Rest Assured Case Study Paper
CASE STUDY #2
Case Study #2
Yuji Shimojo
BMGT 317
Instructor: Prof. Brandon L. Cohen
April 28, 2013
CASE STUDY #2
Introduction
This paper mainly discusses current business analysis of Rest Assured, consideration of four acceptable alternatives to solve the problems which Rest Assured has, and suggestion of one recommended solution to achieve the business objectives. Before considering alternatives, I organized the given information to analyze current business environment which Rest Assured is facing by using Marketing Mix and 3C 's model (Boone, L. E. & Kurtz, D., 2012) as shown by
Figure 1 below.
Figure 1: Rest Assured 's Current Business Environment
The town has 8,000 people.
It swells to double that size in the summer when families …show more content…
and retirees make their way to the coast to enjoy the beautiful
Pacific Ocean for a week or two.
Customer
Tourists pulled back on their beach vacations and retirees opted to stay at home for a while until the economy became more stable.
The past few months have shown some evidence of increased visitors to the town and to the mall, though potential customers don 't seem to be visiting Rest Assured as they have in the past.
The new store specializes in discounted house wares including discounted bedding materials.
Competitor
The store largely relies on synthetic bedding materials made by Chinese workers
It offers its products at significantly lower prices than the products offered by Rest Assured.
Rest Assured is a small retail business specializing in bedding and bedroom accessories: mattresses, comforters, blankets, pillows, sleep ware, and small decorator gift items for the bedroom.
The store’s goose down materials and high quality synthetic fabrics, along with its clear focus on customer service,
Product/Service have made the store a successful enterprise...until recently.
The store is owned by a husband and wife. It employs three full-time people, and the store owner and his wife fill in when employees are ill or off on vacation. One of the store employees has been with the store since it opened; one was hired five years ago; the third came on board as a replacement hire for a person who left the store two years ago.
The objectives are:
1. To achieve and sustain a profit level in the business that will help the owners fund their current lifestyles and prepare …show more content…
for their future retirement plans.
2. To provide fair and equitable treatment of employees by offering competitive pay and reasonable benefits in order to
Price
attract and retain the highest quality customer service employees for the store.
3. To offer Made-in-the-USA products as a way to express support for the country and its workers.
Corporation
4. To demonstrate respect and appreciation of customers by seeking to understand their needs, offer products at reasonable cost that meet those needs, and interact with them in ways that ensure their long-term satisfaction and loyalty as customers.
The store is advertised through the mall’s regular advertising programs. The owners of Rest Assured also purchase an
Promotion
ongoing ad that is run in the local movie theater in advance of the movies.
The store opened eight years ago within the only shopping mall located in a small coastal town in the Northwest.
The company leases space in a rear corridor of the local shopping mall, back from the area that gets the most mall traffic. Place
An advantage to their leased space is its large size that enables the store to display more of its product line than it would have if it leased one of the smaller spaces in a higher traffic area in the mall. It also costs less than spaces closer to the high traffic area.
About a year ago, sales began dropping off, and expenses began outpacing revenues. Even the Christmas season,
Management which is usually a tremendous boost to store sales, wasn’t enough to make up for the losses last year.
Rest Assured was dealt a major blow when the national economy slumped.
CASE STUDY #2
From the situation above, I defined the solving problem is how Rest Assured successfully recover from slumping business with achievement of its business objectives.
Alternatives
A famous American business school professor Porter, M. E. (1998) advocated generic competitive strategies in which he pointed out four analytical framework for understanding industries and competitors, and formulating an overall competitive strategies: cost leadership, differentiation, cost focus, and differentiation focus. I adopted his strategies to Rest Assured and broke each alternative down by elements of the marketing mix.
Figure 2: Rest Assured 's Alternatives by Marketing Mix
Alternatives/4P
Cost Leadership Strategy
Differentiation Strategy
Cost Focus Strategy
Differentiation Focus
Strategy
Products/Service
Focus on core marketable products that are hot-selling and highly profitable to reduce procurement cost by sourcing optimization with narrowing down suppliers Provide products made in a third country including
China
Offer custom-made service by taking advantage of high quality customer service by experienced employees Offer delivery service
Focus on core group of marketable products that are hot-selling and highly profitable to reduce procurement cost by sourcing optimization with narrowing down suppliers
Focus on high quality products Offer custom-made service by taking advantage of high quality customer service by experienced employees Offer delivery service and after-sales service
Price
Offer low-end products targeting people in local town, tourists on vacation, and retirees
Promotion
Place
Create a Facebook Page
Do nothing (same as and put out the information before) on it to reach the targets in outside of the town
Offer middle-end products Create a Facebook Page
Do nothing (same as targeting people in local and put out the information before) town, tourists on vacation, on it to reach the targets in and retirees outside of the town
Offer low to middle-end
Do nothing (same as products targeting people in before) local town
Offer high-end products targeting people in local town Management
Control employees ' salaries and working time for cutting cost
Control employees ' salaries to prevent from cost increases
Move to a smaller space
Do nothing (same as in a higher traffic area in the before) mall because there is no more large space for product line
Create a membership
Move to a smaller space
Improve employees ' website to increase in a higher traffic area in the satisfaction by paying them customer loyalty by issuing mall to catch people 's what he or she is worth to coupons and distributing e- attention more enhance customer service mail magazines
In Figure 3 below, I also describe each of potential risks.
