Jim Wells, owner of Wells Work and Casual Wear plan to establish a new business that focus on selling shoes for Moos. The main objective of the new business is to design a special shoe for cow that can improve the recovery rate of infected hoof by protecting the hoof from moisture and dirt on the ground. The next step would be finding the best way to introduce and market their new product.
Currently there are only two competitors on the market who provide similar product for treating infected cow hoof. The first competitor product is knows as Hoof Shoe which comes in three different color. It basically lifts up the foot of the cows with structural foot problems to prevent it from touching the ground. The Shoes were priced at US$21.80. The second competitor product is knows as Hydrotherapy Boot that comes with a complete hose, suspender, and a compressor. It cost US$ 400 and it is for clinical use only.
Before venturing into the new business Jim Wells did several researches and findings on the new product. These include market research, product pricing, product distribution and product promotion. In term of market research, Jim Wells had identified several potential markets in Canada and US. Potential client of MOO shoes include owners of dairy, beef, show, research and breeding cattle. Based on the result of the customer analysis, it show that the sales of MOO shoes would be focus on dairy cows and beef cows because both types of cow cover majority of the cow market. Besides that, the need of MOO shoes is far greater for dairy cows and beef cows compare to others because problem hoof on dairy cows and beef cows will affect the productivity of milk for dairy cows and beef for beef cows.
In term of product pricing, Jim Wells receive an offer from Kaufman Footwear that the price for each shoe would be $19.00 and the minimum order is set on 100 shoes. Jim Wells would need to decide the selling price of the shoe to ensure that the shoe is affordable for his client while making profit out of the new product. The estimated selling price of MOO shoes range from $39.99 to $80.00 per shoe. The final decision of the selling price for a pair of MOO shoes would base on how the product is distributed and the intensity of the product promotion. In term of product distribution, Jim Wells had two options. The first option is distribute through direct mail to customers. This method is more economical and capable of maintaining one to one relationship with their customer. Besides that, Shoes for MOOs would not have to physically carry inventory or do any of the shipping because the stock keeping and shipping will be covered by Kaufman Footwear. The second option is distribute through direct sales to dealers. Potential dealers include farm supply stores, milking equipment supplier, veterinary officer etc. This method is more costly because the company needs to offer good margin, strong promotion support and provide protected territory to their dealers in order for them to start selling the new product. Besides that, they have no control on the sales of the product because the sales are done through dealers. The advantage of using dealers was that product would get wider geographical exposure more quickly and the product can be easily obtained from dealers without the need of direct order from Shoes for MOOs.
In term of product Promotion, Jim Wells had several options on mind. The first option was through promoting the awareness of the during regional trade shows. Jim wells think that it would be necessary to promote the awareness of the new product because there will be lots of potential customers and dealers attending the trade show. The costs to rent a booth at various trade shows ranged from $100 to $1235. The second option is through magazine advertising. The cost of the magazine advertising depends on the magazines itself. One third-page ad in three issues of “Ontario Milk produce” cost about $545, and the...