Marketing 300 Method Video Case

Why was the US household cleaning industry so appealing to the founders? That is, what did they do differently to compete in this industry? Be sure to answer this question, at least in part, using the concept of segmentation.

The market was static and because it had not changed much in a while Method segmented the market into homeowners and anyone in a kitchen, to anyone who didn’t want to have to hide their cleaning products.

How did Method differentiate itself in the marketplace?

Method positioned itself as more of an accessory not like the ugly same old. They connected it back to the household, and focused on safety.

What percent of businesses succeed according to the founders?

5 percent

How long did the founders engage in market research? Did they use qualitative research, quantitative research, or both?

A full year in research into the combined 20 billion dollar market category. They used both types of research to realize the premium segment within that market

In the minds of the founders, the brand = the ____________.

Promise, the consumer gets from the product, and the product delivers on that promise.

Methods #1 promotion vehicle, at the beginning continuing through today, was what?

Packing. Make it impressive and strand out

After founding the firm, the founders took what key management step?

They used the desire method, instead of consistency focused on an everyday moment of luxury, example of Starbucks Coffee. Method had an elastic brand Packing design communication, merchandising statement by bringing their brand together, test ran a store dedicated to subject of cleaning, advertising- emotional spark, entertaining, no celebrity endorsement, positioned to a healthy home

The four key elements identified in their Situation Analysis around which they built their “monster brand” was what?

Mass channel, grocery, club, and drug. So a design/positioning, environmental responsibility, house old safety, speed to market,

The key criterion/criteria that Method needed in a retail partner was what?

Price, but also to play with creative players. Sharing a vision and overlap of target guest and method target demographic and also positioned the design.

The four components of Method’s competitive advantage were what?

Green living, social responsibility (innovation), available to find and at a good price, design a positive agenda by channeling inequity creativity and drive

What is a “Media Provocateur”? What is a “Lead Green Chef”?

Lead Green Chef was an environmental science research foundation studying environmental impact- his name Anam Rowley,

Media Provocateur- separated Method from the normal cleaning design that companies had been approaching for 50 years, they stop educating people and started inspiring

Briefly, what was Method’s pricing strategy?

Cheaper than their competitors, used good design and creativity, also stay domestic no matter how it affects price, and make it safe.

What key environmental trends did Method take advantage of?

They took advantage of speed to market and especially the green trend that developed nations have. Everyone is green now,, unlike 20 years ago. Instead of educating, encourage the other business to engage and inspire rather than educate

Name one socially responsible act that Method completed/took part in.Planted trees by an airport to prove they are carbon natural and use all natural energy.

Did Method have a global vision? Give two examples of this vision. What mistake did they make going global?

Yes. One was asy entry into Canada who has the same importance of design and environmental responsibility. Second, Retail consolidation in UK, and can converse with many people easily, which helped in the market.

Their mistake was not realizing languages barriers, secure the brand name in certain places so they had to change the name and design.

How did Method make global expansion easier and cheaper?

They focus on retail versus target market, building development on one retailer instead of whole country and can get into multiple countries they don’t need to be in every retailer, thus they can say they Differentiate from other products/ retailers

Was Method’s manufacturing strategy: to manufacturer locally or outsource?

Locally. They are made in America, 90% are manufactured domestically,

What foreign markets would Method not compete in well? Why?

Developing markets, lucrative- China/India, fundamental needs are developing still, but once they mature then they would be a good market for Method to compete in.

You should first open the file that has the questions, save it, and while watching the video type your answers into the file.  Next, save your answers and then submit your answers (WITH the question preceding each answer) electronically.  Do this by clicking on the link entitled "Turn In Your Method

Method Video Case Assignment

This includes Overview, Strategic Planning, Social Responsibility, and Global Marketing. 
You should first save this page and then, while watching the video, type your answers into it.  Be sure to type your answers AFTER each respective question. Do NOT delete the questions. A submission will not be accepted unless each answer is preceded by its question.

You should see a "Turn in Your Method Video Case" link to do this.  

Do the best you can -- some of the dialogue is difficult to hear but stay motivated  and focused. Thus, the student may need to hit the "rewind" arrow to replay a section.  Student will not rewind more than twice, though, to listen to something that is not clear.  
Because of the rapid pace of the video, your answers should show clear and convincing evidence that you watched and listened to the video closely, however.
Typical Submission Format:
1. Font: 12-point Arial (this is a business font you should consider using at all times)
2. Margins: one-inch margins: top, bottom, right, left
3. The QUESTION should precede EACH answer, that is, do NOT delete the questions.  Type in your answer after each question

3rd exam 12-15 study guideline for Management 310

To help all levels of a company management must recognize concepts that are defined and reviewed in Management 310 for the exam. For example, the Organizational process is the collection of activities that transform inputs into outputs that customer’s value.

