Product

Executive Summary

The Clean Edge which is Paramount’s newest nondisposable razor has powerful influence in the market since 2010. It was improved design and used the new skills to make the razor’s properties become better than before. Lots of men like it and consider it was the closest, cleanest and smoothest. The article analysis the Paramount’s situation, competition, product positioning, marketing strategy through the U. S. azor market, market segments and consumer behavior and the trends of nondisposable razors and refill cartridges. After the company overview, the analysis of competition, design and testing and compare the marketing budget, Randall think that the Clean Edge has the significant mainstream potential and will become the new standard in men’s shaving.

Non-disposable razor category has changed a lot these years. The article pointed that nondisposable razors experienced approximately 5% growth per year from 2007 to 2010. Numerous innovations and product in the super-premium segment has grown a lot.

The expenses of advertising increased a lot because of the need to promote new benefits from advances in razor technologies. Changes in retail channel distribution have also been noted in the category. Male-specific grooming products seemed to be a bright spot in the industry from 2007 to 2010 and the segment saw much more growth because shaving became more than just shaving – it started to include body spray, fragranced shower gel and skincare lines proliferated. Channel distribution for the razor category has become increasingly important through the Exhibit 4. It has been quite demand for male-grooming products.

Competitive Position

Paramount has been a global consumer products giant with over $13 billion in worldwide sales and $7 billion in gross profits for 2009 since it entered the nondisposable razor market in 1962. Paramount established itself as unit-volume market-leader in 2009 based on nondisposable razor sales. The nondisposable razor category market is entering a new phase with technology products and new competitors entering the market, it’s a threat to Paramount.

Strategic Life Cycle Challenges

Consumers are becoming more experienced and always looking for new technologies. Namely, they want to spend more money and buy products which are satisfy the necessity of a smooth shaving experience. In other words, through the Exhibit 1, there is a category of consumers called “Maintenance users” that made up 33% of consumers; they were not interested in buying products with superior technology. These consumers cannot be ignored. So, to the challenges, it should provide a product with good cost x benefit but with a short life cycle for the 33% called “Maintenance users” keeping these users buying their products and interested in their brands. And then, launch the Clean Edge product with a longer life cycle. Meanwhile, making this product profitable creating a high quality from the consumer when they buy cartridges for refill.

The nondisposable razor market is segmented to three parts base on price and quality which are: value, moderate and super-premium. From 2009, consumers purchased razors and replacement cartridges more frequently and they were distinct to “Maintenance Shavers”, “Social/Emotional” and Aesthetic”. The “Maintenance Shavers” who almost not interested in the product category. The “Social/Emotional” shavers were motivated by the overall shaving experience and “Aesthetic” shavers were interested in cosmetic results.

 Through the pros and cons, I will recommend the Clean Edge for a niche strategy. Because Rosenberg said that they will siphon off consumers if he considered a mainstream positioning strategy. A niche strategy will make more sense.

Trough the chat above which compares the revenues and costs, it’s easily to find out the Niche is the better one. About the marketing budget, through the comparing, the advertising and promotion of Clean Edge Razor is $15m and $ 16m, and we can reduce the budget for existing products of advertising.

Because the consumers become more sophisticated and the research shows that these will be the mature phrase of the product life cycle in the future. I consider that if it launch the product to the Niche market, it will bring a huge profit to Paramount. So, I want to make the brand name called The Clean Edge Razor by Paramount.

Conclusion

By the time, consumers really purchased razors and replacement cartridges more frequently than they than in any year previously. It’s no doubt that the Clean Edge has huge potential in the super-premium segment.

It should keep developing by the Niche strategy and this will bring the biggest benefits and profit to the company and beat the other competitors.

Work Cited

1. S. E. Smith, “One Tool, Many Uses: Single Edge Razor”, (Aug 02, 2012), http://www. networx. com/article/one-tool-many-uses-single-edge-razor
2. Jeremy Pingul, “Paramount Health & Beauty: The Clean Edge Razor”, (2012, January), http://prezi. com/pjd6evuzfndc/paramount-health-beauty-the-clean-edge-razor/

Evaluate product innovation at Gillette throughout its history.

Gillette has invented the first safety razor with disposable blades in year 1901 which is one of the new-to-the-world products. This safety razor serves as a basic product, for the market segment of men who shave regularly, providing them high quality shaving experience. The safety razor differentiates itself from the razor used at that period of time– the straight razor with an open blade, with its cover over the two edged blades, make it easier to handle and prevent cuts while shaving.

This safety razor can be evaluated as a successful product, with its outstanding market performance of 50%-70% over the next 7 decades, and achieving $6. 80 profit per share. However, due to the lack of focus on product development, Gillette lost its market edge to Wilkinson Sword-Schick’s Stainless-steel blade, a new entry to the shaving market with a significant reduce in market share to 49% in 1962.

