Question: please read case and answer question, do not copy answer from other posted question on answers. 1. situations an
Posted: Sun Jul 03, 2022 1:31 pm
Question:
please read case and answer question, do not
copy answer from other posted question on
answers.
1. situations analysis
• extent of demand
• nature of demand
• environmental climate
• stage of product life cycle
• cost structure of the industry
• skills of the firm
• financial source of the firm
2. distribution structure
3. problems and Opportunities
• key probelms
• key opportunities
• on the balance, the situation is:
4. objectives
• objective defined
• alternative one
• alternative two
• alternative three
• alternative four
5. decision
i dont get your question its not even english .. all yoi have to do is read thr case and pull out components that match the bullet points
172 Part One Formulation of the Sales Program Case 1.1 The Valley Winery* Pat Waller, recently hired as sales manager of the San Francisco region's chain division, was lamenting the problems he inherited. Despite favorable sales results for the San Francisco region, turnover was so severe Waller could not understand how sales increased dur- ing the past several years. He was surprised to learn the average sales rep had been with the San Francisco division of Valley Winery for only seven months and sales force turnover neared 100 percent a year. In fact, only one sales rep had more than two years' experi- ence. Waller had heard that high turnover was a prob- lem nationwide but did not expect such high figures for San Francisco. Waller supervises two area managers, who in turn direct nine district managers. District managers super- vise five to six sales reps, of which there are 50 in the San Francisco division. Approximately 50 new sales reps are hired each year, but the sales force size remains relatively constant. Waller knew the increased competi- tiveness in the market would make it more difficult to continue to obtain future sales increases. The excessive turnover problem would command immediate attention. low-end product include Snake-Eye, 20/20, and Acey- Deucy. Valley also bottles a line of pop wines, which have never achieved high sales. Brands in the pop line are California Dream and Mile-High. The Valley Win- ery sells over 40 percent of all wine produced in the United States each year. THE COMPANY The Valley Winery, founded in 1933 in Napa, Califor- nia, is the largest domestic producer of wine in the United States. Started with only a $7,500 investment at the end of Prohibition, it has become the leading pro- ducer of low-priced, consistent-quality wines. Favorite brands include Santo Rey and Valley premium table wines, Astral sparkling wines, Valley brandy, and most recently the Cool Valley line of wine coolers. As is true with most other wineries, Valley produces a low-grade, fortified sherry known in the streets as "sneaky pete." This product appeals to a small market niche and receives virtually no marketing support. The Valley name does not even appear on the label, a practice fol- lowed by other wineries as well. Brand names for this Jeffrey J. Ertel, MBA-Marketing, University of Wisconsin- Madison, assisted in preparing this case. Copyright © 2001 Neil M. Ford. The Valley Winery is also one of this nation's largest privately held companies. As such, it is not required to disclose any financial information. However, according to financial analysts who specialize in the wine and dis- tilled spirits industry, 2001 sales were believed to have exceeded $1.5 billion. Of the various producers of wine and distilled spirits, the Valley Winery is believed to be the best managed and most innovative. Valley's phenomenal growth and success can be traced to two broad factors. As already stated, it pro- duces wines of consistently high quality at relatively low prices. Second, Valley's sales force, using a push strategy, is considered by many to be the most aggres- sive and innovative in the industry. As the manager of a San Francisco liquor store states, "Turn your back on a Valley sales rep, and your store becomes a Valley ware- house." Heading up the sales force is Carl Roman, whose passion for detail and success is well known. Valley Winery distributes nationwide through liquor and beer distributors located in metropolitan areas. Valley owns roughly 50 percent of these distributors, mostly those that are larger and more profitable. Val- ley's field representatives call on noncompany liquor and beer wholesalers across the country. Valley uses a major account system with reps calling on the head- quarters of large chain stores. The organization of the San Francisco division is typical, especially in those market areas where Valley owns the distributor. There are three sales groups. The first group calls on liquor stores and bars. Career-type salespeople dominate this group and most are older. These sales reps are paid a straight commission of 6 percent on sales. Almost all, 95 percent, are male. The second group calls on restaurants, resorts, hotels, and motels. This predominantly female sales group is paid a straight salary ($19,500 to $23,500) plus a company car. The third group is the chain division. This group, 99 percent male, receives a straight salary plus car and
