Business marketing report Case Study Example | Topics and Well Written Essays - 2250 words

Business marketing report - Case Study Example The gist of this is the need for an effective marketing plan that carefully takes into consideration all of the available data, with the end goal of helping MMG achieve its yearly revenues target of $1 million, or a turnover of 100 guitars on a monthly basis (Finnbogason). II. Discussion A. Analysis of the Case Facts The total guitar market in Canada is $59 million, and the revenue targets of MMG accounts for a small fraction of that, indicating a certain amount of realism in the sales targets, given that the MMG play is purely online. The total market is made up of 2.5 million people, while the sales target is 1,200 guitars annually out of total potential sales of 146,000 acoustic guitars. Again this numerical target is realistic, and is just a small fraction of all unit sales in the country. Meanwhile, among age groups, those between 15 and 24 years and over 55 years had the most leisure time, and they are natural potential target markets for guitars, as a leisure product (Finnboga son). China is the traditional manufacturing base for MMG, but given a one percent increase in tariff and rising labor costs and transport logistics costs, there is some concern whether China remains viable moving forward. Scale is a factor in this decision, and given that MMG only moves 1,200 units a year by target, there is the question of whether the scale is significant enough that any upward movements in labor costs, shipping costs, and tariffs would be material increases in the cost structure of MMG, given profit margins exceed 50 percent of costs, as projected for the new dreadnaught product to be launched in June of that year (Finnbogason). That MMG guitars suffer from a quality perception problem over the fact that its guitars are made in China., even though its guitars in actuality are of high quality and are preferred by seasoned musicians even in TV-broadcasted blind tests, is not a deal breaker, and can be assuaged and managed with advertising. In this sense endorsement deals help. Likewise, word of mouth can be a powerful form of endorsement from ordinary players who become customers as well. In other words, this problem of quality perception is not really a major problem, assuming that the right marketing interventions are implemented in the context of a holistic marketing plan for all of MMG (Finnbogason). The table on pricing reveals that the two Summer Wages models have thinner margins than the premium Signature Dreadnaught model, which has a margin of 40 percent. The two basic models sell at $799 for the Tofino model and $899 for the Dionisio model, with margins at 30 percent and 35 percent respectively. In terms of sales contribution currently the premium model accounts for 50 percent of sales, and the latter two models 40 percent and 10 percent respectively. All of the models are substantially cheaper than respective competing models from other makers. On the other hand, the new product launch would make the sales mix different from the ab ove status quo, with the new mahogany-based dreadnaught model taking market share from the premium line and from the Dionisio line, to take up 25 percent of all revenues,