case study

Marketing Analytics: Case Studies

© Stephan Sorger, 2013; www.StephanSorger.com 1

MARKETING ANALYTICS: Case Study Name: ____________________ © Stephan Sorger 2013; www.stephansorger.com Date: ________________________

Case No. Chapters Case Title

7B 7 Product Analytics: Resource Allocation using BCG Matrix

Background: You are the portfolio manager for Honda motor company. You have been asked to consider the role that six Honda vehicles play in the overall portfolio of the company. The portfolio exercise asks you to consider how the sales performance of these vehicles compares with that of market leader Toyota. You have gathered the following sales data for Honda, Toyota, and total sales and growth rates for six automotive categories: *

Category Honda Sales, 2010 Toyota Sales, 2010 Category; Growth Midsize Accord 186,356 Camry 189,297 1,942,699; +10.2% Small Civic 156,832 Corolla 167,846 1,324,140; - 4.9% Minivan Odyssey 62,278 Sienna 53,482 449,546; +11.0% Midsize SUV Pilot 59,681 4-Runner 25,767 341,886; +27.3% Crossover Element 8,306 Venza 29,220 1,542,211; +14.0% Pickup Ridgeline 9,848 Tacoma 60,471 1,045,835; +10.6%

1. Calculate the market share for Honda and Toyota. Calculate the relative market share for Honda.

Category Honda Market Share Toyota Market Share Relative Market Share Midsize Accord _____% Camry _____% _____ Small Civic _____ Corolla _____ _____ Minivan Odyssey _____ Sienna _____ _____ Midsize SUV Pilot _____ 4-Runner _____ _____ Crossover Element _____ Venza _____ _____ Pickup Ridgeline _____ Tacoma _____ _____

2. Plot the positions for the 6 Honda vehicles on the BCG matrix. (Note the relative share axis is inverted)

Growth . . +30% | Question Marks | Stars | +25% | | | +20% | | | +15% | | | +10% |_________________________________|____________________________________________| + 5% | | | 0 | | | - 5% |. Dogs | Cash Cows |

0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 Relative Market Share

3. Identify vehicles in each quadrant. Suggest a strategy for each vehicle.

Quadrant Vehicles Strategy

Dogs

Cash Cows

Question Marks

Stars

*(1) Source: Honda Press Release, “American Honda Reports July Sales.” August 3, 2010. http://www.hondanews.com/channels/honda-automobiles-headlines/releases/american-honda-reports-july-sales-2 (2) Source: Toyota Press Release: July 2010 Sales Chart http://pressroom.toyota.com/pr/tms/document/July_Sales_Chart.pdf (3) Source: Wall Street Journal, “Market Data Center, Automotive Sales.” September 1, 2010. http://online.wsj.com/mdc/public/page/2_3022-autosales.html

Marketing Analytics: Case Studies

© Stephan Sorger, 2013; www.StephanSorger.com 1

MARKETING ANALYTICS: Case Study Name: ____________________ © Stephan Sorger 2013; www.stephansorger.com Date: ________________________

Case No. Chapters Case Title

8 8 Pricing: Acme Lamp Company

You are the marketing manager for Acme Lamp Company. Acme specializes in the manufacture of lamps (light bulbs) for industrial applications. You are in charge of launching Acme’s new LED-12 light emitting diode (LED) lamp. The LED-12 uses an array of 12 high-intensity LEDs to replace a standard medium-base incandescent lamp. As part of the launch plan, you must select a price. You have the following data:

Attribute Data Description

Investment $20,000 Money invested to develop product

Fixed Cost $10,000 Overhead costs not changing with quantity produced

Variable Cost $10 Labor and material costs to produce each unit

Unit Sales 5,000/ year Quantity of units forecast to sell at $20 per unit

Unit Sales, Max 10,000/ year Constraint on production; Maximum production quantity

% Markup 20% Desired return on sales

Target ROI 20% Target return on investment for new projects

LED-12: Life 24 months Long life due to rugged LED design

Existing lamps: Price $1 Price of existing lamps: Incandescent and CFL

Existing lamps: Life 3 months Shortened life due to severe conditions in industrial plant

Existing lamps: Labor $20/ lamp to replace Labor cost to replace existing lamp

Price elasticity 1 % change in demand given a % change in price

1. Calculate the target price using Markup/ Cost-Plus pricing.

Pricing Calculations Results

Unit Cost

Markup Price

2. Calculate the target price using Target Return pricing.

Pricing Calculations Results

Unit Cost

Target-Return Price

3. Calculate the target price using Value-In-Use pricing. Assume industrial plant uses 100 lamps.

Pricing Calculations Results

Current cost

Value In Use Price

4. Calculate the target price using the Optimal Price Analysis tool on www.StephanSorger.com.

Pricing Calculations Results

Optimal Price