Alfred Woelbing was an entrepreneur out of Wauwatosa, Wisconsin who created Carmex in 1937. Carma Laboratories have been successful for 75 years due to the customers being loyal, the brand being strong, expanding the product line, and ability to set prices to meet company expectations (Kerin & Hartley, 2017). Carmex primary audience are men and women (ages 18-65) who live an active lifestyle outdoors, doing sports, camping, hiking, rock climbing, fishing, biking and canoeing.
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Carmex uses several pricing strategies to achieve the retail price in the store, according to Kirk Hodgon of Bolin Marketing. Consumer demand, production and material costs, profit goals, and competition are all contribute to a specific price (Kerin & Hartley, 2017). The price can determine whether or not the consumer will purchase the product, and the demand for the product determines the maximum selling price. The consumer’s perspective on tastes (flavors) and preferences help define the value of the product-the most important basis for creating a competitive advantage (Boundless Marketing, n.d.). For example, Carmex original formula sells for $0.99 at mass retailers such as Walmart and Target, and between $1.59 and $1.79 in drug and food retailers such as Walgreens and Kroger (Kerin & Hartley, 2017). The price differs between mass retailers and drug and food retailers because mass retailers have bulk purchasing power, which allows them buy more of the product for a reduced price. Production and material (packaging, equipment and staff) costs are all factored into the price of the product. It is important to establish a price that is profitable, to offset the expenses associated with manufacturing the product. Determining the unit cost can assist with controlling costs (What is Unit, n.d.). The profit pricing strategy allows you to compare retailer margins and set the highest price without causing customers to consider other brands. Considering the competitor’s prices is also a valuable pricing strategy, allowing the price gap to be comparable.
In completing a SWOT analysis for Carmex, I found that Carmex is more affordable than most of their competitors. On average, Carmex is priced at $1.99, while the average price for Chap Stick is $2.99 (Bellis, 2017). The red and yellow packaging helps to easily identify the lip balm. According to a national survey, Carmex is ranked number one in over-the-counter lip balm products. Some threats to the organization, are three major competitors- Burt’s Bees, Chap Stick, and Blistex. The competitor’s sales approach and techniques are way more aggressive than Carmex. The competitors are advertising via sales campaigns and product updates. Some weaknesses are that Carmex uses some old fashion approaches by printing prices directly on the containers. The product also has a very strong smell, which is not the most appealing. The product lacks creativity and has a limited product line.
Marketing and Price Strategies and Recommendations
Carmex can gain more market shares by advertising more online, magazines, and on billboards located in Times Square and California, since people spend more time outside walking around. They can also increase their marketing presence on social media and offer promotions by way of contests. For example, the first 50 consumers that post to #1loveCarrmex on Instagram and Twitter will receive a Carmex basket that includes a combination of Carmex products and camping gear. On Facebook you are able to reach millions of people. I would recommend utilizing this platform to engage the consumers by offering a free trip to meet Shaun White, a gold Medalist in the 2010 Olympics, for every 150th person that post on the page.
Advertising in magazines is a good move. 25 % of consumers tend to read magazines, even if the same content is available online According to the US consumer reports, 51% are interested in user general content (Carmex Begin, n.d). Offering Carmex coupons in free magazines ads and in free standing inserts are also a good marketing strategy. Some niche (outdoor) magazines for marketing would be snowboarding, outside climbing, and golf. From a direct marketing prospective Carmex could send out flyers 2-3 times a year, direct mail and online, because the product can become very expensive. Carmex can send sales letters twice a year to educate consumers where they can purchase the product- in stores and online. Carmex can partner online directly with big name retailers like: cvs.com, samclub.com, walgreens.com, and drugstore.com. Developing new sales approaches will encourage consumers to buy Carmex and create a stronger relationship with new and existing customers. Last, offer promotions like buy one Carmex get one free. Studies have proven that readership scores are higher for print ads with coupons than for ads with coupons (Busche, 2017).
Over the years, Carmex has continued to expand by offering squeezable tubes, stick forms, different flavors (mint, cherry, and strawberry), and by extending a promotional partnership with LeBron James. Future plans include offering limited edition styles, and incorporating new products (Kerin & Hartley, 2017).
References
- Bellis, M. (17 March 2019). The History of Chapstick and Carmex. Retrieved from https://www.thoughtco.com/history-of-chapstick-and-carmex-1991474
- Boundless Marketing. (n.d.). Retrieved from https://courses.lumenlearning.com/boundless-marketing/chapter/introduction-to-price/.
- Busch, J. (2018, February 1). Balmy business for Carmex. Retrieved February 17, 2019, from https://www.ibmadison.com/In-Business-Madison/February-2018/Balmy-business-for-Carmex/
- Carmex Begins Advertising, Launches new Products (n.d.). Retrieved from http://www.mediapost.com/publications/article/41675/carmex-begins-advertising-launches-new-products.html?edition=
- Griffin, D. (2019, February 12). The Effect of Competition on Pricing Strategy. Retrieved from https://smallbusiness.chron.com/effect-competition-pricing-strategy-1109.html.
- Iconic Lip Balm Carmex to Expand. Retrieved from http://www.nbcnews.com/id/12069073/ns/business-us_business/t/iconic-lip-balm-carmex-expand/#.WKqACHeZNo4
- Johnsen, Michael, September 17, 2015. New Carmex Marketing Campaign Puts Focus on Customer Feedback. Retrieved from http://www.drugstorenews.com/article/carmex-puts-their-money-where-their-mouth-new-marketing-campaign
- Kerin, R. A., & Hartley, S. W. (2017). Marketing. New York, NY: McGraw-Hill Education.
- What is Unit or output costing? Single Unit or Output costing accounting & Meaning of unit or output costing. (n.d.). Retrieved from http://onlineaccountreading.blogspot.com/2014/11/unit-or-output-costing.html?m=1.
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