4.2 Marketing planning Topic Practice

2. Windmills OPQ (WO)
Windmills OPQ (WO) develops and produces electrical and mechanical components for windmills. WO has developed a unique selling point/proposition (USP) because of its customization and modification services.
In 2023, WO identified two six-year investment project options that could be beneficial.
- Option 1: Research and development (R\&D).
- Option 2: Open a wind farm with five windmills.

The capital costs and forecasted cash flows for both investment projects are shown in Table 2.

WO's board of directors think that the forecasted cash flow for Option 2 is too low. They believe that the demand for electricity generated by windmills is likely to rise more than the current forecast assumes. Electricity prices are also increasing.

Define the term unique selling point/proposition (USP).

BRD manufactures Matchfix plastic model kits in its Liverpool factory. The Matchfix product range was profitable until 2020 . The market is competitive, and prices are increasingly important to customers. BRD uses a cost-plus (mark-up) pricing strategy and reviews its kit prices regularly. In 2021, the cost of plastic increased by 20 %, with a further increase in 2022 of 25 %. Matchfix plastic model kit sales fell in 2021 and again in 2022.

By 2022, 50 % of the Liverpool factory space was unused. The marketing director, Simpson Smith, wants to attract a new market segment. He has suggested two options for this unused space: a science and imagination centre and a railway museum.
- Option 1: A science and imagination centre. This would include interactive exhibits, allowing families to experiment with wind, magnets, electricity, and light. Highly trained employees would be needed to assist with experiments.
- Option 2: A railway museum. This would display full-size railway engines and rail cars used in the 20th century. A small number of employees would be needed as guides.

For each option, the entrance fee would be £ 15 per adult, with accompanied children entering for free. BRD would also open a café. Fixed costs for the café are forecasted at £ 25000 per annum and variable costs at £ 10 per customer. Simpson has predicted that 80 % of visitors will visit the café, with an average spend per adult of £ 15. Forecasted costs and visitor numbers for both options are shown in Table 1 and Table 2.

Define the term market segment.

3. EkoLogiczne Ltd. (EL)
EkoLogiczne Ltd. (EL) is a packaging company owned 60 % by Marek Kowalski and 40 % by his father. EL is a private limited company. Marek founded the company when he realized that the rise in e-commerce would mean the demand for packaging would always increase.
Originally, Marek imagined that EL's unique selling point/proposition (USP) would be to offer recyclable packaging. However, the eco-friendly market was dominated by one large company, Big Boxes (BB), which enjoyed economies of scale. Marek reimagined his USP: E L would have small factories that enabled customized orders to be fulfilled quickly.
Over time, EL opened four factories across Poland and the Czech Republic. Its customers, which included online retailers and small manufacturing companies, placed orders online; if the factory nearest the customer was too busy with other orders, the order would be shifted to another factory. Many customers chose E L rather than B B for this reason. With growth, however, EL began to experience diseconomies of scale and increasingly failed to fulfil orders on time.
Marek is now considering bidding on a large five-year contract for all the packaging solutions for WszystkoMart (WM), a huge traditional retailer trying to expand its e-commerce presence. The contract would require building a huge factory and focusing almost exclusively on keeping costs low. In terms of scale, E L would be almost as big as B B, the large company dominating the eco-friendly packaging market.
To finance the new factory, Marek would either have to sell many shares and reduce his and his father's combined ownership to 40 % or take a 30 -year loan from a bank.

Explain one advantage and one disadvantage for EL of having a unique selling point/ proposition (USP).

