Spring 2009 Mgt602 3 Vuabid

Voice Concepts DESCRIPTION OF COMPANY Voice Concepts is a new company that has been formed to market and sell the “talking chip,” or message maker. The organization is a partnership consisting of two businesspeople from Washington, DC (Tom and Christa Tonis) and two from New Hampshire (Paul and Kim Russo). All parties believe that their knowledge of and experience in the retail market will pave the way for the message maker to be successful and profitable in the United States. Omega Products of America is a subsidiary of a Japanese manufacturer. The Talking chip was their second attempt at the U.S market. The first product was a chip that was used in music cards and books. This product met with great price resistance among distributors and was eventually dropped. But with new technology and a strategy of finding an exclusive marketing and distribution partner, Omega was set to embark on its second entry into the market. Omega’s objective was to sell the machine and the chips to a company like Voice Concepts that would take the marketing responsibility for the product. In term, Voice Concepts was interested in exclusive rights to the U.S market. Both, of course, also needed to consider potential profits and risks. The founders of Voice Concepts al felt that a lease arrangement for the machines, with a purchase option, would be the strategy most acceptable to the retailer. The Russos had in fact conducted some preliminary research and found that for similarly priced products, a lease for $500 per year would be acceptable. After the first year, the retailer would have the option of purchasing the machine for $800, and after the second year, for $350. They believed that Omega might even be willing to drop its prices on the machines by another 20 percent if the Tonises and Russos could convince them that there existed a good market opportunity, especially for the chips, which were the most important element in the business operation.

PRODUCT The product is a combination of a machine and a computer chip that records an individual’s voice message. Once the message is recorded on the chip, it can be inserted into a blank greeting card. When the chip is pressed by the receiver of the card, it is activated to play back the recorded massage a number of times. There is an enhanced value to the “talking chip” over prerecorded or written messages because it can be personalized. It is believed that people will pay more the card because it is extension of them, it contains their voice and the emotion expressed in their language. A Polaroid photo option is going to be combined with the “talking chip” to further personalize the card if the customer desires. Retail prices are set $10 for the “talking chip” and $15 for the “talking chip” photo card. After exploring many different application and uses for the “talking chip”, the company believes that the retail market will be the most successful venue product introduction.

Although Voice Concepts feels it should target the souvenir and novelty item segments of the retail market initially, it also believes that there is much other possible application for the product. This market, which includes all age groups, will be reached via the use of kiosks in tourist areas such as Faneuil Hall in Boston, theme parks such as Walt Disney World in Orlando and large shopping malls.

SOUVENIR/NOVELTY INDUSTRY The souvenir and novelty industry is a highly fragmented market that is experiencing rapid growth. The exact size of this market is difficult to assess since anything that has the name of a location on it could be construed as a souvenir, and the definition of “novelty item” is also quite ambiguous. As annual survey conducted in 1992 by Souvenirs and Novelties, a bimonthly trade publication estimates annual sales volume at $1.4 billion. This figure represents a consolidation of information collected from many sources including press releases, published surveys, phone contacts, trade shows, and reader service card information. Although 439 businesses were included in the survey, many attractions and outlets were not. It has been determined that the theme ark per capita spending is higher than spending at zoos, museums, and other educational attractions. Additionally, consumers are becoming more prices sensitive and are increasingly looking to spend less than $10 for a souvenir.

GREETING CARD INDUSTRY The greeting card industry is a $3.7 billion market that is dominated by three major players. Hallmark, American Greetings, and Gibson Greetings are all well established greeting car companies with extensive distribution channels. These three companies command a combined market share of 85 percent. The remaining 15 percent market share is fragmented among an estimated 500 players. The greeting card industry has begun to refocus its efforts away from traditional holiday cards to concentrate more on alternative products that are purchased and sent for no specific occasion or are personalized by the sender to reflect some specific occasion. Greeting card companies have found tremendous growth in this segment and have responded to consumer needs with many types of cards.