However, Gillette didn’t realize the importance of product innovation and it took them 12 years to introduce the world with another product, the Trac II razor , a safety razor with two blades whereby the second blade cut the number of strokes required & reduced facial irritation. Trac II is an improvement and revision of Gillette’s disposable safety razor. However, although being capable to continue its dominance in the razor segment, Gillette is unable to regain its past glory of high profit per share performance, and remained at the range from $1. 3 to $2. 83 in 1974. Later in year 1976, Gillette continued to innovate and introduced other products with improved performance, such as the Atra razors with a pivoting head which enable men to shave their neck. Other new products which continue to lengthen Gillette’s product line are the Good News! disposable double-blade razor, which is more convenient for men to use and Daisy razor, which serves the segment of women who shave regularly.

These new product lines strengthen Gillette’s position in the global market by gaining 75% of the global market share whereby Gillette achieves for the first time in the history—the $2 billion mark of sales volume by the end of 1980. In addition, the Good News! brand had been the best-selling disposable razor in the United States each year since 1976 and with its moderate increase in sales enabled it to maintain its position as the number-one seller in this product category worldwide. In the effort to further widen the product mix of Gillette to capture other segments of the market, Gillette continues to evelop new products. The Atra-Plus shaving system, which featured a refillable Atra cartridge with a lubricating strip, is an example of another incremental innovation. Along the same revolution is the Good News! line to include a disposable razor with a lubricating strip. Other new product-mixes which carries Gillette’s brand name are the Aapri facial care product, Dry Idea deodorant, Bare Elegance body lotion, Mink Difference hair spray, White Rain hair care products, and Silkience shampoo and moisturizers.

These products help Gillette to serve other segments other than men and women who shave regularly and also build Gillette’s brand awareness and brand equity in the long run. In 1990, Gillette continues to strive for the dominant sales position around the world with more incremental innovative products. Gillette launched the original Sensor razor, the first razor to have spring-loaded blades which claimed that the blades receded into the cartridge head, when they make contact with skin, helping to prevent cuts and allowing for a closer shave.

In 1993, the Sensor Excel was introduced with the added feature of “Microfins,” a piece of rubber with slits at the bottom of the cartridge and Gillette claimed this helped to raise facial hairs, making for a closer shave. Along the same product category which serves the women segment is the Sensor for Women system, launched in 1992, which is the revision of the Sensor and Sensor Excel product line. This system established a major hold on the market for female razor products in the United States.

With such effort, I think Gillette succeeded in increasing Gillette’s brand awareness thus increased its brand equity, although the continued success of the Sensor family of shaving systems led to the gradual decline of the Atra and Trac II twin-blade shaving systems. Six years after in year 1998, Gillette introduced the world with Mach 3, a razor with three thin blades designed to provide a closer shave in fewer strokes with less irritation.

The Mach3 featured five improved microfins and spring blades, a pivoting head with greater flexibility and a blue lubrication strip that faded with usage to encourage users to change their blades more frequently. The feature of the fading lubrication strip served as a great influencer to impact the consumer to buy more of Gillette’s product—the cartridges. The Mach 3 became Gillette’s most successful new product ever as sales hit $ 1 billion in only 18 months. Besides, being the winner of the American Marketing Association’s Grand Edison Award as the est new product of 1998 also proofs the success of this innovative product. Further innovation efforts in this product line are the Mach3 Turbo and the Venus system for women. Besides, Gillette is able to widen its market share to teens who shaves with a line of Sensor razors in a variety of colours in an attempt to develop lifelong customers at a young age. Due to the high profit margin Mach3 created for the shaving market and the uncontested market space, Schick’s enter the market with Quattro—the world’s first foue-bladed razor.

Besides, another product which carries Schick’s brand is the Intuition razor, also suite as the close substitutes to the Venus and Sensor shaving system. The occurrence of direct competitor, competing for the same market segment has affected Gillette’s market share to fall 4. 3 % from 67. 3% to about 63%. Therefore, Gillette started to react aggressively by continuing its progressive geometry technology innovation by introducing the Fusion razor in 2005. The Fusion uses a unique five-blade design with a single blade on the back of the cartridge for use in trimming moustaches and sideburns.

Initial sales were very successful as over 4 billion razors were sold within the first two months, 20% more than when the Mach 3 was launched in 1998. Despite many sceptical issues were brought up involving the pricing strategy, product value and the frequency to have to replace the cartridges, Fusion still gain its success by approaching the $ 1 billion sales within 3 years. However, the consumers reflected in the Consumer Reports whereby Fusion was no better than other razors, particularly the Mach3.

