1. CALGOLIA, Inc. Written by Dr. William C. Johnson for the Wayne Huizenga Graduate School of Business and Entrepreneurship

2. 2 CALGOLIA n A fictitious European company n 3 product categories Ovadols Squazols Trizols n 5 countries United Kingdom Poland France Germany Italy 15 Operational Marketing Units aka OMU’s aka SBU’s We will have only 8!

3. 3 SITUATION n Ms Sylvia Retchi, European Marketing Manager New to the job What was the “old” way of doing business? What issues are confronting her? Answer:  Global allocation of marketing resources  Global standardization vs local adaptation of Product, Price, Promotion  Organization and application of people’s time

4. 4 CALGOLIA Selected Marketing Strategy Issues n Allocation of Marketing resources  Management Time  Consumer Marketing  Trade Marketing n Global standardization vs local adaptation of  Pricing  Product Specifications  Consumer Marketing  Trade Marketing n Organization & People  Management Team 2 product categories 4 countries

5. 5 SITUATION n Greater international co-ordination wanted n 10 year planning horizon n Goal: Maximize shareholder value (Share Price Index)

6. 6 CALGOLIA Levels of Strategy Employed n Top level objective Maximize shareholder value (Share Price Index) n Portfolio Strategy Allocation of resources between  Products  Markets n Product Marketing Strategy Market Segmentation Product Positioning

7. 7 CALGOLIA Marketing Analysis & Strategy Market Analysis Competitive Analysis Company Analysis COUNTRIES PRODUCTS

8. 8 CALGOLIA Market Analysis PRODUCTS 409 Maturing 6% Moderate Low Moderate 5 Stable 17% Strong 13.9% No. 2 233 High Growth 14% Low High 3 Unstable 15% Strong 18.9% No. 1 OvadolsSquazols Current Size Stage in Life Cycle Long Term Growth In Product Purpose In Consumer Prolfie In Price Levels In Trace Demand Number of Int’l Firms Evolution Mkt Share of Largest Reputation Mkt Share ($) Wwide Position 291 Growth/Maturing 10% Moderate Low 4 Consolidating 13% Weak 7.5% No. 4 Trigols CATEGORY SITUATION DIFFERENCE BETWEEN COUNTRIES COMPETITION CALGOLIA SITUATION

9. 9 CALGOLIA Market Analysis COUNTRIES 57M Medium High 265 6% Low High 3 6 15% High Long Established 12.3% No. 2 38M Low 115 15% Moderate Low 12 2 10% Low Early Entry 15.6% No. 1 UKPOLAND Population Income Level Trade Concentration Current Size (M$) Long Term Growth Price Sensitivity Sophistication Qty of Local Firms Qty of Int’l Firms MS of Largest Price Pressure History Mkt Share ($) Overall Strength 57M Medium 152 10% Low High 7 4 15% High Long Established 10.4% No. 4 FRANCE ECONOMIC SITUATION RELEVANT CATEGORIES COMPETITION CALGOLIA SITUATION 81M High Medium 214 13% Moderate Medium 6 3 17% Medium Long Established 14.6% No. 2 GERMANY 58M Medium Low 187 11% Moderate Low 9 2 16% Low Recent Entry 13.5% No. 3 ITALY

10. 10 CALGOLIA Company Analysis-Marketing PRODUCTS 13.9% 46% 40% 64% 33% 90 60 90 12% 18.9% 36% 41% 35% 62% 33% 15 40 30 23% OvadolsSquazols Mkt Share (% of $) Revenue (%) CAM % Marketing Resources (%) CM/Total Marketing (%) Management Priority (%) Local Adaptation of: Product Consumer Marketing Trade Marketing Price Variation (%) 7.5% 18% 13% 26% 67% 33% 40 20 30 19% Trigols

11. 11 CALGOLIA Company Analysis-Marketing COUNTRIES 12.3% 27% 23% 30% 65% 15.6% 15% 14% 64% UKPOLAND Mkt Share (% of $) Revenues (%) CAM (%) Marketing Resources (%) CM/Total Marketing (%) 10.4% 13% 11% 16% 65% FRANCE 14.6% 25% 29% 22% 64% GERMANY 13.5% 21% 23% 19% 65% ITALY

12. 12 CALGOLIA Company Analysis-Profitability PRODUCTS 100% 60.4% 14.6% 8.1% 37.7% 100% 68.0% 15.9% 9.5% 42.6% OvadolsSquazols Revenues Contrib Before Mktg (CBM) Cosnumer Marketing Trade Marketing Contrib After Mktg (CAM) 100% 66.6% 25.6% 12.4% 28.6% Trigols

13. 13 CALGOLIA Company Analysis-Profitability COUNTRIES 100% 62.6% 19.1% 10.4% 33.1% 100% 60.9% 15.6% 8.9% 36.4% UKPOLAND Revenues Contrib Before Mktg (CBM) Cosnumer Marketing Trade Marketing Contrib After Mktg (CAM) 100% 64.7% 21.7% 11.5% 31.6% FRANCE 100% 65.6% 14.7% 8.3% 42.6% GERMANY 100% 66.8% 15.4% 8.3% 43.1% ITALY

14. 14 CALGOLIA Summary of Analysis n Ovadols Nearly half of Revenues and CAM Lowest growth opportunity Highest level of local adaptation  Except for Price Lowest Marketing intensity as % of revenue n Squazols Highest growth opportunity Strongest market share position Highest product standardization Highest consumer price satisfaction n Trigols (Not Applicable) Middle size and growth Weakest market share position Highest marketing intensity as % of revenue

15. 15 CALGOLIA Summary of Analysis n Countries UK & Germany have largest size Poland & Germany have largest growth opportunities n Price Pressures

16. 16 CALGOLIA GAMAR3 Simulation n SOME NUMBERS Budget Between $45 MM and $150 MM Consumer and Trade marketing Management Time 360 Man-Months Fixed cost - not out of CAM Unit Variable Costs (UVC) $100 for Ovadols $40 for Squazols $60 for Trigols UVC Increase for Max Local Product Adaptation 30% Max Price Differential 30% (between lowest & highest of same product) Max Consumer or Trade Budget $15 MM for a given product in a given country

17. 17 CALGOLIA GAMAR3 Simulation n YOUR CHALLENGE 69 decisions/period for 10 periods 10 possible tests per period STRATEGY vs BUNCH OF DECISIONS vs EXPERIMENTATION vs RANDOM WALK

18. 18 CALGOLIA GAMAR3 Simulation-Assignment n Marketing Plan (3-5 pages) addressing: SITUATION  Brief overview: Each product Each country PLAN  In each area What do you recommend (conceptually) What is your rationale  Areas to address Split between Consumer & Trade Marketing Pricing Application of Management Time Standardization vs Local Adaptation

19. 19 CALGOLIA GAMAR3 Simulation-Assignment n SIMULATION SCORES 5000+ = Excellent 4000 - 5000 = Very Good 3000 - 4000 = Good 2000 - 3000 = Satisfactory Under 2000 = Unsatisfactory n GRADING Based on score (40%) Based on plan (60%)