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  • pg 1
									                 Examples of Lessons

    Created for the February 14,2011

issue of Canadian Business     Magazine

                   Marketing / Product
                   Launch / Consumer
                   Studies, p. 1

                   Management / Retail ,
                   p. 4

                   Marketing / Brand
                   Development, p. 5

                   Internet Business
                   Models / Business
                   Strategies /
                   p. 7

Canadian Business Educational Focus, February 14, 2011 Issue

Course Applications: Introduction to Business: Marketing / Product Launch, Consumer

Difficulty Level:                 Level 1-2

Article:                        “No Alberta buzz for the GM Volt”, p. 24

Article Summary:            The selected article for this issue of Canadian Business is about GM’s initial rollout
                           of its electric hybrid car in Canada. Heeding market research about consumer
                           behaviour, GM has chosen certain locations (seven cities mostly in central Canada
                           and British Columbia, but none in the Prairie provinces) for the rollout in order to
                           ensure a maximized initial consumer adoption of the product: “According to GM
                           Canada, the seven cities were selected for their large population base and also for
                           being known as “leaders in adopting groundbreaking environmental technologies.”


 To learn about product launch—the introduction of a product into a market
 To observe the role of market research in marketing
 To think about the role consumer behaviour plays in establishing business and marketing strategies

Terminology & Concepts
Prairie cities: cities in Saskatchewan, Manitoba and          created before
                                                              launch: product launch: The first appearance of a
buzz: activity                                                product in the market. The product launch signifies
                                                              the point at which consumers first have access to a
rollout: geographic expansion of a campaign from a            new product.
single test market outward, as to a regional or
national market                                               targeted: aimed at (Targeted marketing is act of
                                                              making the right offers to the right customers at the
electric hybrid: a vehicle primarily powered by an            right time.)
electric motor that draws current from rechargeable
storage batteries, fuel cells or other sources of electric    niche: the area of a target market where a company
current and also relies on a non-electric source of           or product is particularly strong
                                                              incentive: something that motivates, rouses, or
electric car: plug-in battery powered automobile              encourages
which is moved by electric motor(s)
                                                              knee-jerk: automatic, spontaneous, easily
adopting: choosing and following                              predictable reaction

groundbreaking: innovative: being or producing                escalate: rise
something like nothing done or experienced or

1)   Why has GM Canada chosen Victoria, Vancouver, Toronto, Oshawa, Ottawa-Gatineau, Montreal and Quebec
     for its initial rollout of the electric hybrid Chevrolet Volt, and excluded Prairie cities such as Calgary and
     Edmonton, both with significant populations and improving economies?

2)   What is the strategy behind GM initial rollout of the Volt?

3)   Why are car makers avoiding the Prairie provinces in their initial launches of electric and hybrid cars?

4)   a)   What do current sales of hybrid cars in Canada indicate about Canadian consumers’ interest in these
     b)   What may change this consumer attitude?

5)   According to experts quoted in the article, where in Canada will sales of hybrid cars be strongest, and why?

1) What is a product launch? What considerations in terms of marketing and sales should be taken into account
   before a manufacturer introduces a new product into the market? Consider such key areas as evaluation of the
   market (i.e., market research, focus groups, customer feedback), the development of promotion and advertising
   plan (advertising copy, promotional materials and sales literature), and the development of a media strategy
   (press releases, briefing of industry analysts).

2)   What role has market research played in GM’s choice of locations for its initial electric hybrid car rollout?

3)   What main points about consumer behaviour is this article making? Support your answer with quotes from the

4)   The Volt launch is targeted at niche consumers who are willing to understand how to properly operate an
     electric car. GM wants to ensure the first Volt drivers have, above all, a good experience. Why is this such a
     crucial strategy for GM?

5)   Sales of hybrid cars in Canada have been rather weak. Why do you that is? What can car manufacturers such
     as GM and Nissan do to encourage the sales of hybrid and electric cars? Do you think their efforts should be
     supported by the federal and/or provincial governments because hybrid and electric cars are good for the

Answers to Comprehension Questions
1)   According to GM Canada, the seven cities selected for the initial rollout were selected for their large population base and
     also for being known as “leaders in adopting groundbreaking environmental technologies.”

2)   GM is targeting the Volt launch at niche consumers who are willing to understand how to properly operate an electric car,
     which takes some getting used to. GM wants to ensure the first Volt drivers have, above all,
     a good experience.

3)   Market research. Car manufacturers realize there is some truth to the stereotype of Albertans as big truck-and SUV-
     driving types who are not as interested in fuel-efficient vehicles. Reasons: geography (rural areas require larger trucks)
     and consumer mentality—“They view themselves as the big-honking-vehicle capital of Canada, and they’re going to stay
     that way.” In addition, lower fuel prices and lower tax on fuel in Alberta means consumers have less incentive to
     purchase smaller or alternate-fuel vehicles.

4) a) In Canada, hybrid sales represented only 1% of the market in 2010—it’s an indication that Canadian consumers won’t
       be rushing out to purchase electric cars in record numbers. b) Rising fuel prices could, to some extent at least, increase
      interest in electric cars and hybrids.

