Mgmt 520 Final Exam Week 8

MGMT 520 FINAL EXAM Week 8  


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(TCOs G and I) In the 1930s, after immigrating to the U.S. from a region in central Europe threatened by the onset of World War II, Luigi and Maria Spongee opened a bakery in Chicago. They specialized in snack cakes. Spongee Cup Cakes became so popular in the area that the family stopped being actual bakers and became manufacturers/ food processors of the snack cakes on a regional basis. After returning from the war, their son Steve completed college and began working in television advertising in the early 1950s. Steve approached his parents and his older brother Tom, who was now running the business, about the possibilities of advertising and “going national.” The family liked the idea and began advertising and expanding. In addition, to fuel the expansion, they offered retailers price discounts and other incentives if they prominently positioned the displays set-up by Spongee rack jobbers. By the 1960s, they were a national brand, controlling over 80 percent of the snack food industry.
In the 1970s, with the advent of the hippie counter-culture and the back-to-Earth movement, a new competitor made an impact on the Spongee business. The company, Herbal Snacks, began advertising that their products only used natural ingredients. They even began running a commercial in which a mother and child compared their Herbal Snacks with a lampooned product named “Cup Cake Spungies,” stating that it tasted like poison and dog food! Very-Large-Tom, a counter-culture pop star with a late night UHF and cable show, joined in on the controversy created by the commercial and stated that he did not understand how people, “could buy such poisonous dog food and serve it to their children as snacks!” Market studies showed that Spongee Cup Cakes sales suffered. As a result, Spongee began a more aggressive shelf space and display marketing campaign to combat...