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Harvard Case - Cubo Modular Inc.: Managing Demand for Bamboo Houses

"Cubo Modular Inc.: Managing Demand for Bamboo Houses" Harvard business case study is written by Andrea Santiago, Al Rosenbloom, Fernando Martin Roxas. It deals with the challenges in the field of Marketing. The case study is 11 page(s) long and it was first published on : Dec 9, 2021

At Fern Fort University, we recommend Cubo Modular Inc. implement a comprehensive marketing strategy focused on building brand awareness, establishing a strong online presence, and leveraging strategic partnerships to drive demand for their innovative bamboo houses. This strategy will involve a multifaceted approach encompassing marketing channels, branding, pricing, and customer relationship management.

2. Background

Cubo Modular Inc. is a start-up company that manufactures and sells prefabricated bamboo houses. Founded by a group of passionate entrepreneurs, Cubo aims to provide affordable and sustainable housing solutions. The company faces the challenge of managing demand for its product, particularly in emerging markets where awareness of bamboo housing is limited.

The case study focuses on the company's initial success in attracting customers through word-of-mouth and social media. However, Cubo needs to develop a more structured marketing approach to scale its business and reach a wider audience.

The main protagonists of the case study are the company's founders, who are eager to expand their business but lack the experience and resources to develop a comprehensive marketing strategy.

3. Analysis of the Case Study

To analyze Cubo Modular Inc.'s situation, we can apply the following frameworks:

a) SWOT Analysis:

  • Strengths:
    • Innovative product offering with environmental sustainability appeal.
    • Strong social media presence and positive customer testimonials.
    • Experienced team with a passion for sustainable housing.
  • Weaknesses:
    • Limited marketing budget and expertise.
    • Lack of brand recognition and market awareness.
    • Potential challenges in scaling production and distribution.
  • Opportunities:
    • Growing demand for sustainable and affordable housing solutions.
    • Potential for expansion into new markets, particularly emerging economies.
    • Partnerships with NGOs and government agencies to promote sustainable housing.
  • Threats:
    • Competition from traditional housing manufacturers.
    • Economic fluctuations and potential material cost increases.
    • Regulatory hurdles and building code challenges in some regions.

b) PESTEL Analysis:

  • Political: Government policies and regulations regarding sustainable building materials.
  • Economic: Economic growth and affordability of housing in target markets.
  • Social: Growing awareness of environmental sustainability and demand for eco-friendly housing.
  • Technological: Advancements in bamboo processing and construction techniques.
  • Environmental: Availability of sustainable bamboo resources and environmental impact of production.
  • Legal: Building codes and regulations related to bamboo construction.

c) Marketing Mix (4Ps):

  • Product: Cubo's innovative bamboo houses offer a unique value proposition, combining sustainability, affordability, and modern design.
  • Price: Cubo needs to develop a pricing strategy that reflects the value proposition and considers the target market's affordability.
  • Place: Cubo should explore various distribution channels, including online sales, partnerships with local builders, and direct-to-consumer models.
  • Promotion: Cubo needs to develop a comprehensive marketing strategy encompassing digital marketing, social media, public relations, and content marketing.

4. Recommendations

1. Develop a Strong Brand Identity:

  • Branding: Create a compelling brand identity that emphasizes Cubo's commitment to sustainability, affordability, and innovative design.
  • Brand Positioning: Position Cubo as a leader in sustainable and affordable housing solutions, targeting environmentally conscious consumers and those seeking unique and modern homes.
  • Brand Communication: Develop a consistent brand voice and messaging across all marketing channels, highlighting the benefits of bamboo housing.

2. Implement a Multi-Channel Marketing Strategy:

  • Digital Marketing: Utilize SEO, SEM, social media marketing, and content marketing to reach a wider audience and generate leads.
  • Social Media: Engage with potential customers on relevant platforms, share compelling content, and build a strong online community.
  • Public Relations: Secure media coverage in publications and blogs focused on sustainable living, architecture, and design.
  • Strategic Partnerships: Collaborate with NGOs, architects, and builders to promote Cubo's products and expand reach.

