university marketing case study to market flying discs in mexico

1. International Marketing
Marketing Flying Discs In Mexico
Ross Larsen
Steve Cassidy
Joanna Papageorgiou
Michelle Clarke
James Greaves
Joseph Lin

2. Background
Three Associates
 Roger Blake (Frisbee Association)
 Jose Gutierez (VP of Bank)
 Eloise Dunn (Marketing Consultant)
Ex-O Corporation
 Major U.S. flying disc manufacturer
 Owns rights to the product

3. Background
Alejandro Garcia
 Purchased 4 flying disc molds 6 yrs. ago
 Did not fulfill contract obligations with
Ex-O corp.
 Still possess the 4 molds
No one else in Mexico produces
flying discs

4. Background
• Potential Market Entry obtained by
Jose Gutierez
• Comercial Mexicana
(26 Locations, Nationwide)
• Tiendas Aurerra
(45 Locations, Central Mexico)
• Puerto de Liverpool
(4 Locations, Mexico City)

5. Main Case Questions
• Should we buy the molds from
Garcia?
• Should we buy Ex-O rights to their
discs?
• Should the introduction only be in
Mexico City or throughout Mexico?

6. Additional
Substantive Issues
• What are the distribution channels
to be used?
• What are the pricing strategies to
be implemented?
• Which flying discs are we going to
manufacture? Why?

7. Additional
Substantive Issues
4. What advertising strategies will be
used? Why?
3. How can we satisfy Ex-O Corp’s
request for a detailed marketing
strategy?
5. Can the three associates establish
the necessary contacts to
successfully launch the product?

8. S.W.O.T. Analysis
Strengths
 No direct competitors in target marketplace
 Popularity of sport growing worldwide
 Name brand “Ex-O”
Weaknesses
Customer awareness is low
Projected retail sales may not meet
expectations

9. S.W.O.T. Analysis
Opportunities
 Mexican market untapped
 Cheap production costs
 High volume of foreign tourists
Threats
Disc product could be pirated
Competition (Whamm-O Corp.) could
move into the market

10. Solution
Purchase four molds from Alejandro
Garcia for production
Set up licensing/royalty agreement
with Ex-O Corporation
Market throughout Mexico instead of
just Mexico City

11. Solution
Hire a home country broker (firm)
with established distribution
channels and networks
Gain entry into 5,000 retail outlets
for product launch within 4 months
Promotional plan to align with the
product launch

12. Implementation
Obtain necessary financing
Present Ex-O Corporation with our
marketing strategy
Set up licensing/royalty agreement
with Ex-O Corporation

13. Implementation
Set up legal agreements with the manufacturer
Projected production for first year is 600,000
discs
 $.30 Production + $.10 Packaging = $.40
 600,000 x $.40 = $240,000 U.S.
375,000 discs produced over 3 months, needed
for start-up based on average retail
requirements (75 discs per outlet)

14. Fixed Expenses
Manufacturing ($.30 per disc)
Packaging ($.10 per disc)
Broker Fees ($.30 per disc)
Royalty Fees (5% of gross sales)
 Industry Average
Molds Purchase ($4,000)

15. Advertising Expense
Allocated $.40 per disc towards ad.
Expense
Newspaper (Esto – Sports Paper)
 ¼ page twice weekly (Friday & Saturday)
 ½ page once a week (Sunday)
 Projected Annual Cost - $29,380

16. Advertising Expense
Television
 Introduction period (2 months)
4 ads per day (A time – 240 ads total)
 Months 3 and 4
3 ads per day (A time – 180 ads total)
 Months 5 thru 12
35 ads per month (A time – 280 ads total)
Projected Annual Cost - $210,000

17. Pricing
Our cost per unit = $1.10 per disc
Selling price to retailer = $2.50 per disc
Suggested retail mark up 50% = $3.75
$1.40 per disc gross profit before taxes
and royalty

18. Pricing Strategy
Market controlled pricing
environment with sales based
objectives
Such as high volume and market
share
$2.25 $3.75 $4.50

19. Annual Financial
Forecast
Production Materials $180,000
Advertising $240,000
Broker Fees $180,000
Packaging $ 60,000
Annual Total $660,000

20. Annual Financial
Forecast
600,000 x $2.50 = $1,500,000
600,000 – Total Production
$2.50 – Selling Price To Retailer

21. Annual Financial
Forecast
Gross Sales $1,500,000
Production & Promo Costs $ 660,000
Molds Purchase $ 4,000
Ex-O Corp. Royalty Fees $ 75,000
Profit Before Taxes $ 761,000
Taxes (30%) $ 228,000
Net Income $ 533, 000

22. Future Outlook
Introduce the Pro Model within
6-8 months.
Export the flying discs to
Europe, South America, and
Central America

23. Thank you
Any Questions???