Description
SMU MARKETING
MANAGEMENT
Ed McHugh
May 10, 2022 – June 27, 2022
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Table Of Contents
Beyond the Bean
4
S
w
9B13A006
David House wrote this case under the supervision of Elizabeth M. A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmittal without its written permission.
Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request
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Copyright © 2013, Richard Ivey School of Business Foundation
Version: 2013-03-18
It was late June 2012, and David Greig was completing the details of his business plan to launch a board
games café called “Beyond the Bean” in London, Ontario. He had been working on the idea for over a
year, and he wanted to complete a marketing plan for his proposed venture that would include the chosen
target market, product pricing, a promotion plan and the final product offering. Greig wanted to have the
plan ready by the end of the month so he could review it with his partner, Angela Peck. If Peck agreed
with the plan, the partners would try to launch the new venture within the next year.
BACKGROUND
The Idea
Greig and Peck’s plan was to launch a café that specialized in gourmet coffees and related beverages
(espressos, lattes, cappuccinos, teas, etc.) where customers could also rent tables and play board games.
The partners came up with the idea after visiting the Snakes and Lattes Café in Toronto, Ontario. This
business combined a traditional coffee shop with table rentals for groups to play board games. The café
had a selection of more than 2,500 different games from classics such as Monopoly and Risk to more
recent games such as Angry Birds1, the Settlers of Catan,2 and Game of Thrones.3 Snakes and Lattes had
opened in 2010 and had become so popular that reservations were often required, and the café had already
undergone a significant expansion.
1
Originally released in 2009 on the Apple App Store as an iPhone game, Angry Birds’ success led to versions for other
mobile platforms, personal computers and game consoles. Board game versions were released soon after.
2
An immensely popular German game released in 1995. Settlers of Catan has sold approximately 15 million copies
worldwide and has been translated into 30 languages.
3
An epic fantasy game based on George R.R. Martin’s “A Song of Ice and Fire” series. The first novel in the series, “A
Game of Thrones,” was published in 1991. A television version of the book was shown on HBO in 2011.
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BEYOND THE BEAN
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The Venture
The partners had $60,000 in start-up capital4 and decided to locate their café along or near the Richmond
Row5 area of London. Revenue would be generated from sales of snacks, drinks, and rental fees charged
to customers for the use of a table to play games. The staff would be knowledgeable about a large
selection of games and would be able to provide expertise to help patrons understand the rules. Greig had
prepared a list of board, card, and role-playing games he wanted to have available, and he had already
purchased many of these. To save money, he obtained many of the games at garage sales, used but in good
condition (see Exhibit 1). Greig wanted the café to deliver a great social experience. Consequently, he
planned not to provide free Internet Wi-Fi, which, he believed, discouraged social interaction.
In addition to games, the partners wanted the café to be known for its excellent coffees and snacks (see
Exhibit 2). Greig also pondered the idea of offering a limited selection of alcoholic beverages, primarily
beer and wine. The business would have to obtain a liquor licence from the Alcohol and Gaming
Commission of Ontario (AGCO) at an application cost of $1,055. Obtaining a liquor licence came with a
number of stringent requirements, including staff training and AGCO or police inspections. Serving
alcohol would also expose the business to potential liabilities in tort6 if, for example, customers left the
café intoxicated. Serving alcohol increased a business’s liability, resulting in higher annual insurance
premiums. (See Exhibit 3 and 4 for a list of AGCO requirements.)
The café would be open from 11 a.m. until 11 p.m. weekdays and until midnight on weekends. To
minimize expenses, the partners planned to operate the café without hiring additional staff for the first few
months of operation. Greig would be available to work full time, but Peck’s availability would be limited
by her considerable time commitment needed to complete her doctorate. After three months in operation,
the pair hoped to be financially able to hire a part-time employee. Although no location had yet been
selected, Greig anticipated that the café would have a maximum capacity of 50 customers.
The Partners
David Greig had earned a bachelor degree in mechanical engineering in 2009 and a master’s degree in
2011 at Western University in London, Ontario. His partner, Angela Peck, had graduated from Western
University with undergraduate and graduate degrees in civil and environmental engineering, and she was
currently pursuing a doctorate at Western. Although the partners had limited formal business training, they
had taken a full-year university course called “Business for Engineers” offered by the Richard Ivey School
of Business at Western. This course provided an introduction to basic concepts in business and introduced
the partners to the fundamentals of marketing.
Greig had also attended several seminars at the London Small Business Centre (SBC). At these seminars,
Greig had received expert advice on how to get a new business started, including the preparation of
4
The partners planned to invest $20,000 each and obtain a family loan for another $20,000.
Richmond Row, a shopping district located in northwest London near Western University, was home to several bars and
restaurants frequented by university students.
6
The area of law that deals with the duty of care owed to others and remedies for victims’ of negligence.
5
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Greig and Peck had enjoyed their visit to the Toronto café so much that they decided a similar business in
London could also be very successful. Some quick research showed that there was no similar business in
the area, so the partners began looking into the feasibility of launching a board games café in the city
where friends could get together, have fun, socialize, enjoy gourmet coffee drinks and play games.
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projected financial statements, creation of a cash budget, financing, and the development of a marketing
and business plan. Neither partner had worked in a café before, but Greig had received barista7 training,
and he felt confident that his research and careful planning would produce a successful new venture.
London’s economy was hit hard by the worldwide recession triggered in 2008 and was still recovering.
Unemployment in the city was 8.8 per cent, higher than any other major city in Ontario, other than
Windsor.8 High unemployment generally led to reduced spending on discretionary expenses, including
entertainment. In spite of this economic climate, the partners believed their venture could provide a
relatively inexpensive form of recreation, especially since specialty coffee was a $5-billion industry in the
United States (hit with the same worldwide recession), yet it had a growth rate of 20 per cent annually
during the last decade. The partners believed that the growth rate was similar in Canada and that it would
continue. Additionally, board games had experienced a resurgence in popularity since the early 2000s, and
their sales had increased 100 per cent in the last five years. Seventy-two new board games were expected
to be released in 2012.9 Although the concept of a board games café was relatively new in Canada, such
businesses had become popular recently in Europe and Asia.
COMPETITION
Direct
Greig believed Beyond the Bean would be competing directly with businesses that provided social and
recreational experiences among friends. These businesses included bowling alleys and billiards facilities
— in particular, the Palasad and Fleetway, due to their proximity to the new business’s Richmond Row
location.
Fleetway
Fleetway, located in Northwest London, billed itself as the “new dimension in entertainment.” The facility
(originally, solely a 40-lane, five-pin bowling operation) offered five and 10-pin bowling, glow-in-the-dark
miniature golf, rock climbing on a 40-foot-high wall, and billiards. Fleetway’s operation opened directly
into a Dairy Queen restaurant that provided all food and drink for Fleetway’s customers (the facility was
not licensed to provide alcohol). Fleetway’s advertising and promotional materials targeted children,
teenagers and adults and offered kids camps and youth or adult bowling leagues. Selected pricing for
Fleetway’s various activities is shown in Exhibit 5.
Palasad North
Palasad had two locations: one in south London (Palasad South) and another in the northeast quadrant of
the city, Palasad North. Facilities included: a 70-seat dining room; a 60-seat bar/lounge; an eight-ball
billiards lounge (20 to 30 seats); a private billiards room with two billiard tables, sofa seating, a fireplace
7
A barista is trained to make coffee and related beverages such as espresso, cappuccino and latte.
“More Jobless Throw in the Towel,” London Free Press, March 11, 2012.
9
“Business Plan — Beyond the Bean Board Games Café,” Greig, D., Peck, A., June 2012.
8
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The Industry
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Indirect
The partners expected to compete only indirectly with coffee shops because these businesses did not offer
recreational activities. Local indirect competitors included:
Tim Hortons
Tim Hortons was an extremely popular Canadian franchise with dozens of locations in the London area.
The chain specialized in coffee and baked goods such as doughnuts, bagels and muffins. It also offered a
small selection of teas, as well as espresso, cappuccino and lattes. Its stores had a “fast-food” ambiance,
did not provide comfortable seating that might encourage customers to linger, and had only recently begun
offering Wi-Fi services. In 2011, the company earned revenues of $6 billion in Canada and the United
States and served approximately two billion cups of coffee annually.
Starbucks
Starbucks was an American-owned company with its head office in Seattle, Washington and almost 20,000
locations in 60 different countries. Each site was set up as a coffee house to reflect the mission statement
“to inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time.” The
company focused on premium coffees and offered a wide selection of related drinks and high-end pastries,
including croissants and scones. Patrons were encouraged to relax on home-style furnishings and to spend
time in a comfortable atmosphere. Free Wi-Fi was available at each location. The company had revenues
of $11.7 billion worldwide in fiscal 2011.
Williams Coffee Pub
Williams Coffee Pub (Williams) entered the market in 1993 with the opening of its first location in
Stratford, Ontario (50 kilometres from London). The Canadian company had approximately 50 locations
in Ontario. The company’s concept was to provide fast service while offering tasty, high-quality products
in a relaxed and affordable atmosphere. Williams offered a full selection of coffees and related drinks,
pastries and snacks. The stores had a restaurant look with a heavy focus on the breakfast menu. Starbucks
offered free Wi-Fi at each of its locations.
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and dining table; a 1960s retro-designed lounge with three billiard tables; a bowling lounge with 10 vintage
bowling alleys; a large bar (80- to100-person capacity); and a video arcade amusement area for children.
This extensive activity area was fronted by a full-service restaurant. Palasad North specialized in group
events for corporations, families and sports teams. Its slogan was “Eat! — Drink! — Bowl!” although
many of its customers frequented only the restaurant, which was known for its wood-fired pizza, made-toorder pastas, fresh ingredients, and tomato sauces made from scratch. Pricing was similar to that at
Fleetway.
