What is the Christmas Market?
The Christmas Market was a taster into the world of business. In groups of 2-4, we went through numerous planning phases to develop a product and learn how to look after our small business financially. The complicated and tricky part of this task was that we only got $30 to spend to create our products. During Humanities we would learn about different terms and methods many businesses use in the real world, and then apply them to our own. We had to be flexible with weather interference and costs on the market day. In total, the businesses made over $1600 in profit to go to charity.
Innovation process
During the planning phase of this task, we used the strategy of ideation to come up with a variety of ideas that we could accomplish at the market. After having an array of ideas on the table, we had to consider different characteristics and plan out what would give our business a good outcome. In the end, we decided that phone chains were doable and were within our price range. We also made prototypes of our product so that we could see how reliable our product was and how it would end up looking. Then we presented our thinking to the teachers and got the all-clear to get started.
Costing/ Prices
My group decided on the cost of our products early in the process of the market. Our original and current price was $3 for a small chain and $5 for a big one. Using cost + margin, we considered how much it cost us to make the product individually then we decided to charge extra money so that we could make a profit on the day. My group used penetration pricing by starting at an initial low price to attract consumers towards our product. Then as the market went along, we changed some prices with consideration to making more profit, since we did this in a sneaky manner, the consumers didn’t notice the rise in price.
In total, we used $27.50 of the $30 we were given. Making a total of 42 products. Our CP/U was only $0.65, but our MP was very high, at a large 515.4%. By increasing our prices to satisfy our profit-making abilities, we made, in total, $193.90. After paying back the float money and the school we were left with a $133.90 profit.
How could we improve?
Psychological Pricing: A pricing method I would have enjoyed using, and possibly would use if I were to get the opportunity to participate again would be psychological pricing. Pricing a product at $4.99 or even $9.99 would be very interesting to use because I would like to see how consumers would react to such a deal.
Quality and Management Factors: I would also consider quality factors and management factors to a higher standard. Regarding quality factors, I would consider the quality of the product and the quality of the services I was providing. This way we could measure our costs to be slightly higher and to attract consumers’ eyes towards our high-quality product. Otherwise, for management factors, my business could have run smoother. I could have had a more ideal, organised plan that could have made the process more efficient.
Consumer demand: Now looking at consumer demand, I think if I was to change products, I would attempt to have something that would be scarcer, meaning that consumer demand would be a lot higher. With only limited products at a higher price, we could attract more customers who would be willing to buy something that not everyone else could have.