Australia Based Huggalugs Essay Example | Topics and Well Written Essays - 1000 words

Australia Based Huggalugs - Essay Example Towels, bed sheets and blankets could be added in the company’s product repertoire. All these products can be manufactured to fit into Huggalugs’ core proposition of fashion and function. Most of the new product additions rely on the same raw materials that are used in existing products. By increasing the volume of purchase, the company can exercise more bargaining power over the suppliers of raw materials and gain a cost advantage. Likewise synergies can occur in the production processes (knitting process) as well as the channels of distribution. The skill sets of the existing labour will suffice to produce the proposed products. A product wise profitability analysis can be conducted to determine which of the items need to be removed from the present product line. The company can, after launching the proposed products, claim to be catering to the apparel needs of little ones from head to toe. These outfits would be the children’s best friend whether they are in bed or in the playground. Price A penetration pricing strategy (low price) would entail catering to the masses and dealing in volumes. However this strategy does not justify the quality of the product in question. The skimming pricing strategy (high price) on the other hand would mean that only the top rung of the society is the target market. The thoughts of ‘discounts’ and ‘value for money’ always loom large in the minds of the shoppers (in this case the parents) as kids tend to outgrow apparel pretty fast. It is therefore recommended that the company should adopt a cost plus pricing or ideally a competitive pricing model. A buyer of Huggalugs thus gets the dual benefit of function and fashion at reasonable prices. In other words, the Huggalugs brand gets associated with being stylish, multipurpose and yet inexpensive. Such a pricing strategy may prolong the break even period; however the company would be able to capture a large market share and would sta nd to gain in the long run Given that the company has increased its product range, it could use product bundle pricing. For e.g. if Baby Vintage Smitten (Legruffles) are priced at $ 15, Cheetah (Leghuggers) at $ 15 and Angel Daisy Bonnet (Beanie) at $24.95, a combination of all these 3 product items may be offered at $50. While this combo price saves $4.95 for the customer, it results in higher turnover for the company. The company should also employ ‘special event pricing’ for e.g. during Halloween and Christmas, promotional pricing may be done to encourage giving Huggalugs as gifts. The company should resort to ‘Sales’ sparingly otherwise customers tend to become ‘deal-prone’ Distribution The essence of distribution is that the product has to be made available at the place where the customer expects it to be. Furthermore customers have a tendency to form an opinion about the quality of the product on the basis of the place where it is availab le.