1°) How would you explain the Guinness pricing strategy and the underlying assumptions about consumer behavior when Diageo reports for 2005 that in the UK and Ireland the Guinness sales volume fell by 3 per cent, but a value growth of 4 per cent was achieved in both markets, mainly due to price increases?
2°) Motivated by the success of this pricing strategy, should Diageo continue to increase the price of Guinness?
HOW TO EXPLAIN GUINNESS PRICING STRATEGY ?
- Pricing: Not just a financial and commercialization part => belongs to marketing and sales strategy
- Pricing affects : - sales - market share - revenue - profit => Right pricing : a direct implication to the product success in the market => The
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|Pro’s |Con’s |
|• rapid turnover growth |• A short-term solution |
|=> Reinvestment in marketing, advertising, development strategy and | |
|product development |• Loss of their youth market share. |
| | |
|• enable them to become a premium brand |• Damaged brand image |
|=> Regarding the consumers | |
|=> Regarding the competitors |• High risk of losing their consumers to competition |
Smashburger is a rapidly expanding burger restaurant concept; they have announced a summary of its 2011 accomplishments and their marketing and expansion plans for 2012. Opening their first location in 2007 and growing rapidly ever since, now in 2011 Smashburger had yet another successful year of growth and consumer acceptance. Smashburger is quickly gaining national recognition for its juicy handmade burgers that are smashed fresh and served delicious, along with its localized recipes that celebrate regional taste profiles in
Consider the ski resort satisfaction data we used in class (“satisfaction.sav” in Week 7 folder). This is data based on a survey of 500 users of a ski resort. In class we did part of the analysis. In this question you will be asked to redo some of the analysis and complete the rest. For part a), b) and c), write down your null and alternative hypotheses and then discuss the hypothesis testing results based on SPSS output. Please show your SPSS output for part a), b), and c).
Therefore, we must look at the Income statement for 2005, the 2% decline in sales of premium beer, the contribution margin, the 4% growth of light beer. Also, we need to consider that several costs are incurred to introduce this product line. For example, the cost for a six-month advertising campaign to gain 60% awareness is $750,000, not sufficient to justify the risk. Also, there will be an increment of 900,00 in SG&A, and a new 71.62 Variable Cost to produce the Light Beer Product. Most Important, loss of sales in the premium market will be cannibalize by the new product sales.
1.Provide an argument for why a more variable pricing policy might increase the sales revenue from Apple’s Music Store (compare to flat pricing policy).
The second alternative of implementing a limited everyday low pricing strategy is really dependent on whether or not the option is complemented with an increase in advertising. Without advertising, market share would be contingent on the customer’s awareness of the increase in ‘loss leaders’ at Superior Supermarkets; with advertising, on the other hand, the likelihood of increasing market share with this option would certainly rise. However, with an increase in advertising would come a decrease in Superior Supermarkets’ contribution margin; one must also consider that the high-volume, traditionally popular products that are newly marked with an everyday low pricing strategy would carry more implication towards a decrease in contribution margin then would low-volume ‘loss leaders.’
Brown’s numbers show strong profitability of $2.4 million due to the 2004 sales promotion, while the consultants’ numbers show a loss of $409,697 due to the promotion. Our intermediate scenario, incorporating cannibalization costs but splitting the difference between the consultants and Brown on both sales figures and variable costs, shows a weak profitability of $106,594 from the promotion. This weak profitability must be held against the negative side effects of price promotions in general, and particularly with regard to premium products.
• “Despite the tough trading conditions across the UK in 2010 the company grew total sales by 2.1 per cent compared with the equivalent 52 week period in 2009, including a 0.2 per cent increase in like-for-like sales.” (Annual Report and Accounts 2010, 2010; p8)
penetration pricing strategy. All indications are that sales will continue to grow. In response to a
SK-II is under the concentrated marketing. SK-II has the same marketing mix, and it is for the different customer’s segmentations, which are Demographic, Psychographic and Behavioral. There are 2 main product streams for SK-II, which are Skin Care and Cosmetics. The different product has different effect, like Whitening, Wrinkle Resilient and Spot Control. (*7) The price of SK-II is costly and not adjustable, but there are various seasonal packages for their customers in order to attract them to purchase more and more. Also, there are several selling channels for SK-II, such as Sogo Department Stores, Lane Crawford, Watson’s and Mannings. Excluding those channels, SK-II has their own concept stores in Kowloon Bay and Shatin as well. (*8) For the promotion of SK-II, the two most important ways are from Television and Magazine advertisements with their famous ambassadors.
Diageo’s key ambition is to build one of the leading performing, most trusted and respected consumer products companies worldwide, which is currently been met due to mergers and acquisition. Diageo's main strategy is to drive top line growth and margin expansion in a sustainable and responsible way and to bring reliable value creation for its shareholders in the long term. Diageo will use its broad brand range to do this. They are category depth and geographic reach to deliver on consumer needs. Key to achieving its strategy is the expertise of its people who share the same values.
The word “KTV” stands for Karaoke Television. It is a form of interactive entertainment where amateurs sing along recorded music using a microphone and public address system with a screen of displayed lyrics. There are over 100 KTV establishments in Singapore. Party World KTV is an established karaoke entertainment in Singapore, boasting 12 outlets throughout the island. Equipped with the latest in entertainment technology, user-friendly systems and comfortable spacious rooms, patrons are ensured utmost pleasure and comfort. Party World KTV strives to enrich patron’s experience in singing quality and ‘beyond singing’ experience.