These results showed that people would like to buy celebrity magnets, with images of their favourite celebrities and also would like magnets in the shape of letters. This way they could spell out their own name or certain words to make the magnets seem less boring. Furthermore, people would prefer to see brighter and bolder colours than dull ones. This affected our decision because it made us decide to drop any other ideas, such as animals, which we then knew we wouldn’t be able to sell and would lose money on. We did not use any secondary research, such as surveys conducted by any other companies, and this could have saved us time.
Other companies use many different techniques to advertise and promote products. Promotion could be on the packaging itself, using the branding to make sure consumers know what the product is. Personal selling is often the most effective method of promotion when the company is only a small firm, and the customer feels as though the product is tailored towards their needs. Public relations can be used, either by sponsoring events in the local area or by helping local schools with educational projects. Normally only larger companies use techniques such as sales promotions, as smaller companies may not have enough money to support a television or radio advert. However, they could use point of sale display showing the customer exactly what the product is and attracting attention to the stall – or by using offers such as ‘buy one get one free’.
To promote our product we used a number of different techniques. We used posters and flyers around the school and while we were selling, in places that are often used. We used this because the majority of people said in their opinion the most effective advertising techniques to attract their attention would be these methods, shown in the graph to the side. The corridors were the best place because people are constantly walking past there, and seeing that our business exists.
We also had posters around where we were selling to make the stall look slightly exciting, and so people didn’t have to ask too many questions if they wanted to buy something. The information included what the product was, price, materials and where you could buy them. These posters needed to be bright and bold with an easy to read font, so that they attracted maximum attention and made the business seem more interesting.
Our method of promotion linked to our target market, as the colours, shapes and lettering were made to attract the younger students. We decided not to speak in assemblies or to go around form times as it was hard to gain the permission and nobody particularly wanted to do it. We could have improved our business by doing this, but it may have not appealed to our target market that tends to switch off in assemblies and our market research showed that most people did not like this idea, shown in the graph. Although everyone would have heard about our business this way, we rejected the idea which now we think was a mistake. This method could have been more effective, so we probably should have considered it for a longer period of time, and maybe visited at least one assembly to gain more attention for our business.
A number of price strategies are used by different companies, often even within lines of products. If the price is not set right, then the business will not make a profit. Too low and the company will make a loss on the product as the revenue won’t be high enough to cover manufacturing costs, and if it is too high customers will choose other products instead. Sole traders often have to use one-off pricing, as every job or product may be different so that an individual price may be have to worked out for each consumer. Most often, cost-plus pricing is used. This price is worked out by adding together the fixed costs (the money which must be paid whether the product or service is made or not, e.g. rent) and the variable costs (the costs which change depending on the amount of products/services made e.g. raw materials). Then a flat rate or percentage increase is added on top for the company to make a profit.
Before deciding upon a price for our business, we had to consider a number of factors. Firstly, we had to see what price range we could work with – by using our market research to find out how much our target market would pay for one individual magnet, and also see if people might like to buy more than one so that we could include offers. Our target market would not like to pay more than one pound for a magnet, so we needed to keep the price less than this. We then needed to consider the price of materials per magnet. We bought the main material, foam, in bulk and so got it very cheap. The quality of the product needed to be considered here, but all the foam seemed to be of the same high quality and so the product would not have differed if we spent more on the materials. On average, each magnet would have 7p worth of foam included in it.
The other material involved was the magnetic strip, with each magnet having a 10p piece stuck to the back. This made a whole magnet cost 17p to make. We didn’t need to consider labour costs, as we were making the product ourselves. So then we had to decide what percentage mark up we would have on our product, keeping the price still quite low but enough to make a small profit. We eventually decided on 50p per magnet, which all people asked in our research said they would be willing to pay, with offers for the letter magnets for names. This meant we make 33p on every magnet sold.
We didn’t have any competition in the business, because no one else was making magnets, so we didn’t have to take other prices into account when decided our price. But if new competitors came into the market, we would have our cost a little lower than them, as our market research concluded that most people would prefer that, shown in the chart below. However, we did have to think about our company’s income. We only had a £50 loan from the school, and needed to use some of this for materials and advertising – and so the products had to be at a price where we could break even relatively quickly. As we made the products ourselves and sold them ourselves, tax costs did not come into our business.
The three price plans we needed to consider were creaming, penetrating and skimming.
