Introductory Program for Nundies - Case Study Example

Case Study: Nundies Students Name Institution Supervisor Date 1. Situation facing advanced material in respect to Nundies in January 2008. a. Developments since 2006 The company did a research and found out many women hated panty lines. They therefore came up with the idea of “Nundies” which are disposable panties. A flexible, ultra-thin, tulip shaped lycra and nylon liner was formed by the Advanced Materials Inc. It also had a medical grade adhesive tape to prevent skin rashes and allergic reactions (Boswell, A., 2012, 45). . Research was done on the market and found out that a lot of money was spent on underwear in the United States. It was also done to find out the target customers and the suitable packaging for the product. A well known agency based in Dallas was used to market Nundies. It was introduced in specialty shops, women’s boutiques and in fashion and retail magazines. The market for the product was seen as 36.7 million women between 15 and 60 years. b. Overall market structure The overall market structure for Nundies is a monopolistic competition (Krugman, P., Obstfeld, M., & Melitz, M., 2011, 106). This is because there are many sellers selling products that are almost similar to the Nundies. This is because there are many sellers of panty liners and panties which can be substitutes for the product. Nundies is sold in women’s specialty shops and boutiques and in 10 Neiman Marcus department stores in 40- states in the United States. c. Overview of unit profitability, revenue and expense The price of selling Nundies was 15 dollars for a five count package. The price of a single liner was 0.60 while the price of packaging was 0.45 per unit. Hence, the cost of production in total was 3.45 for a package that were later sold at 15 dollars. The unit profitability for the product is therefore 11.55. d. Problem and its causes One problem in Nundies sales strategy is limited media advertising in Nundies launch. This was a problem as the advertising did not target consumers hence many women did not get to know about the product. Another problem is managers and sales associates do not seem to be sure on how to market the product after it got to the stores. The cause of these problems is lack of good advertising (Kerin, R., &Peterson R., 2012, 453). This made consumers and even sales associates not know much about the product. 2. Introductory program for Nundies a. Market Target The target market is women between the ages of 15 and 60 years. The target market is women who hate panty lines but want a degree of protection. It is suitable for people who wear shorts, parts, maternity clothes and workout clothes. b. Value Proposition The product is suitable for women of different ages who do not want the problem of panty lines when wearing their outfit. It is a comfortable solution as Nundies are disposable and give a feeling of freedom to users as compared to other substitutes like thongs which are uncomfortable. They are also easy to peel, place on in seams and toss once done. The product also comes in a variety of colours so that women can choose according to their colour preference. c. Marketing mix The four P’s in the marketing mix are product, place, price and promotion ( Boswell, A., 2012, 78). In the introduction of the product, the price of the product that was set was high for most individuals. This discouraged many people from buying the product for daily use. The price was a huge strategy as it resulted to the sale of Nundies in high end department stores. The price of the product was a problem as many people considered the price as being on the high side hence less low and middle class people would buy the product. The promotion strategy for the product was done on print media, an article that was put on women’s daily. This promoted the product to the target market that was basically women. There was also point of sales promotion of the product on department stores and boutiques where the product was being sold. Place is another ‘P’ in the marketing mix that determines where the product is sold. The product was sold in women’s boutiques where it would easily be identified and bought by women. Product is the last ‘P’ that was in the introductory program for Nundies. The product is suitable for women of different ages and offers comfort as well as no stress for panty lines when they put on their outfits. The product was made so that it has benefits for the modern woman hence gives it an edge in the market. 3. Contribution to performance i. Target market The target market has contributed a lot to the performance of Nundies to date. The consumers are women between ages 15 and 60 years old. The consumers want to buy something that is comfortable minus the stress of panty lines which Nundies offers. The consumers want to find and buy the product from department stores. Some of the target market wants to buy Nundies for special occasions while other want to buy them for use one to two days a week while others for up to even six days a week. The target market want to buy the product from upscale department stores, mass merchandise department stores, midlevel department stores and women’s specialty stores and boutiques. The target market wants to buy the product because it guarantees them comfort minus the stress of panty-lines. This has contributed to the performance of Nundies to date location os sales, packaging and many other aspects of the product. Considering the target market is the key to sales. ii. Value proposition The value proposition has contributed to the performance of the product today (Kerin, R., &Peterson