Mcgraw hill marketing simulation answers

Introduction and segment chosen

Carry on is an outdoor backpack company with great features at a competitive price. We have devoted our company to construct backpacks for outdoor enthusiasts as they have a deep and lifelong commitment and investment to the outdoors that is not just a casual interest, but a lifestyle.We believe that people will put their money where their passion is. In order to create an ideal backpack for our target market, we needed to understand the demographic segment of these consumers. Statistically, about 30% outdoor enthusiast have a household income of $100,000+ and about 33% of them are 45+ years old. About 70% are Caucasian and 26% are College Graduates (Outdoor Foundation, 2014, p.10). Also, 54% of outdoor participants are male (Outdoor Foundation, 2014, p. 7). We kept this in mind as our backpack had to be created for potential consumers with both the willingness and ability to buy.

Product Features

We’ve adopted the Large rectangular backpack as it has a quite a large capacity and helps create enough comfort for the outdoor enthusiast. We’ve chosen the Wide-padded because it creates enough durability and comfort for the outdoor enthusiast, and provides a more cost-effective approach than Wide + Chest or the Advanced support straps. Outdoor enthusiasts are more concerned with the capacity and water proof of the backpack, rather than comfort and durability. We’ve added features such as a water bottle holder to allow the traveller to grab water at their convenience, waterproof material to help protect the backpack from weather related issues. We avoided a GPS tracker in our backpack because it is too costly for our price. We chose advanced material as the material for our backpack which offers excellent durability with its synthetic coating and also provides enhanced waterproofing. As for color, we chose green to promote and relate to the outdoor enthusiast. The green color provides camouflage and symbolises the outdoors.

Pricing strategy

The total production cost of Carry-on’s backpack will be $45. This is very efficient in comparison with the demands of an outdoor enthusiast. Everything is provided, and we save production costs by avoiding extra benefits such as a GPS system and advanced support straps. We have decided to price our backpack at $96 as the average an outdoor enthusiasts spends is $90 on a backpack. This provides a $51 margin per unit cost.

Distribution decisions

We decided to distribute our backpacks directly, with a $5 discount due to %0 distributer cut. We also decided to distribute a High End Outdoor store, similarly giving a $5 discount. Distributing at High End Outdoor Stores with a $5 discount can be efficient as it promotes purchases in the most customer reaching area, and only takes a %28 distributor cut. We will also distribute through Department stores and Online Discount Retailers to spread the likeliness of customers discovering and purchasing our backpacks. We will not offer a discount in Department stores and Online Discount Retailers as they take a larger distributer cut.

Communications decisions

For promotions, we chose to advertise in TV: Wilderness Cable Network, and Radio: Sports Talk Radio with a communicating message of Peak performance. This message reaches about %66 of our outdoor commuters demographically, and also %33 of commuters. This message can be very effective in raising interest and awareness of our backpack. Although expensive, approximately $3000 per quarter, we chose to advertise in TV: Wilderness Cable Network to reach out to around %55 of our demographics. We will begin by advertising twice in 30 second spots, and slowly increasing our advertising to raise more awareness of our backpack. We have also decided for the first few quarters to advertise also in Radio: Sports Talk Radio. With an advertising price of $1000, this will allow us to reach our demographic in a more cost effective manner. We will eventually cut advertising completely to maximize profit, as much of our demographic will be reached.

Conclusion

In summary, we believe this initial marketing strategy will create the largest profit for Carry on. This profit will come through a cost effective backpack, a reasonable and competitive price for the outdoor enthusiasts, effective distributors with discounts in more profitable distributions, and cost efficiently reaching outdoor enthusiasts through a message of peak performance in television and radio.

References

The Outdoor Foundation. (2014). Outdoor participation report. Retrieved on November

14, 2015 from http://www.outdoorfoundation.org/pdf/ResearchParticipation2014.pdf