3. Optimize Pricing Strategy:

  • Value-Based Pricing: Determine the value proposition of Cubo's houses and price them accordingly, considering the target market's affordability.
  • Competitive Pricing: Analyze competitor pricing and position Cubo's products competitively while maintaining a profitable margin.
  • Flexible Pricing Options: Offer different package options and financing solutions to cater to diverse customer needs.

4. Enhance Customer Relationship Management:

  • CRM System: Implement a CRM system to track customer interactions, manage leads, and build lasting relationships.
  • Customer Service: Provide excellent customer service throughout the entire customer journey, from initial inquiry to post-sale support.
  • Customer Feedback: Actively solicit and respond to customer feedback to improve products and services.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core Competencies and Consistency with Mission: The recommendations align with Cubo's core competencies in sustainable housing and its mission to provide affordable and innovative housing solutions.
  2. External Customers and Internal Clients: The recommendations consider the needs of both external customers seeking sustainable housing and internal clients, including employees and investors.
  3. Competitors: The recommendations acknowledge the competitive landscape and aim to differentiate Cubo from traditional housing manufacturers.
  4. Attractiveness: The recommendations are expected to drive demand, increase brand awareness, and contribute to Cubo's long-term growth and profitability.

6. Conclusion

By implementing these recommendations, Cubo Modular Inc. can effectively manage demand for its innovative bamboo houses, build a strong brand presence, and achieve sustainable growth in the emerging market for sustainable housing. The company's commitment to sustainability, coupled with its innovative product offering and strategic marketing approach, positions it for success in this rapidly growing market.

7. Discussion

Alternatives:

  • Focus solely on word-of-mouth marketing: This approach may be effective in the short term but lacks the scalability and reach required for long-term growth.
  • Partner with a large construction company: This strategy could provide access to resources and distribution channels but may compromise Cubo's control over its brand and operations.

Risks and Key Assumptions:

  • Market acceptance of bamboo housing: The success of Cubo's strategy depends on the market's willingness to embrace bamboo as a viable building material.
  • Availability of sustainable bamboo resources: The long-term viability of Cubo's business depends on the availability of sustainable bamboo resources.
  • Competition from traditional housing manufacturers: Cubo needs to differentiate itself from traditional housing manufacturers and demonstrate the value proposition of bamboo housing.

8. Next Steps

Timeline with Key Milestones:

  • Month 1: Develop a comprehensive marketing plan outlining target markets, marketing channels, and budget allocation.
  • Month 2: Launch a new website and social media channels to enhance online presence and build brand awareness.
  • Month 3: Implement SEO and SEM strategies to improve website visibility and drive traffic.
  • Month 4: Develop and distribute engaging content, including blog posts, videos, and infographics, to educate potential customers about bamboo housing.
  • Month 5: Initiate partnerships with NGOs, architects, and builders to expand reach and promote Cubo's products.
  • Month 6: Conduct market research to gather feedback on customer preferences and refine the marketing strategy.

By following these recommendations and implementing the outlined next steps, Cubo Modular Inc. can effectively manage demand for its innovative bamboo houses, build a strong brand presence, and achieve sustainable growth in the emerging market for sustainable housing.

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Case Description

CUBO Modular Inc. (CUBO) was a start-up social enterprise in the Philippines that emerged shortly after its chief executive officer, Earl Forlales, received a substantial cash award for besting 1,200 entries in a competition. The concept behind Forlales's competition entry was the use of engineered bamboo to produce modular houses. The materials, design, and fabrication resulted in cheaper houses that could be used for mass housing projects. The public gained awareness of CUBO from the various articles posted online about the competition, which were also posted on CUBO's Facebook page. By 2021, interest in the well-designed CUBO houses had swelled, and the quantity of queries overwhelmed the CUBO team, resulting in its failure to respond to hundreds of queries posed by potential customers. What should Forlales do to keep interest in CUBO products at a high level while managing its production capacity to meet consumer demand?

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