Tensator is a small company which until a

| February 25, 2017

Question
Project 1:
TENSATOR THE INNOVATOR
Tensator is a small company which until a few years ago was not known for its innovation. The
company’s Sales and Marketing Director Terry Green stated that ‘I’m a very firm believer that
innovation doesn’t need to be revolutionary. There’s nothing my company has done that couldn’t
be done by anyone else’.
Tensator is a light engineering business which manufactured the Constant Force Spring, a device
used in the manufacture of car seat belts throughout Europe. Although the company continues to
produce this product for this market, it is now far more successful in the production of more
recently introduced new product lines.
When Green joined the company in 1989, he realized that there was much more potential for the
company. In 1978 it had put forward plans for the use of the Constant Force Spring in the
production of queuing barriers for supermarkets and banks, etc. ‘We hadn’t done much with it’,
recalled Green, ‘even though there was a feeling it could be developed further’. He persuaded the
company to focus on this new product idea.
Research was undertaken where customers, current and potential, were asked to give opinions on
the viability of such a product and how it could improve on the products that were currently
available. The market research proved to be invaluable. ‘It was hardly rocket science, but it made
us realize that what matters is what the customer wants to buy’, noted Green.
As a result of the company’s research and development, Tensabarrier was launched. By 1996, the
product was being exported to thirty-six countries and accounted for £3 million turnover. This
was a dramatic improvement on the sales generated by the original product which was developed
in 1978 and which had now become just a small part of the company’s turnover.
There are now a variety of Tensabarriers in a variety of shapes and forms. There is a bolt-down
barrier and a special checkout version which incorporates an electronic movement sensor to
prevent theft. These and other innovations were developed very proactively. ‘It’s so easy once
you realize that the key is to talk to your customers about how you can find solutions to their
problems.’
Tensator launched thirteen new products in the years 1995 and 1996. Total turnover had risen

more than threefold since 1988 to £10 million, with employee numbers only rising over the same
period from 120 to 200. Green makes the point, ‘Innovation is about the successful
implementation of new ideas, it’s as simple as that. It’s not necessarily about coming up with new
inventions. It boils down to pretty basic stuff. It’s about tweaking the way you do things rather
than jettisoning one big idea for another’.
1.

Why do you think the new application of the Constant Force Spring is more successful
than its predecessor?
To what extent is the above a good example of product portfolio planning?

2.
1.

Project 02:
NEW LINE IN MOBILE PHONES
One of the oldest principles of marketing is that sellers may sell features, but buyers essentially
buy benefits. This is a distinction sometimes lost on technology led organizations, and the
service sector is no exception. Recent experience of the UK’s largest telecommunications
company, Vodafone, illustrates how crucial it is to see service offers in terms of the benefits they
bring to customers. The company was aware of extensive research which had found high levels
of confusion among purchasers of mobile phones, with a seemingly infinite permutation of
features and prices. With four main networks to choose from, dozens of tariffs and hundreds of
handsets, it easy to see why buyers sought means of simplifying their buying process.
Throughout the 1990s, Vodafone had positioned its UK network as superior technically to its
competitors. Advertising focused on high coverage rates and call reliability.
Vodafone was the UK’s most popular mobile phone operator, with almost eight million
customers, including 4.2 million Pay as you Talk customers. It had opened the UK’s first cellular
network on 1 January 1985 and was the market leader since 1986. Vodafone’s networks in the
UK – analogue and digital – between them carried over 100 million calls each week. It took
Vodafone more than 13 years to connect its first three million subscribers but only 12 months to
connect the next three million. Vodafone had the largest share of the UK cellular market with
33% and had more international roaming agreements than any other UK mobile operator. It
could offer its subscribers roaming with 220 networks in 104 countries.
Despite all of the above, Vodafone was aware that although it was recognized as an extremely
strong business in the corporate marketplace, it was not so strong in the market for personal
customers. Research indicated that personal buyers bought Vodafone for essentially rational
reasons rather than having any emotional attachment to the brand. The success of the competing
Orange network, which had developed a very strong image, was a lesson to Vodafone that many
people did not understand many of the product features on offer, but instead identified with a
brand whose values they could share. Vodafone recognized that it needed to be perceived as
adding value to a consumer’s lifestyle. Given the increasing complexity of product features,
positioning on technical features was likely to make life more confusing for personal customers.
An alternative approach was needed which focused on image and lifestyle benefits.
The company decided to hire Identica – the consultancy that originally created the One 2 One
brand – to revamp its brand communications and advertising strategy in an effort to make
Vodafone more appealing to personal customers. Identica created a new ‘visual language’ for the

