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Summary of Key Points
Learning Team A has covered various aspects in the first two phases of the marketing plan. They have discussed reasons for exercise, such as dealing with obesity, and have examined different target markets including recreational, fitness, and professional athletes. Decision motivators and buying behaviors have been analyzed, taking into account individual needs and health concerns. The Product Life Cycle, the four P's (product, price, place, and promotion), and the product mix have also been addressed. Moving forward to the final phase of the marketing plan, Learning Team A will discuss several aspects.
These include situational analysis, market growth potential, competitive analysis, segmentation,target market positioning pricing and distribution,and marketing communication.The financial aspect will also be examined which includes intended market objectives for year 1,year 2,and year 3.Implementation milestones will be outlined,followed by an evaluation of performance using control metrics and methodology.
Situational Analysis
My Run Buddy introduces a groundbreaking advancement in fitness technology with the world's initial voice-controlled treadmill.
The company's product branding and market expansion in the fitness industry are heavily influenced by its exceptional blend of superior design and features.
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“ She followed all my directions. It was really easy to contact her and respond very fast as well. ”
Additionally, the incorporation of a strategic marketing plan will be crucial for the triumph of My Run Buddy.
Market Growth Potential and Competitive Analysis
My Run Buddy offers innovative features such as the Voice Command option, making it a top choice for individuals looking for the perfect treadmill to suit their lifestyle. Learning Team A predicts that these unique features will lead to high sales and generate profits.
Learning Team A compared My Run Buddy with two different treadmills that are currently available on the market: the LifeSpan Treadmill and the Life Fitness T5-0 Treadmill.
Upon evaluation, it was determined that the Life Fitness T5-0 Treadmill closely resembles My Run Buddy in terms of features, warranties, and price range. However, the Life Fitness T5-0 Treadmill does not possess the unique Voice Command feature. This Voice Command feature is exclusive to My Run Buddy and provides a sense of comfort and convenience for users who can easily program it to their specific needs, whether they use it at home or in a gym.
Marketing strategies
According to Wellsource (2014), My Run Buddy focuses primarily on the health and fitness industries. The multibillion-dollar industry is expected to see a minimum 4.2 percent increase in demand for services and equipment over the next five years. My Run Buddy targets individuals between twenty and forty years old but also welcomes those who are fifty years and older due to the growing demand for promoting an active lifestyle across all age groups. Additionally, professional athletes preparing for competitions like marathons or the Olympic games may also utilize My Run Buddy.
Positioning
My Run Buddy is a distinctive treadmill that sets itself apart from other models with its strong design, comprehensive features, and capability to generate favorable health and fitness results. It is the inaugural voice-controlled treadmill that delivers personalized workouts according to users' specific health status, vital signs, and exercise intensity.
The Marketing Program
According to Kotler and Keller (2012), consumers often base their purchasing decisions on their perception of a product's price, rather than the actual price set by the marketer. For instance, one customer may find a car priced at $100,000 reasonable and decide to purchase it. However, that same customer may consider $30,000 for another car too expensive, despite finding $100,000 reasonable for the first car. This illustrates that consumers perceive each product differently. Kotler and Keller (2012) also note that customers are less sensitive to price when they believe: 1) there are few comparable products in the market offering similar quality; 2) the high price of a product can be justified; and 3) the stated price is a small cost in exchange for acquiring a unique product that will last a lifetime.
Learning team A plans to set the price of the voice commanded treadmill in a way that makes customers see it as reasonable and worth purchasing. Instead of matching a competitor's lower price, they believe it would be better to show that customers are paying for the superior quality of the treadmill and getting more value by paying the retail price.
Kotler and Keller (2012) suggest that companies should consider four objectives when determining their market logistics effectiveness: 1) Managing customer orders, 2) Choosing storage locations, 3) Determining inventory levels, and 4) Deciding on product distribution. According to Learning Team A, customers should have the option to order the voice commanded treadmill from either the company's internal website or an electronic commerce platform like Amazon, since not all customers have the time to visit physical retail locations.
