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Sweet Adrenalin: Marketing Planning and Management - Essay Example

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According to the paper 'Sweet Adrenalin: Marketing Planning and Management', Sweet Adrenalin is a business dealing with frozen yogurts that aim at reaching out to customers who are health conscious and fall into the age group of 18 – 30+. The question is whether the company is able to make profits percentage of almost 90.40%…
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Sweet Adrenalin: Marketing Planning and Management
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Sweet Adrenalin Submitted by: Stephanie Holland Number), Cassandra Hayes Number), Jean Kho Number), Nick Robinson Number) and Brian Chow (Student Number) University of XXXXXXX Executive Summary Sweet Adrenalin is a business dealing with frozen yogurts which aims at reaching out to customers who are health conscious and fall into the age group of 18 – 30+. The case of the members of Sweet Adrenalin has been one where the company has been able to make profits percentage of almost 90.40%. The stall has seen a ‘Sold Out’ position within 15 mins of the start of the day. The key problem has been high use of funds and products for promotion and sampling. Also the unorganised stall front and service. The overall achievement of the company has been successful and Sweet Adrenalin has been able to reach its objectives that had been set down in the marketing plan. The recommendations that has been provided is to create a complete workflow for the process and assign each job to every member and remove both sampling as well as the discounts and aim at marketing through other marketing techniques Table of Contents Table of Contents 2 1.Summary of Marketing Objectives 3 2. Company Analysis 5 3.Market Analysis 12 4. Problem Identification 17 5. Statement and Evaluation of Alternatives 18 6. Recommended Solution and Justification 22 22 Bibliography 24 Appendix 25 1. Summary of Marketing Objectives 1.1 Overall outcomes Objective Outcome Achieved or Not Objective 1 To gain a 35% market share in the Health and Well-being sector by the end of the second market day Market Share Gained 42.09% Achieved Objective 2 To create customer loyalty by having 50% of customers who comes on the first market day to come back on the second Yes, the loyalty was achieved. On the second market day, there were no changes made to the stall. Also, ‘free tasting’ was dropped and the prices were not reduced. Achieved Objective 3 To change the behavioural attitudes of our customers towards healthy foods by 50% by the end of the second market day Yes, we were able to do so. Although the price was raised on the second day, it did not slow down the selling process. The products were again sold out within 15 minutes of opening on the second day. Achieved Objective 4 Increase sales by 15% from first market day to the second As all the stock was sold on first day, this objective became irrelevant on the second day. N/A 1.2 Sales & Production Outcomes Selling Price Per Unit: Day Product Price/ Unit Day 1 Frozen Yogurt $15 Day 2 Frozen Yogurt $25 Total Number of Units Sold: Day No. of Units Day 1 100 Day 2 100 Total Units Sold 200 Total Number of Units Bought / Received / Produced: Day No. of Units Day 1 100 Day 2 100 Total Units 200 Stock In hand: Day Remaining Day 1 0 Day 2 0 Total Stock left over = 0 ‘WE SOLD OUT WITHIN 15 Mins ON BOTH DAYS’ 2. Company Analysis 2.1 Financial Situation Notes $ real currency ($) QUTopia currency 01. Income 02. Turnover (the total sales you made - take this from your sales statement)        5,365 03. Cost of Sales (Production) 04. Materials $65 $0 05. Wages $0 $0 06. Total [4+5]   65 07. GROSS PROFIT [2-6]  $5,300 08. Distribution 9. Delivery Costs  $0 $0 10. Stall Material Costs $30 $0 11. Total [8+9]  $30 12. Expenses Lecturer-controlled communication channels $0 $250 Market research $0 $0 Advertising in QUTopian newspaper $0 $0 Advertising - Green Energy $0 $100 Other Market Day Advertising Materials $20 Other expense: $50 14. Total Expenses [All of 12]  $420.00 15. NET PROFIT BEFORE TAX $4,850.00 [7-11-14]   Profitability of the organization 90.40% Calculated as net profit/turnover The projected break even was at 28 units. However, after the two market days, the actual break even is computed as follows: Total Costs = $65 + $30 + $420 = $515 Variable cost per unit is not applicable, as the products were sponsored and there are no ‘cost of goods’ involved. The price per product on the first day is $15. Hence the entire $15 is contributed to cover the total fixed costs involved. Contribution per unit = $15 Break even volume = Total Fixed Costs / Contribution per unit = $515 / $15 = 34 units Hence the actual break even is achieved after selling 34 units on the first market day. The costs involved were very minimal and all the stocks were sold out. The liquidity position is also very strong with a turn over of $ 5,365 received in cash. Overall, the financial position of the company is very strong. Initially, the plan was to buy and promote seventy units every market day. However, the company sponsored for 100 units a day. Hence the marketing strategy was altered to include this factor. The demand was also estimated at 140 for the two days. The marketing strategy was very effective and entire 200 units were sold out in 2 days. The actual position turned out to be more optimistic than that was projected. 