As my business is new and original I may have a problem with persuading consumers to buy my new products, consumers are often reluctant to try or buy new products or businesses, as they prefer to stay with their trusted brand names they have always brought from. To penetrate or break into the new market I may have to reduce prices in order to attract customers. Once I have established a known name and I become accepted by the public I can raise the price of my products to the level of nearby competitors (in Sutton.) For this to be successful, my penetration pricing should only last for a small period of time. If I keep my prices low I will never be able to make any profit and my business will soon have to close down due to insufficient funds.
A different form of pricing is known as skimming or premium pricing. This is when a business introduces a new product that is clearly superior to its competitors’; therefore the new product can often be sold at a higher price. This is because consumers are prepared to pay more to have the latest products. After a while the product becomes ‘common’ and consumers are no longer willing to pay the higher price. This results in a fall in demand, so companies reduce prices to encourage more consumers to buy it. This would also only be used for a short period of time as it would not be successful long-term. This is seen as very popular in console games. As I have no real competitors this may be a good way of pricing my products, however as I am a new company I may want to establish customer loyalty before introducing new high priced goods.
Overall, I believe I will open my business using skimming pricing as I have no true competitors, consumers will not be able to compare my prices. According to my primary research 41% of my customers are willing to pay £30-£50 for a pair of shoes which can be seen as expensive and therefore skimming pricing can be affective. I believe I am unique enough for this type of pricing as I will be introducing new fashionable shoes which will be at a superior level compared to my few competitors. Skimming pricing will allows for some return on the set-up costs for products such as research and development and advertisement. By charging higher prices, initially I can build a high–quality image for my product and even my business. Charging initial high prices will allow me the luxury of reducing the prices if close competition was to arise. By contrast, a lower pricing stratergy would be difficult to change to a higher price without the risk of loss of sales volume. In conclusion I believe it is the best way of pricing my products.
4.2- Product
In all businesses they are always trying to supply products that consumers will want to buy, and at a price consumers are willing to pay and will make sufficient profit. This will often come as a result of identifying what my consumers will want. I did this by adding questions, which are certain and specific questions about the products I wanted to sell, into my questionnaire which gave me my primary research. A business wants the certainty that a product will sell well.
Even though a lot of preparation is put into deciding what type of product I want to sell (i.e. what type of shoes I want to put on the market) however, there are still some considerations that I will have to make when marketing my products. For example the design. Certain products like clothing and furniture will be marketed on their design. When a new design comes out I will obviously have to keep up-to-date with it in order to keep my consumers happy and wanting to buy my produce.
In order for my shop to be a success I will have to product mix. This means when a business has more than one product or service they either make or sell. I will need to do this because fashion changes and therefore by selling only one type of shoe throughout the whole shop I will surely fail as people will not want to buy them continuously. An advantage of this is if a certain type of shoe is seen as unpopular I will be able to reply on other types of shoes to provide sales revenue.
I have also considered branding. This is the use of a well-known name that consumers connect with a product or service. I have considered doing this with trainers. This is because 24% of likely customers said they would buy trainers. Nowadays, trainers will only be bought if they are fashionable and the right brand, e.g. Nike, Adidas. Therefore because such a big proportion of likely customers are willing to buy trainers I will sell well-known branded trainers in order to guarantee sales. Also, many of my ‘likely’ customers were between the age of 36-45 and had children. Teenagers and some children will only buy shoes with a certain name or symbol, which I can then use to market further products.
Each product has a ‘product life cycle.’ They each have a time span in which consumers will want to buy them. No one would buy exactly the same product forever. consumers’ tastes change and products have to change to meet that changed demand. clothes and shoes only have a short life cycle as fashions come and go, however many designs are brought back into fashion for another chance. If I feel a certain type of shoes is finishing its ‘product life cycle’ too soon then I will try to extend it. To do this I
can reduce the price of it. By doing this the product will become more attractive to consumers and may help maintain the sales.
Finally, I believe I will be selling more female shoes than male. I am led to this conclusion due to my primary research. This proved that more females were interested in shoe shopping than males. However, a small amount of male shoes will still be sold for those still interested, and an equal amount of male and female trainers will be sold throughout the shop. The quality of my shoes will be extremely high in order to keep up an all round good standard of the shop. If the quality of the shoes is poor customer loyalty will be poor, and I will gain negative word of mouth which is one of the main way of advertisements, therefore giving me a pessimistic affect.
4.3- Place
As Wallington is my local area and is the place I have been researching about I will obviously be setting up my business there. I am also led to believe that Wallington is a great place to sell shoes because out of those asked to answer my questionnaire 62% definitely wanted a shoe shop in Wallington, and out of that quantity 42% actually lived in Wallington, therefore making access to my shop easy. The other 58% of customers lived in neighbouring areas such a Carshalton (13%), Purley (33%), and Sutton (16%). All these places can access Wallington via car, bus or train. (See appendix 3.)
My secondary research became very useful when thinking of a place to position my shop as it showed how easy it was to access Wallington high street and various car parks which surrounded it. By looking at my secondary research closely we can see that there are a number of buses which go through Wallington and stop near my shoe shop. These buses allow people from Sutton, Purley, Crystal Palace and other parts of Wallington to enter central Wallington easily. A number of car parks are also available around Wallington and Wallington high street itself has a number of ‘Pay and Display’ parking spaces.
To distribute my product I will use a method of distribution where the producer sells to a retailer (me) the products, and then the retailer then sells it to the consumers. This would be a perfect way to sell my produce as some of them will be already known brands i.e. Lacoste, Nike.
4.4- Promotion.
Promotion is concerned with how a business is to market its product. A business must make a consumer feel that they need to buy the product. To do this, businesses will use a variety of methods which will be analysed to have the greatest affect on the customer. Customers must be persuaded to buy a product in order to maintain of increase sales for a business.
Advertising is a main part of promotion and is very important. By using my primary research we can see how potential consumers will hear or find out about my product through advertising. Out of the people asked 31% believed they decided where to shop by ‘Word Of Mouth,’ as you cannot advertise word of mouth I would just have to keep up a good service and standard and allow a great sense of word of mouth to run its course. However, 60% of people asked believed they decided where to shop by leaflets, adverts and special offers. From this information I have decided that I will hand out informative leaflets with attached special offers which will be persuasive, these will be posted to local peoples houses. This allows people to become aware of my new shop and the special offer may even convince people to come down and view my shop.
