Our firm’s target is to capture 40% of total market share in 2019 after price reduction. Noticing that our market share is not enough due to highest product price in 2018, our firm plans to reduce the product price to industry lowest $62 to see what will happen. However the total contribution record is not good. When we forecasted our competitors in youth market, like firm InfiniteDrivingForce, would increase product price, we also substantially increased our price to $75 with gross margin 53% to capture the high margin. In the 3rd year, we thought our “Bang” product go into the Mostly Mature stage. The following is the unit price and gross margin every year for “Bang” in youth segment: Our firm do not want to be a price leader in the youth segment, but to achieve relatively high product margin in the industry. We did a good job, when price decreasing, we successfully kept Sonic 1 margin increasing given the expanding of scale of economy (see Figure 1). We considered possibly changing the packaging in order to make the product seem newer and to refresh it in the consumers’ minds and lowered the price to keep consumers interested. When entering the third years, the Sonic 1 segment was moving toward the decline stage. Although it is our Cash Cow product, we still apply skimming strategy by setting price high at $100 in order to leave buffer for following years. The pricing strategy at this launching stage is very important. We launched our product “Awesome” to the Sport market at the third round in 2017 and priced at the lower end of the market, since our product Awesome has a lower spec at 0.6 compare with 0.73 the market average we believe the best way to compete is to attack the market with a lower price to achieve a market share around 20 – 30%. Thus our firm persistently invested product development in specs enhancement and cost reduction from the product launch year 2016. In youth segment, we believe that keeping up with product development both in specs and cost is essential for success of “Bang”. In order to benefit from first mover advantage, our firm is the first entrant into youth market and hopes to develop with the segment’s growth.
From the year 4 of 2018, we stop to invest on spec develop but continuously invest on cost reduction.
We adopted very conservative product development strategy on “Sonic 1”, the product name for standard segment, as it is our Cash Cow. Marketing Mix Strategy for Standard, Youth and Sport Segmentsįrom Figure 3, we can see compared to Sonic 1, Bang and Awesome have a much steeper line, due to heavier investment and higher average spec ratings And our plan is to play as a follower in the sport segment at the initial stages, and then try to diminish the profitability of other companies’ high margin products by initiating a price war in the market segment. Therefore instead of a Cash-Cow or Star for the company, the purpose of our sport product “Awesome” is more like a sword to attack. The gross margin of “Bang” is higher than the industry average level The market share shall not be less than 25% of the total youth market potential size It can be achieved by the following ways: The business target of our firm in youth segment is to achieve a STAR product of “Bang” and the leader position in this segment according to the highest contribution in the industry.
0 kommentar(er)
