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Target market
The main consumer target for the new Wellbox Body Optimizer is the middle income earners. This is a group of consumers that the company has not been targeting with their products, and there is hope that they will purchase the new product. This will be in both countries; Australia and New Zealand.
The target group comprise majority of the people who drive the economies of both countries since they comprise the largest part of the population (Kapferer, 2012; Kohlbacher, 2010). Most of the other products from Wellbox Company have been targeting the high income earners.
Therefore, moderate earners have not been able to purchase the products. Since the group is price sensitive, the Body Optimizer comes with a competitive price to other product substitutes in the market that will help it capture a sizeable market share (Pride and Ferrell, 2012). The good massage service provided by the Body Optimizers will be able to maintain the customers’ loyalty (Malhotra, 2011).
Since majority of the people in this group are well educated, they can be able to differentiate Wellbox Body Optimizers from other substitutes in the market. It will also be easier to them to scale the quality of the body service offered.
Despite the age of the consumers, the product is well designed to fit consumers from all ages (whether they are in their young, middle or old age). Middle income group comprise of people at different ages, the new Body Optimizer well designed with several heads of various sizes. Therefore, different heads will suit each group depending on their taste preference.
Pricing method
The price of the new Body Optimizer from Wellbox Company will be set bearing in mind the competition existing in the market from other companies such as Always Beauty Company (Fabiani, 2007). Cost-plus pricing strategy method will be used in setting the price for the Body Optimizer in the market (Fabiani, 2007). This will also enable coming up with a price that is highly competitive.
This is because the new product is not a luxury good, nor is it trying to capture the lower end of the market, but the average income earners (Lucas, 2011). This will allow new Wellbox Body Optimizer customers be able to purchase the product even as a gift to their loved ones.
The Body Optimizer will sell at an average price of $1,499 in the two countries. A small variation may arise due to the differences in tax in the two countries. This price is competitive compared to the prices of other substitute products in the market. The following is the process of how the $1,499 is obtained.
According to Lucas (2011), Wellbox Company can produce 60,000 units on average. The variable cost for each Optimizer is $430 and the fixed cost totals to $ 48,000,000. When the products are taken to market, the estimated price profit is 18 percent of the sales made. Therefore, per unit price will be:
The $1,230 is the break-even price for the Body Optimizer.
Assuming the selling price in the market as X, then the following formula will help us in arriving at the market price (Lucas, 2011).
X [1- expected profit] = $1,230 where
Therefore, Wellbox Company will sell the new Body Optimizer at a price of $1,500, but a discount of 1 shilling will be allowed for each product purchased.
Reference List
Fabiani S. 2007. Pricing Decisions in the Euro Area: How Firms Set Prices and Why. Oxford University Press: Oxford
Kapferer, J. 2012. The New Strategic Brand Management: Advanced Insights and Strategic Thinking. Kogan Page Publishers: London.
Kohlbacher, F. 2010. The Silver Market Phenomenon: Marketing and Innovation in the Aging Society. Springer: London.
Lucas, M. 2011. The Pricing Decision: Economists versus Accountants. Emerald Group Publishing: Bradford.
Malhotra, N. K. 2011. Review of Marketing Research. Emerald Group Publishing: Bradford
Pride, W. M. and Ferrell, O. C. 2012. Foundations of Marketing. Cengage Learning: Stamford.
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