R., 2012, 345). This is because the company did a research to figure out what the target market would want. As a result, the product offers comfort while at the same time easy to use and dispose of. It also offers the solution to no panty lines while giving the users comfort. Hence, the value proposition of the product sells itself. iii. Product. As compared to other products that are almost of a similar nature, Nundies has a competitive age. It is different from other panties as it is comfortable and hygienic as compared other panties and similar products in the market. It is also comfortable and trendy as compared to other products hence has a competitive advantage. It is compatible with customer usage as it is easy to wear and dispose. It also does not leave a pant line on the garment which is the objective of the product. It is also a simple product which is easy to use. It is also less expensive for pregnant women who would otherwise buy maternity panties. iv. Price The price of the product is high for the average people. Hence, this has been a problem for the people (Osterwalder, A., & Pigneur Y., 2010, 265). However, since the product is not worn on daily basis, the price of the product can still be purchased by many people as the pack of five can last on several days depending on the consumer use of the product. The low sales of the product could still be attributed to the price of the product. Reducing the price of Nundies could attract more women to the product. v. Communication Communication has an influence on the sale of a product (Farris, P., Bendle, N., Pfeifer, P., & Reibstein, D., 2010, 234). The product was not advertised well in its launch in 2006 and this resulted to less number of sales as anticipated. Communication between the company and the consumers was also not good. This is because the product was not advertised well to the target market. The advertisement of the product was aimed at the retailers more than the customers who are the target market for the product. Communication between Advanced material Inc and their product distributors was another problem. This is because form the research, many of the people working at distribution outlets did not know how to market the products to their consumers. Hence, communication should have been established between the companies and distributors. vi. Distribution The distribution of the product had an effect on the performance of the product (Grimes, A., 2012, 67). This is because the product was sold in forty states hence it reached many people. This was a good move as the product could be accesses from many states in the United States. It was also distributed in areas such as department stores where the target market could easily see and purchase the product. This was a suitable distribution technique as many sales of the product were done from department stores. 4. Market potential is the estimated maximum total sales revenue of suppliers of a product during a certain period in the market. It is the total figure representing sales of prospects who could benefit from the product (Hanssens, D., Parsons L.,& Schultz, R., 2003, 456). Sales potential is the highest share in the market which a product can be expected to reasonably achieve in a specific time frame. The figure of sales potential is m usually optimistic and is normally pruned down by other factors (Vogel, D., 2006, 56). Sales and market potentials are used to decide on entrance into new markets. This information is also useful in determining markets that have great potential for sales force. It is also used in determining market shares and in a growth plan. The market potential for Nundies stood at 36.7 Million for women between the ages of 15 and 60 and in those households with more than $25,000 as their income. Therefore, the market and the sales potential for Nundies will be tabulated as follows: Women age category Market potential (Millions) (a) %age earning $25,000 or more (b) Market Potential Millions (c) %age who would seek for Nundies (d) Sales Potential Millions (e)       (b*c)   (c*d) 15-24 13,267 13.50% 1,791.05 29.40% 526.57 25-34 17,151 48.80% 8,369.69 26.80% 2,243.08 35-44 19,199 52.80% 10,137.07 26.85% 2,721.80 45-54 20,135 55.40% 11,154.79 26.85% 2,995.06 55-64 9,575 54.70% 5,237.53 26.85% 1,406.28 Total 79,327   36,690.12   9,892.78 5. Pros and cons of the proposals identified for Nundies. i. Marketing channel proposals and Advertising and channel proposals. The pro of the marketing channel proposal is Nundies would reach many of its customers. Another advantage is the channels chosen would bring high profit margin considerations. Selling the product in the chosen channels also gives the product class thus maintaining a certain customer base. The con of the marketing channel proposal is the product cannot be available to low income earners. This is because the product is not sold in mass merchandise, discount and warehouse club store channels proposals. Also, pursuing upscale department stores could be expensive for the company in the long-run. The advantage of the advertising and channel proposal is the search engine marketing would be able to reach a huge target audience (Corson-Knowles, T., 2013, 432). This is because Nundies would be accesses by people searching for intimate apparels hence a suitable advertisement technique. Another advantage is Metropolitan advertising would be advantageous as it would also advertise the product at the area where there are numerous stores stocking Nundies. Hence, with food advertisement, this would boost sales in metropolitan areas. The fashion magazine proposal for advertising is