*Not affiliated with the company GU. This was completed only for classroom teaching purposes, and is in no way indicative of GU or its business.*
A group project created for the course MGMT 42300: New Product Development at Purdue University in the Spring of 2018. A final report outlining findings from a semester-long product development research project.
3. 3
EXECUTIVE SUMMARY
A little over 25 years ago, Bill Vaughan created his first endurance gel for his daughter, a
marathon runner who was upset with the sports nutritional products on the market. The
market for endurance foods in the 1990s consisted of protein bars and other dry foods that
left athletes with less than ideal side effects when consumed during their workout or event.
And thus, GU Energy Labs was born, creating gooey energy gels to combat the dry
products on the market.
GU is a company dedicated to exploring new research and expanding into new product
lines and varieties, as long as those explorations lead back to their roots of giving our
bodies what they need, when they need it, as quickly and easily as possible. The company
culture is centered around knowing that the journey is more important than the finish line,
and it is that culture that pushes their continuous research.
The Vitamin and Manufacturing industry in the United States is seeing an increase in
demand due to the increase in health consciousness amongst the general public, an
increase in disposable income since the end of the recession, and an increased interested
in participating in sports. The logical question then is, what’s next for a company dedicated
to creating the best products for our bodies? An all-natural alternative to its tried and true
energy gel.
By expanding on the growing interest in healthy living and staying in check with the desire
to provide athletes with the best fuel possible, GU Energy Labs has decided to move
forward with the product launch of GU Natural.
GU Natural is an all-organic, natural preservative endurance gel
with better ingredients, better flavor, and better results when
consumed during activity.
GU Natural’s product launch will be a Strawberry Honey flavored endurance gel made of
all-natural ingredients. Through concept and prototype testing, the product launch team
has decided on a price of $1.60 per 1.1 ounce packet. The product launch will be released
through GU’s normal distribution channels; both in-store (at specialty sports stores) and
online (GU’s website). Promotion will occur through print advertising, social media, & in-
store promotions. Before launch, more testing will need to be completed to ensure taste
and effectiveness of product are up to GU’s standards.
4. 4
INTRODUCTION
The industry GU Energy falls into is Vitamin and Supplement Manufacturing in the US,
specifically a group within that industry referred to as sports nutrition products. This
industry is responsible for other products as well, such as vitamins and minerals, herbal
and botanical products, protein powder, and meal replacements and weight-loss products.
GU Energy Labs is a company located in Berkeley, California that produces and sells
performance sports nutrition products. Their most notable product is an energy gel,
designed to be eaten during endurance events such as marathons. The gooey energy gels
created by GU have carbohydrates, amino acids, electrolytes, and in some cases caffeine,
intended to increase the endurance of athletes. GU also produces energy chews (GU
Chomps) and energy drink mixes (GU Brews).
GU Energy’s product launch team has decided to pursue a product line extension within
the energy gel product line called GU Natural. The target market for this new product is
health conscious athletic people between the ages of 18 and 54. GU Natural is made of
only three ingredients; organic honey, coconut milk, and flavoring from the extract of your
choice. GU Natural originally tested flavoring with vanilla extract, but that proved to be too
sweet when mixed with the honey. Thus, the decided-on flavor for product launch is
Strawberry Honey. GU Natural will be positioned to provide athletes quick and long-lasting
energy during the run or workout. Since it is made from natural ingredients, one of the
main competitors would be Huma and their non-caffeinated energy gels. Another major
competitor would be CLIF’s naturally ingredient-filled vanilla flavored Shot Energy Gel.
The product launch team conducted two concept tests and a prototype test to examine
our customer’s purchase intent, willingness to pay, and product feedback for GU Natural.
We collected the responses from students who were visiting the CoRec, MGMT 423
classmates, friends, and family. After analyzing the responses and forecasting the sales,
our team concluded that GU Natural is a viable product launch as a product line extension
for GU Energy.
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CONCEPT TESTING
Concept Test 1 - CoRec
Since the target market of GU Natural is health conscious athletes and runners, we
conducted our concept test at the main lobby of Purdue’s CoRec. This concept test served
the purpose of uncovering previous knowledge about endurance gels and related
products, previous product trial in the market, preference for organic versus chemically
processed foods, and purchase intent and willingness to pay for our product line
extension. Unfortunately, we did not manage to receive enough respondents who were
willing to fill out our survey. We only received a total of 12 responses from the CoRec.
