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Transcription of this question: 5.Columbo Coffee (COColumbo Coffee (CC) is a family business that produces four espresso coffee machines.CCS objective is to provide the highest quality machines, but it is currently unprofitable.Espresso coffee Price in SExistingFuturemachine modelThe VenturaThe CremaThe RocketThe Fortunamarket share market growth300050001 ooo2000LowLowLowLowHighA marketing audit Of the four espresso machines had the following results:• The Ventura was CCS best selling espresso coffee machine. It has the strongest brand loyaltyOf all four machines, but has been suffering from overseas competition. Many customers OfThe Ventura want a new, improved version. However, because Of its weak financial position,the company has not been able to develop it.• The Crema is CCS exclusive luxury espresso coffee machine. Considerable publicity for CCwasgained when it featured in a recent popular television series. Sales of The Crema are forecasted togrow further despite its high price.• The Rocket has been very successful. However, technical problems have resulted in manycustomers returning their machines. Reduced brand loyalty and quality control are significantconcerns.• The Fortuna is the company’s newest model. It was developed to replace The Venturabut consumer resistance has forced CC to keep The Ventura in production.The Chief Executive Officer (CEO) Of CC sees The Fortuna as a potential market leader, but toachieve brand awareness this would require most Of CCS limited marketing budget.The CEO Of CC is considering reorganizing the four espresso coffee machines into separatecost centres.However, before any decision is made the CEO receives an Offer from its main competitorto work together. As part Of a strategic alliance, the competitor will provide funds to allow CCto finance extension strategies or enter new international markets. The only condition is thatThe Ventura is discontinued. The family is divided. Some family members are worried about theimpact Of the business losing its most recognizable brand. Others think the competitor’s Offer willallow CCS Other three machines to achieve their full market potential.(Question 5 continued)(a)(b)(c)(d)Define the following terms:(i) market share(ii) extension strategv_Explain two values Of a marketing audit as a business tool for CC.Analyse the implications for the CEO Of converting CC into four cost centres.Discuss whether the family should accept the Offer Of a strategic alliance withits competitor.[2 marks][2 marks][6 marks][6 marks][9 marks]

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