Foundation and Empire 15. The Psychologist

There was reason to the fact that the element known as â€Å"pure science† was the freest form of life on the Foundation. In a Galaxy where the predominance – and even survival – of the Foundation still rested upon the superiority of its technology – even despite its large access of physical power in the last century and a half – a certain immunity adhered to The Scientist. He was needed, and he knew it. Likewise, there was reason to the fact that Ebling Mis – only those who did not know him added his titles to his name – was the freest form of life in the â€Å"pure science† of the Foundation. In a world where science was respected, he was The Scientist – with capital letters and no smile. He was needed, and he knew it. And so it happened, that when others bent their knee, he refused and added loudly that his ancestors in their time bowed no knee to any stinking mayor. And in his ancestors' time the mayor was elected anyhow, and kicked out at will, and that the only people that inherited anything by right of birth were the congenital idiots. So it also happened, that when Ebling Mis decided to allow Indbur to honor him with an audience, he did not wait for the usual rigid line of command to pass his request up and the favored reply down, but, having thrown the less disreputable of his two formal jackets over his shoulders and pounded an odd hat of impossible design on one side of his head, and lit a forbidden cigar into the bargain, he barged past two ineffectually bleating guards and into the mayor's palace. The first notice his excellence received of the intrusion was when from his garden he heard the gradually nearing uproar of expostulation and the answering bull-roar of inarticulate swearing. Slowly, Indbur lay down his trowel; slowly, he stood up; and slowly, he frowned. For Indbur allowed himself a daily vacation from work, and for two hours in the early afternoon, weather permitting, he was in his garden. There in his garden, the blooms grew in squares and triangles, interlaced in a severe order of red and yellow, with little dashes of violet at the apices, and greenery bordering the whole in rigid lines. There in his garden no one disturbed him – no one! Indbur peeled off his soil-stained gloves as he advanced toward the little garden door. Inevitably, he said, â€Å"What is the meaning of this?† It is the precise question and the precise wording thereof that has been put to the atmosphere on such occasions by an incredible variety of men since humanity was invented. It is not recorded that it has ever been asked for any purpose other than dignified effect. But the answer was literal this time, for Mis's body came plunging through with a bellow, and a shake of a fist at the ones who were still holding tatters of his cloak. Indbur motioned them away with a solemn, displeased frown, and Mis bent to pick up his ruin of a hat, shake about a quarter of the gathered dirt off it, thrust it under his armpit and say: â€Å"Look here, Indbur, those unprintable minions of yours will be charged for one good cloak. Lots of good wear left in this cloak.† He puffed and wiped his forehead with just a trace of theatricality. The mayor stood stiff with displeasure, and said haughtily from the peak of his five-foot-two, â€Å"It has not been brought to my attention, Mis, that you have requested an audience. You have certainly not been assigned one.† Ebling Mis looked down at his mayor with what was apparently shocked disbelief, â€Å"Ga-LAX-y, Indbur, didn't you get my note yesterday? I handed it to a flunky in purple uniform day before. I would have handed it to you direct, but I know how you like formality.† â€Å"Formality!† Indbur turned up exasperated eyes. Then, strenuously, â€Å"Have you ever heard of proper organization? At all future times you are to submit your request for an audience, properly made out in triplicate, at the government office intended for the purpose. You are then to wait until the ordinary course of events brings you notification of the time of audience to be granted. You are then to appear, properly clothed – properly clothed, do you understand – and with proper respect, too. You may leave.† â€Å"What's wrong with my clothes?† demanded Mis, hotly. â€Å"Best cloak I had till those unprintable fiends got their claws on it. I'll leave just as soon as I deliver what I came to deliver. â€Å"Ga-LAX-y, if it didn't involve a Seldon Crisis, I would leave right now.† â€Å"Seldon crisis!† Indbur exhibited first interest. Mis was a great psychologist – a democrat, boor, and rebel certainly, but a psychologist, too. In his uncertainty, the mayor even failed to put into words the inner pang that stabbed suddenly when Mis plucked a casual bloom, held it to his nostrils expectantly, then flipped it away with a wrinkled nose. Indbur said coldly, â€Å"Would you follow me? This garden wasn't made for serious conversation.† He felt better in his built-up chair behind his large desk from which he could look down on the few hairs that quite ineffectually hid Mis's pink scalp-skin. He felt much better when Mis cast a series of automatic glances about him for a non-existent chair and then remained standing in uneasy shifting fashion. He felt best of all when in response to a careful pressure of the correct contact, a liveried underling scurried in, bowed his way to the desk, and laid thereon a bulky, metal-bound volume. â€Å"Now, in order,† said Indbur, once more master of the situation, â€Å"to make this unauthorized interview as short as possible, make your statement in the fewest possible words.† Ebling Mis said unhurriedly, â€Å"You know what I'm doing these days?† â€Å"I have your reports here,† replied the mayor, with satisfaction, â€Å"together with authorized summaries of them. As I understand it, your investigations into the mathematics of psychohistory have been intended to duplicate Hari Seldon's work and, eventually, trace the projected course of future history, for the use of the Foundation.† â€Å"Exactly,† said Mis, dryly. â€Å"When Seldon first established the Foundation, he was wise enough to include no psychologists among the scientists placed here – so that the Foundation has always worked blindly along the course of historical necessity. In the course of my researches, I have based a good deal upon hints found at the Time Vault.† â€Å"I am aware of that, Mis. It is a waste of time to repeat.† â€Å"I'm not repeating,† blared Mis, â€Å"because what I'm going to tell you isn't in any of those reports.† â€Å"How do you mean, not in the reports?† said Indbur, stupidly. â€Å"How could-â€Å" â€Å"Ga-LAX-y, Let me tell this my own way, you offensive little creature. Stop putting words into my mouth and questioning my every statement or I'll tramp out of here and let everything crumble around you. Remember, you unprintable fool, the Foundation will come through because it must, but if I walk out of here now – you won't.† Dashing his hat on the floor, so that clods of earth scattered, he sprang up the stairs of the dais on which the wide desk stood and shoving papers violently, sat down upon a comer of it. Indbur thought frantically of summoning the guard, or using the built-in blasters of his desk. But Mis's face was glaring down upon him and there was nothing to do but cringe the best face upon it. â€Å"Dr. Mis,† he began, with weak formality, â€Å"you must-â€Å" â€Å"Shut up,† said Mis, ferociously, â€Å"and listen. If this thing here,† and his palm came down heavily on the metal of the bound data, â€Å"is a mess of my reports – throw it out. Any report I write goes up through some twenty-odd officials, gets to you, and then sort of winds down through twenty more. That's fine if there's nothing you don't want kept secret. Well, I've got something confidential here. It's so confidential, even the boys working for me haven't got wind of it. They did the work, of course, but each just a little unconnected piece – and I put it together. You know what the Time Vault is?† Indbur nodded his head, but Mis went on with loud enjoyment of the situation, â€Å"Well, I'll tell you anyhow because I've been sort of imagining this unprintable situation for a â€Å"Ga-LAX-y, of a long time; I can read your mind, you puny fraud. You've got your hand right near a little knob that'll call in about five hundred or so armed men to finish me off, but you're afraid of what I know – you're afraid of a Seldon Crisis. Besides which, if you touch anything on your desk, I'll knock your unprintable head off before anyone gets here. You and your bandit father and pirate grandfather have been blood-sucking the Foundation long enough anyway.† â€Å"This is treason,† gabbled Indbur. â€Å"It certainly is,† gloated Mis, â€Å"but what are you going to do about it? Let me tell you about the Time Vault. That Time Vault is what Hari Seldon placed here at the beginning to help us over the rough spots. For every crisis, Seldon has prepared a personal simulacrum to help – and explain. Four crises so far – four appearances. The first time he appeared at the height of the first crisis. The second time, he appeared at the moment just after the successful evolution of the second crisis. Our ancestors were there to listen to him both times. At the third and fourth crises, he was ignored – probably because he was not needed, but recent investigations – not included in those reports you have – indicate that he appeared anyway, and at the proper times. Get it?† He did not wait for any answer. His cigar, a tattered, dead ruin was finally disposed of, a new cigar groped for, and lit. The smoke puffed out violently. He said, â€Å"Officially I've been trying to rebuild the science of psychohistory. Well, no one man is going to do that, and it won't get done in any one century, either. But I've made advances in the more simple elements and I've been able to use it as an excuse to meddle with the Time Vault. What I have done, involves the determination, to a pretty fair kind of certainty, of the exact date of the next appearance of Hari Seldon. I can give you the exact day, in other words, that the coming Seldon Crisis, the fifth, will reach its climax. â€Å" â€Å"How far off?† demanded Indbur, tensely. And Mis exploded his bomb with cheerful nonchalance, â€Å"Four months,† he said. â€Å"Four unprintable months, less two days.† â€Å"Four months,† said Indbur, with uncharacteristic vehemence. â€Å"Impossible.† â€Å"Impossible, my unprintable eye.† â€Å"Four months? Do you understand what that means? For a crisis to come to a head in four months would mean that it has been preparing for years.† â€Å"And why not? Is there a law of Nature that requires the process to mature in the full light of day?