I. Statement of the Problem The problem was giving direction to Manson and Associates regarding which research should be completed within a period of time, to determine market potential of a Coors beer distributorship for a 2-county area in southern Delaware. II. Objectives of the Study This study seeks the following objectives: – to be able to understand the market potential of Coors Inc. through research – to determine which research data is/are relevant for the feasibility study of Coors Inc. – to know whether the decision of Larry to become a distributor of Coors Inc. is right – to understand the market potential of Coors Inc. n a distributor’s point of view III. Scopes and Limitations of the Study The study includes the current situation of Larry Brownlow, the nature of the company Coors Inc. , and the background of Manson and Associates. The study however, is limited with only secondary data being proposed by the Manson and Associates’ Research. This study has recommendations and points of view that are based from my own perspectives and thinking as a marketing student. IV. Nature of The Research A. Larry Brownlow Larry Brownlow, MBA had long ago decided to invest in a small, self-owned business as opposed to the corporate giants.
Since the Coors announcement of expansion in Delaware, where Larry resides, he thought that the timing has been just right since he will be receiving by the time he reaches 30 years old, a big amount of money held in trust for Larry from a family tragedy. Before Larry could decide whether or not to apply for the distributorship of Coors Inc, he must have analyzed the market potential of the company. Larry is now baffled with the idea of hiring a reliable research firm to provide him the relevant data on Coors Inc, market potential in Delaware.
Hiring Manson and Associates is costly that is why Larry needs to choose which relevant data should he want to analyze. B. Coors, Inc. Coors is the 4th-largest seller of beer. Some of the positive things about the company are the following: devotion to the quality of the products, caring about the environment, giving people something to believe in and its unwillingness to compromise on the high quality of its products. On the other hand, every business has its negative side and some of Coors are the following: insensitivity to minority issues primarily in employment and distribution and dependent.
Based from the information on the study, some of the expenses that a distributor must comprise are the following: refrigerator, constant refrigerating electricity and the aluminum can recycling equipment. C. Manson and Associates Manson and Associates is a well-known research industry that conducts feasibility studies and produces relevant data for its business-interested clients. Although the firm is a little costly, the quality of its research proposals is worth it. The firm is having a dilemma on which data to provide for Mr. Larry since they only have a limited period of time to do the research, the firm needs Mr.
Larry’s choice of data in 2 days so the firm can start its research. V. Areas of Consideration The areas to be considered upon pursuing this case study are the following: • the budget of 15,000 for research • the importance of sales and pricing • the population in the 2 county • the target market or the percentage of consumers • the effect on ROI • the expenses of being a distributor of Coors Inc. The budget of $15,000 for research is a part of the study that is really relevant since this is the only way to know which data must be processed and analyze for Mr.
Larry’s feasibility study of Coors Inc. Since Manson and Associates is a well known research industry not to mention the cost of its research proposals, Mr. Larry must know what are the most important data to pursue on the Manson’s research proposal that would be enough for the budget of $15,000. The importance of pricing and sales is another aspect to give consideration in making a decision on this case study. It is unquestionable that in every business, sales is significant because it informs entrepreneurs whether the business is still good or already in turmoil.
The pricing of products is another element since demographics are different in every area of the county where Mr. Larry plans to distribute the products. Not all may afford if Mr. Larry increases a little more amount on the suggested retail price. The population in the 2 county in Delaware is one area to be considered as well. Through the population data, Mr. Larry may be able to know how many would constitute to his target market if ever he would continue his decision on being a distributor.
The expected ROI and financials are the most important areas in any feasibility study because through this, business people will know whether they invested on the right enterprise. These areas (the financial perspectives) are likely to be the final check before making a decision. Mr. Larry must have a data on projected financial statements based on all the data that Manson would provide him. The cost of being a distributor is also an area to be considered. Mr. Larry must be able to know whether the cost is just enough or too much.