Vodafone brand. Vodafone became involved in the biggest ever TV, press, poster and radio
advertising campaign in its 15 year history. Employing a completely new style, the new
advertising centred around the theme: ‘You are now truly mobile. Let the world come to you’ and
featured a new end-line – Vodafone ‘YOU ARE HERE’. The campaign demonstrated how
Vodafone’s products and services were designed to make life easier for its customers.
The campaign, created by BMP DDB, was worth £20 million over two months alone and ran for
the whole year. Bringing meaning to the Vodafone brand and what it represented, a series of
advertisements, through a range of media, showed how Vodafone let the world come to its
customers, enabling them to be truly mobile. This portrayed how Vodafone always pioneered to
make things more possible for its customers in a wire-free world.
In press and poster executions, Vodafone used arrows photographed in various real life situations
to depict its flagship services, e.g. a weather vane was used to illustrate the Vodafone Interactive
weather service showing how weather information could be brought to customers through their
mobile. Each advertisement again had the Vodafone ‘YOU ARE HERE’ end-line. The arrows
indicated the directional approach of Vodafone, letting the world come to the customer. Other
executions illustrated cinema listing information, sports updates, share price information,
international roaming and the Vodafone Personal Roadwatch 1800 service.
The change in emphasis by Vodafone seemed to be timely. The mobile phone industry was facing
a new wave of confusing product features hitting consumers, with the development of Wireless
Access Protocol (WAP) phones and the newer “Third generation” phones due to be launched in
2001. It seemed inevitable that all of the competing networks would be offering confusing
permutations of features with their service, so Vodafone calculated that, given similar levels of
reliability and sophistication by all networks, a favourable image and lifestyle association would
be an important source of competitive advantage. Given the right image with existing
technology, there would be a strong probability that consumers would migrate with the brand to
the new technology when it arrived.
1.
2.

Identify the principal benefits to customers which derive from a mobile phone. What
differences are likely to exist between market segments?
Is a strong brand identity on its own a source of sustainable competitive advantage? To
what extent must this be backed up by real product features?

Project 03:
FREE FLIGHTS PROMOTION ENDS IN DISASTER
The Hoover company’s attempts to sell more vacuum cleaners by offering an incentive of free
flights has become a legendary disaster in the field of sales promotions. An examination of the
case is useful for highlighting some of the problems of planning, implementing, and monitoring
sales promotions.
During the early 1990s, Hoover was faced with a period of economic recession in which
discretionary expenditure on consumer durables was held back. In these conditions, most
vacuum sales were replacements for worn out machines or first-time buys for people setting up
home. The challenge was to increase the sales of machines bought to upgrade existing
equipment.
The company came up with the idea of offering free airline tickets to America for anybody
buying one of its vacuum cleaners. For many people, a holiday in the USA may have been
perceived as an unnecessary and unaffordable luxury during a period of recession, but one that
might be justified if it came free with the purchase of an ‘essential’ vacuum cleaner.
The immediate result of the sales promotion was to boost the company’s sales of vacuum
cleaners to more than double the level of the previous year. So far so good, but then serious
problems set in. The first problem occurred when Hoover could not satisfy demand for its
vacuum cleaners and had to resort to paying its staff overtime rates of pay in order to increase
supply. It should be remembered that the initial objective of the promotion was to utilize existing
spare capacity rather than adding to that capacity. The company had carried out insufficient
research prior to launching its incentive. Had it done so, it may have reached the conclusion that
the incentive was too generous & likely to create more demand than the company could cope
with.
A second problem occurred during subsequent periods when sales fell to below their preincentive levels. Many people had simply brought forward their purchase of a vacuum cleaner.
Worse still, many people had bought their cleaner simply to get the free tickets, which at £70 for

