Final report

INDEX

Amber Inn & Suites, Inc. 2 Summary 2 Question 3 Answer 3 Explanation 4 Teaching Notes 7

GloFish, LLC 8 Summary 8 Question 10 Answer 10 Explanation 11 Teaching Notes 20

Amber Inn & Suites, Inc.

Summary

* Time:
Late in the afternoon on April 4, 2005

* Company profile:
Amber Inn Suites, Inc. is positioned as limited service hotel between economy hotels and full service hotels in US. The company locates its properties on premium sites on major highways close to suburban industrial and office complexes, airports, and large regional shopping centers for the most part. Urban, downtown locations have been avoided. And the service mission is to provide principally business travelers with clean and comfortable quest accommodations in convenient locations at reasonable price.

◎ Organization
Board of Directors

President & CEO
Joseph James

VP
Grace
SVP
Elizabeth
SVP
Finance
SVP
Lodging Op
SVP

Players:
1. Joseph James is the new president & CEO of Amber Inn Suites, Inc.
2. Kelly Elizabeth is Senior Vice-President of Sales and Marketing.
3. Catherine Grace is Vice-President of Advertising.

Fiscal 2005 was projected to be the fifth consecutive unprofitable year for Amber Inn & Suites, Inc. The new president of Amber inn &suite inquired that each of company’s four senior vice-presidents was to prepare a one hour presentation that described (1) his or her initiatives, expenditures, and outcomes for each of the past two fiscal years, and (2) planned initiatives and budgetary needs for fiscal 2006 to meet overall corporate objective was a seven percent annual increase in EBITDA over the next two fiscal years.

Back review the past fiscal two years, although the primary objective of 2004 was to increase overall occupancy and they did achieve it, but expanded leisure travelers did not bring the company profit to be positive. And the three objectives of 2005 were increasing overall occupancy in both quest rooms and suites, to attract first-time quests and to increase the length of stay per visit. That’s realistic increase 10 percent expenses on media expenditures compare to 2004 and due to exclusively to the added cost of “frontier” advertising. But the strategy for attracting pleasure travelers was queried by senior Vice-President of lodging operation owing to receiving complaints form frequent business quests and the secret worry of the possibility of decreasing business customers.

Ms. Elizabeth needed to prepare the sales and marketing proposal of fiscal 2006, and three issues required immediate attention when preparing the April 11 presentation. The top one was the allocation of media advertising dollars between the pleasure/vacation travelers and business travelers market. A second issue was the “frontier strategy” initiated in fiscal 2005. A third issue related to promotions, recommended by Grace, “weekend specials” as a replacement for the “free-night stay” promotion used in fiscal 2005.

Question
How to approach goal for the company was to achieve profitability within two years. The overall corporate objective was a 7 percent annual increase in EBITDA over the next two fiscal years.

Answer
1. Focus on business travelers.
2. Additional service: To meet business traveler’s needs, Amber will set up some conference rooms with office facilities as printer and projectors as so on.
3. Discount promotion for companies: Provide the discount to companies by long-term contract to get the stable customer resources.
4. Change the mix of advertising expenditure of business and pleasure travelers to meet the target goal on business travelers and downward the advertising expenses.

Explanation

Table 1
Amber Inn & Suite Guest Profile: July-October 2004 VS July-October 2002 (Amber Inn and Amber Inn & Suites, InC. Properties Combined)
July- October July- October 2004 2002
1. Average number of different occasions a guest stayed at Amber Inn & Suites during the past twelve months: 10.8 9.9
2. Average number of nights stayed on most recent visit 2.6 nights 2.4 nights
3. Purpose of trip (percentages exceed 100% due to multiple answer) Personal 9.5% 10.0% Business 79.8% 81.8% Pleasure/ Vacation 14.2% 13.2% Convention 3.5% 2.0%
4. Frequency of staying at motels or hotels: Once a week or more 39.0% 37.0% Once every few weeks 21.7% 22.7% About once a month 13.1% 19.0% Less often than every few months 21.2% 21.3%
5. Type of trip and payment on most recent visit: Business trip paid for by the company 65.7% 67.7% Business trip paid for by self 16.3% 16.3% Pleasure trip paid for by self 18.0% 16.0%

As the Table 1 data, we can see the 80% occupancy is from the business traveler. And about 67.7% business trip paid for by the company. So we plan to increase the business traveler occupancy and provide some recommendations for this purpose.

