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Human Resource Management
Case Studies
This case discusses software design and development company Menlo Innovations’ (Menlo) approach towards project management
and innovation. Menlo’s founder and president, Richard Sheridan (Sheridan) established the company in association with his
colleagues based on Thomas Edison’s Invention Factory. Sheridan advocated the use of project management during software
implementation. Menlo adopted agile project management practices namely extreme programming that helped it simultaneously run
several projects successfully. This required employees to work in pairs encouraging knowledge sharing and learning from each other.
Similar to Edison’s Invention Factory, the culture at Menlo was characterized by an open, flexible, and a collaborative working
environment. The case is about Menlo’s flexible workplace practices that helped it in curbing attrition and employee retention while
its innovative approach to project management encouraged employee engagement and led to innovation. However, a few analysts
opined that it remained to be seen whether Menlo’s flexible workplace approach could also be applied in a corporate environment.
Answer the following question.
Q1. Explain how Sheridan and the other co-founders at Menlo fostered innovation at the company.
Q2. Discuss the significance of project management in the success of a company.
Q3. Discuss the challenges faced in implementing such a system in a corporate environment.
Phones 4u is the UK’s leading independent mobile phone retailer for the youth and value segments, offering all networks and handset
brands, and is recognized for its success in engaging with these audiences through its unique standout marketing, social media
activity and through offering a market leading smartphone range. Leading the way in the mobile industry through its excellent
customer service, award-winning advertising and differentiated in-store experience, Phones 4u has over 500 stores and is still
growing. Phones 4u known for running the largest Ofsted accredited retail apprenticeship program in the UK. Significant investment
in the training and development along with a unique in store customer consultation process means Phones 4u delivers unrivalled
mobile expertise and advice tailored to individual customers’ needs. As a result, one in four new contract smartphones sold on the
high street are through Phones 4u. Due to a period of exceptional growth, the need arose to fill a number of vacancies in the South
HR team. It was imperative that the candidates recruited to these positions were an ideal fit in order to contribute to the continuing
success of the company. After briefing several agencies, Hudson HR stood out as the only consultancy able to deliver exactly what
was required. Essentially they needed a relationship that was built on trust and assurance of successful and sustainable delivery. Just
as crucial was a complete understanding of the client’s requirements on the recruitment consultancy’s part, not just of the company
and job roles, but also the team fit of both candidates into the current Phones 4u team. The initial contact with the Hudson HR
consultant proved fruitful – an instant rapport was created, which developed into a successful working relationship following faceto-
face meetings. Phones 4u felt from the start of the process that we really understood their needs which in turn helped us stand
apart from other agencies. The Hudson HR consultant took considerable care in ascertaining exactly what was required, whilst
finding out about the HR business partner herself, the team dynamic, team capability and how the team operates. Having all the
information and being diligent paid dividends; time was taken by Hudson HR to meet potential candidates and thoroughly establish
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culture and team fit, as well as the relevant work skills and experience. Hudson HR also impressed by being constantly accessible –
consultants ensured that they were always available on their mobiles and continually kept all parties informed. It was also felt that
Hudson HR struck the right note with regard to approach; having avoided the “too pushy” method. On top of that, it was clear to
Phones 4u that we truly had their interest at heart. The end of a successful and enjoyable recruitment process saw a number of people
placed at Phones 4u who are all still there today and are excelling in their roles.
Answer the following question.
Q1. Give an over view of the case.
Q2. How did he multiple vacancies for recruitment exist in Phone 4 u? Discuss the recruitment procedure adopted by
Phone4 u company.
General Energy is start-up oil and gas company, the global HR Director, who is based in Turkey was keen to recruit an HR and
Reward Manager to be based in the London office. The role is fairly unique as the ideal candidate required a strong reward
background with some HR generalist experience. Given the uniqueness of the role, the Global HRD was not sure exactly what
background and career path the possible candidates might have taken. She initially pitched the role between £50-£100k. The client
was aware of Hudson as we are the preferred supplier with the previous organization she worked for – Thames Water. We agreed that
we would work on this role on an exclusive basis and dedicate the time fully to finding the right candidate. As this was a brand new
role within a start-up company we suggested to the client that we would send CVs of candidates at various levels to enable the hiring
manager to assess the level and experience required. Filtering through CVs, the hiring manager was able to identify the type of
individual from a technical and cultural perspective that would suit the organization. We agreed that a candidate at the more senior
end was required as this role would need a candidate who has experience of designing and implementing reward projects. We did
offer a candidate the role but unfortunately the candidate was not confident in moving to a start-up organization. We however did
find another candidate who had previous oil and gas and start-up experience who was a better fit for the role. The candidate accepted
the offer and has enjoyed joining General Energy.
Answer the following question.
Q1. Debate the difficulties being faced by the organization in recruiting a reward manager.
Q2. Explain the selection procedure used in the recruitment of HR and Reward Manager.
On May 29, 2009, the Emeryville, California-based computer animation Production Company Pixar Animation Studios (Pixar)
released its tenth feature film, Up, which was billed to become a hit like all its earlier nine films. Experts felt that Pixar’s
unprecedented success was due to the culture of innovation developed and nurtured at the company. They felt that its internal
training and employee education program, Pixar University, was one of the devices that the company employed to take forward its
innovation agenda. Making the shift from an idea-centered business to a people-centered business was another.
Answer the following question.
Q1. How, according to you, does the Pixar University help foster creativity and innovation at Pixar?

