MARKETING REPORT

BUSINESS 1220E (SECTION 550)

INSTROCTOR: RON HAE
STEPHANIE LEVSCHUK

MACKENZIE AND MARR GUITARS

STEPHANIE LEVSCHUK
250742319
DECEMBER 6TH, 2013

EXECUTIVE SUMMARY
John Marr, CEO of Canadian guitar manufacturer Mackenzie and Marr Guitars was
considering how he could increase his companys monthly sales. To help reach his monthly sales
goal he had planned to release a new guitar. In order for the company to be successful with its
new product and reach its goals, new marketing ideas need to be considered. These ideas
include:

Identifying a strong target market

Creating an artist endorsement deal for the launch of the new guitar
Having a page in the Acoustic Guitar Magazine
Creating Google search ads
Selling accessories along with guitars

After further analysis it was shown that the current target market has been successful in the
past, which is why the company should continue to market to the same group. This target group
is interested in high-end quality guitars and they are willing to pay the price for them. They
should also consider targeting guitar teachers who make referrals and recommendations to their
students on where to purchase their guitars.
In the past it was shown that by having an artist attached to the release of a new guitar, the
company sees large increase in sales for those guitars. They should continue to seek
endorsements for significant increases in sale volumes.
One way to reach many consumers is through advertising and one of the best ways to do this
is in popular magazines. Acoustic Guitar Magazine has readers all across North America and it
also has an online site. Packages available include print web and social media, which are three
outstanding ways to promote the company.
Google search ads allow companies to place advertisements connected to Google searches.
This is an effective way to gain exposure without consumers having realized they were doing
any research or being targeted.
Along with selling guitars, selling accessories would also be beneficial to the company.
Many direct competitors sell accessories in their stores and have been successful with their sales,
which is why Mackenzie and Marr should consider selling them as well.
By fixing challenges that the company encounters currently and creating new marketing
ideas Mackenzie and Marr Guitars will be able to meet their monthly sales goals and have a
successful release of their new guitar.

THE MARKETING CHALLENGE

I, John Marr CEO of Mackenzie and Marr Guitars, have developed a plan for my
company to help overcome our challenges and accomplish our new goals. The companys goal is
to increase monthly sales and at the same time promote our new guitar, which is being launched
at the beginning of June.
INTERNAL ANALYSIS
Mackenzie and Marr Guitars, has a promotional budget of $4,000 and the annual revenue
goal is $1 million. The company has struggled with cash flow in the past because it is necessary
to always have enough cash on hand to purchase inventory from the suppliers. This marketing
plan will be used to establish how the $4,000 can be used most effectively and how we can meet
our annual sales goal.
Since Mackenzie and Marr is an online store most of the advertising has been done online
through Google AdWords and Facebook. Both these sites allow for people to click on
advertisements, which then brings them to the companys website. Acoustic Guitar and Guitar
World are two big magazines in which the company has published ads. These magazines reach
readers all across North America allowing for large exposure. Both magazines also have online
websites that promote the company. One of the most successful ways that the company has been
able to promote ourselves and gain exposure was on Dragons Den. It was proven that the
company had a major increase in sales for the two years in which the show aired on TV. Once
the episode was taken off air, a downward trend in sales followed. These methods of marketing
have been successful in the past when the marketing budget was only $1, 000 but now that this
budget has been increased to $4,000 this allows for new ideas and new plans to be created and
implemented.