Recommendation:
A. Additional service
To meet business traveler’s needs, Amber will set up some conference rooms with office facilities as printer and projectors as so on. Impact: To set up the facilities, Amber will have extract expenditure on expand the facilities and it will add the depreciation for years.

B. Discount promotion for companies Provide the discount to companies by long term contract to get the stable customer resources.

Impact: The daily rate of every room will decline slightly but it takes time to set up the royalty with our customer. And for the previous experience travelers has no contract with Amber will leave some bad impression. So the package of discount coupon for the experience travelers will be execution as well.

C. Change the mix of advertising expenditure of business and pleasure travelers to meet the target goal on business travelers and downward the advertising expenses.

Table 2 Amber Inn & Suites, Inc. Advertising Media Budget Plan Media | category | Fiscal 2004 | Fiscal 2005 | Fiscal 2006Budget quota | Magazine | Business/Pleasure traveler | 2,780,000 | 3,236,240 | | Newspaper | Business/Pleasure traveler | 3,975,000 | 4,096,965 | | Outdoor | Pleasure traveler | 558,500 | 519,700 | cut the budget | Spot TV | Business/Pleasure traveler | 1,875,500 | 2,340,266 | | Cable Networks | Pleasure traveler | 975,500 | 1,048,589 | cut the budget | Radio | Pleasure traveler | 425,500 | 257,740 | cut the budget | Internet | Business traveler | 750,000 | 1,000,500 | | Total | | 11,360,000 | 12,500,000 | 10,673,971 |

Impact: To stress on business travelers may decrease the attraction to pleasure travelers and may lose the occupancy rate on this kind of segments. Owing to the change to advertising strategy may decrease the revenue from this segment.

To put all the above recommendation on the fiscal 2006, that we can increase the room rate and increase the overall occupancy. To stress on the business travelers, so we can cut the adverting budget for pleasure traveler and increase the budget for business traveler. The revenue can be raised to meet the board of Directors and CEO’s goal setting of 7 % annual increase in EBITDA. To calculate the related inputs and effective result of determination, we will show the EBITDA as below for our initiatives.

Table 3 Amber Inn & Suites, Inc. EBITDA Results : Fiscal 2003 - 2006

Teaching Notes

Setting reasonable communication objects * Primary demand. . * Selective demand. * Consistent. * Quantifiable. * Attainable

Marketing Web Sites and Integrated Marketing Communications * Purpose of Marketing Web Sites * Leveraging Advertising and Personal Selling with Promotional Web Sites

What’s the purpose of marketing communication?
Communication is necessary to inform buyer of the following. * The availability of an offering * The unique benefits of the offering * The where and how of obtaining and using the offering

Development an integrated marketing communication mix * The information requirements of potential buyers. * The nature of the offering.

GloFish, LLC

Summary

* Time:
January 5, 2005

* Company profile:
Glofish, LLC is a company which product is fluorescent zebra fish in US, devoted to promote and popularize the fluorescent zebra fish to common consumers. And has noted as “The GlofishTM fluorescent fish provide marine colors at fresh water prices”

◎ Organization
Board of Directors
COB

CEO
Alan Blake

Legal
Parker Davis

Players: 1. Alan Blake is the CEO and co-founder of Glofish LLC. 2. Richard Crockett is the founder of Glofish LLC. 3. Dr. Ivan Pruchansky is a university geneticist and developed fluorescent zebra fish in university laboratory. 4. National University of Singapore (NUS) has scientists there had developed their own fluorescent zebra fish in 1999. 5. Far-sighted Fish Genetics (FSG) owned patents of the line of red fluorescent zebra fish. 6. Dr. John Rosemary is a renowned professor of management at a major business school, who was the company’s first outside investment. 7. Parker Davis is an attorney, worked for the company.

Glofish LLC founded in 2001, investment of 2002 and 2003 based largely on pro forma sales projections that company would generate $4,000,000 in profit on 2004. However, the company failed to the target goal.

Originally, they want to patent the concept of producing ornamental fish that expressed fluorescence throughout fish’s bodies. Failed to get the patent of cellfish from Dr. Prunchansky’s university, Glofish contacted with NUS and Cellflash for licensing technology for a 16 percent royalty fee with annual minimum royalty of $150,000, these rights would provide the company with an effective barrier to entry against potential competitors. Also, FSG which owned red florescent protein gene was willing to exclusively license to Gofish. Blake confirmed that there will no federal or state regulatory prohibitions that would preclude the sale of the Glofish fluorescent zebra fish.

