bmb taak 1 final

8/2/2019 BMB Taak 1 Final

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Index

1. Written Declaration

2. Introduction3. Summery

4. Target market

4.1 Market segmentation

4.2 Selection of Customers

4.3 Positioning the market

5. Product decisions

5.1 The product levels of the customized Time Dezign watches

5.2 Product classification

5.3 Time Design watches as a new product

5.4 Individual product decisions of Time Dezign watches

6. Distribution decisions6.1 Zero-distribution

6.2 One level-distribution

6.3 Risks involved with multi-level distribution

6.4 Distribution through the use of retailers

6.5 Distribution after the order has been placed online

6.6 Packaging

6.7 Distribution

7. Pricing decisions

7.1 Select the pricing objective and the price strategy

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7.2 Consider the external and internal factors influencing

7.3 Select a pricing method

7.4 Select the final price of the product and adjust the price

7.5 Continuous assessment and evaluation of the pricing

8. Conclusion

9. Bibliography

3. Introduction

4. Summary

5. Target market

5.1 Market segmentation

Market segmentation has to take place to divide the heterogeneous market in to

a homogeneous market. The purpose of dividing the market is to design and

market Time Dezign Watches to meet the needs of each market segment that

was selected, thus resulting in an increased customer satisfaction andprofitability.

Time Dezign Watches will be segmented accordingly to counter segmentation

seemingly that Time Design Watches is the grouping of several segments and

only a single marketing effort will be directed towards these segments in order to

reduce costs on a more economical basis.

The segments are:

Kids design age range from 3 years to 12 years

Teen design age range from 13 years to 19 years

Adult and alternative design any age from 20 years

Executive design young upcoming entrepreneurs and business people

Time Dezign Watches will use the multivariable segmentation approach bases

that consist of:

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Demographic bases such as,

o Age as mentioned above

o Gender Females or males have there own unique designs they

can choose from.

o Income the executive design are for the people who has a slightly

higher income.

o Family life cycle

o Occupation scalars will go for the teen design, while students

would rather focus on the adult and alternative design. It is more likely

that people with a full time job will choose the executive design.

Psychographic bases consist of,

o Lifestyle

o Social class and personality.

5.2 Selection of Customers

Time Dezign Watches will offer its product towards a differentiated market, thus

focusing on several distinct segments and a marketing mix it wishes to reach for

each market segment that will be developed separately.Time Dezign Watches chose differentiated marketing as a target market

although not all targets are necessarily needed to be big to be attractive. A small

segment can sometimes be more profitable than one in which a large volume of

sales can be realised.

The segments are sustainable, since our marketing management is convinced of

further growth possibilities. All the segments, being in some degree of

interrelationship with each other, make the target market even more attractive.

The segments were chosen as a target market because its marketing

management is fully committed to serving this target market better than any other

opponent. It implies that Time Dezign Watches will have an undoubted

differential advantage over the members of the target market, because it gives

the buyer more control over what they want and how they want it. All objectives

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of the Time Dezign Watches are enhanced by the choice of our particular

market segments. The cost of reaching the target market is carefully considered

to reach a reasonable cost. If the cost is too high or the potential target market is

unattainable to an organizations marketing strategies, it should not be

considered.

5.3 Positioning the market

Positioning of products and services helps the marketing managers to satisfy our

customers needs. The positioning of a product or service refers to the way

consumers see a product or service in terms of its characteristics and

advantages, and its competitive positioning. Therefore it involves the creation, in

the minds of the targeted buyers, of a distinctive position relative to those of

competing organizations for the organizations product or services.

The methods to which Time Dezign Watches will be positioned are accordingly

to the benefit positioning that emphasizes the unique benefits of its products and

services offered to its customers. The unique benefit Time Dezign Watches

offers is the ability of creating and customizing your own watch. Customizations

for kids stretches from different colour wrist bands with stickers and different

faces, for example a Spiderman watch customised with a dark blue wrist band, a

face with a red background and spider web stickers on the blue wrist band.