Marketing Management
Case Studies
In early 2001, Gujarat Cooperative Milk Marketing Federation (GCMMF) planned to leverage its brand equity and distribution
network to turn Amul2 into India’s biggest food brand. Verghese Kurien, Chairman of GCMMF, set a sales target of Rs.10 bn by
2006 as against sales of Rs 2.3 bn in 2001. In 2001, GCMMF entered the fast food market in India with the launch of vegetable
pizzas under the brand name SnowCap in Ahmedabad, Gujarat. GCMMF was also planning to launch its pizzas in other western
Indian cities like Mumbai, Surat, and Baroda. Depending on the response in these cities, GCMMF would decide to introduce its
pizzas in other cities in India. The pizzas were offered in four flavours: plain tomato-onion-capsicum, fruit pizza (pineapple-topped),
mushroom and ‘Jain pizzas’ (pizzas without onion or garlic). GCMMF launched the pizzas in the Rs.20-25 price range. The existing
players in the pizza market, like Domino’s, Pizza Hut and Nirula’s offered pizzas at nothing less than Rs.39. Analysts felt that
GCMMF’s move would force the existing players to reduce their prices in the long run. GCMMF planned to open 3,000 pizza retail
franchise outlets all over the country by 2005. The pizzas would be made at the retail outlets. The technical training and the recipe
for the pizza would be provided by GCMMF. It would also negotiate with bulk suppliers of vegetables to get these at wholesale
rates. These would be provided to the retailers. The main cost component of the pizza is the mozarella cheese. GCMMF would offer
the cheese at a bulk rate of Rs.140 per kg, compared to the market price of Rs 146 per kg, thus saving the retailers Rs.6 per kg.
GCMMF on its part would have a ready market for its cheese products.
Answer the following question.
Q1. Give an overview of the case.
Q2. Explain in detail the diversion strategy of Gujarat Cooperative Milk Marketing Federation (GCMMF), “Amul”.
The very first major move which Paul S. Otellini took, after becoming the new CEO of Intel Corporation, was changing the
company’s 16-year old logo. The change was not only in the tag line but also in the famous Intel’s “dropped-e” corporate logo. The
company was the market leader in its microprocessor segment and the famous tag line, ‘Intel inside’, was closely associated with its
success. A sudden shift from its year-old and well known corporate logo to a new one, was quite unlikely Intel. Moreover, the
company was planning to diversify to other businesses, apart from its core PC segment, thus, decided to change from ‘Intel Inside’ to
‘Leap Ahead’. There were many instances where companies had changed their corporate logos and also succeeded in maintaining
their images in the market. This case allows room for discussing whether Intel has made the right move or not.
Answer the following question.
Q1. Discuss the new marketing initiatives taken by Intel.
Q2. Debate on whether this initiative would help Intel to succeed in future.
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Mr. Harish Jain, CEO of Energetic Enterprises, has established the firm for the manufacture and marketing of an innovative product.
The firm earned a reputation of its product within two years of its inception and enjoyed monopoly position in the market for its
product. Now it has a turnover of about Rs.80 crores. Three years back, some firms entered the market and offered cheap substitutes
which were of better quality. This year, Mr. Harish Jain is worried because about 40% of the market share has already been taken
away by the new firms and he is not able to check this trend. Mr. Jain has been looking after both production and marketing
functions though finance is being looked after by a finance manager having a professional degree in chartered accountancy. Mr. Jain
has recently lowered the price of his product to fight competition, but even this has not helped. He has now approached you for
advice to stabilize his sales volume.
Answer the following question.
Q1. Analyze the case.
Q2. Identify the strong and weak points of this case.
Q3. What environmental factors have caused a worry to Mr.Jain?
Q4. As a consultant, what strategies would you suggest to check further fall in market share?
M/s SKYLINE Airlines is a large scale diversified group, since 1980. Due to recent global economic challenges Company is facing
problems with customer orientation. The firm is having declining sales & very few new customers. You have been asked to do the
best in this situation as the Marketing manager for the company
Answer the following question.
Q1. How to coin marketing concept of this company to boost sales?
Q2. What will you do to increase the customer’s base and retain old customers?
Q3. Draft a procedure for grievances.
Q4. Redesign a customer service process.

SUBJECT: Marketing Management
N.B: 1} Attempt all questions
Number: maur-00613-2010750
Case 1
1997 saw the US$19 billion merger of Guinness and Grand Met to form Diageo, the world’s largest drinks company. Guinness was the group’s top- selling beverage after Smirnoff vodka, and the group’s third most profitable brand, with an estimated global value of US$ 1.2 billion. More than 10 million glasses of the world’s most popular stout were sold every day, predominantly in Guinness’ top markets: respectively, the UK, Ireland, Nigeria, the USA and Cameroon. However, the famous dark stout with the white, creamy head was causing some strategic concerns for Diageo. In 1999, for the first time in the 241-year history of Guinness, sales fell. In early 2002 Diageo CEO Paul Walsh announced to the group’s concerned shareholders that global volume growth of Guinness was down 4 per cent in the last six month of 2001 and, more alarmingly, sales were also down 4 per cent in its home markets, Ireland. How should Diageo address falling sales in the centuries- old brand shrouded in Irish mystique and tradition?
The changing face of the Irish beer market
The Irish were very fond of beer and even fonder of Guinness. With close to 200 liters per capita drunk each year- the equivalent of one pint per person per day- Ireland ranked top in worldwide per capita beer consumption, ahead of the Czech Republic and Germany.
Beer accounted for two-thirds of all alcohol bought in Ireland in 2001. Stout led the way in volume sales and accounted for 40 per cent of all beer value sales. Guinness, first brewed in 1759 in Dublin by Arthur Guinness, enjoyed legendary Status in Ireland, a national symbol as respected as the green, white and gold flag. It was by far the most popular alcoholic drink in the Ireland, accounting for nearly one of every two points of beer sold. Its nearest competitors were Budweiser and Heineken, which held 13 per cent and 12 per cent of the market respectively.
However, the spectacular economic growth of the Irish economy since the mid-1990s had opened up the traditional drinking market to new cultures and influences, and encouraged the travel-friendly Irish to try other drinks. Beer and in particular stout were gradually losing popularity compared with wine or the recently launched RTDs (ready-to-drinks) or FABs (flavored alcoholic beverages), which the younger generation of drinkers considers trendier and ‘healthier. As a Euromonitor report explained:
Younger consumers consider dark beers and stout to be old fashioned drinks, with the perceived stout or ale drinker being an old, slightly overweight man and thus not in tune with image conscious youth culture.1 Beers sales, which once accounted for 75 per cent of all alcohol bought in Ireland, were expected to drop to close to 50 per cent by 2006, while stout sales were forecast to decrease by 12 per cent between 2002 and 2006.