† â€Å"But nothing impends. Nothing hangs over us.† Indbur almost wrung his hands for anxiety. With a sudden spasmodic recrudescence of ferocity, he screamed, â€Å"Will you get off my desk and let me put it in order? How do you expect me to think?† Mis, startled, lifted heavily and moved aside. Indbur replaced objects in their appropriate niches with a feverish motion. He was speaking quickly, â€Å"You have no right to come here like this. If you had presented your theory-â€Å" â€Å"It is not a theory.† â€Å"I say it is a theory. If you had presented it together with your evidence and arguments, in appropriate fashion, it would have gone to the Bureau of Historical Sciences. There it could have been properly treated, the resulting analyses submitted to me, and then, of course, proper action would have been taken. As it is, you've vexed me to no purpose. Ah, here it is.† He had a sheet of transparent, silvery paper in his hand which he shook at the bulbous psychologist beside him. â€Å"This is a short summary I prepare myself – weekly – of foreign matters in progress. Listen – we have completed negotiations for a commercial treaty with Mores, continue negotiations for one with Lyonesse, sent a delegation to some celebration or other on Bonde, received some complaint or other from Kalgan and we've promised to look into it, protested some sharp trade practices in Asperta and they've promised to look into it – and so on and so on.† The mayor's eyes swarmed down the list of coded notations, and then he carefully placed the sheet in its proper place in the proper folder in the proper pigeonhole. I tell you, Mis, there's not a thing there that breathes anything but order and peace-â€Å" The door at the far, long end opened, and, in far too dramatically coincident a fashion to suggest anything but real life, a plainly-costumed notable stepped in. Indbur half-rose. He had the curiously swirling sensation of unreality that comes upon those days when too much happens. After Mis's intrusion and wild fumings there now came the equally improper, hence disturbing, intrusion unannounced, of his secretary, who at least knew the rules. The secretary kneeled low. Indbur said, sharply, â€Å"Well!† The secretary addressed the floor, â€Å"Excellence, Captain Han Pritcher of Information, returning from Kalgan, in disobedience to your orders, has according to prior instructions – your order X20-513 – been imprisoned, and awaits execution. Those accompanying him are being held for questioning. A full report has been filed.† Indbur, in agony, said, â€Å"A full report has been received. Well!† â€Å"Excellence, Captain Pritcher has reported, vaguely, dangerous designs on the part of the new warlord of Kalgan. He has been given, according to prior instructions – your order X20-651 – no formal hearing, but his remarks have been recorded and a full report filed.† Indbur screamed, â€Å"A full report has been received. Well!† â€Å"Excellence, reports have within the quarter-hour been received from the Salinnian frontier. Ships identified as Kalganian have been entering Foundation territory, unauthorized. The ships are armed. Fighting has occurred.† The secretary was bent nearly double. Indbur remained standing. Ebling Mis shook himself, clumped up to the secretary, and tapped him sharply on the shoulder. â€Å"Here, you'd better have them release this Captain Pritcher, and have him sent here. Get out.† The secretary left, and Mis turned to the mayor, â€Å"Hadn't you better get the machinery moving, Indbur? Four months, you know.† Indbur remained standing, glaze-eyed. Only one finger seemed alive – and it traced rapid jerky triangles on the smooth desk top before him.

Case Analysis for Virgin Mobile Essay

VIRGIN MOBILE USA – ‘FIRST PRICE’ STRATEGY (An analysis of the Pricing Decision alternatives that Virgin has to undertake to create an alternate customer segment and monetize their buying power)VIRGIN XTRAS – OVERVIEWThe Virgin Mobile USA service involved content, features and entertainment, called â€Å"Virgin Xtras†.Collaboration with MTV networks as it was the most recognized youth brands in the country and unparalleled reach forthe under-30 market segment: Exclusive, multiyear content and marketing agreement. MTV network to deliver music, games and other MTV-, VH1-, and Nickelodeon based content to Virgin Mobile subscribers. Subscribers would have access to MTV- branded accessories and phones, graphics, ring tones, text alerts and voice mails. Promotional airtime on MTV’s channels and website. Virgin mobile subscribers to vote for their favorite videos on a few MTV shows.Other Virgin Mobile services that aimed to appeal to the youth market , generate additional usage and create loyaltywere: Text Messaging Online Real- Time Billing Rescue Ring Wake- Up Call Ring Tones Fun Clips The Hit List Music Messenger MoviesTraditional Channel Virgin’s ChannelServices sold at own proprietary retail outlets, kiosks in Services sold where youth shop especially consumermalls, high-end electronic stores, speciality stores etc. electronic goods in stores like Target, Sam Goody music stores, Best Buy. High-touch sales people who were paid high sales Products packaged in consumer electronics packaging, placedcommission to ensure hands-on service. on a bright red clamshell, which gave it visibility and no salesperson was required.Cost per handset from Nokia, Motorola, Samsung etc. – Cost per handset from Kyocera- $60-$100. Lesser subsidy$150-$300. Entailed substantial subsidy from the entailed by the company.handset makers, a component of acquisition cost.Distributors’ industry avg. Commission- $100/phone Distributors commission- $30/phone.The availability of the phones were not as segment Phones available at 3000 retail outlets in USA, and availabilityspecific as Virgin targeted included at retailers such as Sam Goody, Circuit City, Media Play, Virgin MegastoreBilling is monthly Billing is to be real-time and with online avenues PRICING DECISIONS:-CUSTOMER PERSPECTIVESThe company tried to distinguish itself from the competitors standpoint by playing on the fact that t he targeted segment‘did not trust  the prevalent pricing points’ in the industry that hinged on the credit worthiness . The main practicesprevalent were:- 90% of all subscribers had contractual agreements for a period of 1 year-2 years Required rigorous credit check Plans established â€Å"buckets† of minutes, on extra usage users penalized heavily. Charged less for off-peak than on-peak minutes, but the off-peak period had shrunk. An additional fee was charged to add to the monthly bill, which included taxes, service charges. Per minute Charge (Y-axis, in cents) for the bucket of minutes contracted (X-axis) 180 160 140 120 100 80 Per minute Charge for the bucket of minutes andcontracted (X-axis) 60 40 20 0 0 20 40 60 80 100 120 140The bold line represents the cost per minute charged for a valid contract (which is shown by the arrows). The higher costin the vent of under-utilization of the contract is due to the high fixed cost (like the subsidization of hand sets,, contractcharges etc.)The higher limit in the vent of exceeding the contract is due to penalizing.PRICING DECISIONS – COMPAN Y PERSPECTIVESVirgin Mobile USA had to fix all these problems prevalent in the industry while taking a pricing decision. The mainconstraints it faced was that the prices should be competitive and profitable without triggering of competitive reactions.There were 3 options available:OPTION 1- ‘Clone the Industry Prices’ The message would go to customers that they were priced competitively with few advantages like differentiated applications [MTV] and superior customer service. Better off-peak hours and fewer hidden fees would be the selling point but the total pricing structure would still depend on off-peak and peak categorization as well as contacted minutes. Easy to promote as this strategy of â€Å"buckets† was already prevalent in industry. But risks alienating the target base as they already did not make the required cut for the credit worthiness. OPTION 2- ‘Price below the Competition’ Similar pricing structure as rest of industry, with actual prices slightly below those of competition only within the highest frequency range. Better off-peak hours and fewer hidden fees could also be given.OPTION 3- ‘A Whole New Plan’ Entirely different pricing structure. Eliminate contracts and going for prepaid pricing structure. However the nature of the American cellular market with operator dedicated handsets ad prohibitive pricing followed by the competitors due to high churn rates Cost of Acquisition Subsidization of Advertisement Sales handsets . Break even analysis and Life  time Value for cellular subscribers:- As already, stated in the current scenario, most mobile companies amass working capital by going for long term contracts. Compared to a US$ 100 acquisition cost for a prepaid connection, the equivalent historical cost of acquisition for a post paid consumer is US $ 370. Assuming that we stay with the post paid plan due to industry imperatives, we find that the average calling rate is around 10-30 cents per minute for a average bucket usage of 100-300 minutes (this is the target usage range that Virgin is aiming to target in the second option) Hence, average cost incurred by the company for a customer = US$ (0.1 x 300) =US$ 60 (The most promising aspect in the relevant range) Acquisition cost = handset subsidy given to hand set manufacturers (US$ 60 -100) + advertisement costs ( US$60 million budget spread over an estimated 1 million subscribers = US$60)+ sales overheads (US$100-150) = US$ 290-370 per user per month. Now, Breakeven point in terms of month is calculated as:- Total fixed cost = US$ 370 (acquisition cost for a post paid customer) = 28.46 months Revenue – Variable cost US$ 57 (avg. revenue per month from a user- ARPU) – US$30Hence it takes around 29 months for the customer to prove profitable for the company even in the most promisingscenario of the relevant range.But we will also have to induct the churn rate of around 2% per month into this optimistic consideration and try tocalculate the LTV. If the LTV is positive then the company should go ahead. The option that yields the largest LTV shouldbe chosen.LTV = ∑ (Ma).r(a-1) – Acquisition cost (1+i)a View slide Here, the margin remains relatively fixed across the periods which can be assumed as a modest 12%, r is the retentionrate which comes to around 72% (churn rate of 2% p.m. compounded monthly over a year = 1.02Ãâ€"1.02x†¦..till 12months ), i becoming interest rate assumed to be around 5%Margin in a month = (Average monthly phone bill ∞,=US$52)-(Cash cost per user =US$30) = US$22Now taking this value of