2.2 Organisational Structure Team performance and cooperation among all team members plays a very important role in this project. The team consisted of five members Stephanie Holland, Cassandra Hayes, Jean Kho, Nick Robinson and Brian Chow. The team performance and team dynamics as whole was very powerful and every individual in the team took up responsibilities and performed towards achieving a common goal of the team. There has been active participation from all members thereby making it possible for Sweet Adrenalin to achieve the success that it has achieved in the market day. The team structuring as a whole has been very strong and the allocation of the various positions in the team has been extremely good (Jobber, 2004). Communication flow within the organisation and in regards to the customers has proven to be very successful. Sweet Adrenalin, has used the theory of ‘Hierarchy – of – effects’, for the communication flow. This theory involves a number of steps which the company sends out to the customers. These steps normally send out information to customers to help them make decisions of whether or not to buy the product. Figure: The Hierarchy – of – Effects Sweet Adrenalin has taken the above steps to build the loyalty of the customers and have proved to be successful by gaining as much as 42.09% of the market share. Considering the steps undertaken by the company on the market day it is clear that Sweet Adrenalin has used all the above mentioned steps (Peppers & Rogers, 2005). On both days, the entire team would be dressed in T – shirts that spell out ‘SWEET’ (Please see picture, Appendix 1). On the first market day, we had two staff that went around and gave out ‘free tasting’ to attract customers. We also gave out flyers that had “$5 off” if they use it within those first 15 minutes. It worked out well and many people came holding the ‘$5 off’ flyers. Including the yogurt and 2 booklets that cost $15 for the whole package, we also gave each customer a ‘buy one get one free’ yogurt coupon from Yogen Fruz and a nutritional guide from yogen fruz. There is also a loyalty coupon given out on the first day (shown on page 32 of marketing plan), and when customers come back with it on the second market day, they would only have to pay $10 for it. Thus these attempts made by us have been mainly to create high loyalty in the customers. As mentioned in the marketing plan, one of the objectives of Sweet Adranalin is to alter the behavioural attitudes of consumers towards health food and build a customer loyalty where at least 50% of the customers from the first market day would come back on the second market day as well. Decision Making within the group has been one which has followed the decision making model. There has been a team effort and every decision that has been made within the company has been after a well thought out five steps which include, stating the problem, identifying alternatives, evaluation of the alternatives making a collective decision and implementing the decision. The team cooperation and team work has led to better decisions being made and making the market day a complete success. The style of management that has been used within the company is one where the management has been a ‘Permissive democratic’ style. The decisions have been made anticipatively and each one within the team has been giving the freedom to work by their will and in a manner which is best suited to them as well as all within the company. This style of management along with the team working and structure of the team, there has been immense unity within the team. The team cohesion has been at very high levels throughout the process of the market day from the marketing plan until the end of day two of the market day and submission of reports. Each of the group members have shown complete leadership and have completely in a very positive way completed and fulfilled they role and responsibility in the organisation. Every member has cooperated and completed their role in the entire process. Also there has been full cooperation in putting together all the pieces to make the entire show one complete successful company. All deadlines have been met and all responsibilities have been completed within the stipulated time periods. There could be a few corrections that can be made to the marketing plan where attempts to increase the target market by providing some toys or items which might interest children or young adults. Since this product is a healthy product, the chance of parents refusing Sweet Adrenalin products will be very low. The company will also be able to expand the target market to a greater extent. 