A4 . Pricing Strategy (Day Six)
The pricing of the new products will be both affected by the cost plus pricing and competition -based pricing. Even though there will be no very similar products that directly compete with the new products, there exist alternatives that at some level compete with the new products. The cost plus pricing will leverage the current cost and price of regular burgers. At the same time, the competition-based price would allow the products to sell well.
Cost associated with developing and launching new products. Based on the similar products and the cost of existing products, a cost structure is derived as follows:
Material cost Labor cost Indirect cost Set price Profit
A Rice burger $1.4 $0.3 $0.3 $2.2 $0.2
A
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For the rice burgers, a McDonalds double cheese burger is priced at $VND 55,000 or about $USD 2.5 (McDonalds). Similarly, one can find a Whopper Burger priced at $VND 55,000 at Burger King Stores. The estimate cost of a similar size rice burger is about $USD 2.0, so it can be priced at $2.2 in order to sell well. The gross profit would be $0.2 – 0.3 per burger. Thanks mainly to the low labor cost, the company would be able to make a profit at this price. The other size rice burgers are priced at the same price as similar to the competitors and still make a decent profit.
For baguette burgers, they are also priced at the same prices like rice burgers because the cost of making a baguette burger is about the same as a rice burger. At this price, the baguette burgers are very competitive and still make decent profit. In addition, pricing both rice and baguette burgers at the same price would allow the flexibility for customers to choose one or the
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A5. Promotional Strategy (Day Seven and Eight)
The company will use two promotion activities to introduce the new products to customers. The first one is 50% off coupons for the first month of the new product introduction. This method is to create new product awareness and create mouth-of-words about the new and exciting products. The second promotional activity is bingo games on the company’s website or in stores. If a customer wins a game, they can have a free rice or baguette burger on the weekend. It is hoped that they will also bring their family, relatives or friends along to try the new products and play bingo games.
The company will also use the Facebook and Twitter accounts to promote the new products. As Vietnam experienced a good growth in the number of people using the internet and smartphones, the social media sites become a must for the two new products. Moreover, the Vietnam population is considered young, the social media sites such as Facebook and Twitter even play significant roles in promoting product awareness and building long term customer relationship and
The use of social media marketing has become a standard way in which organizations advertise their products or services. Social media marketing allows consumers to have immediate access to other consumers reviews or to post a review about a product or service. There is engagement between the company and the consumer (Evans, Dave 2010). Social Media emerged in the late 1980’s when websites such as Prodigy, Compuserve and America Online. Prodigy was first of it’s kind and was known as a ”consumer online service”. Half of the page is devoted to advertising. Facebook, Twitter, Myspace, Hi5, Bebo and Orkut are all social media platforms that are utilized as platforms today.
1- Th firm should introduce the new "complete meal" at price of D.Cr. 6.85 because the price will raise the demand and generate high profit for the company.
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* A positioning statement for the company with careful consideration of their brand and strategy
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The allocation of the New Product Development costs is also questionable. Even though these costs are being utilized to create new products, the established products are bearing the costs based on their profits.