Whereas, Departmentalization is subdividing work and workers into separate organizational units responsible for completing particular tasks 

Functional departmentalization – definition, characteristics is organizing work and workers into separate units responsible for particular business functions or areas of expertise

Product departmentalization is organizing work and workers into separate units responsible for producing particular products or services 

Customer departmentalization - advantage and disadvantage organizing work and workers into separate units responsible for particular kinds of customers

Hostile work environment

a form of sexual harassment in which unwelcome and demeaning sexually related behavior creates an intimidating and offensive work environment

Chain of command – Line, staff is the vertical line of authority that clarifies who reports to whom throughout the organization which is different from Chain of command -Staff authority the right to advise, but not command, others who are not subordinates in the chain of command 

Project teams are those  teams created to complete specific, one–time projects or tasks within a limited time 

Norms are informally agreed–on standards that regulate team behavior and communication in the workplace

Line authority is the right to command immediate subordinates in the chain of command

an activity that contributes directly to creating or selling the company’s products is Line function

To properly manage a team goals must be set that are reasonable and easily achieved. It is necessary for all members to feel like they are contributing to the common goal. For example, consider the following terms

By definition, solving problems by consistently applying the same rules, procedures, and processes is Standardization

Decentralization- definition, advantage- the location of a significant amount of authority in the lower levels of the organization

Team- definition, advantages & disadvantages, classification (functional or cross-functional)

a team composed of employees from different functional areas of the organization

forming storm norming perform is a Cross–functional team

Managers must recognize Social loafing. the behavior in which team members withhold their efforts and fail to perform their share of the work is defined as Social loafing

Self-designing teams is the a team that has the characteristics of self–managing teams but also controls team design, work tasks, and team membership

Cognitive conflict & affective conflict

Human resource management: definition the process of finding, developing, and keeping the right people to form a qualified work force

BFOQs is the an exception in employment law that permits sex, age, religion, and the like to be used when making employment decisions, but only if they are “reasonably necessary to the normal operation of that particular business.” BFOQs are strictly monitored by the Equal Employment Opportunity Commission.

Adverse impact- unintentional discrimination is the unintentional discrimination that occurs when members of a particular race, sex, or ethnic group are unintentionally harmed or disadvantaged because they are hired, promoted, or trained (or any other employment decision) at substantially lower rates than others

Disparate treatment is the intentional discrimination that occurs when people are purposely not given the same hiring, promotion, or membership opportunities because of their race, color, sex, age, ethnic group, national origin, or religious beliefs

sexual harassment- definition, meaning, types (quid pro quo and hostile work environment)

Quid pro quo sexual harassment is a form of sexual harassment in which employment outcomes, such as hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to sexual harassment

Job analysis, job description, job specification- definition, meaning, implications

Job analysis

a purposeful, systematic process for collecting information on the important work–related aspects of a job

Functional departmentalization: organizing work and workers into separate units responsible for particular business functions or areas of expertise.

Job description

a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job

Job specifications

a written summary of the qualifications needed to successfully perform a particular job

Selection- definition, selection information the process of gathering information about job applicants to decide who should be offered a job

Diversity- definition, meaning, purpose a variety of demographic, cultural, and personal differences among an organization’s employees and customers

Affirmative action and diversity purposeful steps taken by an organization to create employment opportunities for minorities and women

Types of discrimination

Glass Ceiling the invisible barrier that prevents women and minorities from advancing to the top jobs in organizations

Managing discriminations – the role of the managers

three paradigms for managing diversity are the discrimination and fairness paradigm

(equal opportunity, fair treatment, strict compliance with the law), the access and

legitimacy paradigm (matching internal diversity to external diversity), and the learning

and effectiveness paradigm (achieving organizational plurality by integrating deep-level

diversity into the work of the organization).

Staff function

an activity that does not contribute directly to creating or selling the company’ products, but instead supports line activities

Follow and enforce federal and state laws regarding equal employment opportunity. Treat group differences as important but not special. Find the common ground. Tailor opportunities to individuals, not groups. Reexamine, but maintain, high standards. Solicit negative as well as positive feedback. Set high but realistic goals. The two types of diversity training are awareness training and skills-based diversity training. Companies also manage diversity through diversity audits and diversity pairing and by having top executives experience what it is like to be in the minority.