Giving Guinness a boost in its home market
With Guinness alone accounting for 37 per cent of Diageo’s volume in the market, Guinness/UDV Ireland was one of the feel the pain caused by the declining popularity of beer and in particular stout. A Euromonitor report in February 2002 explained how the profit of the Guinness drinker, typically men aged 21-plus, was affected:
The average age of Guinness drinkers is rising and this is bringing about the worrying fact that the size of the Guinness target audience is falling. The rate of decline is likely to quicken as the number of less brand loyal, non-stout drinking younger consumer’s increases.2
The report continued:
In Ireland, in particular base for Guinness is shrinking as the majority of 18 to 24 year olds
consistently reject stout as a product relevant to their generation, opting instead to consume lager or spirits.
Effectively, one-third of young Irish men and half of young Irish woman had reportedly never tried Guinness.
3 A Guinness employee provided another explanation. Guinness is similar to coffee in that when you’re young you drink it [coffee] with sugar, but when
you’re older you drink it without. It’s got a similar acquired taste and once you’re over the initial hurdle, you’ll fall in love with it.
4 .n an attempt to lure young drinkers to the somewhat ‘acquired’ Guinness taste (40 per cent of the Irish population was under the age of 24) Diageo had invested million in developing product innovations and brand building in Ireland’s 10,000 pubs, clubs and supermarkets.
Product innovation
Until the mid-1990s most Guinness in Ireland was drunk in a paint glass in the local pub. The launch of product innovations in the form of a new cooling mechanism for draft Guinness and the ‘widget’ technology applied to cans and bottles attempted to modernize the brand’s image and respond to increasing competition from other local and imported stouts and lagers.
‘A perfect head canned Guinness
In 1989, and at a cost of more than 10 million, Guinness developed an ingenious ‘widget’ device for its canned draft stout sold in ‘off-trade’ outlets such as supermarkets and ‘off-licenses. The widget, placed in the bottom of the can, released a gas that replicated the draft effect.
Although over 90 per cent of beer in Ireland was sold in ‘on-trade’ pubs and bars, sales of beer in the cheaper ‘off-trade’ channel were slowly gaining in importance. The Guinness brand manger at the time, John O’Keeffe, explained how home drinkers could how enjoy a smoother, creamier head similar to the one obtained in the pub thanks to the new widget technology:
When the can is opened, the pressure causes the nitrogen to be released as the widget moves
through the beer, creating the classic draft Guinness surge . Nearly 10 years later, in 1997, the ‘floating widget’ was introduced, which improved the effectiveness of the device.
A colder pint
In 1997 Guinness draft Extra Cold was launched in Ireland. An additional chilled tap system could be added to the standard barrel in pubs, allowing the Guinness to be served at 4 C rather than the normal 6 C. By serving Guinness at a cooler temperature, Guinness/UDV hoped to mute the bitter taste of the stout and make it more palatable for younger adults, who were increasingly accustomed to drinking chilled lager, particularly in the summer.
A cooler image for Guinness
In October 1999 the widget technology was applied to long-steamed bottles of Guinness. The launch was supported by a US$2 million TV and outdoor board campaign. The packaging-with a clear, shiny plastic wrap, designed to look like a pint complete with creamy head –was quit a departure from the traditional Guinness look.
The objective was to reposition Guinness alongside certain similarly packaged lagers and RTD s and offer younger adults a more fashionable way to drink Guinness: straight from the bottle. It also gave Guinness easier access to the growing number of clubs and bars that were less likely to serve traditional drafts Guinness, which could be kept for only six to eight weeks and took two minutes to pure. The RTDs, by contrast, had a shelf-life of more than a year and were drunks straight from the bottle. However, financial analysts remained sceptical about the Guinness product innovation, which had no significant positive impact on sales or profitability:
The latest news about the success of the recently introduced innovations suggests that they have not had a notably material impact on Guinness brand performance.
Brand building
Euromonitor estimated that, in 2000, Diageo invested between US$230 and US$250 million worldwide in Guinness advertising and promotions. However, with a cost-cutting objective, the company reduced marketing expenses in both Ireland and the UK by up to 10 per cent in 2001 and the number of global Guinness agencies from six to two. Nevertheless, Guinness remained one of the most advertised brands in Ireland. It was the leading cinema advertiser and, in terms of outdoor advertising, was second only to the national telecoms provider;
7 Guinness was also heavily promoted at leading sporting and music events, in particular those that were popular with the younger age groups.
The ultimate tribute to the brand was the opening of the new Guinness storehouse in Dublin in late 2000, a sort of Mecca for all Guinness fans. The storehouse was also a fashionable visitor centre with an art gallery and restaurants, and regularly hosted evening events. The company’s design brief highlighted another key objective:
To use an ultramodern facility to breath life into an ageing brand, to reconnect an old company with young (skeptical) customers.
8 As the Storehouse’s design firm’s director, Ralph Ardill, explained:
Guinness Storehouse is a way to get in touch with a new generation to help young people reevaluate Guinness.
Within a year, the Storehouse had become the top tourist destination in Ireland, attracting more than half a million people and hosting 45,000 people for special events and training.
