EMBA IIBMS CASE STUDY SOLUTIONS – What relevance do you believe such legal related issues have for your region or country

EMBA IIBMS CASE STUDY SOLUTIONS – What relevance do you believe such legal related issues have for your region or country


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CASE: I    Trap-Ease: The Big Cheese of Mousetraps
One April morning, Martha House, president of Trap-Ease, entered her office in Moncton, New Brunswick. She paused for a moment to contemplate the Ralph Waldo Emerson quotation that she had framed and hung near her desk: “If a man [can] make a better mousetrap than his neighbor … the world will make a beaten path to his door.” Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. Martha had just returned from the National Hardware Show in Toronto. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, this show had excited her. Each year, National Hardware Show officials hold a contest to select the best new product introduced at the show.
Of the more than 300 new products introduced at that year’s show, her mousetrap had won first place. Such notoriety was not new for the Trap-Ease mousetrap. Canadian Business magazine had written an article about the mousetrap, and the television show MarketPlace and trade publications had featured it. Despite all this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales. A group of investors who had obtained worldwide rights to market the innovative mousetrap had formed Trap-Ease in January. In return for marketing rights, the group agreed to pay the inventor and patent holder, a retired rancher, a royalty fee for each trap sold. The group then hired Martha to serve as president and to develop and manage the Trap-Ease organization. The Trap-Ease, a simple yet clever device, is manufactured by a plastics firm under contract with Trap-Ease. The trap consists of a square, plastic tube measuring about 15 cm long and 4 cm square. The tube bends in the middle at a 30- degree angle, so that when the front part of the tube rests on a flat surface, the other end is elevated. The elevated end holds a removable cap into which the user places bait (cheese, dog food, or some other tidbit). A hinged door is attached to the front end of the tube. When the trap is “open,” this door rests on two narrow “stilts” attached to the two bottom corners of the door.
The trap works with simple efficiency. A mouse, smelling the bait, enters the tube through the open end. As it walks up the angled bottom toward the bait, its weight makes the elevated end of the trap drop downward. This elevates the open end, allowing the hinged door to swing closed, trapping the mouse. Small teeth on the ends of the stilts catch in a groove on the bottom of the trap, locking the door closed. The mouse can be disposed of live, or it can be left alone for a few hours to suffocate in the trap. Martha believed that the trap had many advantages for the consumer when compared with traditional spring-loaded traps or poisons. It appeals to consumers who want a humane alternative to spring traps. Furthermore, with TrapEase, consumers can avoid the unpleasant mess they encounter with the violent spring-loaded traps—there are no clean-up problems. Finally, the consumer can reuse the trap or simply throw it away. Martha’s early research suggested that women were the best target market for the Trap-Ease. Men, it seems, were more willing to buy and use the traditional spring-loaded trap. The targeted women, however, did not like the traditional trap. They often stay at home and take care of their children. Thus, they want a means of dealing with the mouse problem that avoids the unpleasantness and risks that the standard trap creates in the home
To reach this target market, Martha decided to distribute Trap-Ease through national grocery, hardware, and drug chains such as Safeway, Zellers, Canadian Tire, and Shoppers Drug Mart. She sold the trap directly to these large retailers, avoiding any wholesalers or other intermediaries. The traps sold in packages of two, with a suggested retail price of $2.99. Although this price made the Trap-Ease about five times more expensive than smaller, standard traps, consumers appeared to offer little initial price resistance. The manufacturing cost for the Trap-Ease, including freight and packaging costs, was about 31 cents per unit. The company paid an additional 8.2 cents per unit in royalty fees. Martha priced the traps to retailers at $1.49 per unit and estimated that, after sales and volume discounts, Trap-Ease would realize net revenues from retailers of $1.29 per unit. To promote the product, Martha had budgeted approximately $60,000 for the first year. She planned to use $50,000 of this amount for travel costs to visit trade shows and to make sales calls on retailers. She would use the remaining $10,000 for advertising. Because the mousetrap had generated so much publicity, however, she had not felt the need to do much advertising. Still, she had placed advertising in Chatelaine and in other home magazines. Martha was the company’s only salesperson, but she intended to hire more salespeople soon. Martha had initially forecast Trap-Ease’s first-year sales at 500,000 units.
By the end of April, however, the company had sold only a few thousand units. Martha wondered whether most new products got off to such a slow start, or whether she was doing something wrong. She had detected some problems, although none seemed overly serious. For one, there had not been enough repeat buying. For another, she had noted that many of the retailers kept their sample mousetraps on their desks as conversation pieces—she wanted to traps to be used and demonstrated. Martha wondered whether consumers were buying the traps as novelties rather than as a solution to their mouse problems. Martha knew that the investor group believed that Trap-Ease had a once-in-a-lifetime chance with its innovative mousetrap. She sensed the group’s impatience. She had budgeted approximately $150,000 in administrative and fixed costs fore the first year (not including marketing costs). To keep the investors happy, the company needed to sell enough traps to cover those costs and make a reasonable profit. In the first few months, Martha had learned that marketing a new product is not an easy task. For example, one national retailer had placed a large order with instructions that he order was to be delivered to the loading dock at one of its warehouses between 1:00 and 3:00 p.m. on a specified day. When the truck delivering the order had arrived late, the retailer had refused to accept the shipment. The retailer had told Martha it would be a year before she got another chance. Perhaps, Martha thought, she should send the retailer and other customers a copy of Emerson’s famous quotation.
1. Martha and the Trap-Ease investors believe they face a once-in-a-lifetime opportunity. What information do they need to evaluate this opportunity? How do you think the group would write its mission statement? How would you write it?
