A Case Study on Rachman's Discount Store

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RACHMAN’S DISCOUNT STORE -Roger Dickinson Summary Louis Rachman is a president and chief executive officer of Rachman’s discount store in a major city in the south east. The case study basically talks about Rachman’s confusion regarding the advertising budget. He thought about investing dollars in advertising but it seems to be contradicting what he have learned in business school and the principle he had been following that was beaten by his professors, which he revisits in his mind, i.e. “never spent any money for anything unless you are reasonably sure that you will get back more than you spent.” After eight years of commencement of business he is trying to ascertain an optimum advertising expenditure level for his stores but the answers still confuses him. Rachman decides to list what he knew about advertising by retailers i.e. he considers that almost all successful retail firm advertise, a substantial amount of benefits of advertising is supposed to be long term. He also considers Loss leaders are valuable in developing traffic for the stores and etc. Rachman had adjusted the percentage allocated to advertising depending on how he felt the chain was doing and on the actions of his competition. He had several meetings with his executives to see what had learned about the returns from advertising and finds out that the volume had slightly gone up. However, Rachman is still in a state not able to decide what to do about the situation and he discusses with his four executives for their recommendations. Having listened to the view points of the four executives, Rachman still wondered if he was any nearer to an understanding of the basic problem. Problem The basic problem is Mr. Rachman, the CEO of Rachman’s Discount Store, is in a state where he is not able to decide what to with the situation i.e. whether to spent dollars on advertising. He thinks about

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