Therefore, we decided to create an online survey where we distributed to our friends,
family, and peers. The online survey was also updated with more specific questions to
retrieve more useful data about GU Natural.
For data on results of Concept Test 1, refer Appendix 1.
Concept Test 2 – Google Forms
Our online survey saw a total of 107 responses. We targeted our online survey towards
athletes or individuals who exercise regularly. Questions in the improved concept testing
survey including previous knowledge of similar products, average amount of exercise per
week, whether the respondent self-identified as an athlete, previous product trials,
preferences toward organic or chemically processed foods, willingness to try an all-organic
performance enhancing food, important factors when making purchase decisions, and of
course, willingness to pay and purchase intent.
One of our questions was about how individuals feel about the presence of chemically
processed ingredients in performance enhancing or other related health foods, and 62.6%
of the respondents wished there were less or no chemically processed ingredients. Since
GU Natural is positioned as an all-organic endurance gel, having a majority of respondents
looking for all-organic or more natural products is a step in the right direction. This majority
also means that we already have a potential customer base upon launch. Additionally,
65.4% of the respondents were willing to choose an organic substitute for performance
enhancing foods if the same results can be achieved through the product usage. This
finding solidifies our decision to move forward with GU Natural as it supports our product
positioning and shows that if our marketing can inform audiences of the same effects being
achieved, more people should be willing to try our product. Even though only 37.4% of our
6. 6
respondents stated that they were willing to try our product, we still believe that there is a
potential market for this product because of the potential consumers behavior towards
organic products. Our concept test was not strictly targeting athletes who participate in
endurance activities, nor did it include a majority of individuals who already consume
performance enhancing foods already. With a more accurate sample for concept testing,
the purchase intent would likely be much higher.
Another noteworthy finding was that 21.5% of the respondents were willing to pay more
than $2 per serving of performance enhancing or other healthy food. GU Natural is
estimated to launch at a price of $1.60 per packet. Therefore, our potential customers are
willing to pay more than the price that we are setting for our product, which could stimulate
additional product trials. Since their willingness to pay is higher, we can still increase the
price of our product to gain more profit, if we choose to do so in the future. After carrying
out our concept test and receiving overall positive feedback, our findings support the
recommendation to move forward with the product launch for GU Natural. The only
additional recommendation from our concept testing is to continue research in the exact
target market for GU Natural to gain a better picture of purchase intent.
For data on results of Concept Test 2, refer Appendix 2.
PROTOTYPE TESTING
The prototype test developed by our team was modeled after the concept test. The
intention of this design move was to keep consistent with our data, and to compare our
results from individuals who had heard the product described to them and those that had
tested the taste and consistency of the product.
The test itself was a simple taste test. There were two flavor prototypes developed and
brought in for individuals to sample. The reason for multiple flavors was to test if there was
a better flavor and if variety helped influence how others perceived our product. It also
gave a comparison of whether the honey or extract was too powerful or not. Once the
respondents had tasted each flavor, they were asked to fill out a survey.
This survey had similar questions to the concept test, with minor variations. These changes
were based around the difference between theoretically pitching a product and allowing
consumers to taste the product. It still has some of the original questions, which are used
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to help segment the responses that would be used to filter out those not in our target
market. The question used to segment our results is number 5 in Appendix 1.
This prototype test returned 17 responses, which is considered a small sample size, and
may not be highly representative of the population of our market. This is okay, as it was
just the first of what could be multiple similar tests. The results of each question can be
found in Appendix 3, but we want to draw particular attention to three questions.
When asked if there was a preference for organic substitutes, 58.8% said yes, showing
there is a potential market. When asked if they liked the flavor, 62.5% said yes, however,
when asked if any flavor was overpowering, a majority of respondents said at least one of
the three flavors was too strong. This shows our product has potential but will need more
experimenting to be perfect. Due to this need for improvement, we believe that our price
determined from the prototype test, $1.13, may be skewed and as such will not be
considered in its present form, until the formula has been corrected. For the current report,
our concept test will be used to determine the price.