The storehouse also had training facilities for Guinness’s bartenders and 3000 Irish employees. The quality of the Guinness paint remained a high priority for the company, which not only developed pub-like classrooms at the Storehouse but also employed teams of draft technicians to teach barmen how to pure a proper pint. The process involved two-steps –the pour and the top up –and took a total of 199.5 seconds. Barmen also needed to learn how to check that the pressure gauges were properly set and that the proportion of nitrogen to carbon dioxide in the gas was correct. The Uncertain future of the Guinness brand in Ireland Despite Guinness/UDV’s attempt to appeal to the younger generation of drinkers and boost its fading image, rumors persisted in Ireland about the brand’s future. The country’s leading and respected newspapers, the Irish Times, reported in an article in July 2001:The uncertainty over is future all adds to the air of crisis that is building around Guinness. Sales of the famous stout in Ireland, still its single most important market, are falling … The decline in Irish sales triggered a review process at Guinness Ireland Group four month ago … The review is not complete and the assumption is that there is more bad news to come.
10 . in the pubs across Ireland, the traditional Guinness drinkers looked on anxiously as the younger generation drank Bacardi Breezers, Simirnoff Ices or Californian wines. Could the goliath Guinness survive another two centuries? Was the preference for these new to seriously reconsider how it marketed Guinness?
A quick solution?
In late February 2002, Diageo CEO Paul Walsh reverted that the company was testing technology to cut the waiting time for a pint of Guinness from 1 minute 59 seconds to 15-25 seconds. Ultrasound could release bubbles in the stout and from the head instantly, making a pint of Guinness that would be indistinguishable from one produced by the slower, traditional method.
‘A two- minute pour is not relevant to our customers today,’ Walsh said.11 A Guinness spokeswoman continued, ‘ We have got to move with the times and the brand must evolve. We must take all the opportunities that we can. In outlets where it is really busy, if you walk in after nine o’ clock in the evening there will be a cloth over the Guinness pump because it takes longer to pour than other drinks.’12 Aware that some consumers might not be attracted by the innovation, she added ‘It wouldn’t be put everywhere-only where people want a quick pint with no effect on the quality.’ Although still being tested, the ‘quick-pour pint’ was a popular topic of conversation in Dublin pubs, among barmen and customers alike. There were rumours that it would be introduced in Britain only; others thought it would be released worldwide.
Some market commentators viewed the quick-pour pint as an innovation way to appeal to the younger, less patient segment in which Guinness had under performed. Others feared that the young would be unconvinced by the introduction, and loyal customers would be turned off by what they characterized as a ‘marketing u-turn’.
1. From a marketing perspective, what has Guinness done to ensure its longevity?
2. How would you characterize the Guinness brand?
3. What could Guinness do to attract younger drinkers? And to retain its older loyal customer base?
Can both be done at the same time?
4. Is the quick- pour concept a good or bad idea? Why?

Case 2
Good old fashioned rock ‘n’ roll could be dead. If a mobile phone ringtone in the shape of the vocalizations of the animated Crazy Frog dominates the billboard charts for month on end, then it could well signal the death knell for the industry, and how it operates. If this ubiquitous amphibian’s aurally annoying song, converted from a mobile phone ringtone, outsold even mainstay acts such as Oasis and Coldplay, why should music companies invest millions in cultivating fresh musical talent, hoping for them to be the next big thing, when their efforts can be beaten by basic synthesizer music? The industry is facing a number of challenges that it has to address, such as strong competition, piracy, changing delivery formats, increasing cost pressures, demanding primadonnas and changing customer needs. Gone are the days when music moguls were reliant on sales from albums alone, now the industry trawls for revenue from a variety of sources, such as ringtones merchandising concerts, and music DVDs, levering extensive back catalogues and music rights from advertising, movies and TV programming. The music industry is in a state of flux at the moment. The cornerstone of the industry- the singles charthas been facing terminal decline since the mid-1990s. Some retailers are now not even stocking singles due to this marked freefall. Some industry commentators blame the Internet as the sole cause, while others point to value difference between the price of an album and the price of a single as too much. Likewise, some commentators criticize the heavy pre-release promotion of new songs, the targeting of ever younger markets by pop acts, and the explosion of digital television music channels as root causes of the single’s demise. The day when the typical record buyer browses through rows of shelves For a much sought-after band or song on a Saturday afternoon may be a thing of the past. Long term success stories for the music industry are increasingly difficult to develop. The old tradition of A&R (which stands for ‘Artists & Repertoire) was to sign, nurture and develop musical talent over a period of years. The industry relied on continually feeding the system with fresh talent that could prove to be the next big thing and capture the public imagination. Now corporate short-term thinking has enveloped business strategies. If an act fails to be an immediate hit, the record label drops them. The industry is now characterized by an endless succession of one-hit wonders and videogenic artists churning out classic cover songs, before vanishing off the celebrity radar. Four large music labels now dominate the industry (see Table C2.1), and have emerged through years of consolidation. The ‘big four’ major labels have the marketing clout and resources to invest heavily in their acts, providing them with expensive videos, publicity tours and PR coverage. This clout allows their acts to get vital radio airplay and video rotation on dedicated TV music channels. Major record labels have even been accused of offering cash inducements or gift to radio station and DJs in an effort to get their song on playlists. This activity is known in the industry as ‘radio payola’. Consumers have flocked to the Internet, to down load to stream, to ‘rip and burn’ copyrighted music material. The digital music revolution has changed the way people listen, use and obtain their favorite music. The very business model that has worked for decades, buying a single or album from a high-street store, may not survive. Music executives are left questioning whether the Internet will kill the music business altogether. The traditional music industry business model has been fundamentally altered. According to the British Phonographic Industry (BPI), it estimated that 8 million people in the UK are downloading music from the Internet-92 per cent of them doing so illegally. In 2005 alone, sales of CD singles fell by a colossal 23 per cent. To put the change into context, the sales of digital singles increased by 746.6 per cent in 2005. Consumers are The “big four’ labels Universal music The largest music label, with 26 per cent of global music market share; artists on its roster include U2, Limp Bizkit, Mariah Carey and No Doubt Warner music Third biggest music group; artists on its roster include Madonna, Red Hot Chili peppers and REM Song BMG Merger consolidates its position; artists on its roster include Michael Jackson, Lauryn Hill, West life, Dido, Osast and cristina Aguilera EMI Artists on its roster include the Rolling Stones, Coldplay, North Jones Radiohead and Robbie Williams Buying their music their through different channels and also listening to their favourite songs through digital media rather than through standard CD, cassette or vinyl. The emergence of MP3 players, particularly the immensely popular Apple iPod, has transformed the music landscape even further. Consumers are now downloading songs electronically from the Internet, and storing them on these digital devices or burning them onto rewritable CDs.

