Sec102Team6StrategicPlan (2)

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Simulation Strategic Plan COMR 465 102 Instructor’s Name: Phaedra Burke Date Submitted: Sunday November 6th, 2022 Simulation Team: 6 Names: Isha Afzal, 51722585 Lynn Campbell, 19443662 Emma Ho, 37195534 Koosha Issari, 66800392 Maanit Rohira, 21952205

Simulation Strategic Plan Company Vision Prime Apparel wants to minimize costs of production and marketing expenses in order to maximize the rate of return on investment. Assuming estimated sales, we will implement a target return pricing strategy with the goal of a 50% gross profit margin on our packs. Company Mission At Prime Apparel, we value accessibility, reliability, and versatility. We are committed to providing comfortable, minimalistic, and high-capacity daypacks that are not only suitable, but essential, for all your day-to-day backpack needs. Objectives 1. Gain majority market share among our target segments (university and school children). We will consider market size, growth rates, purchase behavior, price preference data, and desired characteristics (alongside their corresponding production costs) to target the consumer segments with the greatest potential for generating revenue. Since school children have the greatest market share, our primary focus is to appeal to their needs. However, we will sacrifice some of their desired characteristics to maintain a design that is minimalistic enough to appeal to other segments. Considerably, the design’s simplicity would also benefit us in keeping the cost of production low. 2. Price the backpack to maximize marginal revenue while remaining in the budget of our target consumers. We will aim to find the highest price that our desired consumers would pay for the value of our daypack. We will aim higher than the average price preference of our target market segments to find the maximum we could charge without overvaluing our product. We are aiming to set a price that is high, but still within budget for our target segments. Since the 1

production costs are low, our pricing will still be an affordable option in comparison to competitors using more expensive materials.] 3. Distribute through as many channels as possible to establish brand-recognition and choose a marketing strategy that is cost-effective. We want to keep advertising costs low and will limit our advertising budget to less than 10% of our estimated revenue. With a high marginal profit on each backpack, we hope to be able to distribute through many channels and still make a significant profit after paying distributors. Proposed Backpack 1. Product (backpack) Strategy The target market is school children, but we are also directing towards university students. We want to design a bag which will be targeted towards school children, but make it a mature design so older students can also use it. This means no cartoon graphic images. 2. Placement (distribution) Strategy We want to try to get as many placement channels as possible with a positive profit. We will try to place the backpack into the following channels: Department store, Online discount retailer, Direct, Discount retail chain, and University Store. 3. Target Market Strategy We are targeting School Children since they have the largest market size of 36,413 which is about 34% in the total market of 106,171. Also, this group has the highest product awareness with 19%. 4. Pricing Strategy We utilized the Everyday Low Pricing strategy to decide on a price of $32 per unit. Due to our choice to use inexpensive materials, the cost of production is low. Even though our price is set so the company makes a significant marginal profit, our packs will still be an affordable option compared to competitors offering more (costly) features. We predict that many of our competitors will have a higher cost of production and, 2

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consequently, sell at higher prices. Our customers will not have to wait for our packs to go on sale to make a purchase. 5. Promotional Development (Positioning and Media) Strategy Positioning: For the benefit message, we will use “Fun” and “Great Value.” This combination will result in a high percentage of clarity and competitiveness and can attract more school children and university students to the product. Media: We will use advertising media with a larger reach to school children, such as comic books and gaming sites. We want the largest reach with less amount of money spent. Comic books and gaming sites are popular media advertisements commonly used by younger audiences. This will help reach our target market. TACTICS that will be used as a team (decision-making and implementation) so that decision deadlines aren’t missed: Tactics to successfully meet the objectives: The strategy we are using is profit oriented. The tactics we are using for price is target return pricing. As a company, we are interested in a 50% gross profit margin return on our packs. We have chosen to have the packs available on multiple channels to make it more accessible for the people and increase the percentage of sales overall. We have chosen ads with more exposure to children, but at the same with larger customer reach overall. This will help increase product awareness at a lower cost. The product is designed to be comfortable, minimalistic, with high-capacity which can be targeted to school children but also university students. Our target return for this product, due to our high profit margins and the size of the market we are targeting , is expected to be around 300% annual growth on investment assuming sales between 800 and 2000 in the first year. This is assuming our only fixed costs are marketing if we outsource our manufacturing. To achieve this target return we calculated the MSRP price of the product to be around $32 to help achieve our goal. This is 30% above the average purchase price data for school children, which we believe is reasonable given the quality and desirable features of the bag. To break even, 248 bags must be sold annually. Tactics for Successful Simulation 3

We have as a group chosen to follow the strategy used in one of our simulations with the highest revenue generated. This will help us choose the best product, placement, pricing and promotion strategy. We can compare the different decisions we all made in our individual simulations and what the result was. This will help us predict the outcome of the competition in the simulation and plan accordingly. 4

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