Craft Marine Corporation Case Analysis

Craft Marine Corporation Case Analysis Craft Marine Corporation The case study presents the situation of Craft Marine Corporation and the challenges the company has to face, given the circumstances that follow the 9/11 terrorist attacks. This situation has changed the company's sales program, being forced to modify its advertising and sales strategy. The question that rises concerns these modifications and how they will be implemented in order for Craft Marine Corporation to achieve its financial objectives. Craft Marine Corporation provides fiberglass pleasure boats, being a pioneer in this market segment.

The company's range of products covers all the categories: family (pleasure), offshore, cruiser, fishing and water skiing. But the pleasure boat market in the United States is currently suffering from slight setbacks. This will definitely affect the company's sales in terms of units sold in the following years, until customers; economic situation will improve. Although the company's sales in 2001 were similar to sales in 2000 and bigger than sales in 1999, this increase was due to boat prices increase. Even more, sales by unit have decreased 6% in 2001 in the entire industry.

This decrease was reported by Craft Marine Corporation also. Given the economic circumstances, it is obvious that the units sold by the company will not increase in the following year if special measures are not implemented. Regarding the company's market distribution, Michigan, California, and Florida represent the most profitable states for the company. Craft Marine Corporation has a significant number of clients in states like Minnesota, Texas, Wisconsin, New York, Ohio, South Carolina, and Illinois.

All these account for 12.9 million registered boats throughout the United States, purchased from Craft Marine Corporation. Problem Statement The issue here is how to properly divide the advertising budget in order to comprise as many activities as possible. Craft Marine Corporation requires an aggressive advertising campaign. This means that some activities will receive a bigger percentage of the budget. Craft Marine Corporation has invested significant amounts of time and money into developing its products.

However, without suitable publicity, these improvements may go unnoticed, and the company's efforts will not be rewarded in sales increases. This is what public relation means: doing something good and speaking about it. Situation Analysis Strengths Quality of products - for Craft Marine Corporation, as for boat owners, quality comes first. The company will not make any compromises regarding the quality of its boats, no matter how high the price might become.

Customers also are determined to not make any compromises regarding the quality of the boats they want to purchase. Sales growth - the company has reported significant increase in the number of units sold over the past years Solid presence on the market - the company's situation on the market has improved each year, becoming one of the most important boat providers.

Weaknesses Product prices - the quality provided by Craft Marine Corporation for its products requires significant financial investments in the development area, production, raw materials, and other implied costs. These investments are reflected in the boats' prices, which are definitely not low or promotional. A high price can significantly affect the buying decision in such cases. Opportunities Foreign markets - at some point, the national and the Canadian market will be saturated or close to saturation.

This means that the company should think about expanding its activity abroad, and to especially approach the European market. Threats Current economic situation - given the circumstances created by the 9/11 terrorist attacks, it is expected that some of the prospective customers looking to buy a boat might postpone their decision until more favorable economic conditions. Budget Alternatives Competitive parity method One of the most important boat manufacturers in the United States and also an important competitor for Craft Marine Corporation is Genmar Holdings, Inc. Genmar's sales are estimated at $1.2 billion.

It is estimated that Genmar spends approximately 0.9% of sales on advertising. Given these figures, Craft Marine Corporation's advertising budget should be: 2001 sales - $120.5 million Estimated growth - 15% 2002 expected sales - $138.5 million Competitors % of sales - $10 million Advertising budget = 120.5 X 15% = 138.5 X 10 Amount = $1.2 million This amount is significantly higher than the usual amount spent by Craft Marine Corporation on advertising budgets the past few years. The company's competitors taken into consideration in this case report significantly higher amount of sales, which means they can afford a bigger budget for advertising.

It is not necessarily a good idea to follow competitors' pattern. This does not necessarily guarantee success. 2. Percent of sales method In this case, the advertising budget is: 0.265 of sales: $360,000. This budget is lower that the advertising budgets reported by Craft Marine Corporation in 2001 and 1999. It is recommended that the company invests more in advertising. 3. Objective task method Objectives The objectives that must be achieved by the advertising campaign are the following: Showcasing product developments performed by Craft.