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Harvard Case - Fidello Cigar Cutter

"Fidello Cigar Cutter" Harvard business case study is written by Bruce C Bailey, Michael A Levin. It deals with the challenges in the field of Marketing. The case study is 19 page(s) long and it was first published on : Jun 1, 2015

At Fern Fort University, we recommend Fidello Cigar Cutter adopt a multi-pronged strategy to achieve sustainable growth. This includes:

  • Refining brand positioning to appeal to a broader, more modern audience while retaining its core customer base.
  • Expanding distribution channels to reach new markets and increase brand visibility.
  • Developing a robust digital marketing strategy to engage with potential customers online and build brand loyalty.
  • Investing in product innovation to introduce new product lines and cater to evolving consumer preferences.

2. Background

The case study revolves around Fidello Cigar Cutter, a family-owned business specializing in high-quality cigar cutters. The company faces challenges in maintaining its market share in a competitive industry. The founders, John and Mary Fidello, are passionate about their craft and have built a strong reputation for quality. However, they are struggling to adapt to changing consumer preferences and market dynamics.

3. Analysis of the Case Study

To analyze the case, we utilize the following frameworks:

1. SWOT Analysis:

  • Strengths: Strong brand reputation for quality, loyal customer base, skilled craftsmanship, family-owned business with strong values.
  • Weaknesses: Limited marketing budget, reliance on traditional distribution channels, lack of online presence, limited product line, potential for product commoditization.
  • Opportunities: Expanding into new markets, leveraging digital marketing, developing innovative product lines, partnering with retailers and distributors, building brand awareness through social media.
  • Threats: Increasing competition from lower-priced brands, changing consumer preferences, economic downturn, evolving regulations, potential for brand dilution.

2. Porter's Five Forces:

  • Threat of new entrants: Moderate. The industry is relatively easy to enter, but building a strong brand and reputation requires significant investment.
  • Bargaining power of buyers: High. Consumers have many options for cigar cutters, and price sensitivity is high.
  • Bargaining power of suppliers: Low. The raw materials used for cigar cutters are readily available and not highly specialized.
  • Threat of substitute products: Moderate. Consumers can choose alternatives like manual cutters or electric cutters.
  • Competitive rivalry: High. The market is fragmented with many competitors vying for market share.

3. Consumer Behavior Analysis:

  • Target Market: Current target market is primarily older, experienced cigar smokers.
  • Consumer Needs: High-quality craftsmanship, durability, ease of use, aesthetics, brand reputation.
  • Purchase Motivation: Desire for a premium product, brand loyalty, social status, gifting.

4. Marketing Mix (4Ps):

  • Product: High-quality cigar cutters, limited product line, potential for innovation.
  • Price: Premium pricing strategy, potential for price adjustments based on market competition.
  • Place: Limited distribution channels, potential for expanding online and retail presence.
  • Promotion: Limited marketing budget, reliance on word-of-mouth, potential for digital marketing campaigns.

4. Recommendations

1. Redefine Brand Positioning:

  • Target a broader audience: Appeal to younger, more diverse demographics interested in premium cigar experiences.
  • Emphasize craftsmanship and heritage: Leverage the family-owned business story to build emotional connections.
  • Modernize brand image: Update visual identity, website, and marketing materials to reflect a contemporary aesthetic.

2. Expand Distribution Channels:

  • Online Presence: Develop a user-friendly website with e-commerce capabilities.
  • Retail Partnerships: Collaborate with specialty cigar shops, online retailers, and gift stores.
  • Direct-to-Consumer Sales: Explore options for selling directly to consumers through online platforms and pop-up events.

3. Implement Digital Marketing Strategy:

  • Content Marketing: Create engaging content about cigar culture, product reviews, and brand stories.
  • Social Media Marketing: Establish a strong presence on platforms frequented by target audiences.
  • Search Engine Optimization (SEO): Optimize website and content for relevant keywords.
  • Paid Advertising: Utilize targeted online advertising campaigns to reach potential customers.
  • Influencer Marketing: Partner with relevant influencers to promote products and build brand awareness.