Overall, our prototype test, though consisting of a small sample size, provided beneficial
results for our team to draw conclusions from. In conjunction with our concept test, we
have been able to move forward with the construction of a well-informed marketing
strategy and marketing mix.
For an overview of all prototype questions and results, refer to Appendix 3.
MARKETING STRATEGY
Target Market
Our initial target market, was younger athletes who are health conscious. Our team
believed that they would be a good target market for their active lifestyles and desire to
ingest less chemically processed foods. However, upon conducting our online concept
test, we noticed that individuals from all age brackets were showing interest in an all-
organic product. These age brackets, spanning from the 18-24 range to the 65+ range,
showed positive views of our product as a substitute to what they currently use/what is
currently offered on the market. Due to this, we changed our target market to include
individuals in multiple age brackets, deciding on health-conscious athletes aged 18-54.
8. 8
Positioning
Our product is an all-organic, natural preservative endurance gel made with better
ingredients, better flavor, and better results when consumed during workout. Although this
is a great description of our product, it is a mouthful and as such, will not be our positioning
statement. It is a basis to build upon. As a line extension for GU Energy products, which
typically uses “GU For It” as a branding tagline, we wanted to keep consistent with some
of the other positioning statements. Due to this, our product positioning is “Natural Energy
for Supernatural Performance.” This is short, sweet, distinct, and ties in the all-
natural/organic aspect of the product with the performance enhancement aspect.
MARKETING MIX
Product
The product is an all-organic, natural preservative endurance gel. More specifically, it is
made almost entirely from all-organic honey. There are two other ingredients; coconut milk
and an extract for flavoring. By making the product almost entirely of honey, it is comprised
of almost all simple sugars. Simple sugars are the key to this product as they are absorbed
almost immediately after consumption. The problem with serving just honey is its
consistency. If straight honey is put into a packet, it would be too thick for a majority of
individuals. This notion is where the idea of thinning it out with, first water, and later
coconut milk originated. Coconut milk thins out the gel without compromising the flavor.
Expanding on flavor, using extracts will allow there to be a great variety in available flavors
without making major changes to the recipe. Our initial product launch will be Strawberry
Honey flavored, but there are ample flavor opportunities for additional variation.
Place
GU Energy, being a well-established organization, has its own distribution channels
already set in place. They primarily sell in athletic based stores and online. These athletic
stores are typically designed with specific sports in mind. Stores such as Fleet Feet and
Road Runner are targeting runners and triathletes who will be focusing on distance and
endurance challenges, whereas Mike’s Bikes may be focusing on cyclists. In all cases,
however, performance enhancing food products are a viable option for the consumers,
and are sold on shelves in-store. Online based sales are primarily sold through the GU
Energy website and other retailers, such as Amazon. These allow for the product to be
sold directly from the warehouse that they be stored in, which increases the “foot traffic”
9. 9
of the product. GU Natural will utilize both of these distribution channels to enter into the
market with the maximum possible impact in mind.
Promotion
GU Energy currently has its own promotional material, which can be found online. This is
in the form of print advertisements, television ads, social media publicity and
advertisements, in-store promotions and more. Something unique about GU is that they
allow individuals to see some of their marketing materials and enable users to download
the content. Due to this, we have created both a print advertisement, but also our own logo
and final product. We have kept these consistent with GU Energy’s current means of
packaging and branding, which will be discussed more in depth in that section of the
report. Utilizing the already established means of promoting GU’s products, our team
intends to promote the new product online, in television, and in print advertisements.
For all branding executions, refer to Appendices 4-6.
Price
The price for an individual packet of GU Natural, with a weight of 1.1 ounces, will be $1.60.
This value is heavily dependent upon our concept test and the research done on the
closest competitor, Huma Gel. The concept test, as was mentioned earlier, showed an
overwhelming amount of interest in this product, and a willingness to pay higher prices to
try this product, which can be seen in Appendix 2. As such, we believe that $1.60 per
packet is not an unreasonable price. It is also less, per ounce, than our closest all-organic
competitor, ensuring we can compete on price. To guarantee that our price is as low as
possible, we have decided to produce these packets at the highest batch size per
ingredients purchased. To see more details on this, refer to Appendix 9.