It is always important to know your market beforehand, the segments you want to

divide your market in and know who you want to target. A business can position

his market a lot more effectively if an appropriate target market is selected.

6. Product Decisions

The product that has been chosen amongst the alternative categories given is

the Watch category. This was chosen as the watch market has not yet been

exploited to such an extent that there no longer can be new developments. The

new product that has been developed is a new and exciting concept, thus the

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concept of customized watches with the brand name Time Dezign. This line of

new watches has various categories that are directly related to age and gender.

The total product or customized watch can be described as the wide-ranging

variety of tangible (various physical straps faces and fashionable watches that

can be worn by the customer) and intangible (Customizing own watch according

to the customers taste and the service received during and after the purchase)

benefits (new watch, with unique look and services received) that the purchaser

can gain, once product or watch is purchased at a convenient location.

6.1 The product levels of the customized Time Dezign watches

There are five levels of products that should be considered, when the marketing

offering is being developed, according to Kotler and are discussed below.

The first level is referred to as the core product, as this is the most essential and

fundamental benefit purchased by the customer. In relation to this specific

product the core product is the function of being able to use the watch tell and

keep track of the time, which is essential in the fast moving lifestyle that we all

experience on a daily basis. The next level is called the Basic product, which is

where the core product is changed into the basic product, this refers to the

customer being able to buy an actual watch with the function that shows the time

and is easy to use, and attach the watch to their wrist and being able to carry the

watch with them, and be able to tell the time wherever the customer may be. The

expected product is the third level which is what the customer expects to receive

in relation to the attributes and conditions of the product, which is the watch itself

which must be waterproof, durable, easy to use and carry and consistent in its

functioning. The forth level is known as the augmented product which will exceed

the customers expectations. This is the area that our Customized watchesmainly focus on, as the customer can now walk into a familiar store that is

located close to their homes and use a sticker catalogue with standardized

options of various watch straps, watch face colours and designs, hands designs,

designs of numbers etc. in accordance to the customers age. So that the

customer can match and choose to their hearts content and create a unique and

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new watch that can be a fashion accessory and a way to still preserve and

portray the customers individuality at the same time. Therefore no customer ever

has to have the same watch as anyone else and can always find a watch that

they personally like. The customer can then place their order with their own

personal specifications at the store and the watch will be produced and sent back

to the customer, along with the instruction manual in their first language as well

as a customer service toll free line that the customer can use if they have any

queries or complaints and a lifetime guarantee on the functioning of the watch

itself, as well as an in store demonstration of the watch, at the store closest to the

customer. The final product level is the potential product, which are all the

possible transformations and augmentations the product or watches may

undergo in the future. This could be that the product or watches can have more

options to choose from or perhaps the development of the watch functions such

as music function where MP3s can be stored on the watch and have earphones

that can be pulled out of the side of the watch or that the watch can have a cell

phone with calling and 3G function within the watch that can be switched on by

inserting the currently owned SIM card to keep the customers number or even a

camera function where a mini SD card can be inserted for the storage of data.

The potential product level of the watch can even be a new solar battery thatcharges as the customer moves in direct sunlight and a charger for the watches

battery that can save the customer time and money.

6.2 Product classification

Based on the type of consumer that will use the watches and the intended use of

the product, the classification can be made. In this case with the customized

watches the product can be classified as consumer products, due to the fact thatthese watches are meant for the final consumers own personal use. The

classification is further extended in terms of tangibility and durability as well as

the consumers buying behaviour. In terms of tangibility and durability of the

watches, watches are considered to be goods as they are physical things that

can be touched (tangible), seen by all and owned by a consumer. As a result of

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the watches being goods, the watches then need to be further classified as

durable goods or non-durable goods. In this case the watches can be classified

as durable goods, due to the fact that the watches will function over an extended

period which is in years and can be used more than once by the consumer or

customer.