2.3 Marketing System: The marketing objectives that have been set down are based on Specific, Measurable, Achievable, Realistic, and time bound (SMART). As has been discussed earlier, all of the objectives that had been set down in the plan have been met. The marketing strategies have been very precise and achievable. The result of the market day shows that achieving the objectives was possible. Also the market day also led to exceeding the objectives and gaining more than expected. The marketing mix for our company has been very beneficial. On the basis of the marketing mix, we have been extremely lucky both for the product, and place. Product firstly because as mentioned, the product has been provided free of cost to us and the company Yogen fruz has been very cooperative. Since we were sponsored with the yogurts, we didn’t have to spend any money on our main product. Additionally, we made 2 small booklets that were sold as a package with the yogurt. One booklet was the ‘how to get fit’ booklet and the other was a “nutritional guide’ booklet. The promotion and price as well has been very strong and has been able to directly appeal to the target market as well. Not too many changes were made in the activities as planned for the ‘action day’. One of the changes was that we did not require doing the promotional activities on the second day and the product sold for itself. This could mainly be because of the loyalty that we were able to create in the customers on Day 1. Also with the many promotional activities like free sampling, discounts, and coupons the customers were much more drawn towards the company. 3. Market Analysis 3.1 Customer Analysis Sweet Adrenalin has defined their target market as men and women aged between 18-30+ years old with active lifestyles. Data from the Australian Bureau of Statistics suggests that males between the ages of 18-24 years old participate in more physical activity than women of that age; therefore our promotions will focus on appealing to males. The Roy Morgan Value segments suggest ‘Young Optimists’, ‘Socially Aware’ and ‘Something Better’ are the most likely characters to participate or join in an active and healthy lifestyle further defining the overall target market for Sweet Adrenalin. Therefore, Sweet Adrenalin’s products and promotional actions will focus on them and be well suited to their needs and wants. Based on the number of customers that we received on the market days, it has been noted that almost143 of the 177 customers that bought the products from us fell under our target market. They fell into the Roy Morgan’s classification of ‘Young Optimists’, ‘Socially Aware’ and ‘Something Better’. Also the age group of these people was between the age group of 18 – 30+. The customer demand was estimated to be 75 cups per day. However our sponsors were generous enough to provide us with 100 cups per day. We had a complete sell out on both days (See Appendix 3). 3.2 Competitor Analysis Sweet Adrenalin has analysed and evaluated their competitors and strategies in the marketing plan. Due to the variety of products within our package we are competing within two industry sectors (See Appendix 4). The prediction of the competitors and their performance to quite a degree can be considered to have been over rated. However we did face a lot of tough competition from the others in the industry as well. The table below provides for a comparison of Sweet Adrenalin versus its competition. Table: Market share and Competitor Analysis Post – Market Days As noted in the above table, Sweet Adrenalin was able to perform better than it had expected and we were able to attain the market share. We owned as much as 42.09% of the market. Our biggest competition in terms of the market share has been ‘Crazy Nuts’ with almost 21.46% of the complete market. The graphs below provide a better understanding of the market share break up and the turnover comparisons of the various companies. Chart: Market Share Break up Chart: Turnover for each company For our product, we were very lucky in that the company, Yogen Fruz, said yes for sponsoring us free yogurts on two Market Days. (We emphasized to them how great of an opportunity this would be for their company as it will be creating brand awareness to a large number of students, one of their selected target markets). We were given 100 cups of yogurts each day, with a huge variety of different flavours. (However, in our original marketing plan, we actually wrote we would ask for 70 cups of yogurts each day). Picture: The Product & Price Since we were sponsored with the yogurts, we didn’t have to spend any money on our main product. Additionally, we made 2 small booklets that were sold as a package with the yogurt. One booklet was the ‘how to get fit’ booklet and the other was a “nutritional guide’ booklet. Figure: Promotion: Above - Images of the ‘Booklets’ used as promotion Below – Image of the Flyers Sweet Adrenalin had one very big advantage when compared to the competitors, we were pretty lucky in that our stall was in the corner. We tried to make use of that by selling on both sides. Customers approached us from both sides, and we successfully made use of it by having 3 staff all the time in the stall serving. Our service might have been better if our roles were more clear for each staff. It felt like a bit of shuffling around, where