Lecture 8

Question 1

What are the pros and cons of having a distributor?

Answer 1

When you first put product on shelf you need some time to gain trust with the consumer.
When you have a contract with the distributor you lose control of elements such as, where the product is stored, packaging is handled or presented wrong etc. As the company it can be hard to know why the numbers are stagnant since you’re not seeing the issues from the distributor first hand.

Question 2

What are the pros and cons of having your own structure?

Answer 2

You’re doing elements here upfront because you don’t know if the product will even sell. You have more control (+). For a luxury brand you have your own shops in the best area in the city → even higher costs.

Question 3

What are the pros and cons of franchising?

Answer 3

Franchising: Subway is the franchiser and the owner of subway in Nice is the franchisee. Franchisor sets standards on how the store must be (location, offers, design etc). Advantage for the franchise is they don’t have to put money upfront since the franchisee is the one that puts money upfront. Makes a huge difference, the financial burden of going international is reduced. No capital (local franchisor), local knowledge, efficient management, less control.
Other industries that franchise: Hotels, clothing stores, gyms

Question 4

What are brand elements?

Answer 4

Brand elements are elements that identifyand differentiatethe brand Brand elements are the basic “bricks” marketers chose to build a brand internationally but also locally

Question 5

What is co-branding?

Answer 5

For example mini cooper did a collaboration with gucci. Philadelphia did a cadbury chocolate flavour.

Question 6

What is brand licensing?

Answer 6

Essentially a firm is “renting” another brand/character to contribute to the attractiveness of its own products. For example celebrity endorsed fragrances. Guiness flavored food and beverages.

Question 7

What is the BCG Matrix?

Answer 7

categorizes a company’s products or businesses into four quadrants:

Stars: Products or business units with high market share in a high-growth market. Stars have the potential for high growth and profitability. They often require significant investment to maintain their growth trajectory and market leadership position. EX: APPLE

Question Marks (or Problem Children): Products or business units with low market share but in high-growth markets. These are opportunities that require more investment to gain market share and potentially become Stars. They may either become successful and move into the Star category or fail and move into the Dogs category. EX: TESLA when it comes to solar power and energy.

Cash Cows: Products or business units with high market share in a low-growth or mature market. Cash Cows generate substantial cash flows and profits due to their established market presence but have limited growth prospects. They are typically managed to maintain profitability while minimizing investment. EX: Microsoft

Dogs: Products or business units with low market share in a low-growth market. Dogs have limited growth potential and often generate minimal profits or even losses. Companies may consider divesting, repositioning, or discontinuing Dogs if they don’t contribute to the overall business objectives. EX: Blackberry phones

Question 8

What should you do for each quadrant?

Answer 8

Stars: Require investment for future growth to maintain or increase their market share.

Question Marks: Need careful consideration and investment to determine whether to grow them into Stars or divest.

Cash Cows: Require efficient management to generate profits that can support other business units.

Dogs: May require reevaluation or disinvestment if they do not align with the company’s overall strategy.