You will hear a Business Studies tutor and a student, Martin, discussing Ralcona

Woman: OK, Martin, I asked you to prepare the case study of Ralcona, the soft-drinks manufacturer. Let’s work through the main issues together. Now, I assume you’ve looked at the background? Can you give me a summary?
Man: Erm, yeah, er - well, um, Ralcona are a UK company who had one very famous drink -Jista - which was selling well world-wide. But two years ago, when the new Chairman arrived, he decided to exploit that popularity to expand the product range. Ralcona had introduced Jista into markets in Japan, Australia and several South-East Asian countries. But there’s recently been a slide in sales, despite the fact that Jista is still holding up reasonably well against some stiff competition from other multinationals.
Woman: OK, stop there, because I want to fill you in on the discussions that took place in the planning of this new product range - they were very interesting. Inevitably, the various interested parties in the company all had very different ideas - but they all advocated caution. So, for example, the finance department wanted to test the markets closer to home first, while the marketing team were worried any new drinks would dilute the image of the core brand and so were looking at new names. But across the board, the people at the top favoured launching each product separately at different times to get maximum impact for each product. So that’s what happened. All right, go on . . .
Man: Well, they then had to decide which market to aim for. Did they just replicate other drinks on the market and try to eat into those markets? Should they focus solely on the youth market, which was rapidly expanding? Or should they be daring and go for an older, more sophisticated age group with more expensive products? Riskily, they plumped for the latter. Then, having decided where they were going, the R and D department began developing the products.
Woman: Right, and a key factor here was deciding on the all-important design of the packaging. Now, designers tend to have a track record of success - or not - so the safest option would have been to employ a team of consultants who specialised in this. But, driven by the focus on innovation from the new chairman, they trawled the market for recent graduates, thinking their enthusiasm would make up for their lack of experience. They were also approached by designers from other companies, but thought they’d be too set in their ways. So the industry was waiting eagerly to see what Ralcona had to offer, but at the last minute, the company halted the launch for three months. Why was that?
Man: Um ... an over-worked marketing department had pulled out all the stops to get everything ready. And the retailers, who had been geared up for getting the products in the shops, took a pretty poor view of the decision. But Ralcona’s chairman had heard, correctly, that their main rivals intended to attack the launch with an aggressive promotion, so he intervened at the last minute. Eventually, the delayed launch went ahead, and the new products were brilliantly successful.
Woman: Yes . . . and hoping to exploit this still further, Ralcona did some research into why the products had struck such a chord, expecting to find positive results for their advertising campaign or design. But they were taken aback. Why?
Man: Well, they discovered that the drinks were being drunk as mixers with other products - so much so that sales had almost reached the level of Jista, the core product. So Ralcona had targeted the market accurately, but had failed to see how wide the applications for the products were.
Woman: And this taught Ralcona some valuable lessons that have now put them at the forefront of the industry.
Man: Yes, it seems they have now established a good creative team who constantly come up with new ideas, and the marketing division has rethought its mission and now focuses on getting copious feedback from supermarkets, clubs and cafes to find out what consumers are looking for.
Woman: So other businesses, not just the drinks industry, have looked to Ralcona as a model and as a warning. What were your conclusions?
Man: Their experiences prove what we already know - that successful companies must be prepared to go out on a limb, and finely targeted markets can be more profitable than making products with more general appeal. But what it uniquely demonstrates is that, in any business, you should never assume that you know what’s going on - the consumers have a lot to tell us -but they won’t if they’re not asked, and your products can live or die by getting the right information.
Woman: OK, now can you write all that up for me ... ?
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Now listen to the recording again.
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That is the end of Fart Three. You now have ten minutes to transfer your answers to your Answer Sheet.
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Note: Teacher, stop the recording here and time ten minutes. Remind students when there is one minute remaining.
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That is the end of the test.