CASE STUDY #2
Figure 3: Rest Assured 's Alternatives by Potential Risks
Alternatives/Risks
Cost Leadership Strategy
Differentiation Strategy
Cost Focus Strategy
Differentiation Focus Strategy
Potential Risks
Technology changes or external environmental changes
The store may give an opposite impression of current brand image to existing customers Competitors ' immitation
Employees ' satisfaction will keep or decline; however, if an employee leaves, the store won 't be able to offer high quality customer service, which is one of the biggest differentiators
Demand in the target segment disappear
The focus strategy is imitated
Demand in the target segment
disappear
Broadly-targeted competitors overwhelm the segment
Consequences
I assumed consequences along the business objectives by each case of strategy, and calculated contributions to overall desirability by making a risk profile, shown in Chapter 8 in
Hammond et. al. (1999).
Figure 4: Risk Profile for Rest Assured 's Competitive Strategy
Consequences
/Alternatives
Cost Leadership
Chance Desirability
Differentiation
Contribution Chance Desirability
Cost Focus
Contribution Chance Desirability
Differentiation Focus
Contribution Chance Desirability
Contribution
Business is broadly successful 15%
90
13.5
15%
90
13.5
0%
90
0
0%
90
0
Business is locally successful 30%
70
21
40%
70
28
70%
70
49
60%
70
42
Employee satisfaction is improving
0%
60
0
5%
60
3
30%
60
18
60%
60
36
Contribution to the country is achieving
0%
20
0
100%
20
20
100%
20
20
100%
20
20
Customer satisfaction is improving 30%
40
12
70%
40
28
40%
40
16
70%
40
28
Contribution to overall desirability 46.5
92.5
103
126
CASE STUDY #2
Recommended Alternatives
Figure 4 above shows, differentiation focus is the highest risk tolerance. In addition, I made a decision matrix by reference to Chapter 6 in Hammond et. al. (1999) shown by Figure 5 and 6 below.
Figure 5: Unweight Assessment of Ranking Alternatives
Consequences/Alternatives
Success of Business
Employee Satisfaction
Contribution to the Country
Customer Satisfaction
Total
Cost Leadership Differentiation Cost Focus Differentiation Focus
1
2
4
3
1
2
3
4
1
4
4
4
1
4 (tie)
2
4 (tie)
4
12
13
15
Figure 6: Weighted Assessment of Ranking Alternatives
Consequences/Alternatives
Success of Business
Employee Satisfaction
Contribution to the Country
Customer Satisfaction
Total
Cost Leadership Differentiation Cost Focus Differentiation Focus Weights
4
8
16
12
4
3
6
9
12
3
1
4
4
4
1
2
8 (tie)
4
8 (tie)
2
10
26
33
36
As a result, Differentiation focus resulted in maximum number as well.
Change Management Considerations
Rest Assured 's stakeholders are identified as the owner and his wife, three employees, customers, and community in the town. Among them, employees perhaps resist to change.
Therefore, employer has to see the link to the old way of doing things as Rogers, E. mentioned
(as cited in Maurer, R., 2010). For example, even if the number of products is reduced by the focus strategy, employees can recommend custom-made service to customers instead of a variety
CASE STUDY #2
of products as before. And another thing the owner should be careful is changes of external environment such as new technologies and new entrants, even the new strategy eventually runs its course. For such threats, they have to keep doing Time to Move On in the cycle of change
(Maurer, R., 2010).
CASE STUDY #2
References
⋅
Boone, L. E. & Kurtz, D. (2012). Principles of Contemporary Marketing, International
Edition (15th ed.). Stanford, CT: Cengage Learning. ISBN 0-538-48177-3
⋅
Hammond, J.S., Keeney, R.L., & Raiffa, H. (1999). Smart choices: A practical guide to making better decisions. Boston, MA: Harvard Business School Press. ISBN 0-7679-0886-04
⋅
Maurer, R. (2010). Beyond the Wall of Resistance: Why 70% of All Changes Still Fail--and
What You Can Do About It (2nd ed.) [Kindle Paperwhite 3G] Austin, TX: Bard Press. ASIN:
B0048EKJM8
⋅
Porter, M. E. (1998). Competitive Advantage: Creating and Sustaining Superior
Performance. New York, NY: Free Press. ISBN 0-684-84146-0
Case Study #2
Yuji Shimojo
BMGT 317
Instructor: Prof. Brandon L. Cohen
April 28, 2013
CASE STUDY #2
Introduction
This paper mainly discusses current business analysis of Rest Assured, consideration of four acceptable alternatives to solve the problems which Rest Assured has, and suggestion of one recommended solution to achieve the business objectives. Before considering alternatives, I organized the given information to analyze current business environment which Rest Assured is facing by using Marketing Mix and 3C 's model (Boone, L. E. & Kurtz, D., 2012) as shown by
Figure 1 below.
