It is important to note that the bag market is a large one, where customers are highly segmented, and products significantly vary in both quality and purpose. Therefore, readjusting the bag price is essential in order to ensure that profits are maximized on the basis of collected data. The previously selected price was $250, which was based on high-end tote bag analysis findings of $65-$250. The product’s size is 9×11 made from leather, and it has a cost per unit equal to $36. The initial price choice was motivated by profit maximization, but it is evident that it did not account for price’s influence on supply-demand. Therefore, the newly selected price is $65, which is still almost twice as high as the cost per unit, and the expected profit from each bag is equal to $29.
55% prefer to buy online, and tote bags are the fastest-growing handbag styles. Many low-end bags have prices below $65, but the selected product is made from leather and can be categorized as a mid-range, and thus, it cannot be lower than $65. The target audience is middle-class and higher-class mothers, but it should be noted that the brand is still unknown and requires proper marketing to build brand image. Thus, it is unjustified to select a high price range and risk lowering the demand, and it cannot compete with high-end bags and is not recognized as such.
In the case of promotion and ad allocation, the majority of customers prefer to shop online. Therefore, a significant portion of $20000 will be allocated towards social media. The selected channels include Facebook, Instagram, TikTok, YouTube, Twitter, Magazine, Billboard, and TV. Facebook and Instagram are the most popular social media platforms for the target customers, and each gets $5000. From the remaining $10000, TikTok, YouTube, and Twitter will get $1000 each. Magazine, Billboard, and TV will get $2333 each, and the final result is that more than 50% is allocated to online platforms, and less than 50% is allocated to traditional marketing means in accordance with consumer preference data.
As for creating a promotion plan, providing coupons can be a great way to promote a business and spread information about it. Hence, it is possible to provide a five or ten percent discount on the next purchase with a certain amount of money spent. The convenience of this action is that coupons are provided electronically; thus, they cannot be lost. It will play an excellent motivator for customers to return to the online store and purchase the product again.