BUSI 7210: Marketing and Consumer Theory – Dr.

Avery Abernathy

Zeus Company
Case Analysis

Jacob Watkins
 1. The success of Zeus Company’s Tiger Pants product line can be contributed to

the good marketing decisions on the behalf of the Zeus Company senior

management executives combined with good timing and a little bit of luck. Glenn

Whitener made a number of great marketing decisions for the company and the

Tiger Pants line that put the product in the right time with the right resources. He

set up a great incentive program with retail stores in order to encourage them to

push products from his company. This project paid retailer owners in bonus

clothes in order to incentives them and their sales people to push the Tiger Pants

brand. This program proved to be a huge success. While it cost the company a

good amount of money to run the program, it allowed for a tremendous amount

of sales growth. The celebrity clothing project that Whitener introduced was really

the major contributor to the success of Tiger Pants. Having the celebrity clothing

program allowed him the opportunity to give the members Punk Rock Academy

the jeans at his daughter’s request. Once the band wore the altered clothing on

MTV, the pants became an instant hit and sales grew immensely. Without the

decisions Whitener made to set up these projects, it is unlikely the product line

would have experienced the success it experienced.

2. The forecasted unit quarterly sales can be found in Table 1 of the attached

appendix. For the last three quarters of 2007 the sales are as follows: quarter two

92,500, quarter three 127,500, quarter four 148,750. The first quarter of 2008 has

an expected sales forecast of 83,500. The total forecasted unit sales for these

quarters are 452,250. I have a moderate amount of confidence in the forecasted

numbers. These expected sales numbers were found using the probabilities

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 presented in the case data by Mr. Whitener. The reason for my confidence level

is because he state that these probabilities are “just guesses.” His best guess of

these probabilities is the best data we have in order to make a justified sales

forecast. Therefore we must use this data in order to forecast sales. Using the

probabilities that Whitener presented in the meeting, I found the expected values

for the future sales forecast multiplying the probabilities by the predicted amounts

(see Table 11 of Appendix).

3. The cost of using independent reps for the first quarter of 2007 was $925,650. If

Zeus had used an internal company sales force during this quarter they would

have had a total cost of $78,276 for the quarter. This is a cost savings of

$847,374 for the company in only one quarter. If Zeus has sales of $1,375,000

per year ($343,750 per quarter) or less it would be more effective for the

company to use the independent reps, if the sales are greater than $1,375,000

per year it would be more cost effective for the company to hire their own internal

sales force. Since recent sales have been much higher than this amount, and

forecasted sales are much higher than this amount, I recommended Zeus

Company hire their own internal sales force for the next four quarters (see Table

9 of Appendix).

4. For the next four quarters, Zeus Company should use the internal company sales

force option for the Tiger Pants product line. Using the internal company sales

force instead of the independent sales reps Zeus will save $3,091,200 over the

next four quarters if sales are at the expected forecasted values. It would cost the

company $3,391,875 to use independent reps while it would cost a mere

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 $300,675 to hire their own sales force (see Table 10 of Appendix). Financial

matters are not the only issues that must be considered. There are always issues

that must be considered when terminating someone from a job they are doing.

You must take into account the relationship they may have with the customers.

Zeus must make sure than maintain good relations with their customers in order

to continue be successful. Also you are dealing with someone’s family and

financial matters when firing them, the decision should not be taken lightly. All

considered I believe the cost savings achieved by moving to an internal sales

force versus the independent sales reps far outweighs any negative issues. In

addition you must also consider the company’s other product lines and the

independent sales reps that are currently selling these items. You run the chance

of hurting sales within those product lines by firing the independent sales reps

that are selling Tiger Pants. My recommendation is for Zeus to move to the

internal sales force for the Tiger Pants line, and examine moving into the same

structure for all of their products. As long as Zeus continues to take care of their

customers and hire hard working sales reps they will be successful and continue

to increase the sales growth for Tiger Pants tremendously.

5. Examining Table 8 of the attached appendix, you will find the most profitable

option for Zeus Company is option three considering sales are at the expected

forecasted values. With the forecasted sales, Zeus will earn a profit of

$23,410,312.50 for the next four quarters using the third option versus a profit

$23,329,387.50 using option two. This is a profit gain of $80,925 (see Table 8 of

Appendix). The breakdown of unit cost for all three options can be found in

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 Table 7 of the attached appendix. Considering all costs, option three is the best

decision for Zeus Company. The bonus clothes and celebrity clothes projects

have been essential programs to the success of the Tiger Pants product line and

Zeus Company. It is imperative to continue these programs as part of the

marketing plan. The cost of these programs have run roughly 2% sales since

they were introduced. The program should be maintained at the same level

during the next four quarters to continue to help grow sales. The cost projections

for Tiger Pants for the next four quarters can be found in Table 8 of the attached

appendix under celebrity and bonus costs. I have projected the costs for this

project to continue to run at 2% of sales in the next four quarters. Accounting for

the change in the sales team structure, the change in the production contract to

option three, and maintaining the celebrity and bonus clothes program, total cost

for the next four quarters consist of cost of goods sold, the salary and benefits

cost, the commissions cost, and the bonus and celebrity clothes cost. Total cost

for the next four quarters is $3,724,687.50. This cost does allow for excess

inventory on the company’s shelves left over from production requirements in

2007 Quarter 2 and 2008 Quarter 1. This excess inventory allows for growth

during these four quarters. Considering the probabilities and numbers used for

the expected sales forecast it would be beneficial for the company to have this

buffer available to them.

6. If I were in the position of Glenn Whitener I would not be in favor of the bonus

pool suggested by the CEO. While there are no financial negatives that may

directly come from the decision, this type of business is not something I would

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 want to take part in. The is an unethical decision to make and risk relationships

the company has made as well as the reputation they have worked hard to build.

The management team has had a great year and has already earned huge

bonuses. Doing what the CEO suggested could have harmful repercussions for

the reputation of the Zeus Company. You also bear the chance of hurting

relationships you have with retailers by cancelling their orders and then

rebooking them. They may be inconvenienced or unhappy which may cause

them to choose to do business elsewhere. Also the company will soon be

switching too an internal sales force and it is not worth risking the negatives for

one quarter on bonuses. By voting for the CEO’s suggested plan, Whitener

would be making an unethical selfish decision that would not be looking out for

the best interest of himself, his employees, his clients, or of the company.

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