a cleaner with a free £250 ticket made sense. These people frequently disposed of their cleaner as
they had no need for it. The classified ads of many local newspapers contained many adverts for
‘nearly new, unused’ vacuum cleaners at discounted prices and this further depressed sales of new
machines once the sales promotion had come to an end.
A third and more serious problem occurred when large numbers of buyers tried to use their free
flight vouchers. All sales promotions are based on an assumption of take-up rates, which can be
as low as 5-10 per cent. Anything higher and the cost of the incentives actually given away can
wipe out the benefits arising from increased sales. In this case, Hoover had carried out
insufficient pre-testing of the sales promotion in order to assess the likely take-up rate and was
surprised by the actual take-up which subsequently occurred. In an attempt to control costs, the
company became notorious for its attempts to ‘suppress’ take-up of free flights. Many claimants
complained that telephone lines were constantly busy and, when they did get through, they were
offered the most unattractive flights possible. It was reported that claimants from the south-east
of England were only offered flights departing from Scotland and those from Scotland only
offered flights from London, done to reduce the attractiveness of the free offer. These activities
attracted high levels of coverage in the media and left a once highly respected brand as one with
a perception of mistrust. Five years after the initial débâcle, the Hoover Holiday Pressure Group
continued to be an awkward reminder for the company.
The free flights promotion eventually cost Hoover a reported £37 million in redemption charges,
without bringing about any long-term growth in sales. With appropriate pre-testing, these costs
could have been foreseen. Worse still, the company’s brand image had been tarnished in a way
that

would

take

many

years-if

ever-to

recover

from.

1. What are the inherent problems for a company such as Hoover in assessing the
effectiveness of sales promotion activity?
2. What alternative methods of promotion might have been more suitable to achieve
Hoover’s objective of utilizing spare capacity during a period of economic recession?

Project 04:
CONSUMERS CONFOUND MARKETERS
Household spending by all UK households amounted to over £500 billion in 1997, or 63% of
gross domestic product. This level of expenditure is very closely related to conditions in the
country’s macro-economic environment. For marketers, it is crucial to be able to read the macroeconomic environment and to predict the effects of change in demand for their goods and
services. Identifying turning points in the economic cycle has become a work of art as well as
science, as consumers frequently confound experts by changing their expenditure levels in a way
which could not have been predicted on the basis of past experience.
During the Autumn of 1998, mortgage rates in the UK were falling; unemployment was close to
its lowest level for two decades; pay rises were keeping ahead of inflation; and share prices were
recovering from their recent falls. Yet expenditure by British households was falling sharply.
For three consecutive months retail sales fell in value, with retailers such as Marks and Spencers
and Storehouse reporting below expected levels of sales. Retailers have traditionally found
excuses to justify poor sales to their shareholders, including weather which is too cold/too hot.
Even the death of Diana Princess of Wales was widely blamed for keeping people out of the
shops.
Throughout 1998, prices of consumer goods had fallen significantly, with consumer durables
down in price by an average of 2% in a year and clothing by 5%. Economic theory would have
suggested that lower prices would have resulted in higher sales, especially considering the other
favourable elements of the macro-environment. However, this did not appear to be happening.
What else could have been happening in the marketing environment to explain falling household
expenditure? At the time, the media was full of reports of an impending global economic crisis,
triggered by difficulties in the Asian economies. Consumer confidence is crucial to many high
value household purchases such as houses and cars, with consumers reluctant to commit
themselves to regular monthly repayments when their source of income is insecure. Even this
may be only a partial solution, as a survey of consumer confidence carried out in October 1998
by GFK on behalf of the European Commission showed that although consumers were
pessimistic about the state of the national economy, they were quite upbeat about their personal
financial situation.
One possibility was that consumers had become cannier. If prices are falling, why not wait

