Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

Back Matter Cases © The McGraw−Hill

Companies, 2002

Using this alternative, the following additional pizza prepa-
ration and delivery personnel costs would be required:

Angelina Cello presented the three alternatives to RT’s

owner, Romano Marino. Romano was pleased that Angelina

had done her homework. He decided that Angelina should

make the final decision on what to do (in part because she had

a profit-sharing agreement with Romano) and offered the

following comments and concerns:

1. Romano agreed that the plant market was extremely sen-
   sitive to delivery timing. Product quality and pricing,
   although important, were of less importance.


2. He agreed that plant demand estimates were conservative.
   “In fact, they may be 10 to 30 percent low.”


3. Romano expressed concern that under alternative 2, and
   especially under alternative 3, much of the store’s capacity
   would go unused over 80 percent of the time.


4. He was also concerned that RT’s store had a bad reputa-
   tion with plant customers because the prior store
   manager was not sensitive to timely plant delivery. So
   Romano suggested that Angelina develop a promotion
   plan to improve RT’s reputation in the plants and be sure
   that everyone knows that RT has improved its delivery
   service.

Evaluate Angelina’s possible strategies for the Flint store’s plant

market. What should Angelina do? Why? Suggest possible promo-

tion plans for your preferred strategy.

748 Cases

Additional rental expense of $ 1,600 per

proposed store over current store year

Cost of moving to new store $16,000

(one-time cost)

The addition of even more equipment and personnel to
handle all unmet demand was not considered in this alterna-
tive because the current store is not large enough.
Alternative 3:Add additional equipment and personnel as
described in alternative 2, but move to a new location that would
reduce delivery lead times to two to five minutes. This move
would probably allow RT to handle all unmet demand—because
the reduction in delivery time will provide for additional oven
time. In fact, RT might have excess capacity using this approach.
A suitable store is available near about the same number of
residential customers (including many of the store’s current
residential customers). The available store is slightly larger
than needed. And the rent is higher. Relevant cost informa-
tion on the proposed store appears below:

Cost Total

Hours per Additional

Required Hour Daily Cost

Delivery personnel 6 6 $36.00

Preparation 8 6 48.00

personnel

$84.00