Cost and Promotion
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Costs Analysis The overall costs of production of the keychain tracker is around 11 USD. There are a number of firms who sell the similar products at around $17-30 per unit. The fixed overheads of our production are around $50,000 per annum, which includes all the costs associated with production and distribution. Keeping a profit margin of $6 per unit at the beginning, the breakeven point shall be reached at 8334 units. This means that the overall level of marketing and promotion should be very high. Since we cannot afford to invest any more costs in the marketing, we will have to find innovative measures for advertisement and promotions (Mihir). The concentration of the marketing is to make sure that the company reaches the desired level of sales within a year of operations. Since we are starting with a very small margin of profits and high costs of production, it is imperative that the organization will earn profits in the future once we cover fair amount of market share. We plan to increase the profit margin to $10 per unit, once the breakeven has been consistently achieved. The fixed costs are
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Transcript of Cost and Promotion
Costs Analysis
The overall costs of production of the keychain tracker is around 11 USD. There are a number of firms who sell the similar products at around $17-30 per unit. The fixed overheads of our production are around $50,000 per annum, which includes all the costs associated with production and distribution. Keeping a profit margin of $6 per unit at the beginning, the breakeven point shall be reached at 8334 units.
This means that the overall level of marketing and promotion should be very high. Since we cannot afford to invest any more costs in the marketing, we will have to find innovative measures for advertisement and promotions (Mihir). The concentration of the marketing is to make sure that the company reaches the desired level of sales within a year of operations. Since we are starting with a very small margin of profits and high costs of production, it is imperative that the organization will earn profits in the future once we cover fair amount of market share. We plan to increase the profit margin to $10 per unit, once the breakeven has been consistently achieved. The fixed costs are around $30,000. Even though, the variable costs will increase significantly, still an increase in the selling price will help in achieving the desired results.
Promotion
The promotion of the product will be carried out through various media resources like the internet and TV. We will initially offer a lower price than any of the competitors. The application software required to access the device shall be available free of cost at Android Play Store and App Store. Our price of around 11 USD is about half of any of the competitors. The battery life is also thrice the normal products available in the market (Stern).
We will target the working class to increase our sales. The social media will be used extensively in order to draw comparison between the competitors and our product. The core competency of the product is long battery life with affordable pricing (Patkar). We hope to double the sales within one year of operations. However, since we are using low prices at the beginning, it will increase in the future.
Refernces Patkar, Mihir. 'Find Your Keys! 6 Gadgets That Help Locate Your Missing Keys'. MakeUseOf. N.p., 2013. Web. 19 May 2015.Stern, Joanna. 'Finding The Best Lost-Item Trackers: Tile, Trackr And Duet Reviewed'. WSJ. N.p., 2015. Web. 19 May 2015.