  1. Has Martha identified the best target market for Trap-Ease? What other market segments might the firm target?
  2. How has the company positioned the Trap-Ease relative to the chosen target market? Could it position the product in other ways?
  3. Describe the current marketing mix for Trap-Ease. Do you see any problems with this mix?
  4. Who is Trap-Ease’s direct competition? Who are indirect competitors?
  5. How would you change Trap-Ease’s marketing strategy? What kinds of control procedures would you establish for this strategy?
According to Larry Dykstra, manager of marketing research for Quaker Oats, the development of a focused positioning for Gatorade has allowed the company to target core users and identify secondary markets. Before Quaker acquired the beverage in 1983, Gatorade’s previous owner had promoted it by portraying users as competitive athletes, adult men, teens, and caricatures of athletes. “When we acquired Gatorade,” recalls Dykstra, “it was a poorly positioned brand, with a lack of consistent focus.” This position stood in contrast with the way current users were defined. “There was no message on the uses of this product or under which circumstances and occasions it was supposed to be used.” When Quaker looked at marketing research, Dykstra says the company found that Gatorade’s main users were men aged 19 – 44, that they understood the product, had a good perception of what it did, and knew when to drink it and how to use it. Since Gatorade had been developed and marketed primarily in the South, Quaker wanted to find out if there was an opportunity to market the drink in other areas. A study of attitudes determined that the target could be expanded geographically. “We felt, based on research, that could take a narrow, solid positioning of the product that is consistent with southern users and market the product in the North,” Dykstra says. Gatorade was positioned for physical activity enthusiasts as a drink to quench their thirst and replenish minerals lost during exercise better than other beverages did. Subsequent advertising in 1984 centered on these attributes. In 1985, the company moved away from this core positioning by trying to joke about the product’s competitive heritage – a strategy that failed.
[TV ads showed people in different activity situations trying to make sports jokes.] A decision was made to go back to narrow positioning in 1986. “In 1987, we focused in our primary target, but there have been refinements,” Dykstra explains. “We’ve tried to portray users as accomplished but not professional athletes.” Although the drink is perceived as a “serious beverage, the ads have added a fun component by showing people enjoying it together. We tried to show people who didn’t alienate customers, but also people they could aspire to be like.” 2 An effort also was made to portray people’s motivations for using the product. A computer graphic that portrays thirst quenching was introduced—one which, according to Dykstra, came “across so strong we’ve started to change the language.” But being well-focused and consistent in developing the product over time can create other problems. “Because Gatorade is narrowly positioned in terms of users and user occasions,” explains Dykstra, growth opportunities are probably limited. So how can we go about identifying new opportunities?” The answer was to look for opportunities consistent with the product’s imagery: “About two years ago,” says Dykstra, “we conducted a large study that included a sample of current users and other possible targets, such as older men and mothers with young children.” Quaker also looked in terms of vertical target: Should it target Gatorade toward runners or basketball players? “We built a large enough attitudinal study so we could look at people who considered themselves basketball players separate from those who considered themselves to be aerobic athletes. In the user section, we asked people, “The next 10 times you’re in this specific situation, are you going to use Gatorade?” Dykstra also felt Quaker could target mothers with active children and found this group a large market that could be targeted separately. Additionally, the company is attempting to market the product year-round. We found we were promoting our own seasonality, so we wanted to develop some continuity,” says Dykstra.
Quaker has most recently started marketing the product to Hispanics. “We felt we could position Gatorade to them,” explains Dykstra, “because they are a large growing segment, sports is important to them, and their populations are centered in areas where its presence is already well developed.” An ad has been developed for this purpose and is currently being tested. “We made an effort to do it right and not offend this group,” Dykstra adds. Based on qualitative findings, the TV spot’s approach is conservative and narrow, focuses on sports, and includes family members. “We showed it to several focus groups and made sure the benefits translated.” At the same time, efforts were made to ensure that the changes and refinements would not alienate the core users and secondary targets.
1) What are the major variables that might be used to segment Gatorade’s consumer market?
2) Define the core and secondary targets for Gatorade.
3) Propose a marketing strategy for penetrating the pre-teen market.
Case III. Current Legal Issues for eBusiness
Legislation to support the development and implementation of new Information and Communication Technology (ICT) and reduce barriers to the adoption of eBusiness is an important indicator for economic success. While the EU’s legal and regulatory framework in this regard has only been gradually developed over the last years, there are valuable lessons learnt which can be leveraged  in the implementation of a legislative environment to support the adoption of eBusiness in African States.
Reflecting research carried out under the Legal-IST project, which was funded under the European Commission IST Programme, this case study addresses four recently studied  issues  determined  to  be  of  high  importance  for  eBusiness  adoption  in Europe. The  objectives was to identify, address and study legal research areas to define research and development needs for short, medium and long-term focus (with regard   to   technology,   methods,  organisational  and   human  issues,  business relationship and working groups,  national legal entities and codes) as well as to initiate  and  co-ordinate  the  analysis  of   specific  issues  of  relevance  for  ICT- businesses and to provide recommendations on each research area studied, suitable for being used and adopted by policy-makers at EC level in order to evolve current legal  framework.  This research was based on   questionnaire-based  feedback received from legal experts, SMEs, policy makers and NGOs across Europe.
The four key legal issues for eBusiness in Europe identified are:
  • Legal issues related to RFID
  • Liability of information society service provider
  • Self regulation on B2B internet trading platforms
  • Business registry.

