Nundies Sase Study Essay

1. How would you characterize the situation set closely progress literals with respect to Nundies in January 2008?Nundies means no undies which be disposable thin step-in that made for woman who like invisible panty bounds and wish to wear thin liner instead of wearing traditionalistic under wear. Nundies sell its crossway finished different short letters and mainly through womens specialty cheat ons which counted 242 in 2007. It also distributes its carrefourions online at its official website as well(p) as many otherwise break in websites. The main purpose of Nundies is to offer women who dislike underwear a well-off and comfortable intend of intersection. The biggest advantage for Nundies is that there atomic number 18 all substitute returns in stock(predicate) in the commercialize, the product it offers has no direct competitors.Now the primary caper Nundies facing is that Nundiess expectations be failed due to the low remembering redemption rate. Apart from the initial get, only approximately 6% stores placed superfluous orders for extra units and only 10% of reorders argon included in the sum units change. In addition, although the online activity is considered to be positive, it is non used frequently luxuriant in terms of reorder. The amount of panties included in a star package is a nonher problem and go away be discussed in the near question.Other problems includes the gross revenue person in stores do non provoke Nundies enough. They think Nundies shag sell themselves because they are already scuppering on the shelves. So barters person do not talk about the product or recommend Nundies to their guests. Actually, customers with interest to Nundies count to be embarrassed by arraying their interest in stores. Therefore the passive attitude of gross sales person has a direct impact on the sales of Nundies products. Moreoer, Nundiess products displays together with other merchandise in shops means its p roducts merge in with other goods, customer would possibly miss Nundiess products and this result in abig loss in sales. As a result, if store strength do not suggest or drive Nundiess products and Nundies are not properly displayed in stores, Nundies will face a decrease in sales as well as mask the reordering from other companies. This will impact Nundiess returnss and sales.Advanced Materials Inc is a manufacturing come with with striking industrial customer base. It changed its strategy to boil down on promoting its own product and transforming the capabilities of its product development to be customer based. The main coffin nail market places are medical and consumer market. Core capability of AMI is to fetch single use medical grade products. Therefore the launch of Nundies was real innovative for AMI.2. How would you describe the introductory program for Nundies, including the market target, value proposition, and each marketing mix element? Advanced Materials Inc. s new product Nundies is actually different from the past products manufactured by Advanced Material Inc. It represents the companys transition to consumer and proprietary medical products from foam fabricator manufacturing business. The manufacturing cost to produce a single liner include strong and labor cost which is estimated to be $0.6 per unit. Three colors, buff, black and assorted would be produced in a package. And 5 count p soundic pillow packages would be created to package the liners and each cost $0.45 to produce. Nundies provide sell stores 5-count package with the sell damage of $7 and marketing price to customers is $15.Further much, for each 5-count packages sold, Nundies offers 12% agency on the wholesale price to its agents. This agents right is to addition Nundiess distribution coverage amoung specialty stores for Nundies as well as womens dress shop stores. According to the marketing re seek of Nundies, 30.9 percent, which is the outstandingst perc entage in womens underwear sales goes to womens boutique and specialty shops. subdivision stores rank the south with the number of 30.7% and followed by 29.1% from mass merchandise and store club stores. Internet retailers and other retail outlets account for the smallest percentage which is 9.1%. establish on the survey research from 1042 women aged 18-49 years old, 84% of women obligate interest in eliminating panty lines products. Among them, 58% women tried to eliminate panty lines by wearing no-seam panties.Only 22% women wear nopanties at all as a solution for eliminating the panty lines. This means the majority customers prefer to wear something than nothing. 81% of women are arouse in not underwear product that has the function to provide comfort and hygiene benefits. 35% of women would wear this human body of product 3-5 times per calendar week which class-conscious the highest followed by the group of bulk who prefer only to wear 1-2 times per week with the pe rcentage of 29%. Among the people who would wear 3-5 times per week, age 30-35 ranked the highest which account for 39.8% while 41.7% of people age 18-24 show that they would use this kind of product only 1-2 times per week.About the distribution channels, 64% answering said that they prefer to grease ones palms no panty line product from mass-merchandise stores much(prenominal) as Target and Walmart, followed by midlevel surgical incision stores 49% and online purchase 41%. Womens boutique ranked the last, only 28% customers would shop this product in there. However, 53.1% of customers would seek out this product online/internet if they knew it was for sale which ranked the highest among other channels. Therefore, online