Marketing
Pricing Strategy
There are different approaches to pricing strategy. The pricing strategy should fit within the context of the overall marketing strategy. Among the different options for pricing strategy are revenue maximization, profit maximization, survival, skim pricing, and penetration pricing (NetMBA, 2010). There are also approaches such as cost-plus that take into account the company's cost structure but in a competitive marketplace it is more normal that the pricing strategy reflects what competitors are doing. For MegaWidget, the $10 price tag comes with a sales target of one million new units. The MegaWidget only costs $3 to produce, so the price is not based on the cost. It is based on penetration pricing strategy. Ten dollars is a threshold, one that consumes will notice more -- at ten dollars or less a consumer is willing to purchase the product on impulse. As a result of that, the MegaWidget should be able to build a good market for itself with $10 pricing. In addition, this sort of pricing strategy can be seen as defensive, because the company believes it can prevent others from entering the market with similar products if it is able to price this low.
Branding and Distribution
The MegaWidget is going to carry premium branding for a product of its nature. The brand is going to convey the following brand attributes: innovation, uniqueness, handy, and high quality. The word "widget" signifies something that is an all-purpose tool, versatile and very handy, and "mega" is a Greek prefix that implies bigness. Thus, a "mega-widget" is something that has enormous versatility.
Distribution is an important part of the marketing mix (MindTools, 2014). The MegaWidget will be distributed via wholesalers, targeting retailers mostly at the hardware store level. Wholesalers will be needed for this product in order to reach the small, independent hardware stores. Larger customers might receive self-distribution because of the need to provide superior service, something that is easier to do when you are doing your own service.
Competition Analysis
The MegaWidget does not have any genuine competitors. It is a new and unique product, and because of that it is the first...
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