Glossary of online music jargon
Streaming: Allows the user to listen to or watch a file it is being simultaneously downloaded. Radio channels utilize this technology to transmit their programming on the Internet. ‘Rip n burn’: Means downloading a song or audio file from the Internet and then burning the song on to a rewritable CD or DVD. MP3 format: Mp3 is a popular digital music file format. The sound quality is similar to that of a CD. The format reduces the size of a song to one-tenth of its original size allowing for it to be transmitted quickly over computer networks. Apple iPod: The ‘digital jukebox’ that has transformed the fortunes of the pioneer PC maker. By the end of 2004 Apple is expected to have sold close on 5 million units of this ultra-hip gadget. It was the ‘must-have item’ for 2003. The standard 20GGB iPod player can hold around 5000 songs. Other hardware companies, such as Dell & Creative Labs, have launched competing devices these competing hardware brands can retail for less than 75
Peer –to peer networks (P2P): These networks allow users to share their music libraries with other net users. There is no central server, rather individual computers on the Internet communicating with one another. A P2P program allows users to search for material, such as music files, on other computers. The program lets users find their desire music files through the use of a central computer server. The system works like this: a user sends in a request for a song; the system checks where on the internet that song is located; that song is download directly onto the computer of the user who made the request. The P2P server never actually holds the physical music files-it just facilitates the process.
The Internet offers a number of benefits to music shoppers, such as instant delivery, access to huge music catalogues and provision of other rich multimedia material like concerts or videos, access to samples of tracks, cheaper pricing (buying song for 99p rather than an expensive single) and, above all, convenience. On the positive side, labels now have access to a wider global audience, possibilities of new revenue stream and leveraging their vast back catalogues. It has diminished the bargaining power of large retailers; it is a cheaper distribution medium than traditional forms and labels can now create value-laden multimedia material for consumers. However, the biggest problem is that of piracy and copyright theft. Million of songs are being down loaded from the Internet illegally with no payment to the copyright holder. The internet allows surfers to download songs using a format called ‘MP3’, which doesn’t have inbuilt copyright protection, thus allowing the user to copy and share with other surfers with ease. Peer to peer (P2P) networks such as Kazaa and Grokster have emerged and pose an even deadlier threat to the music industry-they are enemies that are even harder to track and contain. Consumers can easily source and download illegal copyright material with considerable ease using P2P networks (see accompanying box)
P2P Networks used for file sharing
Win MX
A large number of legal download sites have now been launched, where surfers, can either stream their favourite music or download it for future use in their digital music libraries. This has due to been to the rapid success of small digital media players such has the Apple iPod. The legal downloading of songs has grown exponentially. A la carte download services and subscription-based services are the two main business models independent research reveals that the Apple’s iTunes service has over 70 per cent of the market. Highlighting this growing phenomenon of the Internet as an official channel of distribution, new music charts are now being created, such as the ‘Official Download Chart’. Industry sources suggest that our of a typical 99 download, the music label gets 65p while credit card companies get 4p, leaving the online music store with 30p per song download. This service may fundamentally eradicate the concept of an album, with customers selecting only a handful of their favourite songs rather than entire standard 12
tracks. These prices are having knock-on consequence for the pricing of physical formats. Consumers are now looking for a more value-laden music product rather than simply 12 songs with an album cover. Now they are expecting behind the scenes access to their favourite group, live concert footage and other content-rich material. Big Noise Music is an example of one of the legitimate downloading sites running the OD2 system. The sites is different in that for every 1 download, 10p of the revenue goes to the charity Oxfam. The music industry is ferociously fighting back by issuing lawsuits for breach of copyright to people who are illegally downloading songs from the Internet using P2P software. The recording industry has started to sue thousands of people who illegally share music using P2P.
Apple iTunes
Sony Connect
Huge catalogue of over
750,000 songs;
With Apple’s very hip iPod system; offers free single of the week and other exclusive material
The now legitimate website offers over 1,000,000 songs; offers several streaming radio stations too Over 300,000 songs from the major labels; excellent sound quality but compatible only with Sony product due to proprietary file formats Pricing 79 per track, 7.99per album Subscription asedsubscribers pay 9.99a month to stream any of the catalogue, plus another 99p to download
on to a CD From 80-1.20 per track, and 8-10per album Wippit OD2 System, used by:
Big Noise Music
Small catalogue of 15,000 songs with a focus on independent music labels; high quality downloads due to media files used UK-based service; 175,000songs to download; gives a selection of free tracks every month These online sites use the OD2 system for music downloads; they look after encryption, hosting, royalty management and the entire e-commerce system; provides access to nearly 350,000 tracks from 12,000 recording artists 99 per track,6.99 per
Album From 30p to 1 to download alternatively, users can subscribe to the service for 50 a year to gain access to 60,000 songs Varying product bundles, typically 99p for track download , and 1p for streaming . They are issuing warnings to net surfers who are using P2P software that their activities are being watched and monitored. Instant Internet messages are being sent to those who are suspected of offering songs illegally. In addition, they have been awarded court orders so that Internet providers must identify people who are heavily involved in such activity. The music industry is also involved heavily in issue advertising companies, by promoting anti-piracy websites such as– to educate people on the industry and the impact of piracy on artists. These types of public awareness campaign are designed to illustrate the implications of illegal downloading.