The consumers behaviour also deepens the classification, in terms of how the

consumer/ customer will behave when purchasing the product. These

customized watches can be classified as speciality products, due to the watches

are seldom- purchased items as is jewellery. The consumers will gather a large

amount of information concerning the products and are not price sensitive. The

customers are willing to invest a great deal of time and effort into locating and

obtaining the products. Due to the watches only being sold at certain jewellery

shops, it is important that the brand is well marketed and well introduced to the

market with extensive advertisements and promotional activities. The

manufacturer of the customized watches will carry a part of the advertising costs

as well as the names of the jewellery stores that sell the customized watches for

the manufacturer.

The definition of a new product can be described as those products or product

attributes which are new to the organization and the target market regards asbeing

6.3 Time Design watches as a new product

significantly different from existing competitive products. In this regard the time

dezign watches are a new product, because the attributes and benefits are

different to what has been done before in the watch industry. Therefore it is new

to both the manufacturer (producer) and the consumer or customer, which solvesthe problem of not finding a watch that the consumer likes, as a watch can be

considered a fashion statement and an accessory. With Time Dezign watches,

the customer can design their own watch according to their individuality and

taste. The category that Time Dezign watches fall into is New to the world

products, for the reason that the customer invents their own watch, which

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means that there will seldom be a similar watch as all people and consumers

differ in taste, personality and maturity and they all want something different,

which is exactly what Time Dezign watches allow customers to have.

6.4 Individual product decisions of Time Dezign watches

Figure 6.2

The product attributes are as follows, the product features refer to what the

product is, thus the Watch is a watch with the standard functions of a wrist watch,

but with the consumer deciding entirely on how the watch will look, therefore

allowing the customer perform the vital function of designing and deciding on all

the details of the watch in order to customise the watch according to the

customers taste. The customer can perform a value analysis, where the

customer can weigh the benefits of the customised watch with the price they are

paying and so the difference of the customers perception and expectation will

ultimately result in customer satisfaction. Time Dezign watches strive for

customer satisfaction and quality that is why the customer can decide on how the

final watch will look like and therefore the customer will know what to expect and

then the service addition can add more value to the customers experience.

Customers can also decide on the style of the product, which is described as the

way the final product or watch will look like.

Branding is important especially due to the fact that the watches are speciality

products. The brand name is: Time Dezign, this name was chosen as it literally

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Product

AttributesBranding Packaging Labelling

ProductSupport

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says what the consumer can do, Design their own time piece. The brand name is

easy to pronounce and can easily be understood which makes it easy for

consumers to recognise. The brand mark or trade mark is the following logo:

This logo was chosen as it is easy to identify, even

illiterate persons can identify it. The blue T

represents the word Time and the vertical blue line

joined to the red line represents a D, which

ultimately stands for the rest of the name the word

Dezign. Dezign is also written with a Z and not and

an s.

Figure 6.3

7. Distribution decisions

The distribution of Time Dezign Watches will be handled on two separate

levels, namely zero- and one- level distribution.

7.1 Zero-distribution

In light of the fact that Time Dezign Watches mainly operates as an internet

based company, focus will be on zero level distribution, which implies that the

manufacturer will directly supply the end channel user by means of the use of a

professional delivery company.

7.2 One level-distribution

When taking into consideration the size of Time Dezign Watches target market

it is understandable that some potential clients may not have access to the

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internet. Therefore a hybrid channel, a simple one level distribution method with

other marketing and distribution options needs to be created.

In accordance with the prescribed one level marketing and distribution,

distribution will be handled as follow. Clients will be offered the opportunity to

place their orders with the use of full colour catalogues, which will be available in

certain pre selected shops. All those orders will then be handed over or

forwarded to Time Dezign Watches. The shops role in the distribution is thus

limited to receiving the order and passing the order through to Time Dezign

Watches. After the orders have been received from the shops, the distribution

then again turns into a zero level distribution strategy, with no further connection

with the shop.