a year-end bonus. Their salary ranged from $22,000 to $27,000. The chain group is considered the major source of future sales managers. The San Francisco chain division sales organization has experienced numerous changes. Early in 1997, the company had a wine division and a wine cooler divi- sion. Exhibit I illustrates this organization. Early in 1998, Carl Roman revamped the structure and created a product line division reflecting premium and vintage products. Within the Premium Division were the Valley wines, the aperitif wines, and the Astral sparkling wines. The Vintage Division carried the Estate wines, Santo Rey wines, the Cool Valley line of wine coolers, and the Valley brandy. Exhibit 2 shows this organiza- tion. Less than six months later, Carl Roman introduced yet another modification reflecting the importance of key customers, which were classified as major accounts. Exhibit 3 illustrates this change. Sales reps calling on major accounts represented the entire Valley line of wines and distilled spirits. The San Francisco division is responsible for sales to all of the major grocery head- quarters, such as Safeway, Lucky, and Alpha Beta. Forward integration decisions are a function of how well the independent distributor covers the market and the size of the market potential. Carl Roman had been Cool Valley division EXHIBIT 1 San Francisco Division: Chain Store Division Organizational Chart (May 1997) Sales manager Area manager District managers Sales representatives Case 1.1 The Valley Winery 173 very concerned with the chain store sales performance in the San Francisco area for some time. The previous dis- tributor assigned 15 sales reps to call on the chain outlets and had resisted Valley's pleas to increase the sales force to 30 to 35 reps. After Valley Winery bought out the San Francisco distributor, sales of Valley Wines increased dramatically, primarily due to the increased number of sales reps calling on chain stores-from 15 up to 50. None of the 15 reps who worked for the previous owner was retained after Valley purchased the distributorship. The buying process for these major chain accounts is fairly standard. Each sales rep is personally responsi- ble for a specific number of stores taken from all major grocery chains. Thus, a sales rep will call on Safeway, Lucky, and Alpha Beta stores. The total number of out- lets constitutes the sales rep's territory. 500 The sales rep is responsible for reaching monthly display quotas on each line of products. For instance, one month the representative is responsible for display- ing 50 cases of Santo Rey wine in 1.5- and 4.0-liter sizes. The next month the rep may have a display quota of 50 cases of Santo Rey in 3.0-liter sizes. This pattern repeats itself throughout the year. Exhibit 4 illustrates monthly quota patterns for different display results by sales rep and the extent of the turnover problem District managers Sales Area manager 60 representatives Wine division 1 10
174 Part One Formulation of the Sales Program EXHIBIT 2 San Francisco Division: Chain Store Division Organizational Chart (January 1998) Premium division Valley wines Aperitif wines Astral District managers Sales Area manager representatives Safeway division Area manager District managers Sales manager Sales representatives EXHIBIT 3 San Francisco Division: Chain Store Division Organizational Chart (June 1998) Sales manager 10 Area manager District managers Sales representatives Vintage division Estate wines Santo Rey Cool Valley Valley brandy District managers Sales representatives Lucky and Alpha Beta division Area manager 100
176 Part One Formulation of the Sales Program universities was common. This generally resulted in 101 to 15 new sales reps a year. Open newspaper advertise- ments usually produced 10 hires per year. The use of six local employment agencies, with fees of approxi- mately $2,000 per hired individual, resulted in 15 to 20 new reps per year. Last, any employee recommending a friend or an acquaintance who was subsequently hired received a $200 finder's fee. This practice typi- cally cost the company $2,000 per year. Wehner claims not to recruit personnel from competitors or customers. Wehner said he thought those hired through employ- ment agencies were the most successful, but he was not positive. The hiring process generally followed a similar pat- tern. The selected applicant completes a simple appli- cation form and is then interviewed by Wehner or his. assistant for approximately 30 minutes. During that time, if the candidate seems motivated and enthusias- tic, and asks for the sales job, the applicant is asked back for additional interviews. The candidate then interviews with the distributor- ship's top manager for no more than 10 minutes. The San Francisco distributor is owned by Valley, and the new sales rep works for the distributor. Valley can reas- sign the sales rep to wholly owned distributors. All sales reps interact with the area distributor and often participate in training programs with the distributor's other two sales groups. Waller learned the distributor's top manager regards youth and physical characteristics as the most important traits an applicant should have to pass this stage. where he served as area manager before accepting a home office assignment as a product manager assistant. This itinerary was typical for a person selected to move into sales management, except that most sales man- agers are promoted from the chain store sales force. Waller's new assignment represented his first exposure to major account management. On September 8, 2001, Waller traveled with Marv Flanigan, a nine-month veteran. Although scheduled to meet at 7 A.M., Marv was late, stating his hour-long drive was delayed by a terrible accident. Flanigan said the latest