OPPORTUNITIES The fastest-growing type of greeting card is the alternative or nonoccasion card. American Greetings’ research found that alternative cards appeals to the baby boomers, ages 25-44. The card from Voice Concepts falls into this category and would suggest an opportunity to enter this non traditional segment. The souvenir/novelty industry has very low capital requirement barriers, thus offering easy market entry.

THREATS Since Voice Concepts product is not a technology innovation, once the product is introduced, it is very likely that competitors will be able to reproduce the technology and enter the marketplace. To counter this situation, Voice concepts must capture a significant market share immediately when the product enters the market. Because the product will have a relatively low repeat purchase rate, continued expansion into new markets or changes in the use of the product must be planned.

PRODUCT POSITIONING AND STRATEGY Voice Concepts’ “talking chip” product will be initially positioned as a “souvenir” item from a tourist location. The “talking chip” can be purchased alone or combined with a Polaroid picture. The product can be kept as a souvenir for oneself or sent to a friend or loved one as a greeting. The product will be distributed primarily through independent retail outlets located at resort and tourist areas. The “talking chip” can use a name that better fits this positioning and will inform consumers of what the product does. Possible names include “Sight and Sound Souvenirs” or “The Memory Makers”.

DISTRIBUTION Specialty leasing, such as kiosks, is a relatively new practice that is emerging in the retail industry. It involves the use of freestanding kiosks or pushcarts as supplemental tenants in a mall or retail area. This leasing allows retail merchants to capture increased traffic and achieve their own goals for maximum profit. It also gives the developer an added profit, usually based on the level of sales achieved by the merchant. Presentation of the kiosk must be in line with the specifications provided by the developer, and every aspect of the kiosk and the product must be approved.

TARGET MARKET Using the number of annual visitors as a criterion for selecting markets, Voice Concepts has chosen three locations for the initial product introduction: Faneuil Hall marketplace in Boston (14 million annual visitors), the Mall area in Washington, DC (19 million annual visitors), and Walt Disney World on Orlando (25 million annual visitors). Larger New England shopping mall will also be targeted for potential locations on per kiosk basis. Voice concepts’ sales forecast is based on the assumption that the kiosk operators will generate sales from 0.2 percent of the visitors to the tourist location.

FINANCING The Russos will work out of their home for the first year in order to reduce overhead expenses. Omega also agreed that, for the first year, Voice concepts would not have to pay for machines or chips until they were sold to a retailer. Thus Voice concepts would not have to obtain business loans or venture capital to finance the start-up. Additional

inventories will be maintained by Omega at its west Coast warehouse after being imported from Japan. Order will be delivered to the retailer. Retailers will need to make an initial investment of $1,100 for the machine to record the messages on the “talking chip”. Voice concepts hopefully will be able to offer, as described earlier, the leasing program with the option to purchase in order to reduce the start-up costs and make the venture more attractive to retailers.

Questions Q#1: The above stated case study is showing which of the following attribute of the marketing? A. B. C. D.

Demarketing of traditional cards Distribution network of two companies Technical aspects of a valuable product Extension in the feature of greeting cards

Q#2: Which of the following statement LEAST evaluates the concept of entrepreneurship? A. Omega’s first product was a chip that was used in music cards and books B. Omega reentered in the US market to capture the share of US market C. Voice concepts manufactured and launched an innovative product like Talking chip in the US market D. Joint venture of Omega products and Voice concepts has opened the new ways of other companies to enter in the market Q#3: Which of the following statement BEST evaluates the concept of Intrapreneurship? A. Talking chip is a very innovative product among all the other products in the market B. A photo card supplement enhances the feature of Talking chip and hence it attracts more customer C. The selection of US market for the sale of Talking chip is a good decision taken by the Omega product D. Japanese market requires more innovative product then the current products of Omega Q#4: Omega Products and Voice Concepts are struggling for better performance by keeping in views which of the following? A. B. C. D.

