市场学case 2-strategic planning and the marketing process

Company case 2 (strategic planning and the marketing process)

TRAP-EASE AMERICA: The Big Cheese of Mousetraps

One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She caused for a moment to contemplate the Ralph Waldo Emerson quote which she had framed and hung near her desk.

If a man [can] …… make a better mousetrap than his neighbor …… the world will make a beaten path to his door.

Perhaps, she mused, Emerson knew something that she didn’t. she had the better mousetrap – Trap-Ease --- but the world didn’t seem all that excited about it.

Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, this show had excited her. Each year, National Hardware Show officials held a contest to select the best new product introduced at the show. Of the more than 300 new products introduced at that year’s show, her mousetrap had won first place. Such notoriety was not new for the Trap-Ease mousetrap. People magazine had written about the mousetrap in an article, and numerous talk shows and trade publications had featured it. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

A group of investors who had obtained worldwide rights to market the innovative mousetrap had formed Trap-Ease America in January. In return for marketing rights, the group agreed to pay the inventor and patent holder, a retired rancher, a royalty fee for each trap sold. The group then hired Martha to serve as president and to develop and manage the Trap-Ease America organization.

The Trap-Ease, a simple yet clever device, is manufactured by a plastic firm under contract with Trap-Ease America. It consists of a square, plastic tube measuring about 6 inches long and 1 1/2 inches square. The tube bends in the middle at a 30 degree angle, so that when the front part of the tube rests on a flat surface, the other end is elevated. The elevated ends holds a removable cap into which the user places bait (cheese, dog food, or some other tidbit). A hinged door is attached to the front end of the tube. When the trap is “open”, this door rests on two narrow “stilts” attached to the two bottom corners of the door.

The trap works with simple efficiency. A mouse, smelling the bait, enters the tube through the open end. As it walks up the angled bottom toward the bait, its weight makes the elevated end of the trap drop downward. This elevates the open end, allowing the hinged door to swing closed, trapping the mouse. Small teeth on the ends of the stilts catch in a groove on the bottom of the trap, locking the door closed. The mouse can be disposed of live, or it can be left alone for a few hours to suffocate in the trap.

Martha felt the trap had many advantages for the consumer when compared with traditional spring-loaded traps or poisons. Consumers can use it safely and easily with no risk of catching their fingers while loading it. It poses no injury or poisoning threat to children or pets. Furthermore, with Trap-Ease, consumers can avoid the unpleasant “mess” they encounter with the violent spring-loaded traps – it creates no “clean-up” problem. Finally, the consumer can reuse the trap or simply throw it away.

Martha’s early research suggested that women are the best target market for the Trap-Ease. Men, it seems, are more willing to buy and use the traditional, spring-loaded trap. The targeted women, however, do not like the traditional trap. They often stay at home and take care of their children. Thus, they want a means of dealing with the mouse problem that avoids the unpleasantness and risks that the standard trap creates in the home.

To reach this target market, Martha decided to distribute Trap-Ease through national grocery, hardware, and drug chains such as Safeway, Kmart, Hechingers, and CB Drug. She told the trap directly to these large retailers, avoiding any wholesalers or other middlemen.

The traps sold in packages of two, with a suggested retail price of $2.49. although this price make the Trap-Ease about five to ten times more expensive than smaller, standard traps, consumers appeared to offer little initial price resistance. The manufacturing cost for the Trap-Ease, including freight and packaging costs, was about 31 cents per unit. The company paid an additional 8.2 cents per unit in royalty fees. Martha priced the traps to retailers at 99 cents per unit and estimated that, after sales and volume discounts, Trap-Ease would realize net revenues from retailers of 75 cents per unit.

To promote the product, Martha had budgeted approximately $60,000 for the first year. She planned to use $50,000 of this amount for travel costs to visit trade shows and to make sales calls on retailers. She would use the remaining $10,000 for advertising. So far, however, because the mousetrap had generated so much publicity, she had not felt that she needed to do much advertising. Still, she had placed advertising in Good Housekeeping and in other “home and shelter” magazines. Martha was the company’s only “salesperson”, but she intended to hire more salespeople soon.

