1. What is the size of the loss at the Coop? What could have been attributed to this loss? (Be thorough in your analysis) Answer: In 1994, “‘The Coop’s” average sales were $775,000, and there were 76 stores in total. So the Coop would reach the sales $58,900,000(76 x $775,000 =$58,900,000). If Coop were able to maintain the 10% growth per year. In 1995 Coop’s sales should be $64,790,000 ($58,900,000 x (1 +10%) =$64,790,000). However, due to the 6% average decline in sales for 20 stores, the real sales in 1995 is $62,310,000 (20 x $775,000 x (1-6%) + 56 x $775,000 x (1+10%) =$62,310,000). So in total Coop lost $2,480,000 ($64,790,000 – $62,310,000 = $2,480,000) in 1995. There are many factors may result in Coop’s sales decline. Firstly, Coop may fail to meet the consumer needs. The Chicken Coop founded in 1974, and the specializing in chicken never changed. However the consumer’ taste and habit have changed today. Also, the consumer targeting between the age of 18 and 45 is too board. Secondly, the manger does not have depth knowledge about the market. Wallace made business plan rely on his hotel business experience. Thirdly, the number of new employee increased because of the business expanding. However, there are many new employee are less trained, so the quality of the service decreased. Also, the Coop’ sales did not increase, the cost of the new employee increased a lot. Lastly, the competitors are improving. For example the KFC complemented its advertising with special promotions and provide a variety products service. All the four factors may have been attributed to Coop’s sales loss.
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2. Analyze the dynamics between McMichael and Wallace. Are they looking in the same direction? Why, why not? Answer: McMichael and Wallace are two of the top managers. All of them are paid close attention to customers. They realized the lack of customer sight and market insight, but they have different views about the market research and the sales slump. McMichael worked for Coop science 1982, she always thinks the quality of the food is the core competence of Coop. As same as Buckmeister, she believes the motto “We are chicken”. So she thinks the better food quality and service could help Coop solve the sales problem. For Wallace, he is relatively new to the company and has extensive experience in the hotel business. Wallace focus on renew the brand image to meet current consumer needs. He provided new menu to attract more consumers. Wallace thinks Coop need new market activities improve competitive advantages. Both McMichael and Wallace are thinking from their narrow functional area.
3. Evaluate each of the initiatives proposed by Buckmeister, Wallace, and McMichael (pros and cons). Answer: McMichael suggested Quality Inspection Program and The taste. The Quality Inspection Program will help Coop improve the quality of the food, service and facilities, these all important factors to attract consumers and increase sales. However, these program only provide current information about Coop stores, it does not provide information about consumer taste and competitor situations. The Taste grogram provided the information of competitors, it help Coop to make positive change to reflect competitive environment. However the information gathered from loyal customer may not represent all the consumer thought. And it has the cost of the program is high. Wallace suggested Brand Image Monitoring Surveys and The Customer Experience Study. The Brand Image Monitoring Surveys will gather quantitative data on the Coop’s brand image vis-à-vis its competitors.
A market research supplier would interview customers and potential customer by telephone. This program may help Coop gather a lot of representative information. However it cost too much. And personally I do not like answer the telephone survey, especially pick up a call from restaurant which I have never been. The Customer Experience Study provided consumer some benefit if they cooperate with Coop’s survey, I think it will help for Coop’s brand image and attract loyal consumer. However, I do not think this is the best way to gather information with so many costs. Coop should consider is that worth to cost $45,600 and even more. Buckmeister’s Customer Feedback Cards is a direct and easy way to get consumer feedback, and it cost less and response well. However, it will make employees and mangers work more. And the flexibility is poor, also this method only gather information from current Coop consumer.
4. Which one(s) would you support and why?
Answer: I support Wallace’s suggestion. McMichael’s suggestion focus on the customer service and food quality, I do not think this the main factors related to Coop’s sales decrease. I think Coop should focus on consumer information research. Coop is old company failed to meet current consumer needs. Wallace’s suggestion will help Coop gather large information about consumer thinking, and then they can make changes to reflect the market development.
5. What would be the total cost of your selected market research and is it well justified? Answer: Brand Image Monitoring Surveys was the most expensive option that The Coop was considering. Proposals from market research suppliers ranged from $20,000 to $50,000, and it may need 900 interviews. The Customer Experience Study would cost $45,000 and even more. I think the cost is not justified, because not very consumer will cooperate with the survey. I do not think every telephone survey will be successes answered, but Coop has to pay it.