In the later stage, Gillette continued to innovate by offering power versions of its razors that contain tiny electronic motors in the handle. These motors create a vibration in the blades that cause hair to stand more erect, thus giving a closer and smoother shave. The powered razors also helped promote each company’s batteries. Other products which contribute towards Gillette’s sales are the supplementary products, for example the chemistry if shaving creams, gels, and aftershaves in order to compliment the shaving experiences.

The vison of the wool manufacturing sector of Australia is to expand its export sales to emerging markets in the ASEAN region. Emerging markets are those of the developing countries with high demand on basic raw materials for clothing manufacturing and other industries related to uses of fiber, plus the corollary products from the same category of industry. Emerging markets maybe from developing countries, rather than highly developed ones. The mission would be to penetrate these emerging markets, create a foothold with the right liaison procedures and obtain long term contracts for wool, wool products and its ancillaries.

The main objective is to increase the export revenues of the wool manufacturing sector, thereby contributing to the GNP and GDP of Australia to improve per capita income and to generate more employment. The specific objectives are: a. To find out the trade channels of emerging markets in the ASEAN Region and penetrate these markets. b. To develop the right strategy how to penetrate these emerging markets and establish long-term trading activities with the same. c. To research more uses of the wool fiber as raw material, whether in bulk raw wool or thread wool or fabric wool.

d. To involve foreign investors as allies in the development of wool fiber for new uses of wool and its corollary products mentioned herein. e. To secure a captured market in exchange for foreign investments. 1. 1 Sales Objectives The general sales objective is to establish a continuing and growing demand for export sales of wool, wollen products, probably new developed products out of wool, and corollary wool products, e. g. sheep meat or lambchops and sheep leather. The increase in sales may not actually mean increase in profitablity in the short term.

It is the long term objective that is the main focus in order for sales projections to be drawn with ease and followed. Long term projections can only be done if investment-marketing contracts can also be drawn with the probable buyer of the manufactured products. It would be an investment laden project, such that the need for investment can be specifically pinpointed in terms of machinery, labor, working capital and project costs or, in order to find out the specific uses of the capital investment.

From there, the Return on Investment (ROI) or the Return to Equity (ROE) can be calculated and deemed to be viable or feasible to Autralian preferences. Thus, the sales objective considers the long term viability of the project and determines what level of equity the Australians should allow any foreign investor to come in and intervene in the wool industry. 1. 2 Product Positioning There is no substitute for a high quality, optimum priced product and consistent supply and these factors must be the position of the products.

In order to elaborate further the market position, it is best to enumerate the products that may come from the wool industry, expound the charecteristics of the products and analyze where it uses would be. Thereon, there could be research and development (R&D) to improve the product so that there is value added when it is sold. a. Bulk Raw Wool Fibers Bulk raw wool fibers maybe classified. The usual process starts with sheering, washing, bleaching, drying and bailing. Then there can be classifying, perhaps, into which batch comes from a more mature or younger herd of sheeps or known sheep varieties.

Another way, which would need R&D, is to find out how to separate the long fibers from the short fibers. Then the method of classification can be into long and short fibers. Machineries can be designed to seggregate which fibers are long or short. Both kind of fibers can be wooven into fabric with different characterics and long fibers can be an additive in matress production for car seats. In Europe car seats have organic fibers as substitute for foam cushions, and is already a regulation. Foam cushions produce toxic fumes when it burns in case of accidents.

b. Wool Thread If and when wool can be seggregated into long and short fibers, there can also be two kinds of threads produced. Short fibers will produce thread with short elasticity because the spinning process produces a more fine textured thread. Long fibers will produce thread that is more elastic, which is wool’s characteristic and has been accepted by users of this thread. Fine thread from wool can become a new product which can be compared to cotton thread. c. Wool Fabric When wooven into cloth, long fibers make the cloth stretchable.

The stretchable fabric is usually used for insulation such as sweaters and blankets, the main finished products of wool. Although standard woolen fabric is good insulation, it has a charcteristic very distinct from cotton cloth. The wool fibers are a bit abbrasive and may induce allergy or itchiness to human skin and is generally heavier than cotton fabric. Should there be fine thread from short fibers wooven into wool fabric, then the outcome would be fine and lighter cloth, which can become a versatile material in sewing clothes.

Definitely, this range of product development needs R&D. d. Sheep Leather Sheep skin can be processed into leather to manufacture rubber shoes. China and Korea are becoming top producers of rubber shoes. Those countries could be the target market of sheep leather if it were tanned in Autralia. Thus, tanning sheep leather can become a side manufacturing concern of the wool industry. Cow and kangaroo leather from Australia is already known in the world market. It would not hurt if the sheep leather market can be developed.

