Camilo Infante MKTG Report.docx

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Business Administration
Business Administration 1220E
Bob Deane

Mar keti ng Mackenzie & Marr Guitars Man age men t Rep ort Image taken from Student NCamilo InfStudent Number: 250455990 Instructor Name: Robert Deane 2 Course Code: Business 1220E Section Number: 575 Due Date: December 6, 2013 Executive Summary 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. Marketing Challenge MMG’s primary goal is to increase sales to a total of $1 million in annual revenue, or sell st 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. Competitive Analysis 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. Customer Analysis 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 bigger. Self-Analysis (SWOT) 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 country music. Distribution Approach 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 Advertising 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
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