n we have :- LTV = M/(1-r+i)Now calculating the LTV for every option available will give us a marker of how the pricing strategy should be used forusing various options considering the fact that the interest rate remains constant at 5%:-For option 1:-LTV = US$ {(22*12)/(1-0.72+0.05) } – 360= US$ 421For option 2:- Here the retention rate can be assumed to have been bettered by differential pricing in the 100-300minutes usage category , so we can assume a modest increase to 80%. But this is more or less offset by the increase incash cost to user which  can be assumes to rise by 5% if the differential pricing is 5% below the average industrystandard. So the margin can be assumed to drop to US$19. Here, LTV = US$ {(19*12)/(1-0.8+0.05) } – 360= US$ 489Hence we can see that even with modest assumptions, the LTV is maximized for Option 2, henca the company shouldventure into differential pricing if at all it wants to deviate. But considering the high acquisition turnover time andrecovery time of almost 29 months, it is a risky strategy because of very high mobility in the targeted segment.Hence Virgin should focus on non price factors such as :- If the contracts are done away with, this will ensure more loyalty of the target segment as the majority of them are not credit worthy. The positioning of Virgin Mobile USA and its collaborations with partners like MTV will attract more customers which are loyal. The cost of acquisition of a customer comprises of advertisement, sales cost and subsidy given. Since these costs are much lower than the other competitors, they can price themselves lower than competitors. They can also be transparent in their cost structure, eliminating hidden costs .Hence, initially it should give non-price advantage to its customers and over a period of time can reduce costs to sustaingrowth and drive off competition virgin mobile Presentation Transcript We Answer To A Higher Calling Prepared By – Team 4 Pooja Gupta (P122033) Rohit Singh (P122038) Saurabh Singh (P122041) Varun Anand (P122049 Virgin Groupâ€Å"Virgin believes in making a difference. We stand for value for money, quality, innovation, fun and a sense of competitive challenge. We strive to achieve this by empowering our employees to continually deliver an unbeatable customer experience.† Virgin Mobile USA†¢ Commenced operations in June, 2002†¢ Led by founding CEO Dan Schulman†¢ Entered USA as a 50-50 joint venture between Virgin Group and Sprint Corporation. Virgin Mobile USA’s service would be hosted on Sprint’s PCS network†¢ Sprint was in process of updating its network and increasing its capacity. View slide Virgin Mobile USA†¢ Schulamn- â€Å"The nice thing about this model is that we don’t have to worry about huge fixed costs or the physical infrastructure. We can focus on what we do best-understanding and meeting customer needs.†Ã¢â‚¬ ¢ â€Å"We Answer To A Higher Calling†Ã¢â‚¬ ¢ Providing extra-ordinary services and experiences at a low price as $35 View slide Objective†¢ Create value and profitability in cell  phone service industry†¢ Target market ages 15-29, opportunity for growth with this market segment†¢ 1 million subscribers by year 1, 3 million by year 4†¢ â€Å"By focusing on the youth market from the ground up, we’re putting ourselves in a position to serve these customers in a way they have never been served before† -Dan Schulman, CEO, Virgin Mobile USA 4P’s of Virgin Mobile USAWhy? Problem with Current Telecom Services†¢ Low penetration among consumers aged 15-29. Growth rate for this segment was projected to be robust for the next 5 years†¢ Target group had been undeserved by existing carriers and specific needs that haven’t been met†¢ Average monthly cell phone bill – $52 representing 417 minutes of use. Hence, cost to serve a customer – $30†¢ Carriers tended to be wary of acquiring low- value subscribers Target Group and Behavior†¢ Consumers aged 15-29†¢ Calling pattern is different from typical business person†¢ Open to new things: – Text messaging – Downloading information using cell phones – More likely to use: ringtones, faceplates and graphics †¢ It’s a fashion accessory and a personal style statement Mobile Penetration by Age Group Revenue from Mobile Entertainment Services Pricing Trend in US before Virgin†¢ Over 90% of all subscribers had contractual agreements for a period of 1-2 years with their cellular providers†¢ Customers would sign up for ‘buckets of minutes’†¢ If a user used more than allocated minutes, they would be charged with extremely high rates (eg: 40 cents / minute)†¢ If a user used less than allocated minutes, they were still charged the fixed monthly fee, which drove up their price per minute Calling Plans – Industry PricesPrice per minute Contract Commitment – Minutes Calling Plans – Industry PricesPrice per Minute Contract Commitment – Minutes Pricing Trend in US before Virgin†¢ Carriers charged less for off-peak than on-peak minutes†¢ Off-peak time changed from 6:00 PM to 7:00, 8:00 and then finally 9:00 PM†¢ Some carriers charged a monthly fee (appox. $7) to move the peak time back to one hour†¢ Carriers added additional fees to monthly bill (tax or other additional cost information was not communicated. So a $29 plan ended up being a $35 plan) What Virgin focused on?†¢ Customers couldn’t predict their usage and ended up choosing  wrong plan pattern†¢ Customers think they use more minutes than they actually use†¢ Target segment actually used 100-300 mins/month but target predicted their usage is higher than that†¢ People tried picking up lower bucket plans to avoid high monthly fees but they ended up paying a lot more than that due to usage of minutes above the bucket†¢ On-peak and off-peak minutes weren’t in right mix 4P’s of Virgin Mobile USAWhat? What to provide them? VirginXtras†¢ Delivery of content, features and entertainment†¢ Signed a exclusive and multiyear, content & marketing agreement with MTV networks to deliver music, games and other MTV, VH1 and Nickelodeon based content to Virgin Mobile Subscribers†¢ Deal with MTV also ensured airtime on MTV’s channel and web site VirginXtras†¢ MTV-branded accessories and phones and contents (ringtones, text alerts and voice mails†¢ To vote for their favorite videos on MTV’s shows like â€Å"Total request Live†Ã¢â‚¬ ¢ Text messaging – No. of text msgs tends to skyrocket during school hours. Reason: Parents don’t see who they call, private form of communication VirginXtras†¢ Online Real-Time Billing – No call detail on monthly bills. Website will record individual calls on a real-time basis†¢ Rescue ring – Mobile subscriber will get a call at prearranged time to â€Å"escape† in case a date was not going well .†¢ Wake-up Call – Chance to wake up to original messages from a variety of cheeky celebrity VirginXtras†¢ Ring Tones – Customized ringtones would be available for subscribers to download†¢ Fun clips – News, tidbits, jokes, gossip, sports and more†¢ Hit List – Vote top 10 list of hit songs. Would be able to hear the %age of other subscribers who either â€Å"loved it† or â€Å"hated it† VirginXtras†¢ Music Messenger – Tap into 10 songs list & forward it to a friend allowing them to check out a hot new track†¢ Movies – Movie descriptions, show timings, and buy tickets in advance Handset: First 2 basic models named â€Å"Party Animal† and â€Å"Super Model† came with interchangeable faceplates decorated with eye-catching colors and patterns 4P’s of Virgin Mobile USAHow? Virgin’s Goal†¢ To make sure their prices are competitive†¢ To make sure they could make profit†¢ Don’t want to trigger off competitive reactions Options†¢ Clone the Industry Prices†¢ Price Below Competition†¢ Whole New Plan Clone the Industry Prices†¢ Use same prices as other competitors†¢ Communicate  -â€Å"priced competitively with everyone else but with a few key advantages like differentiated applications (MTV) and superior customer service† – MTV Applications and features – Superior Customer service†¢ Offering better off-peak hours and fewer hidden fees†¢ Put on packaging so that even without a salesperson, consumers would get the message Price per minute Contract Commitment – Minutes Clone the Industry Prices Price Below the Competition†¢ Maintain buckets and volume discounts†¢ Set price per minute below the industry average for certain key buckets – Target young market 100-300 mins Price per minute Contract Commitment – Minutes Price Below the Competition A Whole New Plan†¢ Shorten or Eliminate Contracts – Contracts guarantee annuity stream – Contract allows 18 years or below to purchase the product – Churn rate was 2%, new plan could increase churn rate to 6%†¢ Prepaid service – 92% US subscribers had Post-paid – Pre-paid was used on occasional basis as rates per minute was high and no credit check was required – Has high churn rates. Company would never be able to recoup its customer acquisition costs – New mechanism or infrastructure was required for prepaid services A Whole New Plan†¢ Handset subsidies – Mobile carriers subsidized the cost of handset to end users to acquire customer cost†¢ Eliminate Hidden Fees and off-peak hours – ‘what you see is what you get’ – Rolling out hidden costs into pricing such that pricing feels competitive – off-peak should benefit the target group. Minute usage is very different from busines s class Price Below the Competition What they did?†¢ LTV Model – Life Time Value†¢ In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer†¢ Simplified Model†¢ LTV = (M/(1-r+i)) – AC Factors influencing LTV†¢ ARPU: Avg Revenue Per User†¢ CCPU: Cash Cost per User = 45% of ARPU†¢ M: Monthly Margin = ARPU – CCPU†¢ r: Retention rate ( 1 – (12*6%)) = 0.28†¢ AC: Acquisition Cost ( = $120 for Virgin) – Sale commission – Advertising per gross add – Subsidy cost LTV Calculation†¢ LTV = (M/(1-r+i))  Ã¢â‚¬â€œ AC†¢ => M = ARPU – CCPU = (1 – 45)% = 55%M on yearly basis, assuming that a customer talks for 200mins. M = (1-0.45) * 200 * 12 * p p -> can be 5 – 30 cents/min (As competitors are charging more than 30 cents/min LTV @ Different Price Points†¢ LTV(at 5 c ents)= (1-.45) (200*12*.05) /(1-.28 + .05) – 120 = -34.28†¢ LTV(at 7 cents)= (1-.45) (200*12*.07) /(1-.28 + .05) – Break-even120 = 0 point†¢ LTV(at 10 cents)= (1-.45) (200*12*.1) /(1-.28 + .05) – 120 = 51.42†¢ LTV(at 15 cents)= (1-.45) (200*12*.15) /(1-.28 + .05) – 120 = 137.14†¢ At 7 cents, the LTV =0 which tells that minimum of 7 cents should be charged by the virgin†¢ Virgin can charge any amount more than 7 cents LTV @ Different Price Points Price Point LTV5 cents / minute -34.287 cents / minute 010 cents / minute 51.4215 cents / minute 137.14 Break-even point Current Plans in Market Company Plan ValueAT&T Starting at $40/monthVirgin Mobile USA $35T-Mobile $34.99 (Only talk + text) other plans starting at $59.99 Providing a plan with music and other added features Virgin’s Service Offering†¢ Extra features: Music, Wallpapers, Videos, Live Video Request, Rescue ring, wake-up call facility†¢ New improved billing pattern and online real-time monthly bills†¢ Prepaid plan†¢ No contracts†¢ No hidden charges†¢ No peak off peak hours†¢ Very low handset subsidies†¢ No credit checks†¢ No Monthly bills†¢ Price: 25 cents per minute for the first 10 minutes; 10 cents/minute for the rest of the day†¢ No exact numbers, but churn rate lower than 6% Conclusion†¢ Virgin correctly identified service gaps in telecom industry and what customers needed.†¢ Virgin identify inflexibility in calling plans and in other plans.†¢ Provided extra services than current mobile carriers.†¢ Provided a medium of entertainment on go.†¢ Offered customized services at a relatively low cost. References†¢ HBR case study â€Å"Virgin Mobile USA: Pricing for the Very First Time†Ã¢â‚¬ ¢ Wikipedia.com

