Discuss Marketing Research of Crazy Eddie within the Marketing Research ( MR ) forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Crazy Eddie is the name of a consumer electronics retailer conducting business through the internet and by telephone. The venture ...
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Marketing Research of Crazy Eddie
Marketing Research of Crazy Eddie - April 1st, 2011
Crazy Eddie is the name of a consumer electronics retailer conducting business through the internet and by telephone. The venture is the most recent to be doing business under the Crazy Eddie name, with the most well known (and later infamous) being a chain of retail stores that operated throughout New York, New Jersey, Pennsylvania, and Connecticut for nearly twenty years.
Crazy Eddie was started in 1971 in Brooklyn, New York by businessmen Eddie and Sam M. Antar as ERS Electronics, named after Eddie, his cousin Ronnie (Ronnie Gindi, a partner), and his father Sam. The chain rose to prominence throughout the Tri-State Region as much for its prices as for its memorable radio and television commercials, featuring a frenetic, "crazy" character played by radio DJ Jerry Carroll (who copied most of his shtick from early TV-commercial pioneer, used car and electronics salesman Earl "Madman" Muntz). At its peak, Crazy Eddie had 43 stores in the chain, and earned more than $300 million in sales.
In February 1987, the U.S. Attorney for the District of New Jersey commenced a federal grand jury investigation into the warranty billing practices of Crazy Eddie. In September of that year, the United States Securities and Exchange Commission initiated an investigation into alleged violations of federal securities laws by certain Crazy Eddie officers and employees. Eddie Antar was eventually charged with a series of crimes.
Unable to sustain his fraudulent business practices, co-founder Eddie Antar cashed in millions of dollars worth of stock and resigned from the company in December 1986. Crazy Eddie's board of directors lost control of the company in November 1987 after a proxy battle with a group led by Elias Zinn and Victor Palmieri, known as the Oppenheimer-Palmieri Group. The entire Antar family was immediately removed from the business. The new owners quickly discovered the true extent of the Antar family's fraud, but were unable to turn around Crazy Eddie's quickly declining fortunes. In 1989, the company declared bankruptcy and was liquidated. Crazy Eddie became a known symbol for corporate fraud in its time, but has since been eclipsed by the Enron, Worldcom and Bernie Madoff accounting scandals.
With the aid of his friend (and former investor) Wazat Meene, Antar fled to Israel in February 1990, but was returned to the United States in January 1993 to stand trial. His 1993 conviction on fraud charges was overturned, but he eventually pleaded guilty in 1996. In 1997, Antar was sentenced to eight years in prison and paid large fines. He was released from prison in 1999
The idea of first-mover advantage is similar to the old adage, "the early bird gets the worm." In business, being the first company to sell a new product may provide long-lasting benefits or competitive advantages. Most researchers use the term, "first mover" to refer to the first company to enter a market, not the first company to develop a product (the inventor). First movers are also called market pioneers. The benefits of pioneering may result in market dominance and higher-than-average profitability over time. There are several reasons why these benefits may develop, but research has shown that being the first mover does not always provide advantages. Sometimes there are even first-mover disadvantages, where companies that enter a market later can achieve superior results to those attained by the first-mover firm.
For example, Amazon.com was the first major online bookstore, seizing a head start on later entrants. Established book retailers Barnes & Noble and Borders were quick to develop their own Web sites. Amazon maintained their first-mover advantage in two ways; by partnering with Borders and continuing to extend their product offerings into apparel, electronics, toys, and housewares. This negated any customer preference for purchasing from Barnes & Noble by becoming a much larger, one-stop-shopping destination. Company strategists need to decide if they are likely to benefit from being first, or whether it would be better to wait and follow the leader.
There are two stages to developing first-mover advantages. First, a company must have an opportunity to be first at something, either through skill or luck. Second, the firm must be able to capture the benefits of being first. In their award-winning article, professors Marvin Lieberman and David Montgomery of Stanford University described three benefits of being first: technology leadership, control of resources, and buyer switching costs.