5)   The strongest sales of these cars will be in Vancouver, where environmentally conscious consumers faced with high gas
     prices lead the country in hybrid purchases.
 Canadian Business Educational Focus, February 14, 2011 Issue

Course        Management, Retail
Difficulty Level:       Level 2
Article:                “The Ode”, p. 57

Article Summary: This issue’s “The Ode” feature traces the rise and fall of the iconic grocery chain, the
                        A&P. Started back in 1859 as a mail order spice business, the company quickly grew
                        into a grocery chain empire, and became deeply imbedded in the North American
                        culture. However, major acquisitions during recessionary times burdened the company
                        with unmanageable debt and forced its management to file for Chapter 11 bankruptcy
                        protection in December 2010.

Comprehension / Discussion
1) How did A&P start back in 1859?

    It started as a mail-order spice business, offering discount prices by buying the goods straight off the ship. It
     was known then as the Great American Tea Co.

2) When the Great American Tea Co. morphed into a dry goods shop in Manhattan, how did it promote

    The shop was painted brilliant red, had live bands on Saturday nights and attracted customers with a branded
     wagon drawn by eight grey horses.

3) Why was 1881 a landmark year for the A&P?

    It became the first grocery chain to reach 100 stores.

4) What marketing and retailing techniques—still very much in use by today’s businesses—did A&P

    It pioneered a customer loyalty program, branded products, and most notably, the “no frills” grocery store.

5) How big was the company in 1925?

    By 1925 the company had nearly 14,000 stores and annual sales of $437 million.

6) How did A&P fare during the Great Depression, and why?

    The company kept a close eye on the books, which allowed it to come through the crash of 1929 unscathed.

7) What challenges did A&P face as it grew during the 1940-1960 period?

    Its size soon proved a liability. Antitrust laws hiked taxes, limited competitive pricing and prompted
     numerous court battles.

      It also struggled against competition from suburban supermarkets and a demand for national brands.

8) What initiated the company’s downfall in 1990s?

      The company was making acquisitions and launching new products even though sales suffered during the
       recession in the early 1990s, and the competition from big-box retailers like Walmart and Costco took its toll.
       A&P closed stores and pulled out of key markets, and in 2005, it sold A&P Canada to Metro Inc. The trouble
       worsened after 2007, when it acquired Pathmark Stores with a $1.4-billion financing package, just as the
       economy went into free fall.

Analysis / Assignments
1) In what ways is A&P a retailing pioneer?

2) How was A&P’s size both an advantage and a drawback for the company?

3) What in the article indicates that the A&P was a very successful, strong brand in the 1950s and 1960s?

4) If you had to point to one thing that was the biggest culprit in the downfall of the A&P’s, what would it be?

5) In December, the company filed for Chapter 11 bankruptcy protection. What will happen to the company as a
   result of this action?

     Canadian Business Educational Focus, November 8, 2010
Course Application:                  Marketing: Brand Development
Difficulty Level:                    Level 2
Article:                             “Define your brand and deliver on your promise”, p. 11

                                       In his column this week, Richard Branson, the founder of the Virgin
Article Summary:                       Group, explains why his company is a very strong brand despite the fact
                                       that Virgin has interests in many varied and unrelated business activities.
                                       He also gives advice to those embarking on a new business venture on how
                                       to build and develop a brand.

Comprehension / Discussion
1)    What distinguishes Virgin from all the brands listed as the Top 20 brands in the world?

       All the other brands are in well-defined trades: Coca-Cola specializes in soft drinks, Microsoft in
        computers, Nike in sports shoes and gear. Virgin has diversified into a range of business activities,
        including airlines, trains, vacations, mobile phones, media, the Internet, financial services and health care.

2)    How has diversification benefited Virgin in the recession?

       Virgin’s risks are spread over many companies, industries and countries; so the failure of one will not bring
        down the whole group.

3)   Despite running a wide range of business activities, why is Virgin such a strong brand, according to

      The Virgin brand came into existence gradually reflecting what its founder was
       fundamentally interested in. His driving force was not just one business area but finding new ways to help
       people have a good time— ideally, in places where they were least expecting it, like airports. Although
       Virgin is diversified, there is that one idea/philosophy behind all the activities.

4)   How does Branson define a brand?

      “Brands exist as a means of communicating what to expect from a product or service. Subscribers to a
       magazine or newspaper expect a certain perspective and subject matter; families look forward to taking
       their kids to see the new Pixar movie, regardless of whether it’s about animals, toys or cars… “

5)   How does Branson define the Virgin brand?

      “It is a guarantee that you’ll be treated well, that you’ll get a high-quality product that won’t dent your bank
       balance, and you’ll get more fun out of your purchase than you expected.”

6)   What is Branson’s advice for those embarking on a new venture in terms of brand development?