Small independent music labels view P2P networks differently, seeing them as vital in achieving publicity and distribution for their acts. These firms simply do not have the promotional resources or distribution clout of the ‘big four’ record labels. They see P2P networks as an excellent viral marketing tool, creating buzz about a song or artist that will ultimately lead to wider mainstream and commercial appeal. The Internet is used to create communities of fans who are interested in their music, providing them access to free videos and other material. It allows independent acts the opportunity to distribute their music to a wider audience, building up their fan base through word of mouth. Savvy unsigned bands have sophisticated downloads as well as opportunities for audio philes to purchase their tunes. Alternatively major labels still see that to gain success one has to get a video on rotation on MTV and that this in turn encourages greater airplay on radio stations, ultimately leading to increased purchases.
For traditional music retailers the retailing landscape is getting more competitive, with multiple channels of distribution emerging due to the Internet and large supermarket chains now selling music CDs supermarket are becoming one of the main channels of distribution through which consumers buy music. These supermarkets are stocking only a limited number of the best-selling music titles, limiting the number of distribution outlets for a new and independent music. Only charts hits and greatest hits collections will make it on to the shelves of such outlets. Now consumers can buy albums from traditional Internet retailers such as, and also on
websites that utilize access to gray markets such as, as well as through legitimate download retailers. This has left traditional music retail operations with severe conundrum: how can they entice more shoppers into their stores? The accompanying box highlight where typical sources their music at present.
Where do people buy their music?
Music stores (like HMV, Virgin Megastore) 16 per cent
Chains (like Woolworth, WHS mith) 16 per cent
Supermarkets (like Tesco, Asda) 21.6 per cent
Mail order 3.9 per cent
Internet sales (like 7 per cent
Downloads Not yet measured
Sources: British Phonographic Industry
The issue of online music retailers using parallel importing, such as CDWOW ( is a concern. These retailers are taking advantages of worldwide price discrepancies for legitimate music CDs, sourcing them in low-cost countries like Hong Kong and exporting them in to European countries. Prices for music in these markets are considerably lower than the market that they are exporting to, and they don’t charge for international delivery. Yet technological improvements have led to revenue opportunities for the industry. Development such as online radio, digital right management, Internet streaming, tethered downloads (locked to PC), downloads (burnable, portable), in-store kiosks, ring tones, mobile message clips, video clips and games soundtracks are great potential revenue sources. In an effort to unlock this potential the major labels have digitized their entire back catalogues. In the wake of these dramatic environmental changes the industry has had to radically adapt. The ‘big four’ music labels are
consolidating even further, developing a digital music strategy, and re-evaluating their entire traditional
business model. Mobile phones are seen as the next primary channel of distribution for digital music. High
penetration levels in the market for mobile phones and the inherent mobility advantages make this the
next crucial battlefield for the music industry.
The Internet may emerge as the primary channel of distribution for music, and the music industry is going to have to adapt to these changes. The move towards the online distribution of entertainment is still in his infancy, with more investment into the telecommunications infrastructure, such as greater Internet access, increased access to broadband technology, 3G technology and changing the way people shop for music will undoubtedly take time. The digital revolution will fundamentally change the way people purchase and consume their musical preferences. In forthcoming years the digital format will become more mainstream, leading to a proliferation of channels of distribution for music. However, as with most new channels or technology, catalogue shopping never surpassed regular high-street shop-ping, Internet shopping likewise, and ‘video never really killed the radio star’ …but will the Internet kill the record store?
1. Discuss the micro and macro forces that are affecting the music industry.
2. Based on this analysis, what strategic options would you recommend for both music publishers and music retailers in the current marketing environment?
Discuss the advantages and disadvantages associated with online distribution from a music label’s perspective.

Section B
Questions 1 to 3 carry 16 marks each:-
1.} From a brand-building perspective, television advertising has two particularly important strengths. List and briefly explain these strengths.
2.} Prior research has shown that although consumers may have fairly good knowledge of the range of prices involved, surprisingly few can recall specific prices of products accurately. When examining products, consumers often employ reference prices. List the possible prices consumers use as their “reference.”
3.} Brands can be differentiated on the basis of many variables; however, four differentiation strategies are emphasized in the text. List and briefly characterize the three differentiation strategies.

Case 1
Difficult Transitions
Tony Stark had just finished his first week at Reece Enterprises and decided to drive upstate to a small lakefront lodge for some fishing and relaxation. Tony had worked for the previous ten years for the O’Grady Company, but O’Grady had been through some hard times of late and had recently shut down several of its operating groups, including Tony’s, to cut costs. Fortunately, Tony’s experience and recommendations had made finding another position fairly easy. As he drove the interstate, he reflected on the past ten years and the apparent situation at Reece.
At O’Grady, things had been great. Tony had been part of the team from day one. The job had met his personal goals and expectations perfectly, and Tony believed he had grown greatly as a person. His work was appreciated and recognized; he had received three promotions and many more pay increases.
Tony had also liked the company itself. The firm was decentralized, allowing its managers considerable autonomy and freedom. The corporate Culture was easygoing. Communication was open. It seemed that everyone knew what was going on at all times, and if you didn’t know about something, it was easy to find out.
The people had been another plus. Tony and three other managers went to lunch often and played golf every Saturday. They got along well both personally and professionally and truly worked together as a team. Their boss had been very supportive, giving them the help they needed but also staying out of the way and letting them work.
When word about the shutdown came down, Tony was devastated. He was sure that nothing could replace O’Grady. After the final closing was announced, he spent only a few weeks looking around before he found a comparable position at Reece Enterprises.
As Tony drove, he reflected that “comparable” probably was the wrong word. Indeed, Reece and
O’Grady were about as different as you could get. Top managers at Reece apparently didn’t worry too much about who did a good job and who didn’t. They seemed to promote and reward people based on how long they had been there and how well they played the never-ending political games.
Maybe this stemmed from the organization itself, Tony pondered. Reece was a bigger organization than O’Grady and was structured much more bureaucratically. It seemed that no one was allowed to make any sort of decision without getting three signatures from higher up. Those signatures, though, were hard to get. All the top managers usually were too busy to see anyone, and interoffice memos apparently had very low priority.
