Docstoc

Blue Mountain Coffee Company

Document Sample
Blue Mountain Coffee Company Powered By Docstoc
					Blue Mountain Coffee
     Company

  Robin Cheung
   Zhouxin Zhou
  Shaoyuan Zhou
                    Background
   Based in Squirrel Hill, PA
   Established in coffee business
   Regional Market:
       East Coast
       Southern US
       Large portion of Midwest
   15 per cent market share in 1950s
   Many radio and TV sponsorships
                Decline
 Difficulties began in 1960s
 TV production, time costs rose
 Competition stiffened
 Regional companies absorbed by giant
  marketers
 Freeze-dried/instant coffee crowded out
  traditional vacuum-packed
 Coffee consumption declined in 1970s and
  1980s
Blue Mountain Coffee
                Lucinda Pogue
                  President



 R. James Anthoney              I. Figure
    VP, Marketing               Controller




 Reginald Van Tassle
 Advertising Manager
               Objectives
 Long- vs. Short-term
 Regain market share
 Increase profitability
             ADBUDG (Little, 1970)
   Models market share response to advertising
    spending scenarios                           adv c
    Assumptions:         share x  b  (a  b)
                                              d  adv c
       Minimum level of market share with zero advertising
            One period: floor level
            Long-run: minimum—possibly zero
       Saturation: market share ceiling
       Maintenance advertising rate
       Effects of 50% spending increase known
       Exponential decay
                  ADBUDG
                                       c
                                    advweighted
          share x  b  (a  b)
                                  d  advweighted
                                         c




advweighted  efficiencymedia  effectivenessmedia  adv$
The model: Virtual Reality
FY1994 Advertising
Same, but different…
FY94 Advertising vs. Market Share
FY94 Advertising vs. Contribution
Sustained 20% Increase
20% Increase Sustained vs.
       Contribution
FY95 Proposed Budget



                       +4%



                   +11%
FY95 Spending
                   Applications
 Establish Advertising Budget
 “What if” analysis
       E.g. Short- vs. long-term goals
                  Limitations
   ADBUDG allows LR share to exceed >100%
   Ignores competitive effects
   Advertising independent of other market mix
    elements
   Max/min market shares independent of initial
    share
   Estimates are subjective
   Time-value of money
   Allocation of advertising spending
   Disregards segmentation
                Benefits
 Carry-over effects
 Single-period effects
 Relatively “easy” to understand
 Incorporates media and copy efficiency
 Multicriteria evaluation of scenarios
              Recommendations
 Constrain LR market share ≤ 100%
 Product life-cycle effects
 Calibrate based on marketing research
 Use PV of Contributions
 Model different segments separately
       Integrate effects of various segments
                     Van Tassle
   Seasonality:
       E.g. 3 ads per period most effective
       3+ ads less effective
       New period, begin again with more ads
   Copy quality:
       Use other effectiveness measures (media, copy)
   Model copy/media effectiveness as function of
    spending
       Categorization of advertising spending

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:139
posted:12/8/2011
language:English
pages:22