territory change created a longer commute for him. Since he was late, they started to work imme- diately, forgoing the customary cup of coffee Waller intended to buy as a warm-up tactic to learn about Flanigan's plans for the day. Waller and Flanigan spent nearly the entire morning at an Alpha Beta store (#561) building a 50-case display for Valley wines, resetting the cold box, and servicing the shelves. After a 15- minute presentation to the wine clerk, Flanigan and Waller left for the next call. When Waller congratulated Flanigan on the 50-case display, Flanigan quipped, "Thanks, but unfortunately it's not enough to make quota. Nobody, but nobody, ever makes quota. That's 25 cases short, and that store is one of my best accounts. And did you see my Santo Rey quota-90 cases-no way!" The next step involves an interview with Waller's predecessor, John Ruppert, who was promoted to a home office assignment as a major account manager. The recruit is then whisked off to spend a day in the field with an experienced sales rep. Waller questioned whether this day in the field, during which the recruit is "wined and dined," is an accurate representation of the job. If all of these hurdles are passed, the applicant is then offered the job. Pat Waller's work with the sales reps provided use- ful information. Waller traveled with two sales reps and discovered many new things about the sales job. Before being promoted to the sales manager position for the San Francisco division, Waller had moved through the ranks, starting as a sales rep in the Seattle division. As a sales rep, Waller served primarily in a missionary capacity, calling on liquor stores and taverns. Waller then advanced to district manager for the Seattle division. Next, Waller moved to the Phoenix division, During their afternoon together, Waller observed a very aggressive sales promotion that Flanigan pre- sented to a wine clerk at a Safeway store (#724). After- ward, Waller questioned the tenuous sales figures Flanigan quoted to the wine buyer. He responded by claiming, "John [division's previous sales manager] and Rick [Mary's current area manager] told me to stretch the sales estimates." Continuing, he revealed, "They said it's the only way to make my numbers. Rick even told me to pump up the numbers on the recap I send to Napa." Pumping up the numbers meant a sales rep would claim a 50-case display had been installed when the store manager or wine clerk would only order a 25- to 30-case display. The display would only look like a 50- case display: center boxes in the display would be empty. On September 23, 2001, Waller worked with Bill Murphy, Murphy, a six-month veteran, arrived grum- bling. He said his district manager called him at 10:30 the night before complaining about the condition of Safeway #507. After 30 minutes of specific instructions and other messages, Murphy had agreed to visit the a
please read case and answer question, do not
copy answer from other posted question on
answers.
1. situations analysis
• extent of demand
• nature of demand
• environmental climate
• stage of product life cycle
• cost structure of the industry
• skills of the firm
• financial source of the firm
2. distribution structure
3. problems and Opportunities
• key probelms
• key opportunities
• on the balance, the situation is:
4. objectives
• objective defined
• alternative one
• alternative two
• alternative three
• alternative four
5. decision
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172 Part One Formulation of the Sales Program Case 1.1 The Valley Winery* Pat Waller, recently hired as sales manager of the San Francisco region's chain division, was lamenting the problems he inherited. Despite favorable sales results for the San Francisco region, turnover was so severe Waller could not understand how sales increased dur- ing the past several years. He was surprised to learn the average sales rep had been with the San Francisco division of Valley Winery for only seven months and sales force turnover neared 100 percent a year. In fact, only one sales rep had more than two years' experi- ence. Waller had heard that high turnover was a prob- lem nationwide but did not expect such high figures for San Francisco. Waller supervises two area managers, who in turn direct nine district managers. District managers super- vise five to six sales reps, of which there are 50 in the San Francisco division. Approximately 50 new sales reps are hired each year, but the sales force size remains relatively constant. Waller knew the increased competi- tiveness in the market would make it more difficult to continue to obtain future sales increases. The excessive turnover problem would command immediate attention. low-end product include Snake-Eye, 20/20, and Acey- Deucy. Valley also bottles a line of pop wines, which have never achieved high sales. Brands in the pop line are California Dream and Mile-High. The Valley Win- ery sells over 40 percent of all wine produced in the United States each year. THE COMPANY The Valley Winery, founded in 1933 in Napa, Califor- nia, is the largest domestic producer of wine in the United States. Started with only a $7,500 investment at the end of Prohibition, it has become the leading pro- ducer of low-priced, consistent-quality wines. Favorite brands include Santo Rey and Valley premium table wines, Astral sparkling wines, Valley brandy, and most recently the Cool Valley line of wine coolers. As is true with most other wineries, Valley produces a low-grade, fortified sherry known in the streets