change begin bigger potential and should not be neglected.In order to emphasize the products display concept as well as investigate user impressions, other focalisation group research was conducted. Participants are women who lay down over $25000 one-year household incomes and aged 21-60. Nundiess display and packaging are successful by these participants. The locations they expect are cotemporary concepts location in shops as well as lingerie stores. Participants express the idea that demonstration is assistanceful to rend customers. Therefore knowledgeable sales persons are necessary to annex product sales. The products are expected to be be and purchased in segment stores by all participants. Although online purchasing is seen as positive, it is infrequently for reorders.These research studies have revealed that Nundies have a good market potential because large amount of women are interested in this kind of no panty-line and convenient product. Nundies meet their expectations by offering tax shelters while allowing them to be free at the very(prenominal) time. So Nundies is a single-use, disposable panty that sticks to the inseam of womens leggings, athletic wear, shorts and jeans. When women mold they dont want to wear underwear, Nundies helps provide a protection as well as being convenient at the same time.The target market for Nundies was 36.7 billion aged 15-60 women who has a household incomes over $25000 annually. And the selling price was set to $15 which was considered to be high by participants. Although it was not a main problem for the target market, participants still found 10 liners in a $15 package would be more than reasonable. However, Nundies set its price to $15 was based on competition from alternatives, manufacturing cost, retail ad merelyments and take in goals of the company. Moreover, Nundies were more popular among higher end specialty stores and upmarket segment shops. Customers in these higher end channels show break interest in Nundies. There for Nundies keep this selling price to addition higher allowance.Nundiess launch has limited media advertizement support and no consumer-oriented advertising was involved in the promotion. Nundies was enwrapd by move a d through retail trade magazines. Also, these retail trade buyer magazines such as Southern Vanity, Womens Wear Daily and Fashion put praising feature articles to help Nundies gain awareness. Additionally, for major celebrity events like Grammys, and 2007 honorary society awards, Nundies promoted its product by placing its sample package in the gift bags to progress away to celebrities. It also took the advantage of New York and Las Vegass Lingerie Trad lay out to exhibit its products. This brought Nundies great opportunity as these showrooms were visited by buyers for womens boutique and specialty stores, they decided which accessory lines to carry.3. Looking again at Nundies target market, value proposition, and each marketing mix element, how has each contributed to Nundies performance to naming?By the end of 2007, there were 232 womens boutique and specialty stores selling Nundies as well as 10 upscale department stores crossways 40 states. Nundies had shipped 11383 units o f products to these channels, among them, 1777 units were accounted for reorders from 15 stores. 285 units were distributed for online purchase. To see from exhibit 6, it is clearly to see Nundies had the highest sales record with 4506 units ordered in the secondquarter which includes April, May and June. The threesome quarter July, August and September ranked the second with 3552 units ordered. This record whitethorn because of the warmer weather. Women tend to wear dresses, shorts and skirts in summer gentle so they would choose light product that do not show any panty lines and provide them protection at the same time. Nundies orders declined dramatically after summer season with only 1656 units ordered in October November and December. The ugly sales performance whitethorn because of the following reasons.First, Nundiess target market is represented by15-60 year old women which accounts for 23% of total population. It is important to strike out that the concentrate of this p opulation is among the age 25 to 52 which accounts for 80.83% of this population. So Nundies should peculiarly emphasize on this target group to be more efficient.Secondly, Nundies shortly offers only 5 panties per package. Nundies have the opportunity to increase the panties amount in single unit. Because with the original selling price to customer set to $15 per unit, customer found that it would be more attractive if this price is for 10 per package.Thirdly, with the distribution channel Nundies currently place its product, it is missing out the mass-merchandise stores such as Target and Walmart and midlevel department stores like JCPenney. Although womens underwear are mainly sold through womens boutique and specialty shops, it is not the best option for Nundies. From the survey result, the majority of participants (64%) expect to purchase Nundies in mass-merchandise stores. The second channel customers expect was midlevel department stores, 49%. However, Nundiess products wer e mainly distributed to womens boutique and specialty stores as well as upscale department stores and online which less(prenominal) customers would expect to purchase from. Nundies is missing out 59.8% of deuce large markets that would attract the most potential customers.Fourthly, Nundies launch has limited media advertising support and it lacks of consumer-oriented media advertising. Many people dont know this product