7.3 Risks involved with multi-level distribution

Multi-level distribution holds in advantages as well as disadvantages. When

looking at the risks and disadvantages of multi-level distribution the main

disadvantage is the cost of developing and maintaining of the multi-level channel.

Multi level channels also have the possibility to cannibalize the different parts of

the channel.

Research has shown that multi-level distribution can be up to 20% to 30% more

expensive than single-level strategies. If all the aspects of the multi-level channel

are properly managed and function properly the turn over of the product and in

turn the profit of the business will increase, which will justify the extra costs.

7.4 Distribution through the use of retailers

When deciding which retailers to use, one must look at and carefully consider

certain aspects, for example the class and type of product. If the demand for the

product is high, like, for example, Coke or Bic Pens, it is necessary to be widely

available and one would use intensive distribution. Large retail stores with long

business hours like SPAR and Engen-One Stop are ideal retailers.

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Products that are less common like, for instance, Golf clubs use a selective

distribution channel, which has less market coverage.

Products that are more exclusive like Diamond Rings and Time Dezign

Watches watches as in this case, will only be available at a selected retailers,

which is known as a micro segmented strategy.

Distribution through the use of a retailer also has other disadvantages, because

the retailer will most probably also sell the competitions products, the retailer

may not meet the requirements of the manufacturer.

7.5 Distribution after the order has been placed online

Direct distribution is not without its shortcomings. When orders and distribution

are done through a retailer, contact with the manufacturer and client is kept to a

minimum and it is accepted that the retailer will take care of the questions and

complaints of customers. Without a retailer this also becomes the responsibility

of the manufacturer which can be the cause of more personnel being needed.

Modern technology, however, has the answer: Internet based companies.

7.6 Packaging

After the product has been manufactured it needs to be delivered to the client. To

ensure that the product arrives safely one should properly plan its packaging.

There is a wide variety of watch containers in different sizes and styles with

increasing prices. From a distribution perspective the type of container does not

matter, as long as the packaging will keep the watch and its container safe.

The watch and its container will be wrapped in bubble wrap to protect it from

water and shock. That package will then be placed in a box to keep everything

safe and sealed.

Item Cost, per item

Container R3

Bubble Wrap R7

Total Costs R10

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7.7 Distribution

There are a couple of distribution companies available each with different

advantages and disadvantages.

The Post offices prices are cheaper than most but they only offer counter to

counter delivery. Then there are a couple of delivery companies that will deliver

the product at the clients door but at a higher price.

The following is an example of a couple of companies prices for a 4x4x4 inch

package with a weight of 500grams to be shipped from Johannesburg to Cape

Town.

Delivery Company Cost, per item

Post office ( Counter-to Counter) Speed delivery : R 45-35

Registered post : R 17-55

Ordinary post : R 5-15

Postnet Counter-to Counter: R 90-00

At doorstep : R 105-00

XPS (Door-to-Door) Speed and ordinary : R 86-51

After the product has been delivered feedback is necessary. It is important to

know if the client received his correct order and if it was in a working condition.

The delivery company will make sure that the client signs a receipt to confirm that

that he or she is satisfied with the product.

8. Pricing decisions

8.1 Select the pricing objective and the price strategy

Before setting a price a corporation must decide on a strategy for the product.

After they have chosen its target marked and positioning carefully, the marketing

mix including price will be quite straight forward. Selecting pricing objectives is

the first step in any pricing strategy. A marketer needs to consider the

organizational and marketing objectives because the pricing objectives must help

to achieve the organizational objectives. Pricing objectives are used to choose

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the role of price in the organizations marketing and strategic plans. It helps to

indicate what the organization wants to achieve through its pricing. Many

categories of pricing objectives exist.

For example: Survival as the major objective.