Martha had initially forecasted Trap-Ease’s first-year sales at five million units. Through April, however, the company had sold only several hundred thousand units. Martha wondered if most new products got off to such a slow start, or she was doing something wrong. She had detected some problems although none seemed overly serious. For one, there had not been enough repeat buying. For another, she had noted that many of the retailers on whom she called kept their sample mousetraps on their desks as conversation pieces – she wanted the traps to be used and demonstrated. Martha wondered if consumers were also buying the traps as novelties rather than as solutions to their mouse problems.

Martha knew that the investors group believed that Trap-Ease America had a “once-in-a-lifetime chance” with its innovative mousetrap. She sensed the group’s impatience. She had budgeted approximately $250,000 in administrative and fixed costs for the first year (not including marketing costs). To keep the investors happy, the company needed to sell enough traps to cover those costs and make a reasonable profit.

In these first few months, Martha had learned that marketing a new product is not an easy task. For example, one national retailer had placed a large order with instructions that the order was to be delivered to the loading dock at one of its warehouses between 1:00 and 3:00 P.M. on a specified day. When the truck delivering the order had arrived late, the retailer had refused to accept the shipment. The retailer had told Martha it would be a year before she got another chance. Perhaps, Martha thought, she should send the retailer and other consumers a copy of Emerson’s famous quote.

Discussed questions

1. Martha and the Trap-Ease America Investors feel they face a once-in-a-lifetime opportunity. What information do they need to evaluate this opportunity? How do you think the group would write its mission statement? How would you write it?

2. Has Martha identified the best target market for Trap-Ease? What other market segments might the firm target?

3. How had the company positioned the Trap-Ease relative to the chosen target market? Could it position the product in other ways?

4. Describe the current marketing mix for Trap-Ease. Do you see any problems with this mix?

5. Who is Trap-Ease America’s competition?

6. How would you change Trap-Ease’s marketing strategy? What kinds of control procedures would you establish for this strategy?

Discussed questions

1. Martha and the investors in Trap-Ease seem to face a “once-in-a-lifetime” opportunity. “What information do they need to evaluate this opportunity?” What do you think the investor group would write as its “mission statement?”

The case paints a very typical picture of a group of businesspeople who believe they have an outstanding product that will be readily accepted by the market. There is little evidence in the case that the investors have done any real thinking about customer needs or have followed the marketing concept as it is introduced in the chapter. The investors believe they have a mousetrap which will satisfy customer needs and, therefore, customers will buy it. Students needs to realize that even though a firm may have an excellent product, it needs to understand customers’ needs and how they respond to those needs. There is no indication in the case that the investor group has any marketing information about its potential customers or has done any real marketing research. The investors would need to know the size of the mousetrap market in the United States. Who buys mousetraps? What kinds do they buy? What prices are charged for the various kinds of mousetraps? How are these mousetraps sold to consumers? What customer needs to do existing mousetraps solve, and which needs do they fail to solve adequately? How do consumers deal with their mice and rate problems? Answers to these and other “marketing research” types of questions would give the investors a better feel for the challenges facing them in marketing the mousetrap.

However, like many new, small businesses, the investors would write a mission statement which focused on making money for themselves. Their statement might be, “Make a lot of money by selling a patented mousetrap.” Discussing this with the class will allow the instructor to raise the oft-repeated slogan, “maximize shareholder wealth.” Proponents of the marketing concept might well argue that making money is not the goal of the firm. Rather, if one follows the marketing concept, the goal of the firm must be first to satisfy the firm’s customers and to do that better than the competition. Only then does a firm have the opportunity to “make money.”

2. Who is identified as Trap-Ease’s target market? Are there other possible market segments that the firm could target?

The case indicates that Trap-Ease is targeting housewives, and implies that housewives are reluctant to set and bait traditional spring-loaded mousetraps. They also are concerned about the safety of children and pets who may be around the home because once the spring-loaded trap has caught a mouse, one often has a mess resulting from its action. Besides being unpleasant, the mess presents health concerns due to the diseases which may be carried by mice.

