200086 Lecture Notes - Lecture 8: Scratchcard, Marketing Communications, Product Bundling

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amberhippopotamus661

26 Apr 2019

School

UWS

Department

University of Western Sydney

Course

200086

Professor

anon

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Document Summary

Marketing communications: bundling is when you put a combination of products on sale for the same price. So, for example, normally a 100 dollars might buy you just a shirt. However, with product bundling, 100 dollars might buy you a set of shirt and pants. As a result, the consumer is much more likely to buy this bundled offer as compared to a single offer. We see bundling strongly in retail where a shampoo might be bundled with a soap or we can see a bundled combinations of many different items. The disadvantage of bundling is that customer might think one of the products is of poor quality. However, if the products are bundled together and both products are of an excellent brand, then the bundled product will sell much higher quantities and will defeat competition in numbers. Bundling is commonly used as a type of sales promotion: contests.

Related Questions

few years, British Sky Broadcasting has transformed the way people in Britain watch and use their television. Before Sky, people could never have imagined ordering a pizza or sending an email from their set. Today it's an accepted thing.

Part of Sky's success has been in its brand - in defining what makes Sky special and in expressing that difference visually, in products and in the actions of people in the company. And that brand has become one of the company's greatest assets. Brands help companies build a relationship with a customer. A good brand not only helps differentiate a company, it also helps the customer feel something as a result. A pair of Nike trainers might make a person feel more fashionable. A Sony minidisc player might make a person feel they are at the cutting edge of miniature technology. A Rolls Royce might make a person feel that they have reached the top.

Some brands even go beyond that and become so well known that they become generic. This means they're used as a general term for that type of product, even if it's a competitor's product. Walkmans, and Hoovers are a good example. People Hoover the carpet, even if they're really using an Electrolux.

A brand helps customer recognition and enables recognition to be spread by word of mouth as well as by advertising. A brand also adds value. It can allow a company to offer its products at a premium, without reducing the customers' perception of value for money. It also allows a company to extend what they offer to the customer - if a customer trusts one product from that company, they are more likely to trust (and buy) another product from the same company.

That is why Sky has invested so much in its brand. As the first entrant 16 years ago in the field of multichannel television, it had the opportunity to build strong recognition and to even establish itself as the generic brand for multichannel television.

Source: (viewed 10 February 2019)

QUESTIONS

1. In the above article, "if a customer trusts one product from that company, they are more likely to trust (and buy) another product from the same company". Discuss different ways that companies can use to increase brand loyalty. Justify your answers with relevant examples. (5 marks) (500 words)

2. In the above article "brand has become one of the company's greatest assets". Do you agree? Justify your answers with arguments and examples. (5 marks) (500 words)

redcaribou169

Read the attached article, âHow the cost of shirt adds upâ andanswer the following question. For amounts, if there is a rangegiven, use the high value. Each question is worth 2 points.

1. What are the direct material costs of the making the shirt?List each item and the cost. Then total up the direct materialcosts. Item Cost Total Direct materials:

2. How much is the direct labor cost of producing the shirt?

3. The total cost of producing the shirt is $30.00. Using youranswers to #1 and #2, how much manufacturing overhead cost must beassigned to each shirt? Show your computation here:

4. Katherine & Jared MacLane sell the shirts to awholesaler/retailer. Compute the profit per shirt that they make.Show your computation here:

5. The shirt is then sold by the wholesaler/retailer. Computethe profit per shirt that retailer makes. Show your computationhere:

A KP MacLane polo shirt.

CBS News

(CBS News) Ever wonder who figures out how much a shirt willcost? Erin Moriarty of "48 Hours" has been ADDING IT UP:

Designers Katherine and Jared MacLane so believe in the poloshirt they brought to market this past November that they arewilling to share the nuts and bolts of their business - and theydon't shy away from a tough question, such as pricing:

"Most of the polo shirts I can buy at retail are $90," saidMoriarty. "And you're asking $155. How do you convince somebody tospend that kind of money on a polo shirt?"

"We just say, 'Just try it on!'" she laughed. "I think thatpeople will see the difference.

"We almost took a backwards approach to manufacturing. A lot ofpeople look at, 'Oh, how are we going to keep our costs low so wecan make a higher profit?' And what we looked at is, 'What can wedo to make this the best shirt possible?' And then we'll price itfrom there."

Katherine and Jared met while working at the Hermes boutique inBeverly Hills - which may help explain why they looked to Francefor the fabric for their shirts.

"A woman's shirt can take anywhere from a yard to a little lessthan a yard of fabric, per shirt," said Jared. "And that runs about$6.10 or $6.50 depending on what time of the year we buy."