as "sneaky pete." This product appeals to a small market niche and receives virtually no marketing support. The Valley name does not even appear on the label, a practice fol- lowed by other wineries as well. Brand names for this Jeffrey J. Ertel, MBA-Marketing, University of Wisconsin- Madison, assisted in preparing this case. Copyright © 2001 Neil M. Ford. The Valley Winery is also one of this nation's largest privately held companies. As such, it is not required to disclose any financial information. However, according to financial analysts who specialize in the wine and dis- tilled spirits industry, 2001 sales were believed to have exceeded $1.5 billion. Of the various producers of wine and distilled spirits, the Valley Winery is believed to be the best managed and most innovative. Valley's phenomenal growth and success can be traced to two broad factors. As already stated, it pro- duces wines of consistently high quality at relatively low prices. Second, Valley's sales force, using a push strategy, is considered by many to be the most aggres- sive and innovative in the industry. As the manager of a San Francisco liquor store states, "Turn your back on a Valley sales rep, and your store becomes a Valley ware- house." Heading up the sales force is Carl Roman, whose passion for detail and success is well known. Valley Winery distributes nationwide through liquor and beer distributors located in metropolitan areas. Valley owns roughly 50 percent of these distributors, mostly those that are larger and more profitable. Val- ley's field representatives call on noncompany liquor and beer wholesalers across the country. Valley uses a major account system with reps calling on the head- quarters of large chain stores. The organization of the San Francisco division is typical, especially in those market areas where Valley owns the distributor. There are three sales groups. The first group calls on liquor stores and bars. Career-type salespeople dominate this group and most are older. These sales reps are paid a straight commission of 6 percent on sales. Almost all, 95 percent, are male. The second group calls on restaurants, resorts, hotels, and motels. This predominantly female sales group is paid a straight salary ($19,500 to $23,500) plus a company car. The third group is the chain division. This group, 99 percent male, receives a straight salary plus car and
a year-end bonus. Their salary ranged from $22,000 to $27,000. The chain group is considered the major source of future sales managers. The San Francisco chain division sales organization has experienced numerous changes. Early in 1997, the company had a wine division and a wine cooler divi- sion. Exhibit I illustrates this organization. Early in 1998, Carl Roman revamped the structure and created a product line division reflecting premium and vintage products. Within the Premium Division were the Valley wines, the aperitif wines, and the Astral sparkling wines. The Vintage Division carried the Estate wines, Santo Rey wines, the Cool Valley line of wine coolers, and the Valley brandy. Exhibit 2 shows this organiza- tion. Less than six months later, Carl Roman introduced yet another modification reflecting the importance of key customers, which were classified as major accounts. Exhibit 3 illustrates this change. Sales reps calling on major accounts represented the entire Valley line of wines and distilled spirits. The San Francisco division is responsible for sales to all of the major grocery head- quarters, such as Safeway, Lucky, and Alpha Beta. Forward integration decisions are a function of how well the independent distributor covers the market and the size of the market potential. Carl Roman had been Cool Valley division EXHIBIT 1 San Francisco Division: Chain Store Division Organizational Chart (May 1997) Sales manager Area manager District managers Sales representatives Case 1.1 The Valley Winery 173 very concerned with the chain store sales performance in the San Francisco area for some time. The previous dis- tributor assigned 15 sales reps to call on the chain outlets and had resisted Valley's pleas to increase the sales force to 30 to 35 reps. After Valley Winery bought out the San Francisco distributor, sales of Valley Wines increased dramatically, primarily due to the increased number of sales reps calling on chain stores-from 15 up to 50. None of the 15 reps who worked for the previous owner was retained after Valley purchased the distributorship. The buying process for these major chain accounts is fairly standard. Each sales rep is personally responsi- ble for a specific number of stores taken from all major grocery chains. Thus, a sales rep will call on Safeway, Lucky, and Alpha Beta stores. The total number of out- lets constitutes the sales rep's territory. 500 The sales rep is responsible for reaching monthly display quotas on each line of products. For instance, one month the representative is responsible for display- ing 50 cases of Santo Rey wine in 1.5- and 4.0-liter sizes. The next month the rep may have a display quota of 50 cases of Santo Rey in 3.0-liter sizes. This pattern repeats itself throughout the year. Exhibit 4 illustrates monthly quota patterns for different display results by sales rep and the extent of the turnover problem District managers Sales Area manager 60 representatives Wine division 1 10
