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Cost Effective Technique for Product

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Tejas Shastri

on 9 September 2013

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Transcript of Cost Effective Technique for Product

Cost Effectiveness of the Product
Cost-effectiveness is derived from the analysis of economic efficiency, where one alternative is preferred to another if it provides greater benefit at the same or lower cost or lower cost for the same, or greater benefit. This definition opens the question of which of the two alternatives is more efficient if one provides greater benefit than the other, but at a lower cost.
Unorthodox Promotional Techniques
The company is not indulging in Television advertisement which would increase its cost. It is also avoiding use of other Sales Promotional techniques such as personal selling which would increase the promotional budget and result in degradation of the image of the company.
Factory Location
The location of the factory acts to the advantage of the company since the factory is located well near the following important factors:
Raw Materials: The factory is situated at the heart of the tea plantation in Assam.
Labour: The labour availability for tea in Assam is highly skilled and specialized in plantation of tea and production of tea.
Subsidies: The Assam Govt promotes the establishment of industries.
Social Responsibility
The Company believes in fulfilling its social responsibility. The company will be hiring deaf and dumb people for the delivery of the product in the zero level of channel of distribution. This would reduce the cost of human element in the delivery process and also the company will receive certain tax and other benefits for fulfilling its social responsibility.
Organising blood donation camps in collaboration with Rotary Blood Bank is an expensive promotional technique compared to other means like newspaper, radio etc. However, the impact of this campaign, and the positive image it would build for the company makes investing in blood donation camps worthwhile. Any other form of promotional technique won't be able to create that awareness and positive image that will be built through this technique no matter how much is spent on promotion. This is because the public tend to respond to companies which attend to the social matters as well.
Zero Level of Distribution
In the initial stage, the company will be carrying out the business through zero level of distribution wherein they would be selling the tea product directly to the chai walas. This channel would reduce the expenditure on promotion techniques and advertisement because to sell the product to the chai walas, advertisement is not required.
Binge believes that setting up a packaging unit would require a lot of investment and the company would deviate from its core activity since it will also have to look after its packaging plant. By outsourcing this, the company will be able to focus on its core activity and in reducing the cost of production.
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