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This franchise, established in 2006, promoted the slogan “Come for the taste, stay for a visit.” The
company had approximately 40 locations throughout Ontario, two of which were located in London. Each
site resembled an old-world style coffee house and offered an extensive specialty coffee menu and baked
goods, ice cream and gourmet foods. Similar to Starbucks, customers were encouraged to relax, socialize,
enjoy the ambiance and take advantage of free Wi-Fi.
CUSTOMERS
The partners believed that Beyond the Bean would be of interest primarily to people between the ages of
15 and 34 years and that neither gender nor ethnicity would constitute a basis for segmentation. Greig was
considering four segments of this target market: Western University students, Fanshawe College students,
high school students and young professionals.
Western University Students
Western University (Western) and its three affiliate colleges (Brescia, Huron and Kings) were located in
northwest London. There were approximately 30,000 undergraduate and graduate students enrolled with
almost 4,500 first-year students enrolling each year. Students came to Western primarily from Ontario, but
a significant number of out-of-province and international students also attended. The partners believed that
they understood this group well because they had recently been students at Western themselves. Greig and
Peck thought university students enjoyed the opportunity to inexpensively socialize with friends and were
looking for an alternative to the bars frequented by most students. Most of Western’s students did not own
cars and lived near the university; therefore, Beyond the Bean needed to be close enough to the university
for students to either walk to it or to be accessible with public transit. All full-time undergraduate students
at Western received a public transit pass for the school year. Although some classes were offered in the
spring and summer, the majority of students spent eight months (September through April) in London, and
returned home over the summer months.
Fanshawe College Students
Established in 1962 and located in northeast London, Fanshawe College (Fanshawe) enrolled over 15,000
full-time students at its London campus. The partners believed that Fanshawe students had characteristics
similar to those of Western students and also enjoyed a night out at a reasonable price that did not include
alcohol and bars. Fanshawe was approximately 10 kilometres away from Western’s campus and the
proposed Richmond Row location of Beyond the Bean. The presence of Fanshawe students in the city was
also highly seasonal, with many of these students leaving London during the months of May through
August.
High School Students
The partners estimated that there were almost 20,000 high school students, between the ages of 14 and 19,
enrolled in secondary schools within the city. These students usually lived with their parents and often
worked part-time, which provided them with some spending money. The partners believed this group
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Coffee Culture Café and Eatery
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Young Professionals
The partners deemed young professionals to be between the ages of 25 to 35 years, generally well-educated
and with a higher disposable income relative to others their age. The partners’ research revealed that
approximately 15,000 young professionals10 lived in London. Greig and Peck believed this group would
align well with their gourmet coffee shop offering but they were less clear on how much interest this group
would have in playing board games. Young professionals generally provided their own transportation and
lived year round in the city.
PROMOTION
Greig had budgeted $6,000 to be used for marketing during the business’s first three months of operation,
but he was unsure how to promote Beyond the Bean. His promotional strategy had to get customers to try
the café. If it did not get enough customers to break even, the business would quickly run into cash flow
problems that would cause it to fail. Greig knew from his university course in business that he also needed
to decide on the content and message of his chosen promotional methods.
Web and Facebook Pages
Greig and Peck planned to develop both a website and a Facebook site for Beyond the Bean. To minimize
costs, Peck planned to do the development work herself since she had the technical abilities to take on this
task. The partners had not yet finalized what content should be on their webpage. They did not plan to use
any of Facebook’s paid advertising. Instead, they intended to use Facebook primarily as a medium to
create free word-of-mouth publicity. One way to enact this plan was by adding a “Like” button to the
Beyond the Bean Facebook page. When a user visited the site and clicked “Like,” a link was added to the
user’s activity page for all the user’s Facebook friends to see. If the user’s friends clicked the link, they
would be directed to Beyond the Bean’s Facebook page. This approach had the potential to create a lot of
free exposure.
The Western Gazette
The Western Gazette (Gazette) was Western University’s student newspaper. It was published every
weekday except Monday. Approximately 11,000 copies of each edition were distributed free of charge
throughout Western’s campus. Students could also view the Gazette on the paper’s website. Many local
businesses targeting this student market advertised in this paper and often included discount coupons in the
publication. Rates for advertising are shown in Exhibit 6.
10
“A Statistical Portrait of London’s Neighbourhoods,” 2006,
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would be interested in social interaction while playing board games, but they were not sure how much
interest high school students would have with the coffee-focused menu offered at Beyond the Bean. The
members of this group would also be restricted in their ability to visit the café on school nights with the
requirements of homework, part-time jobs and parent-imposed curfews. This segment often relied on
public transit or parents to drive them around the city.
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Fanshawe Interrobang
The London Free Press
London’s major local newspaper, The London Free Press, was published six days each week with a weekly
reach11 of 245,000 readers for its print edition and over 80,000 unique hits on its online edition’s
homepage.12 The paper had a newsstand price of $1 for its print edition. Although Greig had not
researched advertising costs for this paper, he believed the cost would be significantly more expensive than
either the Gazette or the Interrobang for comparable advertisements.
Groupon
Groupon was an Internet company that launched in 2008. Essentially a “groupon” worked like a coupon
but with some distinct differences. Individuals had to sign up to become Groupon members to have access
to its deals, and there were approximately 35 million members worldwide. Groupon collected personal
information from its members in order to send e-mails about local deals for products or services that might
interest its members. Typically, Groupon deals offered members a 50 per cent to 90 per cent discount on a
product or service. For example, if a restaurant offered a groupon for $20 credit towards its menu
offerings, a Groupon member might be to buy this offering for $10. Groupon would typically charge the
restaurant half the value of the coupon price, and the merchant would redeem the other half of the value
from Groupon. In the case just described, Groupon and the merchant would each receive $5.
Groupon provided extensive editorial and marketing support to create effective promotions on its deals at
no charge to merchants. It allowed the merchants offering deals to set minimums before the groupons
were effective. For example, if the set minimum was 20, the groupons would not be released for sale
unless at least 20 people had signed up to purchase them. This process ensured that the merchant would
gain enough new customers to justify the steep discounts that were being offered. Groupon smartphone
applications for iPhone, Android and Blackberry were also available. These applications allowed
Groupon’s bar-coded coupons to be kept electronically rather than on printed paper, making groupons easy
to use for both the merchant and the consumer.
The use of Groupon for marketing tended to greatly increase traffic to the merchant’s website, and
Groupon encouraged users who purchased deals to share their experiences with friends on social networks
such as Facebook and Twitter, thus increasing dramatically the merchant’s exposure.
Merchants needed to clearly understand their own business’s cost structure so that groupons could be
designed to increase customer traffic (by providing significant price savings for customers) while ensuring
that the merchant at least broke even. Groupon provided financial guidance for merchants to help them
understand cost structure concepts such as variable and fixed costs, cost of goods sold and gross margin.
11
Reach refers to the total number of people who read the paper which could be significantly higher than the number of actual
subscribers.
12
“Powerful Buy,” London Free Press. accessed June 21,
2012.
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The Fanshawe Interrobang was a weekly newspaper published by Fanshawe College’s Student Union.
Approximately 3,000 copies were distributed at the London campuses. Many local businesses targeting
Fanshawe students advertised in this paper. Rates for advertising are shown in Exhibit 7.
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PRICING
Greig estimated the average customer would spend three hours in the café. Although there could be some
flexibility in the selling prices of food and beverages, prices generally needed to be similar to those offered
at competing coffee shops. He estimated conservatively that each customer would spend $4 on food and
drinks and that the average weighted gross margin on these items would be 30 per cent. He was
considering two pricing scenarios for the board game rentals. The first scenario was to charge $8 an hour
for a table with a maximum of six customers per table. The second scenario was to charge each customer a
flat rate of $6 for unlimited game-play time per day. Greig projected that the café would need to generate
approximately $6,500 gross income each month to cover its fixed costs, including rent, insurance and
utilities.
SUMMARY
Greig had to design an effective marketing plan that would ensure the successful launch of Beyond the
Bean. He had to select a target market, develop a detailed promotion plan, determine a pricing model for
table rentals for game play, decide whether alcohol should be added to the café’s menu, and work out the
financial feasibility of his proposed marketing plan. With only a week until his review meeting with Peck,
Greig realized that he still had a lot of work left to do and a lot of decisions to make.
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This guidance was intended to prevent merchants from offering groupons that would lose money for the
business each time a customer used one. The key marketing strategy of groupons was to get customers to
try a product or service at a discounted rate, thereby baiting the hook for these same people to become
repeat customers at regular prices. Greig and Peck liked the zero up-front cost aspect of the Groupon
marketing tool but had yet to decide what deal they should offer in a groupon.
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Exhibit 1
13 Dead End
Drive
Caylus
20th Century
Centurions
Abalone
Chang Cheng
Acquire
Dungeon Twister
Exp2
Dungeon Twister
Exp3
Labyrinth
Pente
Shangri‐La
Thurn and Taxis
Le Havre
Pick & Pack
Shogi
Ticket to Ride
Dutch Golden Age
Life
Pictionary
Shogun
Change Horses
Eclipse
Loaded Questions
Age of Steam
Checkers
El Grande
Loot
Pillars of the
Earth
Pirate King
Size Matters
Ticket to Ride:
Europe
Tigris and
Euphrates
Tikal
Agricola
Chess
Emira
Lost Cities
Pirate’s Cove
Small World
Timbuktu
Simpsons Clue
Airlines Europe
Chicken Out
Evo
Lungarno
Polterdice
Snakes and Ladders
Tobago
Amun‐Re
Amyitis
Chinese Checkers
Citadels
Fagin’s gang
Feudo
Mad Gab
Mad Magazine
Pompeii
Power Grid
Torres
T‐rex
Antike
Clue
Finca
Maoi
Primordial Soup
SoC 5‐6 Exp
SoC C+K Exp
SoC Cities and
Knights
Apples to Apples
Commands and
Colors: Ancients
Gloria Mundi
Masons
Principato
SoC Seafarers
Tribond
Trivial Pursuit
Archrival
Connect Four
Go
Master Mind
Probe
SoC Seafarers Exp
Trouble
Arkham Horror
Bacchus’
Banquet
Conquest of Pangea
Grand Tribunal
Memoir ’44
Puerto Rico
Sorry!
