Session 12
Track Chair
and Session Chair: James W. Camerius, Northern Michigan University
CASES:
Carnival Cruise Lines: Positioning for
the Future
Thomas L.
Huey, Florida International University
Health Sense International (HIS), Inc.
James W.
Clinton, University of Northern Colorado
James W.
Camerius, Northern Michigan University
Holeproof Australia – Competing in the
Socks and Jocks Market
Peter W.
Reed, Monash Mt. Eliza Business School
Indian Ridge Golf Club: What Price Glory?
David W.
Rosenthal and James M. Stearns, Miami University
Lenox, Inc.: The Gift Company
Kristine
Koenig, Fleet Credit Card Services
Alfredo
Mauri, Baruch College
G. Steven
McMillan, Penn State Abington
Pacific Cataract and Laser Institute:
Competing for Consumers in the Lasik Eye Surgery Market
Linda J.
Morris and John J. Lawrence, University of Idaho
Carnival Cruise Lines:
Positioning For The Future
Vicky Freed, Senior Vice President of Marketing for Carnival Cruise Lines has received the most recent marketing study from the Cruise Line International Association (CLIA). She had recently been appointed to the Presidency of the association and was considering how best to use the information in the study. One particular observation was of considerable concern. Ms. Freed was seeing the same reasons for not taking a cruise cited by the sample group that had been cited in a similar study 10 years earlier.
Although Carnival Corporation has had a booking rate of between 106.3-108.3% (1996, 1997, and 1998 respectively) for the last three years, the challenge was to maintain that rate of occupancy even though nine new ships were to built by the end of year 2003.
This case demonstrates the difficulty in changing consumer preferences when dealing with long and widely held perceptions. The student will be exposed to the concept of forecasting market demand for at least three years out. They will also be exposed to the concepts of market potential, and the relationship between supply, demand and marketing of a product. There is also the necessity to analyze potential customer’s intentions and how that can be forecast into future demand.
Market segmentation plays a key role in this case inasmuch as the decision-makers may need to decide which segments present the greater potential with the least effort/expense (i.e., efficiency). In evaluating the market’s segmentation, Demographics, Psychographics, and behavioral concepts come into play and should be analyzed.
The teaching note was written for graduate level courses in Marketing and possibly Managerial Decision Making. It should be used fairly early in the course to demonstrate the segmentation of markets and how that is used to determine courses of action from the decision-makers in major corporations.
The case is applicable to courses in Marketing Management, Marketing Strategy, Business Strategy, Hospitality or Touristic Management and generally should be introduced during the demand forecasting or market segmentation segments.
______________________
Contact Person: Mr. Thomas L. Huey, 4301 Eastridge Circle, Pompano Beach, FL 33064
Voice: (305) 406 5042 FAX: (954)
942-3879 E-mail: huey@fiu.edu
HEALTH SENSE INTERNATIONAL (HSI), INC.
James W. Clinton, University of Northern Colorado
James W. Camerius, Northern Michigan University
This case illustrates that entrepreneurial initiative may be insufficient to grow a company. The importance of limiting the product line of a newly-formed company and clearly identifying a target market is highlighted. Thorough testing of a product and disciplined, focused product research are examined. Students will be introduced to a small company’s ability to survive, although unprofitable, over an extended period of time. Also illustrated is how the environment of both an industry and the government can influence a company’s decision making.
Health Sense International, Inc., a small company formed in 1990 by entrepreneur Larry Fisher to develop, produce, and market fluid sensing devices to individuals with problems of incontinence and also to long-term health care institutions, had, after 9 years, failed to make a profit. A new management team and board of directors, headed by another entrepreneur, Robert Oosdyke, had made major changes in the company’s direction in an effort to turn the company around. The direct to consumer product line was dropped and licensed to another company, staff was reduced and also replaced, the headquarters and operations were moved from the home town of the founder, Coos Bay, Oregon, to southern California, and the company adopted a more methodical approach to reach what it identified as its target customers, operators of long-term health care facilities.