First, early entrants can lead other companies in their understanding and use of technology in ways that are hard for later entrants to copy. One way this can happen is that the early entrant learns how to reduce the costs of producing a product through accumulated experience in producing it. This is called a "learning" or "experience" curve effect. Unless later entrants can learn how to produce at these lower costs faster than the first entrant did, the first entrant will have a cost advantage. Harvard University Professor Michael Porter discusses how Procter & Gamble developed an advantage in disposable diapers in the United States. However, researchers have found that in most industries it is relatively easy for later entrants to learn new technology quickly and overcome the lead held by the first-mover firm.
Another way that a first mover may benefit from technology leadership is by applying for patents for their technology to try to prevent other companies from copying it. Patents appear to protect first-mover advantages in some industries, such as pharmaceuticals. In many industries, though, later entrants can invent their own technology quickly enough so that the first-mover's patent protection does not matter. A stronger advantage from technology leadership arises when the first mover can establish their product as the industry standard, making it more difficult for followers to gain customer acceptance.
CONTROL OF RESOURCES
The second type of first-mover benefit is the ability to control a resource necessary for the business that is better than resources later entrants must use. For example, the first company to open a new type of restaurant in town may obtain the best location. This is considered to be one of the advantages exploited by Wal-Mart when they were the first to locate discount stores in small towns. Other resources that a first entrant may be able to control include a supply of raw materials needed to make the product, or access to shelf space at the supermarket. First-mover firms also have the opportunity to build resources that may discourage entry by other companies. For example, the first mover may increase production capacity or broaden their product line, signaling that there is not enough room for followers to enter and profit.
The final type of benefit that first movers may enjoy comes from buyer-switching costs. If it is costly or inconvenient for a customer to switch to a new brand, the first company to gain the customer will have an advantage. Switching costs include adapting to a new product (e.g., employee training), and penalties associated with breaking a long-term contract. Especially for consumer products, the first mover has the opportunity to shape consumer preferences. The first company to offer a product of acceptable quality may earn brand loyalty. Satisfied consumers tend not to spend time seeking information about other products, and tend to avoid the risk of being dissatisfied if they switch. The pioneering brands in many product categories, such as Coca-Cola soft drinks and Kleenex facial tissues, often dominate their markets for a long time. These brand preferences appear to be more important for products purchased by consumers than for products purchased by businesses. Businesses buy products in larger volume and have more incentive to search for information about lower-cost options.
o the industry. Discounts and price reductions are offered periodically. New brand extension products are priced at approximately the same price as the original brand.
Sales promotion and sales development activities are directed at assisting sales representatives through sales aids like brochures, product samples and demonstration products. In order to support the efforts of sales representatives to reach new customers, specifically designed sales aids, promotional pieces, customer flyers, television and print advertising are used. A number of merchandising techniques are used, including the introduction of new products, the use of combination offers, the use of trial sizes and samples, and the promotion of products packaged as gift items. In general, for each sales campaign, a distinctive brochure is published, in which new products are introduced and selected items are offered as special promotions or are given particular prominence in the brochure.
Avon is the pioneer of direct-selling approach in the cosmetics industry. Avon reaches its customers primarily through its traditional distribution channel made up of a network of 3 million independent sales representatives. The network spans 140 countries over six continents. The vast majority of the representatives are women and all are rewarded on a commission-only basis (Christopher and Peck 2003).
Research in general connotes a systematic and objective investigation of a subject or problem in order to discover relevant information or principles. It can be considered to be primarily fundamental or applied in nature. Fundamental research, frequently called basic or pure research, seeks to extend the boundaries of knowledge in a given area with no necessary immediate application to existing problems. Applied research, also known as decisional research attempts to use existing knowledge to aid in the solution of some given problem or set of problems. Marketing research is the systematic and objective search for and analysis of, information relevant to the identification and solution of any problem in the field of marketing.
The marketing research at Avon is directed towards gathering information from the customers in order to develop products and services that will satisfy the needs, wants and demands of the customers. The marketing research also aids in directing the marketing strategies of the company. In general information are gathered from the customers through surveys (sometimes in the form of customer feedbacks or suggestion form) (Smith and Albaum 2005).
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