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Marketing Education

Market Share

Task: Dorothy Keel and David Howse will prepare a budget request for all four quarters of fiscal 1983 within the next week. This budget should make all attempts at delivering a 6.0 market share.

Situational Analysis:  Castle Coffee Company Inc. is a company that is as rich in tradition as is its coffee. Once holding a market share as high as 15 percent, Castle Coffee now struggles in finding a market share that will allow such a basic competitive advantage as its own distribution system.

Market share, at the end of the fiscal year 1981, stood at about 5.4 percent. The mandate for the upcoming fiscal year is to attain a share of 6 percent. Unfortunately, this was the same goal for 1982 but the market share never past 5.7 percent and averaged under 5.6 percent over the first 8 months (Sept. to Apr.) of that year.

Strengths:  A loyal core of customers that has prevented the market share from dropping under 5.4 percent. A higher quality of coffee.

Weaknesses:  A history of a lack of innovation; the failure to meet the freeze dry and instant coffee market. A market share that allows little room for advertising experimentation. Though media placement is based on research, sales cannot be guaranteed. If an annual advertising campaign fails to meet sales goals, the repercussions may not only damage the bottom line but threaten the viability of the company – especially its distribution network.

Other elements posing weaknesses inherent with Castle Coffee come from a complete lack of understanding of IMC (sales, promotions, advertising, distribution, innovation, etc.), CRM, to requesting an advertising plan with all of the key elements already planned out. The only significant question we have to ask in this case is about advertising budgeting, media buying, or how to frustrate a young marketer?

As stated in the case, the advertising strategy for fiscal ’82 was terminated half way through the year. This signifies an executive that either lacks faith in their advertising expert or one that is too aware of a weak marketing position and therefore afraid to gamble.

The most significant weakness was made clear in the controller’s memo dated August 1, 1981, “. . . should help to relieve the cash flow bind which I mentioned last week.” The situation is desperate.

Opportunities:  The task at hand is less about opportunities than it is about getting it right – for once. After years of not meeting past goals, the only significant opportunity that presents itself is to position itself as a first choice among coffee drinkers; at least 6 percent of them anyway.

Threats:  General Foods Inc.’s ability to operate on an economy of scale. To use it massive advertising leverage to drive sales and to invest in innovation that can create markets.

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