174 Part One Formulation of the Sales Program EXHIBIT 2 San Francisco Division: Chain Store Division Organizational Chart (January 1998) Premium division Valley wines Aperitif wines Astral District managers Sales Area manager representatives Safeway division Area manager District managers Sales manager Sales representatives EXHIBIT 3 San Francisco Division: Chain Store Division Organizational Chart (June 1998) Sales manager 10 Area manager District managers Sales representatives Vintage division Estate wines Santo Rey Cool Valley Valley brandy District managers Sales representatives Lucky and Alpha Beta division Area manager 100
176 Part One Formulation of the Sales Program universities was common. This generally resulted in 101 to 15 new sales reps a year. Open newspaper advertise- ments usually produced 10 hires per year. The use of six local employment agencies, with fees of approxi- mately $2,000 per hired individual, resulted in 15 to 20 new reps per year. Last, any employee recommending a friend or an acquaintance who was subsequently hired received a $200 finder's fee. This practice typi- cally cost the company $2,000 per year. Wehner claims not to recruit personnel from competitors or customers. Wehner said he thought those hired through employ- ment agencies were the most successful, but he was not positive. The hiring process generally followed a similar pat- tern. The selected applicant completes a simple appli- cation form and is then interviewed by Wehner or his. assistant for approximately 30 minutes. During that time, if the candidate seems motivated and enthusias- tic, and asks for the sales job, the applicant is asked back for additional interviews. The candidate then interviews with the distributor- ship's top manager for no more than 10 minutes. The San Francisco distributor is owned by Valley, and the new sales rep works for the distributor. Valley can reas- sign the sales rep to wholly owned distributors. All sales reps interact with the area distributor and often participate in training programs with the distributor's other two sales groups. Waller learned the distributor's top manager regards youth and physical characteristics as the most important traits an applicant should have to pass this stage. where he served as area manager before accepting a home office assignment as a product manager assistant. This itinerary was typical for a person selected to move into sales management, except that most sales man- agers are promoted from the chain store sales force. Waller's new assignment represented his first exposure to major account management. On September 8, 2001, Waller traveled with Marv Flanigan, a nine-month veteran. Although scheduled to meet at 7 A.M., Marv was late, stating his hour-long drive was delayed by a terrible accident. Flanigan said the latest territory change created a longer commute for him. Since he was late, they started to work imme- diately, forgoing the customary cup of coffee Waller intended to buy as a warm-up tactic to learn about Flanigan's plans for the day. Waller and Flanigan spent nearly the entire morning at an Alpha Beta store (#561) building a 50-case display for Valley wines, resetting the cold box, and servicing the shelves. After a 15- minute presentation to the wine clerk, Flanigan and Waller left for the next call. When Waller congratulated Flanigan on the 50-case display, Flanigan quipped, "Thanks, but unfortunately it's not enough to make quota. Nobody, but nobody, ever makes quota. That's 25 cases short, and that store is one of my best accounts. And did you see my Santo Rey quota-90 cases-no way!" The next step involves an interview with Waller's predecessor, John Ruppert, who was promoted to a home office assignment as a major account manager. The recruit is then whisked off to spend a day in the field with an experienced sales rep. Waller questioned whether this day in the field, during which the recruit is "wined and dined," is an accurate representation of the job. If all of these hurdles are passed, the applicant is then offered the job. Pat Waller's work with the sales reps provided use- ful information. Waller traveled with two sales reps and discovered many new things about the sales job. Before being promoted to the sales manager position for the San Francisco division, Waller had moved through the ranks, starting as a sales rep in the Seattle division. As a sales rep, Waller served primarily in a missionary capacity, calling on liquor stores and taverns. Waller then advanced to district manager for the Seattle division. Next, Waller moved to the Phoenix division, During their afternoon together, Waller observed a very aggressive sales promotion that Flanigan pre- sented to a wine clerk at a Safeway store (#724). After- ward, Waller questioned the tenuous sales figures Flanigan quoted to the wine buyer. He responded by claiming, "John [division's previous sales manager] and Rick [Mary's current area manager] told me to stretch the sales estimates." Continuing, he revealed, "They said it's the only way to make my numbers. Rick even told me to pump up the numbers on the recap I send to Napa." Pumping up the numbers meant a sales rep would claim a 50-case display had been installed when the store manager or wine clerk would only order a 25- to 30-case display. The display would only look like a 50- case display: center boxes in the display would be empty. On September 23, 2001, Waller worked with Bill Murphy, Murphy, a six-month veteran, arrived grum- bling. He said his district manager called him at 10:30 the night before complaining about the condition of Safeway #507. After 30 minutes of specific instructions and other messages, Murphy had agreed to visit the a