There are a number of other market segments that the firm could target. The issue of disease control suggests several other potential targets. First, the instructor might ask students where disease control concerns would be important. Any business that handles or stores food and, therefore, is attractive to rats and mice, would be a potential target. Restaurants should come to mind here both because of the presence of food and food products and also because these establishments cannot use chemicals near food. This also should suggest food wholesalers or warehouses where large quantities of food may be stored in the channel of distribution. Food manufacturers also need rodent protection.

Another potential market is research laboratories. Here, researchers use large numbers of mice in research projects. It is not unreasonable to think that some of these mice occasionally get loose. A researcher would be interested in the ability to recapture a mouse without harming it – something that the researcher would be able to do with the Trap-Ease.

Another potential target market is exterminators. Because they must work in areas where chemicals would not be allowed and traditional traps would have the same messiness problem, these companies might be a target market. These exterminator companies might also sell the traps directly to consumers with whom they deal. This possibility will allow the instructor to talk about channels of distribution and the impact of Trap-Ease’s decision to go directly to the end customer.

3. How is the product positioned relative to the selected target market in the case? Are there other ways to position the product?

As suggested in the answer to question 2, Trap-Ease has been positioned from the point of view of the customer as meeting safety and cleanliness needs. Because of its pricing and distribution, Trap-Ease is positioned for use by the individual homeowner who has these concerns.

The major alternative positioning for the product focuses on its ability to control disease. Because the mouse would be trapped in a fully enclosed device and would be captured live, there is little opportunity for disease to spread as a result of its capture. It should be noted, however, that positioning the product this way would make substantial differences in the entire marketing strategy. This allows the instructor to make the point that will be reinforced throughout the semester that the full marketing mix must be coordinated to position the product properly in the customer’s mind.

4. What marketing mix has Trap-Ease established? Do you see any problems with this mix?

In summary, Trap-Ease marketing mix is as follows:

Product: as noted above, Trap-Ease is a patented mousetrap that is designed to allow consumers to avoid the safety and cleanliness problems associated with traditional mousetraps.

Perhaps by this point in the discussion someone will have already suggested one of the obvious problems with this product. That is, what does one do with a live mouse caught inside the trap? The inventor had designed the product to capture the mouse alive and to suffocate it over a period of several hours. However, this presents a problem for the user. If the consumer discovers the trap has worked while the mouse is still alive, he must pick up a trap containing a live muse that may be squirming and squealing. Then, what does the consumer do with the mouse? It might be flushed down the toilet or let out in the woods, if one lives near woods. However, we might wonder if the target market, housewives, will be comfortable carrying the trap containing the live mouse and then opening the door to let it out. Later market research revealed that few people felt comfortable in this situation.

On the other hand, if the consumer allows the mouse to simply suffocate in the trap, he will find that mice, like most animals, do not die quietly. You can imagine the trap bouncing around under a sink like a large Mexican jumping bean as the mouse tries to free itself. Experience indicated that the mouse also made a lot of noise prior to suffocating. The targeted housewife may find herself presented with the dilemma of how suffocating. Thus, while the trap works well to catch a mouse, it fails to deal with the problem of what does one do with the mouse.

Price: the price of approximately $1.25 per trap, when sold in packages of two, also creates a problem in that it is five to ten times more expensive than traditional traps. This problem is complicated by the fact that if consumers have significant mouse problems, they would need a number of traps to address the problem. Or, if they decide to simply throw away traps that contain mice to solve the disposal problem, the cost could again become prohibitive.

Place: Martha House has made the decision to distribute the products directly to national chains. Although on one hand this decision makes sense given the company’s desire to achieve rapid sales growth, it creates problems for the company due to its small size. As noted in the example which concludes the case, the company does not have its own truck and distribution facilities. It must depend on outside firms to deliver its product. Because national chains have very strict time schedules, this makes it difficult for Trap-Ease to control its distribution.

Promotion: Trap-Ease is relying basically on appearances at trade shows and some limited advertising. In fact, it is relying on word-of-mouth advertising. Primarily, the firm depends on point-of-purchase displays to sell its product. One might wonder, however, how quickly consumers passing point-of-purchase displays for the product will understand it. Further, the firms is dependent on whatever advertising the chains may do to generate end-customer awareness. Even early in the semester, students should understand that generating such awareness is extremely expensive and difficult. It is not clear that Trap-Ease has adequate resources to do significant advertising aimed at end-consumers, and it is not clear that the chains will devote sufficient resources to advertising the product.

