The problem
Analysis of the case
Alternative solutions
Before making the final recommendation for the current problem, let’s have a look at the possible alternatives to the current issues for James.
Northern Rush can have external funding in the form of startup loan from banks or private investors.
James can sell his idea to the current competitors in terms of creating a separate business venture for targeting the university students.
James can hire an external analyst agency to estimate the possible feasibility of the business and its proposed profitability by reforming the marketing and financial planning.
Recommendations and the suggested Plan
The recommendation for the current business proposal of Northern Rush to Murray James is to start with an investment and undergo the business operations as per the recommended plan and financial projections (based on an initial investment of $10,000 by Murray and partners).
The current STP of the Northern Rush where it is targeting students, parents, and other movers should be kept intact and focused as planned.
Northern Rush should be developed as per the proposed marketing mix (4P’s) and channel its initial marketing communications as a low cost leadership.
The stiff competition by the existing local players can be tackled by projecting the differentiated social image of the business in terms of its primary objective of helping the Canadian students. Hence, the intended positioning of the business will be driven by social cause.
It is evident from the projections given below that business will generate profit between the third and fourth year of operations.
Financial Projections
Assumptions taken in financial projections:
Units sold during 1st year= 150 (equally distributed among 3 types of kits)
COGS= Avg. costs per kit + Commission spent on agent (20% of net sale)
Nil depreciation.
Other figures of expenses are assumed to for projections.
Cash Flow Projections
Learning from the case analysis
The main learning from the business and its marketing plan lies in the fact about how the social cause can be utilized in the market positioning of a business to gain a competitive edge. Similarly, the importance of product, its price, and place of launch are relatively important for an industry (home furnishing for university students) with low bargaining power of buyers. Finally, how a startup can be launched as a new entrant by using a differentiated ‘low-cost’ leadership.