Mackenzie and Marr Guitars is a 4-year-old online stores and their mission is to build the
best acoustic guitars available and sell them for significantly less than competing models. The
company is able to sell products at a cheaper price because they do not have to contract with a
wholesaler or a retail outlet, just the manufacturer. The capacity to produce these guitars depends
on the suppliers. Mackenzie and Marrs sales goal is 100 guitars a month and this will not
happen if the supplier takes on another contract because they may face capacity constrains. The
Naked Lady and Limited Edition guitars are capped at 250 where the Dreadnought is unlimited.
Having an efficient business and strong relationships with suppliers allows us to meet customers
needs and demands.
John Marr and Jonathan Mackenzie founded Mackenzie and Marr Guitars in 2009 in
Montreal Quebec. Both owners bring forward a diverse set of skills and have always been avid
guitarists. Mackenzie has a successful medical practice in Ottawa, Ontario where he spends most
of his time. Marr founded Athletes Foot, which evolved into a successful company. After that he
held many executive level sale positions and is the person responsible for the day-to-day
operations of Mackenzie and Marr Guitars. Both owners have operated successful businesses in
the past and bring a wealth of experience to this operation, which should result in a successful
business venture.
EXTURNAL ANALYSIS
PEST ANALYSIS
Adjustments in Canadas trade relationships with China will have an impact on imported
goods into the country. Tariffs on Chinese goods are expected in increase by 2015, causing the
prices of imported goods to increase. Duties on imported goods are expected to increase to 6%.
These changes are taking place because Chinas economic status has changed from 1974 and it is

now a developed country. Chinas historical cost advantage in production has also been
diminishing because of rising wage rates. Increasing transportation costs due to high fuel prices,
have caused some companies to move their production back to North America. To maintain
selling guitars at lower prices, Mackenzie and Marr need to decide where is best to produce their
guitars in order to get the lowest price but still maintain high quality.
In 2008, a major recession occurred in Canada and the economy has been weak ever
since. In years to come the economy is projected to grow stronger. Due to the recession and the
fact that guitars are not a necessity, many people were not spending their money on them. As we
move past the financial crisis, we are starting to increase our sales once again.
Guitars are a non-essential purchase, and are seen as a leisure activity. In the past, when
the economy was stronger, the Canadian market showed an interest in acoustic guitars. With
consumer confidence decreasing this had an effect on sales numbers. The new marketing plan
needs to increase consumers confidence in the economy and convince them to use their
discretionary funds on activities they enjoy, like playing guitars.
With many new advances in technology, businesses need to stay current with these
changes both for the sake of their business but also for their consumers. An online retail store
requires the company to have an up to date, easy to navigate, and efficient website. It should be
multi-faceted and create social media sites such as twitter, instagram, and facebook to help
promote the store and feature the strengths of the company and products.
COMPETITIVE ANALYSIS
Retail Music Chains are seen as a direct competitor and examples of these stores include
Long and McQuade (61 locations across Canada), Tom Lee Music Co. (11 locations in British
Columbia) and Group Archambault (13 locations in Quebec). These stores carry many different

types of instruments, guitars just being one of them, and have a range of products from high end
to entry-level quality. Consumers find it helpful that they carry a large variety of guitars to
choose from and that they have the opportunity to test the product before making their purchase.
The staff at these locations are very knowledgeable about the products they sell. These
companies are known for always offering the same price for their products in the store as it
appears online.
Specialty guitar retailers are another example of a direct competitor. These companies
operate on a smaller scale and target much more of a specific clientele. They focus more on
guitars and fretted instruments and sometimes have vintage and collectibles in their stores. These
guitars are custom made and are a high quality product. As a result of being a specialized
business, companies can struggle to compete with prices that the retail chains are able to offer.
Musicians Friend is an online musical instrument retail store and is also a direct
competitor. They offer a wide variety of brand name instruments, which they try to sell at a
lower cost. They have a strong distribution network, with their headquarters located in the United
States. This company offers international shipping for most of its products, although duties and
taxes will be added on. Canadian consumers generally have to wait up to 2 weeks to receive their
purchases where customers in the United States wait between 5 and 8 business days.
Other leisure activities that people may enjoy in their spare time are seen as indirect
competition. Examples include sports, camps and family time.
CONSUMER ANALYSIS
Mackenzie and Marr Guitars is currently trying to identify and decide who their target
market is. They have been targeting consumers who are 55 years and older, who are financially
well off and who have been playing guitars their entire life. These consumers are able to