The new management improved the quality and reliability of the company’s product line, incorporated new technology into the products, and adopted a stronger research orientation to prove the efficacy of the company’s products. For the company to survive, investors and potential customers must be convinced that the company’s health care products and systems were cost-effective. The new management felt that an IPO was unlikely and that, in view of a negative investment environment in health care issues, investors and employees would be served best by purchase of the company by one of its marketing partners.
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Contact Person: James W. Camerius, Northern Michigan University, Marquette, MI 49855-5359
Mail: College of Business, Northern Michigan University, Marquette, MI 49855-5359
Voice: (906)-227-1245 FAX: (906)-227-2930 E-mail: jcameriu@nmu.edu
HOLEPROOF AUSTRALIA—COMPETING IN THE SOCKS AND JOCKS MARKET
Peter W. Reed, Monash Mt Eliza Business School
This case demonstrates the challenges confronting management of a clothing manufacturer competing in a mature domestic market that has been opened up to low cost foreign competition. The company is a market leader in a number of low-interest product categories. Students are encourages to develop strategic options for the company and to develop marketing strategies with emphasis on the role of branding and brand management.
The teaching note was written for undergraduate and graduate courses in introductory marketing, strategic marketing, brand management and marketing communication.
During the 1980s Holeproof Australia successfully launched a number of innovative brands in the socks, underwear and sleepwear categories of the Australian clothing market. Many of the brands that were launched in this era, such as Underdaks, No Knickers and Holeproof Heroes, became household names and the award winning advertising campaigns, created by The Campaign Palace for Holeproof, were legendary in the advertising industry.
However, by the mid-1990s Holeproof was struggling to remain profitable in the face of low cost foreign competitors that had entered the market. Holeproof’s individualized branding strategy had become costly to maintain and in an effort to rationalize the new product range a number of lesser performing brands were consolidated into one new brand, Me, in 1997. The success or otherwise of this strategy was a critical issue confronting Greg Lucas, the newly appointed general manager of Holeproof, in 1999. In September of that year he called for a review of the company’s portfolio of brands as a prelude to the development of marketing strategies to take the company into the new millennium.
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Contact Person: Peter W. Reed, Monash Mt Eliza Business School, 27 Sir John Monash Drive, Caulfield east, Victoria 3145, Australia
Voice:+6139215.1807; Fax: +61 3 9215.1815; e-mail: peter.reed@buseco.monash.edu.au
INDIAN RIDGE GOLF CLUB: WHAT PRICE GLORY?
David W. Rosenthal and James M. Stearns, Miami University
This case demonstrates the complexity of pricing decisions in the financial structure of a “fixed cost” business. It relates the pricing dimension of marketing to the other marketing elements and environmental factors, particularly the concepts of segmentation and target marketing. The case also illustrates the difficulty of applying the concept of elasticity in practice in a highly competitive market.
The case was written for undergraduate courses in marketing strategy, marketing management, pricing, small business, entrepreneurship, buyer behavior, and sports marketing.
In October, 1988 James P. Rohr, Organizing Member of the Indian Ridge Golf Club (IRGC) needed to set the specific pricing levels for the new course. The course was expected to open the next spring and in order to meet printing and promotional deadlines the pricing had to be established immediately. During discussions with management and investors in the course two points of view had emerged. One approach was to keep the prices low initially in hopes of generating trial and a consistent, loyal clientele. Prices could then be raised as warranted. The second point of view was to price somewhat higher in order to establish a position or image of a higher quality course. Rohr has a great deal of information on the competition, but the complexity of the influences on consumer makes the decision difficult.
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Contact Person: David W. Rosenthal, Miami University, Oxford, Ohio 45056
Mail: Marketing Department, Miami University, Oxford, Ohio 45056
Voice: (513) 529-1203; FAX (513) 529-1290; e-mail: rosentdw@muohio.edu
LENOX, INC.
