Marketing Case Study for Glitz Essay

1. What factors capture a go after the determine decisions for a crossroad such as Glitzz? Analyze these factors and comment on the target of prices that bottom of the inning be set.The right price must pay back enough sales dollars to pay for the costs of developing, producing, distributing and securities industrying the return as well as earn a profit for the company. There atomic number 18 various factors that affect the pricing decision such as objectives, necessarys and market forces. We go forth examine these factors in detail be mild.1.1 troupe FactorsBefore embarking on pricing decisions, it is necessary to understand companys objectives. Lee Jr. and Albert atomic number 18 looking to achieve long-term profit do and sustainability in the market. Higher importance would then be condition to obtaining increased market sh atomic number 18 and sales over immediate profit making. Glitzz call fors to guidance on piping foothold in the market, as it would be a new product facing comparatively established competing brands and products. As such, Glitzz should non be priced at premiums but instead work to encourage trials, consumer acceptation and return business. If lucky, high profits should follow.1.2 Consumer FactorsConsumer factors such as drive for the particular product class, product or brand, price and availability of similar product, price sensitivity as well as apprehensions of value can affect pricing decisions and facilitate Lee Jr. and Albert gauge feasibility and acceptability of prices.The demand for the product is extremely important for pricing decisions. The greater the demand, the higher can the product be priced. Demand by consumers is affected by four factors. (1) Consumer Tastes (2) Price and Availability of Substitutes (3) Consumer Income and (4) Price of product.Glitzz can be classified as unsought goods products that potential consumers do non normally want or know they can pervert. These products are not search ed for and do not create demand in consumers initially. Consumers of such product only buy when they perceive the necessity for it. As such, creation of ken and education about product benefits becomes crucial for retailers and creators. This hand over to the need for increased budgeting assigned to advert strategies such as personal selling, comparatively aggressive advertising and benefit demonstrations, increasing fixed overhead costs for marketing and distribution.Glitzz would be a complementary product, with its demand somewhat predicated on the prices and sales of relevant product classes such as jewelry, diamonds and watches. There is negative cross elasticity between Glitzz and the above menti championd product class, i.e. the decrease in prices of jewelry, diamonds and watches would bring an increase in demand for cleaning agents such as Glitzz. In times of recession, luxury goods such as the above whitethorn not be highly sought after, affecting Glitzzs ability to se ll due to its constitution as a derived product. Pricing strategies should take into consideration market trends and demands of these product classes and be adjusted accordingly.Consumers perception of values and benefits provided by a product will affect the amount of money they are free to pay in exchange for the product and their price elasticity. Assessing value involves the judgment by a consumer of the worth and desirability of a particular product relative to its substitutes. At the core level of the product, Glitzz is a jewelry cleaner, delivering to consumers the opport unit of measurementy to renew and bring back the shine in their precious stones, jewelry and watches.The tangible benefits offered come from the products non-corrosive, non-abrasive and gentle on skin nature. Premium natural ingredients used in the making of the product are also marketed as a key attribute. The attribution values of Glitzz will metamorphose into a definitive price that consumers deem wor thy for the product. Lee Jr. and Albert pay off already interpreted steps to survey consumer market and test product responses. The NUS student researchers found that few consumers are unbidden to pay more than SGD20 for the product.Price and availability of similar products are also whole molding forces on pricing for new entry products such as Glitzz. Technological advances and increasingly discerning consumers meant heightened awareness about substitute products and prices. The ability to compare similar products and weigh out the benefits against cost, affects consumers decision-making and willingness to pay for a product. The way to apologise such comparisons is to possess strong distinguishing characteristics from its enemys. Glitzz, however, seem to be substitutable by many alternatives in the market. An in-depth challenger analysis is as follow.Brilliant Restorer and GlitzzBrilliant Restorer and Glitzz appear to be offering resembling product benefits and have similar dispensing system and publicity. It is also under a largely established distributer brand, Gordon Max. It is distributed through channels that Glitzz is thinking of using, taking up counters at large departmental stores such as Tangs. It