Formulating the marketing strategy, which answers the question of “Where do we want to be?” was Team B’s strategy to guarantee the success for Allstar Brands
Team B (My Team)
Introduction
Formulating the marketing strategy, which answers the question of “Where do we want to be?” was Team B’s strategy to guarantee the success for Allstar Brands. Throughout the simulation it was necessary to continually adjust this strategy given the challenges introduced each period. Appendix A provides a brief summary of the initial strategy for Allstar Brands and Appendix B provides a table which summarizes the results for each period. This paper provides a thorough review of the decisions made in each category throughout the product life cycles of Allround and Allround+.
Manufacturer’s Suggested Retail Price
Firms continually seek to maximize profits by pricing their products above marginal cost in a way that captures potential consumer surplus as profit (Brickley, Smith, & Zimmerman, 2009). There are numerous ways to price products, but the key is to remain the preferred provider of the good or service being produced and to possess market power that prohibits other competitors from increasing their market share. The only element in the marketing mix that produces revenue for a company is price and this element is the easiest to change (Kotler & Keller, 2012).
It is industry standard to suggest retail prices for retailers. The price that the consumer pays is ultimately set by the retailer and is influenced by volume discounts and promotional allowances which will be discussed in the next section of this paper. At the beginning of the simulation, the manufacturer’s suggested retail price (MSRP) for Allround was higher than the competition but was not effecting sales due to consumer loyalty and the brand’s effectiveness (James, Kinnear, & Deighan, 2014).
Team B’s pricing decisions are summarized in Table C1 (Allround) and Table C2 (Allround+) in Appendix C. In periods 4, 6, and 8 pricing surveys were purchased in order to compare the MSRP of Allround and Allround+ to their direct competition Besthelp for Allround and Coldcure for Allround+. The surveys provided valuable information for pricing decisions. Allround maintained its price leadership position throughout the simulation while Allround+ initially was priced lower than Coldcure to provide an incentive for consumers to try the new brand. In periods 7 and 8 Allround+ was prices slightly higher than Couldcure. Unit sales increased for Allround+ while Allround’s unit sales decreased initially and were up and down towards the end of the simulation. Volume discounts may have contributed to the decrease in sales.
We also found that the best strategy is to adjust each price to the previous year’s inflation rate. This allows Allround to remain competitive while recovering any potential losses due to rising inflation our industry trade-off grid has shown our prices have remained in the optimal zone.