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Marketing Strategies

Pricing strategy

Looking into the elasticity of demand, the demand market for our product is very elastic, given the fact that our product is not a necessity product. To increase revenue, Easy tab will have to go for sales quantity. The pricing has also taken into consideration that our main retailer will be 7 eleven, Cheers, NTUC FairPrice xpress, and their profit margin on all products are slightly higher. Therefore to reduce the impact on end consumers, we will set only a price structure of 45 percent mark-up of the wholesale cost.

The price structure will also follow a skimming pricing strategy. As EasyTabs is the first of its kind product in the market, we do not have to set a very competitive price in its beginning. We forecast that imitations or competitors will start entering the market in 6-12 months time. And when that happens, we will then look into the market situation and bring down the pricing to a competitive range.

The estimated cost structures are as followed:
(Per month for the first year of launch, with forecasted sales of 1500 units/ month)

Total costs:
Fixed cost: $15,000
Variable Cost ($11/Unit) $16,500
$31,500
Average Cost: $31,500
1500 = $21 per unit

Wholesale price (45% mark up) = $30.60 per unit

Break-even point = 765 units

Net profit =$(30.60*1500) – 31500
=$45900 – 31500
=$14,400
Market penetration strategy

To achieve market penetration, we will absorb or rather sacrifices some profit margin during the first six months of launching. We will work with retailers to...