Marketing princing strategy

What

This advice serves to introduce The Glue Roller st JAPAN into the Dutch glue market. The business objective is to provide people all over the world with goods and services that support and promote comfortable, pleasant, smart lifestyles and workspaces, and contribute to the sustainable advancement of society. (PLUS No Kokoro｜PLUS Corporation, n.d.) in other words, to grow and expand, having the business objective in mind, our pricing strategy
aligns with the objectives and the Dutch price response of 3,75 to their perceived value points: refillable, the new design, and the neat and clean stick. Our advice is to capture as As much market share as possible is to position the product in a Standard section, with an optimal price of 3.99 euros a unit, and set a discount of 25% on the second product and 75%. A discount for the 3 products and setting a value pricing strategy

Why

Market Overview and Strategy

The primary goal of implementing this strategy is to significantly increase sales volume and capture a larger market share. This will be achieved by cultivating a loyal customer base and effectively converting sales into revenue.

The Dutch glue market boasts a total addressable market (TAM) of €194,250,000 annually. This market exhibits dynamic behavior, with a noticeable sales peak in September, coinciding with the start of the school year. For glue rollers, the most effective approach is to target households with families, which represents a serviceable market of €45,500,000.

Target Customers

Our focus customers are families with children residing in the Netherlands. These families purchase glue for their children’s use at home to facilitate activities requiring the adhesion of two elements. More specifically, we are targeting families who enjoy engaging in fun activities with their children and actively participate in DIY projects. Common applications for glue products within these households include gift wrapping, securing documents and paper, and various arts and crafts projects.

Pricing Strategy

Based on customer feedback, the optimal price response for a unit is approximately €3.75. The demand curve further indicates that the market is elastic, suggesting that offering discount packages would be the most effective strategy, as customers are highly responsive to price changes. The optimal price according to the demand curve is around €4.00.

Customers perceive the value of the product as functional, emphasizing aspects such as:

  • Neat and clean application
  • Strong adhesion
  • Refillable design

Market Tiering and Competition

The market is segmented into three main tiers:

  • Economy Tier (Price Range: €0-€1): Products in this tier are characterized by poor adhesion, unreliability, stickiness to hands, and subpar design.
  • Standard Tier (Price Range: €1-€4.50): This tier offers products with improved features such as a longer lifespan, refillable options, and medium quality. The GLUE Roller St fits into this tier.
  • Premium Tier (Price Range: €5 and up): Products in the premium tier feature diverse designs, are refillable, provide very neat and clean adhesion, are durable, and have a very long lifespan (e.g., over 10 meters for glue rollers).

Our main competitor in both the Standard and Premium tiers is Pritt, which has established a significant market share and a loyal customer base. Tesa also competes in both tiers but is less dominant than Pritt. It’s also important to consider substitutes like glue sticks and tape as competitors. Our pricing recommendation is to align with the average competitor price in the standard section, which is around €3.50.

Customer Decision Process

The customer decision process can be categorized into four main types:

  1. Price Comparers: Customers who primarily focus on price comparisons and do not prioritize specific brands.
  2. Cheapest Price Seekers: Those who seek the lowest price while maintaining a certain level of quality.
  3. Brand Loyalists: Customers who prefer brands that have performed well for them in previous purchases.
  4. Multi-Aspect Considerers: Customers who evaluate several factors simultaneously, including:
    • The intended use of the product.
    • The expected duration of product use.
    • Product features.
    • Product price.

Customers have indicated that they are more likely to purchase 2 to 3 units when offered a discount. Therefore, a value pricing strategy is the optimal approach for market entry. This strategy will differentiate the product from competitors, foster brand loyalty, and has the potential to generate high-profit margins. The proposed strategy aligns with the business objective by offering discounts on additional products, making the purchase more appealing to families. This will directly contribute to increasing sales volume, thereby supporting the business objective of expansion and growth. The value pricing strategy is expected to cultivate loyalty, helping to secure the expanding market share.

How

Market Entry Strategy

We will enter the market with a value-based pricing strategy. This approach emphasizes the customer value of the product, making the price more customer-friendly. This strategy is designed to increase customer loyalty and strengthen profitability.

Promotion

Our promotional strategy will involve a multi-channel approach:

  • Television advertisements: To reach a broad audience.
  • Social media advertisements: To engage with target demographics online.
  • Arts and Crafts Events: We will provide glue rollers for free at these events to allow families to experience and familiarize themselves with the product.

Sales Channels

To maximize sales and reach the target customers effectively, we will distribute the product through key retail channels:

  • Home Appliance Stores: Such as IKEA or CASA.
  • Department Stores: Including Hema or Action.
  • Grocery Stores: Like Albert Heijn or Jumbo, as these are frequently visited by families (Pinnell, 2019).
  • Online Stores: Platforms like Amazon or Bol.com, to capture the online shopping segment.

Customer Service and Product Support

To ensure a positive customer experience, we will provide comprehensive support:

  • Refill Explanation: Clear instructions on how to replace the refill.
  • Usage Tutorial: A tutorial on how to correctly use the glue roller.
  • Creative Ideas: Provide inspiration for crafts and situations where the glue roller can be utilized.
  • Complaint Resolution: Promptly respond to and resolve product complaints, including apologies for any inconvenience caused.

Product Design and Psychological Factors

The product design will be crucial for reinforcing brand value. It will clearly highlight all features, psychologically communicating to users that the glue roller is the optimal choice for families.

A key psychological factor in our pricing strategy is to initially increase the price to match perceived good quality. As a new product, users tend to associate higher prices with superior quality. Our initial price will be set above the optimal price, specifically using an anchor price of €3.99. This price leverages the «charm of 9 effects,» influencing customers to perceive the price as cheaper due to the non-whole number, thereby increasing purchase likelihood (Chiu, 2023).

Furthermore, we will offer discounts on the second and third units purchased. This strategy aligns with the prospect theory, where people perceive more losses than gains. By offering increasing discounts for multiple units, we enhance the perceived gain for the customer, encouraging them to buy more than one product.

Financial Calculation

  • Estimated Total Addressable Market (TAM) Value for Dutch Glue Market: €194,250,000 (see Appendix 1). This value is expected to remain consistent as competitor sales quantities are not anticipated to vary significantly.
  • Estimated Serviceable Addressable Market (SAM) Value (at optimal price of €3.99, without discounts): €62,244,000 (see Appendix 11).
  • Gross Profit per Unit:
    • Single Unit Package: €3.59 (variable cost per product is €0.40).
    • Two Units (Discounted Bundle): €6.19
    • Three Units (Discounted Bundle): €6.79
  • Gross Profit Ratio:
    • Single Unit Package: 17.8%
    • Two Units: 26.4%
    • Three Units: 42%
    • Total Estimated Gross Profit Ratio: 88.6% (see Appendix 12)

Appendix

  • APA

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