Potential profits and risk Potential Loss and opportunity Acquisition of resources Future prospects for partnership

Q#5: The sale of a technical product depends on easy usage of that product. Keeping in view of that highlights the technique which is used in making “Talking chip”. A. It records individual voice message along with emotions and their photograph which are easy to communicate

B. It records individual voice messages with emotions which are easy to communicate C. It involves the use of computer chip which is easily available in the local market D. Only tourists are attracted Q#6: Marketing strategy is an important part of marketing plan. According to this highlight the best statement of Omega products from the followings: A. B. C. D.

Omega’ objective is to sale the product in the US market Omega’s objective is to make a lease arrangement with the Voice concepts Omega’s objective is to market the product in the US market None of the above

Q#7: The US history shows that the inhabitants of the country are more materialistic then social. Keeping in view of this the souvenir and novelty industry which is famous for greeting cards in US market is experiencing: A. B. C. D.

Slow growth Fast growth Stagnant growth No growth

Q#8: Suppose you are the marketing manager of Voice concepts and you are confronting with another product like Talking Chip in the US market. What would be your decision in order to improve the sale of product? A. Lower down the price of Talking Chip to attract other segments of the US market B. Changing the segments which is targeted by the previous company i.e. to attract mass market C. Arrangements of large number of Kiosks in different places for easy availability of the product D. Making Talking chip more innovative and attractive by enhancing the features of your product

Q#9: It is a famous saying that the purchasing of greeting cards depend on the arrival of occasions. If you ask to make a SWOT analysis in above stated situation the opportunity for the Voice concepts might be: A. B. C. D.

Non occasion cards Conventional cards Occasion cards Christmas card

Q#10: According to the survey in 1992, which of the following age group shows attraction to the cards of Voice concepts? A. B. C. D.

Teen ages Executives Pension holders None of the above

Q#11: Market share shows the growth of the company. With reference to this phrase why does Voice Concepts want to capture a significant market share? A. B. C. D.

Because other companies are growing rapidly in the US market Because there is a wide space of growth exist in the US market Because there is chance of reproduction of technology in the US market Because potential market is at the verge of vanishing in the US market

Q#12: With reference to the behavior of the customers, the product of Voice Concepts is kind of product which is: A. B. C. D.

Being purchase frequently Low repeat purchase Customer has to update it after sometime Perishable

Q#13: According to the study on business plan, what portion of case study shows weaknesses then the rest? A. B. C. D.

Product planning Distribution strategy Pricing strategy Promotion strategy

Q#14: Why the possible names of “talking chip” include “Sight and Sound Souvenirs” or “The Memory Makers”. A. B. C. D.

Due to its distribution network Due to its functionality Due to the customer’s needs Due to the availability of names

Q#15: Kiosk is basically the good option for attracting more customers. Do you think that it enhances the cost of the Voice Concepts? A. Yes, as large number of customers are not attracted B. Yes, but increases the overall profit

C. No, as it attracts more customers D. No, as it increases the overall profit Q#16: There are many channels through which a company can reach its customers. In this case Voice Concepts use which of the following distribution channel to market it product? A. B. C. D.

Developer—Whole sellers—End customers Developer—End customers Developer—Retailers—End customers Developer—Whole sellers—Retailers—End customers

Q#17: It is quite often that many marketing companies are committing mistakes while targeting the market. In this scenario Voice Concepts commits which of the following mistake in targeting market? A. B. C. D.

Targeting people instead of dollars Targeting the universals Targeting different regions in the same locality Targeting the different segments in one segments

Q#18: If the price of the Talking chip is 5.53 US$ then what would be the sale of Voice concepts in Washington DC in one month? A. B. C. D.

1751166.667 1751167.667 1751166.766 1751166.776

Q#19: Usually in start up many companies face difficulties while raising the finances. However in this case in start up Voice concepts get finance through which of the following source? A. B. C. D.

Venture capital Third party financing Debt financing Equity financing

Q#20: The overhead expenses for additional inventory handling of “Talking chip” for the first year are beard by which of the following entity? A. B. C. D.

Retailers Developers Distributors Any of the above