Target Market The starting point for pricing is generally driven by who your target market for a product is and why would your target market expect the price you are setting for the product?

Topic:

marketing investigation

Type of paper:

Essay (any type)

Discipline:

Marketing : Marketing

Format or citation style:

APA

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Price for the Product You have a document describing the product (Flow) you are pricing. It is not currently available, but it is anticipated to be in production soon. Something that the firm is now trying to decide is what would be the price for the product. There are a number of aspects of pricing that you will need to think about and consider. Target Market The starting point for pricing is generally driven by who your target market for a product is and why would your target market expect the price you are setting for the product? So for this paper start with a description of your target market, focusing on demographic characteristics which might set your target market apart from other market segments. Describe the level of income, level of education, household size, household composition, etc. Anything that you feel will be important in trying to sell this particular product and why you feel these variables are important. Pricing Method Here we are looking for you to explore the different types of pricing methods and discuss which one you feel will be appropriate for this product and why. One of the difficult things to do in pricing is that there will frequently be some back and forth between thinking about the method and the ability for it to generate profit, which is really what the next section is about. Retail Price and Wholesale Price Here we will set a retail price for the product and what prices would occur in the distribution channel. While the exact distribution channel the firm would chose would be selected to service the target market, we will assume that this product will be sold through some type of retail store. The retailer may have both an online presence as well as brick and mortar stores, but the product will definitely be sold through some type of retailer. What you will need to do is some research into what type of margin retailers expect to receive for selling electronic equipment. This will vary by type of retailer, so the retailers that you investigate should be ones that would be servicing the target market you identified. Then you will use this margin to determine how much of the retail price the firm sets for this product will actually be received by the manufacturer. For example, a new car dealer typically has only

about a 5% gross margin on the new cars it is selling. So if a car sells for $30,000, the dealer actually only gets about $1,500 to keep to cover all its expenses. The other $28,500 goes back to the car manufacturer. The typical gross margin will vary significantly from one form of retail industry to another. Costco is very open that it only has a 15% gross margin on everything it sells, except for its private label Kirkland products. Those will have an 18% gross margin. A high end design clothing retailer may have gross margins that would average out to be about 55-60%. So think about the type of retailer for this product and see what you can find about the average gross margins for that type of store. So in this section you will set the retail price and then figure out how much will be coming back to the manufacturer. The document about the product has estimated manufacturing costs (the variable costs for the product) and the estimated fixed costs for the firm. What you will need to do is to determine the breakeven point in units for the firm based upon the retail price that you have set. Mechanical Aspects As always, be sure to use good writing skills in developing this paper. And be sure to do some good research. I encourage you to use the people in the library who help with finding information. Some things, like gross margins for retailers, is not always easy to find.

Rubric for Pricing Investigation Critical ElementAccomplishedCompetent DevelopingIntroductoryIdentiÞcation of Target Market15 pointsPotential target market is clearly identified with appropriate and justified segmentation variables. 15 Ñ 13.5Target market is broadly defined, but lacking in clarity and/or effective segmentation variables. 13.49 Ñ 12Target market is too broadly defined and/or the segmentation variables are too few or not well defined 11.99 Ñ 10.5Target market is not well defined, lacking detail, and/or the segmentation variables do not seem related to the market 10.49 Ñ 0Pricing Method 10 pointsDifferent potential pricing methods are well discussed and a solid foundation for selected method is developed 10 Ñ 9Different potential pricing methods are briefly discussed and a particular method is selected with some relevant support 8.99 Ñ 8Pricing methods are not well presented and/or there is little good support for the method chosen. 7.99 Ñ 7Pricing methods are not presented and/or no particular method to use for this product is presented 6.99 Ñ 0Retail and Wholesale Pricing 20 pointsA retail price is selected, well supported, and the wholesale prices and breakeven quantities are accurately done. 20 Ñ 18A retail price is selected, but there are errors in determining wholesale prices and/or breakeven quantities needed. 17.99 Ð 16A retail price is selected but little support for its selection and/or significant problems with wholesale prices and/or breakeven quantities needed. 15.99 Ð 14A retail price is selected but little other work is presented. 13.99 Ñ 0Mechanical Aspects 5 pointsPaper is free of mechanical, spelling, and/or punctuation errors. Appropriate use of citations. 5Paper has a few mechanical, spelling, and/or punctuation errors. Citations are appropriately used, but are few in number 4Paper has multiple mechanical, spelling, and/or punctuation errors. Citations are appropriately used, but are few in number. 3Paper has sufficient mechanical, spelling, and/or punctuation errors to hamper communication. Paper is lacking citations. 2 Ñ 0

FLOW Record PlayerFLOW is the Þrst high-end, smartphone controlled record player that you can use with or without its app.FLOW turns counterclockwise on a still record. It can be controlled by a smartphone to play records, skip and repeat tracks, alter the volume, and even select different RPM speeds. It is Bluetooth and Wi-Fi compatible.Listen with ease. Place any size record on the FLOW turntable record base to scan the vinyl and determine speed. For example if you want to listen to track 3: You can start playing your record by either pressing FLOW’s top shell three times or selecting the track through the app.Page of 13

FLOW’s smartphone app allows you to play, pause, skip tracks, repeat tracks, select rpm speeds, adjust the volume & display the album cover.FLOW connects to speakers, headphones, receivers, multi-room systems and more wirelessly via Bluetooth or Wi-Fi and directly via 3.5mm cord or RCA Bluetooth adapter.FLOW maintains the intimacy of vinyl and the organic, natural melodies speciÞc to analog sound that we all love.Page of 23

Company speciÞcs for FLOWThe variable costs for a single FLOW is estimated to be $192.57. That includes the two record bases, all chords, and packaging.The estimated Þxed costs for FLOW are $1,257,000 a year.The sunk costs for FLOW are $300,000 for the app, $421,000 for the engineering, $55,000 for development of brand logo, and $25,000 for development of company website. The website has NO ability to allow consumers to buy directly. Page of 33

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