ALARM FORCE: THE LAUNCH OF ALARMFOG Case Study Solution
The company should offer alarm fog at reasonable price in order to cater larger market, thereby preventing thefts and robbers, also ensures safe business operations. To increase profit returns, it should find efficient price level, thus applying low price than competitors (Martin, 2015). Under the placement choice, the company should target both commercial and residential customers living in urban areas rather than limiting its product to residential use, due to the fact that significant number of customers of alarm fog resides in urban areas. Though the police response time is not an issue but individuals living in urban areas will be more willing to spend. As they are more concerned regarding their safety and protection compare to individuals living in rural areas.
The company should advertise its products on Facebook, google, LinkedIn, also use contents such as social media or blogs to educate its potential customer regarding the benefit of the product. Also the company should adapt digital marketing strategy, collecting emails from all customers and prospects. It would help company being in touch with its customers, create raving fans, and build trust. It would save time, and helps cost leads (Holt, 2016).
Under the Brand strategy, the company will target the families and small businesses that are looking for affordable yet firm Security service. In doing so, it will price itself at the cost leadership strategy, with the people earning 3000 to 4000 dollars monthly. Also, it will offer the customized security to the single parent who are looking for additional features for their families.
“For the families and businesses, ALARMFOG is security providers that offers the convenient and easy security services to the families to take care of their loved ones and the businesses to maintain their operations”.
Financial analysis
Gross profit for one subscriber
Without equipment cost | With equipment cost | |||||
PRICE | $900 | PRICE | $900 | |||
COST | $600 | EQUIPMENT | $299 | |||
GROSS PROFIT | $300 | COST | $600 | |||
GROSS profit | $599 | |||||
Break even volume
BEV = FC / (SP – VC) |
||||||
Developmental cost | $250,000 | |||||
Advertising cost | $1,000,000 | |||||
Variable cost | $600 | |||||
selling price | $900 | |||||
Break even volume | 4167 |
*$900 price has been taken on the basis of assumption
As per the calculation, it can be seen that in case the company choose to stick with its current strategy that is to provide the product free of charge, despite the monitoring fee the revenue per subscriber will be $300 and in case the company decided to change its approach then it will be earning a gross profit margin of $599 per subscriber. The break even volume that needs to be achieved by the company in order to meet its financial objectives is 4167 units in order to cover its fixed cost........
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