Strategic Marketing Plan - Preparation Documents Part 4 (of 5)

A. Determine Pricing Objectives

i. Setting your Price Objectives

o Determine your pricing objectives, what are you trying to accomplish with your

pricing?

In aligning with Flex Mobile's strategic goals, our pricing objectives are

meticulously designed to ensure competitiveness in the market while fostering

customer retention:

1. Competitive Pricing:

Objective: Maintain a pricing structure that is as low as possible to attract

the price-sensitive student demographic. Strategy: Minimize overhead costs

through efficient operations and digital-first customer interaction models,

allowing us to offer competitive rates without compromising service quality.

2. Cost Leadership:

Objective: Achieve the lowest cost base among competitors through

operational excellence and economies of scale. Strategy: Streamline processes and

leverage technology to reduce expenses, enabling us to match or undercut

competitor pricing effectively, thereby attracting cost-conscious customers.

3. Customer Retention:

Objective: Implement pricing strategies that enhance customer loyalty and

reduce churn. Strategy: Introduce loyalty programs that reward long-term

 customers with progressive discounts, promotional offers, and exclusive access to

new features or services.

ii. Cost Analysis (lite):

o What are the (top level) costs involved in producing and delivering your product

to the market? Include manufacturing, labor, materials, logistics, and any other

relevant costs.

- Fixed Costs

 Network Infrastructure:

Cost Elements: Purchasing or leasing network equipment (cell towers, servers,

etc.), software licenses for network management.

Estimated Cost: Capital expenditures can range from $100,000 to several million

dollars depending on network scope and technology (e.g., 4G vs. 5G

deployments).

Office and Administrative Expenses:

Cost Elements: Salaries for administrative staff, rent for office space, utilities.

Estimated Cost: Typically ranges from $50,000 to $500,000 annually, depending

on the location and size of operations.

 Customer Support Infrastructure:

Cost Elements: Call center setup, support staff salaries, training programs.
Estimated Cost: Around $100,000 to $300,000 annually, which includes fixed

costs of setting up support infrastructure and ongoing costs of staff salaries and

training.

 Regulatory and Compliance Costs:

Cost Elements: Fees for licenses and regulatory compliance, legal retainers.

Estimated Cost: Generally, ranges from $20,000 to $100,000 annually depending

on the regulatory environment of the operating region.

 Marketing and Advertising:

Cost Elements: Fixed costs associated with branding, agency retainers, and

baseline marketing campaigns.

Estimated Cost: Fixed marketing costs can be around $50,000 to $200,000

annually, especially if long-term contracts or retainers are involved. -

- Variable Costs

 Manufacturing of SIM Cards/Devices:

Cost Elements: Cost per unit for manufacturing SIM cards or branded devices, if

applicable.

Estimated Cost: $1 to $5 per SIM card; devices can range widely based on

specifications.

 Logistics and Distribution:

Cost Elements: Shipping costs for SIM cards/devices, distribution logistics.

 Estimated Cost: $0.50 to $2.00 per unit, depending on distribution scale and

logistics efficiency.

 Sales and Commission Costs:

Cost Elements: Commissions paid to retail partners or sales staff.

Estimated Cost: Variable based on agreement terms, typically 5% to 10% of the

sales price per contract signed.

 Billing and Operational Systems:

Cost Elements: Costs associated with billing management software and

operational logistics.

Estimated Cost: $10,000 to $50,000 annually, depending on the sophistication of

the systems used.

Total Annual Costs: $2,100,000 (Fixed) + $560,000 (Variable) = $2,660,000, More

customers the mores the infrastructure cost increases

 Information Attained from:

Deloitte (2021). Telecommunications Industry Outlook. [Online] Available at:

https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/

telecommunications-industry-outlook.html [Accessed Date: 10 October 2023].

GSMA Intelligence. The Mobile Economy. [Online] Available at:

https://www.gsmaintelligence.com/research/?

file=9e930f74309cd5b1a5bf44786766ce63&download [Accessed Date: 10 October 2023].

 PwC (2022). Communications Review. [Online] Available at:

https://www.pwc.com/gx/en/industries/tmt/telecommunications.html [Accessed Date: 10 October

2023].

B. Pricing Strategies

i. Pricing Model and Strategies:

o Identify which pricing strategy you are adopting for your product and justify your

choice based on your product positioning, target market(s) and competitive analysis.

At Flex Mobile, our strategic focus includes Competitive Pricing, Cost

Leadership, and Customer Retention, as we position ourselves as a value-oriented

brand specifically designed for an economically diverse customer base. Our target

segments include high school students, as well as college and university students

—each with unique needs and financial considerations.