also a good idea as many people follow trends in magazines hence a good advertising channel. The disadvantage of the adverting and channel proposals is it would be costly for the company. This can be seen in the fashion magazine advertising that would require 200, 000 dollars for a full spread advertisement in three consecutive issues of the Cosmopolitan (Capon, N., 2012, 123). Search engine marketing is also expensive as it would require 120, 000 dollars per month for the six major metropolitan markets. ii. Centralized buying and de-centralized buying for upscale and midlevel department stores. The advantage of using centralized buying instead of de-centralized buying is once the upscale or the midlevel store decide to stock the product, the product would reach many different outlets of the centralized department stores. Another advantage is it is also cheaper as compared to trying to convince single department stores to consider a product (Sorger, S., 2013, 356). The disadvantages of this method is it would be expensive to hire retail sales consultant to help with convincing the owners of thee centralized upscale and midlevel department stores. 6. Sales and profit impact for the proposals. i. This is a good marketing channel proposal as the cost that the company could have to face is taken care of by the manufacturer’s agent’s organizations which recruit stores through exhibits and showrooms at apparel markets (Blattberg,R., Getz, G., & Thomas J., 2012, 150). Hence, this channel would save costs. This would increase sales and the profit ii. Incremental unit volume to breakeven with the initiative of the upscale department store channel in advertising and promotion spending would boost sales and profits of Nundies. Advertising plans like point of sales displays would be an affordable way for advertising the product hence a good way to boost sales and increase profits of Nundies (Baye M., & Prince, J., 2013, 345). Promotion spending would also be beneficial in the long-run as hiring professional agents to help who would be paid on commission would boost the sales of Nundies. iii. The executives from advanced materials would go to the stores using centralized buying with a retail sales consultant. Less expensive paper package would be used so as to make the product more [profitable. Hence. this proposal positively impacts profits. 7. Recommended course of action The best course of action would be to link market and the sales potential and the impact on profit. Advertisement would be key in promoting the product so that it can reach the target market. Point of sales displays should also be used to capture the attention of the Nundies customer. The price of the product can also be reduced so that it can be affordable to most people as this would boost sale, hence, it would be profitable. Advertising the product on cosmopolitan is also a good idea as it is a fashion magazine hence has a lot of potential for boosting sales. With a cash budget of 300, 000 dollars, the best solution would be to use marketing channels as they are not expensive as other methods of promotion and advertising and would target the consumers. The budget for this when estimated would be 50, 000 dollars. Advertising and promotion proposals would also be suitable as the previous problem with the introduction of the product was it was not advertised well.., Sending email messages to managers is suitable plus it does not require cost of promotion apart from the cost of the normal internet service use. Advertising the product on Cosmopolitan girl would also be suitable at it would target many young women and cost 115 thousand dollars. The remaining money would be 135 thousand dollars. Outdoor billboards and kiosks would also be suitable as if placed in a high traffic site would be viewed by many people. The cost of this would be 35, 000 dollars a year if located in an area where the target market can view the product. The advertisement could also be placed in five kiosks in 6 metropolitan areas. This would cost roughly 10, 000 dollars for advertisement space of about 30 kiosks for a month. This could be done for two moths making it 20, 000 dollars resulting to a balance of 80 thousand dollars. The remaining amount could be used on advertisement on print media as many people subscribe to newspapers hence it would reach the target audience. References Baye M., & Prince, J., 2013. Managerial Economics & Business Strategy (Mcgraw-Hill Economics). New York: NY; McGraw-Hill/Irwin; 8 edition. Blattberg,R., Getz, G., & Thomas J., 2012. The Marketing Mix [Download: PDF] [Digital]. Amazon.com Boswell, A., 2012. Understanding the marketing mix: A pocket guide to Marketing Models for Managers. Amazon.com Capon, N., 2012. Managing Marketing in the 21st Century (3rd edition). London, UK; Wessex Press; third edition Corson-Knowles, T., 2013. 57 Hot Business Marketing Strategies: Offline and Online Marketing Techniques, Tips And Tricks From Successful Entrepreneurs [Kindle Edition] United States; US: Business Marketing Group Farris, P., Bendle, N., Pfeifer, P., & Reibstein, D., 2010. Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (2nd Edition). Atlanta: ATL;  Pearson FT Press; 2 edition. Grimes, A.,2012. The Art and Science of Technical Analysis : Market Structure, Price Action and Trading Strategies. London, UK: Wiley. Hanssens, D., Parsons L.,& Schultz, R., 2003. Market Response Models: Econometric and Time Series Analysis (International Series in Quantitative Marketing). Massachusetts; Springer; 2nd edition Kerin, R., &Peterson R., 2012. Strategic Marketing problems. 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