appears to be Glitzzs main competitor, targeting similar markets, offering similar benefits and marketing in similar channels. novice and GlitzzConnoisseur practices product differentiation, offering a range of specialized cleaning agents for different kinds of metals. It may drift off out on the convenience associated with the all-purpose Glitzz, but can market its specialized uses as a plus point. The company has strong advertising roots, marketing its products in mainstream newspapers and online. Glitzz may face threats stemming from Connoisseurs strong advertising efforts.Powervescent and GlitzzPowervescent is a tablet-form cleaning product, offering similar benefits at very low price. It may be less convenient to use when compared to Glitzzs pump bottle design. Powervescent does not distribute in capital of Singapore and is in process of setting up its e-store. While Powervescent may prove to be a competitor among price sensitive consumers in the future, its low prices may also be viewed as a observation of its quality. As such, it may not be as big a competition to Glitzz as others. answer clean Machines and GlitzzThe second tiered competitors offer jewelry-cleaning machines with high technology performances such as the Connoisseur Jewelry bath ($49), Savco Jewelry Cleaner ($95) and OSIM uSonic ($108). It is priced much higher than cleaning solutions such as Glitzz but seem to hope better and more targeted results. The products may be marketed at affluent consumers or retailers mostly. It is not as near a substitute as portable, self-administered cleaning products such as Brilliant Restorer.Other solutions for dirty or tarnished jewelry include common soap and toothpaste as well as free cleaning operate provided by retailers as a value-add for purchases.The large number of substitutes makes demand for such products very elastic i.e. consumers are price-sensitive and decrease in prices will lead to increase in demand for the product. Glitzz would have to pay surplus attention to Brilliant Restorer and Connoisseurs as they are tight-fitting substitutes and their prices will be critical in the pricing decision. Glitzz is a normal good and is relatively price elastic as compared to necessity goods or luxury goods. As such, lowering prices and keeping check with competitors prices becomes the key to increasing consumer demand.1.3 Competitive FactorsPricing for Glitzz is cumber by the type of market in which it competes. Jewelry cleaning products compete in a noncompetitive competition market structure. There are a number of competitors competing on both price and non-price factors. For example, Lockhart competes with its low prices in the sector while OSIM offers high technology solution as the unique selling point. understand the environment in which they compete will allow a deeper insight into the range of acceptable prices, close of market differentiation and importance of advertising. In such an environment, Glitzz should allocate more budgets to advertising to distinguish itself from its competitors. This meat a rise in costs and subsequently, a necessary rise in pricing. Also, its prices should strive to not deviate too much from the competing products prices.To be effective, pricing must work to cover the costs and make profits. It is on that pointfore necessary to take into considerations the various costs involved in producing, packaging, marketing and distributing the product. The cost of product for Glitzz in this case includes the SGD5000 re-packaging consultation fee and the direct production cost of Glitzz cleaning solution and fees associated with packaging it into 30ml pump bottles to achieve sales state. Overhead costs may also include distribut ion fees such as retailers cut in exchange for sales services and media fees to advertise the product. cracking research and delicate mediation of all the above company, consumer and competitive factors will allow conclusion of a feasible price that is most symbolic of the value Glitzz hold.I propose a price range of SGD13 to SGD17. The ultimate upper limit as surveyed by NUS students is SGD20. The ultimate lower limit is established with the unit variable costs and other production costs in mind, which will be SGD5 at the initial stage. The recommended price ranging between SGD13 to SGD17 takes into consideration competitors prices, companys objectives and consumers buying responses. The suggested price should work to undercut competitors prices and let trials while not deviating too much from the market rate. This way, Glitzz can remain profitable, competitive and achieve a deflowereven within a short period of time.2. What price would you recommend for Glitzz? Why?I would recom mend Glitzz be sold at SGD14. In the monopo angle of inclinationic competition market structure, Glitzz cannot simply establish its price as an independent company. It has to be subjected to the market demand and supply forces, causing prices to be relatively similar to its close competitors.To use a demand-oriented pricing approach, Glitzz should engage in penetration pricing. By setting a relatively lower price to its competitors, Glitzz can ensure interest and high levels of appeal