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Olympian Ltd is a company that produces a range of high quality branded sportswear - Leaving Cert Business - Question C - 2009
Question C
Olympian Ltd is a company that produces a range of high quality branded sportswear. Following a lengthy market research process, the firm is now expanding its busine... show full transcript
Worked Solution & Example Answer:Olympian Ltd is a company that produces a range of high quality branded sportswear - Leaving Cert Business - Question C - 2009
Step 1
Costs: The price should cover the firm's costs (production, marketing, distribution etc.) and include a profit margin/Cost plus pricing.
Answer
When determining the selling price, the Marketing Manager needs to ensure that the price covers all costs involved in the production and sale of the Hoodie Tracksuits. This includes direct costs such as manufacturing and indirect costs like marketing and distribution. Additionally, a profit margin should be included to ensure the business remains profitable.
Step 2
Competitors Prices: Competition is very intense in the sportswear industry and this will influence the price to be charged/Going rate pricing.
Answer
The Marketing Manager should analyze the pricing strategies of competitors offering similar products. Given the competitive nature of the sportswear market, the pricing should be in line with competitors’ pricing to attract customers while ensuring profitability.
Step 3
Type of Product: As the firm is selling branded tracksuits, the price is likely to be high to reflect this/Premium Pricing.
Answer
Since the Hoodie Tracksuits will be branded, the perceived value of the product can allow for a premium pricing strategy. This means setting a higher price to reflect quality and brand reputation, which may appeal to the teenage market that values trendy and high-quality apparel.
Step 4
Stage of Product Life Cycle: As the products are new and at the introductory stage a high price is suitable to help recover costs/Price skimming.
Answer
At this introductory stage, implementing a price skimming strategy can be effective. By setting a higher initial price, the company can maximize profits from early adopters who are willing to pay more, which helps in recovering development costs before possibly lowering the price later to attract a broader audience.
Step 5
Consumers: The type of buyers will determine the price which can be charged. The target market has been identified as the teenage market.
Answer
Understanding consumer behavior in the teenage market is crucial. Factors such as disposable income, fashion consciousness, and pricing sensitivity should be considered. The price must align with what teenagers are willing to pay, ensuring it is attractive yet profitable for the company.