Learning team A suggests storing voice commanded treadmills in warehouses in west coast, east coast, and southern states. They recommend using fast transportation methods like FedEx, UPS, and USPS to expedite shipments. It is not advised for the company to store excessive amounts of treadmills in their storage locations. Instead, it is suggested that the company's logistic professional and sales professional collaborate to estimate sales projections for a given period, and promote clearance sales events to clear out excessive inventory if necessary.
Marketing Communication Plan
Multiple methods of advertising and promotion will be utilized in the marketing plan for My Run Buddy to reach its target market. This includes installing kiosks in stores and retailers that sell the product, allowing shoppers to experience a free product demonstration. Additionally, promotions such as discount coupons, extended warranty, free product delivery, and free trial offers will be considered for customers. Apart from kiosks, My Run Buddy can also be offered for free trial or deals at various fitness locations like LA Fitness or Gold’s Gym. Furthermore, information about the product will be spread through advertising on multiple media platforms including print, online, and television.
Financial Information
Our cost structure enables us to pass on savings and maintain a strong 200% contribution margin. This means that even if our initial profits are low, we can still sustain our operations enough to establish our product in the market. As part of our policy, we offer allowances and discounts for wholesalers tied to our accounts receivable. Therefore, our promotional pricing follows the following criteria: Total Cost (Including Labor, Overhead, and Transportation) per unit: $2,000 US Direct Cost (Parts, electronic components, etc...) per unit: $1,250 US Contribution Margin Goal (Floor Price):
$2,500
The effect of marketing expense on total profit can be seen in two different price scenarios. For Price 1, the profit per unit is $3,600 with an 80% profit margin. For Price 2, the profit per unit is $3,200 with a 60% profit margin.
The Unit will be sold to the Wholesale at a price of $3,600. The Wholesale is eligible for a 5% prompt pay discount if they pay within 30 days. Additionally, they can receive a volume discount of 7% if they order more than 10 Units per month. Therefore, if the wholesaler pays on time and orders 10 units per month, they will only have to pay $3,181 per unit. This results in a savings of $419 per unit or an overall discount of 11.64%.
The main competitor to our product is the Life Fitness Club Series Treadmill (http://www.treadmilltalk.com/treadmill-comparison-chart-5.html). It has similar specifications, including a 4.0 Motor, Absorption pad, and Monitor among other features. However, it does not have voice activation. The average price for this treadmill in the US is $5,500.
Financial Objectives
To achieve a minimum of 60% profit in sales.
To increase sales by 2% in Year 2 and an additional 5% in Year 3.
To ensure that the plan remains within budget.
Break Even Analysis
The cost to produce a treadmill unit (Direct Cost) is $1,250.
The fixed cost for annual overhead is $9,000 ($750*12).
If the selling price is $3,200, we need to sell 5 units to break even! ($9,000/($3,200-$1,250))
If the selling price is $3,600, we need to sell 4 units to break even! ($9,000/($3,600-$1,250))
If the selling price is $3,181.81 , we need to sell 5 units to break even! ($9 ,000/($3181.81 - $1250))
Marketing Expenses
The budget provides a breakdown of the estimated marketing expenses per unit for Year 1, Year 2, and Year 3. These expenses include promotion, training, and other costs, with amounts of $500, $400, and $280 respectively.
Forecasting demand involves making predictions about the future quantity of a product or service that will be required by consumers.
The projected sales for the first year are 200 Units, with an anticipated increase of 2% in Year 2 and an additional 5% in Year 3. The price of the units will remain constant during this period. Consequently, we expect to generate revenue of $636,200 in Year 1, which accounts for 64.7% of total revenue.
Profit
Year2: $648,924 in revenue with a 64.7% Profit Year3: $681,370 in revenue with a 64.7% Profit Marketing Objectives Year 1: Establish the Product in the industry: To become one of the top 5 brands in the fitness equipment industry among wholesalers and consumers. Year 2: Increase Sales on a steady pace: To achieve a 7% increase in wholesalers purchasing our product. Year 3: Brand Management: To maintain consistency between our brand licensing strategy and the overall business goal, and to maximize the leverage of our brand.