staff had to serve the customer (talk to them), try to find the flavor they specified, get the money (and give change if necessary), get the spoon, tissue, 2 booklets, coupons. Picture: Place: Corner stall for Sweet Adrenalin, i.e. better accessibility 4. Problem Identification The major problem that was faced by us was surprisingly not with the marketing mix or even with the finances. We faced the biggest issue with the performance of each of us on the market days. As mentioned earlier, our stall was a corner stall and we could sell on both sides of the stall. This was a strong advantage for the company, however, the issue was that Sweet Adrenalin had not planned and allocated the job to each member within the team. This led to a number of confusions and chaos at the stall during the market day. Since none of us had been designated to particular jobs, i.e. collecting money, providing the product, taking the order from the customers, it lead to a number of confusions. We didn’t have clear roles about who’s doing what, so it caused a bit of a problem and we easily got into each other’s way (Ireland, 1987). This just highlights the unorganised nature of the stall and can increase the wait time for the customers. A major problem however, was the fact that the company provided for a number of free samples, and discounts, which did help increase the customer loyalty and also led to drawing a number of customers to the stall. However since the promotion involved providing the customers with a number of free samples and a number of discounts which have been provided to the customers on the two days. This has led to reduction of the profitability of the company. Sweet Adrenalin has a higher potential to make better profitability and better revenues. Both these issues need to be considered for recommendations as these will allow Sweet Adrenalin to improve in terms of the revenue earned as well as the customer turnover time (Kotler & Armstrong, 2007). 5. Statement and Evaluation of Alternatives As discussed in the previous section, two major problems have been faced by Sweet Adrenalin. Firstly, the unorganised behaviour at the stall and secondly the high use of promotions and free sampling by the company. The table below provides a brief of the possible solutions for the issues. These will be dealt with individually to reach out for the best solution. Table: Main Problems with Solution Alternatives Unorganised Behaviour at stall: This issue is quite serious as it can affect the customer turnover time and could also lead to high customer queuing time as well. Based on this the possible solutions have been provided. Firstly, to create a job for each of the five members at the stall, this is a good solution however, it is important to also realise that there is a high requirement for people to do marketing as well. The advantage of this would be that all five members will be at the stall and the customer queuing time will be reduced due to the smooth flow of the process. However the disadvantage of this is that the customers will not be directed to the stall, i.e. no one will be outside the stall to get the traffic into the stall (McCabe & Wolfe, 2000). Second option is to set two people at a time in the stall while the other three are outside the stall completing the marketing activities. This will be done on rotational bases so that every team member gets a chance to be a part of the stall as well as the marketing staff. However if the case is like that of what happened on the market day that on both days the products were sold out within the first 15 mins, then this could cause confusions and chaos (Johnson, et.al., 2006). The third option that is available is to create a clear work flow for the entire team. This will include details of who is responsible to collect the money, greet the customers at the store, who would be responsible for giving the product to the customers and also the work to be done by the marketing staff. This will provide a clear flow of the entire process and will leave each member with a clear idea of what they need to work on. High use of promotions and free sampling by the company is the second issue. This requires to be handled at early stages as the providing samples and free products leads to reduced revenues. Firstly, Sweet Adrenalin can reduce the sampling and promote using different marketing techniques like campaigns. This will save the company a lot of samples, which can then be sold for money and which will increase the revenues and profitability of the company. However campaign needs a lot of planning and thinking and it is not sure if the campaign might help for short term sales like the market day. Secondly, Sweet Adrenalin can choose to keep the sampling but reduce the discounts. This can be very beneficial for the company as it will make the customers drawn towards the company yet it will not lead to loss of potential revenue to the company due to the discounts. The only issue is that the lack of discounts can led to customers not buying the product. It is only once the customers try the product that they will become loyal to the company. Third option for Sweet Adrenalin