      Decide what your brand will stand for, and what is core to your product/service.
      When creating your first ads, designing a logo and reaching out to potential customers, try to infuse some
       character or sense of humour into them in order to connect with the customer.
      Be honest about what it is you’re offering with customers and the media.
      Don’t promise what you can’t deliver, and deliver on your promise in your offerings.
      Be honest with your customers and the media about the ups and downs of your brand.

Analysis / Assignments
1)    What does Richard Branson mean to convey through his presentation of the Apple’s ad?

2)    The Virgin Group is described as branded venture capital conglomerate. Explain what this means.

3)    Conventional business wisdom says that brand strength comes from a brand’s single strong message. Does
      Branson agree or disagree with this “rule?”

4)    Virgin has interests in selling trans-Atlantic flights, records, cola, lingerie, electricity, trains, concerts,
      holidays and mobile phones, and is likely to acquire more business ventures. Do you think Virgin is risking
      a weakening of its brand with this strategy? What is Branson’s view on this?

5)    Richard Branson himself has been a crucial component in Virgin brand development—his media stunts in
      launching new products are well known, and he has a high media profile. What drawbacks do you think
      there might be in Branson being the biggest Virgin brand element?

Course        Internet Business Models, Business Strategies, Management
Difficulty Level:      Level 2-3
Article:               “Boom: The new dot-com”, p. 28

Article Summary: Internet firms such as Facebook, Twitter and Zynga are catching interest of deep-
                       pocketed Wall Street investors—something that has been missing since the dot-com
                       crash in 2002. The article explains how today’s Internet firms are more solid business
                       models than the dot-com start-ups of the late 1990s, which were generally ill-conceived
                       as businesses, most without sound fundamentals, such as reliable revenue streams.
                       Despite their weaknesses however, these dot-coms had Wall Street money thrown at
                       them which led to the dot-com bubble and the subsequent crash. Today’s Internet firms
                       are better positioned; some are choosing to stay independent, some are poised for
                       acquisition or for IPO in 2011, but a new excitement surrounds this next generation of
                       web businesses.

Comprehension / Discussion
1) What are skeptics saying about the Goldman Sachs and Russia’s Digital Sky Technologies investing $500
   million in Facebook, and the fact that the company has been valued at $50 billion?

    Skeptics wonder how such a young company with an unproven business model can possibly be worth more
     than established media giants, and worry about a repeat of a dot-com bubble.

2) What led to the dot-com crash in 2002?

    Wall Street and investors got very excited about what the dot-com start-ups were doing and threw a lot of
     money on them, raising their values to unrealistic levels. These ventures, however, were usually ill-
     conceived and unstable without solid revenue streams, and when their business models started unraveling,
     investors’ started to flee from them.

3) In what ways are today’s web business leaders different from the e-flops that plagued investors at the
   beginning of the decade?

    Companies like Zynga, Twitter and Groupon haven’t raced to stage massive IPOs mere months after their
     inception, avoiding the skyrocketing stock prices and spectacular crashes that doomed so many 10 years ago.
     They are also not following the mid-decade stars of Web 2.0 such as MySpace, Flickr, Bebo and Delicious,
     selling out relatively quickly to be absorbed into larger entities like Yahoo and News Corp. Instead, the
     web’s newest players have built their billion-dollar businesses, demonstrating both audience growth and
     functional revenue models over years. Even after they’re established, they continue to search for new and
     better ways to monetize.

    Today’s Internet entrepreneurs are building companies without hiring a ton of people in certain categories or
     spending tens of millions of dollars.

    There are a handful of companies right now that, instead of selling out, are betting on their own versions and
     growing the businesses it on their own. Groupon, for one, just turned down a $6-billion offer from Google in
     December, while Twitter has successfully staved off acquisition as well.

4) How has the investment community attitude changed towards Internet firms?

    Technology and consumer behaviour have caught up to many of the previous dot-com ideas, and both
     investors and entrepreneurs are taking advantage, using past experiences to make better decisions.

5) What are the advantages to staying independent and private for companies like Facebok, Twitter,
   Groupon and Zynga?

    The advantage is the ability to innovate, execute and experiment without the scrutiny of shareholders or
     corporate owner.

6) Why is 2011 predicted to by the year of Internet IPOs?

    The drivers of this trend are the sheer amount of venture capital invested and activity on the secondary
     market, and the fact that the products and revenue models have matured sufficiently to survive and thrive on
     the public market.

1) What caused the dot-com bubble in 2000?

2) What business models are today’s Internet firms choosing, for the most part?

3) Explain how Webvan.com, an online grocery outlet founded in 1999, exemplifies the dot-com crash of 2002.

4) How are AOL and Bebo, Yahoo and Delicious, and MySpace, cautionary tales, both on the fickle nature
   of consumers and the downside of joining much larger corporation?

5) What is contributing to increased confidence in the Internet firms sector, a sector not too long ago many on Wall
   Street wouldn’t go near?

6) Read the writ-ups on Groupon, Zynga, Twitter, Netflix, and Foursquare that accompany this article, and
   summarize each company’s model, revenue sources, business strategies and plans for the future.


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