Figure 1: Rest Assured 's Current Business Environment
The town has 8,000 people.
It swells to double that size in the summer when families …show more content…
and retirees make their way to the coast to enjoy the beautiful
Pacific Ocean for a week or two.
Customer
Tourists pulled back on their beach vacations and retirees opted to stay at home for a while until the economy became more stable.
The past few months have shown some evidence of increased visitors to the town and to the mall, though potential customers don 't seem to be visiting Rest Assured as they have in the past.
The new store specializes in discounted house wares including discounted bedding materials.
Competitor
The store largely relies on synthetic bedding materials made by Chinese workers
It offers its products at significantly lower prices than the products offered by Rest Assured.
Rest Assured is a small retail business specializing in bedding and bedroom accessories: mattresses, comforters, blankets, pillows, sleep ware, and small decorator gift items for the bedroom.
The store’s goose down materials and high quality synthetic fabrics, along with its clear focus on customer service,
Product/Service have made the store a successful enterprise...until recently.
The store is owned by a husband and wife. It employs three full-time people, and the store owner and his wife fill in when employees are ill or off on vacation. One of the store employees has been with the store since it opened; one was hired five years ago; the third came on board as a replacement hire for a person who left the store two years ago.
The objectives are:
1. To achieve and sustain a profit level in the business that will help the owners fund their current lifestyles and prepare …show more content…
for their future retirement plans.
2. To provide fair and equitable treatment of employees by offering competitive pay and reasonable benefits in order to
Price
attract and retain the highest quality customer service employees for the store.
3. To offer Made-in-the-USA products as a way to express support for the country and its workers.
Corporation
4. To demonstrate respect and appreciation of customers by seeking to understand their needs, offer products at reasonable cost that meet those needs, and interact with them in ways that ensure their long-term satisfaction and loyalty as customers.
The store is advertised through the mall’s regular advertising programs. The owners of Rest Assured also purchase an
Promotion
ongoing ad that is run in the local movie theater in advance of the movies.
The store opened eight years ago within the only shopping mall located in a small coastal town in the Northwest.
The company leases space in a rear corridor of the local shopping mall, back from the area that gets the most mall traffic. Place
An advantage to their leased space is its large size that enables the store to display more of its product line than it would have if it leased one of the smaller spaces in a higher traffic area in the mall. It also costs less than spaces closer to the high traffic area.
About a year ago, sales began dropping off, and expenses began outpacing revenues. Even the Christmas season,
Management which is usually a tremendous boost to store sales, wasn’t enough to make up for the losses last year.
Rest Assured was dealt a major blow when the national economy slumped.
CASE STUDY #2
From the situation above, I defined the solving problem is how Rest Assured successfully recover from slumping business with achievement of its business objectives.
Alternatives
A famous American business school professor Porter, M. E. (1998) advocated generic competitive strategies in which he pointed out four analytical framework for understanding industries and competitors, and formulating an overall competitive strategies: cost leadership, differentiation, cost focus, and differentiation focus. I adopted his strategies to Rest Assured and broke each alternative down by elements of the marketing mix.
Figure 2: Rest Assured 's Alternatives by Marketing Mix
Alternatives/4P
Cost Leadership Strategy
Differentiation Strategy
Cost Focus Strategy
Differentiation Focus
Strategy
Products/Service
Focus on core marketable products that are hot-selling and highly profitable to reduce procurement cost by sourcing optimization with narrowing down suppliers Provide products made in a third country including
China
Offer custom-made service by taking advantage of high quality customer service by experienced employees Offer delivery service
Focus on core group of marketable products that are hot-selling and highly profitable to reduce procurement cost by sourcing optimization with narrowing down suppliers
Focus on high quality products Offer custom-made service by taking advantage of high quality customer service by experienced employees Offer delivery service and after-sales service
Price
Offer low-end products targeting people in local town, tourists on vacation, and retirees
Promotion
Place
Create a Facebook Page
Do nothing (same as and put out the information before) on it to reach the targets in outside of the town
Offer middle-end products Create a Facebook Page
Do nothing (same as targeting people in local and put out the information before) town, tourists on vacation, on it to reach the targets in and retirees outside of the town
Offer low to middle-end
Do nothing (same as products targeting people in before) local town
Offer high-end products targeting people in local town Management
Control employees ' salaries and working time for cutting cost
Control employees ' salaries to prevent from cost increases
Move to a smaller space
Do nothing (same as in a higher traffic area in the before) mall because there is no more large space for product line
Create a membership
Move to a smaller space
Improve employees ' website to increase in a higher traffic area in the satisfaction by paying them customer loyalty by issuing mall to catch people 's what he or she is worth to coupons and distributing e- attention more enhance customer service mail magazines
In Figure 3 below, I also describe each of potential risks.