is to keep the discounts but completely remove the sampling. This will lead to the customers being drawn to the stall however only people who need discounts and believe in buying products that are cheaper. Final option is to remove both sampling as well as the discounts and aim at marketing through other marketing techniques. This will be very beneficial for the company the members of the teams can use various techniques like a combination of promoting the product by differentiating the products from the competition, becoming valuable resource for information like the nutrition books. The company can also use other cost free innovations like making them laugh by creating a skit or play for the customers, be a guru for the customers by providing them with information, be as interactive as possible (Murphy, 2003). These are simple cost free techniques which will allow and draw more traffic to the stalls. 6. Recommended Solution and Justification Table: Chosen alternative as solution The chosen alternative for the unorganised behaviour at the stall is to create a workflow and to assign each member with a job. This will prove to be most beneficial as the customer wait time will be reduced if every single person on the team is clear of what they need to work on. Also this will influence a customer choice a lot as a system which is smooth and clear will increase the trust of the customers and will be more impactful on the customers (Evans, et.al. 2004). In the case of the high use of promotions and free sampling by the company, it is best to remove both of these and use other innovative ideas for marketing the product. As mentioned in the previous sections there are a number of choices that the company has that it can adopt to increase the marketing without spending much. The use of these innovative ideas will lead to savings for the company in terms of the marketing efforts and will not only increase the revenues and profits but also leave the customers with a strong brand image in the minds even months after the market day. Bibliography Benjamin, C., 2009, ‘Roy Morgan Values Segments’, The Horizon Network, Melbourne Evans, M., O’Maley, L. and Patterson, M., 2004, Exploring Direct and Customer Relationship Marketing, 2nd Edition, Thomson Learning, London Ireland, N.J. (1987), Product Differentiation and Non- Price Competition, Oxford, Basil, Blackwell Jobber, D., 2004, Principles and Practice of Marketing, 4th Edition, McGraw – Hill, Berkshire Johnson, G., Scholes, K. and Whittington, R., 2006, ‘Exploring Corporate Strategy’, 7th edn, Prentice Hall, Essex Kotler, P., & Armstrong, G., 2007, ‘Principles of Marketing’, 12th edition, 9 March 2007, Prentice Hall McCabe, B. and Wolfe, M., 2000, ‘Making the (right) Customer King’, Global Telecoms Business, London, Mar 2000, Issue 46, p42 Murphy, D., 2003, ‘Innovate or die’, Marketing Business, May 16 – 18 Peppers, D. and Rogers, M., 2005, ‘Loyalty Programs Must Create Real Value’, 1to1 Magazine, 29th August 2005 Appendix Appendix 1: Team in ‘SWEET’ T – shirts Appendix 2: Roy Morgan Values Segments1MindSetstmdeveloped with Colin Benjamin, The Horizon Network (Benjamin, 2009) Appendix 3: ‘Sold Out’ on both days! Appendix 4: Competitor’s Analysis Competitor Matrix INDUSTRY: Health and Well-being Competitors Details Competitor 1 The Recovery Competitor 2 Peace of Mind Competitor 3 Skinny Dips Competitor 4 Heya Target Market Something Better, Young Optimism and Visible Achievement (3). Like Peace of Mind they are promoting a healthy lifestyle. However with the option of stress relief massage they are focusing on the hard workers (visible achievers). Something Better and Young Optimism (3). These segments can be considered ambitious they are about improving their lifestyle, which is what the health packages of Peace of Mind are promoting: a healthier lifestyle. Look at Me segment (3). This segment can be defined as quite selfish and reckless with their money, therefore, these products made to improve your skin are an item of interest. Look at Me and Socially Aware segments (3). These segments likes to take part in new, different and outrageous things, therefore, the focus of the environmental elements in the Heya packages will entice them to try. Product Massage therapy with health products available (1) Health pack: vouchers, sample products and information based on physical and mental health (1) Natural Skincare products (1) Packages containing body-friendly health energy drink by Turo (1) Price $50-$80 Massage therapy is a luxury rather than an essential purchase therefore it is considered a want and people are willing to pay top dollar for what they want. $20-$50 Depending on the range of samples included, the package offers a variety of products therefore can charge a higher price. $20-50 This company is offering more than one product therefore their products depending on size should range between the 20-50 brackets. $20-$30 The packages provide a drink and other products based around one of the three elements Place Stall 12 – The Recovery pose minimal threat with their products however, their location is close enough to give customers time to assess which option is