Financials
Value Proposition
This product, likened to other products of its genre, can be placed at around $0.60. This value is determined by two factors: the materials that are utilized in production, and the refinement and distribution of the final product. However, pricing this product at $0.60 will result in a definite loss, so the costs of production should be recuperated by marking the product up to around $2.00, which results in a sufficient return on investment. Competitive Advantage We are at a competitive advantage because no other company has a device like our and if successful people will buy less mechanical pencil because people can now use our device to convert old unused wooden pencils into a nice convenient mechanical pencil. Marketing Strategy Our marketing strategy will be to make these pencils as efficient and cheap as possible, we will continue to progress and update our product to the best of our abilities. We will add new features over time, so our product will become more known and it will attract more customers. |
Positioning Statement
This pencil fills our customers needs because it is time efficient and effective. There is no other company with such product in the industry to compete with. Pricing Strategy Our pricing strategy will be having low affordable prices so most people can afford to use it. Our product lasts a long time and is very cheap so it is definitely worth the price it will be put up for. Sales Strategy Our device should be sold in stores in the vicinity of schools and offices. We should have our device sold in discount and grocery stores. Revenue Streams We will make $1.40 per item and sell them in grocery and discount stores. A fraction of the market will instead opt to purchase the product in bulk, creating another revenue stream. Sales Forecast We predict that our product will make decent sales to those who work in offices or study at school. |
Distribution Patterns
The distribution patterns will consist of small booths that can be set up anywhere such as the mall, grocery store, etc. to advertise our product. Our product will also be available to be bought online. If you buy the product at the booth it will be a direct distribution. However if you bought our product online it will be an indirect distribution.
Milestones
To sell our products and profit off our design. We hope that we will be able sell our product on a global scale. Launch website, purchase inventory and supplies, finalize media plan, secure additional funding.
The distribution patterns will consist of small booths that can be set up anywhere such as the mall, grocery store, etc. to advertise our product. Our product will also be available to be bought online. If you buy the product at the booth it will be a direct distribution. However if you bought our product online it will be an indirect distribution.
Milestones
To sell our products and profit off our design. We hope that we will be able sell our product on a global scale. Launch website, purchase inventory and supplies, finalize media plan, secure additional funding.
Assumptions
We think that if we sell a case for a mechanical pencil we can make something that will help those who are in school or in an office. It will be time efficient and extremely convenient. We hope our product will be seen as useful as we see it and our purchasing rates are high.
Break-even analysis
Each pencil has a material value of around $0.30 cents. This conclusion was contributed by the manufacturing costs of other mechanical pencils, with inclusion of product-specific elements, such as the sharpening edge and the spring. Marking up this product to $1.99 grants a sufficient cost return on sales. We can also determine a manufacturing cost for every product to be around $0.30, taking into account energy, packaging, and delivery. This number can be attributed to similar production costs of like-minded products, which fill other niches. With a $1.40 return, we can recuperate the costs of industrial production and invest into developing further.
Projected Profit and Loss
The largest period of struggle is placed right during launch, where the product has not been in circulation long enough to salvage initial startup costs. A margin of 10-20% pencils will stagnate and not sell. This “loss” of product should be recuperated by the compensation of the other products.
Projected Cash Flow
A visible initial surge would result as the product hits market for the first time. This is where dedicated fans will appear and continue to purchase the product. However, a portion of the market will inevitably be dissatisfied and discontinue purchasing the product.
We think that if we sell a case for a mechanical pencil we can make something that will help those who are in school or in an office. It will be time efficient and extremely convenient. We hope our product will be seen as useful as we see it and our purchasing rates are high.
Break-even analysis
Each pencil has a material value of around $0.30 cents. This conclusion was contributed by the manufacturing costs of other mechanical pencils, with inclusion of product-specific elements, such as the sharpening edge and the spring. Marking up this product to $1.99 grants a sufficient cost return on sales. We can also determine a manufacturing cost for every product to be around $0.30, taking into account energy, packaging, and delivery. This number can be attributed to similar production costs of like-minded products, which fill other niches. With a $1.40 return, we can recuperate the costs of industrial production and invest into developing further.
Projected Profit and Loss
The largest period of struggle is placed right during launch, where the product has not been in circulation long enough to salvage initial startup costs. A margin of 10-20% pencils will stagnate and not sell. This “loss” of product should be recuperated by the compensation of the other products.
Projected Cash Flow
A visible initial surge would result as the product hits market for the first time. This is where dedicated fans will appear and continue to purchase the product. However, a portion of the market will inevitably be dissatisfied and discontinue purchasing the product.