EMBA IIBMS CASE STUDY SOLUTIONS – What relevance do you believe such legal related issues have for your region or country


EMBA IIBMS CASE STUDY SOLUTIONS – What relevance do you believe such legal related issues have for your region or country
1.1.1  RFID
Radio Frequency  Identification (RFID)  Technology  uses  radio  waves  to  identify objects  or people wearing RFID tags automatically and wirelessly. RFID has two parts: a tag  containing an identification number and reader that triggers the tag to broadcast  its   identification  number.  RFID is of  considerable  interest  in  retail, consumer packaged  goods and manufacturing supply chains in terms of potential efficiency.
Hospitals also plan to  deploy RFID to  identify patients, call up records, reduce medical  errors and improve overall productivity. For instance, a pilot project has started  in  July  2005  in  the  clinical  centre  of  Saarbrücken  in  cooperation  with companies such as  Intel,  Siemens Business Services and Fujitsu-Siemens. The study also points out other fields of application including the use of RFID in passports (in November 2005 Germany introduced the first European e-passport, equipped with biometric data stored on a RFID tag) and banknotes, use in libraries and even in the tracking of people (like for example in prisons).
The key legal implications are related to RFID tags that directly store personal data such as name, age, nationality etc. The most prominent current legal issue is the one related with the protection of privacy and data protection. The study examines which European directives  apply in relation to different categories of RFID tags, some of which only include product  reference numbers, while others can provide access to personal data  only  in  conjunction  with  a  backend  database.  Issues  related  to obligations of the data controller are also considered.
1.1.2  Liability of Information Society Service Providers
The background to this issue goes back to the adoption of the EU E-Commerce Directive, and whether there should be stronger protection for the fundamental rights and freedoms of all internet users, or whether the directive should facilitate hunting down individual internet users who broke the law by for example, sharing files and breaching copyright in music. The original intention was facilitate the establishment of Internet  Service   Providers  (ISPs)  as  a  business  model  and  not  hamper  its establishment through liability risks.
The study aims to provide a diagnosis of current liability problems as there is a general lack of regulation at the European Community level of a specific system of liability. The  study points out four fields of interest: The question of the liability of providers  of  Hyperlinks  and  Location  Tools  (where  there  is  a  general  lack  of European case law); liability for the provision of AdWords; claims for information; and problems concerning injunctions.
The main problems detected to date in relation to Hyperlinks and Location Tools are that  linking may give rise to a range of unlawful acts such as libel, intrusion of privacy, IPR  infringements, trademark infringements, misleading advertising, unfair competition and breach of contract. A large number of the complaints are brought for practical reasons:  economic precariousness or lack of knowledge of the identity of the infringing party.
In light  of  applicable legislation  and  available  case  law,  the  potential  problems concerning Adwords (where suppliers pay a premium for their goods or services to be highlighted if certain words are used in a search engine for example) are related to the legal definition of the concepts “keyword” and “metatag” and the legal nature of the “Adwords System”.
The potential problems in relation to issue of claims for information are the lack of harmonised legislation on the obligation for the ISP to retain traffic data and the lack of harmonised legislation related to claims for information.
With  regard  to  injunctions  the  study  considers  problems  related  to  intellectual property   infringements,  and  specifically   some  specific  responsibilities  of   the intermediary.
1.1.3  Self Regulation on B2B Internet Trading Platforms
While across Europe there is eCommerce related legislation at both a national and European  Directive  level,  self-regulation  is  still  an  important  facet  of  Internet regulation. The development of codes of conduct is actually encouraged by the Directive on Electronic Commerce (2000/31/EC – Article 16). Legal issues related to self-regulation are analyzed from the perspective of legal validity and enforcement, including different types  of  self-regulation such as codes of  practice /  codes of conduct, the use of trust marks and labelling, and best practice guidelines and their legal implications. There are valuable lessons to be learnt that can be considered for adoption in other jurisdictions outside Europe.
