Case 3:Universal Cigar & Cigarette Co.

On a Monday morning conference in April 2013, Mr. Alfredo Boromeo, owner and president of
Universal Cigar & Cigarette Co., was discussing with his top sales, production, and finance executives his
plans for launching a new brand of cigarettes.
Ive just come from Hongkong, he said, and I met the regional manager for Asia of Dunhill
cigarettes. He said they would be willing to give us license to manufacture and sell Dunhill locally. They
will give as technical support in blending and quality control. Our role would be achieve maximum
distribution for the product and take care of advertising and sales promotions. This is , I think, a wonderful
opportunity for us to be able to launch a very prestigious and profitable product line like Dunhill cigarettes.
The sales manager, Mr. Robert Chan, was the first to speak up. Are we committed to produce
and sell a specific quantity of Dunhill? he asked. If we are,, Id like to know what it is, because I dont
think sales will be that hot. Its a very expensive cigarette and retails for P12 TO P15 a pack, mostly in
hotels, and mostly for tourists. Even if we succeed in bringing down costs by manufacturing it locally, and
even if we retail it at P6 a pack, its still going to be the most expensive cigarette locally available. I dont
think my men will be able to move more than 50 to 100 cases a month.
Mr. David Chua, the production manager, seconded the sales managers thoughts. The most
attractive thing about Dunhill is its packaging. Its also probably going to be the most expensive thing
about it. I doubt whether we can bring manufacturing costs low enough to be able to retail it at P6 a pack.
To do that our selling price to distributors would have to be around P4 a pack. But I foresee that the
packaging alone would costs us about P3 a pack. I think we probably have to retail it at P8, and therefore
I dont think many people would be buying such as expensive cigarette. It would cost more than twice as
much as the leading brands.
Mr. Alfonso Tan, the finance manager, had other thoughts. I think, if we launch this product, we
should be prepared to sell only in Metro Manila and key provincial cities like Baguio, Cebu, Bacolod, and
Davao. Only the wealthy cigarette smokers will probably be able to afford the product. We shouldnt
expect any sales in other provincial areas. Also, Im not sure whether we should launch the regular Dunhill
in the red package first, or launch Dunhill menthol in the green package simultaneously. There seems to
be a trend toward menthol smoking, so perhaps both should be launched together. But again, this strategy
will tend to increase our costs, so I agree with David and Robert that it doesnt look very promising.
Mr. Borromeo felt irritated by all the objections from his managers, but he kept his irritation to
himself. Dunhill has very great prestige, he said. For the first time we will be producing a foreign brand
which is famous throughout the world. This brand will also be giving us practically free advertising from
the copies of Time and Newsweek reaching the Philippines. Im not worried about the price. In fact I think
the price will help us. Its not just the rich people wholl be buying Dunhill, youll see. Every Tom, Dick, and
Harry will be buying it and showing it off to his friends. You dont have a feel for the market like I have.
Ive been in this business for over twenty years. I think well even cut into the sales of Malboro and take
away 10, may be as much as 20 percent of their market share.
After the meeting ended, Mr. Borromeo tried to reassess his decision. He still felt he was on the
right track, but wondered how he could convince his managers that launching the Dunhill brand was the
right thing to do.

Case 4. Dynamo Sportswear

 Mr. Gerardo Cruz, owner and general manager of Dynamo Sportswear Inc., called in his companys
brand manager to discuss his latest business project. Joe Santos, the brand manager , was hired from a
multinational company engaged in the manufacture and promotion of jeans.
Im thinking of putting a new line of bathing suits, Joe, said Mr. Cruz, and Id like you to plan
the specifics of how we should go about it. So far weve been successful in our different product lines,
such as mens sports shirts, sport jackets, T- shirts and jeans. But all these years weve been catering to
the male market. I think its time for us to diversify a bit and take a crack at the female market. My friends
have been telling me what women are are heavy buyers of a lot of goods, and that the female market
could be more substantial than the market were in. Of course women are more fussy and more
predictable, but I guess thats part of the game, dont you think?.
You dont think wed be going out of character? asked Joe.
No, I dont think so. Well still be in the sportswear business, although were adding the new
female dimension. No, I wouldnt worry about that.
Do we go for mass marketing, or do we go top- of- the- line? asked Joe.
Thats what I m not sure about, Joe, replied Mr. Cruz. Im not sure whether we shoul aim at
the upper bracket first, then go upwards. May be we should do both simultaneously. But Im not sure of
that either. Thats why I want you to plan this thing very, very carefully, Joe. I dont care how much it
takes, because Im quite sure I can raise the money. I dont care if we spend two, three or four million
pesos on it within the next three years. But I dont want to make sure that we succeed, and become
dominant in this new market.
Youre not worried about the seasonality of the new product? asked Joe.
No, not at all. Our manufacturing facilities could be producing throughout the year, and wed be
building up our inventory to sell during the summer season. No problem.
But there may be fashion trends abroad in bathing suits, and we could be caught with the wrong
kind of inventory when we launch in the summertime here, said Joe.
Look, youre the marketing expert. These are the considerations you should be looking into, and
there may be others we havent discussed yet. All I want is to succeed in launching this product line,
because success here will lead to other things. I m giving you six months to plan this thing. You should
check with me from time to time, but I m giving you a free hand. But I do want results.
As he left the office of his boss, Joe began to wonder about the project. He wasnt sure where he
should start, or what approach he ought to take. Bathing suits! he mused. Boy, of boy, what are we
going to think next?.