Consumer acceptance of the company’s products was quite positive, however, the larger retail chains still had not agreed to carry the fish., leaving the company only able to sell into a fraction of its potential market. And fluorescent zebra fish were not nearly attractive enough to sell in the numbers, most retailers refused to display the fish under optimal lighting and aquarium conditions that would showcase them. The company hoped to have new fluorescent red zebra fish available in retail stores in June 2005, followed by additional colors after that. Variety drives purchases.

Distribution was the key to market success. Blake listed four distribution alternatives to present in the next day’s meeting in Board of Directors—independent pet stores, chain stores, kiosks and internet. Blake recommendation would have to consistent with the resources that Glofish presently have available as well as fit other elements of the company’s marketing strategy.

Question
The distribution was the key to market success. The fluorescent zebra fish only sold in few retailers, and Glofish LLC had to expand their market channel let consumers could easier to buy. Alan Blake listed four distribution alternatives, independent pet stores, chain store, kiosks, and Internet. We have to select the suitable channel to sell the fluorescent fish.

Answer
1. To increase the revenue of Glofish, except the original channel of pet store, we also add two channels, chain stores and internet, to sale the fluorescent fish.
2. Chain stores are the largest channels of freshwater fish, to increase the sales of fluorescent fish, to co-work with Wal-mart must be the right direction.
3. Additionally, accompany with population of internet and the purchasing pattern is changing, more and more customers use internet to do the shopping. We would set up an internet web to post and public the new organism technical product of fluorescent fish with how to raise it smoothly. And to make customers can easily get the whole set fish related products, except fluorescent fish, we also provide varied kinds of freshwater fish and Glofish-branded tanks and supplies, fish food, and water conditioner.

Explanation

Table 1 SWOT Analysis

First , we analyze SWOT of all channels. That make us can get all the pictures of all channels. Then, we plan a forecast in all channels by income statement. We give the assumption as follows.

Table 2 Forecast Assumption Of Customer Market

Table 3 Forecast Assumption Of ASP

Table 4 Planned Forecast in 2005

From the forecast in 2005, we find that the risk of Kiosks channel is high. Adapt this channel, we spend the cost $1,406,000 in mall kiosks setup and the revenue only $440,000. So we decide not to invest in the shopping mall kiosks channel. We spread up the three years forecast of all channels except mall kiosks channel to support our thought.

Table 5 Revised Planned Forecast in 2005

Table 6 Revised Planned Forecast in 2006

Table 7 Revised Planned Forecast in 2006

From three years forecast data, we get 30% net margin in using three channels. That data supports selected three channels is suitable for Glofish operating.

Teaching Notes
How to leverage the resource allocation of multiple channels? * Minimize the conflict between the agents and associate the argument among pricing strategy.

How to attract consumer to pay attention and buy? * Variety: Stimulate consumer’s purchasing willing. * Advertisement: Right segmentation target. * Service: Face to face service can provide explanation and feeding attentions for customer to raise their fish smoothly and can exchange the feeding experiences.

How would you manage the company’s future growth? * Define the core competitive advantage to ensure that all future activities will focus on how to change the mindset of possession for fluorescent zebra fish.

What solutions to the distribution problems are being pursued by GloFish LLC? * To expand the channel to make consumer easier to get the product. To see, then have chance to buy. * Convenience * To apply the change of the consumer purchasing behavior.

Developing an Integrated Marketing Communication (IMC) Mix
The factors are： (1) The information requirements of potential b buyers. (2) The nature of the offerings (3) The nature of the target markets (4) The capacity of the organizations.

The mix includeds five components. * Information Requirements of Buyers . Satisfy the buying requirements of the target market * Nature of the Offering * Target-Market Characteristics * Organizational Capacity * Push versus Pull Communication Strategies

Multi-Channel Marketing Considerations * Actual incremental revenue or merely cannibalization? * Incremental cost to launch and sustain an electronic forefront * Disintermediation – a traditional intermediary member is replaced by electronic storefront

Channel-Modification Decisions Basic Objectives * Provide the best coverage of the target market sought * Satisfy the buying requirements of the target market * Maximize revenue and minimize cost

Calculate Margins = Revenues – Channel Costs