought to develop and release three new racquets that met the need of each of their selected target markets. Mr. Ballardie stated, “I don't think it’s possible to develop a racquet that caters to all strokes and levels. I feel that using new technological developments to design a racquet based upon the three different strokes would meet the needs of all levels of our markets”. 'The three primary market segments selected were: performance, recreational, and junior. Mr. Herring, product manager explained that within each of these segments Prince made the difficult design trade-offs to balance (1} the price a player is willing to pay, (2) what playing feature; (speed versus spin, sweet spot versus control, and so on} they want, and (3) what technology can be built into the racquet for the price point. Within each of these three primary market segment, there are at least two sub-segments—sometimes overlapping! Figure 2 gives an overview of Prince's market segmentation strategy and identifies sample racquet models. The three right-hand columns show the design variations of length, unstrung weight, and head size. The figure shows the complexities Prince faces in converting its technology into a racquet with physical features that satisfy players' needs across multiple segments.
Figure 2: Prince Sports’ Targeted Market Segments
Second with respect to social media and building customer relationships, as Prince Sports began to grow their company in attempt to keep up with 21st century demands they needed a new way to market and promote themselves to keep ahead of competition, and maintain their positioning as a high performance product that enhances a player’s play. This was particularly important because the market was very brand conscious. This is captured in its marketing byline ‘Putting Energy Where it Counts’. Especially given their scarce resources. One way to do this is hosting a sponsorship for players that can be promoted through social media such as twitter and Facebook. It is important for Prince to reach a younger audience and their large presence on social networks makes it important for them to gain as much presence through social media as possible.
Even though market is becoming more homogeneous, each market segment has a different way to be reached, and still has significant heterogeneous sets of needs, so it is important for Prince to understand each of those markets and then decide how they will promote themselves according to their demands.
As a result of these strategic initiatives, the company expected to generate global revenues around $25-30 million over its next two years. CEO Ballardie in an interview with FORBES stated. “This is a huge revenue target for this time of year. Typically all tennis companies introduce new products starting in January. We are introducing our 2014 products earlier to grab the attention of dealers and gain their support now. It is a really important part of the year coming up for the future of Prince."
Question 1
If you were responsible for developing a marketing objective statement, which of the following informational factors would you require? That is, which items would become part of the marketing objective statement. {Select All That Apply}
Question 1 options:
A)
Nature of Demand
B)
Planning Horizon
C)
Core Values
D)
Company Resources
E)
Product Life Cycle
F)
Value Creation Gap
G)
Growth Strategy
H)
Market Behavior
I)
Corporate Misison
J)
Relative Market Share
K)
Resource Allocation Strategy
L)
Corporate Philosophy and its associated Performance Measure(s)
Question 2
Which of the following statements would be the most appropriate marketing objective statement for Prince Sports?
Question 2 options:
A)
In order to build and increase profitability to 25 to 30 million dollars within the next two years, the Tennis Unit will continually challenge the status quo, and push the game forward by equipping athletes at all levels with unique products and support programs designed to take their game to the next level using continuous innovation, continual commitment to helping players play better, continual and meaningful support of industry partners and the continual commitment to the integrity of the game of tennis itself while always adhering to a product development strategy.
B)
In order to continually challenge the status quo, and push the game forward by equipping athletes at all levels with unique products and support programs designed to take their game to the next level and increase profitability to 25 to 30 million dollars within the next two years, the Tennis Unit will Build using a product development strategy while always adhering to continuous innovation, continual commitment to helping players play better, continual and meaningful support of industry partners and the continual commitment to the integrity of the game of tennis itself.
C)
In order to continually challenge the status quo, and push the game forward by equipping athletes at all levels with unique products and support programs designed to take their game to the next level and increase technological superiority within the next two years, the Tennis Unit will develop new products using a build strategy while always adhering to continuous innovation, continual commitment to helping players play better, continual and meaningful support of industry partners and the continual commitment to the integrity of the game of tennis itself.
Question 3
Which segmentation strategy was the company proposing to use after 2012 in their efforts to rebuild sales and revenues.?
Question 3 options:
A)
Undifferentiated
B)
Niche
C)
Differentiated
D)
Concentrated
Question 4
Which segmentation strategy should the company be proposing to use after 2012 in their efforts to rebuild sales and revenues.?
Question 4 options:
A)
Undifferentiated
B)
Niche
C)
Differentiated
D)
Concentrated
Question 5
Which of the following positioning strategies should the company use in its rebuilding efforts?
Question 5 options:
A)
Demand Focus-Change Perception of What product is
B)
Attribute Focus-improve rating on an attribute
C)
Attribute Focus-increase the importance of an attribute
D)
Demand Focus-Change Perception of When and Where Product would be used
E)
Attribute Focus-introduce a new attribut
A)
Nature of Demand
B)
Planning Horizon
C)
Core Values
D)
Company Resources
E)
Product Life Cycle
F)
Value Creation Gap
G)
Growth Strategy
H)
Market Behavior
I)
Corporate Misison
J)
Relative Market Share
K)
Resource Allocation Strategy
L)
Corporate Philosophy and its associated Performance Measure(s)
Explanation / Answer
Answer 1
In order to build a marketing objective statement, I would require information on the following fronts
1.Value Creation Gap
2.Planning Horizon
3.Growth Strategy
4.Corporate Mission
Marketing has always been about listening to the customers’ voice and identifying the gap between what customers have at their disposition and what they aspire. This is precisely what the new management has also done, based on which the three racquets have been designed. Owing to this, the value creation gap should definitely be part of the marketing objective statement.
Since the firm, under its new management, has a target of 2 years to achieve its revenue targets, the marketing objective statement should definitely reflect the same.
Growth strategy is a direct consequence of identifying the value creation gap and hence its presence in the marketing objective is critical. Factors such as designing new products, technology innovations, leveraging social media and grabbing the attention of dealers early on, would all come under the growth strategy.
The corporate mission and vision statements are often a guiding criteria for company initiatives and when the marketing campaign is to reinvent the company’s existing growth strategy, the vision statement should definitely reflect in the objective statement.
Answer 2
If we notice, all the three options are composed of the same 3-4 components, viz. profit target, time target, mission statement, and growth strategy. Following table shows how the marketing objective statement is sequenced in each of the options
A
B
C
Profit Target
Mission Statement
Mission Statement
Time Target
Profit Target
Time Target
Mission Statement
Time Target
Growth strategy
Growth strategy
Growth strategy
Now as per my opinion, option C should be negated since it does not mention the revenue target. Between options A and B, we see that in option B there is greater stress on the mission statement and the revenue and time targets are more of by-products of the mission statement. This is clearly reflective of a more long term strategy as compared to option A, where the marketing objective seems more about achieving a 2 year target than the larger objective of sustainable growth. Hence of the three options given, option B seems most appropriate.
Answers 3 and 4
The new management is clearly going for a differentiated segmentation methodology wherein the three major segments have been created and products have been made accordingly.
With a stiff target in hand, it is always tempting to cater to every segment. However, with the new strategy, I feel that the new management is committing the same mistake of selling its product to every segment. In my opinion, the company should probably go for a concentrated segmentation strategy, wherein products can be made for the Performance segment, with focus on both the sub-segments. Since these would normally constitute of professional players who would typically be in demand of high-end products, the price range can be at a higher side. With increased margins, the company can meet its target. In addition, since technology has always been the USP of Prince, designing products will not be a serious challenge either.
A
B
C
Profit Target
Mission Statement
Mission Statement
Time Target
Profit Target
Time Target
Mission Statement
Time Target
Growth strategy
Growth strategy
Growth strategy
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