CASE STUDY #2
Figure 3: Rest Assured 's Alternatives by Potential Risks
Alternatives/Risks
Cost Leadership Strategy
Differentiation Strategy
Cost Focus Strategy
Differentiation Focus Strategy
Potential Risks
Technology changes or external environmental changes
The store may give an opposite impression of current brand image to existing customers Competitors ' immitation
Employees ' satisfaction will keep or decline; however, if an employee leaves, the store won 't be able to offer high quality customer service, which is one of the biggest differentiators
Demand in the target segment disappear
The focus strategy is imitated
Demand in the target segment
disappear
Broadly-targeted competitors overwhelm the segment
Consequences
I assumed consequences along the business objectives by each case of strategy, and calculated contributions to overall desirability by making a risk profile, shown in Chapter 8 in
Hammond et. al. (1999).
Figure 4: Risk Profile for Rest Assured 's Competitive Strategy
Consequences
/Alternatives
Cost Leadership
Chance Desirability
Differentiation
Contribution Chance Desirability
Cost Focus
Contribution Chance Desirability
Differentiation Focus
Contribution Chance Desirability
Contribution
Business is broadly successful 15%
90
13.5
15%
90
13.5
0%
90
0
0%
90
0
Business is locally successful 30%
70
21
40%
70
28
70%
70
49
60%
70
42
Employee satisfaction is improving
0%
60
0
5%
60
3
30%
60
18
60%
60
36
Contribution to the country is achieving
0%
20
0
100%
20
20
100%
20
20
100%
20
20
Customer satisfaction is improving 30%
40
12
70%
40
28
40%
40
16
70%
40
28
Contribution to overall desirability 46.5
92.5
103
126
CASE STUDY #2
Recommended Alternatives
Figure 4 above shows, differentiation focus is the highest risk tolerance. In addition, I made a decision matrix by reference to Chapter 6 in Hammond et. al. (1999) shown by Figure 5 and 6 below.
Figure 5: Unweight Assessment of Ranking Alternatives
Consequences/Alternatives
Success of Business
Employee Satisfaction
Contribution to the Country
Customer Satisfaction
Total
Cost Leadership Differentiation Cost Focus Differentiation Focus
1
2
4
3
1
2
3
4
1
4
4
4
1
4 (tie)
2
4 (tie)
4
12
13
15
Figure 6: Weighted Assessment of Ranking Alternatives
Consequences/Alternatives
Success of Business
Employee Satisfaction
Contribution to the Country
Customer Satisfaction
Total
Cost Leadership Differentiation Cost Focus Differentiation Focus Weights
4
8
16
12
4
3
6
9
12
3
1
4
4
4
1
2
8 (tie)
4
8 (tie)
2
10
26
33
36
As a result, Differentiation focus resulted in maximum number as well.
Change Management Considerations
Rest Assured 's stakeholders are identified as the owner and his wife, three employees, customers, and community in the town. Among them, employees perhaps resist to change.
Therefore, employer has to see the link to the old way of doing things as Rogers, E. mentioned
(as cited in Maurer, R., 2010). For example, even if the number of products is reduced by the focus strategy, employees can recommend custom-made service to customers instead of a variety
CASE STUDY #2
of products as before. And another thing the owner should be careful is changes of external environment such as new technologies and new entrants, even the new strategy eventually runs its course. For such threats, they have to keep doing Time to Move On in the cycle of change
(Maurer, R., 2010).
CASE STUDY #2
References
⋅
Boone, L. E. & Kurtz, D. (2012). Principles of Contemporary Marketing, International
Edition (15th ed.). Stanford, CT: Cengage Learning. ISBN 0-538-48177-3
⋅
Hammond, J.S., Keeney, R.L., & Raiffa, H. (1999). Smart choices: A practical guide to making better decisions. Boston, MA: Harvard Business School Press. ISBN 0-7679-0886-04
⋅
Maurer, R. (2010). Beyond the Wall of Resistance: Why 70% of All Changes Still Fail--and
What You Can Do About It (2nd ed.) [Kindle Paperwhite 3G] Austin, TX: Bard Press. ASIN:
B0048EKJM8
⋅
Porter, M. E. (1998). Competitive Advantage: Creating and Sustaining Superior
Performance. New York, NY: Free Press. ISBN 0-684-84146-0