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Topic 1: Product, price & distribution

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by

Michael Rasmussen

on 3 October 2014

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Transcript of Topic 1: Product, price & distribution

Welcome
Underlying thoughts
Target group
Women
Aged 30-60
Request quality
Income above average
Career oriented
Minerva-model: Blue & green segments
Positioning
USP
Handmade, pure silk & unique design made by selected designers

ESP
CSR policies (e.g. child labor)
Underlying thoughts

Product- & brand strategy

Packaging

Optimal price & elasticity

Pricing strategy

Distribution

Sales price suggestion
Product- & brand strategy
Product strategy
Product
High quality, Handmade & unique design

Assortment
Product line length & depth
Brand strategy
Brand equity
High quality
Handmade
CSR-focused

Brand extensions
A possibility for the company

Line extensions
Additional materials e.g. Cashmere
Additional prints & designs
Labels on the scarves, so the consumers recognize the brand
Calculations
2. Unit calculation
3. Marginal calculation
1. Total calculation
Mathematical calculation
Step 1: Estimation of price/quantity function
Calculate the curve slope

Calculate Y-axis intersection

The price/quantity function

Step 2: Calculate optimal quantity
Estimate the GROMS-curve

Equate GROMS & GROMK


Step 3: Calculate optimal price
Insert the optimal quantity in the price/quantity function


Use of the STP-model
Optimal price & price elasticity
The economist approach
Sales price suggestion
Suggested price to end user

Why?

Related to distribution strategy
Agenda
It starts with silkworms...
...and it ends with silk scarves
Topic 1 - Product, price & place
Segmentation
Geographic
Urbanization

Demographic
Gender
Age
Occupation

Psychographic
Lifestyle

Technographic
Social media


Supply
Demand
Price elasticity
Competitor oriented pricing
Compares prices with those of the competitors
Value-based pricing
Marketing oriented pricing
The customers perceived value is compared to the values, they know from similar products.

Price is set too high
There is a risk that the customers choose competitors products

Price is set too low
Sales will probably explode, but a higher turnover would be possible by increasing the price to the level of the perceived value
A price strategy combining the other strategies.
Urbanization

Selective distribution

Indirect distribution

Conventional marketing
Distribution
Primary packaging
Plastic

Secondary packaging
Exclusive & girly box matching the scarves - made of sustainable material.

The scarves are wrapped in silk paper.

The company name is printed on the squared box.
Packaging
Market pricing
Start-up phase
Competitive price

When the brand is established and well known
Increasing price
By consultant group 2
Full transcript