Marketing Case Study for Glitz Essay
1 ) What factors affect the prices decisions for any product including Glitzz?
Examine these factors and discuss the range of prices that can be established. The right cost must create enough sales dollars to cover the costs of developing, creating, distributing and marketing the merchandise as well as make a profit to get the company. There are several factors that affect the prices decision including objectives, needs and market forces.
All of us will examine these elements in detail under. 1 . one particular Company Factors Before trying to achieve pricing decisions, it is necessary to figure out company’s aims. Lee Jr. and Albert are looking to obtain long-term earnings making and sustainability available in the market. Higher importance would after that be given to obtaining elevated market share and sales over immediate profit making.
Glitzz needs to focus on gaining foothold in the market, since it would be a new product facing relatively established contending brands and products. As a result, Glitzz must not be priced at payments but instead work to encourage trial offers, consumer acceptance and returning business. In the event that successful, substantial profits should certainly follow. 1 ) 2 Client Factors Consumer factors just like demand for this product school, product or perhaps brand, price and availability of similar merchandise, price sensitivity as well as perceptions of value can impact pricing decisions and help Lee Jr. and Albert measure feasibility and acceptability of prices.
The demand intended for the product is really important for pricing decisions. The greater the demand, the larger can the merchandise be priced. Demand by consumers is impacted by four elements. (1) Buyer Tastes (2) Price and Availability of Alternatives (3) Buyer Income and (4) Cost of item. Glitzz could be classified since unsought merchandise; products that potential buyers do not normally want or perhaps know they can buy. These products are not looked for and do not produce demand in consumers initially.
Consumers of such item only buy when they see the necessity for doing it. As such, creation of recognition and education about product benefits turns into crucial to get retailers and creators. This translate towards the need for increased budgeting designated to advertising and marketing strategies including personal providing, relatively intense advertising and benefit demonstrations, increasing set overhead costs to get marketing and distribution. Glitzz would be a complementary item, with its require somewhat predicated on the rates and sales of relevant product classes such as jewelry, gemstones and wristwatches.
There is adverse cross flexibility between Glitzz and the previously discussed product school, i. elizabeth. the decline in prices of jewelry, diamonds and watches might bring a rise in demand for washing agents such as Glitzz. In times of recession, high-class goods such as the above will not be highly preferred, affecting Glitzz’s ability to offer due to its character as a produced product. Charges strategies should take into consideration marketplace trends and demands of those product classes and be tweaked accordingly. Consumers’ perception of values and benefits offered by a product will certainly affect the sum of money they are willing to pay in exchange to get the product and the price flexibility.
Assessing benefit involves the judgment with a consumer of the worth and desirability of your particular product relative to the substitutes. At the core level of the product, Glitzz can be described as jewelry solution, delivering to consumers the chance to renew and bring back the shine in their precious stones, jewelry and watches. The tangible benefits offered come from the product’s noncorrosive, non-abrasive and delicate on skin area nature. Superior natural ingredients utilized in the making of the product are also sold as a crucial attribute. The attribution principles of Glitzz will translate into a certain price that consumers regard worthy pertaining to the product.
Lee Jr. and Albert have already taken steps to survey buyer market and test merchandise responses. The NUS student researchers found that couple of consumers are willing to pay more than SGD20 for the item. Price and availability of similar products are usually strong molding forces in pricing achievable entry items such as Glitzz. Technological advancements and increasingly discerning customers meant increased awareness about substitute companies prices.
The ability to compare comparable products and weigh out the benefits against cost, influences consumers’ decision-making and motivation to pay for a product or service. The way to mitigate such reviews is to own strong specific characteristics from its competitors. Glitzz, however , seem to be substitutable by many alternatives available in the market. An specific competitor evaluation is as comply with. Brilliant Restorer and Glitzz Brilliant Restorer and Glitzz appear to be providing analogous merchandise benefits and also have similar dishing out system and packaging.
