Case Company Inc( Richard Ivey School Of Business Essay Example
Analysis of BLACK FLY BEVERAGE COMPANY INC: Despite facing great success and favorable reactions from both consumers and the media, Black Fly should consider expanding their product offerings now to capitalize on the current momentum and exposure they have gained.
Black fly is considering various options for expansion, the first being the launch of a new flavour. This is a common approach in the food and beverage industry, as it benefits from economies of scale and often does not require new equipment. For Black fly, this is a conservative option as they currently have sufficient production capacity. However, the risk identified by the company is that sales will be split between the original recipe and the new flavour, rather than increasing market share. The new flavour may only attract existing customers looking for an alternative, resulting in steady revenues rather than a re
...venue increase.
Considering the psychological buying process of consumers, it has not been proven that offering multiple flavours increases the likelihood of a purchase or helps a consumer reconsider a previous choice. Another initiative proposed is the creation of a new product line called "Spiked Ice". This innovative idea is a first in the wine and spirit marketplace, presenting an opportunity to establish its potential. As the largest retailer of alcoholic beverages in the world, the LCBO has extensive knowledge of industry trends as the primary distribution channel in Ontario. Therefore, it serves as the ideal resource for product and industry feasibility assessments, meticulously examining quality, price, and market potential. The LCBO has recognized the potential for Spiked Ice and committed to a 4-month order while providing shelf space for the product.
The "Spiked Ice
presents an opportunity for additional revenue and the potential to expand the customer base beyond those who typically enjoy vodka coolers. This could include beer drinkers who seek a refreshing freezee with a vodka twist during summer months. However, this expansion requires substantial capital investment for upgrading production facilities, and there is a risk of significant loss if sales do not meet expectations. The company has committed support from LCBO for a large quantity to aid in the rollout of the new product. From a managerial and organizational perspective, the company has successfully undertaken similar projects in the past.
Launching “Spiked Ice” is my recommended option for the company as it has the potential to increase revenue and expand into a new market segment. Introducing a new flavour may be a good retention strategy to improve customer satisfaction, but it has low potential for generating additional revenue as it does not target a new customer base.
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