Rather than disposing sheep skin as fertilizer, it may be manufactured into leather. e. Sheep Meat or Lamb Chops It is only logical that there is consistency in the supply of raw materials for wool. Thus, backward integration to produce wool becomes an inevitable factor when there are plans to expand the wool market. Therefore, sheep production, which Australia is also known for, becomes an integrated portion of the wool export industry. Sheep are proliferous and multiply like goats and there will be surplus of sheep in terms of number of heads if the wool industry were to expand.

Lamb meat can become one of the ancillary products of the wool industry and capacity of processing plants for fresh or even canned sheep meat must be ready when the market is developed. 1. 3 Product Objectives It is best to enumerate again what are the probable export products derived from the wool industry: short fiber raw wool, long fiber raw wool, fine wool thread, ordinary wool thread, lamb chops/sheepmeat, and sheep leather. The overall product objective is to enhance the development of products manufactured from the wool sector. This sector starts from the livestock production of sheep, an integral part of agriculture.

Wool must not be the only product that can derived from this industry. In terms of short and long fibers that need R&D, new machineries may have to be brought in. This could be done by asking foreign investors to conduct the research, design and fabricate the machinery themselves. The machines needed would pertain to milling machines, weaving, and knitting machines. If China were the choice of partnership, it has already developed its machineries for weaving and knitting. It may be the milling machine that should be designed in order to segregate the short and long fibers before milling into threads.

The threads may be further processed so that the texture could be close to or the same as silk, a well known Chinese fabric. In any case, innovation should come in so that the end products becomes a new one and will probably have its place in the fashion world, which is very big business. Should this happen, there will be curiousity from European buyers, thereby creating a damand, as the capital of fashion is in Paris, France. This would expand the manufacturing sector thereby generating more employment for the locales.

In terms of sheep meat, blast freezing and cold storage facilities upgrade may be needed for the expansion of the industry. Foreign investors may also be invited. The same protocol may be applied to sheep leather manufacturing. The machineries acquisition can be negotiated such that it may come in the form of a loan, whereby, part of the payments would be in the form of manufactured products the machineries would churn out. In general, the direction of this concern is towards expanding the manufacturing sector in processing, increase employment, generate export revenues and foreign investments.

1. 4 Pricing Objectives General market re-entry, just like pricing, is an art. The general pricing objective is to retain optimum profits that would benefit the industry in the long term. The volume of business may compensate the optimum profit margins when the demand for the manufactured products increase. The pricing should be generally lower than competition. This would attract foreign manufacturers to buy the wool and woolen products. When it comes to leather, the pricing should be comparable to hog leather (e.. g. Hush Puppies use hog leather).

Only when if it becomes a fad and is highly sought for, should sheep leather prices be increased to a maximum level. Shoes are a basic necessity too. Leather bags and luggage may not be a necessity and fashion trends may dictate the demand for these leather products. When it comes to sheep meat, prices should go lower than that of pork or chicken prices as cheap food is a sign of progress. Generally, product innovation should be one of the largest factors in product objectives. It is a fact that wool has been a fabric since the medieval ages and is outdated.

Sheep meat has been a staple food to some countries but has not been promoted as a low cholesterol meat. Sheep skin could have been used only as insulation or rough clothing during the medieval ages also, and not as leather for shoes and bags. Innovation is altering the product so that when it is used or consumed, it is new and attractive. Thereon, consistency in supply and quality again should be sustained. Lastly, when innovation is implemeted, the product or products has to pass the taste and preferences of the target market. Test marketing can be done through the trade envoys in the various embassies.

That wold be part of promotion and advertising already. 1. 5 Retail Objectives As previously mentioned, one of the objectives is to sell the products to wholesalers and not go into direct retailing. The fibers of bulk wool, and wool thread may be sold to textile mills suppliers. The woven fabric may be sold to textile wholesalers whose down the line customers are tailors, haberdashers and manufacturers of apparel. The leather can be sold to large leather wholesalers. Lastly, the meat can be sold to a main office of a chain of grocery stores. 2. 0 SWOT Analysis of the Products a.

Short and Long Wool Fibers in Bulk, Fine and Ordinary Wool Thread, and Fine and Ordinary Wool Textile Wool fibers and products are unique in a sense that it provides better protection against cold weather. It is organic in nature and does not come from synthetic resins. It has been known to be the source of textile since production in Europe started. Clothing sewn from wool generally cater to residents of temperate and artic countries. Australia, because of its vast grazing lands can produce sheep in voluminous quantities assuring the consistency of supply. These are the strengths of these products.

