Learning Activity #1:
Please Read + Answer the Questions Below:
Mary owns a business that makes geometric shaped lamps called Mobilelights. The Mobilelights are made from plastic panels that fit together like puzzle pieces. The pieces make lamps of different shapes, patterns and colors. The Mobilelights come in a variety of shapes and sizes with the largest ball lamp being 4’ in diameter, or 4’ x 4’ square. The largest lamp sells for $125 while the most popular model, a 15” diameter model sells for $49.99. People who purchase more than three Mobilelights get one free. The choice can be hanging lamps or sit on a desk or a table. Mobilelights are popular with children and teenagers for room decor. Party planners like Mobilelights because they can set a mood in the room and they can be use again in different ways supplementing the patterns or colors from time to time.
Mary first started the business in a kiosk of a local mall. The overhead was low and sales varied. She broke even almost immediately. By the end of the first year; she was making a profit. Mary expanded to another mall by the end of second year doubling sales. Encouraged by the success, Mary thought it may be time to open a shop. She looked for a spot in a small strip of stores but not in a strip mall. She found a place on the main street of “Old Town” in Ellicott City, Maryland. It was a small store with questionable parking.
Mary began doing lighting for party events and sales skyrocketed. Yearly sales went from $200,000 to $500,000. Thrilled with her success, Mary began to take on help. She even considered opening a shop or kiosk at the Baltimore Harbor Pier thinking she would have a lot of foot traffic. Mary was constantly thinking of ways to expand the customer base of the company. She opened a kiosk in the Harbor Building housing “Philips,” a popular Maryland landmark restaurant. Sales were far from stellar but the business still showed growth. The company was now looking at over a million dollars in sales with expenses of just over $500,000. The business had 18 employees. At this point, Mary had not really explored internet sales or social media.
Unbeknownst to Mary, who had been very busy growing the business, You Tube was showing instructional videos on how to make the lamps and included online websites where people could purchase the panels and other materials needed to make the lamps. One day, a downtown employee spoke with Mary about the videos. Mary was shocked. The employee said she overheard someone say to a friend, “Yes I think they are cute too, but you can go online and buy the panels and make it yourself for half the price.”
Within six months of this conversation, Mary, found that sales were dropping in the various kiosks, but not in the party business. Mary closed two of the kiosks, the Baltimore and the location at the first mall. She stuck with the store and the second mall location. Sales were doing well at both locations although profits were flat. One year later, Mary closed the remaining kiosk. She kept the party business in the store front. Later, Mary would close the party business as well but continued to work out of her house. Her million-dollar business had reverted to $300,000 in the span of three years.
- Explain how Mary might have used the life-cycle theory to manage her business better.
- Prepare a SWOT Analysis for Mary’s Lamps. Provide a minimum of 3 particulars for each SWOT category
Solution Learning Activity 1
1-Life Cycle Theory for Management of Mary’s Business
The product of Mary; Paneled Geometric Shaped Lamps offered a new market niche which was tapped by Mary at the right time. The Life Cycle Theory is one of the economic theories which show five stages of products from its development, introduction, growth, to maturity and decline (Claessens, 2015). The theory could have helped Mary in better management of its business as it could have known then that the type of product which she is selling had moved exponentially from its introduction to growth stage when the market not only accepted her product but gave increasing profits as well. The next stage would have been the maturity stage in which sales growth would have naturally slowed down. By the time the sales growth of lamps became stable, Mary would have then realized that the maturity stage of the product had started. For extending the maturity phase or for restarting the product lifecycle, Mary needed to introduce another product in the market or extend its product portfolio.
2-SWOT Analysis of Mary’s Lamps
There were certainly many mistakes which Mary made while operating her lamp business. However, there were some strong strengths and opportunities as well. Making use of these opportunities and strengths, Mary could have better strategies for reducing her weaknesses and coping with threats.
Strengths
- Mary enjoyed her competitive strength by introducing an innovative way of making lamps which were not only economical, changeable but also had wider life spans and helped in different purposes.
