Letter of Transmittal – Report on feasibility of cassette recorder
November 20, 20___
The Managing Director
Lea Company Limited
7,Abdullah Haroon Road
Subject: Submission of the Feasibility Report
With reference to your letter of October 20, asking me to write an analytical report on feasibility of starting a new product, cassette recorders under the brand of “Lyrics” with the existing facilities, I am pleased to inform you that the project is viable profitable, and promising.
In the report, I have critically discussed the marketing strategy and all the possible marketing approaches and aspects as desired by you. I will be honored if you please let me know your comments on the report.
I am sure that the report will answer your all questions, floweret, if any point is not clear I am ready to call on you in your office to make clarifications.
Ahmed Imran, Research Officer
The Lea Company was established 5l years back. After one year of its completion and installation of its machinery it launched its product, refrigerator, tinder the brand name of “White House”. When the company put its product into the market its productive capacity was 2000 refrigerators a year, which was in line with the market demand. Now after completion of 50 years the company is producing 30,000 refrigerators a year, which is the consummation of the existing productive capacity. Now the company wants, keeping in view its marvelous past record, to launch its second product, cassette recorders, under the brand name of “Lyrics” utilizing the existing facilities.
The company has been producing its first product refrigerators, and successfully marketing it into local, national and international markets. The name of the company has a good image in the minds of the public. People trust the name of Lea Company Limited, the manufacturers of “White House”. The company has experienced marketing staff which has required ability to organize the marketing of the company’s new product “Lyrics”.
The world of cassette recorders is highly competitive. At present the markets of the world are full of cassette recorders with hundreds of beautiful and attractive models and designs. The company will have to make such designs that are currently popular and it will have to change it every year to attract mom people to the product.
NUMBER OF RECORDERS TO BE PRODUCED
It is necessary that the product should not be short of demand, since the company will have to launch aggressive advertising campaign. It can be expected that the proposed product will receive warm reception from the general public. So the number of recorders to be produced should be safely 8,000 a month.
There should be at least three models to be put into the market every year. The three models with different prices should be as follows
Model No.1 LyricsSuperior
Model No.2 Lyrics Deluxe
Model No.3 Lyrics Double Cassette Recorder
the product will have one year warranty plus after sales service and easy availability of spare parts.
The packaging of Lyrics should get proper and due full attention because it plays an important role in attracting the customers. Packaging makes the product safe and facilitates transporting. It should bear in bold words the names of the cassette recorder and the company, and the model number.
The market conditions are not flint easy as they were 50 years ago when the company introduced its refrigerators. Now the business conditions are very complex due to the existence of price, quality, advertising, and design competition. If our “Lyrics” cassette recorder’s quality, price, appearance, and efficiency of operations get the public acceptance, there is no reason as to why our product can not compete with the “National”, “Sanyo”, “Sony”, and the like.
The company will have to start and maintain promotional techniques such as advertising, publicity, personal selling, calendars, diaries, prize competitions, lucky draw etc.
The company will have to give foremost attention to advertising. Under the existing business conditions no product can survive without aggressive advertising. The company should expend on it at least one percent of net sales in the first year.
The advertising media must include newspapers, television and billboards. Newspapers should include Dawn, June, and Pakistan Times etc.
In the first year of the introduction of “Lyrics”, advertisements should be printed, telecasted daily and in the following years at regular intervals.
Along with advertising and publicity the company must maintain personal contacts with the dealers. The more the personal contacts with them the better will be the results,
CHANNELS OF DISTRIBUTION
It would be better for the company to adopt the same channels of distribution for “Lyrics” as those for “White House”, which is selling direct to the retailers.
At present a Japanese Stereo cassette recorder has an average price Rs.2500. The company should try to control its manufacturing and distribution costs so that our rate should be around the same average level.
The company should allow following various kinds of discounts at the rates shown against them to the dealers. To avoid price competition among our dealers the price of our cassette recorders should be uniform at every shop.
1. Cash Discount:
2. Quantity Discount:
10 units to 20 units
21 units to 30 units
31 units to 50 units
50 units to and above
Allowing the above discounts to our dealers is necessary to meet competition with foreign brands.
Since the product is new the company should extend credit facilities to dealers. Credit period should not be more than one month. To avoid bad debt a credit investigation of the dealers will be necessary before allowing them credit.
According to the data gathered, through investigation and analysis made, I can safely conclude that the “Lyrics” cassette recorder should surely be introduced into the market. In the light of research, our product will be able to meet the competition with the foreign brands. The addition of the new product will enhance the sales volume bringing lucrative profits for the company. The existing image and goodwill of the company will help the new project to be a great success.
THE FINAL WORD
The proposed project sounds feasible and the company better get it underway without any unnecessary delay. The market has great potentials to absorb the company’s new product due to favorable legal, social, economic, and competitive environments.