Twilight Struggle
Cranium
Guess Who
Mind Trap
Quarriors
Star Wars: New Hope
Ultimatum
Balderdash
Cribbage
Guesstures
Ming Dynasty
Quoridor
Barney Miller
Battle of the
Pyramids
CSI: Miami
Hansa
Monopoly
Diplomacy
Hansa Teutonica
Mouse Trap
Ra
Race for the
Galaxy
Star Wars: Escape
from Deathstar
Star Wars: Hoth
Wacky Wacky West
Stone Age
War of the Ring
Vikings
Battleship
Dixit
Hardy Boys
Munchkin
Rigamarole
Stratego
Waterloo
Battleship Galaxies
Battlestar
Expansion
Domaine
HeadBandz
Nautilus
Risk
Stratego: Legends
Whatzit?
Dominant Species
High Voltage
Ninja Turtles
Robo Rally
Sunken City
Yggdrasil
Home Alone
okko
Rummoli
Swap
Zombies!!!
Horus
Olympus
San Juan
Taboo
Hunting Party
Ora et Labora
Scattergories
Talk About
Ingenious
Palatinus
Scotland Yard
Taluva
Inka
Inside Moves
(Camelot)
Pandemic
Pandemic:
Expansion
Scrabble
The 7 Wonders
The Dangerous
Book for Boys
Bohnanza
Dominion
(Card game)
Dominion
Cornucopia
Dominion: Alchemy
Dominion:
Hinterlands
Dominion: Intrigue
Bootleggers
Dominion: Prosperity
Brass
Dominion: Seaside
Inspector Gadget
Panzer General
Settlers of Catan
Carcassonne
Dungeon Twister
Jambo
Paris Connection
Shadow Hunters
Cartagena
Dungeon Twister
Exp1
Jenga
Paris Paris
Shadow Hunters
Exp
Kingdoms
Pay Day
Shadows over
Camelot
Battlestar Galactica
Bionic Crisis
Blokus
Boggle
Cave Troll
Scrabble Upwords
Source: Business plan.
Page 12 of 16
The Gender Gap
The Prices of
Florence
Through the
Ages: A Story of
Civilization
Through the
Desert
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Use outside these parameters is a copyright violation.
PROPOSED GAMES INVENTORY
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Exhibit 2
MENU
Coffee
o Regular black/milk/cream
o Cappuccino
o Latte
Vanilla/caramel/chai
o Mocha
o Espresso (single + double)
o Americano
o Iced Coffee
Tea Bag
Hot Chocolate
o Choice of flavour (regular, dark, milk, white)
Milk Shakes
o Vanilla, chocolate, banana, strawberry
Lemonade
Smoothies – Strawberry, banana, blueberry
Milk
Pop
Sandwiches
o Classic Clubhouse
o Turkey
o BLT
o Vegetarian
o roast beef
Toast
o Bagels, bread, with butter
o Cream cheese, peanut butter, jams
Popcorn
Nuts
Pretzels
Chips (Full bag of selection of name brand)
Exquisite pastries
o Cinnamon rolls
o Muffins
o Croissants
Desserts
o Brownie
o
Cookies
medium
$1.75 / $2.00
$4.00 / $4.50
$3.00 / $3.50
$4.00 / $4.50
$3.50 / $4.00
$2.25 / $3.00
$2.00/ $2.50
$1.75 / $2.00
$1.00
$2.00
$4.25
$2.00
$4.00
$1.00
$2.00
$6.50
$6.00
$5.00
$4.50
$5.50
$1.25
an extra $0.25
$2.00
$1.00
$0.50
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Exhibit 3
For use only in the course SMU Marketing Management at Nova Scotia Community College from 5/10/2022 to 6/27/2022.
Use outside these parameters is a copyright violation.
LIQUOR LICENCE REQUIREMENTS
Source: Alcohol and Gaming Commission of Ontario, www.agco.on.ca/en/services/licence_apply_LSL.aspx, accessed May
2012.
Page 14 of 16
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Exhibit 4
LIQUOR LICENCE STAFF TRAINING AND INSPECTIONS
All owners, managers, licensed security personnel and employees selling and serving liquor must
complete a server training course approved by the Alcohol and Gaming Commission of Ontario (AGCO).
Currently, the approved server training course is Smart Serve. New employees have a maximum of 60
days from their start of employment to obtain the certification. Staff should carry a copy of their
certification card while they are working. An AGCO inspector may ask to see any staff member’s
certification.
AGCO Inspections
All licensed establishments are inspected periodically by AGCO Inspectors and police. You are required
to allow AGCO inspectors and/or police officers unobstructed access to your business, and you must
facilitate their inspections. The most serious infractions include:
1. Permitting drunkenness.
2. Selling and serving alcohol outside of prescribed hours and/or failing to remove the evidence of
service of alcohol.
3. Permitting disorderly behaviour (also includes permitting drugs and illegal gambling).
4. Exceeding the lawful capacity of the premises.
5. Selling and serving alcohol to individuals under the age of 19.
Source: Alcohol and Gaming Commission of Ontario, www.agco.on.ca, accessed 2012.
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Server Training
Page 13
9B13A006
Exhibit 5
5-Pin Bowling
$5.10/game
(shoe rentals extra $3.25/person)
10-Pin Bowling
$5.65/game
(shoe rentals extra)
Billiards
$13/table/hour
Mini Golf
$8.65/person/round
Rock Climbing
$7.50/person for 15 minutes
Source: Fleetway, www.fleetwayfun.com, accessed June 16, 2012.
Exhibit 6
THE WESTERN GAZETTE ADVERTISING RATES
Size
Full page
Half page
Quarter page
Smith
Eighth page
Sixteenth page
Donovan
Dimensions (inches)
10 × 15.71
10 × 8
6 × 6.6
2×2
4×5
4 × 2.25
4 × 6.4
Rate
$1,430.00
$ 963.20
$ 481.60
$ 51.60
$ 240.80
$ 120.40
$ 309.60
Cost is $180 extra to add colour for each advertisement.
Source: The Gazette – Advertising, www.gazette.uwo.ca/advertising/displayads, accessed June 21, 2012.
Exhibit 7
FANSHAWE INTERROBANG ADVERTISING RATES
Size
Full page
Half page
Quarter page
Eighth page
Sixteenth page
Front-page banner
Dimensions (inches)
10 × 16.4
10 × 8.2
6×7
4 × 5.25
4 × 2.6
10 × 2
Rate
$625
$325
$180
$95
$60
$315 (includes colour)
Cost is $80 extra to add colour for each advertisement.
Source: Fanshawe Student Union Advertising, www.fsu.ca/interrobang_advertising, accessed June 21, 2012.
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FLEETWAY SELECTED PRICES
Individual Case Analysis – Apple: Corporate Social Responsibility
MKTG 3379
Problem
Apple’s supply chain is largely outsourced outside of the U.S., making it difficult to control and
monitor. Allegations of unethical labour practices from these offshore suppliers have plagued
Apple, despite the company’s best efforts to implement numerous CSR strategies and work with
suppliers to improve labour practices. Even with the controversies, Apple remains as one of the
world’s most valuable brands and is ranked as one of the most reputable companies.
Apple and Senior VP of Operations Jeff Williams need to determine the best course of action on
how to handle these allegations so that Apple’s supply chain is not disrupted and it can continue
to manufacture enough products to meet the high, global demand.
Situational Assessment
Competition
Competition in the smartphone industry has been growing steadily over the past decade since the
introduction of the first iPhone in 2007, reaching the maturity point where yearly growth will
start to decline. In 2014, smartphone revues topped $380 billion. Apple’s biggest competitors
include Samsung, Huawei, HTC, and Nokia. Apple dominates the high-end, western markets.
Samsung dominates the low-end of the market, offering an affordable smartphone option.
Lenovo and Xiaomi have also just recently introduced their own low-cost models, which have
intensified competition in low-income countries where there is plenty of potential to give another
company a competitive edge over Apple (Hye, Mol, & Mellahi, 2016).
Regulations
Apple products are manufactured in almost 800 locations, with more than 600 manufacturing
facilities located in Asia, and over 300 being in mainland China (see Exhibit 1). Due to the
global nature of Apple’s suppliers, it is difficult for the company to regulate the work
environments of their suppliers (Myers, n.d.).
Exhibit 1
Locations of Apple suppliers as of 2014,
In 2013, China Labour Watch, a U.S. based NGO, released a report that documented the working
conditions at one of Apple’s main suppliers, Pegatron. According to the report, Pegatron had
violated eighty-six Chinese labour laws; ranging from child labour, violations of women’s rights,
excessive overtime, and environmental pollution (Hye, Mol, & Mellahi, 2016). A year later,
another report accused Pegatron of providing unethical living conditions to its workers, stating
that dormitories were overcrowded and filled wall-to-wall with tiny beds.
Under Chinese labour laws, employees may not exceed thirty-six overtime hours in a month. At
Foxconn, a former major supplier for Apple, it was reported that some employees worked eighty
to one hundred overtime hours per month, sometimes without pay. The fast-paced assembly
process required workers to complete each assembly component within two seconds. 13% of
workers reported passing out from exhaustion, and 24% of female workers reported developing
menstrual disorders from the stress and poor working conditions (Myers, n.d.).