Because of rapid technical developments and the trans-national nature of Internet trading   platforms,  self-regulation  was  proposed  as  a  solution  to  increase  the willingness of businesses to join a B2B trading platform. Part of the focus of this study is to develop a template for such a voluntary code of conduct, identifying the main  features  of  self-regulatory  mechanisms  and  discussing  the  opportunity  to address the identified barriers of entry on the B2B Internet trading platforms through self-regulation rather than state intervention. It also outlines future research required into how efficient a tool  self-regulation can be for those considering joining a B2B trading platform.
1.1.4  Business Registry
An  electronic  business  registry  (eBusiness  registry)  is  a  software  system  and infrastructure that enhances information channeling and interactions, required by eBusiness. It enables organizations to store information, select business partners and provide content for customers. However, information supplied by such a registry may raise  issues related to data protection and liability issues, depending on the quality and standards of its service.
Using data  warehousing techniques, allows analysis of  data  in  a  registry easy. However, depending on the methods used, information of varying quality can be produced. The study on business registry gives a clear overview over what business registries are as well as of legal issues regarding this sector. It ends with a summary of legislative recommendations.
Barriers to eBusiness
The B2B Expert Group identified a series of factors that might explain the reluctance of  businesses (and especially  SMEs) to  fully engage in  electronic trade. These include:
o    lack  of  awareness  regarding  the  risks  and  benefits  of  joining  a  trading platform,
o    difficulties in identifying the most suitable platforms for them to join,
o    incompatibilities between technical standards,
o    insufficient  information  about  the  rules  applicable  to  the  marketplace Transactions,
o    financial barriers (costs of implementing a secured transaction protocol and maintaining IT systems and websites).
The study recommends:
  1. The formulation of Guidelines on the procedures to be followed in drafting a code of conduct and in the involvement of relevant stakeholders
  2. Studying the  true  effectiveness  of  the  codes  of  conduct  in  modifying  the behaviour of market players, or marketplace operators. Such a research should include concrete examples of market changes brought by the implementation of self regulatory measures
  3. Carrying out legal research on the enforceability of the provisions of codes of conduct by business partners or by third parties and available dispute resolution mechanisms.
  4. Carrying out legal research regarding trust marks, what rules govern their activity and the extent of their certification obligations

What relevance do you believe such legal related issues

Key Conclusions
For RFID, it is essential there is good coordination between technologists, regulators, legislators, and consumers to ensure that RFID can realize benefits to businesses and the wider society. Use of RFID requires serious consideration of data protection  and data security implications, which in turn requires re-examination of the traditional    legal principles and instruments.
For Liability of ISPs, it is essential to review the liability regime, taking into account the  special role of ISPs in the Information Society. Greater legal certainty can be achieved by  providing a legal definition of the appropriate court and out-of-court action and procedures.
Technical rules for business registries should be standardized in order to protect privacy of communication and to assure integrity and security of communications.
Self-regulation including  use  of  codes  of  conduct  is  essential  for  B2B  Trading Platforms. The creation of guidelines to help in the drafting of codes of conducts would  be  very  beneficial. However, research into  the  enforceability of  codes of conduct is recommended.
  1. Are similar legal issues currently being faced in your country or region?
  2. What relevance do you believe such legal related issues have for your region or country?
  3. What cultural, legislative or other barriers exist to successful adoption of eBusiness in your country?

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