Questions by yweimann - Page 34
Murphy's, Incorporated, has 70,000 shares of stock outstanding with a par value of $1 per share. The market value is $12 per share. The balance sheet shows $73,000 in the capital in excess of par account, $70,000 in the common stock account, and $138,500 in the retained earnings account. The firm just announced a stock dividend of 11 percent. What will the balance in the capital in excess of par account be after the dividend? Multiple Choice a) $150,000 b) $232,400 c) $165,400 d) $157,700
THE COMPANYWith a near-cult following, Trader Joes has carved out a successful position in the competitive grocery market. Started in Los Angeles in 1958 by Joe Coulombe as a convenience store, Trader Joes was dramatically repositioned in the 1960s as a store with luxurious food at low prices. Trader Joes has grown to 331 stores in some two dozen states. Estimated 2008 sales were $7.2 billion. The company had 10,000 employees.THE SHOPPING EXPERIENCE What makes Trader Joes a unique grocery shopping experience? Trader Joes stores are not largeabout 10,000 square feetand carry a limited number of items to keep costs down. While there are fewer items (2,500 to 3,000), the items are often unique. More than 70 percent of the merchandise is private label, including Charles Shaw wine that sells for about $3.29 per bottle! Private label has been part of Trader Joes product strategy for more than 30 years. According to Trader Joes president, Doug Rauch, "We went into private label because of the value opportunity, so we could put our destiny in our hands." And over the years, consumers confidence in these offerings has grown, allowing Trader Joes to try new things and experiment with other offerings. Private-label offerings allow Trader Joes to knock at least 20 percent off the cost of its products. And all private-label offerings boast no artificial colors, flavors, or preservatives. Dont let the low prices fool youthe merchandise quality is upscale. In addition to organic fruits and vegetables and other grocery staples such as milk, cheese, and meat, there are unusual items such as Trader Joes own chocolate-covered, a peanut butterfilled pretzels, and exotic cheeses such as an Indian Paneer and a white Stilton with mango and ginger chunks.THE SEARCH FOR NEW PRODUCTS Trader Joes uses a group of trained employees called "the tasting panel" to evaluate, critique, and improve its varied lines of house brands. New-product ideas have been uncovered in an airport in Thailand and a small restaurant in Italy and brought back to Trader Joes and the tasting panel. This constant influx of new, tasty, critically reviewed products replaces the bottom 10 percent of products. Rotating out the bottom 10 percent isnt easy, but it ensures a constant flow of new products for customers to try, according to Matt Sloan, vice president of merchandising. And customers are willing to travel to take advantage of the value provided by Trader Joes. Trader Joes has become to Manhattan supermarkets what Walmart is to middle America grocery stores. The values offered by Trader Joes exceed the convenience of the local market. According to Jon Hauptman of consulting firm Willard Bishop, there are price-gap "tipping points" where consumers are willing to pay more for additional convenience. Hauptman says this price gap typically is around 10 percent. Since Trader Joes prices are easily more than 10 percent lower for similar items (generally 20 percent lower) and offered in a more upbeat shopping environment, consumers are willing to trade convenience and tote their Trader Joes shopping bags through the subways of Manhattan. Sampling is a key promotional tool. For a grand opening in Newport News, Virginia, customers were able to try Atlantic smoked salmon and hot cider in the morning followed by roasted red pepper soup, sweet potato bisque, and Tuscan Italian bread in the afternoon. Employees answer customer questions and offer food suggestions. Handwritten suggestions on labels offer ideas for foods that work well together. Recipe cards are available with additional food preparation ideas. Looking for a special dessert? How about a frozen pumpkin cheesecake or strawberries dipped in white chocolate? "People will think youve gone through so much trouble, or theyll say You got that at Trader Joes," says Trader Joes Danny Owens.1.How would Trader Joes be classified as a retail outlet in terms of ownership, level of service, and merchandise line?2 What type of retail position does Trader Joes occupy? Who do you see as its primary competitors, given this positioning?3 How do you reconcile Trader Joes success with the fact that grocery stores as a category are in the maturity stage of the retail life cycle? What are the key factors behind Trader Joes success, and what steps should it take beyond its current marketing activities to continue to prosper?