LAILAS TEDDY BEAR

Lailas Teddy Bear



Laila's Teddy Bear

Memo

To: Laila Teddy Bear

From: C&W

Date: 03/03/2012

Laila Teddy Bear was founded in 1991 by Dev Patel, to design, manufacture and develop Teddy Bears. The company produces fifteen inch Teddy Bear, target for the children to enjoy. The bears are fully jointed, constructed of washable acrylic pile fabric, and stuffed with a polyester fibre filling (Lancaster, Reynolds, 2005, p. 85). The company tries to give a nice, pleasing look, as it packs the Teddy Bear with a proactive box, with wrappings. Company's sales have been significantly improving for the past few years, because of its product quality and online selling. The company does business on the Internet and by mail. The selling expense of the company is immense, and they are spending a lot on marketing. Marketing was done through the following:

1.Direct response radio

2.Television commercials

3.Direct response print advertisements

4.Catalogue marketing

5.Online allied marketing program

If we continue with the same sales units and sales mix, than it is important to understand how to improve the profitability of the company. It is also important to consider the fact that company allocates half of its operating income to charitable work. Although the company is offering very excellent customer services, the major problem that the company is facing is competition. There is intense competition in the toy industry. This is because there is no barrier of entry. There are already many competitors in the market because of which Vermont Teddy Bear Company has to compete with many companies. Similar products are sold by many other companies in lower prices, which are a major challenge for Vermont Teddy Bear Company.

However, since the company is offering excellent customer services and a lot of expense is made on marketing, the profit margins are low. Marketing and selling expenditures of Vermont Teddy Bear Company has greatly impacted the profit levels.

An essential element, when opting for market penetration is price. Price refers to the allowance of cash that consumers willingly pay for a good or a service. Previously, the practice of barter system was common, but it could not value the commodities accordingly. However, now money is being used by the people to purchase commodities from the companies. Today, various forms of pricing schemes are used by the companies to sell their commodities. For the consumers, it is the cost of a good or a service; therefore, Vermont Teddy Bear Company should study the prices of the local toy market in India and should set prices accordingly.

Price skimming is used by the companies to charge very high prices to consumers, and this happens when the products are new in the market which the competitors cannot offer. This is charged initially when the product is launched so that the company can reap lots of profits. Typically, when a company launches a new product, they charge higher prices in the beginning to help recoup its expenditures quickly.

Though price skimming is very effective, it has some limitations. It usually works for goods with inelastic ...