Apple has responded to these allegations of labor rights abuses. The company set up a Supplier
Code of Conduct in 2005 and has stated that it continues to work alongside suppliers to ensure
that the code is upheld. Apple also conducts audits on its suppliers and posts an annual supplier
responsibility report to its website. Pressure from Apple has helped reduce child labour,
excessive overtime, and unsafe practices, while also increasing benefits and pay for factory
workers (Myers, n.d.).
Economic Factors
The smartphone industry is a profitable market around the world, with low-income countries
starting to surface and join the market. With emerging economies, Apple has new markets to
appeal to, although it may prove to be difficult as they offer a more lucrative product than its
competitors. Producing a low-cost model of the iPhone, similar to the iPhone 5c, for these
markets may make Apple more of a contender for market share.
In China, where many of components of the iPhone are manufactured, wages are very low.
According to China Labor Watch, wages of Pegatron factory workers in Shanghai were
equivalent to $1.50 US per hour (Hye, Mol, & Mellahi, 2016). Though unethical, Apple’s
suppliers in China employ millions of workers (Wu, 2020). These factories are vital for the
production of Apple products and other electronic goods, and the livelihood of millions of
Chinese people. Moving production elsewhere would take money out of the Chinese economy
and may put some workers out of a job.
Social Trends
Sourcing cheap labour from China and Asian factories is not new, and Apple is not the only
company guilty of doing so. Conditions in these factories are unfavourable and lead to human
rights violations; inadequate working and living environments, excessive overtime, unfair wages,
insufficient break time, or nowhere for workers to air grievances. In 2010, it was reported that
suicide attempts at Foxconn were on the rise. Between January and November 2010, seventeen
Foxconn workers attempted suicide, with thirteen being successful. This incident led to
demonstrations in Hong Kong against globalization and Apple (Myers, n.d.). Offshoring is
perceived as unfavourable by Americans as many see it as a loss of job opportunities, despite the
U.S. being unable to fulfill the requirements to the degree that Apple desires.
Despite the negative press of questionable work practices, Apple’s customer loyalty has not
faltered, suggesting that their brand image is much stronger than others. Workers’ rights and
sweatshop conditions are a prevalent topic when dealing with multinational companies, however,
the degree to which the average consumers focuses on those conditions when deciding on what
type of phone to buy will vary, and possibly be quite low.
Technological Factors
Due to the complexity of technological requirements, Apple needs to work with many suppliers,
many of which are in Asia. It is estimated that around 90% of the iPhone’s parts are
manufactured overseas. There are very few manufacturers that have the capability to meet the
needs of Apple and other tech giants simultaneously. It is timely and costly for Apple to seek
more socially responsible manufacturing alternatives.
Natural Factors
The Institute of Public and Environmental Affairs in Beijing released a report in 2011,
documenting cases of pollution from dozens of Apple suppliers in China. The report stated that
twenty-seven suppliers were found to have environmental problems, and many fail to properly
dispose of their hazardous waste. Apple has made a commitment to be a green company,
however, Ma June, director of the Institute of Public and Environmental Affairs has said that
Apple has a poor environmental record and is not as responsive to environmental investigation as
other tech companies are (Barboza, 2011).
A report published from the Institute of Public and Environmental Affairs ranked twenty-nine
multinational technology companies in terms of their response to inquiries on pollution and
workplace health hazards at facilities in China. Apple ranked last. They are in good company,
with Nokia, LG, Sony, and Ericsson also faring poorly in the survey (Feng, 2011).
SWOT Analysis
Strengths
•
Offers a differentiated product that has an aesthetic design and uses an Apple-owned
operating system, allowing for multimedia content and sharing across all Apple products
•
The quality of the iPhone allows Apple to charge a premium price, increasing profits and
market value
•
Is the leader in the high-end smartphone market
•
Apple has an extremely loyal consumer base, many of whom own more than one Apple
product
o Survey results from simonlycontracts.co.uk indicated that 60% of the 3000
respondents have blind loyalty to their iPhones
•
Was ranked fifth on Forbes’ 2014 “Best CSR Reputation” list
Weaknesses
•
Relies on offshore outsourcing – 90% of iPhone parts are manufactured outside of the
United States. It is in these foreign factories that Apple has faced challenges regarding
poor labour conditions.
•
Offshoring limits Apple’s ability to control and monitor manufacturing processes and
practices
•
Net sales rely heavily on the iPhone (see Exhibit 2), which is largely manufactured
outside of the U.S.
Exhibit 2
Opportunities
•
Focusing on producing a lower-cost model to introduce to emerging low-end markets
•
Increased levels of automation and robotization in the U.S. may signal a possible return
of manufacturing to the country in the future
Threats
•
Emergence of competition in low-income markets
•
As the largest and most valuable company, it is prone to more scrutiny and public
backlash
•
Offshore manufacturing is seen as a loss of American job opportunities
•
Increased pressure from NGOs and other stakeholders to address unethical workplace
practices at offshore facilities
Alternatives
Ignore/Deny
Apple can choose to ignore the negative publicity and allegations and continue as is. They have
shown efforts of improving the working conditions of supplier factories and the accusations have
not hurt their performance or reduced market share by any considerable margins.
Initiate Further CSR Efforts in its Sourcing
Apple can work with NGOs and auditors on how to improve working conditions. Transparency
in workplace practices should be increased. Instigating stricter monitoring procedure should be
considered.
Set Up In-House Manufacturing
Apple can build its own manufacturing facilities, taking some of the burden off of Chinese
suppliers. Facilities would not necessarily have to be in the U.S., providing the opportunity to
offer jobs in other markets.
Source from U.S. Manufacturers
With an increase in automation and robotization, Apple can look to bring manufacturing back
home to the states. This would make monitoring the supply chain easier and give Apple more
control. Opens up the possibility of hiring foreign workers, which is seen as both favourable and
unfavourable by the public.
Reduce Cost-Minimizing Practices
Apple makes a large profit margin off the sale of each iPhone – the Centre for Research on
Socio-Cultural Change at the University of Manchester estimated that Apple made a profit of
$451.55 on each iPhone 4 is sold (Myers, n.d.). This comes from requesting that suppliers take a
smaller profit margins and cutting corners where possible. If Apple allowed suppliers to make a
higher profit, perhaps working conditions would be different.
Criteria
•
Stakeholder perception – how do company stakeholders view this alternative? Good?
Bad?
•
Costs – will this alternative come at a great cost for Apple?
•
Availability of resources – does Apple have the resources in place for this alternative?
Can they be acquired easily?
•
Meets market demand – can this alternative be implemented and not impede on Apple’s
ability to manufacture products that meet market demand?
•
Employee welfare – how does the alternative impact manufacturing employees’
wellbeing?
Analysis
Ignore/deny
Increase CSR
efforts
In-house
manufacturing
U.S.
manufacturing
Reduce
practices
Stakeholder
Perception
5
Costs
Resources
Demand
9
9
10
Employee
Welfare
2
10
5
9
10
9
43
8
5
6
7
9
35
7
6
3
3
9
28
8
3
9
7
8
35
Total /50
35
Scale of 1-10, 10 = most favourable, 1 = least favourable
Ignore/Deny
Apple can continue to ignore the controversy and continue operations as is and remain popular
and profitable, as indicated by net income (See Exhibit 3), its designation as one of the world’s
most valuable brands, and its large, loyal consumer base in Western markets. It is the most costeffective option as it allows Apple to continue unethical profit maximizing practices, and it does
not require additional internal staffing or manufacturing facilities. The processes in place can
remain the same and Apple will not have to worry about reviewing and renegotiating supplier
contracts.
The issue with ignoring the problem is that it can create a snowball effect. Popularity remains
strong, but consumers, notably those in North America and Europe, are becoming more and
more conscious on the products they consume. Ethical consumption is trending upwards and an
issue that can be ignored now may be unavoidable in the future. The standards and labour
conditions manufacturing employees in offshore markets
Exhibit 3
Increase CSR Efforts
Increasing CSR efforts is the best course of action to take, as it would increase stakeholder
perception, which would decrease the number of allegations, investigations, and bad publicity
brought against it. Instigating CSR efforts in offshore markets will allow Apple to continue using
their services to meet customer demand, as well as improve employee welfare of factory
workers.
The negatives against increasing CSR efforts are that it would increase company costs and
resources, as more managerial practices, training, and staff would be needed. Despite having the
monetary resources to accomplish this venture, Apple is known to be a cost-saving company, so
the company budget would need to be revised and approved to accommodate these initiatives.
In-House Manufacturing
Apple has the capacity, innovation, and money needed manufacture their products. This would
give Apple full control over labour practices and standards, providing a stable and regulation-
compliant workplace. Supplier contracts would not be needed, and Apple would not be blamed
for the wrongdoings of another company.
The main deterrent of this alternative is that currently, Apple would not be able to gather the
resources needed in a timely manner to do a full transition from offshore suppliers. This would
take years of planning, and it would be difficult for Apple operate at a level that meets customer
demand.
U.S. Manufacturing
This is the most unrealistic alternative for Apple. The biggest benefit would be the creation of
domestic jobs, helping improve U.S. stakeholder perceptions. The downfall is that the U.S. does
not currently have the skills and people needed to manufacture all Apple products at the level
and cost that China does. Chinese wages are much lower, and it is easier to attract thousands of
workers to work in sub-par conditions. Taking away the jobs of thousands of Chinese workers
would also negatively affect Chinese stakeholders, which could hurt Apple’s market share in
China and other Asian countries.
Reduce Cost-Minimizing Practices
Apple’s efforts to minimize costs in production have directly impacted the current situation.
Apple’s price policy has led manufacturers to choose between demands; meet higher working
standards (higher wages, more employees, safety training) but also accept lower prices and
higher volumes.
If Apple could reduce these practices, suppliers would not have to implement such harsh
working standards. This would improve stakeholder perception and employee welfare. The
downside is that it would come at a cost to Apple (a reduction in savings), and the volume of
production may not be to the level needed.
