The Coop

HBS CASE: THE COOP---MARKET RESEARCH

Answers by Chenghao Zheng (Chuck)

1. What is the size of the loss at the Coop? What could have been attributed to this loss?

Stores: 76, Grown sales percent per year: 10%, Stores of Declined in sales: 20, Declined sales percent per year: 6%, Average Sales: $775,000

In 1995, if they keep the grown sales=76*775,000*(1+10%)=64,790,000

Real sales=[20*775,000*(1-6%)]+[56*775,000*(1+10%)]=62,310,000

The size of the loss=64,790,000-62,310,000=2,480,000

There may be four causes of the loss:

Firstly, the food quality of the Coop may not be as good as usual. Secondly, they may not provide satisfied customer service as usual because of the insufficient training of the new staff. Thirdly, the marketing strategy of the Coop is not effective and distinctive with the competitors. Last but not least, the price of the Coop maybe a little higher than the competitors’ and their menu is less attractive to the consumers.

2. Analyze the dynamics between McMichael and Wallace. Are they looking in the same directions? Why, why not?

McMichael and Wallace are in the totally different directions. McMichael thought the problem of declined sales is in operation (including food quality and customer service). In contrast, Wallace thought the problems are that the brand image of the Coop is old and less spirit and the marketing strategy is not effective.  

As to the future developmental direction of the company, McMichael proposed the home delivery service and Wallace proposed the co-branding strategy with Margie’s Muffins.

The reason why they two have such different directions is that they both only focus the area that they are in charge of and are good at without considering the whole picture.

3. Evaluate each of the initiatives proposed by Buckmeister, Wallace, and McMichael.

(1) Buckmeister proposed the Customer Feedback Cards.

Pros: The solution cost nothing.

Cons: It will not be effective and helpful to figure out the real problems. As we all experienced, filling the Customers Feedback Cards is usually not seriously treated. And some customers are not willing to fill the cards even they are not satisfied with the food or service.

(2) Wallace proposed the conduct of focus group, Brand Image Monitoring Survey (BIMS) and Customer Experience Studies (CES).

①Brand Image Monitoring Survey (BIMS)

Pros: It may identify the advantages and weakness of the Coop through comparing with the competitors. The number of the interview is 450 to 900, so the results may be reliable and may figure out the real problems.

Cons: The total cost is expensive ($20,000 to $50,000)

②Customer Experience Studies (CES)

Pros: The questionnaire form may provide the comprehensive data about the customers’ opinions of the Coop’s food, service, and prices because the evaluation is based on a variety of specific criteria. The quota method can help to identify the target customers and make the results valid and effective.