3mc3 tremco case PDF

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Summary

Case analysis for the Tremco case study....

Description

Product: Mono Foam is an insulating spray foam manufactured by ‘Foam-O’. Mono Foam has received exclusive rights to relabel and sell the product, which includes an anti-competition law preventing ‘Foam-O’ from entering the market in any other means. The product is an extension of the Mono brand name which has an established salesforce for alternate products. Mono-Foam is a consumer product used to patch holes, cracks and gaps in domestic settings. The product expands and dries, preventing airflow through the damaged areas. The foam is sold in 350-gram and 935-gram variants, which are categorized as small and large respectively.

Price: The product is priced at $8.00/can, which is double the retail price of Great Stuff, Foam-it and Touch ‘n’ Foam. This allows Mono Foam to be considered a premium product within its market. The primary goal for Tremco is to receive a 30% contribution margin, which elicits the high price. Tremco is comfortable withdrawing from the market if consumers were not willing to pay the premium. The premium pricing system allows for greater profits, as Tremco had a low investment in the market; which reduced risk. Place: Tremco has a very efficient supply chain system allowing for ease of adoption for this new product. No new product development costs were incurred, and there was no additional overhead for Mono Foam. With a very established sales force, Tremco could penetrate retail stores and easily distribute its new product. Due to Canadian Tires unwillingness to place Mono Foam on its shelves, Tremco lost out on approximately 25% of market exposure. Promotion: There is a limited amount of advertising which was done in trade publications. Aside from Tremco’s sales force, there is an information brochure available on the product. No alternative promotional investments were done. Current Target Market: Mono Foam is usually sold to ‘do it yourself’ consumers who comprise 90% of its respective sales volume. The remaining 10% of the sales is attributed to small contractors. Segmentation Strategy: Mono Foam has focused on individuals who do home renovations and have a good understanding of the product already as it was priced at a premium. Consumer Needs and Decision Criteria: Insulating spray foam is a product that is meant to be used by the masses for common repairs. The consumption of ‘spray foam’ is approximately 5-10 times higher is Europe where the product is more well known. In the North American region, awareness of how to use the product was lacking, which led to its poor adoption among the masses. 20% of people reported that they knew about insulating spray foam; 25% of those who were aware, purchased the product. When consumers purchase Mono Foam, they tend to be loyal to the brand after using it, and they repurchase the product. This goes to show that consumers can discover the value of Mono Foam through proper education and engagement. Customers desired attributes for Mono Foam as follows: high insulation R value, ease-of-use, ability to provide a tight seal, and the ability to seal cracks and air leaks. The need for the product is greatest when the possibility of cold air leakages are prominent, which is why sales peak in the months from October-January. This is the time when consumers were most interested in prepping their houses for winter. The product has a 3-month shelf life after opening, leading to it being used quickly after opening.

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Product

o Insulating spray foam - Mono Foam o Established brand behind the product 

Price

o Premium pricing system 

$8.00/can at retail (at par with its competitor sista, twice the price of Great Stuff, Foam-it and Touch 'n' Foam.

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Need to maintain 30% contribution margin therefore eliminates price conscious consumers from market

o Chance of losing money on the project was low 

Place

o Efficient warehousing a distribution system with no additional overhead or new product development costs

o Limited shelf space in the hardware, building supply and mass merchandising stores 

Promotion

o No mass advertising efforts

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Limited use of trade advertising in past and sales force support

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No promotional investment in the product

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Exposure through info brochure, rack

Current Target Market

o 90% of sales volume came from consumers acting as "do it yourselves" o 10% to small contractors 

Segmentation Strategy

o Product has a mass consumer need however Mono Foam focuses on those individuals who do home renovations

o Research shows that consumers repurchase the product once using 

Consumer Needs and Decision Criteria

o Product fills a mass consumer need o Not enough promotion - only 20% of consumers knew about insulting spray foam o 25% of those aware purchased the product 

They would purchase again and had positive experience

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Loyal customer to the brand after using

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Conclusion: consumers need to be shown product to be engaged with it. Therefore using in store advertising seems like most appropriate and cost effective way to target customer.

o Consumer needs identified by survey: 

High inslution "R" value

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Easy to apply

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Provides a tight seal

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Seals air leaks

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Seals cracks

o Sales peaked in oct, nov, dec and jan (opportunity to leverage holiday sales) 

Months when consumers were most interested in preparing their homes for winter

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Consumers go through the product quickly bc of three month shelf life and multi purpose nature of product

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Homeowners would use it to fill cracks and block air leaks and ran out quick

o Decision criteria: 

How do we show the consumer our product through demonstration and what is the best outlet to do so that is cost effective?

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How do we ensure customer loyalty as the product runs out relatively quickly and we want to ensure repeat sales

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Cost of customer acquisition = total cost of marketing / # of customers acquired

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First exclusive product for the Consumer Products group in Canada

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Canadian market

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Decision Criteria:

o Competitors had succeeded in chain hardware stores - canadian Tire 

Third in market share

o Market size remain stable o Accounts for 25-30 of all hardware sales to consumers in Canada 

Product in Canada is in the primary stages of the growth cycle.

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Sales peaked in oct, nov, dec and jan

o Months when consumers were most interested in preparing their homes for winter o Consumers go through the product quickly bc of three month shelf life and multi purpose nature of product

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Homeowners would use it to fill cracks and block air leaks and ran out quick...