Notes of Commercial Law

Contracts (C3, pg 58) |Nature of contract |- Legal relationship consisting of the right and promises constituting an agreement between the parties that give each party a legal | | |duty to the other and also the right to seek for breach of those duties | | |- Consensus ad idem (meeting of minds); what the parties agree on must be clear and unambiguous and parties must be ad idem. | |Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006) , | | |T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008) | |Types of Contracts | Oral contracts | | |Written contract provides evidence of the parties’ contractual obligations. | |Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd (2006) | | |Parol evidence rule = oral evidence not admissible to add to, vary, amend or contradict written contract s 93-94 Evidence Act (refer | | |to Terms) | | |Engelin Teh Practice LLC v Wee Soon Kim Anthony (2004) | . Offer (C3, pg 63) |As the expression to another of a willingness to be bound by stated terms. | |Invitation to treat (pg 64) | |An invitation to others to enter into a negotiation which may eventually lead to the making of an offer. | |An ad is view as invitations to treat. | |Auction without reservations (refer to Barry v Davis (2000) pg 5) |(Offer = Bids made by audience, Acceptance = Auctioneer indicates bids accepted) | |Display of Goods | |Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constitutes an | |invitation to treat. The offer is only made when a customer selects the item he wants and brings it to the cashier to pay for it. |Reaffirmed by Singapore High Court in Chwee Kin Keong & Others v Digilandmall com Pte Ltd (2004) | |Advertisements An ad is view as invitations to treat. | |Partridge v Crittenden (1968) | |Provision of Information | |Harvey v Facey (1893) – The court held that there was no contract because provision of information was not an offer .Stevenson, Jacques & Co v McLean | |(1880) – Seeking for more information is neither a rejection nor acceptance, it was merely an enquiry. | |*compare between offer and invitation to treat, must prove why choose one over the other | |Specific Offeree |An offer is an expression made by one party to another party. For an offer to be effective, the offer must be communicated to the | | |offeree. | Unilateral Contracts |A contract brought into existence by the act of one party in response to a conditional promise by another. Harvela Investments Ltd v | |(involving only one |Royal Trust Co of Canada (Cl) Ltd & Ors (1984)No exchange of promise, only 1 promise (made by offeror). | |side) |Offeree makes no promise, only performs conditions attached to offeror’s promise. Carlill v Carbolic Smoke Ball Co. (1892) – Where | |(pg 63) |advertisement contains a promise in return for an act, an offer is intended. (No general rule that an ad cannot be an offer. | |Bi-lateral Co ntracts |An agreement where one party makes a promise to the other party. | |(involving on 2 side |There are duties, rights and considerations on both parties. In other words, performance of the conditions is an acceptance of the | |or both) |offer and this acceptance should be notified. | Termination of Offer (Pg 75) (5 ways) |Withdrawal |Law: Offer can be withdrawn or revoked by the offeror at any time before it is accepted. (When an offer is withdrawn, the offer is said | | |to be revoked). Overseas Union Insurance Ltd v Turegum Insurance Co (2001) | | |Law: Withdrawal must be communicated to offeree (Revocation is only effective when the offeree receives notice of the revocation) Byrne | | |v Van Tienhoven (1880) – It was held that the revocation was not effective until it was received by the plaintiff. Since the offer was | | |accepted prior to the revocation, there was a valid contract. | |Law: Revocation of offer can be communicated by a third party (as long as offeree obtains knowledge of the revocation) (must be a | | |reliable and trustworthy source) Dickinson v Dodds (1876) Law: Fresh Offer (Revocation can also occer if the offer is replaced by a | | |fresh offer) Ban Paribas v Citibank NA (1989) | | |Law: Offer is opened for a fixed period Routledge v Grant (1828) –Rationale is that an offeree cannot enforce an offeror’s promise to | | |keep his offer open unless there is separate contract supported by consideration to do so, such contracts are called options – Tay Joo | | |Sing v Ku Yu Sang – essentially a promise, supported by consideration, to keep an offer open for a specific period of time within which | | |to decide whether or not to enter into the purchase of agreement. | | |Law: Unilateral Contracts Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to | | |act. – Dickson Trading(s) Pte Ltd v Transmarco Ltd (1989), obiter dictum, the offeror in a unilateral contract has an obligation not to | | |revoke the offer after the offeree has involved in the performance of the conditions. |Lapse of time |Acceptance after specific period which offeror states that his offer is open = Ineffective | | |If the offer is opened for a specified period, a purported acceptance after that period would not be effective since the offer had | | |lapsed. the court may imply that the offeror has specified the period of offer even if he has not done so expressly. Wee Ah Lian v Teo | | |Siak Weng (1992) | | |- however, if it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern| | |their relationship after the specified period, then it is still valid and acceptable after the deadline. Panwell Pte Ltd & Anor v | | |Indian Bank (No2) (2002) | | |When no specified period of time is expressed, an offer would lapse after a reasonable amount of time, (depending on the facts of the | | |case). Ramsgate Victoria Hotel Co v Montefiore (1866) – the court held that Montefiore could refuse to take up the shares because his | | |offer had lapsed after a reasonable time. | |Failure of |Offer automatically terminated if condition not met | |Condition |An offer may terminate on the occurrence of a specified event if the offer is subjected to the condition that it will do. e. g. erminate| | |if goods are damaged before acceptance, subject to the approval of my lawyer Financings Ltd v Stimson (1962) | |Death |Dickinson v Dodds( if the man who makes an offer dies, the offer cannot be accepted after he is dead. Reynolds v Atherton (1921)( | | |Offeree dies before acceptance, this offer cease to be capable of acceptance. Bradbury v Morgan (1862)( the court held that the death of| | |an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. | 2. Acceptance (C3, pg 67) |Indication by the offeree of his consent to the offer and his intention to form a contract based on the exact terms of the offer | |- Whatever its form, a communication constitutes acceptance only if it is an unconditional expression of assent to the terms of offer.Compaq Computer Asia| |Pte Ltd v Computer Interface(s) Pte Ltd (2004) | |- Conditional Acceptance is treated as no acceptance. Struttgart Auto Pte Ltd v Ng Shwu Yong (2005); | |- Accepts seller’s offer subject to a written contract drafted – Thmoas Plaza (Pte) Ltd v Liquidators of Yaohan Departmental Store Singapore Pte Ltd (in | |liquidation) (2001); | |- Agreenment shall not be final and binding agreement – Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002) | |Brogden v Metropolitan Railway Co. 1877) The Court held that the facts and actual conduct of the parties, established the existence of a contract, and | |there having a clear breach of it, Brogden must be held liable upon it. | |Law: Acceptance of unilateral contract is when all the terms o f the contract are fully performed Carlill v Carbolic Smoke Ball Co. (1892) | |Counter |Offeree introduces a new term or varies the terms of an offer (original offeror is free to accept or reject the â€Å"counter offer†) Hyde v Wrench | |Offer |(1840) – The court held that there was no contract because Hyde’s reply was a counter offer which extinguished the earlier offer.When the | | |response is an inquiry or a request of information, it should not be construed as an offer | |Knowledge|Law: Offeree cannot accept in ignorance of the law | |of Offer |offeree must be aware of the offer – Fitch v Snedaker (1868) and R v Clarke (1927) – As long as offeree has knowledge of offer, motive is | | |irrelevant. Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept | | |the offer.William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward, she ha d done so with knowledge of the reward| | |even though her motive for giving the information was her own remorse. | | |Cross-offer: Do not constitute to agreement/contract; lack of consensus / meeting of minds between parties at the time of making offer. – Tinn v | | |Hoffman & Co (1873) | |Communica|General Rule: Acceptance must be communicated (Acceptance must actually be received by the offeror) | |tion of |Acceptance effective when communicated/received by offeror. | |Acceptanc|If in writing, it must be physically received by the offeror, and if orally, heard by the offeror. Acceptance must be unconditional and absolute. |e |obiter dictum in Entores Ltd v Miles Far East Corporation (1955) and CS Bored Pile System Pte Ltd v Evan Lam &Co Pte Ltd (2006) | | |Powell v Lee (1908) Held that there was no authorized communication of intention to contract on part of the body hence no contract. | |Silence |Silence is only a form of acceptance if both parties agree to it. Silence o f the offeree would not constitute a valid acceptance | | |Felthouse v Bindley (1862)–held that there was no contract between the two parties. The plaintiff had no right to impose a condition that a sale | | |contract would come into existence if the defendant remained silent. | |Exemption case: Both parties agree that the offeree would have a positive obligation to communication only if he wished to reject the offer. | | |Albeit rare in practice, silence is properly be construed as acceptance – Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG (1993) and | | |Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004) – defendant’s conduct of paying the reduced rent showed that a contact exists. | |Instantan|Time of acceptance is the time at which the acceptance is communicated to the offeror | |eous |Ithe acceptance will take effect when and where it is received, acceptance must be absolute and unconditional Entores v Miles Far East Corp | Communica|(1955) | |tions |- if got designated info system; receipt when e-record entered the designated info system. Emails, Fax, Telex | | |- if got designated info system but sent elsewhere then is receipt upon retrieval. | | |- if no designated info system; receipt upon entering any info system of addressee. | |Exception|The Postal Rule (ONLY FOR LETTERS OF ACCEPTANCE! ) | |s |- Quenerduaine v Cole (1883) – telegram means speedy reply; not attracted by postal rule.Offeror will claim that it is only valid acceptance | | |when physically received. | | |- Agreement cannot be withdrawn once the post is sent out. Henthorn v Fraser (1892) | | |- Acceptance deemed effective as soon as the letter is posted regardless as to when it reaches the offeror or whether it reaches him at all. | | |Adams v Lindsell (1818) | | |- the court held that the acceptance was communicated and the contract was formed as soon as the plaintiff posted the acceptance letter. Lee | | |Seng Heng v Guard ian Assurance CO Ltd (1932) | | |Waiver of Communication: facts show that the offeror has waived the need for communiation of acceptance; when offer made to whole world | | |(unilateral contract; anyone can accept) – Calill v Carbolic Smoke Ball. | | |( the doing of the act by the offeree may itself be constructed as acceptance, without requiring formal communication to the offeror. | | |Termination of acceptance: Once posted, an acceptance cannot be revoked. – Wenkheim v Arndt (1873) | 3. Consideration (C4, Pg 85) Two Main Rules on Consideration Must move from promisee but need not move to promisor.Tweedle v Atkinson (1861) Need not be adequate but must be sufficient. Chappell & Co Ltd v Nestle Co Ltd (1960) |Is what each party gives to the other as the agreed price for the other’s promise | |Detriment to one OR Benefit to another | |But it need not move to the promisor Malayan Banking Bhd v Lauw Wisanggeni – A third party who is a stranger to the contra ct may benefit from the contract | |although he may not enforce it. | |Need not be adequate but must be sufficient – Law will not interfere with parties contract so long as consideration is of â€Å"some value† in the eyes of the | |law. |In order for a promise to be enforceable in court, consideration must first be given (exchange of promises would be sufficient consideration)– Dunlop v | |Selfridge (1915) | |Past Consideration is |Refers to an act performed prior to and to that extent independent of, the promises being exchanged (act performed without the | |not valid |reciprocal promise in mind). | | |Past consideration is no consideration The court held that the promise was made after the transaction had already been concluded | | |and therefore past consideration.Roscorla v Thomas (1842) and Teo Song Kwang (alias Richard) v Gnau Lye Chan and Another (2006) | | |To become executed consideration: – Pao On v Lau Yiu Long (1980) and Sim Tony v Ah Ghee (t /a Phil Real Estate &Building Services) | | |(1995) | | |Act done at promisor’s request If the promisor has previously asked the other party to provide goods or services, then a promise | | |made after they are provided will be treated as binding. | | |Contract must otherwise be enforceable Done in biz context and it is clearly understood by both sides that it will be paid for then| | |valid.Re Caseys’s Patent v Casey (1892) held the request to Casey to manage the patent carried an implied promise to pay for that | | |service, hence it was enforceable. | |Consideration must move|The only person who can sue for breach of contract must be the party who has given consideration (promise) – Tweedle v Atkinson | |from the promisee |(1861) – the court held that Tweedle could not enforce the contract between the two fathers because firstly he is not a party of | | |the contract, and secondly, no consideration flowed from him. | | |Consideration need not move to the promisor; 3rd party can may benefit although may not enforce it. Malayan Banking Bhd v Lauw | | |Wisanggeni | |Sufficient, |- Law will not inquire to the fairness of consideration, as long as the parties agree to it willingly – Lam Hong Leong Aluminium | |Need not be Adequate; |Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) | |Adequacy of |- Law does not measure value (once the subject of exchange is recognized in law as suitable consideration, quantity is irrelevant) | |Consideration |- Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No2) (2003) and Chappell & Co Ltd v Nestle Co Ltd (1960) –the | | |consideration included the wrappers even though they were of no value to Nestle. | | |Thomas v Thomas (1842) – The court held that the nominal rent was sufficient consideration but the husband’s wishes were | | |irrelevant; motive is not the same thing as consideration. |Sufficiency of |A promise not to enforce a Claim is Good Consideration Promise not to sue or enforce a valid claim or settlement of legal action = | |Consideration |sufficient consideration Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) and Alliance Bank| | |Ltd v Broom (1864) Normally, banks would not promise to enforce debt but is not done here. For not suing, considerations shown ( | | |binding agreement to provide security. | |Sufficient |Forbearance to sue |A promise to forbear from suing or enforcing a valid claim can constitute sufficient or valuable | | | |consideration. Alliance Bank Ltd v Broom (1864).K-Rex Finance Ltd v Cheng Chih Cheng (1993) – The court | | | |spoke the words of Cockburn CJ in Callisher v Bischoffsheim (1870). | | | |The same applies to a compromise of a legal action. The req. is that the legal action must be reasonable and| | | |not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that | | | |the claimant h as not concealed from the other party any fact which, to the claimant’s knowledge, might | | | |affect its validity.Miles v New Zealand Alford Estate Co (1886) | | |Performance of |The Eurymedon (1975) – The Privy Council held that even though the defendant was already contractually bound| | |existing contractual |to a third party to do so, the defendant’s act of unloading the ship formed good consideration for the | | |duty to third party |contract with the plaintiff. This was also clarified in Pao On v Lau Yiu Long (1980) by the HOL. This was | | | |also accepted in the Singapore High Court in SSAB Oxelosund AB v Xendral Trading Pte Ltd (1992). | |Moral obligation & |Eastwood v Kenyon (1840) – The court rejected the plaintiff’s view and held that moral obligation is | | |motives |insufficient consideration for a fresh promise. | |Insufficient |Vague or insubstantial|White v Bluett (1853) – The court held that Bluett’s promise was no thing more than a promise â€Å"not to bore | | |consideration |his father†. As such it was too vague(fake) and was insufficient consideration for the alleged discharge by | | | |his father. | | |Performance of |Collins v Godefroy (1831) –Performance of an existing public duty is not valid consideration. | |existing public duty |Glassbrook Bros Ltd v Glamorgan City Council (1925)- If the court finds the promisee did something more that| | | |required by an existing public duty, then it may be sufficient. | | |Performance of |Stilk v Myrick (1809) – It was held that there was no consideration for the captain’s promise because the | | |existing contractual |remaining crew did what they were contractually required. Two sailors deserting were within the usual | | |duty |emergencies found in such a voyage. | | |However, if it is more than what is contractually required, that may constitute good consideration – Hartley| | | |v Ponsonby (1857) and William s v Roffey Bros (1991) – The English Court of Appeal held that as long as the | | | |extra payment was not given under duress or fraud, the oral promise was enforceable because the defendant | | | |obtained â€Å"practical benefits† from the plaintiff’s work. The benefit was that they would not be liable under| | | |the main contract for late completion. | | |Rule in Pinnel’s Case |Pinnel’s case is authority for the proposition that payment of a lesser sum without anything extra is not a | | | |good consideration. | | |- It would be good consideration provided with a gift (can be anything, even time) is given as the gift | | | |might be more beneficial than the money. -But if the person asks me pay lesser, then cannot sue. – If I | | | |accepted a smaller amount, after that I decided to sue again, CAN! Provided no gift! | | | |Pinnel’s Case (1602) – The part payment of a debt does not discharge the entire debt unless the part p ayment| | | |was made at the request of the creditor and the payment was made earlier, at a different place, or in | | | |conjunction with some other valuable consideration.Foakes v Beer (1884) affirmed Pinnel’s Case – the HOL | | | |held that Beer’s promise not to take further action was not supported by consideration. She could claim the | | | |money. ( in Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001), District Court in Singapore | | | |endorsed the rule in Foakes v Beer and held favor in creditor. | | |Promissory Estoppel is an equitable doctrine whose origin may be traced to Lord Cairns in Hughes v Metropolitan Railway Co (1877). | | |When p. e. is established, the court may enforce a promise despite the fact that there was no consideration. Central London | | |Property Trust v High Trees House Ltd (1947) | | |Elements (Central London Property Trust v High Trees House Ltd (1947) and D&C Builders v Rees (1966)) | | |1)Parties must have existin g legal relationship 2)Clear and unequivocal promise which affects the legal relationship 3)Promisee | | |relied upon promise and altered his position 4)Inequitable for the promisor to go back on his promise. | |Promissory Estoppel |Cause of action | |(For no consideration) |When the promisor gives reasonable notice of his intention to revert to the original legal relationship, the original relationship | | |is restored. The effect of p. e. is