a. Do several problems result from the same basic cause or “root problem”? b. Ar

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a. Do several problems result from the same basic cause or “root problem”? b. Are problems linked together in a chair of cause and effect relationships? c. Identify what was “wrong” with the design or administration of the controllable marketing management variables (i.e. basic marketing strategy, elements of the marking mix, etc.). d. Whichever decision Julie makes to resolve this problem, it what way (if any) would this impact the retailers that carry the product? Think about the relationship between the retailer and the manufacturer as well as bottom line revenues and margins. · Recommendation- Recommend a coordinated plan of action to correct business problems through marketing solutions. As well as you can determine the recommended changes should be economically rational. Actions recommended should be “applicable” to the problems you identified in the case. Once problems are identified, alternative courses of action that management can take are identifiable. The list of alternatives that should be considered is sometimes choices that are being argued in the case. In other cases, the student need to consider alternatives that are not being discussed in the case. In other words, based on what you read in the case, what should Julie do in order to meet her objectives and please all parties involved? Make sure to include a rationale and justification for your recommended plan of action. a. Do several problems result from the same basic cause or “root problem”? b. Are problems linked together in a chair of cause and effect relationships? c. Identify what was “wrong” with the design or administration of the controllable marketing management variables (i.e. basic marketing strategy, elements of the marking mix, etc.). d. Whichever decision Julie makes to resolve this problem, it what way (if any) would this impact the retailers that carry the product? Think about the relationship between the retailer and the manufacturer as well as bottom line revenues and margins. · Recommendation- Recommend a coordinated plan of action to correct business problems through marketing solutions. As well as you can determine the recommended changes should be economically rational. Actions recommended should be “applicable” to the problems you identified in the case. Once problems are identified, alternative courses of action that management can take are identifiable. The list of alternatives that should be considered is sometimes choices that are being argued in the case. In other cases, the student need to consider alternatives that are not being discussed in the case. In other words, based on what you read in the case, what should Julie do in order to meet her objectives and please all parties involved? Make sure to include a rationale and justification for your recommended plan of action.
Value.pdf-Adobe Reader Tools Fill & Characters Julie, Brand Manager for potato chips at a regional salty saacks manufacture Dave, Marketing Director for the regional salty saacks manufachre Jube has been concerned about the profitability of the various items in her line of potato chips. According to her potato suppliers, the recent drought caused a 35 percent reduction in the potato crop compared to one year ago, esulting :n a 25 percent hike m potato prices to large buyers like Jules conpasy Potatoes accounted for almost a of the content of ba chips ( tch also coassted of vegetable al ooe ofthe daffer ent flavoring spices, and sah), phas there were packaging costs. To hold the line on margins wch of late had been slim at only about 5 percent dae to fierce competition from several other local and regional brands, Julbe would need to raise potato chip prices about 15 percet On ber most popular 75 oz size, which had a price spot of $1 59 on the package this would require a price hike of $24, bringing the price up to $1.83 Julie wondered what would be the apprograte strategy to deal with this unfortunate antace She was very rehactant to raise the price to maintain the margin First, she feared incurring the bad wll of her oyal customers, it wouldn't be perceived as fair by thea Moreover, she was worried about competitive responses ber other larger competitors might be willing to incur a loss in the shbort-run to keep thei customer bases and to attract price-hiking inals customers Julie coulda't afford such a strategy since she was evaluated solely on the basis of monthly net profits Hestorical data in this indastry revealed another possable conspetitive maneuver in the face of rising ingredsient costs: bold the line on prices and packape size whule reducing the net weight of the package Julie was concersed that this might be a deceptive practice She secalled fom a Cossamer Behavior course de had taken in college a coecept known as te·just noticeable dierence-Tas sad dat relatively small changes 'in a stinailus (such as a price hike or content shrinkape) go unnoticed by comsumers, Jualie felt imnatively that the price increase necessary to maintain margins would be noticed given the price sensitivity of buyers for snack foods Howeves, the past industry data suggested that perhaps buyers might not notice the package size rediction seeded to sustain prodits, which in this case would be 1.1 oaces uke asked her boss, Dave, the Marketing Diaector, about the advisabality of reducing the net weight of the potato chips. Dave said that this was a practice known variousty as "doansizing and "nckage shorting " It was a very common practice among packaged goods tctures For mane be ud candy bar manuEacturers are subject to constantly fuchating ingredient prices, and because hare are expected (i or refer eace) prices for candy bars, package sizes are frequently adjasted without informing consouers. Jim said that was a nocissue since marketers have been aboue board in labeling products accurately as to weigh serving size price, and quatity Futhermore, the Food and Dg Administration had no laws against the practice Dave reconmended downsizing the potato chips, but he made it clear to Julie that the ultimate decision was up to her. Julie still had ber doubes. Atfter all it would seem that conesumers who are in the habit of buying a particular grodact size gencrally doe't snutinige the net weight label on subsequent purchases. If this deceptive practice were true, it seemed to Julie that downsizing would be a Worked efficiently in a fast-paced flexib service Communicated with customers transacti . . oducts Collaborated with management to . impro rch

Explanation / Answer

a. Yes. The root cause of all issues is the hike in the potato prices due to a bad crop.

b. Yes. The hike in the potato price by 35% has forced the brand manager to either hike the product prices or reduce the package size, as she works on a very thin margin of 5% owing to the competition. While hiking the price will make her customers vulnerable to the lure of competitors, who might incur the loss in the short run to poach customers, reduction of size will taken as an act od deception by the customer who take a notice of it.

c. The flaw in the basic marketing strategy is that the company did not do any efforts to command higher margins,as a result of which, now it finds it difficult to sustain in the event of fluctuation in the prices of raw materials. Such efforts could have been in the form of product differentiation, sustainable sourcing or increasing efficiency of operations.

d. If the price is hiked, the retailers will have a difficult time to sell it, creating a slow moving SKU at the store, shrinking the sales and subsequently the bottom line. If the size is reduced, the sale may be affected marginally if the customers take a not of it. Otherwise, it will lead to availability of more space for holding the SKUs, making it advantageous for retailer.

Since the fluctuation in the potato prices is temporary, the action should be just as. Julie should go for a package size reduction for the time being, and revert back to the original size once the crisis is over. This is by far the most viable option of all, because not only it will help to retain customers, it will also not affect the retailers, while maintaining the financial feasibility fot the company.

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