Sales Objective ,Competition, Price objectives ,Product-quality leadership

objective , Social responsibility objective and profit objective.

We choose a profit objective and this means that the main objective of this

company is to make and maintain a good profit and keep the shareholdershappy.

Profit is another objective that many businesses claim that their pricing strategy

is profit but this is unclear. One should maximize current profit. Many

organizations prefer to aim for satisfactory profits these profits must satisfy both

the managers and the stockholders. The common profit objective is the target

return on investment (ROI) objective. Can be called the return on total assets

(ROTA) objective.

8.2 Consider the external and internal factors influencing price

A company must evaluate the demand for the product class and the product

brand because this influanse the price of the product.

The product stage must be evaluated and in this case the product is stil in its

early stages

We decided on a singel produkt rather than doing a product line.

Cost of chainging prices must always be applyed to maximise total revinue.

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The cost of marketing and produsing the produkt is very importaint. Here is a

bugit of how these costs will be calculated:

The average cost of a watch out of our executive category:

Raw materials- +- R 150

Labour- +- R 30

Goss cost R 180

Overhead costs R 5

Total cost R 185

Profit

Price R 350

Costs R 150

Profit R 200

The watch industry is pure competition with quite a few author watch

manufacturers this Type of competitive market makes it possible for the marketerto make his/her own price without even comparing it to the competitors

8.3 Select a pricing method

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There is a few price strategies that can be considered when having to price a

new product. Firstly a marketer must decide between a high price or low price.

High or low entry price decisions boils down to two alternative strategies, namely

skimming or penetration.

We chose skimming pricing this is normally used when a new product is

launched onto the market, just like this unique product. Price skimming is when a

marketer starts with the price very high to recover the costs of research and

development. The idea is to skim the cream of rich profits. The problem with this

method is that it could attract new competitors to the market because of the

rewarding profits. It can therefore be said that entry barriers are usually quite low

when price skimming is used. Skimming has a number of advantages. It allowsa organization to establish a quality brand image that could serve as a stepping

stone to future development of lower-priced, more mass-market versions. If the

product in question is difficult to produce, pricing to keep the market small and

exclusive can also allow breathing space to gain learning experience on lower

volumes, while still marketing the product in a real market. But a company must

be able to keep up with the expectations witch goes along with the higher price.

8.4 Select the final price of the product and adjust the price

Firstly a company must select an estimated price level. At this stage the

company has all the background information to give the business a idea of the

actual costs to manufacture and sell this product. They must think about the

price constraints and the price objectives, the aim is to arrive at the estimated

price for the product. A marketer must look at all the options and there for need

to find a basic price or starting point. We decided to use the profit based pricingwitch goose well with the product objective.

For example Profit = Total revenue - Total cost

= ( P x Q ) - [FC + (UVC x Q)]

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There are several profit based pricing methods target-profit, target return-on-

sales, rate-of-return, demand- based, value- based, odd-even, price lining,

bundle pricing and demand- backward pricing method.

The pricing method we will use is prestige pricing. This type of pricing is prefer

because this product has its unique features and this product must be seen as an

prestige product. Customers connect price with quality and style. This product is

made for the individual who wants to stay and individual.

Each individual category has a minimum and maximum price range each

determined by there individual manufacturing costs.

These prices are as follow:

Kids Design R 50 - R100

Teen Design R 80 - R120

Adult & Alternative Design R180 - R250

Executive Design From - R350

8.5 Continuous assessment and evaluation of the pricing is necessary.

A form of price adjustment is Discounts. A discount is a reduction off the list

price offered by the producer or seller of the product tips of discounts include

trade or functional-, quantity-, cumulative quantity-, noncumulative quantity-,

minimum-order-, cash-, seasonal-discounts.

All of these will most probably be used in the life time or life cycle of this product

in no specific order.

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9. Conclusion

10. Bibliography

http://www.fast-pack.com/bubblewrap.html

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