4. Invest in Product Innovation:

  • Expand Product Line: Introduce new designs, materials, and functionalities to cater to evolving consumer preferences.
  • Develop Limited Edition Collections: Create exclusive products to generate excitement and drive sales.
  • Collaborate with Designers: Partner with artists and designers to create unique and visually appealing products.

5. Basis of Recommendations

These recommendations are based on a comprehensive analysis of the company's internal strengths and weaknesses, external market opportunities and threats, and evolving consumer behavior. They are also aligned with the company's core values of quality, craftsmanship, and customer satisfaction.

1. Core Competencies and Mission: The recommendations align with Fidello's core competencies in craftsmanship and quality, and support the mission of providing premium cigar cutting experiences.

2. External Customers and Internal Clients: The recommendations address the needs of both existing and potential customers by offering a wider range of products, improved accessibility, and engaging brand experiences. They also empower internal clients (employees) by providing them with the tools and resources to succeed in a changing market.

3. Competitors: The recommendations aim to differentiate Fidello from competitors by focusing on brand storytelling, digital marketing, and product innovation.

4. Attractiveness: The recommendations are expected to drive revenue growth, increase brand awareness, and enhance customer loyalty. While quantifying the exact impact requires further analysis, the potential for positive ROI is significant.

5. Assumptions: These recommendations are based on the assumption that the cigar industry will continue to grow, that consumers will increasingly value quality and craftsmanship, and that digital marketing will play a crucial role in reaching target audiences.

6. Conclusion

By implementing these recommendations, Fidello Cigar Cutter can position itself for sustainable growth in a competitive market. The company can leverage its strong brand reputation, skilled craftsmanship, and passion for quality to appeal to a broader audience, expand its reach, and build a thriving business for generations to come.

7. Discussion

Other alternatives not selected include:

  • Merging with a larger competitor: This could provide access to resources and distribution channels, but it would also compromise the company's independence and identity.
  • Focusing solely on the existing customer base: This would limit growth potential and expose the company to market volatility.
  • Adopting a low-cost strategy: This would compromise the brand's premium positioning and potentially dilute its reputation.

Risks and Key Assumptions:

  • Market volatility: The cigar industry is subject to economic fluctuations and regulatory changes.
  • Competition: New entrants and existing competitors could erode market share.
  • Consumer preferences: Consumer tastes and preferences are constantly evolving.
  • Digital marketing effectiveness: The effectiveness of digital marketing campaigns can be difficult to predict.

8. Next Steps

Timeline:

  • Year 1: Implement digital marketing strategy, expand online presence, and introduce new product lines.
  • Year 2: Develop retail partnerships, launch limited edition collections, and refine brand positioning.
  • Year 3: Expand into new markets, invest in product innovation, and build brand loyalty through customer relationship management (CRM) programs.

Key Milestones:

  • Develop a comprehensive digital marketing plan: This should include a website redesign, social media strategy, content calendar, and paid advertising campaigns.
  • Establish key partnerships with retailers and distributors: This will expand reach and increase brand visibility.
  • Launch new product lines: This will cater to evolving consumer preferences and generate excitement.
  • Track key performance indicators (KPIs): This will monitor the effectiveness of marketing efforts and inform future decisions.

By taking these steps, Fidello Cigar Cutter can navigate the challenges of a competitive market and achieve sustainable growth.

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Case Description

The Fídelló Cigar Cutter case highlights the introduction of a new-to-the-world product to a niche market with an elite target customer group. Chris Jones, the inventor of the Fídelló cigar cutter and managing partner of The Fídelló Company, spent nine years perfecting his product. After successfully test marketing a limited number of hand-assembled prototypes, Jones and his partners had funded the production of 5,000 units and were ready to launch the first new cigar cutter in more than thirty years to an uninformed public.

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