Our first task was to study the market research and decide our initial strategy. To decide our initial strategy, first we analyzed the different types of research data. There were five segments to choose from; Cost cutter, Work horse, Innovator, Mercedes and Traveler. We reviewed the customer needs for each segment and the information regarding how customers intend to use computers. After that we looked at the average price each segment was willing to pay for the ideal brand in different cities as well as the 12-month potential market demand in each geographic area.
After analyzing the market research data we decided our initial market strategy. We chose two segments that we wanted to target o be our primary and secondary target segments. We chose cost cutter to be our primary segment and traveler to be our secondary. We formulated a mission statement for our company, decided our market position competitive postures and our distinctive competence. Our mission statement came to be “PC International provides our customers with state-of-the-art reliable computers while striving to provide excellent customers service at low prices.
Our computers are made to mold into many different lifestyles and execute many different functions for the benefit of our customers”. Our mission statement says that we wanted to provide computers with high reliability to prices that most people can afford. Further, we decided to focus our strategy on large, highly competitive segments, which we thought the cost cutter segment would fit in. We also decided to focus on geographic markets which where in the middle of the cost/size continuum.
We wanted our competitive posture to be like a leader’s markets position; to build a strong market position, take the lead and defend it. Our distinctive competencies goals was to be the low price provider in the market, be the high service provider in he market, and provide the most reliable product on the market. After deciding our initial strategy we decided which sales offices we wanted to open. We had to take in consideration the quarterly lease cost, the setup cost and the annual salary for our employees. We decided to start our business in Berlin where our headquarter came to be.
That decision was based on the relative low setup, leas and salary price, and the demand that was relative high on for our cost cutter segment, traveler and the other three segments. Now we had our initial strategy done and it was time to design a product for each target segment. We chose our brand names to be Data Pro for the cost cutter market and ITravel for the traveler market. We felt like those names conveyed our desired image of our product line. When choosing the components for our computers we reviewed customer needs and wants for each segment carefully, and also the use patterns for each segment.
We picked the components that we thought would satisfy our customers the most for each segment. For Data Pro we carefully picked components that would make the computer of high quality but at the same time less costly. For ITravel we chose the components that would be most suitable for people on the go, like business travelers. In the third quarter, our goal where to develop the tactical details for our strategy and enter into the test market and to maximize our knowledge of our market. First we hired sales force for our head quarter in Berlin.
We decided to hire one service support man, 3 sales personnel for the cost cutter segment since this was our primary market, and 1 sales personnel for the travel segment. Next, we prepared an advertising campaign. Before starting to design our ads we reviewed the customer needs and use patterns again. When designing the ad we reviewed the list of benefits that could be presented in the ads. We picked the items that we thought our target markets would find most persuasive. For both ads we wanted to mention our brand name and make sure the customer would be aware about our rebate.
For the Data Pro ad we picked “easy to use” pictures, finance-, word-, and data management applications were important to mention. For the ITraveler ad we picked pictures of people in travel settings was important since we wanted people to get the picture of using this computer when traveling. We also wanted to mention rugged design for portability, presentation application and business graphics application. The ads were carefully designed according to the customer’s needs and use patterns together with our gut feeling.
After designing the ads we decided on how many times we wanted the ads to appear in the local media in Berlin this quarter. We chose to show it 13 times for the Data Pro and 7 for iTravel. Since this was just a test market, we did not want to spend too much money in this quarter. This was more of a learning process for us to see what the market really wanted. After designing the ads, de decided on what prices we wanted to set for each product. We started with reviewing the price our customers where willing to pay for each market in Berlin.
We also tried to estimate our production cost by forecasting how many units to be sold. We assumed to not sell very many units of each brand in this quarter. When setting the prices for out two brands we definitely wanted to have a price above the production cost for selling 0-100 units so that we could pay for our marketing expenses but at the same time have a price below the price people was willing to pay. We set our Data Pro price to be $1,799 with a $50 rebate and the price for the iTravel to be $3,250 with a $100 rebate.
These prices where below the prices people was willing to pay and above the production cost with the forecast of selling 0-100 units for each brand. Again, Data Pro was our first priority. Also in this quarter we bought market research data. We thought it would be clever to learn about our competitor’s prices, sales staff, and advertising campaign in order to maximize learning from test marketing. We decided to buy end user feedback for Europe and Asia since we were planning on expanding in these markets. We also bought competitive benchmark for the same markets.