After the warranty has expired, customers are encouraged to address their requests to the repair service within the company.
d. Pricing Strategies
In order to adopt the most appropriate pricing strategy, Sabertooth took into consideration the comparative advantages that differentiate their products from the competitors' products, the costs that needed to be covered, the profits that have to be registered and also the need to set an affordable price for the future clientele. In order to meet all these demands, the price has to be established based on a combination of three pricing strategies: Competitive Pricing, Cost Plus Mark-Up and the Bundling and Quantity Discounts.
The first strategy to implement regarding pricing is the Competitive Pricing. This strategy is used so that Sabertooth does not promote a considerably higher price than Charon Tires Inc. And Course Tire Ltd. And in order to insure the tires' competitiveness on the market.
The second strategy used to set the Sabertooth tires' prices is the Cost Plus Mark-Up. This strategy is useful because it insures the manufacturer that the established price will be sufficient to cover the expenses registered with the new items and will also generate profit.
Finally, the third strategy implemented in establishing the price is the Bundling and Quantity Discounts. This strategy increases customers' fidelity to Sabertooth and rewards it.
e. Promotion Strategies
To decide upon the suitable promotion strategies to implement, the marketing department at Sabertooth took into consideration the following criteria: advertising the tires onto three communication channels: television, radio and fliers; the allocated budget; the company's slogan, as well as the means of communication with the targeted market segment.
Based on these criteria, the marketing department felt it would be best for the company to approach promotions from both Pull as well as Push strategies. These two strategies imply that final customers, as well as retail sellers and other intermediaries would become better acknowledged with the product and generate an increase in the demand for Sabertooth tires.
f. Distribution Strategies
Before deciding upon the appropriate distribution strategy, Sabettoth marketing department looked at the available distribution channels, retail sellers and other intermediaries, intermediaries' and company's own capability to stock and transport the tires.
Based on the available distribution channels, Sabertooth chose to sell their products throughout indirect distribution to retailers. These retailers will be chosen based on the Selective Distribution strategy.
IV. Implementation Strategies a. Action Plans
The product strategies will be implemented within the company's own premises and will generally regard the production process. Employees will be suitably motivated and supervised in order to properly produce, handle, pack and repair the tires.
The Competitive Pricing strategy will be implemented by closely analyzing the prices promoted by Charon Tires Inc. And Course Tire Ltd. Sabertooth tires will be placed on the market at slightly higher prices to explain the better quality and the longer warranty period, but not high enough to be unaffordable and drive customers towards the competitors' products.
The Cost plus mark-up strategy will be implemented by closely analyzing the costs that have been registered with the manufacturing, promoting and distributing the tires and based on this costs, a price will be formed. The price will include both costs as well as remaining profits.
The Bundling and Quantity Discounts strategy will be implemented by offering long-time customers special discounts. Also, granted discounts will be the new customers who purchase larger quantities of Sabertooth tires.
Pull and Push promotion strategies will be implemented as follows:
The Pull strategy will familiarize final customers with the product. The final customers will then demand the product from retailers, who will be forced to buy the tires from the producer;
The Push strategy familiarizes retailers with the new tires. Retailers buy the products and resell them to the final customer.
The indirect distribution implies that the products will be sold to retailers, who will then resell the tires to the final customer. Further, the Selective Distribution strategy implies that only a certain number of retailers will be chosen to receive the new tires.
b. Budgets
Sabertooth allocated a total of $2.5 million for producing, promoting and distributing the new tires. The funds will be spent in the first year of production to cover expenditures as depicted in table 1.
Sabertooth Tires Inc. foresees that they will fully recover the expenses within the first year of selling the new tires onto the market, as they should register an income of $3.2 million, as depicted in table 2.
Table 1: Sabertooth expenditures
Running Costs:
Commodities Costs
Fixed Charges
Staff Costs
Storage Costs
Advertising Expenses
Promotional Expenditures
Distribution Costs
Other Expenditures
Table 2: Sabertooth incomes
Sales Revenues
Sponsoring Incomes
Other Incomes c. Timing/Schedules
The new Sabertooth tires will be placed onto the market starting with January 2008. The schedules for the three remaining months of 2007 and the entire year of 2008 are as presented below:
October 2007 is dedicated to beginning production of the tires; attracting...
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