Dark Chocolate as an Alternative to Healthy Drink: A Case Memo

Please follow the instruction that attached.
Use the method from WK11.1 and WK11.2 to finishi this case memo
Must use Exhibit 5 (Page 13 from the Chocolate Case) for this assignment

Case Memo (25%) Instructions 2020/2/10 MKTG488 Department of Management and Marketing School of Business Goal of Developing a Case Memo Use data and data analysis to make a persuasive and concise argument about what a company should do. Memos Topic Weight Deadline Total Grade M1 Positioning - Crescent 20% Feb 21 @ 12PM 100 (25%) M2 Place - Sagacity 20% Mar 6 @ 12PM M3 Product - Chocolate 20% Mar 27 @ 12PM M4 Price - SafeBlend 20% Apr 3 @ 12PM M5 Promotion - Superbowl 20% Apr 20 @ 12PM 1. Problem identification ➢Focus on the cause—not the symptom: for example, low sales may be a symptom of poor customer service or something completely different; ➢Read the case completely—including exhibits and footnotes—identify useful and useless data; ➢Analyze the situation quantitatively as well as qualitatively: don’t just take the data as it’s presented—combine and transform it to make it meaningful. Case Analysis Steps 2. Solution/recommendation generation ➢Develop multiple solutions/recommendations; ➢Don’t limit yourself to things the company has done in the past or assume that decisions made by the company or other companies are the best; ➢Compare ideas on multiple dimensions— be clear about what those dimensions are; how strong is the logic for each idea? 3. Decide on/communicate your recommendation ➢Decide on one final recommendation as your proposal; use data to support your analysis and recommendation. ▪ Memo Heading ▪ Introduction (omit this subheading) ▪ Background ▪ Recommendation ▪ Recommendation Reasoning ▪ Assumptions and Risks ▪ Next Steps ▪ Exhibits to show your analysis See detailed format instructions on the next page—don’t lose points unnecessarily. Case Memo Format (use these subheadings) ▪ One page case ▪ One-inch margins on all sides ▪ 12-point Times font ▪ Heading – follow the example memo (spaced and bold) ▪ Bold all subheadings ▪ No space within paragraphs; add space between paragraphs ▪ One page exhibits ▪ Maximum of 3 exhibits ▪ Exhibits should be created using information from the case; can be quantitative and qualitative ▪ Note your reference (from the case) for your exhibits You will lose 4 (out of 20) points if you don’t follow this format Case Memo Format Your memo should be a TWO-page document! Case Memo Components – Instruction and Example ▪ Summarizes your recommendation ▪ presents your plan of action and demonstrates to the reader your point of view, not the background information of the problem. ▪ Answers the following questions: ▪ What is recommended? ▪ What key details or data influence this decision? Introduction The proposed Coors distributorship will be profitable. A 12% short-run and a 6% long-run profit can be achieved in 2021, both of which are much greater than the industry average. Therefore, you should seize the investment opportunity and move fast. Introduction Example – South Delaware Coors Note: for developing the case memo example, assume Larry had already bought the tables he needed, and the problem in this case was whether Larry should invest in the distributorship. Your analysis supported by data Your recommendation ▪ Sets the context for your plan of action ▪ Include one or two statements of strategy that form the basis of your recommendation ▪ Important - do not restate the facts in the case. Use only key facts that led to your conclusion. Background Investing in the Coors distributorship can be risky especially when the corporate is viewed as to hold anti-union beliefs. Analyzing profit dynamics through both the short- and longrun perspectives would provide objective evidence regarding this project’s ROI. Background Example – South Delaware Coors Background Context Basis of you recommendation (why you did this) ▪ Provides a complete, detailed statement of your plan of action ▪ Answers the following questions: ▪ What is being recommended? ▪ Specifically, how is your recommendation going to be accomplished? (e.g. quantities, costs, timing) Recommendation You should invest in the Coors distributorship. Specifically, this investment should be operated in both the short-term (one year) and long-term (two years and beyond). Given licensing competition