Creative Pricing Mechanisms - Essay Example

The external opportunities and threats can affect the organization depending on the market and the environmental conditions. Suppose opportunities are available to the organization and within your control then they can be classified as strengths. If potential threats are identified as soon as possible then they can be proactively dealt with since being informed is akin to being forearmed.

5.2

The current Rocked product line evoked interest among potential buyers in our survey and in the focus group although the current price is rather exaggerated. The major disadvantage that comes with this is that it discourages customers from going for the rocked product. The focus group also gave us insight into changes that might make the product more attractive to potential buyers. The most prioritized concern that needs to be addressed is the high cost. For recommendation, the product should be completely redesigned and should focus on only selling bracelets until the company expands its product line.  The redesign serves to resolve issues found in primary research, while still maintaining the titanium performance aspect that has defined the target from conception. The product is currently jewelry that falls into the high-end jewelry market though we believe after hearing from the focus group that if the product is supposed to have some connection to physical activity it should not have the appearance of a high-end product.

The bracelet should simply be a band of .5 millimeter knitting cord with a stone pendant that is held by 2 titanium hands.  This new product design would address many of the problems of the current product and most importantly, it should be much cheaper to produce hence fewer production costs. A single strand of nylon, a cheap colored stone, and the two titanium hands will have much lower material costs along with lower labor costs. Besides, it will also create a lighter product that can be worn at all times. Lighter weight eliminates a degree of worry for those clients who are looking for jewelry that can be worn without having to bear the weight of feeling ornaments on their bodies.

One criticism of the old product design was that it was too formal and couldn’t be worn in a variety of situations; this new product design will be able to be worn more easily at all times. The new product is rather versatile and fits many occasions without having to consider blending it with different colors to pull out an outfit. It will be lighter so it won’t interfere with physical activity, and the titanium hands holding the stone will still give the perceived performance benefit.

The focus group of women also said that for the fashion-conscious woman, they would want multiple colors of the product. The implication of such a product is that it will allow such women to be able to switch their looks to suit different occasions with less hustle. Having a cheap colored stone as a pendent would allow for a customer to purchase a couple of different colors and match their Rocked Jewelry to their outfit for the day.

At the old price of $200+, this would not have been realistic, a problem that can be solved by going for products with fewer production costs as proposed. This design also still holds true to Rocked’s core value. The hands will still serve as the clasp although they will no longer be touching fists, which was described by the focus group members as a bit masculine. We believe that this new product design will be much cheaper, be better suited to be worn during physical activity, still possesses the perceived benefits of the titanium, and still conveys Rocked’s main message, which is to have variety in one.

5.3 Pricing Strategy and Key Tactics

Based on the product we plan to offer, we think the costs of making a single bracelet will be range between $5.00-$10.00. Assuming that COGS is 1/3 of the retail price, the price points for this product are going to be between $15.00-$30.00. This price point will allow for a much wider variety of individuals to be able to afford to purchase this product hence attracting a wider clientele base. The bigger the client base, the bigger the network hence it will market the product more. It moves the product out of the high-end jewelry market and moves it into a price point that is more conducive to impulse purchases. This implies that the product is never seasonal and can be bought at any time hence making it an all-time product. Jewelry in the $15-$30 range tends to be purchased without any prior planning and has much lower potential buyer’s remorse. Little effort is made in deciding to buy the product making it very pocket-friendly.

                        In terms of creative pricing mechanisms, we feel that bundling a variety of colors together for a small discount would be an effective pricing strategy. The primary research we conducted told us that many women felt that they would need a product like this in a variety of different colors in order to match different outfits used during physical activity. If we were to sell the product at a full retail price of $30, we could sell 3 different colored bracelets bundled together for $75, giving the customer a $5 discount per bracelet.