Communication the process of transmitting information from one person or place to another

Perception- definition, process (perception filter, retention,…)

perception the process by which individuals attend to, organize, interpret, and retain information from their environments attend to, organize, interpret, and retain information from their environments

Perceptual filters the personality–, psychology–, or experience–based differences that influence people to ignore or pay attention to particular stimuli Closure the tendency to fill in gaps of missing information by assuming that what we don’t know is consistent with what we already know

selective perception the tendency to notice and accept objects and information consistent with our values, beliefs, and expectations while ignoring or screening out or not accepting inconsistent stimuli or information

Attribution theory- fundamental attribution error

a theory that states that we all have a basic need to understand and explain the causes of other people’s behavior

Fundamental attribution error

the tendency to ignore external causes of behavior and to attribute other people’s actions to internal causes

Types of bias

Defensive, self serving, Communication channels

e sender, the receiver, noise, and feedback. formal and informal communication channels, one-on-one communication, and nonverbal communication

Bond Yield and Bond Prices 17 Blackstock Econ 215

Bond Yields Questions:

These multiple choice questions willl determine the understanding you have on bond yields. I do not think any calculator is needed because it is all very simple addition and multiplication. Students who are economics majors should pay careful attention to each of the following sections.

Some of this Bond Yield Questions have been answered for you already. Professor Blackstock

Econ 215

How can duration and convexity assist the portfolio manager in assessing the interest-rate risk inherent in a bond portfolio? This can happen because the greater the duration and convexity, the greater the interest-rate risk. Since interest-rate risk is a major source of systematic risk, this makes the portfolio manager's job easier.
One percentage point of a bond yield represents:100 basis points
If a bond is callable, this means:the issuer may redeem the bond early.
Subtracting the inflation rate from the market interest rate results in an approximate real risk-free rate of interest
For risk-free securities, the nominal interest rate is a function of real rate of interest and expected inflation rate
Under the Fisher hypothesis, if a one point increase in the inflation rate is anticipated nominal rates on short-term securities would rise by one pointWhich of the following regarding the current yield on a bond is not true?
The current yield shows the bond’s expected rate of return if held to maturity.
In order to have a yield to maturity greater than the coupon rate, the bond must be:
selling at a discount.
Typically, a yield to call calculation will use the end of the deferred call period rather than remaining years on the term.
When interest rates rise, bond prices fall.
The yield to maturity consists solely of interest income if the bond was purchased at par.
The YTM calculation assumes reinvestment of interest is at YTM rate.
When calculating the yield-to-call on a bond, the stream of interest payments is __________ and the par value is replaced by the __________.shortened to the call period . . . call price.
The face value of most bonds is $1000
The Fisher hypothesis is an approximation of the risk-free interest rate.
Bonds with deferred call features can only be retired after a specified period following the date of issue.
The real rate of interest is almost always the opportunity cost of foregoing consumption.
An increase in reinvestment rate risk results from a decline in interest rates.
The yield-to-call is like the yield-to-maturity except for the coupon rate and coupon payments.
The yield to maturity is 8 percent. If the yield increases by 50 basis points, the new yield is :
8.500 percent.
A bond is selling at a discount if the:yield-to-maturity is greater than the coupon rate.
The __________ equates the present value of the total future dollars expected to be available at the end of a specific time period, given certain assumptions, to the price of the bond. > horizon return
If bond investors do not reinvest the coupons received during the life of the bond, then the
RCY will exceed the YTM.
Find the price of a 10 percent coupon bond with three years to maturity if the yield to maturity is now 12 percent. Use semiannual discounting. $950.85 Price = 50(4.917) + 1000(0.705)
The YTM for a zero-coupon bond with 10 years to maturity and selling for $450 is
8.15 percent. = [1000/450]1/20 – 1
Reinvestment rate risk increases with a ________ coupon rate and a ________ term to maturity.
high . . . long
Which of the following statements regarding the realized compound yield (RCY) is true?
The RYC does not assume coupons are reinvested at the YTM.
Bond Prices
Which of the following statements regarding changes in bond prices relative to changes in market yields is true? Short-term bond prices will increase less than long-term bond prices if market yields decrease.
Which of the following bonds would you expect to have the greatest price volatility? 5%, 10 year bond
Which of the following statements about the risk premium affecting market interest rates is FALSE? The risk premium is not associated with the issuer's own particular situation.
Bond Price Changes – understand inverse relationships
All other factors constant, the -------------- of a bond, the shorter the duration. higher the coupon rate
DURATION
Duration can be used minimize interest rate risk.
Duration tells weighted average maturity of a bond.
For all bonds paying coupons, duration is less than maturity.
The duration of a zero coupon bond is equal to its term.
Duration is based upon present value concepts.
Which of the following statements about bond prices is FALSE? Bond price fluctuations and bond coupons are directly related.
The term used to describe the degree to which duration changes as the yield to maturity changes is linearity. Not True
Maturity constant, increases in interest rates ___ bond prices by proportionately __ amounts than decreases in rates ___ bond prices. decrease . . . smaller . . . increase
Convexity is important in bond analysis because the relationship between bond price changes and duration is an approximation.
Convexity is largest for bonds with _________ coupons, ________ maturities, and ________ yields to maturity. low . . . long . . . low
Why is the yield to call a more appropriate measure to use for callable bonds with high coupons rather than the yield to maturity?
High coupon bonds face a greater chance of being called than low coupon bonds so investors will more likely to receive the yield to call than the yield to maturity.
Which of the following bond relationships is NOT inverse? Duration and maturity
Coupon and duration, Interest rate changes and bond prices, Duration and yield to maturity are INVERSE relationships
A current yield = coupon______
current market price
= 100/850 = 11.76 percent
B = 2 pmts per year, 1000 FV, -850 PV, 20 N, 50 pmt, solve for interest rate = 12.69 percent
Two 10 percent coupon bonds are selling at par. Bond A has a 15 year maturity and Bond B has a 25 year maturity. If the appropriate required rate of return for these two bonds drops to 8 percent, calculate the percentage change in the price of each bond, using a financial calculator. Assume interest is paid semi-annually.
With regard to duration, choose the INCORRECT statement. Yield to maturity is directly related to duration.

