Marketing Management Final Assignment
- 1. Case: Volunteer Water Metering in the City of Richmond Hugo Valdivia International Full-Time MBA, Class of 2013 Marketing Management
- 2. S hould Neptune continue working with City of Richmond? Because: • Onl 20 ofel e househol v unt ed y % igibl ds ol eer • Pr a a aeness notspr d a desir ogr m w r ea s ed • Pot ia highermonet r benefit forbot Cit ofR ent l ay s h y ichmond a Nept nd une • Possibil yofl t m r aionship, incl M t fa ycompl in t pr a it ong-er el t uding uli- mil ex he ogr m J y9, 20 ul 12
- 3. Only 20% of eligible households volunteered • Pea occurdue t w t bil incl w h Cit a lt x not ks o aer l uded it y’s nnua a ice • No const ntbeha iorofv unt s enr l a v ol eer olment • 20 5: ~190 v unt s 0 0 ol eer • 20 6: ~ 13 0v unt s 0 0 ol eer • 20 7: ~ 20 0v unt s 0 3 ol eer • Incr singbiling fr ea l equencyca incr se peopl a aeness n ea e wr • Pessimist scenaio: numberofv unt s aound l estpea of ic r ol eer r ow k l st3yeas a r • F om J nuayt A il20 6, aound 28 househol v unt ed r a r o pr 0 r 0 ds ol eer J y9, 20 ul 12
- 4. Only 20% of eligible households volunteered (cont.) • Dur l st3yeas, Nept a ed conta ua t r of1,250v unt s peryea ing a r une chiev r ct l aget ol eer r • r a r 0 o ember20 7: ~5,3 0househol enr l Fom J nuay20 5 t Nov 0 0 ds oled • Consider pr ect ‘pessimist scenaio, fr J nuay20 8t December20 : sign- ~7,90 new ing oj ed ic’ r om a r 0 o 10 up 0 v unt s ol eer • T a v unt s dur 6yeas ofoper t ~13 0 ot l ol eer ing r aions: ,20 Market penetration within S ingle-family and Duplex segment J y9, 20 ul 12
- 5. Program awareness not spread as desired • T t r iewNept maket a oa ime o ev une’s r ing ppr ch: Fir yea guaa ee st r r nt Fr w t conser aion dev ee aer vt ices Fr a no- ssl inst laion a ma ena ee nd ha e al t nd int nce • A w la Nept pr ions init t es: s el s une’s omot iaiv A lbil inser nnua l t Infor t bookl maion et W e ebsit Open- houses Post s er • Because: T e is her misconception regardingprogram itself, And, misunderstanding aboutfuture ofthe program J y9, 20 ul 12
- 6. Program awareness not spread as desired ( cont.) • Peopl t t tt e is no guaa ee ofsa ing. T showfolow gr ph: e hink ha her r nt v hen, l ing a Pr ect oj ed J y9, 20 ul 12
- 7. Potential higher monetary benefits for both City of Richmond and Neptune • Richmond’s cost ofw t w lhighl incr se dur coming yeas (20 6- 15 pr ect s aer il y ea ing r 0 20 oj ion), • A w la ga bet een summera w err t s el s p w nd int aes J y9, 20 ul 12
- 8. Potential higher monetary benefits for both City of Richmond and Neptune ( cont.) • Pr perm3consumed byhousehol w lincr se dur coming yeas t ice ds il ea ing r oo • Nota much a Fl tr t but since market penetration will increase, so will revenues s s a aes , Year Type Water rate % Increase 20 5 0 M er r t (perm3 et ed ae ) $0.6577 40 .8 % 20 6 0 M er r t (perm3 et ed ae ) $0 0 .70 6 80 .3 % 20 7 0 M er r t (perm3 et ed ae ) $0 1 .753 7.3 % 0 20 8 0 M er r t (perm3 et ed ae ) $0 0 .8 15 6.42% 20 9 0 M er r t (perm3 et ed ae ) $0 4 .8 67 5.65% 2010 M er r t (perm3 et ed ae ) $0 8 8 .8 8 4.97% J y9, 20 ul 12