THE GIFT COMPANY
Kristine Koenig, Fleet Credit Card Services
Alfredo Mauri, Baruch College
G. Steven McMillan, Penn State Abington
The case illustrates the complexities of implementing a dramatic change in strategy, and how a firm’s reward systems may need to be altered to support such a shift. The student is encouraged to develop and evaluate alternative actions to achieve the company’s new “stretch” goals. Also, the value, and possible liability, of having a well-known brand name are explored.
The teaching note was written for undergraduate courses in Strategic Management, and possibly a capstone Marketing Management class. It might also be useful in courses in Human Resources Management and Organizational Behavior.
Lenox is one of the most well known and successful brands in the world. The year 2000 finds Lenox in a very strong position with many of its brands, yet faced with significant challenges ahead. The company has been increasing both sales and profits for the last three years (1997-1999), and market share has remained steady. However, senior management has established a BHAG (big, hairy, audacious goal) of doubling sales and tripling profits within the next ten years. These goals cannot realistically be accomplished with their current product and brand positionings. Thus, Lenox is implementing a strategic shift from being primarily a tableware enterprise into becoming a “gift” company”
Lenox does face obstacles in their attempt to migrate to becoming a gift company. One is their reputation of being predominately a bridal company, and perhaps more importantly, of being “your mother’s” bridal company. However, a larger obstacle is their current compensation plan.
Lenox’s senior managers are evaluated based on a measure called Business Value Added (BVA), which represents the company’s after-tax operating income less the cost of capital for the net operating profits. This type of formula is very short-term oriented, yet the process of becoming The Gift Company will certainly take a great deal of time. This presents many of the senior managers with a fundamental conundrum: Invest for the long-term or just invest for tomorrow.
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Contact Person: G. Steven McMillan, Penn State Abington
Mail: 1600 Woodland Road, Abington, PA 19001-3990
Voice: (215)-881-7476; FAX: (215)-881-7623; e-mail: gsm5@psu.edu
PACIFIC CATARACT AND LASER INSTITUTE:
COMPETING FOR CONSUMERS IN THE LASIK EYE SURGERY MARKET
Linda J. Morris, University of Idaho
John J. Lawrence, University of Idaho
This case provides students the opportunity to analyze the consumer decision process for a high involvement situation and to analyze alternate service delivery designs and to integrate these analyses to determine a marketing positioning strategy. Consumer scripts provide in the case provide students insight on both the consumer decision process and the differing process designs used. Students are asked to compare the service delivery processes of U.S. and Canadian eye care clinics through the use of service blueprints to uncover where process costs differ and where degree of customer personalization enhances the perception of a high quality service. The case then requires students to examine how U.S. eye surgery clinics can compete using non-price strategies in a growing market where U.S. medical insurance practices and government regulations are more restrictive and where the exchange rate difference places U.S. clinics in a vulnerable position.
This case was written for use in a services marketing course, marketing management, and/or services operations course at either the undergraduate or graduate level. If used at the undergraduate level, the case should be used later in the course given the detailed analysis required and the necessity to integrate these analyses in order to develop recommendations.
Pacific Cataract and Laser Institute (PCLI) is a privately held eye care clinic specializing in refractive eye surgeries. PCLI, located in eleven cities in the Pacific Northwest, is facing some stiff competition from lower-priced laser eye surgery centers in Canada and the larger publicly traded laser eye care centers in the U.S. PCLI’s standard practice has been to provide the highest quality care and to build a long-term relationship with its patients. As the laser eye care surgery market rapidly expands, PCLI realizes it is losing potential U.S. patients to lower-priced surgical clinics since medical insurance plans typically do not cover the full costs of the elective surgery. In order to be competitive and maintain its strong market share in the Pacific Northwest, PCLI realizes it must rethink its marketing efforts and its service operations process in view of the consumer decision making process and the service quality perceptions of its patients.
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Contact Person: John J. Lawrence, University of Idaho
Mail: Department of Business, University of Idaho, Moscow, ID 83844-3178
Voice: (208) 885-5821; FAX: (208) 885-5347; e-mail: jjl@udiaho.edu