MBA Case Study

average items order in each order amounts to 3 item. Therefore, the average selling price of each order can be determined amounting at $60.33., whichwould enable us to evaluate the total revenues generated by order, amounting at $452,500 based on the assumption that each householdwould order at least one orderunder normal seasonal condition. Moreover, the total revenues generated under peak seasons amount to $905,000, where it was assumed that each household would order at least two order, whereas, the revenues generated under off-seasonsamounted to $226,250.

Young Professional Customers

The young professional customers segment developed by the management of the company comprised of those customers in the market, who were difficult to maintain loyal , and such customers had a tough time balancing work/life. Additionally, these customers were least likelyvisitsite, whereas the cost associated towards their acquisition was minimal. The pricing policy is represented in the exhibit below.

Young Professional Customers

Young Professional Customers

In order to calculate the selling price of each item ordered, the total young professional households available to the online store were assumed at 1,200 and the average people in the household were around 2 people. Furthermore, it can be determined that the average value of the order amounted to $74 and the average items order in each order amounted to 1 item. Therefore, the average selling price of each order can be determined as $74.00., which would help us to evaluate the total revenues generated by order, amounting to 88,800 under the assumption that each household would order at least one orderunder normal seasonal condition. Moreover, the total revenues generated under peak seasons amounted to $177,600 where it was assumed that each household would order at least two orders. On the other hand, the revenues generated under off-seasonsamounted to $44,400.

Off-Price Customers

The Off-price customers segment developed by the management of the company consisted of those customers in the market that spent most of their time on the internet and were very savvy in comparing prices with other sites. Additionally, they were prone towards any special offers made by the sites. The pricing policy is represented in the exhibit below.

Off-price customers

Off-price customers

Off-price customers

In order to calculate the selling price of each item ordered, the total off-price household available to the online store was assumed at 1,800 and the average people in the household were  3 people. Furthermore, it can be determined that the average value of the order amounted to $48 and the average items order in each order amounted to 5 items. Therefore, the average selling price of each order can be determined as $9.60., which would allow us to evaluate the total revenues generated by order, amounting to 86,400 under the assumption that each household would order at least one orderunder normal seasonal condition. Moreover, the total revenues generated under peak seasons amounted to $172,800 where it was assumed that each household would order at least two orders, whereas, the revenues generated under off-seasonsamounted to $43,200.
Family Customers
The family customers segment developed by the management of the company consisted those customers in the market who were busy with their families and spent the least amount of time on the internet. Additionally, they accounted towards providing the least amount of profit, attributed to their higher return rates. The pricing policy is shown in the exhibit below.

Family Customers

Family Customers

In order to calculate the selling price of each item ordered, the total family household available to the online store was assumed at 1,000 and the average people in the household were at 5 people. Furthermore, it can be determined that the average value of the order amounted to $45 and the average items ordered in each order amounted to 2 items. Therefore, the average selling price of each order can be determined as $22.50., which would enable us to evaluate the total revenues generated based on the order, amounting around 45,000 under the assumption that each household would order at least one order under normal seasonal condition. Moreover, the total revenues generated under peak seasons amounted to $90,000 where it was assumed that each household would order at least two orders,whereas, the revenues generated under off-seasons amounted to $22,500.

Assuming no Budget or Resources constraint

Under the assumption that there are no Budget and resources constraints faced by the company, additional data could be used to generate a more efficient pricing policies in which the customers’ demand with respect to the product brands, such as the amount of items ordered of each of the favorites brands would be identified in their segment. This, as a result, would allow us to determine the true revenue stream of the order in which various items of different brands could be ordered by the customers. As different brands are sold for different prices, this additional data would help to determine the prices of each item in these brands, and it would further help to determine the total revenues generated from an order, consisting of various items with different brand and prices.

Premium Customers Optimization through Marketing Mix

The premium customers marketing mix is illustrated below with respect to its product, price, promotion and place.

Product

It can be determined that the premium customers had high income, which allowed them to purchase higher valued item or higher valued orders from the site. Furthermore, the products demanded by these customers were associated with high quality brands, which indicated that the quality of product required by these customers was high and this led the company to charge a premium price on these products, hence increasing its economies of scale and profitability margins.

Price

The high quality product offered by the site should be sold on a premium price to its premium customers available in the market, as it would allow the company to attain higher return from the sale of those products, which are associated to high quality brands. As a result, the company would be able to improve its own brand image in the online market.

Promotion

The company should develop effective marketing strategies, representing the wide range of high quality products available in the market, which would increase the appeal of the premium clients towards the product offered by the site. This wouldthe company’s sales revenues, while increasing its profitability.

Place

It can be determined that the premium customers do not necessarily necessary like to go for shopping in crowded places, therefore, there is a huge opportunity for the company as it operates online. The company can provide its customers with a platform, where they could choose their products with the necessary customization as per their requirement. This, as a result, would further attract the premium customersto make purchases from the site.

Pricing Strategy

The pricing strategy should be formulated through efficientdata sourcing as well as appropriate analysis analysis of the market should be conducted along withthe customers present under each of their segments. Therefore, the product should be priced in such while considering the attitudes of the customers towards price. Furthermore, the premium customers in the market could be charged a premium price, as they require the expensive brands in the market. Moreover, the off-price customers should be presented with reasonable prices and offered attractive discount offers or coupon for premium users which would increase the sales units generated from their segment, which would increase their loyalty towards the company, while enhancing their profitability. Additionally, for the family customers, the online store should present those products that would appeal to their nature and requirements, which, in turn, would increase their economies of scales and allow the family customers to gain additional trust on the online store, while increasing their loyalty. Similarly, for young professional customers, the company should incorporate functionality and accessibility in their site design and interface, providing reasonable, yet high quality products to them, which would attract those customers towards the products offered on the site, thus increasing their loyalty and the company’s profitability…………………

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