Price primary decision to be made when considering price dynamics is given by the pricing strategy the company must opt for. They must also consider seasonal pricing, discount pricing and price flexibility.
Pricing strategy: immediately after launch, the manufacturer will implement a penetration pricing strategy aimed at forming and consolidating a loyal customer base; this strategy will also ensure and easy penetration of the market and will attract the attention of the market. With the completion of the promotional strategies, Lex Corporation will implement a variable pricing strategy, meaning that the retail price to the end consumer will be given by the cost incurred during the production and distribution of the fridge; a change in these costs (commodities, technologies, labor force) will be reflected in the retail price
Seasonal pricing: a clear season when fridge sales increase or decrease has not been clearly identified; therefore, no seasonal strategies will be implemented
Discount pricing: to encourage massive purchases and to reward the customers who buy more from the company, Lex Corp will offer several discounts; for instance, when purchasing five fridges, the customer will get a 30% discount for the next product he will acquire
Price flexibility: also to make it easier for the customers to purchase their products, the manufacturer will be flexible in regard to the payment possibilities. In this particular instance, they will accept an advance with the possibility of a second payment when the fridge is delivered to house of the buyer; other flexible payment opportunities regard the payment by installments or the payment through a personal short-term bank loan
The third P. Of the marketing mix revolves around the decisions to be made in regard to the most advantageous channels of distribution to be used by Lex Corporation. Their decisions are centered on features such as the usage of intermediaries or the direct selling of the products as well as other logistics issues, such as storage, warehousing or transportation.
Intermediaries: the usage of intermediaries is often a favorable choice as it eases the work of the manufacturer and implies reduced costs; on the other hand, it places a new link in the process, furthering and such the producer from the end customer; in other words, the producer will be unable to maintain constant communications with the customers, and to identify new demands and retrieve feedback, they will have to request the services of a tertiary entity
Direct sales: this process implies that no tertiary party will interfere between manufacturer and buyer, but additional costs will arise as the company will have to possess and administrate a retail facility; the risks generated by direct sales are larger as are the investments, therefore, the best solution for the primary stages would be the usage of intermediaries
Logistics: the storage and transportation of the fridges will be ensured by the company and they will also offer customer the possibility to make a payment and have the product delivered at a specified time in the future; this possibility will be embraced by those customers who have recently purchased a home and do not currently have the space to store the product, but only need it after they renovate the location.
Promotional strategies play a vital role in the successful launch of a new product as they are aimed to familiarize and attract the customer to the respective item. In making the best decisions in regard to the promotional campaign, the company will have to select the most suitable promotional strategy. Then, they will have to choose the most viable media channels on which to advertise and promote the fridge; also, they will have to develop strong advertisements. Finally, Lex Corporation must maintain constant communications with the audience.
Promotional strategy: the two most common strategies are the pull and push promotional strategies; the first pulls the customers towards the product by capturing their interest and the second pushes the product onto the market; the most suitable one in the case of Lex Corp's new fridge is the pull strategy
Advertisements: the advertisements developed by the marketing team at Lex Corporation will emphasize on the core benefits of the new fridge and the wide range of needs they are able to satisfy
Media channels: the manufacturer will use various media channels in familiarizing the audience with the new fridge and the ads will take the form of television advertisements aired during prime time television programs, radio announcements, street banners and fliers and also internet ads
Communications: similar to the media channels, the manufacturer will use various opportunities to maintain constant communications with their audience; in this particular instance, they will develop, maintain and upgrade a corporate website that will contain information on the company and the products (for the future, the company could also consider allowing online purchases). Then, the company officials will appear on televised talk shows and radio programs and will discuss new product features; also, they will grant interviews to specialized magazines and journals.
Lex Corporation is trying to establish a strong position on the domestic Australian market and in the future, they will also expand onto the international market. The currently manufactured product is a new line of fridges that integrate the latest technologies and satisfy a wide range of needs that could be forwarded by the audience. The primary target market is formed from women over the age of 25, as they represent the main force in the purchase decision. The socio-economic status of the customers is irrelevant to the company as all individuals, coming from all income and cultural backgrounds need a fridge.
Lex Corporation will initially implement a penetration pricing strategy to then replace it with a variable pricing strategy. They will use intermediaries to distribute their products to the end consumer and the advertising and promotional campaigns will be based on emphasizing the core benefits of the new fridges.
The company bases its success on the high quality of the products and they expect an increased demand of fridges, mostly due to the foreseen population growth for the future years and the continually increasing life expectancy.
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