The weaknesses of wool products is that Australia’s geographic position is far from temperate and artic zones that are most populated, no market. On the side of the globe where Australia is located, the most developed market is Japan. Europian markets are not that accessible due to the distance which would increase freight costs. Another weakness is the acceptability of wool sewn clothing. Though fabric from wool make good blankets, its acceptability seem to be outdated because of the emergence of felt and other cotton like materials that are also thick and provides good insulation from the cold.

Blankets and sweaters are the most sewn apparel from wool, with the introduction of thicker textile substitutes, the demand for wool decreased. Another weakness is in terms of the acceptability of the fabric when in contact with human skin which may induce allergies. Lastly, the fabric produced is heavier in terms of weight, than other fabrics. Opportunities lie in the current and biggest emerging market, China. China is about 2 billion in population. China is an aggressive market because it has positioned itself in the ASEAN Region with trading agents and its strategy has become an open trade policy if proper liaison can be done.

With very cheap machineries fabricated from the mainland, it may be possible to negotiate the R&D portion for the bulk wool fiber. The biggest threat comes from its largest competitor, cotton. Cotton is light and is very variable in terms of sewing clothing. Countries producing cotton are located near the tropical zone and are positioned nearer the emerging markets than Australia, meaning the freight costs are cheaper. b. Sheep Leather The strength of this product also lie in Australia’s capacity to produce it in bulk and it may come out cheaper than cow leather.

The opportunity lie in the huge market in China and Korea for leather and it may mean the introduction of the product at the right quality, quantity and price to garner this market. As earlier mentioned, China and Korea have been manufacturing rubber shoes. The threat is again is in its competitor, cow leather, and Australia’s own leather production may be the same culprit. Balancing the export of the leather products, whether it comes from cow, kangaroos or sheep might be hard to implement if there is over production. c. Sheep Meat/Lambchops The strength of this product lie in the consistency of production.

With the vast grazing lands in Australia and its agriculture technology, sheep production has become comparable with cow production. Australia has gone into export of lamb meat during the mid 90’s, but has not fully developed the market potential. Australia is also known for its beef supply, though sheep meat has already been marketed (e. g. Philippines), the market forces somewhat gave the impression that supply is inconsistent. The weakness of this product is its acceptability because of its semi-pungent odor and knowledge has to be transferred to those who would cook it.

Sheep meat, the same with goat meet, has to be processed or seared with heat first before it is cooked and the process is just simple frying of the exposed surfaces. There is a very large market opportunity for this due to two (2) given and existing circumstances: (1) there is growing consciousness about the carrying capacity of bad cholesterol of pork, chicken and beef, and (2) Muslims do not eat beef and they tend to shy away from pork as customary practice, instead, goat’s or sheep’s meat is preferred. The Muslim people and Chinese (because of the large population) in the ASEAN would also be in need of food.

The opportunity to develop the demand for lambchops or sheep meat exists. This is a very large opportunity because there are large Muslim populations also in the same region. Mindanao in the Philippines, Indonesia, Malaysia and Singapore have a significant number of Muslims in their populace. Sheep meat has threats from cheap pork and chicken meat (beef prices are very high). Producers of pork and chicken in the ASEAN have been in the doldrums too because of the high cost of feed ingredients but once in a while there is glut in these particular markets when the U. S. and Canada dumps its excess production into the ASEAN region.

The nations where excess are dumped generally protect their producers by imposing high tariffs for these products and this may also pose a threat if sheep meat becomes a lot cheaper than prices of pork or chicken. 3. 0 Strategies The brand positioning of wool, woolen products, sheep meat and leather may take the low key, low profile stance at first. Raw material from Australia, final product made in China or Korea. Australians may, might as well take advantage of the cheap labor from these manufacturing countries, and should allow the same to manufacture the end or final products such as shoes and apparel.

When it comes to sheep meat, it could carry an Australian brand since there is no other large sheep production in the region. The market entry or re-entry strategy can be to invite Chinese investors to conduct the R&D portion for the short and long fiber segregation. Let them develop and fabricate the machinery then buy the machinery from them with the intent to supply the manufactured fibers to them also. With fiber segregation, comes thread production, then textile milling or fabric production. The Chinese have already machinery for these and it could be included in the package.

It may revolutionize Australia’s textile industry. The practice of machinery acquisition in exchange of manufactured end product or raw materials have already been done by the Chinese in Thailand and the Philippines. To exemplify, vapor heat treatment plants for mangoes were put up in Thailand in corroboration with a private company and the Thailand government, provided the Chinese will buy the entire mango produced. In the Philippines, decorticating machines for coconut fibers were loaned to a government agency in charge of the coconut industry, provided all the fibers (whether short or long fibers) were bought back.