This area is also significant in decision making because there is an approximate amount that Mr. Larry is willing to invest on Coors Inc. If the expenses would be too much as opposed to the budgeted amount, then that would be a no for the decision. VI. Financial Analysis | |B&C |KEG |TOTAL | |Selling Price |$10 |$4. 50 | | |Cost of Goods per unit |7 |3. | | |Gross Margin |3 |1 | | |Contribution Margin (in percentage) |30% |22% | | | | | | | | | | | | |Fixed Cost |187,500 |625,000 | | |Divided by Contribution Margin |0. 3 |0. 2 | | |Break-even Sales |625,000 |284,090 |909,090 | |Divided by 12 |12 |12 | | |Monthly Break-even Sales |52,083 |23,675 | | | | | | | | | | | | |Break-even Sales | | |909,090 | |Total Investment | | |800,000 | |ROI | | |1,709,090 | | | | | | | | | | | |Target Sales (Break-even Sales/Total Break-even Sales*ROI) |1,175,000 |534,089 | | |Multiply by difference of Contribution Margin |0. 7 |0. 8 | | |Annual Target Sales |822,500 |416,589 |1,239,089 | |Divided by 12 |12 |12 |12 | |Monthly Sales |68,542 |34,716 |103,258 | |Estimated Monthly Inventory | | |240,000 | |Excess of Inventory in one month | | |-136,742 | VII. Alternative Courses of Action Upon examining and clearly understanding the situation of the case, I have 2 choices for Mr. Larry. First would be to let Manson do the extra work for his feasibility study. Before doing so, Mr. Larry must choose the following data on Manson’s Research Proposal: the data A (Delaware per Capita Beer Consumption for 1988-1992), data C (Coors Market Share Estimates for 1990-1995), data G (Consumer Study), and data H (Retailer Study). These data would sum up to $13,800. The other option would be Mr. Larry doing the estimates, the surveys, the consumer studies manually without hiring any research industry.
Larry must know the population of Delaware, the percentage of the population that will include his target market, the consumer behavior, the estimated or projected financial statements and the expenses in becoming a distributor. Some of which were started already by Mr. Larry, shown on the last pages of the case. VIII. SWOT Analysis A. 1st Alternative Corse of Action: To give the work to Manson and Associates with data A, C, G and H • Strengths – The research will be very reliable and convenient to analyze. – The research has quality in it – The research will be complete and accurately based on reliable information – It will be finished in less time. • Weaknesses – The research is costly. – The research will be limited according only to the ordered data. • Opportunities – Larry can have time to think without worrying too much with working on research. Larry can analyze the research without the hassles of making them. – A faster and easier decision would come up in no time. • Threats – There might be some errors on the research. – Larry might be adding more payment on the research if he thinks the research is lacking. – The data he’ll chose might not be enough to make a decision. B. 2nd Alternative Course of Action: To do the research manually all by himself • Strengths – It would not be as costly as the first alternative. – The research is not limited to 4 data or information. • Weaknesses – It is time consuming. – The research may not be accurate enough. – Most information are estimates only. Opportunities – Larry can work on whatever data he wishes to analyze. – Larry can save the $15,000 instead of spending it on research. • Threats – The research might have too much error. – The research might be too presuming and will become irrelevant. – Decision might be made too late. IX. Recommendation I recommend that Mr. Larry Brownlow must choose the first alternative course of action. Upon letting John Rome of Manson and Associates to do the job, he can have a more reliable research for his decision making. There are some of the data found on the research proposal by John Rome that are not relevant. These data include data B, D and I. lthough data F may somehow be significant, the cost would exceed the budget of $15,000. Besides, data F (Statement Studies) are not selected by any random or statistically reliable method and many companies have varied product lines. Therefore, the data is not really relevant. Through data A, C, G and H, Mr. Larry Brownlow can analyze if applying for a distributorship is a good idea. He will also have understanding if Coors Inc is the best investment for the consumers. He will be able to analyze if the products will click in the market and if he can have a quick ROI on his capital investment. X. Conclusion I therefore conclude that Mr. Larry Brownlow’s decision to apply for distributorship is a very good career choice.
If he has the right tools like all the information needed, he will be able to sense clearer the opportunities that Coors Inc will offer. I also understood that there is a great potential in the market since Coors Inc has been expanding. On the last page of the case, there are data made by Mr. Larry Brownlow that constitutes his estimates for the expenses and capital. Although the amount he estimated was 100% more of his trust money, the bank assures him that there is no problem in extending a line of credit on the order of $400,000. Therefore, Mr. Larry’s financial capability is not a matter of crisis. That is why a little spending on research would not be that bad.