recognize the difference between high and low quality products because they have an interest in
guitars and have been playing them for most of their lives.
Mackenzie and Marr offer custom made, high quality and long lasting guitars, which are
sold at a cheaper price than their competitors. Guitars are not a product that you buy often unless
you are a collector or an avid musician. This purchase will vary from consumer to consumer
depending on their finances, interests and amount of leisure time they have to enjoy their guitar.
Customers of Mackenzie and Marr Guitars, have the ability to purchase their products
online and have them shipped right to their residence. The company does offer a seven-day love
it or leave it guarantee. This allows the customer a seven-day trial period to test out their guitar
before making their final decision. If they are not satisfied with the product, they will receive a
full refund.
This purchase is not an impulse buy. Consumers spend time researching the product
before they make their final decision and weigh the pros and cons of many styles of guitars. The
fact that the consumer is unable to play the guitar before they purchase it may present a
challenge for some, however, with the companys 7-day love it or leave it policy, the consumer
has room for a trial.
TARGET MARKET
Mackenzie and Marr sell high quality guitars at very reasonable prices. This hobby is
considered to be a leisure activity, which is why it would be best to continue targeting the same
group of consumers who are 55 years and older. Trying to target consumers, who are between 15
and 24 may be challenging because they may be unable to afford this product at this stage in
their life and may not have enough time to enjoy their purchase. Targeting guitar teachers is also
a possible avenue to explore. Many teachers provide referrals to specific stores where students

should purchase their guitars. Teachers can determine the type of guitar that is best for their
students, review it with their parents and make the purchase an easier process.
THE FOUR PS
As an online retail store Mackenzie and Marr Guitars are an international company and
have consumers all over the world. A weakness that may arise from being an online store is that
customers do not have the opportunity to physically see the guitar before they purchase it. This
challenge does not have an impact on the target market in general but may affect individual
consumers decisions.
Currently, Mackenzie and Marr sell five different guitar models and are releasing their
sixth model in June 2013. They have two different series of guitars: the Legend and the Summer
Wage. The Legend Series is made up of three different guitars and they are categorized as
premium models. These guitars are the Tom Rush Naked Lady, Ian Tyson Limited Edition and
Rush Signature Dreadnought. The Summer Wage series is composed of basic model guitars
called the Tofino and the Dionisio. The Dionisio has a special feature, a cut-away in the body of
the guitar that allows players to reach the highest frets. All five models differ in body size and
price. Each guitar has its own strengths and weaknesses, which can affect the consumers
choices. The Limited Edition is a jumbo acoustic model, which is known for its deep tones. It
produces the loudest volume but overall it is the least balanced guitar with regards to overall
tones. The Naked Lady and Dreadnought Guitars are known as Dreadnought models. These
guitars are smaller, they produce a good volume and are generally well balanced. The Tofino and
Dionisio are Auditorium models, which are the smallest and quietest but they have the best
balance in terms of high and low tones. All of these models are custom made and constructed
from Indian rosewood, which is known for its rich overtones. Mackenzie and Marrs new guitar

that is being released is crafted from mahogany wood. This guitar will have a crisper and
brighter sound than the existing ones.
It is also in the companys best interest to be selling accessories online. Accessories can
include music books, strings, capos, humidifiers and tee shirts. Giving the consumers the
opportunity to purchase items that accompany their guitar from Mackenzie and Marr Guitars,
gives the consumer confidence in the quality of the product. The company is targeting a group of
people who have a great deal of knowledge regarding guitars and they will know the difference
in the diversity of the products offered and which may be best for themselves and their students.
Guitars are sold between $800 and $1,000. The new guitar, which is being released, will
be sold at price of $700.00 and this price includes a 54% markup on the product (Refer to
Exhibit 1). This guitar has been priced lower than others because it is projected that it will help
increase monthly sales for the company. It is projected that this new guitar will make up 25% of
the companys overall sales. Since the target market is typically people who are financially well
off, the price of the guitar will not have a negative effect on the consumer. Many music teachers
tell their students where their instruments need to be purchased from, without considering the
price. A $700.00 guitar will provide the students with a durable, long lasting and quality product.
In order to market the release of the new guitar along with increasing the companys
overall sales, Mackenzie and Marr Guitars need to be reaching out to their customers in the most
beneficial ways possible (Refer to Exhibit 2). In the past, an endorsement has been used to help
promote products and it has proven to increase sales. Currently, country music is very popular in
todays society, which is why it would be in the companys best interest to have an endorsement
for the release of their new guitar with a popular country artist. Artists to consider include, Brad
Paisley, Luke Bryan and Keith Urban and they will receive a 10% royalty on each new guitar

