Segments in the Music2Go MP3 market
A. Situation analysis
Segments in the Music2Go MP3 market
The Music2Go MP3 market has three market segments; the standard, youth and sport segment. To begin with, the standard segment involves consumers who are less active than the ones in the sport segment. These consumers do not need high level of technological specifications which is essential in the sports designs. The standard segment is characterized by highly sensitive medium prices between $85 and $100, medium sensitivity to advertising, high sensitivity to distribution coverage, slow change of technology specifications preferences because of the low sensitivity if consumer style. Second is the youth segment which is mainly represented by emphasis on high styles and youths below eighteen years of age. The purchases are done by older people on behalf of the youths; this makes the pricing competitive ($55-$65) and a medium sensitivity to price. The price ranges between $20 and $80 and a high sensitivity to advertising. Also, there is a medium sensitivity to product specifications and distribution coverage. Digital media influences the purchase decisions of consumers in the youth segment. The technological specifications are influenced by fashion and they change quickly. The segment basically moves at a moderate rate on the perceptual map. The last segment is sport, which involves young and physically active individuals who need high level of technological specifications in their music players. This helps them cope with the physical requirements they place on the MP3 players during their sport activities. The MP3 players are priced highly ($120-$135) and a low sensitivity with prices ranging between $60 and $150. There is a low sensitivity to advertising, high sensitivity to product features and medium sensitivity to the distribution coverage. The consumer style changes quickly since the preferences are based on technology. The sport segment moves quickly on the perceptual map.
Short analysis of company
My sales revenue was $110Million, the gross margin was $42.3Million and the marketing contribution last year was $24.6Million. My original base marketing budget limit last year was $25Million, and the amount that was not spent was $7.3Million. My Total Marketing Contribution was $24Million, and the company was ranked number 2 in the industry.
Marketing information report
The potential market sizes at the start of the simulation of the sports, standard and youth segments in the Music2Go market were; zero units, 8.2Million units and zero units in 2016, and in 2017 the expected units were 4.2Million,8.7Million and 4.3Million. The recommended retail prices for the three segments were $130 for sport, $95 for standard and $60 for the youth segment. The most desirable attribute of the MP3 player for the standard segment is the highly sensitivity of distribution coverage while the least desirable is the high prices. The standard segment consumers view the digital media and television channels the most. The most expensive media channel to reach 20% of the viewing population is through magazines.
Performance of Sonic 1
My product is positioned in the standard segment with four other competing products. The retail price of my product is $100 in 2016, and I am ranked third in the group. I sold 8.2Million units last year and third highest in the sold units group. I am currently spending $6Million on advertising with 60% on TV, 10% on the Newspaper, 10% on Magazines an 20% on Digital media.My awareness index was 0.42 last year (2016) and ranked third in my segment.
B. Marketing plan
Company’s Mission Statement?
The mission statement of my company is ; To provide MP3 players with the technological specifications that meet their wants and needs at the right price and ensure a profitable growth through exemplary customer service, innovation, commitment and quality.
The three main goals of my company are profitability, customer service, and growth
Profitability is the main focus of the company and is anticipated in 2 years after the project launch. Customer service is expected to be achieved within year one and growth of the product is projected for two years.
I launched the Sonic 1 product into the standard market segment. There are four other firms in the multi-player industry, and all the companies are in a similar position as my company. My goal is to increase the marketing contribution for it to be higher than that of my competitors. My pricing strategy will involve recommending prices to retailers that the products should be sold for. I set the price at $80. The retail margin for the product will influence its distribution coverage in a way that increases the marketing contribution; therefore I will increase my retailer margin to increase the number of retailers willing to stock my product. I will set the retail margin at 25%. The amount of my total Marketing Contribution is $23.5 Million. Each year I will base marketing budget at 50% of my gross margin, although I have currently spent $4Million and still have $7.3Million on my budget for the year. The number of my sales revenue in my forecast for Sonic 1 product is $105Million, which has a current market share of $4Million. I am currently selling 1.6 Million units of Sonic 1 product. I have satisfied all the available demand at this time. My plan is to keep the product growing and developing