BRANDING
Brand Name
The brand name GU Natural is purposely a minor change to the original company name of
GU Energy. Seeing as our GU Natural product is a product line extension for the parent
company, it will benefit our product to be associated with the known company name. The
addition of the word “natural” to the product name is to signify the organic nature of the
product, and hopefully appeal to health-conscious athletes in our target market.
10. 10
Logo Design
The logo design of GU Natural also piggybacks off of the GU Energy original logo, in the
same way that the brand names are associated. For the same reason as listed above, we
hope to gain immediate familiarity with our target audience because of our ties to the
parent company GU. For that reason, the GU Natural logo is almost identical to the GU
logo, except it includes the differentiation of “natural” and has a leaf icon. The lead icon is
supposed to signify the organic nature of the product in the same way that including
“natural” in the brand name does.
Packaging
The packaging of the GU Natural endurance gel will be the same as GU currently uses for
their traditional energy gels, with minor aesthetic changes for differentiation. The package
is a 1.1 oz packet that includes the logo, the product flavor, the calories included, and basic
nutritional information, and colors that coincide with the flavor of the product. Our
packaging will be very similar. GU Natural’s product packaging will have the GU Natural
logo, colors matching the flavor printed on the package (for our product launch, strawberry
honey), and information about the simple sugars and amino acids.
For examples of all branding executions, refer to Appendices 4-6.
COMPETITOR ANALYSIS
Huma Gel
Huma Gel is a veteran-owned company that officially started in 2012 by two young grad-
school students who were interested in making great-tasting energy gels for athletes. The
company creates 100% all-natural energy gels with flavors such as Cinnamon, Blueberries,
Chocolate, Lemonade, Apples and more. Their energy gels aim to provide an alternative
fuel source so that the glycogen of athletes lasts longer and have better endurance. This
is very similar to GU’s mission, which is to create energy gels that help increase endurance,
provide optimum hydration and effective recovery to the athletes that consume them. The
most essential ingredient in Huma’s energy gel is chia seeds. Chia seeds serve as a major
source of energy for the body, but it takes a longer time for the absorb it because they are
molecularly more complex. Thus, the product would be more effective during post
workout. On the other hand, the GU Natural gel will be more suitable to consume during
workouts because honey is one of the main ingredients and it is easier for the body to
11. 11
absorb. Not forgetting, Huma produces non-caffeinated energy gels and the average price
is $2.30 for 1.5oz packet, which is $1.53/oz. The GU Natural energy gel is also non-
caffeinated, and the average price is $1.60 for 1.1oz packet, which is $1.31/oz. Huma’s
products are being advertised on social media and their own website. The products can
be purchased at Walmart, Amazon, and through their website. The company is still steadily
growing and has invested advertising on social media and their website. Since the target
market, product positioning and prices from both companies are similar, we consider
Huma as our main competitor.
CLIF
CLIF is an American company started in 1992, and known for making energy bars, protein
drinks, and energy gels. They have been focusing on producing organic drinks and foods.
Currently, they have multiple flavors for their energy gels such as citrus, mocha, razz,
strawberry, and vanilla. The product positioning for the CLIF energy gels is to provide
athletes quick energy and recovery during racing and training. This positioning similarly
aligns to our product as well because our product allows easy absorption in the body and
provide athletes the endurance. Specifically, we would be competing against CLIF’s Shot
Energy Gel because it is non-caffeinated, and it is produced to be consumed during runs
or workouts. It costs $1.39 for 1.2oz packet, which is $1.16/oz. The price of CLIF’s energy
gel is the cheapest compared to GU Natural and Huma’s energy gels. The CLIF brand has
the most awareness compared to the others as they have been in the market for a very
long time and their product advertising can be seen on social media, TV commercials, ad
banners and more. Their products are also available at various places such as sports
retailers, grocery stores, CLIF website, and Amazon.
SALES AND FINANCIAL FORECAST
For our sales and financial forecasts, we used an ATR model to represent how we would
be selling and promoting products and how much projected revenue there will be. The
ATR model hits three main points for our sales forecast: awareness, trial, and repurchase.