- 9. S hould Neptune continue working with City of Richmond? …Through a new bidding process! • W inning anewRequestforpr lw lal t a ustpr a suppor fut e maket a pr ion init t es t - - oposa il low o dj ices nd t ur r ing nd omot iaiv o a e newest bl obj iv chiev a ished ect es • A a yv unt pr a t M t mil compl nd… ppl ol eer ogr m o ulifa y exes J y9, 20 ul 12
- 10. Let’s start from Neptune’s Income S tatement • T pr ectgiv Income St t o oj en aementunt December20 7, w need nextconsider t il 0 e aions: 1,920dev inst led unt Nov ices al il ember20 7 0 2,0 dev t be inst led dur 20 7(pr ect 13 ices o al ing 0 oj ed) • So, Jan ‘07 – Dec ‘07 R enues ev $562,728 COGS ($3 0 11,3 5) $ 251,423 Fixed expenses G a &A ener l dminist aiv rt e ($8 3 5,14 ) Consuma e Suppl bl ies ($117,905) ( $ 203,049) Net Operating Profit $ 48,374 J y9, 20 ul 12
- 11. Projected future Income S tatements • Consider t aions: 2,610dev t be inst led in 20 8 2,64 , in 20 9; a 2,64 , in 20 ices o al 0; 0 0 nd, 0 10 Since l - owequipment al R owfl s low ichmond t sa e 8 ofconsumpt Nept ca incr se it unitpr up t 8 5% in 20 8 o v % ion, une n ea s ice o %: 0, 6.5% in 20 9a 8 in 20 0 nd, % 10 Infl t a s COG G a &A aion* ffect S, ener l dminist aiv a Consuma e Suppl r t e nd bl ies Due t mor effor on maket ca ign, G a &A o e t r ing mpa ener l dminist aiv incr ses bya iona 10 r t e ea ddit l % • So, 2008 2009 2010 R enues ev $766,098 $785,974 $797,0 4 4 COGS ($4 ,198 13 ) ($4 9,4 9) 0 8 ($415,526) $ 352,900 $ 376,485 $ 381,518 F expenses ixed G &A en. dm. ($95,8 ) 78 ($93 8 ,93 ) ($95,322) Cons. Supp. ($156,497) ($153 3 ) ,3 0 ($155,590) ( $ 252,375) ( $ 247,267) ( $ 250,913) Net Operating Profit $ 100,525 $ 129,217 $ 130,605 J y9, 20 ul 12 * htp:/w w aeinfl t t / w .r t aion.com/ aion-r t ca dahist ica-infaion-ae.php infl t ae/ na - or l l t r t
- 12. Recommendations for Neptune • Apply for a new bidding process • Pr fa s a st t ics t Cit ofR esent ct nd aist o y ichmond (W W negot t in- in iaion) • Keep in pl ce curentmaket a oa a r r ing ppr ch F styea guaa ee ir r r nt F ee w t conser aion dev r aer vt ices F ee a no- ssl inst laion a ma ena r nd ha e al t nd int nce • Pr r anewpr ion pl n epae omot a Incr se fr ea equencyofbiling (e.g. quat l t r ise peopl a aeness a pr a benefit (a t ow monet r benefit l rery) o a e wr bout ogr m’s s nd heir n ay ) Eiminae non- ofit bl init t es (ev l t bet een open houses a bookl s), a a ocae t r ces t cust ser ice l t pr a e iaiv auae w nd et nd dv t hose esour o omer v (doort door -o- ) • R ce t a t t einfor r ining o echnica per l sonnelt spr d a ae w d ofmout o ea ccur t or h T a oid popul t bot misunder a a misconcept r r v unt pr a ov aion h st nding nd ion egading ol eer ogr m • Cha design ofdev (gr l nge ices een id) • St r apil t a yv unt pr a t M t fa ycompl (since 20 9) at ot o ppl ol eer ogr m o uli- mil exes 0 J y9, 20 ul 12