Recommendation
It is recommended that Apple increase its CSR efforts with international suppliers and take
action to reduce unethical and abusive labour practices within its supply chain. This will ensure
that fewer instances of workplace violations occur, resulting in an efficient and ethical supply
chain.
Action Plan
Apple needs to improve its partnership with suppliers, and this starts with holding manufacturers
and itself to a higher standard. Apple needs to collaborate with NGOs and suppliers to
acknowledge possible CSR opportunities. This will come at a cost, but the ability to maintain
operations internationally will benefit both parties in the long run.
Efforts Apple can take, or already takes and simply needs to expand on:
•
Hiring a third-party auditor who is free of corporate influence to assess the situation and
review Apple’s Supplier Code of Conduct.
•
Discussing and working towards resolutions with local and international NGOs
•
Manager training programs focused on anti-harassment policies, communication, and
worker protection.
•
Worker training and education on local laws, worker’s rights, and occupational health
and safety.
•
Ensuring all working personnel is equipped with proper PPE.
•
Conducting more facility occupational hazards monitoring activities.
•
Tracking employee hours and addressing management violations of going over hour
limits as stated by Chinese labour laws.
o Apple started their tracking program in 2012 and publishes the compliance rate in
its annual supplier sustainability reports (Myers, n.d.).
•
Increase the level of transparency; Apple ranks as the 15th least transparent company on
the Transparency in Corporate Reporting index according to NGO Transparency
International (Myers, n.d.).
These efforts should be implemented at all supplier facilities, however it would seem necessary
to start in China, as they have the most facilities and have incurred the most negative publicity
concerning labour violations. Apple has the resources to implement these changes, it just needs
to increase attention and funding. Because Apple uses many of the same suppliers as other tech
giants, improving the working conditions of the supply chain would serve as an example for
others to follow.
Contingency Plan
The next best course of action would be for Apple to look into reducing their cost-minimizing
practices with all suppliers, in particular Chinese and other factories who accept the lower profit
conditions. This would come in the form of allowing suppliers to take a higher gross profit
margin. The profit gained should be put towards hiring more workers, paying higher wages,
providing safety training, offering health benefits, are improving living quarters. A contract
between Apple and suppliers would be needed to ensure funds go towards socially responsible
initiatives.
Works Cited
Barboza, D. (2011, September 1). Apple Cited as Adding to Pollution in China. Retrieved from
The New York Times:
Feng, J. (2011, January 20). Apple Targeted in China Pollution, Work Safety Report . Retrieved
from Industry Week:
Hye, S., Mol, M. J., & Mellahi, K. (2016). Apple and its Suppliers: Corporate Social
Responsibility. London: Ivey Publishing.
Myers, C. (n.d.). Corporate Social Responsibility in the Consumer Electronics Industry: A Case
Study of Apple Inc. Washington D.C.: Georgetown University.
Wu, D. (2020, February 4). Apple suppliers aim to resume full China production Monday.
Retrieved from Los Angeles Times:
Case Analysis
Case Analysis
▪ – It is an actual business issue faced by
an organization
▪ – like a puzzle
▪ -many possible answers
▪ – analysis is key
Case Analysis
▪ Step # 1 – read it! ☺
▪ Step #2 – Define Problem
Situational Analysis
▪ Situational Analysis:
▪C
▪R
▪E
▪S
▪T
▪N
Situational Analysis
▪ Porter’s Five Forces:
▪ Assumes that five important forces determine
competitive power in a business situation. These are:
▪ Supplier Power: Here you assess how easy it is for
suppliers to drive up prices. This is driven by the
number of suppliers of each key input, the uniqueness
of their product or service, their strength and control
over you, the cost of switching from one to another,
and so on. The fewer the supplier choices you have,
and the more you need suppliers’ help, the more
powerful your suppliers are.
Situational Analysis
▪ Buyer Power: Here you ask yourself how easy
it is for buyers to drive prices down. Again, this
is driven by the number of buyers, the
importance of each individual buyer to your
business, the cost to them of switching from
your products and services to those of
someone else, and so on. If you deal with few,
powerful buyers, then they are often able to
dictate terms to you.
Situational Analysis
▪ Competitive Rivalry: What is important here is
the number and capability of your competitors.
If you have many competitors, and they offer
equally attractive products and services, then
you’ll most likely have little power in the
situation, because suppliers and buyers will go
elsewhere if they don’t get a good deal from
you. On the other hand, if no-one else can do
what you do, then you can often have
tremendous strength.
Situational Analysis
▪ Threat of Substitution: This is affected
by the ability of your customers to find a
different way of doing what you do – for
example, if you supply a unique software
product that automates an important
process, people may substitute by doing
the process manually or by outsourcing
it. If substitution is easy and substitution
is viable, then this weakens your power.
Situational Analysis
▪ Threat of New Entry: Power is also affected by the
ability of people to enter your market. If it costs little in
time or money to enter your market and compete
effectively, if there are few economies of scale in place,
or if you have little protection for your key technologies,
then new competitors can quickly enter your market
and weaken your position. If you have strong and
durable barriers to entry, then you can preserve a
favorable position and take fair advantage of it.
▪
Reprinted by permission of Harvard Business Review. From “How Competitive Forces Shape Strategy” by Michael E. Porter, March 1979.
Copyright © 1979 by the Harvard Business School Publishing Corporation; all rights reserved.
SWOT
▪ INTERNAL:
▪ Strengths
▪ Weaknesses
▪ EXTERNAL:
▪ Opportunities
▪ Threats
Case Anlysis
▪ Problem Statement
▪ (here.. Or.. Earlier)
Case Analysis
▪ Alternatives?
▪ Criteria to be used
Possible criteria
▪ Criteria should be brief/point form
▪ Examples:
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Cost
Fit with positioning statement
Competition
Improve (or maintain) profitability
Increase sales, market share, return on investment
Maintain customer satisfaction, corporate image
Be consistent with the corporate mission or strategy
Within our present (or future) resources and capabilities
Within acceptable risk parameters
Ease or speed of implementation
Retain flexibility
Minimize environmental impact
Alternatives Analysis
▪ Analysis of each one
▪ + and – of each?
▪ Create a table?
Case Analysis
▪ Recommendation
▪ Action Plan (who / what / when / where/
why / how) / Control?
▪
Contingency plan???
FRAMEWORK FOR CASE ANALYSIS
A. Situational Assessment / Environmental Scan – the broad view
look at: CREST(N)
Competitive Landscape – Is it a competitive industry? Who are primary competitors?
What are they doing?
Regulatory – Three levels of government – who are they? what can they do to change
your business environment?
Economic Factors – how is the economy doing?
Social Trends – what’s happening? what’s changing?
Technological factors- that would affect our business
Natural Factors- how does the environment enter into this?
AND/OR: Porter’s Five Forces:
Competition in the industry;
Potential of new entrants into the industry;
Power of suppliers;
Power of customers;
Threat of substitute products.
B. SWOT Analysis
Strengths / Weaknesses – internal assessment
Opportunities / Threats – external assessment
C. Problem Statement
What is the primary problem in the case?
Make sure you understand the difference between the actual problem and symptoms of it
D. Alternatives
List 4-5 – what can be done?
E Criteria/evaluation
What will you use to measure each alternative?
(eg staff turnover? Staff motivation? profit? market share? survival?)
F Analysis of the Alternatives
What would be the pros and cons of each?
How does each measure up against the criteria?
G. Recommendation
Which alternative would you recommend?
H. Action Plan
Who? What ? When? Where ? Why? How?
I. Contingency Plan
Briefly – in case your first plan of action isn’t quite working?
SMU MARKETING
MANAGEMENT
Ed McHugh
May 10, 2022 – June 27, 2022
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Unless otherwise stated, Copyright ©2022, Ivey Business School Foundation. Ivey Business School
is the leader in providing business case studies with a global perspective.
Table Of Contents
Beyond the Bean
4
S
w
9B13A006
David House wrote this case under the supervision of Elizabeth M. A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmittal without its written permission.
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Copyright © 2013, Richard Ivey School of Business Foundation
Version: 2013-03-18
It was late June 2012, and David Greig was completing the details of his business plan to launch a board
games café called “Beyond the Bean” in London, Ontario. He had been working on the idea for over a
year, and he wanted to complete a marketing plan for his proposed venture that would include the chosen
target market, product pricing, a promotion plan and the final product offering. Greig wanted to have the
plan ready by the end of the month so he could review it with his partner, Angela Peck. If Peck agreed
with the plan, the partners would try to launch the new venture within the next year.
BACKGROUND
The Idea
Greig and Peck’s plan was to launch a café that specialized in gourmet coffees and related beverages
(espressos, lattes, cappuccinos, teas, etc.) where customers could also rent tables and play board games.
The partners came up with the idea after visiting the Snakes and Lattes Café in Toronto, Ontario. This
business combined a traditional coffee shop with table rentals for groups to play board games. The café
had a selection of more than 2,500 different games from classics such as Monopoly and Risk to more
recent games such as Angry Birds1, the Settlers of Catan,2 and Game of Thrones.3 Snakes and Lattes had
opened in 2010 and had become so popular that reservations were often required, and the café had already
undergone a significant expansion.
1
Originally released in 2009 on the Apple App Store as an iPhone game, Angry Birds’ success led to versions for other
mobile platforms, personal computers and game consoles. Board game versions were released soon after.
2
An immensely popular German game released in 1995. Settlers of Catan has sold approximately 15 million copies
worldwide and has been translated into 30 languages.
3
An epic fantasy game based on George R.R. Martin’s “A Song of Ice and Fire” series. The first novel in the series, “A
Game of Thrones,” was published in 1991. A television version of the book was shown on HBO in 2011.
Page 4 of 16
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Use outside these parameters is a copyright violation.