to suspend promisor’s rights temporarily.Tool Metal Manufacturing Co Ltd v Tungsten Electric Co| | |Ltd (1995) However, the promise could become ‘final and irrevocable if the promisee cannot resume his position. † Ajayi v R T | | |Briscoe (Nigeria) Ltd (1964) | | |A defensive tool | | |This means that it can only be raised as a shield and not a sword, i. e. a defense against a claim and not to commence a suit.Combe| | |v Combe (1951) (people sue you then can use ) Assoland Construction Pte Ltd v Malayan Credit Properties Pt e Ltd (1993) and Lai Yew | | |Tay Pte Ltd v Pilecon Engineering BHd (2002) | | | | 4. Intention to Create Legal Relations (Pg 17) |The test is whether a reasonable person viewing all the circumstances of the case would consider that the promisor intended his promise to have legal | |consequences. objective test† (objectively ascertained) | |Social and |General presumption = no legal intention | |Domestic |Balfour v Balfour (1919) and Jones v Padavatton (1969) – An agreement is not legally binding unless the parties intend that each will | |Agreements |accept the lefal consequences for its breach. Choo Tiong Hin v Choo Hock Swee (1959) – the plaintiff’s promises were not enforceable | | |because the lack of intention to create legal relations. De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd and Others | | |(2003) -Friend doing a favor even though secret profit or commission is earned. | |However in Merritt v Merritt (1970) and Wakeling v Ripley– The English Court of Appeal found the necessary intention and held that the | | |wife succeeded in her claim for breach of contract. | |Commercial |General presumption = Legal intention | |Agreements |- There is necessary intention to create legal relations. Edwards v Skyway Ltd (1964) – The court held that Skyways was legally bound. | | |Binding but unenforceable | | |Honour Clauses – When parties have expressly stated that their agreement is not to be legally binding. Rose &Frank Co v J R Crompton | | |&Bros Ltd (1925) | | |Exceptions (not legally binding): | | |Letter of Comfort (pg 17) ( may be binding depending on its terms | | |usually a document supplied by a 3rd party to a creditor indicating a concern to ensure that a debtor meets his obligations to the | | |creditor. | | |Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad (1989) Court only found a moral not legal obligation. refer to pg 17) | | |Letter of Intent (LOI) (pg 17) | | |A de vice by which one indicates to another of his intention to enter into a contract with him | | |E. g. a main contractor is prearing a tender and he plans to subcontract some of the work. | Privity of Contract (Pg 105) |The general rule is that no one, other than a person who is a party to the contract may be entitled to enforce or be bound by the terms of the contract. – | |Price v Easton (1833) – court held that Price could not succeed, as he was not a party to the contract between the debtor and the Easton.Management | |Corporation Strata Title Plan No 2297 v Seasons Park Ltd (2005) | |Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993) | |Agency relationship | |Assignment of choses in action – consent of 3 parties | |Letter of Credit | |Agreement |Intention to create legal relations |Consideration | |Is it an offer? Define offer |Is there any intention? |Is it revocation? Via broadcast? | |Was the offer effectively revoked? |Is the agreement legally bind (To place under legal|Is Consideration need to be sufficient but not | |Is it valid acceptance?Communicated |obligation by contract)? |adequate? | |Third party’s conversation? |Is the agreement reached in a business context? |Promissory Estoppel? Talk about the elements, sword| |Postal rude? |(eg. Family, friends) |or shield? | |Is there any provision of information? |Is it (social and domestic) or commercial |Is the consideration moved from promisee? | |Any counter offer? |agreement? | | |Is the offeree aware of offer with motive? | | | |Is the offer lapse? | | | | | | | | | | | | | | | | | | | | | | | | | | Notes of Commercial Law Contracts (C3, pg 58) |Nature of contract |- Legal relationship consisting of the right and promises constituting an agreement between the parties that give each party a legal | | |duty to the other and also the right to seek for breach of those duties | | |- Consensus ad idem (meeting of minds); what the parties agree on must be clear and unambiguous and parties must be ad idem. | |Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006) , | | |T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008) | |Types of Contracts | Oral contracts | | |Written contract provides evidence of the parties’ contractual obligations. | |Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd (2006) | | |Parol evidence rule = oral evidence not admissible to add to, vary, amend or contradict written contract s 93-94 Evidence Act (refer | | |to Terms) | | |Engelin Teh Practice LLC v Wee Soon Kim Anthony (2004) | . Offer (C3, pg 63) |As the expression to another of a willingness to be bound by stated terms. | |Invitation to treat (pg 64) | |An invitation to others to enter into a negotiation which may eventually lead to the making of an offer. | |An ad is view as invitations to treat. | |Auction without reservations (refer to Barry v Davis (2000) pg 5) |(Offer = Bids made by audience, Acceptance = Auctioneer indicates bids accepted) | |Display of Goods | |Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constitutes an | |invitation to treat. The offer is only made when a customer selects the item he wants and brings it to the cashier to pay for it. |Reaffirmed by Singapore High Court in Chwee Kin Keong & Others v Digilandmall com Pte Ltd (2004) | |Advertisements An ad is view as invitations to treat. | |Partridge v Crittenden (1968) | |Provision of Information | |Harvey v Facey (1893) – The court held that there was no contract because provision of information was not an offer .Stevenson, Jacques & Co v McLean | |(1880) – Seeking for more information is neither a rejection nor acceptance, it was merely an enquiry. | |*compare between offer and invitation to treat, must prove why choose one over the other | |Specific Offeree |An offer is an expression made by one party to another party. For an offer to be effective, the offer must be communicated to the | | |offeree. | Unilateral Contracts |A contract brought into existence by the act of one party in response to a conditional promise by another. Harvela Investments Ltd v | |(involving only one |Royal Trust Co of Canada (Cl) Ltd & Ors (1984)No exchange of promise, only 1 promise (made by offeror). | |side) |Offeree makes no promise, only performs conditions attached to offeror’s promise. Carlill v Carbolic Smoke Ball Co. (1892) – Where | |(pg 63) |advertisement contains a promise in return for an act, an offer is intended. (No general rule that an ad cannot be an offer. | |Bi-lateral Co ntracts |An agreement where one party makes a promise to the other party. | |(involving on 2 side |There are duties, rights and considerations on both parties. In other words, performance of the conditions is an acceptance of the | |or both) |offer and this acceptance should be notified. | Termination of Offer (Pg 75) (5 ways) |Withdrawal |Law: Offer can be withdrawn or revoked by the offeror at any time before it is accepted. (When an offer is withdrawn, the offer is said | | |to be revoked). Overseas Union Insurance Ltd v Turegum Insurance Co (2001) | | |Law: Withdrawal must be communicated to offeree (Revocation is only effective when the offeree receives notice of the revocation) Byrne | | |v Van Tienhoven (1880) – It was held that the revocation was not effective until it was received by the plaintiff. Since the offer was | | |accepted prior to the revocation, there was a valid contract. | |Law: Revocation of offer can be communicated by a third party (as long as offeree obtains knowledge of the revocation) (must be a | | |reliable and trustworthy source) Dickinson v Dodds (1876) Law: Fresh Offer (Revocation can also occer if the offer is replaced by a | | |fresh offer) Ban Paribas v Citibank NA (1989) | | |Law: Offer is opened for a fixed period Routledge v Grant (1828) –Rationale is that an offeree cannot enforce an offeror’s promise to | | |keep his offer open unless there is separate contract supported by consideration to do so, such contracts are called options – Tay Joo | | |Sing v Ku Yu Sang – essentially a promise, supported by consideration, to keep an offer open for a specific period of time within which | | |to decide whether or not to enter into the purchase of agreement. | | |Law: Unilateral Contracts Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to | | |act. – Dickson Trading(s) Pte Ltd v Transmarco Ltd (1989), obiter dictum, the offeror in a unilateral contract has an obligation not to | | |revoke the offer after the offeree has involved in the performance of the conditions. |Lapse of time |Acceptance after specific period which offeror states that his offer is open = Ineffective | | |If the offer is opened for a specified period, a purported acceptance after that period would not be effective since the offer had | | |lapsed. the court may imply that the offeror has specified the period of offer even if he has not done so expressly. Wee Ah Lian v Teo | | |Siak Weng (1992) | | |- however, if it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern| | |their relationship after the specified period, then it is still valid and acceptable after the deadline. Panwell Pte Ltd & Anor v | | |Indian Bank (No2) (2002) | | |When no specified period of time is expressed, an offer would lapse after a reasonable amount of time, (depending on the facts of the | | |case). Ramsgate Victoria Hotel Co v Montefiore (1866) – the court held that Montefiore could refuse to take up the shares because his | | |offer had lapsed after a reasonable time. | |Failure of |Offer automatically terminated if condition not met | |Condition |An offer may terminate on the occurrence of a specified event if the offer is subjected to the condition that it will do. e. g. erminate| | |if goods are damaged before acceptance, subject to the approval of my lawyer Financings Ltd v Stimson (1962) | |Death |Dickinson v Dodds( if the man who makes an offer dies, the offer cannot be accepted after he is dead. Reynolds v Atherton (1921)( | | |Offeree dies before acceptance, this offer cease to be capable of acceptance. Bradbury v Morgan (1862)( the court held that the death of| | |an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. | 2. Acceptance (C3, pg 67) |Indication by the offeree of his consent to the offer and his intention to form