SILKY SKIN SOLUTION
Our company has just made the scientific breakthrough of the century. It has invented a wrinkle cream that really works. One application results in smooth, wrinkle-free skin without costly and painful plastic surgery. There are other products that claim they eliminate wrinkles, but they only conceal them for an hour or two. Your cream works so well it needs to be used only once a month to keep skin silky. The cream is relatively inexpensive to produce with a total production cost of 20 cents per ounce. The cream could, therefore, be priced at either a competitive level or below it. The firm is not sure which policy is the best to follow.
When your Silky Skin Solution is promoted, your firm wants to have as many tubes as possible on the retailers’ shelves. Thus, the firm plans to offer its wholesalers a much larger discount than is normal.
If the product is handled correctly, the return on investment should be between 40 and 70% after taxes. It would be the most profitable product in your firm.
Assume that you are the product manager for Silky Skin Solution. Don’t forget to justify your answers.
For the pricing policy. I would price the product slightly higher than the market rate of the other existing wrinkle-free skin creams. The product sold i.e. Silky Skin Solution is to be applied only once a month and thus it's consumption would be low. Also, due to this consumers would throng to purchase your product. Hence, slight premium pricing would help you generate the desired profits.
Firstly, you must devise promotional strategy in order to advertise the product to potential customers. Provide trial packs and dealership to niche salons. Also, use the distributers and retailers to reach the consumers fast and effectively.
Wholesellers must be treated well, with additional perks as incetives to higher sales. They must be motivated via commissions and economies of scale to promote the product to the consumers.
SILKY SKIN SOLUTION Our company has just made the scientific breakthrough of the century. It has...
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