Thus market entry or re-entry is possible with the Chinese, to supply the R&D, needed machinery, and provided all the produce would be bought back. The general strategy for market expansion is to let foreign investors come in and put up their own plants to manufacture the mentioned products herein, provided they market the products themselves. Sales strategy advertising is easy with the global upgrade in information technology. But, for the general public to be aware of emerging new policies of trading in Australia could require direct advertising in television and newspapers.

This could be done through the trade consuls of the embassies of Australia in the countries within the ASEAN Region. The strategy for product positioning can be generalized to be generic sold products at first, and then acquire a brand name later on. This could probably mean that the goods are traded are in bulk status. 3. 1 Sales Strategies For market segmentation, the particulars could be Japan, China, and Muslims from the ASEAN Region. It would be better to cut off the supply with Japan first, let China enter.

Market forces should be monitored for control and market research. China has several retail outlets in key cities in Japan (Tokyo, Kyoto, Nagasaki, etc.. ). For Muslims, which would pertain to sheep meat marketing, trade consuls can offer counter trade measures to promote the product. Counter trade means there is no change hands of currency but plain barter. This is usually done on a government to government (G-to-G) basis. Stratety in distribution would be in terms of volume. The best would be to allow China to buy all, as this has been their practice with other countries.

Slowly remove the Japanese market and let the Chinese do the trading and networking, make the Chinese Australia’s allies in trading. Definitely there will be some unpleasant reactions with the U. S. and the U. K. with these move, thus the Australian government should be ready for this. 3. 2 Product Strategies The product strategies can come in terms of service and support. When the Chinese have decided to enter into Australian territories, they might as well have some incentives like free trade zones, less tariffs for machineries, dedicated warehouses and maritime discounts in berthing their ships.

This can justify adjusted lower FOB pricing rates and the high costs of freight.. 3. 3 Pricing Strategies Now that the general strategy is to tap China as an emerging market, at first FOB prices of the manufactured goods must be 5 to 10 per cent lower compared to its competitors. This should be done provided a yearly marketing contract can be inked with the Chinese. Chinese traders practice forard buying; which means that they might opt to buy the whole production for one year of a manufacturing plant, securing a low price and selling the manufactured goods when prices of the goods go up.

This semi-monopolistic in nature but works very well if a company is into trading and has very huge capital base. Forward buying is very capital intensive. 3. 4 Retail Strategies The trends for market position of wool and its corollary products should start from the very basic step of the product chain that it can access abroad, the wholesalers. China is a wholesaler and bulk trader. The manufacturing sector of wool and other products must at first, take a stand that their final export product must give a privilege for better profit for the wholesalers as their allies.

In the short run, this may mean that in order for the products to penetrate the retail market, other people outside the wholesalers network must be deplored and employed by the wholesalers themselves. It also may mean that the wholesalers that are buying the final export products could independently establish their own retail chains. Thus, the first position of the wool and other corollary wool products should be that of the wholesalers dominion. The next, and without violation of the terms and conditions with the current wholesalers, would be the retailing sector. 5.

0 Budget The product marketing plan must come in phases; therefore, it would be hard to arrive at a fix budget for the total project cost of implementing the plan. Only in the first phase can a budget be appropriated for approval. The first phase would be to approve the concept and policies in the magistrates of the Australian government and conduct advertising and marketing campaigns for the re-aligned trade and marketing policies through the embassies. TV and newspaper promotions would be the bulk of the cost of the campaign. Let us estimate the allocation at A$ 200,000.

00 per country, targeting seven (7) countries; total estimated budget is A$ 1. 4MM. This can suffice buying airtime and newspaper publishing for one year. Additional single-liaison staff maybe hired in the embassies but the representation allowance should be flexible, as Chinese representatives are hungry for wine and dine related negotiations. 5. 0 Future Trends and Issues of Marketing Concern The future trends in the global market: more use of organic fibers and leather rather than synthetic substitutes because of the characteristic that synthetics churn toxic fumes when it burns.

In the last few decades when there was little awareness on accidents concerning toxic fumes, the trend was to use non-organic fibers. But when research resulted to synthetic fibers as the source of toxicity, the manufacturing sector using synthetics has slowly reverted to organic sources. This is the same trend with foods and sheep meat as health food will become a fad. The future issues that may arise are that of capital flight to Australia from China, exchange rate fluctuations, currency retention in the partner countries. This can be addressed by lowering or totally eliminating the trade deficits between partner countries.

Whereas, Australia may buy Chinese machinery and equipment in return for a captured export market, at both profitable levels of operation, ROI’s and ROE’s can be internally kept a secret within and between both trading partners. 6. 0 Conclusion The product marketing plan designed herein to increase the export revenues of the wool manufacturing sector in Australia is to garner a corresponding increase in the gross trade revenues of the country as a whole. It must consider the balance of trade with the ally it will do the trading with.