during the launch stage in the market. Whether or not penetration market works is predicated on several factors. Firstly, consumer base should be relatively price sensitive. This aspect is fulfilled in the case of Glitzz. With the existence of many substitute products in the market, there is high demand elasticity.Consumers with no immediate preferences or prior experiences may make purchase decisions base on prices. By setting the price at SGD14, Glitzz can subtly undercut its competitors and establi sh its value. Secondly, as a new product in its introductory stage, Glitzz has to work on overcoming its weakness in footing of its new entry and unknown brand identity. Glitzzs main objectives should then be to stimulate trials and soft accumulate market share. Penetration pricing helps to encourage first purchases and can work hand-in-hand with quality suppress and good brand management to build market share. Increased volume of sales will help maximize profits for Glitzz as unit production and marketing costs falls.That being said, Glitzz products must not be priced too low and deviate too much from similar competitors. Assuming Glitzz eventually decides to market and distribute its product through large departmental stores like Robinsons, its breakeven price for the initial batch of 20,000 where extreme cost = profit margin will be at 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 fo r Glitzz to price its product closer to the end of SGD10.50. Firstly, it may encourage a price war where competitors engage in successive price-cutting to increase or suffer market share. This can only be pestilential to the entire industry in the long run. Secondly, Glitzz as a new company needs to have buffer in profits to invest in further marketing or advertising efforts, cope with emergency operational issues or save up for brand expansion.Also, the skimming pricing method would not work for Glitzz as its product is too uniform and not differentiated enough to justify premium pricing.In addition, the pricing of Glitzz cleaning solution at the higher end of the SGD10.50 to SGD14 range ensures Glitzz have future opportunities and space to conduct promotional initiatives such as discounts and still be profitable. Consumers may not take kindly to products increasingly their prices after a successful intitial promotion period where low prices were offered. This may affect their p erceived image of the brand and be detrimental to future sales.In essence, Glitzz product pricing must be low enough to undercut competitors to generate interest in consumers and high enough to allow profit maximization. While the penetration pricing dodging can help to build volume, managers must keep close skip of the costs and monitor its effects on the market.3. What strategy would you propose for Glitzz? What costs and expenses would be involved? Calculate the break-even point.Glitzz at its point of entranceway would be at the introduction stage of its product life cycle. Here, the marketing objective should be to gain awareness. This objective is further amplified by the nature of Glitzz as an unsought good. There is high level of need for promotional and advertising efforts to inform and educate the public about the presence and benefits of Glitzz. According to past track records, Glitzz did well in promoting with in-store counters and consumer exhibitions.This has roots in the personal selling and benefits-demonstration means of promotion. I would recommend Glitzz to affect with such channels of marketing and to distribute and promote their products with departmental stores such as Robinsons. As a new product, this would allow consumers to experience the benefits of Glitzz first-hand at well-established shopping places, triggering first purchases and trials.To give a concrete example, on top of in-store distribution, Glitzz could hold demonstration booths at shopping mall forums to introduce its products. Free samples could be given out to generate brand awareness and trials.Costs involved and Assumptions made* Production cost of one bottle of Glitzz at SGD5 (Unit Variable Cost) * Branding Consultation Fee at SGD5000 (Fixed Cost)* Promotional Event at approximately SGD25000 (Fixed Cost) Amount from assuming a 3 days (6 hrs/day) promotional event at a shopping mall costing about SGD9000 in rentals, with an estimated 3000 samples to be given out and an employment of 3 sales assistants at SGD100 per day. The event will total up to about SGD$24900 * Distribution Margin for Retailers at its maximum of 50% Profit Margin * One bottle of Glitzz is priced at SGD14Hence given the list price of SGD14, the newly incurred marketing cost coupled with the sunk cost of consultation fee will result in the breakeven point being at 15 000 bottles of Glitzz, a highly feasible goal. I believe that promotions and demonstrations should be used at the initial stage of the product launch to create awareness and inform consumers of its existence. Subsequently, advertising in other forms should follow to distinguish Glitzz from its competitors and achieve brand recognition and preference. Glitzz would have to reevaluate costs and prices to determine next marketing move then.