Surfside Leisurescapes Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Porter’s five forces

Bargaining power of the buyer

With the availability of many options, buyers have the advantage of choosing between the available brands. This choosing option makes the bargaining power very high for the buyer. Buyers, as defined are of three types, price-sensitive, quality conscious and brand loyal. Surfside needs to tackle these three different types of consumers on the basis of their respective needs and wants to remain competitive.

Bargaining power of the supplier

The supplier has a very major role to play in this category and has the advantage of choosing different seller for their brands if the sales volume of Surfside declines. With the majority of space provided to the Jacuzzi, the supplier of pacific can opt for other options. The growing competition in the market and the availability of many players in the market, supplier has the advantage to bargain thus increasing their bargaining power.

Threat of new entrants

The threat is very intense as the market is very attractive and growing thus attracting many new players to enter the hot-tubs category. The product category has witnessed less competition at the start, but with innovation and fewer entry barriers many new players entered the market and stole the market share from Surfside. The threat is very important as it will increase the competition for Surfside and will make the situation worse for Surfside.

Threat of substitute

Threat of substitute is there, but moderate. The substitutes that are available include few, and the most prominent one is the large pools, but hot tubs are less expensive and with the advancement in the product category the product is becoming attractive for consumers. On the basis of these factors, the factor of substitute is not considered as a major threat to the category.

Competition

The intensity of competition is very high and is posing a big threat to the market share and sales growth of Surfside. With the entrance of almost 12 players till 2004, the competition was a factor of consideration for Surfside. No developments were made to tackle this issue by Surfside as it witnessed monopoly for a long period.

Marketing Mix

Product: In the hot tubs category, Surfside is selling two brands, Pacific and Jacuzzi. Both the brands are the premium brands for Surfside in this category. The company is also selling different brands and serving different categories.

Price: The prices of both the brands differ a great deal. Jacuzzi as compared to the Pacific is more expensive. The price distribution shows that Jacuzzi ranges from $8,995-$13,995 while the Pacific is sold between the price range of $5,499-$9,499.

Place: The brands are sold under a same shelf at the Surfside Leisurescapes, Newmarket, Ontario but the brand that occupies the larger space is Jacuzzi as it covers the 90% of the space.

Promotion: Surfside can choose from many options to advertise and promote its products. The company can choose home shows, newspapers, food and home magazine, direct mail, etc.

Break-even Analysis

A company in order to remain at no profit no loss situation needs to analyze its expenses and sale and decide a point at which the company will be at break-even. Surfside is selling two brands under the hot tubs category and is facing intense competition. In the above portion the completion of external, internal factors, along with industrial external,internal factors were analyzed. This portion will determine the value for each brand and the number of units to be sold in order to remain at breakeven.

The two brands Jacuzzi and pacific are both prime brands, but Jacuzzi holds 90% of the space while pacific gets the remaining 10%. In terms of contribution margin the difference is not as vivid as the space. The contribution margin of the pacific is 32% compared to the Jacuzzi which is 42%. The number of units sold of the Jacuzzi and the pacific, is 56 and 36 respectively. These numbers indicate that at what certain level the company will be at break-even.

The total fixed cost of each product, let’s suppose is $50,000, so in order to be at break-even the company needs to generate sales of approximately $119,048 for Jacuzzi. Similarly, in the case of pacific the company must be able to generate the sales of $156,250 to be at breakeven. This analysis showed that Jacuzzi requires less units to be sold than pacific to be at break-even, butthe company needs to increase the shelf space for pacific in order to increase its sale.................................

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