Stocks

 

۞ = TRUE

X = FALSE

۞X

Treasury bonds are typically used a proxy for the short-term riskless rate.X
The real risk-free rate of interest is the rate that must be offered to persuade individuals to invest rather than save.X
If the current yield is above the coupon rate, the bond is selling at a premium.X
If two bonds have the same coupon rate and the same term, they will have the same intrinsic value.X
The horizon return is the bond return to be earned based on assumptions about reinvestment rates.۞



Bond Prices


In bond valuation, the appropriate discount rate is the required yield.۞
The higher the discount rate used in bond valuation, the lower the bond’s intrinsic value.۞
Bond Price Changes
Duration measures the weighted average maturity of a noncallable bond’s cash flows on a present value basis is True
Duration expands with time to maturity at an increasing rate is Not True
Bond Yields
What is the reinvestment rate assumption in regard to the yield to maturity?
That all receipts of coupon payments are reinvested at the yield to maturity.


Bond Price Changes
What weakness of modified duration does convexity correct? Modified duration predictions are linear approximations. Convexity corrects the answer for the curvature of the price function.



Why does the coupon rate affect the volatility of bond price? The higher the coupon rate and payment, other things the same, the more of the bond’s value comes from the coupon payments and the less from the maturity value. The coupon payments are received sooner than the maturity value, and, therefore, are affected less by compounding.



For each of the following variables, state whether duration has a direct or inverse relationship: term to maturity, size of coupon payment, yield to maturity.


Term to maturity – direct; size of coupon payment - inverse; yield to maturity – inverse.


Calculate the duration of a bond with a 7 percent coupon and a 3-year maturity currently priced at $1,000. Interest is paid annually.
Year Cashflow Present Value PV of CF PV/ Price Year X PV/Price
$70 .9346 $65.42 .065 .065
$70 .8734 $61.14 .061 .122
$1070 .8163 $873.44 .873 2.619
$1000 2.806 years

How does value of a bond change as it nears its maturity? Bond prices will change so that the bond will be worth its face value on the maturity date.


The next section tests the students general understanding of the entire chapter. I hope you enjoy this blog entry and find it helpful.


3 reasons that duration is important in bond analysis and management {
i It measures effective lives of alternative bonds.
ii It is used in bond management strategies.
iii It measures bond price sensitivity to interest rate changes.
.
The following are mathmatical problems. I reccommend using your iPhone or calculator or computer determine the following answers:
A 10-year, $1000 corporate bond with a 10 percent coupon rate (interest is paid semi-annually) is currently selling for $850:



(a) Calculate its current yield.
(b) Calculate its yield to maturity (using a financial calculator)

Bond A = original price = $1,000; new price = 1000 FV, 8 interest rate, 50 pmt, 30 N, solve for PV = $1,172.92
Percentage change in price = 1172.92 - 1000
1000 = .1179 = 11.79%


Bond B = original price = $1,000; new price = 1000 FV, 8 interest rate, 50 pmt, 50 N, solve for PV = $1,214.82
Percentage change = 1214.82 - 1000
1000 = .2148 = 21.48%