among vendors may be stiff, you should move fast on getting the loan, hiring, establishing the facilities, and building the connections. Recommendation Example – South Delaware Coors Name of company/department of the company Summary of your recommendation. Specific actions of your recommendation. Sergeant Major’s should stop discounting its products and switch to an everyday-low price strategy. In particular, Sergeant Major’s should reduce its wholesale case price by 10% to $16.65, eliminate promotional price discounts while holding other advertising expenditure constant (see Exhibit A). Recommendation Example 2 Name of company/department of the company Summary of your recommendation. Specific actions of your recommendation. Key supporting reasons for recommendation – this is where you explain your analysis and your exhibits! This is the most important part of the memo! ▪ Prioritize—list in descending order of importance ▪ Bullet points are helpful ▪ Limit to three points/reasons Recommendation Reasoning Recommendation Reasoning Example – South Delaware Coors ▪ From the short-run perspective, the net marketing contribution for the distributorship is calculated as $303,312 in 2021 (see attached Exhibit 2 for estimation). This is 12% of the projected revenue and is around 2.3 times higher than the industry average (3.6% according to the case Table G). ▪ From the long-run perspective, covering the fixed costs leads to an annual overall profit of $155,556 (see Exhibit 2 for estimation). This is 6% of the projected revenue and is around .7 times higher than the industry average. ▪ Given above, the Coors distributorship for the two Delaware counties presents strong profitability. Note that the long-run profit will increase as partial of the fixed costs is sunk. Assumptions Outline key assumptions you have made. Risks Briefly discuss possible risks involved with recommendation. Assumptions and Risks Assumptions and Risks Example – South Delaware Coors The recommended plan assumes that the industry maintains current growth rates, such as tax, population, and price growth. It also assumes that your cost estimates are accurate. Please note that due to lack of information, competition is not part of the estimation. However, the level of competition may alter Coor’s licensing policies, which would lead to different profit levels. Assumptions for you analysis Potential risks • Brief and action-oriented statement of next steps needed to implement recommendation • Answers the questions: • What must be done now? • Who will do it? • When will it be done? Next Steps Next Steps Example – South Delaware Coors Start the investment by securing the loan at the lowest possible interest rate. Get the application ready before March 5, 2020. In three months, complete the planned hiring and establish healthy connections with designated retailers. In six months, get equipment in place and build up the initial inventory. Next Steps Example 2 Start by using the sales force to educate retailers about the advantages of the new pricing policy. In three months, lower the wholesale case price to $16.65 and focus advertising expenditures on informing consumers of the advantages of everyday-low pricing. In six months, evaluate the effectiveness of the new strategy in terms of profits, brand equity and production costs. Exhibit 1 – Estimating Proposed Distributorship Revenue in 2021 Exhibit Example – South Delaware Coors Total Tax Paid in this Marketing $367,112 (6.26% growth rate) Tax-Volume Converting Rate $.06 per gallon Total Market Demand 6,118,535 Gallons Coors Market Share 0.087 Coors Selling Units 532,312 gallons Six-pack Price $5.59 / gallon Keg Price (45% of six-pack) $2.52 / gallon Selling Weights Six-pack: Keg = 3:1 Weighted Price $4.82 / gallon Coors Total Revenue = Coors Selling Units * Coors Weighted Price = 532,312*$4.82 = $2,565,743 Exhibit 2 – Proposed Distributorship Profitability Exhibit Example – South Delaware Coors Shortterm (2021) Total Variable Costs (77.1% Revenue) $1,978,187 Marketing Expenses (11% Revenue) $282,231 Unit Contribution = Price – Unit Variable Cost = $1.1 Net Marketing Contribution = Unit *(Unit Contribution) – Marketing Expenses = $303,312 Long-tern (> 2yrs) Total Contribution = Unit Contribution * Units = $587,556 Fixed Costs (Salaries; Semi; Interests 4%) $432,000 Profit = Total Contribution – Fixed Costs = $155,556