Implementation Milestones
The main guides to progress and success in this project will be the milestones. Our team has decided to set milestone or timeline marks to stay on track and determine if the product development and launch is on schedule. There will be 4 major milestones for our product, each with its own set of goals. The first milestone is to identify customer needs, which includes business problems, customer requirements, business opportunity, target application, and technology requirements/abilities. The second milestone is to understand the market opportunity, including industry trends, market size and growth, target market, and market channels.
The third milestone encompasses entering the market, which entails achieving product positioning, competitive strategies, pricing, marketing plan, sales strategy, sales tools, and customer support. This milestone will be an ongoing process throughout the product's lifecycle. The final milestone is generating revenue and includes establishing partners, channels, and leads. Like the third milestone, this milestone will also be continuous for the duration of the product. Milestones may be adjusted and refreshed based on shifts in the product's lifecycle. To ensure continuous growth and success, our team recognizes the need for milestones to be in place and periodically reintroduced to prevent failure and maintain progress.
Evaluation of Metrics and Methodology
In their 2013 study, Elrod, Susan Murray, and Bande discussed four categories of performance measures that supply chain companies use to evaluate their supply chain management system: financial cost, quality, time, and flexibility. The financial cost category includes factors such as production costs, distribution costs, and warehousing costs (Elrod et al, 2013). The quality category encompasses the perceived value of the product by customers, product accuracy, and the ability to safely distribute the product without damage (Elrod et al, 2013).
Learning team A plans to assess the performance metrics of the voice commanded treadmill. These metrics include evaluating the production cost and inventory cost relative to the revenue generated within a specific timeframe. The team will determine if the revenue surpasses the product cost. Additionally, the team will analyze the efficiency of distributing the voice commanded treadmill to customers without causing damage. Furthermore, they will measure how well the product performs based on its specific features to ensure customer satisfaction and loyalty.
Contingency Planning
According to Mindtools.com (2014), contingency planning is necessary for organizations to analyze risks they face and consider alternatives if "Plan A" does not go as expected. Contingency planning will be the basis for our team's risk assessment and planning. We will anticipate the worst to minimize errors and failures. What if consumers do not purchase our product? What if it sells less than our expectations?
In order to ensure a successful future, we will prepare for the worst. Our contingency plan involves conducting continuous risk assessments, regardless of the product's current success. The product team and involved shareholders are committed to a constant goal of communicating issues and good ideas. If necessary, we have the necessary information to retrain or train personnel. We will document both successes and failures, regardless of their magnitude. Lastly, we will evaluate performance and set goals to accurately assess the product's performance.
Conclusion
In conclusion, Learning Team A has demonstrated in their marketing plan that the Voice Command treadmill is a distinctive product that can generate substantial profits for the right company in today's society. Additionally, they have highlighted the treadmill's superiority to existing ones in the market by incorporating the Voice Command feature, and explained how it will be embraced by health-conscious consumers as a long-term workout equipment solution. With this groundbreaking feature, Learning Team A believes that My Run Buddy will attract health-focused consumers who seek a more comfortable workout experience and have the added assurance of immediate medical assistance simply by instructing the machine to contact the hospital.
References Elrod, C., Susan Murray, P. E., & Bande, S. (2013). A Review of Performance Metrics for Supply Chain Management. Engineering Management Journal, 25(3), 39-50. Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Wellsource. (2014). Market trends project more growth for wellness industry. Retrieved from http://www.wellsource.com/company-news/Market-Trends-Project-More-Growth-for-Wellness-Industry.html Mindtools. (2014). Contingency Planning. Retrieved from http://www.mindtools.com/pages/article/newLDR_51.htm
Innovative Marketing Strategies for My Run Buddy. (2016, Apr 30). Retrieved from https://studymoose.com/new-product-launch-marketing-plan-2-essay
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