Case Studies In Detail

Front 1

Punch Tab

Back 1

PunchTab aims to be a turnkey instant loyalty program,where consumers earn universal loyalty points that canbe redeemed across a participating network ofcompanies• PunchTab seems to be an early mover in this space• The cost of supporting a growing network of businsseswill rise at a very small proportion of revenues oncePunchTab begins to charge fees or monetizedata/analytics• Concern is whether or not PunchTab addresses a largeenough market; large brands may not be interested inparticipating because they do not need a turnkeysolution• PunchTab is the kind of business whereexperimentation is valuable for the investor; it has thepotential to be very valuable, but also equally likely tohave a low probability of being successful• However, with the minimal funding, valuation may beaffected

Causal logic. The opportunity was identified andanalyzed, then a plan was developed and executedto realize the opportunity.

• VC firms are best positioned to grow the company inthe long run• Some key differences between angel and VC investors:o Structure of funds VC firms work with large funds of others’money Angels typically invest their own fundso Decision not to reinvest in a startup If angels decide to not reinvest, signaling isnot strong since they are often early-stageinvestors If VC firms decide to not reinvest, a verystrong signal is sent; they may have somenegative private information about thefounder or businesso Involvement in the company’s operations Angels typically take a less active role VC firms may want representation on theboard• VC firms and angel investors may push for different exitstrategies• Consider trade-offs between short-term and long-termbenefits

Front 2

XM satellite radio

Back 2

Value proposition• Satellite radio can deliver content that is not easilyavailable through conventional radios:o The variety of content including different genre ormusic and programs The fact that satellite radio is nationwideprovides aggregates the demando The responsiveness of content to new listeningtrends (e.g. music, current affairs)o The high quality content is accessible everywherewithout the need to retune• Satellite radio eliminates the need to endure adso Ads build up to 18 minutes of each hour of radioprogramso XM could be ad free by following subscription freeSegments and their alignment with the proposed values• Usage locationo In automobiles: not that many entertainmentalternatives to radioso It has three more segments (commuters,professional drivers like trucker, and drivers ofluxury cars)o The value proposition is for automobiles: highaudio quality for the whole drive duration, free ad, customized program (for the commuting time),differentiation (like data features)o In homes: more people use, but there are alsomore alternative to radioso The value proposition is: alternative music,continuous quality music for events such as parties• Demographicso Age: The demand shows an inverted U-Shapepatterno <18: do not have money to subscribeo >35: are not seeking a variety of content(however have more disposable income)o 18-35: seeking a variety of content, also: Maybe more responsible to buy cars or newtechnologies for home?• Geographyo Rural areas: lower number of potential radiocustomers (maybe because of low quality radioexperience?)o Metropolitan areas: higher concentration ofpotential customers; but there are lots of otheralternative entertainment• Other factorso Music toleranceo Comfort with new technology / early adaptor For show off -> high price can be anindication for them Seeking latest and greatest -> radio beyondAM and FM

Pricing elements: hardware vs. software (XM dependson receiver manufacturers)• Basic Pricing: there is an inherent price conflictbetween service price (subscription) and hardwareprice (radio receiver)• XM needs to collaborate with both manufacturers andretailer to sell its serviceo The other two are interested in fixed markup to sellthe radioo If the price of receiver is perceived high, XM canpay part of the price to the other two parties? Which one makes more sense to subsidize?The manufacturer considering the fixedmarkup modelo XM can provide bundle price (subsidize the costfurther) for potential subscribers

Basic pricing: optimizing the number of listenersregarding the increase in revenue from subscriptiono trade-off between the number of subscribers, andthe subscription price to maximize the revenue• Dynamic pricing: taking into account the revenue thatXM can generate by selling listeners’ attention to theadvertisement companies (and the importance of costper impression).o trade-off between the number of subscribers andthe subscription price to maximize the revenuefrom both subscription and advertisemento The optimum pricing changes, as the increase inlisteners could generate a significant $ number(and the number is sensitive to the pricingsubscription)o How XM can achieve the high number oflisteners? Skimming (tart high and come low)? -> maynot be effective as there is not a big drop indemand with drop in cost from 12 to 0.o Total ad revenue in the industry per year perlisteners: 24 $ (from aggregated ad revenue andmetro cume) or 2$ per montho Pricing with and without ad: 12$ without ad vs. 10 $ with ad: how muchad XM needs? The 2$ difference results in 13.2 M / mrevenue difference (considering the loss ofsubscription and gain in listeners) That is equivalent to 0.4 $ / listeners permonth 2$ per month ad ~ 18 to 20 minutes ad / hour-> 0.4 $ ~ 3 to 4 minutes ad / hour• The decision to pursue with and without ad model isbased on the reach and target of the customerso Availability of different channels that targetdifferent niches enhances the targetabilityo Pursuing ad revenue has a risk as XM will end upcompeting with companies like Disney and CBSWithout ad, the competition will be limited between Siriusand XM

Front 3

Sanofi

Back 3

• Having a strong background in vaccine manufacturingwhich provided them with required expertise.• Dedicated significant resources towards the new vaccinedevelopment.• Large upfront investment in R&D for the new vaccine.• Partnership with University of Mahidul in Bangkok.• Acquisition of US firm, Acambis for further vaccinedevelopment.• Spent $398 million on a new manufacturing plant to set upindustrial capacity and prepare the market entry launchin parallel.• Developed an innovative organizational mode, calledDengue Companyo To mobilize the staff and provide a common vision.o To secure execution, time, and budget.o To cover dengue vaccine development, production,and marketing.o They also had to be careful that it does not suck upthe best talents and it doesn’t distract people fromother important business.