Additionally it is under a generally established distributor brand, Gordon Max. It can be distributed through channels that Glitzz is definitely thinking of employing, taking up desks at large departmental stores including Tangs. It appears to be Glitzz’s main competitor, focusing on similar markets, offering related benefits and marketing in similar channels. Connoisseur and Glitzz Connoisseur practices item differentiation, offering a range of specialized cleaning agents for different kinds of metals.
It may lose out on the convenience associated with the all-purpose Glitzz, but can easily market it’s specialized uses as a advantage. The company provides strong advertising and marketing roots, promoting its products in mainstream newspaper publishers and on the web. Glitzz may well face risks stemming by Connoisseurs solid advertising initiatives.
Powervescent and Glitzz Powervescent is a tablet-form cleaning item, offering similar benefits at very low value. It may be significantly less convenient to use in comparison with Glitzz’s pump bottle design and style. Powervescent would not distribute in Singapore and is also in means of setting up their e-store.
While Powervescent might prove to be a competitor among price hypersensitive consumers down the road, its low prices may also be considered as a reflection of its quality. As such, it may not be because big a competition to Glitzz as other folks. Cleaning Machines and Glitzz The second tiered competitors provide jewelry-cleaning devices with substantial technology activities such as the Fanatic Jewelry Shower ($49), Savco Jewelry Cleaner ($95) and OSIM uSonic ($108). It can be priced higher than cleaning solutions such as Glitzz but appear to promise better and more targeted results.
The items may be sold at wealthy consumers or retailers typically. It is not since close a substitute as portable, self-administered washing products just like Brilliant Restorer. Other solutions for filthy or damaged jewelry contain common detergent and toothpaste as well as cost-free cleaning services provided by suppliers as a value-add for purchases. The large number of substitutes makes demand for such products incredibly elastic; i. e. people are price-sensitive and minimize in prices will result in increase in demand for the product. Glitzz would have to spend extra awareness of Brilliant Restorer and Lovers as they are close substitutes and their prices will be critical inside the pricing decision.
Glitzz can be described as normal good and is relatively price supple as compared to need goods or perhaps luxury goods. As such, cutting down prices and keeping consult competitors’ rates becomes the important thing to raising consumer demand. 1 . 3 Competitive Factors Pricing for Glitzz is usually constrained by the type of industry in which it competes. Rings cleaning products compete within a monopolistic competition market composition.
There are a number of competitors competitive on the two price and non-price elements. For example , Lockhart competes having its low prices in the sector whilst OSIM presents high technology solution because the unique feature. Understanding the environment in which they compete will allow a much deeper insight into the number of acceptable prices, magnitude of marketplace differentiation and importance of promoting.
In this environment, Glitzz should designate more finances to advertising and marketing to distinguish on its own from its competitors. This means an increase in costs and subsequently, a necessary within pricing. Likewise, its rates should make an effort to not deviate too much from the competing products’ prices. To work, pricing must work to hide the costs and make income.
It is therefore necessary to take in considerations the various costs involved in producing, product packaging, marketing and releasing the product. The expense of production to get Glitzz in this instance includes the SGD5000 re-packaging consultation fee and the immediate production expense of Glitzz cleaning solution and costs associated with packaging it into 30ml pump bottles to accomplish sales point out. Overhead costs can also include syndication fees such as retailer’s lower in exchange pertaining to sales companies and press fees to promote the product. Eager research and refined mediation of all of the above company, consumer and competitive elements will allow realization of a possible price that is certainly most representational of the benefit Glitzz hold.
I propose a cost range of SGD13 to SGD17. The ultimate higher limit while surveyed by simply NUS students is SGD20. The ultimate lower limit is made with the product variable costs and other production costs in mind, which will be SGD5 at the initial stage. The recommended selling price ranging between SGD13 to SGD17 takes into consideration competitors’ prices, company’s objectives and consumers’ ordering responses. The suggested value should function to undercut competitors’ rates and promote trials although it is not deviating too much from the market rate.
By doing this, Glitzz can easily remain profitable, competitive and acquire a breakeven in a short period of your time. 2 . What price would you suggest for Glitzz? Why? I would recommend Glitzz become sold at SGD14. In the monopolistic competition marketplace structure, Glitzz cannot merely establish its price because an independent firm.