Awareness is a key factor in this model because it gets the name of the product out there,
allowing there to be potential sales. To maximize awareness of GU Natural, we plan on
having ads on Twitter and Facebook, sponsoring Instagram fitness accounts and
celebrities, creating TV commercials, producing print ads, and spreading awareness by
word of mouth. The second part of the model, trial, is also very important because it is the
12. 12
customers actually trying the product. In our concept test, we noticed a high percentage
of purchase intent from the results we gathered. The final step in the ATR model is
repurchase. We believe that if this product trial is achieved, there is a high possibility to
repurchase because of the nature of the product.
The ATR model also helped us produce some numbers that give us a good idea of the
amount of revenue GU Natural could produce for GU Energy. We start with the total
population in our target market, which is 84,180,497. From our concept test results, we
found that GU Natural is available to around 80% of that population, leaving 67,344,398
units sold. After digging deeper into the concept test results, we found out that 51.25% of
that number would be aware of the product, leaving us with 34,514,004. We then did a
prototype test and found that 37.97% of that number would buy or try the product, which
is 13,104,967. Finally, from our questionnaire during our prototype test, 29.4% of people
said they would repurchase this product. This number comes out to 3,852,860 additional
unit sales from repurchase.
By adding the trial amount and repurchase amounts together, GU Natural has the ability to
roughly 16,957,827 products, producing $27,132,523.20 in revenue. After doing a cost
analysis our team figured out that it would cost roughly $0.30 to make each individual pack
of GU Natural. This means costs will add up to be around $5,087,348.10, resulting in a
profit of $22,045,175.10 in revenue for GU Natural.
For an expansion on the ATR model, see Appendix 8.
For more information on Cost Analysis, see Appendix 9.
13. 13
RECOMMENDATION
Our team got together and spent some time talking about what the future holds and what
we should do next. We made a pros and cons table debating on if we should keep going
with GU Natural or stop it all.
A few of the positives our team discovered that helped argue the case of moving forward
were the extensive and growing market that GU Energy is in, and the minimal competition
that is currently in the market. We also really see large benefit in being able to expand the
product’s flavors in many directions. The feedback we received from our concept and
prototype tests were also strong cases for moving on with GU Natural.
Some disadvantages we uncovered were having to implement more prototype tests and
taste tests, to perfect the taste and consistency of the product. We believe the taste is
something that needs to be worked on, and that can also cost a lot of money depending
on how long it takes to perfect and how many trials it could take to have adequate enough
preference data from our target market.
Overall, our team believes the best choice for GU Energy is to continue developing GU
Natural to implement product launch. We believe it can be a successful product that can
be used worldwide by athletes of all ages. We have decided that we should move forward
with the product launch, but only after we implement some more taste tests and prototype
tests, no matter what the cost. We need the taste to be perfect, so every consumer in our
target market will love GU Natural. Once the taste is perfected, GU Natural will be a great
success for GU Energy.
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APPENDICES
Appendix 1: Concept Test 1 - In CoRec
Our initial concept test was held in the CoRec lobby, trying to catch athletes before they
entered or as they were leaving the facility. We informed them of our product and asked
them to take a brief survey. We had very low response rate, as most people refused to
participate.
Age: Gender: Are you an active athlete?
18-24 12
25-34 0
35-44 0
45-54 0
55+ 0
Do you engage in endurance or strength workouts? How many times per week?
Yes, endurance 1
Yes, strength 1
Yes, both 10
No 0
Have you ever used endurance gels before?
Yes 4
No 8
Yes 8
No 4
Male 9
Female 3
Prefer not to say 0
0 0
1-2 0
3-5 10
6-7 2
8+ 0
15. 15
Does it bother you that energy boosting products are often chemically processed?
Yes, it bothers me 3
No, it doesn’t bother me 7
No opinion 2
Would you prefer an organic substitute if it provided the same results?
Yes, prefer organic 8
No, prefer normal product 0
No opinion 4
What is the max price you are willing to spend
(per serving) for workout, healthy, or
performance enhancing foods?
How likely would you be to purchase GU
Natural if it were
available?
