If they chose not to increase their vanilla order, what could happen? If they did not get any order, they would be in good shape since they would not have purchased extra vanilla, so they would be financially ok and no real adjustment to their marketing strategy would be needed. On the other hand, if they did receive and order, they would not have enough vanilla to meet demand. This would be a bad situation if the grocery chain placed a small order, but would really be a huge problem if the grocery store chain placed a large order. If this happened, they would have to either fill the order without vanilla bars, or would have to use artificial vanilla flavoring, which they were all against given their mission and positioning as a high end bar. Another option if they did receive an order would be to shift vanilla bars to the new grocery chain from existing customers. In this scenario, existing customers would not get all of the vanilla bars they ordered, but would instead get substitute bars with other flavors. Chloe said she would have to figure out some way to rank customers to determine how to â€œrationâ€ the vanilla bars needed to fill the order for the new grocery chain. She also mentioned this would likely cause some existing customers to reduce or even stop ordering from TBSL altogether.
Option 2: If they chose to increase their vanilla order anticipating the smaller order quantity, what could happen? If they did not get any order, they would have purchased extra vanilla, so they would lose money unless they could figure out a way to increase the demand for vanilla bars relative to other flavors. If they did receive a small order, they would have enough vanilla to meet demand and would not need to adjust their marketing strategy. If the grocery store chain placed a large order, they would have to either fill the order without enough vanilla bars, or shift vanilla bars to the new grocery chain from existing customers. This scenario would have the previously mentioned potential consequences if existing customers were not happy about orders for vanilla bars that went unfilled.
Option 3: If they chose to increase their vanilla order anticipating the larger order quantity, what could happen? If they did not get any order, they would have purchased a lot of extra vanilla, so they would lose a lot of money that could potentially devastate the growing company’s financial position. If they received a small order, they would have enough vanilla to meet demand but would still need to adjust their marketing strategy because they would have too much vanilla. They would lose money and unless they could figure out a way to increase the demand for vanilla bars relative to other flavors. The new grocery chain would not want only vanilla bars, so in this case, TBSL would have to figure out a way to shift existing customers to order more vanilla bars relative to other bars. Perhaps promotions or other quantity discounts could help, but shifting customers to vanilla bars might then result in surpluses of other ingredients. If the new grocery chain made the larger order, everything would go as planned if TBSL ordered enough vanilla to meet the larger order and they would make significantly more profit.
1. Which of the three options is the highest risk? Why?
2. Which of the three options is the least risky? Why?
3. Which of the three options would present the greatest challenge from a marketing perspective if something unexpected happens?
4. Can you think of other viable options for each decision if the unexpected happens? Be specific.
What would you suggest they do in this situation? Justify your decision.