BEYOND THE BEAN
Page 2
9B13A006
The Venture
The partners had $60,000 in start-up capital4 and decided to locate their café along or near the Richmond
Row5 area of London. Revenue would be generated from sales of snacks, drinks, and rental fees charged
to customers for the use of a table to play games. The staff would be knowledgeable about a large
selection of games and would be able to provide expertise to help patrons understand the rules. Greig had
prepared a list of board, card, and role-playing games he wanted to have available, and he had already
purchased many of these. To save money, he obtained many of the games at garage sales, used but in good
condition (see Exhibit 1). Greig wanted the café to deliver a great social experience. Consequently, he
planned not to provide free Internet Wi-Fi, which, he believed, discouraged social interaction.
In addition to games, the partners wanted the café to be known for its excellent coffees and snacks (see
Exhibit 2). Greig also pondered the idea of offering a limited selection of alcoholic beverages, primarily
beer and wine. The business would have to obtain a liquor licence from the Alcohol and Gaming
Commission of Ontario (AGCO) at an application cost of $1,055. Obtaining a liquor licence came with a
number of stringent requirements, including staff training and AGCO or police inspections. Serving
alcohol would also expose the business to potential liabilities in tort6 if, for example, customers left the
café intoxicated. Serving alcohol increased a business’s liability, resulting in higher annual insurance
premiums. (See Exhibit 3 and 4 for a list of AGCO requirements.)
The café would be open from 11 a.m. until 11 p.m. weekdays and until midnight on weekends. To
minimize expenses, the partners planned to operate the café without hiring additional staff for the first few
months of operation. Greig would be available to work full time, but Peck’s availability would be limited
by her considerable time commitment needed to complete her doctorate. After three months in operation,
the pair hoped to be financially able to hire a part-time employee. Although no location had yet been
selected, Greig anticipated that the café would have a maximum capacity of 50 customers.
The Partners
David Greig had earned a bachelor degree in mechanical engineering in 2009 and a master’s degree in
2011 at Western University in London, Ontario. His partner, Angela Peck, had graduated from Western
University with undergraduate and graduate degrees in civil and environmental engineering, and she was
currently pursuing a doctorate at Western. Although the partners had limited formal business training, they
had taken a full-year university course called “Business for Engineers” offered by the Richard Ivey School
of Business at Western. This course provided an introduction to basic concepts in business and introduced
the partners to the fundamentals of marketing.
Greig had also attended several seminars at the London Small Business Centre (SBC). At these seminars,
Greig had received expert advice on how to get a new business started, including the preparation of
4
The partners planned to invest $20,000 each and obtain a family loan for another $20,000.
Richmond Row, a shopping district located in northwest London near Western University, was home to several bars and
restaurants frequented by university students.
6
The area of law that deals with the duty of care owed to others and remedies for victims’ of negligence.
5
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Greig and Peck had enjoyed their visit to the Toronto café so much that they decided a similar business in
London could also be very successful. Some quick research showed that there was no similar business in
the area, so the partners began looking into the feasibility of launching a board games café in the city
where friends could get together, have fun, socialize, enjoy gourmet coffee drinks and play games.
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projected financial statements, creation of a cash budget, financing, and the development of a marketing
and business plan. Neither partner had worked in a café before, but Greig had received barista7 training,
and he felt confident that his research and careful planning would produce a successful new venture.
London’s economy was hit hard by the worldwide recession triggered in 2008 and was still recovering.
Unemployment in the city was 8.8 per cent, higher than any other major city in Ontario, other than
Windsor.8 High unemployment generally led to reduced spending on discretionary expenses, including
entertainment. In spite of this economic climate, the partners believed their venture could provide a
relatively inexpensive form of recreation, especially since specialty coffee was a $5-billion industry in the
United States (hit with the same worldwide recession), yet it had a growth rate of 20 per cent annually
during the last decade. The partners believed that the growth rate was similar in Canada and that it would
continue. Additionally, board games had experienced a resurgence in popularity since the early 2000s, and
their sales had increased 100 per cent in the last five years. Seventy-two new board games were expected
to be released in 2012.9 Although the concept of a board games café was relatively new in Canada, such
businesses had become popular recently in Europe and Asia.
COMPETITION
Direct
Greig believed Beyond the Bean would be competing directly with businesses that provided social and
recreational experiences among friends. These businesses included bowling alleys and billiards facilities
— in particular, the Palasad and Fleetway, due to their proximity to the new business’s Richmond Row
location.
Fleetway
Fleetway, located in Northwest London, billed itself as the “new dimension in entertainment.” The facility
(originally, solely a 40-lane, five-pin bowling operation) offered five and 10-pin bowling, glow-in-the-dark
miniature golf, rock climbing on a 40-foot-high wall, and billiards. Fleetway’s operation opened directly
into a Dairy Queen restaurant that provided all food and drink for Fleetway’s customers (the facility was
not licensed to provide alcohol). Fleetway’s advertising and promotional materials targeted children,
teenagers and adults and offered kids camps and youth or adult bowling leagues. Selected pricing for
Fleetway’s various activities is shown in Exhibit 5.
Palasad North
Palasad had two locations: one in south London (Palasad South) and another in the northeast quadrant of
the city, Palasad North. Facilities included: a 70-seat dining room; a 60-seat bar/lounge; an eight-ball
billiards lounge (20 to 30 seats); a private billiards room with two billiard tables, sofa seating, a fireplace
7
A barista is trained to make coffee and related beverages such as espresso, cappuccino and latte.
“More Jobless Throw in the Towel,” London Free Press, March 11, 2012.
9
“Business Plan — Beyond the Bean Board Games Café,” Greig, D., Peck, A., June 2012.
8
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The Industry
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Indirect
The partners expected to compete only indirectly with coffee shops because these businesses did not offer
recreational activities. Local indirect competitors included:
Tim Hortons
Tim Hortons was an extremely popular Canadian franchise with dozens of locations in the London area.
The chain specialized in coffee and baked goods such as doughnuts, bagels and muffins. It also offered a
small selection of teas, as well as espresso, cappuccino and lattes. Its stores had a “fast-food” ambiance,
did not provide comfortable seating that might encourage customers to linger, and had only recently begun
offering Wi-Fi services. In 2011, the company earned revenues of $6 billion in Canada and the United
States and served approximately two billion cups of coffee annually.
Starbucks
Starbucks was an American-owned company with its head office in Seattle, Washington and almost 20,000
locations in 60 different countries. Each site was set up as a coffee house to reflect the mission statement
“to inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time.” The
company focused on premium coffees and offered a wide selection of related drinks and high-end pastries,
including croissants and scones. Patrons were encouraged to relax on home-style furnishings and to spend
time in a comfortable atmosphere. Free Wi-Fi was available at each location. The company had revenues
of $11.7 billion worldwide in fiscal 2011.
Williams Coffee Pub
Williams Coffee Pub (Williams) entered the market in 1993 with the opening of its first location in
Stratford, Ontario (50 kilometres from London). The Canadian company had approximately 50 locations
in Ontario. The company’s concept was to provide fast service while offering tasty, high-quality products
in a relaxed and affordable atmosphere. Williams offered a full selection of coffees and related drinks,
pastries and snacks. The stores had a restaurant look with a heavy focus on the breakfast menu. Starbucks
offered free Wi-Fi at each of its locations.
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and dining table; a 1960s retro-designed lounge with three billiard tables; a bowling lounge with 10 vintage
bowling alleys; a large bar (80- to100-person capacity); and a video arcade amusement area for children.
This extensive activity area was fronted by a full-service restaurant. Palasad North specialized in group
events for corporations, families and sports teams. Its slogan was “Eat! — Drink! — Bowl!” although
many of its customers frequented only the restaurant, which was known for its wood-fired pizza, made-toorder pastas, fresh ingredients, and tomato sauces made from scratch. Pricing was similar to that at
Fleetway.
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This franchise, established in 2006, promoted the slogan “Come for the taste, stay for a visit.” The
company had approximately 40 locations throughout Ontario, two of which were located in London. Each
site resembled an old-world style coffee house and offered an extensive specialty coffee menu and baked
goods, ice cream and gourmet foods. Similar to Starbucks, customers were encouraged to relax, socialize,
enjoy the ambiance and take advantage of free Wi-Fi.
CUSTOMERS
The partners believed that Beyond the Bean would be of interest primarily to people between the ages of
15 and 34 years and that neither gender nor ethnicity would constitute a basis for segmentation. Greig was
considering four segments of this target market: Western University students, Fanshawe College students,
high school students and young professionals.
Western University Students
Western University (Western) and its three affiliate colleges (Brescia, Huron and Kings) were located in
northwest London. There were approximately 30,000 undergraduate and graduate students enrolled with
almost 4,500 first-year students enrolling each year. Students came to Western primarily from Ontario, but
a significant number of out-of-province and international students also attended. The partners believed that
they understood this group well because they had recently been students at Western themselves. Greig and
Peck thought university students enjoyed the opportunity to inexpensively socialize with friends and were
looking for an alternative to the bars frequented by most students. Most of Western’s students did not own
cars and lived near the university; therefore, Beyond the Bean needed to be close enough to the university
for students to either walk to it or to be accessible with public transit. All full-time undergraduate students
at Western received a public transit pass for the school year. Although some classes were offered in the
spring and summer, the majority of students spent eight months (September through April) in London, and
returned home over the summer months.
Fanshawe College Students
Established in 1962 and located in northeast London, Fanshawe College (Fanshawe) enrolled over 15,000
full-time students at its London campus. The partners believed that Fanshawe students had characteristics
similar to those of Western students and also enjoyed a night out at a reasonable price that did not include
alcohol and bars. Fanshawe was approximately 10 kilometres away from Western’s campus and the
proposed Richmond Row location of Beyond the Bean. The presence of Fanshawe students in the city was
also highly seasonal, with many of these students leaving London during the months of May through
August.