$0.50 or less 0
$1 1
$2 3
$3 2
$4 3
$5 3
$6+ 0
Extremely Likely 0
Likely 6
Neither likely nor unlikely 5
Unlikely 1
Extremely Unlikely 0
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Appendix 4: Product Logos
PRIMARY LOGO:
The main logo is the exact same logo as GU Energy Labs
original logo, except it include the “Natural”
differentiation. Since GU Natural is a product line
extension, we wanted to lump the GU Natural logo in
with GU’s traditional branding. The green leaf is an extra
indicator of the natural aspect of our product.
SECONDARY LOGO:
The secondary logo of GU Natural is the same secondary
logo as GU, with the same added differentiation of the
natural tagline and leaf. The secondary logo would be
used on product packaging as well as on background in
which the full color logo would blend in.
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Appendix 5: Product Packaging
The product packaging for our product is
the same as GU Energy’s traditional
endurance gels, with the differentiation of
the GU Natural logo. The flavor we chose
to move forward with was Strawberry
Honey, as indicated twice on the
packaging. The packaging colors are pink
and yellow to tie in with the flavor. Lastly,
there are basic nutrition facts on the
packaging (which may be altered once
GU Energy is the producer of the product,
rather than our team).
To the left is an additional
product markup that could
be used on various
advertising efforts. It
includes images of the
ingredients, portraying the
naturalness of the product
and makes it look more
appetizing than just the
normal packaging.
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Appendix 6: Print Advertising
Above is an example of print advertising that could be released around the product launch
of GU Natural. The advertising follows the same branding as GU Energy, including their
hashtag of #guforit and tagline of “hydration energy recovery.” We included the product
packaging mockup, as well as the GU Natural logo, and added onto their tagline of “GU
for it” with the addition “Naturally.” The ad also includes what would be a landing page for
GU Natural with more product information: guenergy.com/natural.
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Appendix 7: Population Size
Population of America 326,766,748
Population of America Over the Age of 18 252,566,748
Percent of Adults that Exercise 33.33%
Population of Target Market 84,188,916
Determined the target market within the US market by taking the US population, removing
those under the age of 18, and multiplying by 1/3rd due to the statistic that about 1/3rd of
adults exercise a minimum of once a week. 33.33% is a rounded figure from slide 17 of the
2010 Healthy people review.
Appendix 8: ATR Model
Percentage Unit Sales Revenue
Population 84,180,497
Availability 80% 67,344398
Awareness 51.25% 34,514,004
Trial 37.97% 13,104,967 $20,967,947.20
Repurchase 29.40% 3,852,860 $6,164,576.00
Population was determined in appendix 7. Awareness and Trial were determined by our
concept survey, and the repurchase was determined by our prototype test.
25. 25
Appendix 9: Cost Analysis
Figure A
Ingredient Prices Quantity
of Gu’s
Greatest
Quantity per
batch
Total Price
per Batch
Total Price after
tax per Batch
(IN)
Honey (40 oz) $9.00 40 188 $1,692.00
Coconut Milk
(½ gallon)
$3.30 7500 1 $3.30
Extract
(29mL)
$6.50 120 63 $409.50
$2,104.80 $2,252.14
Figure B
Cost per
Individual Pack
Revenue per
Pack
Profit per
Pack
Profit if 7500
produced
Number of batches
for demand
$0.30 $1.60 $1.30 $9,747.86 2,262
Figure C
Revenue from ATR Cost from ATR Profit from ATR
$27,132,523.20 $5,087,348.10 $22,045,175.10
26. 26
WORKS CITED
“Clif Bar & Company: Feed Your Adventure®.” CLIF, www.clifbar.com/.
Concept Test 1: 12 individuals who were present at CoRec. Anonymous survey.
Concept Test 2: 107 responses via Google Forms. Anonymous survey.
“GU Energy.” GU Energy Labs, guenergy.com.
Health Promotion Statistics Branch, and Office of Analysis and Epidemiology National
Center for Health Statistics. “Healthy People 2010 Final Review: Overview and
Selected Findings.”
Huma Gel. “All Natural Chia Energy Gel.” Huma Gel, humagel.com/.
Oliver, Kelsey. IBISWorld Industry Report 32541d. 2017. Vitamin and Supplement
Manufacturing in the US.
Prototype Test: In-class, MGMT 423. 17 class mates responded. Anonymous.