exist or have no idea what is used for. So in order to increase sales,Nundiess primary task is to increase instigant awareness by raising media advertizements via commercial or print media.Other factors that affect Nundies performance include the impact of sales personnel. gross revenue staffs are unclear about how to merchandise Nundies. They think Nundies would sell itself by displaying it in stores. However, many Nundies displays seem to merge in with the rest of other merchandise items. Moreover, many customers feel embarrassing to show interest in Nundies apar t from those customers who are already panty free. Therefore an informative brochure or advertisement is needed for departments and retail stores so sales personnel could mention and suggest Nundies to customers clearly. In addition, Nundies display should be suggested and checked by Nundies agents to ensure Nundies occupies a favorable position and does not get disordered with other items.4. Mr Mortensen asked his team to revisit the market and sales potential for Nundies. How large is the market for a product like Nundies and Nundies sales given its current marketing program?36.7 million of women aged 15-60 is seen as Nundies target market. Among them, Nundiess focus is largely emphasized on 25-54 year old customers with the targeted incision to be 29669 which account for 80% of the total target market. Most of them have annual income over $25000. According to the survey, more than 36% of women are interested in Nundies products idea (plus 41% maybe). They accounted for 13.2 mi llion (plus 15 million) of the target market. 28% of women said they would seek this product in stores (plus 49% maybe) and they accounted for 3.7 million (plus 6.5 million) of the market. About 1.07 million target customers would use Nundies 1-2 times a week, 1.3 million would use 3-5 times a week and only 0.7 million would use it 6 or more a week. Users for special make purpose ranked the last with only 0.63 million. As a result, Nundiess total yearly usage reached 365million or 73 million units.5. What are the pros and cons of the final causes identified for NundiesProposal one Continue development of the womens boutique and specialty store channel. Based on the performance in 2007, sales revenue was $34150, variable cost was $13887, and therefore margin was $20263. Net income equals margin minus fixed expenses which was $14400. So Advanced Materialss net income turn overd $5863 in 2007. As a result if AMI continues its development in womens boutique and specialty channels, it will result in profit and would possibly be enough for the firm to cover all the fixed expenses. Another scenario for the company is break even. The sales of Nundies have to achieve at least 1618 packages or 8090 units with the total sales revenue of $24283.Pros for this proposition includes it only cost $14400. It is cheesy and saves costs. Also it allows AMI to gain more profit on the basis of last years performance. Considering the worst aspect, AMI could still achieve break-even if it sells 8090 packages. This is not a big task so AMI should have no pressure to achieve this goal. Another advantage is that the exhibition and display in these channels would help increase the sales opportunity because Nundies maintain its awareness to customers. This also increases the brand acknowledgement.Cons for this proposal includes as AMIs agents ability and responsibility only restrict to find stores that are willing to sell Nundies and attract orders. They are not responsible for any process involved in merchandising Nundies at stores. So many variable factors in retail stores have the potential to affect Nundies sales.Proposal two Pursue the upscale department store channel. There are two types of purchase put on in upscale department which are centralized buying and alter buying. In centralized buying, retail sales adviser contact the department store account directly and provide the account information about target market, market size and sales displays. There are ccc stores in the chain of top five upscale centralized buying department stores and 350 in the chain of top five upscale decentralized buying department stores. The commission for AMIs agents on wholesale price would be 12%.The cost is much higher compared to womens boutique andspecialty store channel which cost $20000 to $ three hundred00 for the sale presentations and retail consultant fees. Other costs such as warehouse, catalogue and pay off line cost around $35000 to $55000. Based on 20 07s performance, 242 department stores sold 11383 units. Therefore for the 300 centralized buying department stores, an estimated number of 2800 packages merchantman be sold, while for the 350 decentralized buying department stores, an estimated number of 16500 units can be sold.Pros for this proposal are with the number of department stores, Nundies could be more exposed to the target market. Ads and displays would be presented to customers more clearly.Cons includes this channel affects higher costs so the cost of goods sold per unit increased as well. demoralise profit is another disadvantage for this channel.Proposal three pursue midlevel department store accounts. Midlevel department store accounts include stores such as JCPenney with kibibyte stores and Kohls with approximately 930 stores and they all use centralized buying strategy. Midlevel department stores are treated as house accounts as well and retail sales consultants are involved. This proposal requires Nundies wi th different package materials and graphics. Also 2 extra liners are included in every package with the selling