High School Students
The partners estimated that there were almost 20,000 high school students, between the ages of 14 and 19,
enrolled in secondary schools within the city. These students usually lived with their parents and often
worked part-time, which provided them with some spending money. The partners believed this group
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Coffee Culture Café and Eatery
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Young Professionals
The partners deemed young professionals to be between the ages of 25 to 35 years, generally well-educated
and with a higher disposable income relative to others their age. The partners’ research revealed that
approximately 15,000 young professionals10 lived in London. Greig and Peck believed this group would
align well with their gourmet coffee shop offering but they were less clear on how much interest this group
would have in playing board games. Young professionals generally provided their own transportation and
lived year round in the city.
PROMOTION
Greig had budgeted $6,000 to be used for marketing during the business’s first three months of operation,
but he was unsure how to promote Beyond the Bean. His promotional strategy had to get customers to try
the café. If it did not get enough customers to break even, the business would quickly run into cash flow
problems that would cause it to fail. Greig knew from his university course in business that he also needed
to decide on the content and message of his chosen promotional methods.
Web and Facebook Pages
Greig and Peck planned to develop both a website and a Facebook site for Beyond the Bean. To minimize
costs, Peck planned to do the development work herself since she had the technical abilities to take on this
task. The partners had not yet finalized what content should be on their webpage. They did not plan to use
any of Facebook’s paid advertising. Instead, they intended to use Facebook primarily as a medium to
create free word-of-mouth publicity. One way to enact this plan was by adding a “Like” button to the
Beyond the Bean Facebook page. When a user visited the site and clicked “Like,” a link was added to the
user’s activity page for all the user’s Facebook friends to see. If the user’s friends clicked the link, they
would be directed to Beyond the Bean’s Facebook page. This approach had the potential to create a lot of
free exposure.
The Western Gazette
The Western Gazette (Gazette) was Western University’s student newspaper. It was published every
weekday except Monday. Approximately 11,000 copies of each edition were distributed free of charge
throughout Western’s campus. Students could also view the Gazette on the paper’s website. Many local
businesses targeting this student market advertised in this paper and often included discount coupons in the
publication. Rates for advertising are shown in Exhibit 6.
10
“A Statistical Portrait of London’s Neighbourhoods,” 2006,
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would be interested in social interaction while playing board games, but they were not sure how much
interest high school students would have with the coffee-focused menu offered at Beyond the Bean. The
members of this group would also be restricted in their ability to visit the café on school nights with the
requirements of homework, part-time jobs and parent-imposed curfews. This segment often relied on
public transit or parents to drive them around the city.
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Fanshawe Interrobang
The London Free Press
London’s major local newspaper, The London Free Press, was published six days each week with a weekly
reach11 of 245,000 readers for its print edition and over 80,000 unique hits on its online edition’s
homepage.12 The paper had a newsstand price of $1 for its print edition. Although Greig had not
researched advertising costs for this paper, he believed the cost would be significantly more expensive than
either the Gazette or the Interrobang for comparable advertisements.
Groupon
Groupon was an Internet company that launched in 2008. Essentially a “groupon” worked like a coupon
but with some distinct differences. Individuals had to sign up to become Groupon members to have access
to its deals, and there were approximately 35 million members worldwide. Groupon collected personal
information from its members in order to send e-mails about local deals for products or services that might
interest its members. Typically, Groupon deals offered members a 50 per cent to 90 per cent discount on a
product or service. For example, if a restaurant offered a groupon for $20 credit towards its menu
offerings, a Groupon member might be to buy this offering for $10. Groupon would typically charge the
restaurant half the value of the coupon price, and the merchant would redeem the other half of the value
from Groupon. In the case just described, Groupon and the merchant would each receive $5.
Groupon provided extensive editorial and marketing support to create effective promotions on its deals at
no charge to merchants. It allowed the merchants offering deals to set minimums before the groupons
were effective. For example, if the set minimum was 20, the groupons would not be released for sale
unless at least 20 people had signed up to purchase them. This process ensured that the merchant would
gain enough new customers to justify the steep discounts that were being offered. Groupon smartphone
applications for iPhone, Android and Blackberry were also available. These applications allowed
Groupon’s bar-coded coupons to be kept electronically rather than on printed paper, making groupons easy
to use for both the merchant and the consumer.
The use of Groupon for marketing tended to greatly increase traffic to the merchant’s website, and
Groupon encouraged users who purchased deals to share their experiences with friends on social networks
such as Facebook and Twitter, thus increasing dramatically the merchant’s exposure.
Merchants needed to clearly understand their own business’s cost structure so that groupons could be
designed to increase customer traffic (by providing significant price savings for customers) while ensuring
that the merchant at least broke even. Groupon provided financial guidance for merchants to help them
understand cost structure concepts such as variable and fixed costs, cost of goods sold and gross margin.
11
Reach refers to the total number of people who read the paper which could be significantly higher than the number of actual
subscribers.
12
“Powerful Buy,” London Free Press. accessed June 21,
2012.
Page 10 of 16
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The Fanshawe Interrobang was a weekly newspaper published by Fanshawe College’s Student Union.
Approximately 3,000 copies were distributed at the London campuses. Many local businesses targeting
Fanshawe students advertised in this paper. Rates for advertising are shown in Exhibit 7.
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PRICING
Greig estimated the average customer would spend three hours in the café. Although there could be some
flexibility in the selling prices of food and beverages, prices generally needed to be similar to those offered
at competing coffee shops. He estimated conservatively that each customer would spend $4 on food and
drinks and that the average weighted gross margin on these items would be 30 per cent. He was
considering two pricing scenarios for the board game rentals. The first scenario was to charge $8 an hour
for a table with a maximum of six customers per table. The second scenario was to charge each customer a
flat rate of $6 for unlimited game-play time per day. Greig projected that the café would need to generate
approximately $6,500 gross income each month to cover its fixed costs, including rent, insurance and
utilities.
SUMMARY
Greig had to design an effective marketing plan that would ensure the successful launch of Beyond the
Bean. He had to select a target market, develop a detailed promotion plan, determine a pricing model for
table rentals for game play, decide whether alcohol should be added to the café’s menu, and work out the
financial feasibility of his proposed marketing plan. With only a week until his review meeting with Peck,
Greig realized that he still had a lot of work left to do and a lot of decisions to make.
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This guidance was intended to prevent merchants from offering groupons that would lose money for the
business each time a customer used one. The key marketing strategy of groupons was to get customers to
try a product or service at a discounted rate, thereby baiting the hook for these same people to become
repeat customers at regular prices. Greig and Peck liked the zero up-front cost aspect of the Groupon
marketing tool but had yet to decide what deal they should offer in a groupon.
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Exhibit 1
13 Dead End
Drive
Caylus
20th Century
Centurions
Abalone
Chang Cheng
Acquire
Dungeon Twister
Exp2
Dungeon Twister
Exp3
Labyrinth
Pente
Shangri‐La
Thurn and Taxis
Le Havre
Pick & Pack
Shogi
Ticket to Ride
Dutch Golden Age
Life
Pictionary
Shogun
Change Horses
Eclipse
Loaded Questions
Age of Steam
Checkers
El Grande
Loot
Pillars of the
Earth
Pirate King
Size Matters
Ticket to Ride:
Europe
Tigris and
Euphrates
Tikal
Agricola
Chess
Emira
Lost Cities
Pirate’s Cove
Small World
Timbuktu
Simpsons Clue
Airlines Europe
Chicken Out
Evo
Lungarno
Polterdice
Snakes and Ladders
Tobago
Amun‐Re
Amyitis
Chinese Checkers
Citadels
Fagin’s gang
Feudo
Mad Gab
Mad Magazine
Pompeii
Power Grid
Torres
T‐rex
Antike
Clue
Finca
Maoi
Primordial Soup
SoC 5‐6 Exp
SoC C+K Exp
SoC Cities and
Knights
Apples to Apples
Commands and
Colors: Ancients
Gloria Mundi
Masons
Principato
SoC Seafarers
Tribond
Trivial Pursuit
Archrival
Connect Four
Go
Master Mind
Probe
SoC Seafarers Exp
Trouble
Arkham Horror
Bacchus’
Banquet
Conquest of Pangea
Grand Tribunal
Memoir ’44
Puerto Rico
Sorry!
Twilight Struggle
Cranium
Guess Who
Mind Trap
Quarriors
Star Wars: New Hope
Ultimatum
Balderdash
Cribbage
Guesstures
Ming Dynasty
Quoridor
Barney Miller
Battle of the
Pyramids
CSI: Miami
Hansa
Monopoly
Diplomacy
Hansa Teutonica
Mouse Trap
Ra
Race for the
Galaxy
Star Wars: Escape
from Deathstar
Star Wars: Hoth
Wacky Wacky West
Stone Age
War of the Ring
Vikings
Battleship
Dixit
Hardy Boys
Munchkin
Rigamarole
Stratego
Waterloo
Battleship Galaxies
Battlestar
Expansion
Domaine
HeadBandz
Nautilus
Risk
Stratego: Legends
Whatzit?
Dominant Species
High Voltage
Ninja Turtles
Robo Rally
Sunken City
Yggdrasil
Home Alone
okko
Rummoli
Swap
Zombies!!!