In terms of foreign investments, the trading partner, in this particular case it is China, Australia must be very cautious in the pricing of the machineries and the technology that China will bring in. Machineries and technology prices are hard to determine especially if the entity who would buy such were not involved in the actual design of the latter. Australia could only specify the technical data and the percieved or target outputs of the machineries. At any rate, technology is a fast maturing factor. New technologies emerge as the old ones are still being used.

It may be that the cost at the start would be very high, but as the machineries depreciate, the technology depreciates and so with the cost. Further, the after sales service agreement with the Chinese for the machineries could be designed in a such a way that the acquisition of spare parts and other necessary materials to run the machineries can be less costly. These would all depend on the transparency of the trading partner. The logic behind it is that both partners should make enough profits from a sustainable industry and the profits should be declared as transparent as possible.

This is the very reason why the long-term goals are the focus of the product marketing plan. The rest of the strategies can be adjusted along the way if the plan implementation should follow another path and not as intended. The planners can think of 1,001 strategies and can implement some of them after the planning stage. When implementation diverts from what has been as planned, alternative strategies could be applied. The best thing that could happen is to be right the first time, during implementation. References: Agdayemawer, M. L. (1992). International marketing strategy.

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Aloha Products is a United States-based coffee-processor company that has been providing non-specialty and low-priced coffee for over a hundred years. It purchases the raw materials or what buyers and sellers refer to as “green coffee” from brokers and trade firms then processes the coffee and sells the final product to customers. Large companies such as Nestle and P&G directly import the unprocessed or green coffee beans from coffee plantations in tropical countries such as Brazil and Colombia while companies with smaller levels of business such as such as Aloha buy the green coffee beans from brokers or trade firms.

Aloha Products is managed by the owners and its headquarters is located in Ohio, United States. It has three plants located in Midwestern United States, each plant being responsible for its own profit and loss. Each plants performance is measured by each plant managers gross margin generated per plant. The raw materials or green coffee beans are handled by the company’s purchasing unit that is located in New York City. Each plant receives a production schedule that is determined from the center and receives raw materials as well as pay in accordance with the production requirements of each plant.

Aloha’s Top management is regulated by the members of the founding family. Company uses centralized control system where all main decisions regarding purchases, production, sales, marketing and promotion are made on corporate level while plant managers are only responsible for their profit and loss. Also there is centralized preparation of overall financial statement at home offices. This organization has led plant managers to a lack of adequate control over the activities of the managed plant; however, they are still assessed on the performance.

This method has been done until in the 1990s, when the plant managers started to speak out on their dissatisfaction on the computation of their bonuses since they do not have authority to determine the prices of raw materials, production schedules and output prices from the manufacturer. External factors such as the steady decline in Americans consumption of coffee from 1965 to 1990 affected the sales and profits of coffee processors as well.

Because of this, the company president hired a consulting firm to evaluate the current control systems in the three major departments: Plant Operations, Sales and Marketing and the Purchasing groups. 2. Case Question No-1: Evaluate the current control systems for the manufacturing, marketing, and purchasing departments of Aloha Products Answer is: From the case we can see that Aloha products have a centralized control system. What this means is that the main office or headquarters handled the purchasing, marketing and sales activities of each of the three plants.

Based on the current control system evaluating three major departments of Aloha Products are described as follows…… Evaluation of Manufacturing Departments: There are three production plants within AP’s manufacturing department; each plant is responsible for their own profits and losses. Unfortunately, the managers have no control over the any of the major activities in their respective production facilities. the vice president of manufacturing oversees all of the roasting, grinding, and packaging processes. Production schedules are provided to each plant manager for the current and following month.

The plant managers also have no control over the green beans purchase, production schedule, production mix, or the costs of their inputs, as the purchasing department assigns the costs based on the specific contract for that shipment. If the inputs exceed the plant’s requirements, they are sold at the spot rate in the market, and could very well result in a loss. Evaluation of Purchasing Departments: The purchasing department is responsible for obtaining the required quantities and types of green coffee to be roasted in the production plants.

The level of sophistication and expertise needed makes this department a necessity; proper staffing is vital based on the complexity of the green coffee market. This department relies on relationships with growers and brokers; for smaller firms, an important feature of this department is their ability to foresee demand and required inventory and subsequently enter into forward contracts with brokers, anywhere from three to twelvemonths in advance. The costs of each shipment are based on the specific contracts for those green coffee beans, which can vary based on the various price drivers previously mentioned.