Tony also had had some problems fitting in. His peers treated him with polite indifference. He sensed that a couple of them resented that he, an outsider, had been brought right in at their level after they had had to work themselves up the ladder. On Tuesday he had asked two colleagues about playing golf.
They had politely declined, saying that they did not play often. But later in the week, he had overheard them making arrangements to play that very Saturday.
It was at that point that Tony had decided to go fishing. As he steered his car off the interstate to get gas, he wondered if perhaps he had made a mistake in accepting the Reece offer without finding out more about what he was getting into.
Case Questions
1. Identify several concepts and characteristics from the field of organizational behavior that this case
2. What advice can you give Tony? How would this advice be supported or tempered by behavioral
concepts and processes?
3. Is it possible to find an “ideal” place to work? Explain.

Case 2
Humanized Robots?
Helen Bowers was stumped. Sitting in her office at the plant, she pondered the same questions she had been facing for months: how to get her company’s employees to work harder and produce more. No matter what she did, it didn’t seem to help much.
Helen had inherited the business three years ago when her father, Jake Bowers, passed away
unexpectedly. Bowers Machine Parts was founded four decades ago by Jake and had grown into a moderate-size corporation. Bowers makes replacement parts for large-scale manufacturing machines such as lathes and mills. The firm is headquartered in Kansas City and has three plants scattered throughout Missouri.
Although Helen grew up in the family business, she never understood her father’s approach. Jake had treated his employees like part of his family. In Helen’s view, however, he paid them more than he had to, asked their advice far more often than he should have, and spent too much time listening to their ideas and complaints. When Helen took over, she vowed to change how things were done. In particular, she resolved to stop handling employees with kid gloves and to treat them like what they were: the hired help.
In addition to changing the way employees were treated, Helen had another goal for Bowers. She wanted to meet the challenge of international competition. Japanese firms had moved aggressively into the market for heavy industrial equipment. She saw this as both a threat and an opportunity. On the one hand, if she could get a toehold as a parts supplier to these firms, Bowers could grow rapidly. On the other, the lucrative parts market was also sure to attract more Japanese competitors. Helen had to make sure that Bowers could compete effectively with highly productive and profitable Japanese firms.
From the day Helen took over, she practiced an altogether different philosophy to achieve her goals. For one thing, she increased production quotas by 20 percent. She instructed her first-line supervisors to crack down on employees and eliminate all idle time. She also decided to shut down the company softball field her father had built. She thought the employees really didn’t use it much, and she wanted the space for future expansion.
Helen also announced that future contributions to the firm’s profit-sharing plan would be phased out.
Employees were paid enough, she believed, and all profits were the rightful property of the owner—her.She also had private plans to cut future pay increases to bring average wages down to where she thought they belonged. Finally, Helen changed a number of operational procedures. In particular, she stopped asking other people for their advice. She reasoned that she was the boss and knew what was best. If she asked for advice and then didn’t take it, it would only stir up resentment.
All in all, Helen thought, things should be going much better. Output should be up and costs should be way down. Her strategy should be resulting in much higher levels of productivity and profits.
But that was not happening. Whenever Helen walked through one of the plants, she sensed that people weren’t doing their best. Performance reports indicated that output was only marginally higher than before but scrap rates had soared. Payroll costs were indeed lower, but other personnel costs were up. It
seemed that turnover had increased substantially and training costs had gone up as a result.
In desperation, Helen finally had hired a consultant. After carefully researching the history of the
organization and Helen’s recent changes, the consultant made some remarkable suggestions. The bottom line, Helen felt, was that the consultant thought she should go back to that “humanistic nonsense” her father had used. No matter how she turned it, though, she just couldn’t see the wisdom in this. People worked to make a buck and didn’t want all that participation stuff.Suddenly, Helen knew just what to do: She would announce that all employees who failed to increase their productivity by 10 percent would suffer an equal pay cut. She sighed in relief, feeling confident that she had finally figured out the answer.
Case Questions
1. How successful do you think Helen Bowers’s new plan will be?
2. What challenges does Helen confront?
3. If you were Helen’s consultant, what would you advise her to do?

Case 3
Teams at Evans RV Wholesale Supply and Distribution Company?
Evans RV Wholesale Supply and Distribution Company sells parts, equipment, and supplies for
recreational vehicles-motor homes, travel trailers, campers, and similar vehicles. In addition, Evans has a service department for the repair and service of RVs. The owner, Alex Evans, bought the company five years ago from its original owner, changed the name of the company, and has finally made it profitable, although it has been rough going. The organization is set up in three divisions: service, retail parts and supplies, and wholesale parts and supplies. Alex, the owner, CEO, and president, has a vice president for each operating division and a vice president of finance and operations. The organization chart shows these divisions and positions.
In the warehouse there are three groups: receiving (checking orders for completeness, returning
defective merchandise, stocking the shelves, filling orders), service parts, and order filling for outgoing shipments. The warehouse group is responsible for all activities related to parts and supplies receiving,storage, and shipping.
The retail sales division includes all functions related to selling of parts and supplies at the two stores and in the mobile sales trailer. Personnel in the retail division include salespeople and cashiers. The retail salespeople also work in the warehouse because the warehouse also serves as the showroom for walk-in customers.
In the service department the service manager supervises the service writers, one scheduler, and lead mechanics and technicians. The service department includes the collision repair group at the main store and the service department at the satellite store. The collision repair group has two service writers who have special expertise in collision repair and insurance regulations. Two drivers who move RVs around the “yard” also work in the service division.
The accounting and finance groups do everything related to the money side of the business, including accounts payable and receivable, cash management, and payroll. Also in this group is the one person who handles all of the traditional personnel functions.
Alex has run other small businesses and is known as a benevolent owner, always taking care of the loyal employees who work hard and are the backbone of any small business. He is also known as being real tough on anyone who loafs on the job or tries to take unfair advantage of Alex or the company. Most of the employees are either veterans of the RV industry at Evans or elsewhere, or are very young and still learning the business. Alex is working hard to develop a good work ethic among the younger employees and to keep the old-timers fully involved. Since he bought the business, Alex has instituted new, modern, employee-centered human resource policies. However, the company is still a traditional hierarchically structured organization.
