ng Mackenzie & Marr Guitars
Image taken from http://www.macmarr.com
Robert Deane 2
Course Code: Business 1220E
Section Number: 575
Due Date: December 6, 2013
MMG main goal is to increase unit sales to 100, and/or reach $1 million in annual
revenues. In order to accomplish this, the company needs to explore various alternatives and
evaluate the market.
MMG Target Market has been shifted to serve younger customers. The chosen target
market is: males and females between the ages of 15 – 22 with interest in country and pop music.
The company targets its product to individuals with all sorts of incomes. New campaigns have
been put in place to assist low-income individuals to obtain used guitars for a fairly lower price.
The campaign consists on allowing customers with MMG guitars to trade their old guitars and
buy new ones.
Justin Timberlake is the new face of MMG, selected for being enthusiastic and appealing
to our target market. Individuals will feel identified with Justin Timberlake and will become
aware of the MMG brand. Two months prior to the launch of the new guitar model and one
month after the launch, MMG will advertise heavily in GW Magazine in order to gain brand
awareness. After the three-month period, the company will focus on online advertising; including
videos on YouTube, where random individuals are asked to compare MMG guitars to high-end
guitars blindfolded and selecting the best one. The JT Dreadnought will be priced at a
competitive price of $999.99 3
The company is offering the new design packages using “green” products.Also, the
company will be running charity events – such as concerts – in order to help the community and
increase brand awareness.
Organization and Product
Mackenzie and Marr Guitars is a Canadian guitar manufacturer founded in the summer of
2009. The Company operates online and it is currently offering 3 different models of acoustic
guitars. The online business operations, allows MMG to sell high-quality guitars at competitive
prices. Guitars are manufactured in China, and it only uses high-end materials to suit the need of
music enthusiasts. MMG packaging will be made of “green” materials and the company will
involve the community on charities.
MMG’s primary goal is to increase sales to a total of $1 million in annual revenue, or sell
100 guitars every month. The company is planning to launch a new guitar in June 1 , 2013.
MMG is considering using celebrity endorsement for the launch of the new guitar and approach
a different target market. The supplier only has capacity for 100 guitars a month, which can
cause problems if demand increases. Also, MMG wants to penetrate the U.S. market mainly
because of the size of the market and the return it can produce.
Identification of Attractive Market Opportunities 4
Environmental Scanning (PEST Analysis)
Import tariffs from China will increase from 5% to 6% in January 2015, due to the
growth of China’s economy.Arise in tariffs would decrease the margin of the guitars. Many
companies have considered “reshoring”, to avoid the increase in tariffs. The “reshoring” of other
companies, is creating an increase of capacity in Chinese factories. This means that MMG can
increase orders in the near future. Economy is still weak following the 2008 recession; but, it is
gaining strength and sales are expected to increase in a steady way.As noted by the company,
January and February sales have doubled from the previous year.
The majority of guitars are sold in “real” stores. Customers often want to try the
instrument before considering the purchase. The most important process for buying a music
instrument is actually the trying process. MMG has a 7-day return guarantee on the product, that
allows customers to try the guitar and return it if it does not meet their needs – shipping and
handling is covered by the company. Retailers are a big competition, but prices are relatively
high compared to online stores. MMG needs to position itself as a better alternative than
competition; an extensive advertising campaign needs to get implemented to attract customers.
Retailers also have a knowledgeable sales force, which instruct customers with purchase
decisions. MMG should implement a more intuitive and user-friendly webpage, where customers
can find all the information necessary to help them make a decision. Most retail chains are not
extended Canada wide; the chains that are extended Canada wide, only limit themselves to
relatively big cities. Some of these retail chains also have an online store, but prices are
maintained the same as the retail store. MMG has a price advantage and the size of the company 5
allows for a better customer service. Other smaller retailers are only targeting products to a more
exclusive clientele, because of the costly products. Each customer is unique; therefore, MMG
will offer a customization option (for extra charge) to customers who wish to customize their
guitars colours, patterns, etc. The delivery wait will be longer.
Studies have shown that teenagers and young adults (15-22 years) are more likely to try
new brands. They are also one of the two demographic groups with more leisure time. This
group represents 235,000 people in Canada, and The U.S. market is estimated to be 10 times
The company offers a high-quality product at a competitive price – because various
intermediaries are removed from the supply chain. Distribution within Canada remains
competitive at 10 days, compared to the 2 weeks wait the competition offers. To breach into the
U.S market, the company needs to be able to compete with the 5-8 days delivery the competition
is offering. The company presents some weaknesses that need to overcome to penetrate deeper in
the market. Products coming from China have gained the reputation of being a lower quality
product.Also, the company’s size prevents customer from believing in the brand. The new
celebrity endorsement will increase the brand awareness and bring new customers. To increase
revenues and to create a higher brand identity, MMG will sell accessories – such as clothing
(shirts, hats, and backpacks), guitar accessories (Ex. strings) and other products that will help
build a larger image. 6
Primary Target Market
The primary target market for MMG would be teenagers and young adults of both
genders between the ages of 15-22. The primary target market is located in NorthAmerica, but
international purchases will become available in the near future. The company offers different
price range guitars to suit the needs of most income groups. In difference to electric guitars,
acoustic guitars are targeted to people who prefer certain types of music – such as pop and
Distribution will be made through online shopping exclusively, in order to keep prices
low. Launching events will also expose the brand and attract customers. Deliveries will vary
depending on the location. Canada (10 days), U.S (5-8 days) considering same delivery methods
as competition is applied, and international deliveries will take 2-3 weeks.
How to Attract New Customers
MMG will use electronic mass media advertising and a magazine ad campaign. The
electronic ad campaign will use channels such as: GoogleAdWords, Google Search ads,
Facebook ads and YouTube ads. With the endorsement of a new celebrity, potential customers
who are watching videos related to the artist, will receive a video ad. The video ad will consist of 7
a 30 seconds clip, where the artist is playing a song using MMG guitars; also, other clips might
include random individuals comparing MMG guitars to other high-end brands while blindfolded.
The magazine chosen for the campaign is Guitar World Magazine, because 28% of the readers
fall into the target market chosen by MMG. During the new guitar launch, a regular ad (1/6 page)
will be placed in Guitar World Magazine.After the initial 3 months, a marketplace ad (1/6 page)
which is less expensive. About 20% of the readers are from Canada; this will increase
advertisements in the U.S. market and will create brand awareness. Magazine ads will circulate
on a monthly basis, and online ads will circulate until they meet their daily/monthly quota. While
most of the online advertisement can be very specific to the target market, the magazine will
expose the brand to many