longer until prices have fallen further? Consumers had also witnessed the effects of previous
over-borrowing and had been more cautious during the recent period of economic growth,
resulting in a historically low level of personal sector indebtedness. In 1997, 9% of disposable
household income was saved, compared with just 3% at the height of the economic boom of
1988.
For companies who need to commit resources a long while in advance in order to meet
consumers’ needs, an accurate understanding of the market environment is crucial if stock
surpluses and shortages are to be avoided. But this case shows that getting it right can still be
very difficult.
1. Identify all of the environmental factors that can affect the demand for consumer durables
and assess the magnitude and direction of their impact.
2. How can a manufacturer of consumer durables seek to respond to environmental change as
rapidly as possible?

Project 05:
FORD CARS GO IN FOR A SERVICE
To many people, cars come pretty close to the goods-dominant extreme of a goods–services
continuum. They are produced in factories from the combination of thousands of components,
and to most people the physical properties of a car can readily be assessed. But recent experience
from the car sector suggests that car manufacturers may be rather more enthusiastic to describe
themselves as service-oriented companies.
The days are long gone when a car manufacturer would sell a car on the strength of its design
features, and then forget about the customer until the time came to replace the car three years
later. Car manufacturers have realized that car buyers seek more than the tangible offering—
important though that is. Over time, they have moved increasingly into services in an attempt to
gain a larger share of car buyers’ wallets.
In the UK, Ford has led the way in many aspects of this increasing service orientation. It saw an
opportunity in the 1970s with the liberalization of consumer credit regulations to offer car buyers
loan facilities with which to make their car purchase. Not only did this make it easier for
middle-income groups to buy its cars, it also allowed Ford to retain the margins which would
otherwise have gone to banks who were the main alternative source of car loan finance. Ford
Motor Credit has become a licensed credit broker and a major profit centre within the company.
The next major attempt to gain a greater share of car buyers’ wallets came through offering
extended warranties on the cars it sold. Traditionally, new cars had come with just twelve months
warranty, but Ford realized that many buyers wanted to buy peace of mind that they were not
going to face unexpected repair bills after their initial warranty had expired. Increased
competition from Japanese importers, and the improving reliability of its new cars encouraged
this development.
By the mid-1990s, Ford came round to the view that many of its customers were buying mobility
services, rather than a car per se. So it came up with schemes where customers paid a small
deposit, followed by a fixed amount per month, in return for which they received comprehensive

finance and warranty facilities. In addition, it promised that the company would take back the car
after three years and replace it with a new one. Marketed under the ‘Options’ brand name, Ford
was soon selling nearly half of its new cars to private buyers using this method. Over time the
scheme was developed to include facilities for maintaining and insuring the car.
Repairs and maintenance have always been important in the car sector, but manufacturers tended
to lose out on much of the benefits of this because of a fragmented dealership network. Separate
customer databases for maintenance and new car sales often did not meet and Ford found that it
had very little direct communication with the people who had bought its cars. By the 1990s, the
dealership network was becoming more closely integrated with Ford’s operations and new
opportunities were seized for keeping new car buyers within the Ford dealership system. Recent
buyers could be alerted to new services available at local dealers, using a database managed
centrally by Ford. Numerous initiatives were launched, such as Ford’s own mobile phone service.
Ford sought to make it easy for customers to get back on the road when their own car was taken
in for servicing, so the provision of car hire facilities contributed to the service ethos. In 1996 the
company linked up with Barclaycard to offer a Ford branded credit card, so Ford found itself
providing a service to its customers which was quite removed from the tangible cars that it sold
By 2000, volume car manufacturers had ceased to make big profits in the UK. In 2002, Ford,
with 18 per cent of the market made just £8 millions in profits on its European operations.
Falling profit margins on selling new cars were partly offset by profits made on service-based
activities. In the same year, the company made £1.38 billions worldwide from its credit arm,
which arranged finance for about 40 per cent of all new cars that it sold. But adding services is
not a guaranteed route to increased profitability. Ford’s acquisition of the KwikFit tyre fitting
chain failed to be a success and it was later sold back to its founder at a price well below what
Ford had paid for it. Could this have been a warning that Ford’s core competencies lie in
engineering and design, rather than running labour intensive service operations?
1. Given the evidence of Ford, is it still appropriate to talk about the goods and services sectors
being quite distinctive?

