International Marketing Marketing Flying Discs In Mexico

Ross Larsen

Steve Cassidy

Joanna Papageorgiou

Michelle Clarke

James Greaves

Joseph Lin

BackgroundThree Associates Roger Blake (Frisbee Association) Jose Gutierez (VP of Bank) Eloise Dunn (Marketing Consultant)

Ex-O Corporation Major U.S. flying disc manufacturer Owns rights to the product

BackgroundAlejandro Garcia Purchased 4 flying disc molds 6 yrs. ago Did not fulfill contract obligations with

Ex-O corp. Still possess the 4 molds

No one else in Mexico produces flying discs

Background• Potential Market Entry obtained by

Jose Gutierez

• Comercial Mexicana (26 Locations, Nationwide)

• Tiendas Aurerra (45 Locations, Central Mexico)

• Puerto de Liverpool (4 Locations, Mexico City)

Main Case Questions• Should we buy the molds from

Garcia?

• Should we buy Ex-O rights to their discs?

• Should the introduction only be in Mexico City or throughout Mexico?

Additional Substantive Issues

• What are the distribution channels to be used?

• What are the pricing strategies to be implemented?

• Which flying discs are we going to manufacture? Why?

Additional Substantive Issues

4. What advertising strategies will be used? Why?

3. How can we satisfy Ex-O Corp’s request for a detailed marketing strategy?

5. Can the three associates establish the necessary contacts to successfully launch the product?

S.W.O.T. AnalysisStrengths No direct competitors in target marketplace Popularity of sport growing worldwide Name brand “Ex-O”

WeaknessesCustomer awareness is lowProjected retail sales may not meet expectations

S.W.O.T. AnalysisOpportunities Mexican market untapped Cheap production costs High volume of foreign tourists

ThreatsDisc product could be piratedCompetition (Whamm-O Corp.) could move into the market

SolutionPurchase four molds from Alejandro Garcia for production

Set up licensing/royalty agreement with Ex-O Corporation

Market throughout Mexico instead of just Mexico City

SolutionHire a home country broker (firm) with established distribution channels and networks

Gain entry into 5,000 retail outlets for product launch within 4 months

Promotional plan to align with the product launch

ImplementationObtain necessary financing

Present Ex-O Corporation with our marketing strategy

Set up licensing/royalty agreement with Ex-O Corporation

ImplementationSet up legal agreements with the manufacturer

Projected production for first year is 600,000 discs $.30 Production + $.10 Packaging = $.40 600,000 x $.40 = $240,000 U.S.

375,000 discs produced over 3 months, needed for start-up based on average retail requirements (75 discs per outlet)

Fixed ExpensesManufacturing ($.30 per disc)Packaging ($.10 per disc)Broker Fees ($.30 per disc)Royalty Fees (5% of gross sales) Industry AverageMolds Purchase ($4,000)

Advertising ExpenseAllocated $.40 per disc towards ad. Expense

Newspaper (Esto – Sports Paper) ¼ page twice weekly (Friday & Saturday) ½ page once a week (Sunday) Projected Annual Cost - $29,380

Advertising ExpenseTelevision Introduction period (2 months)

4 ads per day (A time – 240 ads total) Months 3 and 4

3 ads per day (A time – 180 ads total) Months 5 thru 12

35 ads per month (A time – 280 ads total)Projected Annual Cost - $210,000

PricingOur cost per unit = $1.10 per disc

Selling price to retailer = $2.50 per disc

Suggested retail mark up 50% = $3.75

$1.40 per disc gross profit before taxes and royalty

Pricing StrategyMarket controlled pricing environment with sales based objectives

Such as high volume and market share

$2.25 $3.75 $4.50

Annual Financial Forecast

$660,000Annual Total

$ 60,000Packaging

$240,000Advertising

$180,000Broker Fees

$180,000Production Materials

Annual Financial Forecast

600,000 x $2.50 = $1,500,000600,000 – Total Production$2.50 – Selling Price To Retailer

Annual Financial Forecast

$1,500,000Gross Sales

$ 533, 000Net Income

$ 228,000Taxes (30%)

$ 761,000Profit Before Taxes

$ 75,000Ex-O Corp. Royalty Fees

$ 4,000Molds Purchase$ 660,000Production & Promo Costs

Future OutlookIntroduce the Pro Model within 6-8 months.

Export the flying discs to Europe, South America, and Central America

Thank you

Any Questions???