a contract based on the exact terms of the offer | |- Whatever its form, a communication constitutes acceptance only if it is an unconditional expression of assent to the terms of offer.Compaq Computer Asia| |Pte Ltd v Computer Interface(s) Pte Ltd (2004) | |- Conditional Acceptance is treated as no acceptance. Struttgart Auto Pte Ltd v Ng Shwu Yong (2005); | |- Accepts seller’s offer subject to a written contract drafted – Thmoas Plaza (Pte) Ltd v Liquidators of Yaohan Departmental Store Singapore Pte Ltd (in | |liquidation) (2001); | |- Agreenment shall not be final and binding agreement – Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002) | |Brogden v Metropolitan Railway Co. 1877) The Court held that the facts and actual conduct of the parties, established the existence of a contract, and | |there having a clear breach of it, Brogden must be held liable upon it. | |Law: Acceptance of unilateral contract is when all the terms o f the contract are fully performed Carlill v Carbolic Smoke Ball Co. (1892) | |Counter |Offeree introduces a new term or varies the terms of an offer (original offeror is free to accept or reject the â€Å"counter offer†) Hyde v Wrench | |Offer |(1840) – The court held that there was no contract because Hyde’s reply was a counter offer which extinguished the earlier offer.When the | | |response is an inquiry or a request of information, it should not be construed as an offer | |Knowledge|Law: Offeree cannot accept in ignorance of the law | |of Offer |offeree must be aware of the offer – Fitch v Snedaker (1868) and R v Clarke (1927) – As long as offeree has knowledge of offer, motive is | | |irrelevant. Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept | | |the offer.William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward, she ha d done so with knowledge of the reward| | |even though her motive for giving the information was her own remorse. | | |Cross-offer: Do not constitute to agreement/contract; lack of consensus / meeting of minds between parties at the time of making offer. – Tinn v | | |Hoffman & Co (1873) | |Communica|General Rule: Acceptance must be communicated (Acceptance must actually be received by the offeror) | |tion of |Acceptance effective when communicated/received by offeror. | |Acceptanc|If in writing, it must be physically received by the offeror, and if orally, heard by the offeror. Acceptance must be unconditional and absolute. |e |obiter dictum in Entores Ltd v Miles Far East Corporation (1955) and CS Bored Pile System Pte Ltd v Evan Lam &Co Pte Ltd (2006) | | |Powell v Lee (1908) Held that there was no authorized communication of intention to contract on part of the body hence no contract. | |Silence |Silence is only a form of acceptance if both parties agree to it. Silence o f the offeree would not constitute a valid acceptance | | |Felthouse v Bindley (1862)–held that there was no contract between the two parties. The plaintiff had no right to impose a condition that a sale | | |contract would come into existence if the defendant remained silent. | |Exemption case: Both parties agree that the offeree would have a positive obligation to communication only if he wished to reject the offer. | | |Albeit rare in practice, silence is properly be construed as acceptance – Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG (1993) and | | |Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004) – defendant’s conduct of paying the reduced rent showed that a contact exists. | |Instantan|Time of acceptance is the time at which the acceptance is communicated to the offeror | |eous |Ithe acceptance will take effect when and where it is received, acceptance must be absolute and unconditional Entores v Miles Far East Corp | Communica|(1955) | |tions |- if got designated info system; receipt when e-record entered the designated info system. Emails, Fax, Telex | | |- if got designated info system but sent elsewhere then is receipt upon retrieval. | | |- if no designated info system; receipt upon entering any info system of addressee. | |Exception|The Postal Rule (ONLY FOR LETTERS OF ACCEPTANCE! ) | |s |- Quenerduaine v Cole (1883) – telegram means speedy reply; not attracted by postal rule.Offeror will claim that it is only valid acceptance | | |when physically received. | | |- Agreement cannot be withdrawn once the post is sent out. Henthorn v Fraser (1892) | | |- Acceptance deemed effective as soon as the letter is posted regardless as to when it reaches the offeror or whether it reaches him at all. | | |Adams v Lindsell (1818) | | |- the court held that the acceptance was communicated and the contract was formed as soon as the plaintiff posted the acceptance letter. Lee | | |Seng Heng v Guard ian Assurance CO Ltd (1932) | | |Waiver of Communication: facts show that the offeror has waived the need for communiation of acceptance; when offer made to whole world | | |(unilateral contract; anyone can accept) – Calill v Carbolic Smoke Ball. | | |( the doing of the act by the offeree may itself be constructed as acceptance, without requiring formal communication to the offeror. | | |Termination of acceptance: Once posted, an acceptance cannot be revoked. – Wenkheim v Arndt (1873) | 3. Consideration (C4, Pg 85) Two Main Rules on Consideration Must move from promisee but need not move to promisor.Tweedle v Atkinson (1861) Need not be adequate but must be sufficient. Chappell & Co Ltd v Nestle Co Ltd (1960) |Is what each party gives to the other as the agreed price for the other’s promise | |Detriment to one OR Benefit to another | |But it need not move to the promisor Malayan Banking Bhd v Lauw Wisanggeni – A third party who is a stranger to the contra ct may benefit from the contract | |although he may not enforce it. | |Need not be adequate but must be sufficient – Law will not interfere with parties contract so long as consideration is of â€Å"some value† in the eyes of the | |law. |In order for a promise to be enforceable in court, consideration must first be given (exchange of promises would be sufficient consideration)– Dunlop v | |Selfridge (1915) | |Past Consideration is |Refers to an act performed prior to and to that extent independent of, the promises being exchanged (act performed without the | |not valid |reciprocal promise in mind). | | |Past consideration is no consideration The court held that the promise was made after the transaction had already been concluded | | |and therefore past consideration.Roscorla v Thomas (1842) and Teo Song Kwang (alias Richard) v Gnau Lye Chan and Another (2006) | | |To become executed consideration: – Pao On v Lau Yiu Long (1980) and Sim Tony v Ah Ghee (t /a Phil Real Estate &Building Services) | | |(1995) | | |Act done at promisor’s request If the promisor has previously asked the other party to provide goods or services, then a promise | | |made after they are provided will be treated as binding. | | |Contract must otherwise be enforceable Done in biz context and it is clearly understood by both sides that it will be paid for then| | |valid.Re Caseys’s Patent v Casey (1892) held the request to Casey to manage the patent carried an implied promise to pay for that | | |service, hence it was enforceable. | |Consideration must move|The only person who can sue for breach of contract must be the party who has given consideration (promise) – Tweedle v Atkinson | |from the promisee |(1861) – the court held that Tweedle could not enforce the contract between the two fathers because firstly he is not a party of | | |the contract, and secondly, no consideration flowed from him. | | |Consideration need not move to the promisor; 3rd party can may benefit although may not enforce it. Malayan Banking Bhd v Lauw | | |Wisanggeni | |Sufficient, |- Law will not inquire to the fairness of consideration, as long as the parties agree to it willingly – Lam Hong Leong Aluminium | |Need not be Adequate; |Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) | |Adequacy of |- Law does not measure value (once the subject of exchange is recognized in law as suitable consideration, quantity is irrelevant) | |Consideration |- Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No2) (2003) and Chappell & Co Ltd v Nestle Co Ltd (1960) –the | | |consideration included the wrappers even though they were of no value to Nestle. | | |Thomas v Thomas (1842) – The court held that the nominal rent was sufficient consideration but the husband’s wishes were | | |irrelevant; motive is not the same thing as consideration. |Sufficiency of |A promise not to enforce a Claim is Good Consideration Promise not to sue or enforce a valid claim or settlement of legal action = | |Consideration |sufficient consideration Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) and Alliance Bank| | |Ltd v Broom (1864) Normally, banks would not promise to enforce debt but is not done here. For not suing, considerations shown ( | | |binding agreement to provide security. | |Sufficient |Forbearance to sue |A promise to forbear from suing or enforcing a valid claim can constitute sufficient or valuable | | | |consideration. Alliance Bank Ltd v Broom (1864).K-Rex Finance Ltd v Cheng Chih Cheng (1993) – The court | | | |spoke the words of Cockburn CJ in Callisher v Bischoffsheim (1870). | | | |The same applies to a compromise of a legal action. The req. is that the legal action must be reasonable and| | | |not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that | | | |the claimant h as not concealed from the other party any fact which, to the claimant’s knowledge, might | | | |affect its validity.Miles v New Zealand Alford Estate Co (1886) | | |Performance of |The Eurymedon (1975) – The Privy Council held that even though the defendant was already contractually bound| | |existing contractual |to a third party to do so, the defendant’s act of unloading the ship formed good consideration for the | | |duty to third party |contract with the plaintiff. This was also clarified in Pao On v Lau Yiu Long (1980) by the HOL. This was | | | |also accepted in the Singapore High Court in SSAB Oxelosund AB v Xendral Trading Pte Ltd (1992). | |Moral obligation & |Eastwood v Kenyon (1840) – The court rejected the plaintiff’s view and held that moral obligation is | | |motives |insufficient consideration for a fresh promise. | |Insufficient |Vague or insubstantial|White v Bluett (1853) – The court held that Bluett’s promise was no thing more than a promise â€Å"not to bore | | |consideration |his father†. As such it was too vague(fake) and was insufficient consideration for the alleged discharge by | | | |his father. | | |Performance of |Collins v Godefroy (1831) –Performance of an existing public duty is not valid