When considering a marketing strategy for the new healthy sleep mattress, it may be a good start for Javier and Elizabeth to begin with the four 4 p’s. The Four p’s consist of price, product, promotion and place and can be a good start for indicating further steps that AAB must take when it comes to marketing the new Healthy Sleep Mattress.
Firstly, AAB will need to consider the price. At the moment, Peter thinks that AAB can set the retail price roughly between £250 and £300, however AAB will need to consider this decision heavily, especially considering that two of the more higher end products such as AAB’s “ultimate” mattress as well as the Supreme are neither receiving the highest possible sales volume, with one facing decline and the other with the estimated market share ending in August 2013 classed as ‘low’ Therefore it could be argued that such a high price may not be advisable as AAB will need to get customers interested and try the product before it establishes a good reputation. With limited information on the product and cost figures for the healthy sleep mattress, there are two pricing strategies that are advisable for AAB to adopt.
For one, AAB may choose to adopt the pricing strategy ‘price skimming’ for the Healthy Sleep Mattress (HSM.) Price skimming involves setting high prices to secure low volume of sales in order to skim the profit from the market before potential competitors take the idea and create their own substitutes. This could be an appropriate pricing strategy for Pete, Javier and Elizabeth to consider as it means that the business will be able to get the best return on the investment before substitutes are introduced. It is reasonable to argue that this will be an appropriate strategy due to the nature of the HSM, being innovative and potentially ground breaking, it makes little sense for AAB to use a loss leaders type pricing strategy as this gives AAB the opportunity to reap the benefits from the market by having an unique and innovative product. Taking into consideration that the fibre is made up of50% of recycled materials with no chemicals or odours, AAB may find that this pricing strategy only caters for the ‘early adopters.’ In this case, Early adopters may only purchase the new HSM at the high cost price that Price skimming entails due to having brand loyalty or are willing to pay high prices to achieve exclusivity. Therefore this pricing strategy may not be suitable for all, as whilst AAB may have some ‘early adopters’ the new mattress will only come in one size and therefore this may be an irrelevant purchase if their child is currently too big to use the one size style of the new breathable healthy sleep mattress.
Another pricing strategy that AAB may consider to adopt, considering the lack of information provided is penetration pricing. Quite the opposite to price skimming, penetration pricing involves setting low prices in order to gain a foothold in the market and therefore secure a higher sales volume. By doing this, AAB will inevitably encourage brand loyalty as customers are invited to try this product at a low price in the hopes that this results in good word of mouth, brand loyalty and eventually repeat custom. However, AAB will need to consider a number of things when introducing this pricing strategy with the HSM , despite being a product that is unique, the low price associated with penetration pricing may allow customers to think that the product is poor quality and therefore may not result in high sales. Additionally, penetration pricing will lower the profit margins created by the HSM and may hinder AAB from meeting their key objective of increasing profitability within the next 12 months.
In addition to price, AAB will need to consider promotion. There are a number of promotion strategies that AAB may find useful when marketing this new healthy sleep mattress. Due to the HSM being a new product with innovative features, it is likely to require a high degree of promotion. However, taking in to consideration the current loss making situation of All About the Baby, it is important that they keep costs to a minimum without spending too much that above the line promotion entails for example television adverts. Therefore, perhaps bearing in mind that the new HSM mattress will be exclusive to only AAB’s stores and not retailers, AAB could use the above the line promotion strategy of newspapers. This means that AAB will be able to geographically select the news papers in the areas in, and close to the stores that AAB currently have their own retailers in. This will not only mean that purchasing from the store will be convenient to customers, but it also means that this method of promotion directly influences and exposes the new products to customers that have the potential to buy one.
Additionally, AAB could use below the line promotion. This will be exceptionally useful as AAB’s new HSM has a number of unique features such as a clean safe hypoallergenic material, and is made up of 50% recycled materials. For this reason, it may be a good idea for AAB to market at trade fairs for mothers and set up desks in their own stores that aim on educating customers. By doing this, AAB have a better chance at reaching customers that are not only directly influenced to the specific nature of AAB’s products (children and mothers) but also will be able to market the benefits of the new healthy sleep mattress by enlightening customers face to face about the benefits for going for this healthy mattress.
AAB will need to consider its current stock issues when marketing this product. It could be argued that if AAB keep having this problem, customers will no longer be interested in the bad word of mouth and adverse publicity and therefore purchase customers from AAB’s competitors. Therefore, taking into consideration price and promotion, AAB will need to weigh out the multiple factors that need to be considered when figuring an appropriate marketing strategy.