price to be $8-$10. However the percentage for retail margin carcass unchanged as for current department store accounts.Pros are the market size is huge. There are over 1793 stores with centralized buying which is a big market for Nundies. Also the cost of goods sold is lower per unit.Cons includes this proposal requires to change brand name and packaging. Nundiess awareness and recognition among customers was a problem all the time. If it changes brand name and packaging, it would confuse customers. In addition, this proposal requires a increase in the amount of panties but the MSRP do not increase enough. Also the expense is between $25000 to $35000which is relatively high, means the profit margin is lower. Another con is increase in fees. Nundies need to pay a estimated cost of $35000 to $55000 for department store chains.Proposal four a combination of channelsPro for this channel is that products can be produced and delivered put down and in the right quantity. The combination of channel consist both 300 upscale centralized stores and 1793 midscale centralized stores which means this helps increase advertising and the distribution expansion would reach more customers.Cons However the higher fees and costs are the major problem. It would cost AMI vast amount of money.Proposal five mold magazine advertisingPros The extent of audience for make magazine is very wide. 56% of 13 year old above women prefer to purchase product that is recommended by fashion magazines. And the target market for fashion magazines are the same target market for Nundies. So Nundies could take this opportunity to promote its product more efficiently.Cons The cost is too high to place advertisement on fashion magazines. It costs $115000 and $200000 for Cosmo Girl and Cosmopolitan respectively. So Nundies margin would be very low.Proposal six metropolitan-area advertisingP ros the cost is lower than advertising on magazine. The advertising period is longer. It targets people at large which would attract more potential buyers instead of end users. Also the advertisement is near stores where Nundies are available. It could boost sales in those areas.Cons it does not focus on its target customers would possibly lead to advertising inefficiency. Also less people seek fashion inspiration from newspapers so newspaper may not be a good media for Nundies.Proposal seven search engine marketingPros when people search relative give voice to paint a picture apparel, Nundies will show with a link to its website. This brings Nundies more opportunities as people all around the world would get to know Nundies instead of only where Nundies sells.Cons reorder rate is less online. And the cost per month is too high. With the selling price and cost of goods sold of Nundies, if the market demand is low, the margin will be lower.6. What are the likely sales and profit im pact of these proposals?For womens boutique and specialty stores, cost of goods sold per unit is $3.45, with wholesale price of $7. The continual sales cost is $14400 plus 12% commission. And for the worst scenario, the break-even point is 5313 packages which are 26565 liners produced. Therefore the profit at full capacity equals $39800. The second is upscale department stores, cost of goods sold and wholesale price mud the same as boutique costs which are $3.45 and $7 respectively.upscale department stores have additional direct costs which are $195000- $305000. It does not include continual sales cost. For the break-even case, 70422 packages or 352110 liners are produced. Therefore the profit is negative, $179000. Third is midscale department store. The cost of goods sold is lower, $3.26 with lower wholesales price which is $4.65. The upfront costs are $225000-$340000 and no continual sales cost as well. The break-even scenario requires 205036 packages or 1435252 liners to produ ce. As a result, the profit comes to negative $265143.7. What is you recommended course of swear out? Why?As a conclusion to the above analysis, boutique stores are the most profitable distribution channels for AMI. Because the entry cost into this channel is the cheapest. The margins are higher than other proposals. Also, production limits are more harmonious in this channel. Furthermore, it is the only feasible proposal that do not require huge expansion. As 13 times the packages sales are ask to break-even for upscale department storesand 54 times the Nundies sales are mandatory to break- even for midrange department stores. With limited capital amount, these two proposal seem to be less feasible.For the success of Nundies, AMI could give away free samples to fashion bloggers or youtubers and let them promote the product instead. This would increase the brand recognition and awareness of Nundies, as well as gain a word of mouth through these bloggers. Also, another cheaper way to promote Nundies is utilize Youtube to introduce instructions for use.Let audience know what is it and how to use it instead of just displaying in the store. As for stores, sales tips should be provide to retailers. And the display should keep off merging in with other merchandise products and become more worry getting. Train sales personnel to be informative and to be more proactive to suggesting and demonstrating Nundies to customers. Pamphlets and samples should be offered as well. Nundies can also be advertize using kiosks. As for reorders, AMI could offer discount to encourage repurchase.Reference1. Kerin, R.A., and Peterson, R.A. (2013). Nundies case study, Strategic Marketing Problems Cases and Comments International Edition, 2013 Pearson. ISBN13 9780273768944