Cost Structure for Producing 8 Oz Juicy Creme Lotion - Assignment Example

Marketing Planning Introduction Marketing planning is a practice of strategy which helps an organisation to enhance its opportunity in terms of profitability and stability along with ensuring to achieve the organisational goals. The purpose of marketing planning is to focus on the adherence of competitive advantages. Marketing planning is the planned application of marketing resources to ensure the organisational objectives (McDonald, 2007). In this discussion, the primary objective is to identify an attractive segment for a new product along with developing a marketing mix strategy. Subsequently, this report presents detail marketing plan for Om Organics. Product In a typical marketing mix, product offering plays the utmost level of importance and acts as a key aspect to draw customers. The dimension of product includes several constitutes such as branding, packaging, features and quality. At the same time, a few essential credentials such as concept, objective and uniqueness of the product are required. A product can be tangible and intangible. Tangible product has physical evidence, on the contrary, intangible product does not have a physical appearance, and thus, it can be asserted as a service (Lamb et al., 2008). Om Organics is a range of luxurious and chemical free personal care products has been developed for the conscious consumers who are willing to accept diverge to the current beauty industry standards. The product that will be offered to the target customers will include ‘Juicy Creme Lotion’. This product is primarily developed for nourishing and hydrating skin with freshly extracted mixture of fruits and juices.  Customer can find the detail regarding this product online by accessing the web address http://www.omorganicscanada.com/#!product/prd1/2038204345/juicy-creme-lotion. The key objective of the product is to change the traditional trend of beauty products, in order to ensure neither chemical and nor environmental effect. Use of petrochemicals or parabens has been strictly omitted. During the execution of this luxurious and beauty product (Juicy Creme Lotion), several ingredients have been used which include Aqua, Carthamus Tinctorius (Safflower), Camellia Oleifera (Camellia) Seed Oil, Caprylic/Capric Triglyceride (coconut oil), Aloe Barbadensis Leaf Juice, Stearate (and) PEG 100 Stearate, Silk Amino Acids, Cetyl Alcohol, Glycerin,  Isopropyl Myristate, DL-Panthenol, Fragrance, Phenoxyethanol (and) Caprylyl Glycol (and) Sorbic Acid, Allantoin, Psidium Guajava (Guava) Fruit Extract, Ananas Sativus (Pineapple) Fruit Extract, Carica Papaya Fruit Extract (Indiegogo, 2014). After evaluating the features of this product offered by Om Organics, it is stated that, product is produced sensitively with the help of best quality fruits and vegetables. Health and safety issues have been taken into concern while developing this product as a result this product will be ideal for children and adults along with aged-citizens. Product positioning statement: High quality and reasonably priced products that can provide significant value addition. Significant level of competition can be faced by Om Organics from other manufacturers offering similar organic products such as Jiadé Organic Cosmetics and Trillium Organics (Be Beauty Smart, 2010).Om Organics beauty products would benefit consumers in several ways, and it does not have any side effects (Om Organics, 2014). The uses of Juicy Creme Lotion have numerous benefits to the customers. The product is available in different sizes and flavour. The product has no side-effects and is healthy. The two major benefits of the uses of this product are that it does not have any side effects while it uses can make the customer to feel their skin softer for longer time. Figure: 1 Product Positioning Map In terms of product position, Om Organic has aimed to ascertain high quality and it has also priced its product’s reasonably as compared to the competitors. Price Generally, pricing is done on the basis of cost. Cost can be segmented in two ways such as fixed cost and variable cost (Friedman, 2009). In case of evaluating the cost structure and profitability, Om Organic needs to keep an account specifically for that purpose. First of all, it should keep a record of raw materials. And, it would need to calculate the cost of production per unit through adding the fixed and variable cost. Subsequently, total cost needs to be divided by the number of items, which will show the cost of each unit. Om Organic needs to consider its competitors pricing position and accordingly launch cost effective products. Concerning pricing, it has also maintained the ethical code of conduct for its own reputation. The prevailing industrial norms as well as due respect to the competitors price will be placed while determining pricing strategy. The pricing strategy for the product will be framed keeping competition in mind. The objective of the pricing strategy will be to ensure maximum revenue through maximum sale. Thus, competition based pricing will be undertaken (Magoa & Pate, 2009). Cost structure for producing 8 Oz Juicy Creme Lotion Components Cost (US$) Direct material US$8 Direct labour US$3 Selling and administrative expenses US$2 Fixed Cost US$2 Total US$15 Per unit cost of the product produced is ascertained to be US$15. The product will be sold to intermediaries at US$18. Correspondingly, the maximum selling price for the ultimate customers will be US$20 for 8 Oz Juicy Creme Lotion. The profit from the sale of 8 Oz Juicy Creme Lotion will be US$3. Sales and Distribution Sales management is one of the challenging tasks for an organisation. It can ensure organisational growth. The objective of sales management is to increase the profitability. On the other hand, distribution means sharing the products and/or services among the consumers. Sales and distribution is highly related with each and other. Through proper distribution an organisation can occupy high number of market share and also ensure high profitability. Sales and distribution