Horus
Olympus
San Juan
Taboo
Hunting Party
Ora et Labora
Scattergories
Talk About
Ingenious
Palatinus
Scotland Yard
Taluva
Inka
Inside Moves
(Camelot)
Pandemic
Pandemic:
Expansion
Scrabble
The 7 Wonders
The Dangerous
Book for Boys
Bohnanza
Dominion
(Card game)
Dominion
Cornucopia
Dominion: Alchemy
Dominion:
Hinterlands
Dominion: Intrigue
Bootleggers
Dominion: Prosperity
Brass
Dominion: Seaside
Inspector Gadget
Panzer General
Settlers of Catan
Carcassonne
Dungeon Twister
Jambo
Paris Connection
Shadow Hunters
Cartagena
Dungeon Twister
Exp1
Jenga
Paris Paris
Shadow Hunters
Exp
Kingdoms
Pay Day
Shadows over
Camelot
Battlestar Galactica
Bionic Crisis
Blokus
Boggle
Cave Troll
Scrabble Upwords
Source: Business plan.
Page 12 of 16
The Gender Gap
The Prices of
Florence
Through the
Ages: A Story of
Civilization
Through the
Desert
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Use outside these parameters is a copyright violation.
PROPOSED GAMES INVENTORY
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9B13A006
Exhibit 2
MENU
Coffee
o Regular black/milk/cream
o Cappuccino
o Latte
Vanilla/caramel/chai
o Mocha
o Espresso (single + double)
o Americano
o Iced Coffee
Tea Bag
Hot Chocolate
o Choice of flavour (regular, dark, milk, white)
Milk Shakes
o Vanilla, chocolate, banana, strawberry
Lemonade
Smoothies – Strawberry, banana, blueberry
Milk
Pop
Sandwiches
o Classic Clubhouse
o Turkey
o BLT
o Vegetarian
o roast beef
Toast
o Bagels, bread, with butter
o Cream cheese, peanut butter, jams
Popcorn
Nuts
Pretzels
Chips (Full bag of selection of name brand)
Exquisite pastries
o Cinnamon rolls
o Muffins
o Croissants
Desserts
o Brownie
o
Cookies
medium
$1.75 / $2.00
$4.00 / $4.50
$3.00 / $3.50
$4.00 / $4.50
$3.50 / $4.00
$2.25 / $3.00
$2.00/ $2.50
$1.75 / $2.00
$1.00
$2.00
$4.25
$2.00
$4.00
$1.00
$2.00
$6.50
$6.00
$5.00
$4.50
$5.50
$1.25
an extra $0.25
$2.00
$1.00
$0.50
Page 13 of 16
large
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Page 11
9B13A006
Exhibit 3
For use only in the course SMU Marketing Management at Nova Scotia Community College from 5/10/2022 to 6/27/2022.
Use outside these parameters is a copyright violation.
LIQUOR LICENCE REQUIREMENTS
Source: Alcohol and Gaming Commission of Ontario, www.agco.on.ca/en/services/licence_apply_LSL.aspx, accessed May
2012.
Page 14 of 16
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Exhibit 4
LIQUOR LICENCE STAFF TRAINING AND INSPECTIONS
All owners, managers, licensed security personnel and employees selling and serving liquor must
complete a server training course approved by the Alcohol and Gaming Commission of Ontario (AGCO).
Currently, the approved server training course is Smart Serve. New employees have a maximum of 60
days from their start of employment to obtain the certification. Staff should carry a copy of their
certification card while they are working. An AGCO inspector may ask to see any staff member’s
certification.
AGCO Inspections
All licensed establishments are inspected periodically by AGCO Inspectors and police. You are required
to allow AGCO inspectors and/or police officers unobstructed access to your business, and you must
facilitate their inspections. The most serious infractions include:
1. Permitting drunkenness.
2. Selling and serving alcohol outside of prescribed hours and/or failing to remove the evidence of
service of alcohol.
3. Permitting disorderly behaviour (also includes permitting drugs and illegal gambling).
4. Exceeding the lawful capacity of the premises.
5. Selling and serving alcohol to individuals under the age of 19.
Source: Alcohol and Gaming Commission of Ontario, www.agco.on.ca, accessed 2012.
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Server Training
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9B13A006
Exhibit 5
5-Pin Bowling
$5.10/game
(shoe rentals extra $3.25/person)
10-Pin Bowling
$5.65/game
(shoe rentals extra)
Billiards
$13/table/hour
Mini Golf
$8.65/person/round
Rock Climbing
$7.50/person for 15 minutes
Source: Fleetway, www.fleetwayfun.com, accessed June 16, 2012.
Exhibit 6
THE WESTERN GAZETTE ADVERTISING RATES
Size
Full page
Half page
Quarter page
Smith
Eighth page
Sixteenth page
Donovan
Dimensions (inches)
10 × 15.71
10 × 8
6 × 6.6
2×2
4×5
4 × 2.25
4 × 6.4
Rate
$1,430.00
$ 963.20
$ 481.60
$ 51.60
$ 240.80
$ 120.40
$ 309.60
Cost is $180 extra to add colour for each advertisement.
Source: The Gazette – Advertising, www.gazette.uwo.ca/advertising/displayads, accessed June 21, 2012.
Exhibit 7
FANSHAWE INTERROBANG ADVERTISING RATES
Size
Full page
Half page
Quarter page
Eighth page
Sixteenth page
Front-page banner
Dimensions (inches)
10 × 16.4
10 × 8.2
6×7
4 × 5.25
4 × 2.6
10 × 2
Rate
$625
$325
$180
$95
$60
$315 (includes colour)
Cost is $80 extra to add colour for each advertisement.
Source: Fanshawe Student Union Advertising, www.fsu.ca/interrobang_advertising, accessed June 21, 2012.
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FLEETWAY SELECTED PRICES
Chapter one: Marketing Defined
• Marketing is defined as an exchange
between a firm and its customers
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 1
What Can We “Market”?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 2
Evolution of Modern Marketing
• Product/production orientation
• Focus on building a better gadget
• Sales orientation
• Focus on convincing the customer that your
product works best for them
• Customer orientation
• Focus on identifying customers’ wants
BEFORE formulating attractive solutions
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 3
Chapter one: Measuring Marketing Success
(slide 1 of 2)
• Quantify results when possible
• Sometimes the effectiveness of
marketing programs is easy to quantify
• Did the coupon promotion lift sales?
• Measure the percentage sales increase, etc.
• Did the direct mail campaign increase web
usage?
• Measure the number of web visits, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 4
Measuring Marketing Success
(slide 2 of 2)
• However, sometimes the effectiveness is
not easy to quantify
• Was the segmentation study effective?
• Difficult to quantify
• Did the advertising campaign increase
sales?
• Difficult to quantify because great advertising
is geared toward long-term brand building not
short-term results
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 5
Marketing Management Framework
• The 5Cs, STP, and the 4Ps constitute
the marketing management framework
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 6
5Cs
(slide 1 of 3)
• Customer
• The firm’s current and potential customers
• What are current customers’ preferences,
buying trends, etc.?
• What are potential customers’ preferences?
Should they be targeted?
• Company
• The firm’s capabilities, resources, etc.
• What does it do well?
• What doesn’t it do well?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 7
5Cs
(slide 2 of 3)
• Context
• Macro-environmental forces facing the firm
• What is going on politically or legally that
might affect the firm?
• What is going on with the economy that
might affect the firm?
• What trends are occurring in society that
might affect the firm?
• What technological innovations might affect
the firm?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 8
5Cs
(slide 3 of 3)
• Collaborators
• The companies/people firm works with
• Are these relationships strong? Can these
relationships be improved or leveraged?
• Competitors
• The companies/people firm works against
and how they compare to the firm in terms
of resources, capabilities, customer
preferences, reaction patterns, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 9
STP
• Segmentation
• Grouping customers with similar needs
• Targeting
• Pursuing segment who makes the most
sense for the firm
• Positioning
• Communicating product’s benefits clearly to
the intended target
• Developed through the 4Ps
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 10
Considerations
(slide 1 of 2)
• Four P’s
• The situation facing the company
changes over time
• Customer preferences change
• Competitors change offerings
• Government passes new laws, etc.
• Firm must consistently monitor the 5Cs
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 11
Considerations
(slide 2 of 2)
• 5Cs, STP, and 4Ps are interdependent
• As contextual factor changes, what would
the impact be on distribution channels?
• As a collaborator shifts their demands, what
will that do to our pricing structure?
• As our company sells off a nonperforming
function, what impact might that have on our
positioning and customer satisfaction?
• Marketers must understand the
interdependencies
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. 12
Chapter two The Purchase Process
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 1
Pre-Purchase Phase
• Customers recognize a need/desire
• Some are heavily marketer influenced;
some are not
• e.g., Having trendy clothes vs. needing to eat
• Customers search and evaluate products
that address their need
• e.g., Conduct online search, ask friends, etc.
• Customers create a consideration set
• All brands considered as candidates for
purchase
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 2
Purchase Phase
• Customers narrow the consideration set
• Customer may delay the purchase
• Customer may decide not to purchase
• Customers decide on retail channel
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 3
Post-Purchase Phase
• Customers assess the purchase and the
purchase process
• Customers determine satisfaction
• Did the customer get what he expected?
• Customers’ level of satisfaction leads to
• Repeat purchases
• Negative or positive word of mouth
• Product returns, etc.
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 4
Three Types of Consumer Purchases
(slide 1 of 2)
• Convenience purchases
• Low involvement; standard, frequently
consumed goods or impulse purchase
• Consumers don’t spend much time thinking
or planning the purchase
• Shopping purchases
• Medium involvement; not as frequently
purchased
• Consumers spend time and effort prior to
purchase
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 5
Three Types of Consumer Purchases
(slide 2 of 2)
• Specialty purchases
• High involvement; occasional purchases,
often more expensive, require more thought
• Customers put much effort into the purchase
• Plus, a fourth – unsought (1-2%)
• Some research – impulse
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 6
Types of Purchases
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 7
Low-Involvement Purchases
• Low-involvement purchases
• Have more price sensitivity
• Use price discounts
• Generally don’t generate word of mouth
• Are usually distributed intensively
• Marketers should focus on how to capture
consumers’ attention
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 8
High-Involvement Purchases
• High-involvement purchases
• Have le…
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