This can create a diversified and volatile cost of inventory. Required inventory demand is based on communication between marketing (sales) and the purchasing department, any discrepancies at the current date is met by purchases through the spot market, which incurs significantly higher costs. The costs associated with running this purchasing department are charged to the headquarters of AP. Currently, there is no communication between the purchasing and manufacturing department. Furthermore, purchasing department does not need to report to head office or meet any performance measurement standard.

Ultimately, the power resides with upper management of the purchasing unit. Evaluation of Marketing (SALES) Departments: Under the current structure, this department is centralized. The president of AP and vice president of sales are in charge of advertising and promotion of the final products. The marketing department also determines the budgeted sales, which are then passed onto the purchasing department. Case Question No-2: Considering the company’s competitive strategy, what changes, if any, would you make to the control systems of the three departments?

Answer is: The changes to the current control systems involve establishing accountability and effective communication among the three departments and providing key measures to evaluate the managers’ performance objectively. Recommendations for the current management control system of Aloha Products are as follows…. Recommendation for Manufacturing Departments: The manufacturing department is currently a profit center. However, the plants do not have control over the costs of the green coffee.

Thus, the main concern of this department as a whole should be efficiency; how well they can control the costs to roast green coffee. As such, were commend that the manufacturing department’s plants be accountable for the costs incurred to roast and package the green coffee. The performance measure for the manufacturing department at AP should be evaluated based solely on the roasting, grinding, and packaging of AP’s coffees. Conceptually, it’s unfair to evaluate manufacturing as a profit center, when in reality it has little to no control over product costs or sales.

Since control over purchasing and selling will not be transferred to the manufacturing department in this proposal, it is logical to assess based on controllable factors such as cost/pound only. This is in contrast to a measure such as using manufacturing costs as a percentage of net sales. Instead of being assessed for the performance of the purchasing and marketing departments, plant managers will now have an incentive to ensure their costs do not vary from the standard. It would still be possible to evaluate roasting plants based on gross margin as well.

However, to ensure that plant managers are not penalized for fluctuations in the cost of green coffee contracts, a standard cost for green coffee would have to be established and used in the computation of gross margin. Recommendation for Purchasing Department: The purchasing department’s costs are being charged to central office. Due to this, the purchasing department is not being held accountable for the contracts it is entering into. The purchasing department’s main concern should be actual contract costs.

Thus, we recommend that the purchasing department be accountable for the difference between the actual costs per signed contracts and the standard cost of green coffee raw materials. The actual costs should be measured in a similar manner to the current practice. Contract costs related to buying and selling in the spot market should not be included in the computed price per bag. A reasonable standard cost for green coffee contracts will have to be established based on discussions between management and executives in the purchasing department.

The standard cost could potentially be based on the average of the spot price over the past 6 months. We recommend that this standard cost be updated every quarter, in order to provide accurate standard costs of green coffee raw materials. Recommendation for Marketing Departments: The marketing department focuses its efforts on advertising and promotion, however, it is not held responsible for the costs it incurs or how accurate their sales forecasts/budgets are. There is a large cost associated with differences between the forecasted requirements and actual requirements.

The difference results in purchases or sales at the spot price for green coffee, which tends to cost more than forward contract prices. It is not reasonable for the marketing department to perfectly forecast sales and therefore there should be leniency in developing a method of accountability for this department. We must keep in mind that our goal is not only to hold each group accountable, but also to make sure managers feel they are being evaluated fairly and motivated to improve performance. In keeping with this, actual sales volume should be compared to forecasted sales volume.

This will not only help to keep the marketing department accountable for their activities, but will also allow for forecast methodology to be reviewed and continuously improved. Overall, we believe that we also need to establish goal congruence between the three departments. This can be achieved through emphasizing communication between departments; this would encourage the forecasts of purchases/sales to be more accurate. In order to increase goal congruence and communication we recommend that the departments also be

evaluated based on an overall measure for the firm. This measure would be economic value added (EVA), as when it is applied, managers will not just be focused on their own department profitability, but also that of the company as a whole. The EVA approach promotes the same profit objectives across the different departments. Thus, by keeping the same structural organization and only changing the way each department is evaluated, the incentive plan for each department more accurately reflects what each department can control.

You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why. You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why.You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why.You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why. You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one
product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why.You may wish to choose a business you already have knowledge of from trips or your part-time employer.

For a product of your choice:

1. Clearly explain the main cost elements and the nature of those costs – define and give relevant examples of variable, fixed, semi-variable, direct and indirect costs

2. Suggest the weekly production level and a breakdown of costs for one product from your chosen business. Then calculate the marginal and absorption costs per unit.

3. Describe at least 2 methods of setting the price, including cost-plus pricing. Then suggest which method is best suited to your chosen business’ product and why.