with regard to Om Organics can be done in several ways (Gupta, 2009). Those are shown below: Figure: 2 Sales and Distribution Channel From figure 2, it can be asserted that, Om Organics can use three different ways in order to sell its products. It can be done through the agent, it can be also done from the retail shop or it can be also done in a traditional ways such as distributer, retailer and then consumer. This process is known as a distribution channel. Different intermediaries have been chosen due to several reasons. Subsequently, this approach can directly and indirectly help the product to increase the sales strength. On the other hand, it also strengthens organisational prospective channel partners which can help in case of revenue maximisation and sales maximisation among others. Apart from that it can also spread the brand name of the firm which would lead a firm towards earn reputation (Jandaghi, 2011). The objective of its objective of the sales and distribution process would be to increase the number of sales item and apart from that it would focus on earning goodwill from the consumers’ point of view. Focus will be placed on customer satisfaction. With an intention of providing high customer satisfaction and availability of its products, Om Organics develop its own retail store for its variety of luxurious beauty products. Besides, it will choose the traditional intermediaries for covering more area in its local market. Concerning sales and distribution, emphasis will be laid down on low cost and high quality for sales appeal. It is projected that during the first year of the product launch it will be able to acquire sales revenue of US$12,000 for which it will require to intake operating expenses of US$ 6850. The net profit for the same year is estimated to be US$5,150 while the gross margin percentage is projected to 42.9% for the first year. The sales revenue is further projected to increase to US$15000 in the next year and the operating expenses for the same is estimated to be US$7,620 while the gross margin percentage for the same years is forecasted to be 49.2%. The net profit from the sales of the product is projected to be 7,380. In the third year the total sales revenue is forecasted to be US$18,000 while operating expenses for the same year is estimated to be 9400. The net profit for the third year is projected to be 8,600 while gross margin percentage for the same years is reckoned to be 47.78% Advertisement For Om Organics’ luxurious and chemical free personal care products’ advertising purpose, different platforms would be required to be selected. The internet is the appropriate platforms for promoting the brand. Apart from social networking sites such as Facebook and twitter will be used to promote brand. The main objective of advertising would be to products benefits the target customers. During the implementation program, the organisation can go with using the medium of the internet as a key platform from where it can spread its awareness. In order to promote the product, Facebook account will be created. The use of social networking sites gas been selected as it offers wide customer reach relatively at low price (Farooq & Jan, 2012. The planned total advertising budget needs to be around US$1500 for the first year. During preparing the advertisement, Om Organics needs to focus specifically on few parameters such as it is required to emphasize that most of the products are natural and chemical free. During the advertisement, it directly should focus on the segmented market. Om Organics has specifically designed its products for young girls, matured women and aged women citizen. This aspect should be highlighted in the advertisements made. Besides, the products are designed for beauty purpose such as spa, bath, face wash and shampoo among others. Apart from this, it also has to highlight a few facts such as toxin chemical free, handicraft and fruits and flowers made products. These factors also need to be communicated through advertisements. Sales Promotion Sales promotion is one kind of marketing strategy that helps an organisation to increase the sales of product and/or services. The prime objective of sales promotion is to bring a change in the demand pattern of product and services. Through sales promotion, buyers can get more information about the product. This can help buyers a lot. At the same time, sales promotion can also help buyers to evaluate the quality of the products from various alternatives (Mullin, 2010). Sales promotion can be done through several ways. It can be done through providing discount especially on during the initial period of product launch. On the other hand, it can also do by providing lucky coupon, prizes and samples. Moreover, it can be also done by offering free gift. Through providing seasonal offers sales promotion also can be done. Moreover, by reducing the price of the products sales promotion can be conducted as well (Selman, 2007). On the contrary, trade promotion denotes the improvement of trade performances of an enterprise through the help of economic policies or through the help of other enterprise. It can be mentioned as a relation between a retail store and an organisation. Trade promotion can provide several benefits to an organisation. An organisation can use the trade promotion strategy in order to increase its product visibility in the market. It will allow to uniquely position the brand image amid the competitors (Mullin, 2010). Om Organics deals with luxurious and chemical free personal care products hence both the sales promotion and trade promotion strategies would be implemented. Through sales promotion Om Organics should aim to push a few products among consumers. The main reason behind such intention is to let the consumers realise about the quality of the product and its significance. During sales promotion, it can desire to provide more number of products to consumers’ hand and subsequently it should not be afraid of allied increasing cost. Total sales promotional budget of US$1500 for the sales promotional purpose has been allocated for the