• Screening and evaluatingo The product is under clinical trials.o The phase I clinical trial of the “second-generation”vaccine was carried out in 2004.o The Phase II clinical trial was carried out in 2007based on positive out of Phase I.o A pediatric clinical efficacy study in Thailand wasconducted as part of Phase II-b in 2009.

• Pros:o The product will be ready to supply the day afterapproval, otherwise they have to wait for another 5years.o Bringing the vaccine to the market as soon aspossible is very important. The dengue is consideredas a public health emergency and delay insupplying the vaccine can be considered unethical.o Sanofi can confidently be a pioneer on this productfor a long time ahead and conquer the market.• Cons:o Very risky, there is no clear vision of potentialoutcome of upcoming clinical trials.o If the clinical trials are unsuccessful, the retrofit of thefacility to use for another purpose will imposeadditional costs.

Front 4

Cisco Smart Grid

Back 4

• Improved efficiency, advanced automation, monitoring, and• Increased consumer information; better demand-responsemanagement system• Coordination of alternative energy sources• Potential security enhancements

Note: specifics of how the technology works is not of majorconcern; focus more on the general concepts of how theelectricity industry works.• Utilities• Advanced Metering Infrastructure (AMI)• Networking Communications• Demand Response• Grid Optimization• Software Solutions and Applications• Home Area Networks and Energy Management Systems• Other Major Players

Consider the following:o Head to head positioningo Differentiated positioningo Repositioningo Position as a leader, and if so, in what category?o Position as a fast follower, and if so, in what categoryand why is this better than pioneer?

b. What barriers will the company likely experience in light ofyour recommended positioning?• Interoperability issue• Regulatory Framework Reform• Architecture evolution• Consumer uncertainty• Expensive consumer smart grid• Other unknowns• International investments

Front 5

Dove

Back 5

• “Plan to Growth” was a 5-year strategic plan to trim 1600brands down to 400 brands• Management of too many brands is increasingly difficult• Unilever wanted to centralize brand development andcreate Masterbrands that served as umbrella identities forvarious products• Centralized branding allowed global brand building withcooperation from all geographical markets

• 1950s – focus was on the functionality. Dove is not a soapand doesn’t dry out skin• 2007 – focus on a message of “real beauty”• Dove’s evolution positioned it as a company withpersonality/message/greater meaning behind it ratherthan simply selling products that are functional• Dove shifted away from functional benefits of productsand towards a “brand with a point of view”

• To not include the actual product in advertising can beseen as a bold move on Dove’s part. They were able to do this because they had already established somebrand recognition in the market• Further, this supports the “Plan to Growth” strategy in thatthe message being sent through the advertisement isrelevant to Dove as a brand, rather than any specificproduct within the umbrella• Dove has matured as a “brand”, instead of simplyproducts, with a “message” to send to society

• By trying to send a message to break traditional views of‘beauty’, Dove tried to appeal to all women – which inturn may have increased its target market segments• Perhaps people may find that Dove is a more “relatable”brand rather than simply a corporation• The campaign also engaged audiences through differenttypes of media (e.g. is this model “oversized” or“outstanding”? while displaying results in real-time). Thisengaged audiences in a two-way communication, ratherthan simply sending a message to consumers

Front 6

Disney

Back 6

Advantages for Disney• Disney’s animation business has failed over the last fewyears. On the other hand, Pixar has remarkableperformance in producing hit films• Disney does not have skills in computer (CGI) animation.However, Pixar is the leader in this field• A significant portion of Disney’s profit in movies come fromPixar• Disney gets ownership of all the existing Pixar charactersand will profit from the franchises (theme parks,merchandise, etc.)• Pixar is in a great financial situation• It is a good defensive move. If Disney doesn’t buy Pixar,Pixar can start producing for the competitors• Disney has worked with Pixar for years, so they know thecompany well and will be able to manage it effectivelyDisadvantages for Disney• The success of Pixar in the future was not guaranteed.Perhaps the next Pixar movie will be a failure (as was thecase for Disney’s own animation unit)• Many experts, mostly at Disney, believe that computergenerated film is just a temporary trend and technology isnever a replacement for creativity.

• Pixar needs Disney – nobody has the ability to takecharacters from a movie and market them moreeffectively than Disney so Pixar has to deal with Disney fora new contract• If Disney buys Pixar, it may destroy the creativity that is atthe core of Pixar’s success. Disney’s corporate culturemay erode Pixar’s creativity• Disney has other options for fixing its own animationbusiness. For instance: hire away the best people fromPixar or establish a relationship with another animationstudio.

Advantages for Pixar• Disney is the best company at distributing andmerchandising movies• Disney will bid higher for Pixar than any other company• Pixar has a strong working relationship with Disney• From a financial perspective, this is a great deal. It’s betterto sell/merge now when Pixar is at its peak. Who knows ifPixar can keep producing these results?Disadvantages for Pixar• Disney’s corporate culture may destroy Pixar’s creativeculture• Workers want Pixar to remain an independent company;many may leave as soon as the merge happens• Pixar can renegotiate the contract to Pay Disney a tinydistribution fee so that Pixar can make all the money fromtheir movies, rather than being left with a small portion ofthe profit• Pixar has many other alternative options such as Universaland Fox that would compete with Disney for its services