better. (2) Stall 11 - Closet competitor in the health and well-being industry. This poses a threat due to the likeness of our packages. (2) Stall 31 – Although Skinny Dips are promoting health and well-being also they are located a fair distance away, posing minimal threat. (2) Stall 43 – Like Skinny Dips their location compared to ours is too far to have any direct affect on our customers. (2) Promotion The Recovery can utilize the concept of relief, stress relief for the hard worker. Also the specialization of massage therapy as they are the only company offering that service. Peace of Mind can appeal to their target markets by promoting their packages as a step towards a healthier lifestyle. The beauty element of this product could be used to attract customers. Heya’s promotional strategy should include differentiation tactics. Also Use the thrill of an exciting new product. Potential Competitive Barriers Sweet Adrenalin offer health products and information like The Recovery, however, they are offering massage therapy which creates competition for us. We have to promote our health packages as better than theirs. Peace of Mind is our closet competitor in reference to our products. We are providing packages that promote health and well-being. Skinny Dips don’t pose that much of a threat compared the three other stores, due to variation between both our products. This company may have better quality and more exciting packages due to specialization. Likely Response Through sufficient promotion of our Yogurt product Sweet Adrenalin can compete with The Recovery’s extra product of massage therapy. Sweet Adrenalin must find a way to differentiate their packages from Peace of Mind’s and use our Yogurt sample as a selling point to make our packages more desirable. If we need to, we can adapt our booklets to include beauty tips using natural products, to attract Skinny Dips targeted market to choose our product. Targeted promotion that highlights Sweet Adrenalins packages as better. Our Yogurt sample being our main point of differentiation. (1) Russell-Bennett, R (2009) (2) Russell-Bennett, R (2009) (3) Roy Morgan Research (2007) Competitor Matrix INDUSTRY: Food and Beverage Competitor Details Competitor 1 Crazy Nuts Competitor 2 Superhero Competitor 3 E-Platinum Target Market Young Optimism, Something Better and Socially Aware (3). Through the promotion of the health benefits of nuts Crazy Nuts could attract consumers on the basis of trying ‘interesting’ things. Look at Me and Young Optimism (3). These two segments will like the sense of adventure associated with the product. The energy drinks are aimed at young people who take part in exciting and ‘cool’ new things. Look at Me (3). E-Platinum aim to position their product within consumers eyes as refreshing, unique and fun. Appealing directly to the ‘Look at Me’ segment adolescent values. Product Packages with different flavoured nuts, promoting their nutritional value. (1) A health juice that aims to energize. (1) Food and beverage products that invigorate and energize. (1) Price $5-$20 Due to the simplicity of their packages Crazy Nuts will probably keep their prices low to attract customers. $5-$20 Superhero has significant direct competition from other energy drink retailers therefore they’ll maintain low prices to compete. $5-$20 Like superhero E-Platinum has competitors producing similar energy drinks. A low-cost strategy will attract consumers. Place Stall 47 (2) – Crazy Nuts aren’t located close enough to Sweet Adrenalin to pose direct threat of stealing customers. Stall 10 (2) _ Superhero are close by therefore with the use of promotional activity and a decorative stall they could attract our target market. Stall 3 (2) – E-Platinum is located in a separate section to our stall therefore risk of stealing customers attention is minimal. Promotion Assuming they focus on their lower costs, Crazy Nuts can promote their packages as ‘more for your money’ and ‘better deals’. Superhero may concentrate on the thrill aspect of their product, making their product a more exciting and adventurous health alternative. E-Platinum are focusing on a vibrate, exciting marketing ploy. The appropriate use of stall space, decorative banners and flyers they will achieve this. Potential Competitive Barriers Crazy Nuts have the ability of pricing their products considerably cheaper. Although our products aren’t too similar customers may perceive their packs as a ‘better deal’. Due to consumers previous position on health food, boring, this product may be viewed by customers as more exciting and adventurous option. E-Platinum isn’t focusing on the health side of their energy drink, however, their product could be perceived by consumers as more fun and youthful. Likely Response Sweet Adrenalin can attack their lower price strategy by offering deals, buy one get one free, with our packages. Through our promotions and advertising we can use bold colours and catchy logos to obtain consumers attention. We can emphasize the option of different toppings and flavours of frozen yogurt to make our product more exciting and fun. Read More
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