3. EkoLogiczne Ltd. (EL)
EkoLogiczne L t d. (EL) is a packaging company owned 60 % by Marek Kowalski and 40 % by his father. EL is a private limited company. Marek founded the company when he realized that the rise in e-commerce would mean the demand for packaging would always increase.
Originally, Marek imagined that EL's unique selling point/proposition (USP) would be to offer recyclable packaging. However, the eco-friendly market was dominated by one large company, Big Boxes (BB), which enjoyed economies of scale. Marek reimagined his USP: E L would have small factories that enabled customized orders to be fulfilled quickly.
Over time, EL opened four factories across Poland and the Czech Republic. Its customers, which included online retailers and small manufacturing companies, placed orders online; if the factory nearest the customer was too busy with other orders, the order would be shifted to another factory. Many customers chose E L rather than B B for this reason. With growth, however, EL began to experience diseconomies of scale and increasingly failed to fulfil orders on time.
Marek is now considering bidding on a large five-year contract for all the packaging solutions for WszystkoMart (WM), a huge traditional retailer trying to expand its e-commerce presence. The contract would require building a huge factory and focusing almost exclusively on keeping costs low. In terms of scale, E L would be almost as big as B B, the large company dominating the eco-friendly packaging market.
To finance the new factory, Marek would either have to sell many shares and reduce his and his father's combined ownership to 40 % or take a 30 -year loan from a bank.

Explain one advantage and one disadvantage for EL of having a unique selling point/ proposition (USP).

4. Les Amis PLC (LA)
Les Amis PLC ( L A ) is a public limited company that sells casual clothes for men. Its target market is high-income professionals who value a personalized sales service. LA has developed brand awareness and operates 42 shops around the country. It owns 10 of these shops and leases the remaining 32 . LA employs 950 people, who receive a higher wage than the industry average. LA also pays commission to sales staff working in the shops. LA's organizational culture values the wellbeing and needs of its employees. Labour turnover is very low.
Recently, L A launched an online shop. Since then, online sales have increased considerably, while sales in LA's physical shops have fallen. Shareholders want LA to close all its physical shops and sell online only. However, many of the employees will be made redundant if the physical shops are closed.
LA's current chief executive officer (CEO), Marie Brossard, has a democratic leadership style, and she regularly meets with employees and encourages feedback. LA's managers and employee representatives have never had a conflict. Marie plans to discuss the shareholders' desire to close LA's physical shops with all the shop managers.
Customer returns of clothing orders at L A have increased substantially. Most returns are from online customers unfamiliar with LA's clothing sizes. Marie has consulted the e-commerce department on how to reduce the increasing cost of returns, and they have suggested investing in expensive software that will enable online customers to find their correct clothing size.

Define the term target market.

4. Les Amis PLC (LA)
Les Amis PLC ( L A ) is a public limited company that sells casual clothes for men. Its target market is high-income professionals who value a personalized sales service. LA has developed brand awareness and operates 42 shops around the country. It owns 10 of these shops and leases the remaining 32 . LA employs 950 people, who receive a higher wage than the industry average. LA also pays commission to sales staff working in the shops. LA's organizational culture values the wellbeing and needs of its employees. Labour turnover is very low.
Recently, L A launched an online shop. Since then, online sales have increased considerably, while sales in LA's physical shops have fallen. Shareholders want LA to close all its physical shops and sell online only. However, many of the employees will be made redundant if the physical shops are closed.
LA's current chief executive officer (CEO), Marie Brossard, has a democratic leadership style, and she regularly meets with employees and encourages feedback. LA's managers and employee representatives have never had a conflict. Marie plans to discuss the shareholders' desire to close LA's physical shops with all the shop managers.
Customer returns of clothing orders at L A have increased substantially. Most returns are from online customers unfamiliar with LA's clothing sizes. Marie has consulted the e-commerce department on how to reduce the increasing cost of returns, and they have suggested investing in expensive software that will enable online customers to find their correct clothing size.

Define the term target market.

HSM Bakery Ltd. (HSM)

HSM Bakery Ltd. (HSM), a privately held company, produces baked goods (bread, cakes, and cookies), which are sold to shops.

In recent years, HSM has broadened its target market by producing a range of gluten-free cakes.

Define the term target market.