It has to be put through the market require and supply pushes, causing prices to be comparatively similar to the close rivals. To use a demand-oriented pricing procedure, Glitzz should certainly engage in transmission pricing. By simply setting a comparatively lower price to its competition, Glitzz may ensure interest and high levels of charm during the kick off stage available in the market. Whether or not transmission market functions is predicated on several factors. First of all, consumer foundation should be relatively price very sensitive.
This feature is achieved in the case of Glitzz. With the presence of many alternative products available in the market, there is popular elasticity. Buyers with no instant preferences or perhaps prior activities may make obtain decisions based upon prices. By setting the price at SGD14, Glitzz can easily subtly undercut its rivals and create its worth. Secondly, as a new product in the introductory stage, Glitzz must work on defeating its weak point in terms of their new entry and unknown brand identity.
Glitzz’s primary objectives should then always be to promote trials and slowly collect market share. Penetration pricing helps to encourage initial purchases and will work hand-in-hand with quality control and good manufacturer management to generate market share. Increased volume of product sales will help maximize profits for Glitzz while unit development and marketing costs falls. That being said, Glitzz products should not be priced lacking and deviate too much from similar rivals.
Assuming Glitzz eventually determines to market and distribute it is product through large department stores like Robinsons, their breakeven cost for the first batch of 20, 1000 where total cost = profit margin will be for SGD10. 50. We have to price higher than SGD10. 50 to break even and lower than SGD14 to SGD17 to undercut the competition.
It is not feasible for Glitzz to cost its item closer to the conclusion of SGD10. 50. Firstly, it may motivate a price war where rivals engage in effective price-cutting to boost or maintain market share. This could only be bad for the entire industry in the long run.
Secondly, Glitzz as being a new business needs to have barrier in income to invest in further marketing or advertising attempts, cope with unexpected emergency operational concerns or conserve for brand expansion. Also, the skimming pricing technique would not improve Glitzz as the product is too homogenous rather than differentiated enough to rationalize premium costs. In addition , the pricing of Glitzz cleaning solution at the higher end in the SGD10. 50 to SGD14 range assures Glitzz have got future options and space to execute promotional initiatives such as discount rates and still always be profitable. Buyers may not take kindly to products significantly their rates after a good intitial promotion period where low prices were offered.
This might affect their particular perceived image of the brand and be detrimental to foreseeable future sales. In essence, Glitzz item pricing must be low enough to undercut competitors to generate interest in buyers and sufficient to allow profit maximization. As the penetration costs strategy can help build quantity, managers must keep close a record of the costs and monitor it is effects in the marketplace. 3. What strategy might you propose intended for Glitzz?
What costs and expenses can be involved? Determine the break-even point. Glitzz at its point of entrance would be in the introduction stage of the product life routine. Here, the marketing aim should be to gain awareness. This kind of objective is further amplified by the mother nature of Glitzz as an unsought good.
There is dangerous of requirement of promotional and advertising attempts to inform and educate the general public about the presence and benefits of Glitzz. According to past observe records, Glitzz did well at promoting with in-store desks and buyer exhibitions. This has roots in the personal selling and benefits-demonstration means of advertising.
I would recommend Glitzz to continue with such channels of marketing also to distribute and promote their products with departmental stores such as Robinsons. As a cool product, this would let consumers to appreciate the benefits of Glitzz first-hand for well-established searching places, triggering first acquisitions and tests. To give a concrete model, on top of in-store distribution, Glitzz could carry demonstration booths at shopping mall forums to introduce its products.
Free selections could be given out to generate brand awareness and trials. Therefore given record price of SGD14, the newly incurred marketing cost coupled with the sunk cost of consultation charge will result in the breakeven point being at 12-15 000 bottles of Glitzz, a highly possible goal. I believe that special offers and demonstrations should be applied at the initial stage in the product kick off to create consciousness and inform consumers of its living. Subsequently, promoting in other forms should follow to distinguish Glitzz from its competition and attain brand identification and choice.
Glitzz will have to reevaluate costs and prices to determine next promoting move after that.