The company is located in a major metropolitan area that has a lot of potential customers for the RV business. The region has many outdoor recreational activities and an active retirement community that either lives in RVs (motor homes, trailers, or mobile homes) or uses them for recreation. The former owner of the business specifically chose not to be in the RV sales business, figuring that parts and service was the better end of the business. Two stores are strategically located on opposite ends of the metropolitan area, and a mobile sales office is moved around the major camping and recreational areas during the peak months of the year.
When Alex bought the company, the parts and supplies business was only retail, relying on customers to walk in the door to buy something. After buying the business, Alex applied good management, marketing, and cash-management principles to get the company out of the red and into profitability.
Although his was not the only such business in town, it was the only one locally owned, and it had a good local following. About two years ago, Alex recognized that the nature of the business was changing. First, he saw the large nationwide retailers moving into town. These retailers were using discount pricing in large warehouse-type stores. These large retail stores could use volume purchasing to get lower prices from manufacturers, and they had the large stores necessary to store and shelve the large inventory. Alex, with only two stores, was unable to get such low prices from manufacturers. He also noted that retired people were notorious for shopping around for the lowest prices, but they also appreciated good, friendly customer service. People interested in recreational items also seemed to be following the national trend to shop via catalogs.
So for a variety of reasons Alex began to develop a wholesale business by becoming a wholesale
distributor to the many RV parts and supply businesses in the small towns located in the recreational areas around that state and in surrounding states. At the same time, he created the first catalog for RV parts and supplies, featuring all the brand-name parts and supplies by category and supplier. The catalog had a very attractive camping scene on the cover, a combination of attractively displayed items and many pages full of all the possible parts and supplies that the RV owner could think of. Of course, he made placing an order very easy, by phone, mail, or fax, and accepted many easy payment methods. He filled both distributor orders and catalog orders from his warehouse in the main store using standard mail and parcel delivery services, charging the full delivery costs to the customers. He credits the business’s survival so far to his diversification into the warehouse and catalog business through which he could directly compete with the national chains.
Although it is now barely profitable, Alex is concerned about the changes in the industry and the
competition and about making the monthly payments on the $5 million loan he got from the bank to buy the business in the first place. In addition, he reads about the latest management techniques and attends various professional conferences around the country. He has been hearing and reading about this team-based organization idea and thinks it might be just the thing to energize his company and take it to the next level of performance and profitability. At the annual strategic planning retreat in August, Alex announced to his top management team that starting on October 1 (the beginning of the next fiscal year), the company would be changing to a team-based arrangement.
Case Questions
1. What mistakes has Alex already made in developing a team-based organization?
2. If Alex were to call you in as a consultant, what would you tell him to do?
3. Using the organization chart of Evans RV Wholesale Supply and Distribution, describe how you
would put the employees together in teams.

Case 4 Stress Takes Its Toll
Larry Field had a lot of fun in high school. He was a fairly good student, especially in math, he worked harder than most of his friends, and somehow he ended up going steady with Alice Shiflette, class valedictorian. He worked summers for a local surveyor, William Loude, and when he graduated Mr. Loude offered him a job as number-three man on one of his survey crews. The pay wasn’t very high, but Larry already was good at the work, and he believed all he needed was a steady job to boost his confidence to ask Alice to marry him. Once he did, events unfolded rapidly. He started work in June, he and Alice were married in October, Alice took a job as a secretary in a local company that made business forms, and a year later they had their first child. The baby came as something of a shock to Larry. He had come to enjoy the independence his own paycheck gave him every week. Food and rent took up most of it, but he still enjoyed playing basketball a few nights a week with his high school buddies and spending Sunday afternoons on the softball field.
When the baby came, however, Larry’s brow began to furrow a bit. He was only 20 years old, and he still wasn’t making much money. He asked Mr. Loude for a raise and got it—his first.
Two months later, one of the crew chiefs quit just when Mr. Loude’s crews had more work than they could handle. Mr. Loude hated to turn down work, so he made Larry Field a crew chief, giving his crew some of the old instruments that weren’t good enough for the precision work of the top crews, and assigned him the easy title surveys in town. Because it meant a jump in salary, Larry had no choice but to accept the crew chief position. But it scared him. He had never been very ambitious or curious, so he’d paid little attention to the training of his former crew chief. He knew how to run the instruments— the basics, anyway—but every morning he woke up terrified that he would be sent on a job he couldn’t handle.
During his first few months as a crew chief, Larry began doing things that his wife thought he had outgrown. He frequently talked so fast that he would stumble over his own words, stammer, turn red in the face, and have to start all over again. He began smoking, too, something he had not done since they had started dating. He told his two crew members that smoking kept his hands from shaking when he was working on an instrument. Neither of them smoked, and when Larry began lighting up in the truck while they were waiting for the rain to stop, they would become resentful and complain that he had no right to ruin their lungs too.
Larry found it particularly hard to adjust to being “boss,” especially since one of his workers was getting an engineering degree at night school and both crew members were the same age as he. He felt sure that Alfonso Reyes, the scholar, would take over his position in no time. He kept feeling that Alfonso was looking over his shoulder and began snapping any time they worked close together.
Things were getting tense at home, too. Alice had to give up her full-time day job to take care of the baby, so she had started working nights. They hardly ever saw each other, and it seemed as though her only topic of conversation was how they should move to California or Alaska, where she had heard that surveyors were paid five times what Larry made. Larry knew his wife was dissatisfied with her work and believed her intelligence was being wasted, but he didn’t know what he could do about it. He was disconcerted when he realized that drinking and worrying about the next day at work while sitting at home with the baby at night had become a pattern.
Case Questions
1. What signs of stress was Larry Field exhibiting?
2. How was Larry Field trying to cope with his stress? Can you suggest more effective methods?