True mother of pearl buttons were too expensive - a dollar each.They found similar but sturdier versions in Hong Kong.

"Our buttons are about three cents apiece," said Jared. Thereare three - plus an extra one "in case, you know, you need it downthe road."

And instead of a box, the shirts are placed insidehand-embroidered linen bags from Vietnam.

"We didn't want to give the customer something that could beeasily, you know, thrown away," Jared said. "We wanted it to bereused, wanted to be special. And we wanted to be of the samequality that the shirt is made.

The linen bags: $2.90 apiece.

But what adds most to the cost of the shirts? The MacLanesactually produce them here in the United States.

Jared said manufacturing the shirts domestically costs 75percent more than making them outside the U.S. - a little over $11per shirt.

And for how little could they be made in, say, China? One or twodollars.

There is also the cost of thread, the labels, cloth tape for theshirt vents, tissue paper, and shipping from the New York factoryto the MacLanes' home in Atlanta.

All told, one KP MacLane polo shirt costs about $30 to make.Using the standard mark-up, the wholesale cost is $65.

As for the retail price? You may be surprised that clothing isusually marked up MORE than 100%. That's how the MacLanes arrivedat $155.

"It sounds like, in order to make this company successful andhave people buy your shirts, they really do have to kind of knowthe story behind each shirt," said Moriarty.

"Yeah, and we're happy to tell it," said Jared. "A lot of timeswe go shopping and you don't always consider what goes into agarment."

"If they know the kind of thought that we're putting behind ourproduct, and they know the kind of quality that we're putting outthere, I think if you build that loyalty and build trust, I thinkthat that will keep you around a lot longer than somebody who'sjust craving a brand - as opposed to a brand and a qualityproduct," said Katherine.

plumhedgehog664

Economics is nothing more than the study of scarcity and choice. It's called the Economizing Problem.

Economics is also the study of human action---why people make the choices they do.

We have finite (limited) resources and infinite (unlimited) demand for goods and services. We must, therefore, use rational decisions as to how to allocate these resources so that we can produce the goods and services that satisfy as many needs and wants as possible.

Needs are those things that make life possible---food, clothing, shelter, etc. Wants are the things that make life easier---glass in windows, carpet on the floor, a refrigerator to keep your beer cold, etc.

The resources we are trying to use wisely are not confined to money. We are talking about talent, ability, drive, ambition, etc. We can't all be brain surgeons. Nor would most of us want to be. We have different needs and wants that drive our ambitions. I have 5 grandchildren. The oldest two are twins---a boy and a girl. My granddaughter graduated from Idaho University with a bachelor's and a master's degree in accounting in 5 years. She passed the CPA exam on the first try. She now lives in Panama and works for BMW. She speaks, reads, and writes 4 languages, including English. Her brother finally graduated from the University of Arkansas in May 2016 after 8 years! Why did it happen this way?? They were raised the same way by the same parents. Why was my granddaughter drove to succeed and my grandson so listless?

Then there is subjective valuation and opportunity cost. Opportunity cost is nothing more than what you have to give up to do something else. Some of you might have to roll out of the bar or the party a little before you wanted to leave just to be able to attend my class. You might also have to give up some precious sleep. In any event, you had to give up something to attend my class. That's the opportunity cost. Remember, everything you do has a price (opportunity cost) that must be paid according to Harry Browne who wrote, How I Found Freedom in an Unfree World.) To do one thing you must give up the opportunity to do something else.

When people decide to buy a product or service they must decide if it will satisfy a need or want at a price they are willing to pay. The number one reason that people buy the products or services they do is called Personal Tastes or Preferences (Subjective valuation). Everyone has a different price they are willing to pay for the same product or service. Something is only worth what someone is willing to pay for it. That's a subjective valuation. Each of us has a different intensity of demand for the same products. Things you want I may not care for at all, and the opposite may also be true. This is why there is such a variety of goods and services offered on the market.

Subjective valuation is also fluid. As your income goes either up or down it changes your valuation of products and services. Have you ever wanted something so bad you would do almost anything to get it---an i phone or I pad?---but once you get the money you think, "do I really want this?' and you don't buy it. This is common. If it were not for a subjective valuation we would all be wearing the same style and color clothes and living in similar houses, etc. Wouldn't that be a wonderful world! I'd find the tallest building in downtown Orlando and see if I could fly! It is not the similarity in people that interests me. It's the differences. It's my desire not to be like everyone else that has driven my life. Don't strive to be someone else. Strive to find and be yourself. God save me from a terminal case of conventional wisdom!

There are 5 embedded questions.

Give me an example of subjective valuation.

salmoneel837

200086 Lecture Notes - Lecture 8: Scratchcard, Marketing Communications, Product Bundling

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