Mountain Bike Case Study Solution
Following the disappointing first rollover, KHMJ rebounded with a strong second fiscal period, moving up a position in the industry standings. A key factor in this turnaround was likely the emphasis placed on product advertising (largest amount spent on advertising in industry). Due to the dramatic increase in the awareness of the mountain bike, the company saw a much higher sales figure. This improvement was reflected in an extremely strong EPS ratio (second highest in the industry). In summary, the second rollover made for positive prospects for future business.
The marketing and operations strategies in 2017 remained the same as the previous year. The high price, lower volume continued to apply. The price of the mountain bike remained the same. However, to again expand the firm’s market reach it was decided to further increase the advertising budget. With increased spending on advertising and PR, the awareness for the mountain bike was expected to rise. It was therefore deemed necessary to increase the inventory volume to match forecasted sales. It is important to note that although the inventory volume …show more content…
Oddly enough, the company had strong growth in the area of increased sales revenue figures but suffered from the decision to increase costs so dramatically. One of such expense areas where the company likely went overboard with spending was in the area of promoting the company/product. KHMJ yet again had the highest advertising and PR figures, totalling $3.85M, while industry leaders allocated a much lower yet effective amount to these areas. Ultimately, KHMJ’s overzealous decision to overspend on certain expenses lead to a poor performance in the third respective fiscal period and will prove to have damaged chances at a podium