2. Discuss the view that Ford should do what it is good at—designing cars—and leave services
to other companies.

Project 06:
RELIANCE PHARMA:
Donald Burr, the founder and the chairman of the Reliance Pharma, has been hailed in his attempt to build
a more human organisation. But his leadership style was changing as the organization grew. Managers at
Reliance Pharma had a distinct managerial style; hard driving, but giving employees a great deal of
freedom. All employees are expected to carry out a great variety of tasks. Thus, senior managers help out
in handling the loading & unloading of the material. Even top executives rotate from job to job to learn
the major aspect of the business. Fulltime employees must buy the stock of the company, although they
received a large discount.
After the company expanded and experienced its first losses, its emphasis on participative management
changed. With the acquisition of Star Pharma, Inc., Reliance Pharma became the fifth largest
pharmaceutical in the country-only five years after its formation in 1980. With its growth, however, the
firm changed its character from a family style organisation to a more traditional one. Critics maintain that
within the company it is even risky to ask unpopular questions. One of the original managing directors,
Lori Dubose, who was the one of the architects of lifetime employment at Reliance Pharma, was
unexpectedly fired. She thinks now that asking Burr challenging questions was risky and probably was a
mistake. Another Director, Harold Parety, who did not like being told that he had to be at work from 6
a.m. to 9 p.m. regardless of the workload, quit and formed his own pharmaceuticals, applying many of
Reliance Pharma`s managerial practice.
1. What are some of the consequences to the company of Burr`s way of firing an officer?
2. Should a company be managed the same way regardless of its size or its profitability?

Project 07:
RONALD ROSS
“The trouble with management as a field of study and practices,” RONALD ROSS, a space physicist,
said to his laboratory head, Claude Greenwood, “Is that it has no scientific base. I feel I know what I am
doing when I design a guidance system for a missile because I have the space, propulsion, and other
sciences available to tell me what to do. But, when you ask me if I am doing a good job as a supervisor of
my engineering and technical team, there is nothing, no science of management, to guide me. In my
reading of the books on management, I get the idea that managers must operate on a closed- system basis,
that the best things managers can do are to be friendly, consult with their subordinates on every little
thing, and develop strict rules and procedures so that no subordinates can make a mistake.
“As I think about it, Claude, I can not see much science in management. And I wonder what good
management books, articles, and management development courses are ever going to do any of us. Do we
have to wait for centuries when a science of management, as an exact science like physics, is developed?”
Claude Greenwood, having been exposed to a number of management development seminars that had
emphasized the usefulness and importance of management knowledge, was taken aback by Fred`s
outburst. But, he was impressed that what his subordinate had said did make a lot of sense. He was,
however, at a loss as to how to respond to Fred.
1. If you were Claude Greenwood, how would you respond to RONALD ROSS`s statement?
2. What would you suggest be done to make management more scientific?

Project 08:
GIANT PHARMA:
Donald Burr, the founder and the chairman of the Giant Pharma, has been hailed in his attempt to build a more
human organisation. But his leadership style was changing as the organization grew. Managers at Giant Pharma had
a distinct managerial style; hard driving, but giving employees a great deal of freedom. All employees are expected
to carry out a great variety of tasks. Thus, senior managers help out in handling the loading & unloading of the

Get a 30 % discount on an order above $ 100
Use the following coupon code:
ESSAY30
Positive SSL