- Mary business was based on the target market of women and teenagers which make up a major portion of the market.
- The party planning line provided a more business-to-business extension to business and a new customer base.
Weaknesses
- Lack of efficient use of Managerial Skills
- No Promotional Activity
- Lack of Understanding of Customer base Psychographics, and Demographics
Opportunities
- Extension into Party Line Wholesale Business
- Extension into DIY workshops and courses
- Online selling
Threats
- High Price of the Product
- New Substitutes
- Change in Customer Psychographics (Sarsby, 2016)
Solution Learning Activity 2
1-Fives Disciplines Theory Application for Mary Business
After reviewing the case, it is evident that the traditional business of Mary was booming until the YouTube videos started educating people on how to make these same lamps. From this point onwards, the sales of lamps had started to drop continuously except for the party planning business. The five disciplines theory is related to these five areas.
The building has shared a vision of the business, the team learning spirit, the systems thinking, the mental models and the personal mastery. Mary can now learn from her experience with the Lamps business that the business lacked systems thinking. The complex systems of the operations were responsible for wearing down her business. It is evident that she has realized that the mentality of its customer base has started to change, and the alternative options are providing the right fuel for her business to go down. Having a system thinking approach would enable her to unravel the developments in a way which would aid in the growth of her business. As the five disciplines are used for the creating of the business future, it is evident that Mary did not make use of it. The lack of true understanding of the mental images of the world translates into assumptions about the market, business, and the decisions taken in this respect. The personal mastery was seen to go down with time with the emergence of new methods and ways of doing business (Senge, 2000). Mary did not innovate and adapt to the new environment and create personal mastery in her product. The lack of shared vision and team learning also depicts from the fact that there was no clear basis for decision making and goals for the business, the team and its growth. The business was based on simple numbers. The kiosks producing numbers were kept open while those not producing any were sealed.
2-Suggestion for Mary Business
There were many loopholes in the business and how Mary was operating it. From its inception, Mary was not looking at the reasons why her product was earning such exponential revenue. She only focused on one part of the marketing mix: place. Even in this area, she did not look at the target market and approached the placement and positioning as based on foot rate and rental expenses. The lack of understanding of management skills was evident from the very start. The lack of realizing the dynamics of the target market and the wrong decisions for market expansion are evident throughout its three-year lifespan. Still, the business was doing well until the YouTube videos of DIY emerged. From there on Mary could have worked on identifying the main reason the market was switching towards alternatives. It would have led her to know that she can use the DIY videos for promotion of her products and the product supplies by positioning ads on these videos. Furthermore, she could have used the information to redesign her product to add extensions, or she could also have used price differentiation to provide the products at better prices. Alternatively, selling the supplies for DIY lamps would have been another option as well. Mary could have invested more in experiencing the lamp making activity by selling workshops or courses.
3-Life Cycle Theory for Management of Mary’s Business
Having gone through the life cycle theory, Mary would have known at which stage its product lines. Furthermore, having known that the product of Mary has now converted from being a star BCG product with high growth and high sales for a cash cow product with high sales and low growth; the maturity phase of the product lifecycle has initiated (The Economic Times , 2018). It would have made her be better prepared for the upcoming decline of the lifecycle. The YouTube DIYs were an external environmental factor which exploited the internal weaknesses of the business and pushed the life cycle decline stage to come early. Even knowing about the potential threat, Mary did nothing to adapt to the changes in her environment.
References
Claessens, M. (2015, June 30). Product Lifecycle Stages (Plc) – Managing The Product Life Cycle. Retrieved from https://marketing-insider.eu/product-life-cycle-stages/
Sarsby, A. (2016). SWOT Analysis. Lulu.com.
Senge, P. (2000). Five Disciplines. Retrieved from ValueBasedManagement.net: http://www.valuebasedmanagement.net/methods_senge_five_disciplines.html
The Economic Times . (2018, August 29). Definition of ‘Cash Cows’. Retrieved from https://economictimes.indiatimes.com/definition/cash-cows
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