MARK101 - PRACTICETEST

Val and Fandi own a small business making a high quality specialist hair-care product for men.They have a very good reputation for the performance of their product.They sell the product from a boutique on Lambton Quay and receive orders on their website from customers throughout North America and Europe.The hair care product is sold in 100ml bottles for $90 each.

Val and Fandi have heard you are taking MARK101 and ask for your advice on expanding their business.From what you know of the firm, its environment and its competitors, and everything you know about the core marketing concepts of branding, segmentation, targeting and positioning, what do you advise them to do?Justify your position. (33 marks)

Val and Fandi own a small business making a high quality specialist hair-care product for men. They have a very good reputation for the performance of their product. They sell the product from a boutique on Lambton Quay and receive orders on their website from customers throughout North America and Europe. The hair care product is sold in 100ml bottles for $70 each. Their business had these costs last year:

Annual Fixed Costs:

Factory rental $25,000

Shop rental $175,000

Staff salaries $135,000

Web site and associated costs $5,000

Electricity $5,000

Promotional activities $5,000

Variable Costs:

Production $25.50 a bottle

Distribution $5.50 a bottle

Sales $5.00 a bottle

Val and Fandi have heard you are taking MARK101 and ask for your advice. From what you know of the firm, its environment and its competitors:

1) What is your pricing strategy? (10 marks)

2) What advice will you give to improve profitability? (13 marks)

3) Would a 10% price cut improve competitiveness/sales growth and profitability? Justify your position. (10 marks)