All of these marketing mix problems should suggest that Trap-Ease has a number of significant hurdles to address if it is going to improve its performance.

5. Who is Trap-Ease’s competition?

Even though Trap-Ease has a patent on its mousetrap, it does have competition. Students may tend to think that with a patent a firm is protected from competition. Obviously, the traditional, spring-loaded trap is competition. Although the Trap-Ease trap has significant advantages, its price means that for many low-income consumers who probably have more mice problems, Trap-Ease is too expensive. Consumers who have better incomes and who may not be excited about dealing with dead or live mice will probably simply turn to exterminators to take care of their problems. While exterminators are more expensive, the benefits of having someone else take care of this unpleasant problem will be attractive to many consumers. Thus Trap-Ease finds itself with competition both above and below it relative to price. This competition significantly reduces the size of the target market.

6. How would you change Trap-Ease marketing strategy? What kinds of control procedures would you establish in connection with this strategy?

There are, of course, numerous possibilities which students might suggest. Many students will focus on trying to make specific changes to elements of the established market mix. For example, some students may suggest that by lowering price the Trap-Ease trap will become more competitive with traditional traps and be more attractive to consumers. However, any attempt to manipulate the existing marketing mix allows the instructor to make the point that the marketing mix should flow from the target market. At this point, having discussed previous questions, it should clear to students that there is some question about the size and viability of the selected target market. In fact, there may not be a real market given the product’s positioning – at least not a market which is big enough to support the firm and reach the investor’s goals.

To revise the firm’s marketing strategy, the firm needs to begin by thinking about its target markt selection. First the student could suggest that the product has been positioned improperly. While health and cleanliness concerns are of interest to consumers, the other aspects of the marketing mix make the product unattractive. However, the disease control apects of the product are important. It would be possible to reposition the product for disease control purposes and to select the industrial/institutional target market. Thus, the target marekt would become food manufacturers, wholesalers, and others who store quantities of food that are subject to rat infestation and also restaurants and other institutions where food may be handled and where poisons and other rat control measures may be inappropriate.

Whith respect to the marketing mix for this new target market, the firm needs to develop larger sizes of the trap. Some of the potential customers will have large rats with which to deal. These firms will also often have maintenance employees who will not be squeamish about dealing with and disposing of rats that are caught in such traps.

With respect to price for this new strategy, there is really no information in the case to allow the instructor to figure what the price might be. We can imagine that, in connection with the place decision, the firm might decide to deal directly with larger exterminating companies or food wholesaling chains. The company will probably find itself in a negotiation situation as it has with the large retail chains. This will make it important that the firm understand its costs and be able to figure what prices it can agree to that will allow it to make an adequate profit.

With respect to place, the firm will be required to continue to sell to a limited number of customers due to the lack of any real sales force. This would imply that it will have to sell to food wholesalers or exteminating companies themsevlves unless it can find a distributor who caters to these kinds of operations. Looking for distributors who could handle some or all of the sales effort would be appropriate given the firm’s limited resources. This may put additional pressures on margins, but the firm will have to evaluate accepting smaller margins versus absorbing the cost of improving its own distribution system.

The new strategy would continue to imply a trade promotion strategy. Appearing at trade shows for food wholesalers or exterminators would be a first step, and one with which the firm is familiar. This strategy avoids the necessity for having to pursue expensive media options for developing end-customers retail demand. Advertising in trade magazines should help bring the product to the attention of targeted customers. Further, if the firm is successful in selling to exterminators, they will become its salesforce.

As to control procedures, the process of revising the marketing strategy allows one to ask the students how they will monitor their progress. In the case, Martha has no connection with the end-customer. She is dealing with buyers for the large retail chains. She is not sure who is buying the mousetrap or why or how they are using it. A first control procedure for any strategy then is to identify the target market and establish mechanisms to monitor the target’s use of and satisfaction with the product. Chapter 4, marketing Research and Information Systems, will introduce students to techniques which might be used by Trap-Ease to evaluate the success of the strategy.

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