initial period. Om Organics should give free sample of its certain beauty products. Accordingly, it will provide cash discount on the purchase of more than US$60 at a time. At the same time, during the trade promotion, it would aim to emphasise three crucial objectives such as product visibility, brand awareness and positioning brand name within the competitors. Through trade promotion, Om Organics can get several benefits especially relating to its luxurious and chemical free personal care products. It can be evidently asserted that in retail most of the products people buy on an impulsive manner. This factor can be leveraged evidently with the help of sales promotion strategy. Budget Implementation and Evaluation Plan Implementation plan can be mentioned as a detailed list of activities. Those activities are related with the expenses of several items, difficulties that are to be expected, strategic plan and objective of the organisation among other crucial factors. This implementation plan can help Om Organics to face the difficult situation smartly and also provide required analytical data or information in order chase that difficult phase. In case of Om Organics, during its business activities, the implementation plan can facilitate it to survive in a difficult situation. On the other hand, evaluation of this plan is quite essential for the organisation. In order to attain that from the very beginning to till up the end, the organisation has to keep focus on its each and every activity. As it was mentioned earlier, the organisation has emphasised natural products, rather than toxic chemical product. Thus, during the implementation and evaluation, it has to be focused on its products. Apart from products, pricing is also quite essential for an organisation, thus during the implementation process it should look after the aspect of price such as relation with the labour and supplier among others. In addition, sales and distribution is also quit essential for the organisation. Thus, in case of sales and promotion, it should focus on customer satisfaction rather than profit. Moreover, in case of sales and distribution, it should maintain a steady relation with its distributors, as they are prime channel through which the organisation can expand its customer base in terms of luxurious and chemical free personal care products. Concerning sales promotion and trade promotion, the organisation will keep emphasising steady relation maintenance with its business partners. In addition, the organisation also needs to focus on attractive packaging and levelling for attracting consumers’ attention among the competitive products. Even, the organisation should remain highly focused during the advertising and promotion period. The evolution of the success of the suggested activities can be judged based on the increase in customer base including greater customer footfall and augmented range of preferring customers. A 10% increase in customer base within the period of 6 months can be evaluated to be a profitable prospect for the organisation. To sum up, the product Juicy Creme Lotion of Om Organics has been introduced in the market that is very useful for beauty purpose as it is develop from the use of organic ingredients and has no side effect. However, the fact is that plenty of such kind of natural products is available in the market. However, it is evidently determined that the most attractive features of these products are toxin chemical nature. Apart from this, all the products are handmade and are made by the help of fruits and flowers generally. These components have ensured the quality of the product. Besides, the prices of the products are also suggested to be kept quite economical. In case of advertising promotion, it is suggested to position the product in a new manner by using social media, television and through hooding among others. Moreover, retail shops and seasonal offers can be very useful aspects during sales promotion. Consequently, it can be asserted that, these luxurious and chemical free personal care products offered by Om Organics can especially fulfil the requirement of the beauty conscious women. S References Be Beauty Smart. (2010). My personal favourite Certified Organic brands Part I. Retrieved from http://www.bebeautysmart.com/2012/05/my-personal-favorite-certified-organic.html Friedman, M. (2009). Price theory. United State of America: Transaction Publishers. Farooq, F., & Jan, Z. (2012). The impact of social networking to influence marketing through product reviews. The Impact of Social Networking to Influence Marketing through Product Reviews, 2(8), 627-637. Green, J. (2011). Advertising. N.Y: The Rosen Publishing Group. Gupta, S. L. (2009). Sales and distribution management. New Delhi: Excel Books India. Indiegogo. (2014). Om organics: luxurious, chemical free personal care products. Retrieved from https://www.indiegogo.com/projects/om-organics-luxurious-chemical-free-personal-care-products#home Jandaghi, G. (2011). A framework for selection of intermediary in marketing channel. Retrieved from http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.edusoft.ro%2Fbrain%2Findex.php%2Fbrand%2Farticle%2Fview%2F230&ei=EwphUXBF4q6uASh24KYBw&usg=AFQjCNFblb2v_AykTRB5RTxjpxYMNBM1Vw&sig2=yLCweYlDLhRzzrbwu68DrA&bvm=bv.65636070,d.c2E Lamb, C. Hair, J. and McDaniel, C. (2008). Marketing. U.S.A: Cengage Learning Mullin, R. (2010). Sales promotion: how to create, implement and integrate campaigns that really work. U.S.A: Kogan Page Publishers. McDonald. (2007). Malcolm McDonald on marketing planning: understanding marketing plans and strategy. U.K: Kogan Page Publishers. Magoa, S. D., & Pate, J. G. (2009). An experimental examination of competitor-based price matching guarantees. Journal of Economic Behaviour & Organization, 70, 342–360 Om Organics. (2014). Shop. Retrieved from http://www.omorganicscanada.com/ Selman, R. L. (2007). Promotion of social awareness: powerful lessons for the partnership of developmental theory and g - reference, information and interdisciplinary subject’s series. U.S: Russell Sage Foundation. Read More