consideration. | |existing public duty |Glassbrook Bros Ltd v Glamorgan City Council (1925)- If the court finds the promisee did something more that| | | |required by an existing public duty, then it may be sufficient. | | |Performance of |Stilk v Myrick (1809) – It was held that there was no consideration for the captain’s promise because the | | |existing contractual |remaining crew did what they were contractually required. Two sailors deserting were within the usual | | |duty |emergencies found in such a voyage. | | |However, if it is more than what is contractually required, that may constitute good consideration – Hartley| | | |v Ponsonby (1857) and William s v Roffey Bros (1991) – The English Court of Appeal held that as long as the | | | |extra payment was not given under duress or fraud, the oral promise was enforceable because the defendant | | | |obtained â€Å"practical benefits† from the plaintiff’s work. The benefit was that they would not be liable under| | | |the main contract for late completion. | | |Rule in Pinnel’s Case |Pinnel’s case is authority for the proposition that payment of a lesser sum without anything extra is not a | | | |good consideration. | | |- It would be good consideration provided with a gift (can be anything, even time) is given as the gift | | | |might be more beneficial than the money. -But if the person asks me pay lesser, then cannot sue. – If I | | | |accepted a smaller amount, after that I decided to sue again, CAN! Provided no gift! | | | |Pinnel’s Case (1602) – The part payment of a debt does not discharge the entire debt unless the part p ayment| | | |was made at the request of the creditor and the payment was made earlier, at a different place, or in | | | |conjunction with some other valuable consideration.Foakes v Beer (1884) affirmed Pinnel’s Case – the HOL | | | |held that Beer’s promise not to take further action was not supported by consideration. She could claim the | | | |money. ( in Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001), District Court in Singapore | | | |endorsed the rule in Foakes v Beer and held favor in creditor. | | |Promissory Estoppel is an equitable doctrine whose origin may be traced to Lord Cairns in Hughes v Metropolitan Railway Co (1877). | | |When p. e. is established, the court may enforce a promise despite the fact that there was no consideration. Central London | | |Property Trust v High Trees House Ltd (1947) | | |Elements (Central London Property Trust v High Trees House Ltd (1947) and D&C Builders v Rees (1966)) | | |1)Parties must have existin g legal relationship 2)Clear and unequivocal promise which affects the legal relationship 3)Promisee | | |relied upon promise and altered his position 4)Inequitable for the promisor to go back on his promise. | |Promissory Estoppel |Cause of action | |(For no consideration) |When the promisor gives reasonable notice of his intention to revert to the original legal relationship, the original relationship | | |is restored. The effect of p. e. is to suspend promisor’s rights temporarily.Tool Metal Manufacturing Co Ltd v Tungsten Electric Co| | |Ltd (1995) However, the promise could become ‘final and irrevocable if the promisee cannot resume his position. † Ajayi v R T | | |Briscoe (Nigeria) Ltd (1964) | | |A defensive tool | | |This means that it can only be raised as a shield and not a sword, i. e. a defense against a claim and not to commence a suit.Combe| | |v Combe (1951) (people sue you then can use ) Assoland Construction Pte Ltd v Malayan Credit Properties Pt e Ltd (1993) and Lai Yew | | |Tay Pte Ltd v Pilecon Engineering BHd (2002) | | | | 4. Intention to Create Legal Relations (Pg 17) |The test is whether a reasonable person viewing all the circumstances of the case would consider that the promisor intended his promise to have legal | |consequences. objective test† (objectively ascertained) | |Social and |General presumption = no legal intention | |Domestic |Balfour v Balfour (1919) and Jones v Padavatton (1969) – An agreement is not legally binding unless the parties intend that each will | |Agreements |accept the lefal consequences for its breach. Choo Tiong Hin v Choo Hock Swee (1959) – the plaintiff’s promises were not enforceable | | |because the lack of intention to create legal relations. De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd and Others | | |(2003) -Friend doing a favor even though secret profit or commission is earned. | |However in Merritt v Merritt (1970) and Wakeling v Ripley– The English Court of Appeal found the necessary intention and held that the | | |wife succeeded in her claim for breach of contract. | |Commercial |General presumption = Legal intention | |Agreements |- There is necessary intention to create legal relations. Edwards v Skyway Ltd (1964) – The court held that Skyways was legally bound. | | |Binding but unenforceable | | |Honour Clauses – When parties have expressly stated that their agreement is not to be legally binding. Rose &Frank Co v J R Crompton | | |&Bros Ltd (1925) | | |Exceptions (not legally binding): | | |Letter of Comfort (pg 17) ( may be binding depending on its terms | | |usually a document supplied by a 3rd party to a creditor indicating a concern to ensure that a debtor meets his obligations to the | | |creditor. | | |Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad (1989) Court only found a moral not legal obligation. refer to pg 17) | | |Letter of Intent (LOI) (pg 17) | | |A de vice by which one indicates to another of his intention to enter into a contract with him | | |E. g. a main contractor is prearing a tender and he plans to subcontract some of the work. | Privity of Contract (Pg 105) |The general rule is that no one, other than a person who is a party to the contract may be entitled to enforce or be bound by the terms of the contract. – | |Price v Easton (1833) – court held that Price could not succeed, as he was not a party to the contract between the debtor and the Easton.Management | |Corporation Strata Title Plan No 2297 v Seasons Park Ltd (2005) | |Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993) | |Agency relationship | |Assignment of choses in action – consent of 3 parties | |Letter of Credit | |Agreement |Intention to create legal relations |Consideration | |Is it an offer? Define offer |Is there any intention? |Is it revocation? Via broadcast? | |Was the offer effectively revoked? |Is the agreement legally bind (To place under legal|Is Consideration need to be sufficient but not | |Is it valid acceptance?Communicated |obligation by contract)? |adequate? | |Third party’s conversation? |Is the agreement reached in a business context? |Promissory Estoppel? Talk about the elements, sword| |Postal rude? |(eg. Family, friends) |or shield? | |Is there any provision of information? |Is it (social and domestic) or commercial |Is the consideration moved from promisee? | |Any counter offer? |agreement? | | |Is the offeree aware of offer with motive? | | | |Is the offer lapse? | | | | | | | | | | | | | | | | | | | | | | | | | |

The Strategic Marketing Plan for Spicy Toddy Wine Essay

The Strategic Marketing Plan for Spicy Toddy Wine - Essay Example The important USP is the introduction of preferential selling days, on selected weekends and holidays, with attractive offers to improve the sales during the weekend and holiday tours. Also an excellent network of sales distribution channels to support the sales outlet is also envisaged in the process. Long-term success depends on having satisfied pool of customers and hence customer retention initiatives also have a major role in the promotion of Spicy Toddy Wine. The primary sales outlets are the key places where the youth is expected to spend considerable amount of time during their leisure. The adventure sport centers, beaches, movie halls and commercial places are the locations where the Spicy Toddy Wine would prefer to consolidate its sales. The distribution channels would be tailored appropriately to support the sales at this location. Though the sugar syrups are reported to have stored for more than a year without any damage, the health consciousness of the population could result in the intuition of avoiding the products with the extended shelf life (foodbanter.com, n.d.). Thus the concentrated selling points with the necessary promotions would demand a highly efficient distribution channels to support the sales. The channels of distribution are also created to ensure a proper supply linkage to the prime tourist places where the product would be pushed as an exclusive product of the region. Further, the logistics in distribution is planned very carefully (Kotler and Armstrong, 2001). The entire chain starts with primary processing centers located in prime palm growing regions. The natural toddy pooled from local producers is processed to remove any microbial contaminants and checked for its purity and product acceptability as per the FDA regulations. The quality control team has diverse role like ensuring the quality at all processing and bottling centers and quality at the delivery locations. The quality assurance is more rigorous in the places where wine vending machines are installed. The packing for delivery is also undertaken in variety of ways. From the small sachets for a fast moving individuals, special tour pack which have better bottle in tamper free boxes to prevent any damage in long journeys and home buyer pack which are targeted at home based users. The packed goods are carried to the exclusive sales points being operated in the specially designed chilled vans to prevent any damage to the product. The inventory updating is scheduled for Fridays based on the sales forecast received from sales team. The beer vending machine placed at prime locations are operated only on weekends and holidays. They are refilled on Fridays and emptied and cleaned on Mondays. The vending machine refill operations are managed by a different team as it demands sophistication and better quality in its handling. In addition, the exclusive weekend parlors are the special centers which were set up to monitor the direct sales and to understand the buying behavior of customers and h ence to develop means to improve the delivery. Marketing Mix: Customer Relationship Management Retention of customers in the most difficult part in the business of wines

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Negative interaction on the psyche of the American teenagers caused by Research Paper

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Marketing Strategy at Tesco plc Essay Example | Topics and Well Written Essays - 1750 words

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