To offer exceptionally competitive pricing, we are committed to maintaining

the lowest cost structure in the market. This approach not only allows us to

provide affordable options but also ensures that our prices remain attractive in a

competitive landscape, encouraging customer loyalty and long-term retention. By

optimizing our operations to reduce costs and leveraging strategic pricing models,

we ensure that our customers—particularly students and first-time phone owners

—receive unmatched value, making Flex Mobile their preferred choice.

o Perceived value and willingness to pay.

Given that Flex Mobile is perceived as a low-cost provider, this perception directly

influences our pricing strategy, as customers expect to pay minimal amounts for our

services. This necessitates that we adopt a pricing approach that aligns with customer
 expectations of affordability while ensuring our offerings remain competitive and

attractive in the marketplace. By strategically setting our prices at a point that

underscores value yet maintains market competitiveness, we ensure that Flex Mobile

is both accessible to budget-conscious consumers and sustainable as a business.

o Price Sensitivity: Discuss how price-sensitive your target market(s) is (are) and how

that influenced your pricing strategy.

The target markets for Flex Mobile — high school students, college students, and

university students — are notably price-sensitive due to their limited disposable

income and reliance on part-time jobs, scholarships, or family support to manage

expenses, including mobile service costs. The high price elasticity in this

demographic means that small changes in price can lead to significant changes in

demand. This sensitivity has been a critical driver in adopting a competitive pricing

strategy that emphasizes affordability and value.

ii. Price Setting(s)

o Initial Price Setting: Detail how you arrived at your product’s initial price,

incorporating insights from your cost, market, and competitive analyses.

Cost Considerations:

Fixed and Variable Costs: Based on the earlier estimation, the total annual costs were

about $2,660,000 for hypothetical operations.

Break-even Analysis: Assuming Flex Mobile aims to acquire 50,000 customers in the

first year, the cost per customer (ignoring variable costs for simplicity) would be about

$53.20 annually.

Competitive Pricing Benchmark:

 Comparison with Competitors:

Fido: Offers plans starting around $15/month for basic services.

Rogers: More premium services starting at about $25/month.

Virgin Plus: Similar to Fido, with entry-level plans around $15/month.

Given these benchmarks, and aiming to penetrate the market:

Penetration Pricing Strategy:

Initial Price Setting: To make Flex Mobile appealing and competitive:

Basic Plan: Start at $10/month — a highly competitive rate aimed at undercutting

the basic offerings of Fido and Virgin Plus by approximately $5. This plan would

include essential features tailored for students, such as more data allowances,

unlimited texting, and basic call features.

o Adjustment Strategies: Will your pricing be static or dynamic.

Flex Mobile's pricing strategy is designed to be dynamic and responsive to the

varying needs of our users, adapting to changes in usage patterns and preferences.

However, to align with key events in our target customers' lives, we will also

implement seasonal discounts, particularly during critical times such as the start

of the school semester.

iii. Competitive pricing Analysis

o Analyze the pricing of your competitors. How are your primary or secondary

competitors pricing their competing products?

Competitor Brand Product/Service Price Delta vs Your Price

Fido Basic Plan with 2GB Data $15/mo -$5
 Competitor Brand Product/Service Price Delta vs Your Price
Rogers Basic Plan with 2GB Data $25/mo -$15
Virgin Plus Basic Plan with 2GB Data $15/mo -$5
Koodo Basic Plan with 1GB Data $14/mo -$6
Chatr Basic Plan with Unlimited Texting $10/mo Equal

o Based on this analysis, how have you positioned your product's price in

comparison to your competitors?

Our positioning is as a cost-effective alternative to competitors, firmly

establishing Flex Mobile on the more affordable end of the spectrum.

iv. Financial Projection

o Revenue Projections: Based on your pricing strategy and market analysis, provide

revenue projections for the first year (monthly or quarterly)

Product / Service Q1 Q2 Q3 Q4
Basic Mobile Plan - - - -
Number of units sold 10,000 15,000 20,000 25,000
Price per unit $10.00 $10.00 $10.00 $10.00
Revenue $100,000 $150,000 $200,000 $250,000
Premium Mobile Plan - - - -
Number of units sold 5,000 7,500 10,000 12,500
Price per unit $30.00 $30.00 $30.00 $30.00
Revenue $150,000 $225,000 $300,000 $375,000
Total Revenue $250,000 $375,000 $500,000 $625,000