that is sold. Having a strong country icon attached to the Mackenzie and Marr brand is what the
company needs to ensure increased sales. Publishing an ad in the Acoustic Guitar Magazine is
also another option to be considered (Refer to Exhibit 4). This magazine reaches readers all
across North America and the average reader is approximately 55 years old, which is directly our
target market. In order to maximize the companys marketing budget and gain the most
promotion, purchasing the 12-month premium package will accomplish this. This package
includes a full-page spread in the magazine, a leaderboard online and 2 promoted facebook ads.
This package reaches out to customers all in the target markets whether they prefer to read online
or a hard copy and a social media aspect is also incorporated. Google search ads and words,
allows for people to search relevant topics related to guitars and ads for Mackenzie and Marr
appear. (Refer to Exhibit 3) In regards to targeting music teachers, for every student they refer
who purchases a guitar they will receive a $50.00 store credit. New marketing strategies will
hopefully lead to the increase in sales that they are seeking.
CONSULSION
In order for Mackenzie and Marr Guitars to overcome their challenges and meet their
goals, the company should consider the changes in promotion. By having a strong focus on two
marketing plans and maximizing the budget to its full capacity, it will assist consumers in
becoming more educated about the company and allow it to become more successful. Selling
accessories along with guitars will help the business in terms of sales and will be beneficial to
consumers. Having a strong and loyal target market is important for stand alone companies
because it allows them to be aware and understand the consumers needs and wants. In
conclusion, with the implementation of a new marketing strategy, Mackenzie and Marr Guitars
have that ability to continue to be successful, launch their new guitar and grow their business.

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Exhibit 1
Mackenzie and Marr Costs
Expense

Calculations

Selling Price

$700.00

Markup

54%

Margin

= Markup / (100% + Markup)

= 0.54 / (1 + 0.54)
= 0. 35
= 0.35 x 100%
= 35%

Mackenzie and Marrs Profit

= 0.35 x $700.00
= $245.00

Artist Endorsement (10 % royalty)

= 0.10 X $700.00
= $70.00

Importing Tariffs (projected to increase to 6%)

= 0.06 x $700.00
= $42.00

Taxes (Goods and services tax 5% of selling

price. Quebec sales tax - 9.975% of selling
price.)

GST = 0.05 x $700.00

= $35.00
QST = 0.09975 x $700.00
= $70.00
Total Tax = GST + QST
= $35.00 + $70.00
= $105.00

Total after all expenses

= Selling Price Margin Endorsement

Tariffs - Taxes
= $700.00 - $245.00 - $70.00 - $42.00 $105.00
= $238.00

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Exhibit 2
Marketing Expense Breakdown
Expense
Google

Cost
Search Ads:
$1.00 per click
Capped at 1000 clicks per month
= $1.00 x 1000
= $1,000.00
Advertisements:
$0.50 per click
Capped at 400 clicks per month
= $0.50 x 400
= $200.00
Total Google Expense:
= Advertisement + Search Ads
= $1,000.00 + $200.00
= $1,200.00

Acoustic Guitar Magazine

Leadership Package (Full printed page,

leaderboard and 2 promotes on Facebook)
= $2,700.00

Artist Endorsement

10 % royalty

Total Promotion Expense

(Budget $4,000)

= Google Advertisement + Acoustic Guitar

Magazine
= $1,200.00 + $2,700.00
= $4,000.00

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Exhibit 3
Acoustic Guitar Magazine Full Page Advertisement

Exhibit 4
Google Search Words
Guitars
Instruments
Acoustic
Mackenzie
Marr

Online Instrument Store

Montreal, Quebec
Guitar Stores
Limited Edition
Dreadnought

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