Free Essay

Channel and Pricing Strategies

In: Business and Management

Submitted By cynthia2001
Words 1777
Pages 8
Channel and Pricing Strategies

MKT/571
November 22, 2011
Abstract
In week two’s learning team assignment, Team A discussed that Kudler Fine Foods (KFF) planned to bring Swiss chocolates to the Atlanta, Georgia market similar to the one currently in three California markets. This week’s team paper will introduce the product to the international market in the United Kingdom (UK) that include channel and pricing strategies and justify the selection of the market selected.
Why the United Kingdom?

The entire worth of the chocolate marketplace in Great Britain and the United Kingdom (UK) is presumed to be more than five billion dollars in 2010, as stated by a 2011 article in Marketing Week magazine titled “Appetite for Indulgence Will Sweeten Bitter Pill” (www.marketing.co.uk). Following that, data on the UK chocolate marketplace gets complex, specifically with owners and manufacturers. For instance, the UK natural chocolate marketplace is believed to be the biggest in Europe. Green and Black’s organic chocolate company maintains that they are the Britain’s top organic maker of chocolate. It was created in 1991 and acquired by Cadbury in 2005. Cadbury has been making chocolate since 1824, and was acquired by Kraft foods in the early part of 2010. Nestle, based in Switzerland, and Mars, a private United States company, also lead Great Britain’s massive chocolate marketplace. Other chocolate manufacturers’ products are also accessible in Britain, including Hershey, a US brand, and Nutella brand hazelnut-flavored spread. There is good news regarding concerns for the quality of chocolate. There is a wide variety from which Britons can choose. The UK is clearly a country filled with lovers of chocolate, irrespective of producer. The British are some of the world’s most prolific chocolate consumers (foodanddrinkeurope.com). The British eat roughly 24 pounds of chocolate annually, which is almost twice what other European countries consume. However, British chocolate addicts pay close to thirty percent more than their European counterparts. The UK chocolate marketplace will be worth 4.6 billion British pounds by 2013, and is dominated by three major players - Cadbury Schweppes, Masterfoods, and Nestlé. The chocolate bar subdivision is the major battleground for these businesses. Chocolate bars account for almost 45% of all chocolate sales by volume. The leaders in this market are Kit Kat, Twix, and Mars Bar.

Nonetheless, British expenditure is slowing down as consumers are becoming more health conscious. The point was driven home in 2004, when general chocolate sales only rose by less than one percent to 1.3 billion pounds. This tendency will probably continue until 2020.

To counteract this, Data monitor anticipates the major players will gradually launch new low carb and products without sugar in an effort to bring adult consumers back to the chocolate marketplace. This drift has already started in the United States. As the controversy regarding obese children continues, makers of food and beverages are continuing to market new product expansions toward grown-ups. In fact, Nestlé just introduced a low carb Kit Kat bar in the United Kingdom (www.justfood.com).

Channel and Pricing Strategies

United States Company KFF stays upbeat concerning its projections and self-assured in its line of attack in spite of reporting yearly losses this fiscal period. Previously this year, KFF retained a loss of more than nearly two million British pounds (2.75 million United States dollars) before taxes for the fiscal year ending June 30th, compared to a pre-tax profit of nearly seven million UK pounds from the identical fiscal time frame last year.

Kudler Fine Foods fell into debt because of expenses connected to a reorganizing package declared in June. The company arranged to shut down one hundred eighty stores due to shifting consumer behaviors and a besieged British stock market. Talking to the media after the declaration of KFF’s annual revenue, chief executive officer (CEO) Anne Kudler says that the changes are essential if the company is to remain prosperous. She says: "We will be undertaking this transformation in the face of economic headwinds but we believe our strategy is right for the company and, indeed, for the times we find ourselves in."

Kudler directed toward a development in manufacturing capacities as a gauge that the company is headed in the correct direction. She states: "We have grown volumes by 5% and maintained flat production costs. Our plan is to rebalance sales into our franchises but also into our commercial channels. Our customer can buy our products any way they want to without us compromising manufacturing capacity."

KFF augmented its profits by almost two percent to 218.3 million British pounds boosted by sales from its money-making network, which was up nearly 26% to 78.8 million British pounds. Kudler stated that the forthcoming holiday term so far had met "encouraging" advance demands. Kudler Fine Foods’ innovative goods include the smaller chocolate gifts costing less than three dollars apiece, which Anne Kudler says are perfect for juvenile customers seeking for a tasty yet inexpensive family or fiends’ gift.

Kudler Fine Foods is also presenting two-for-one campaigns and an ‘eager beaver’ offer, which incentivizes buyers to purchase ahead to beat the Christmas rush. "We have a strong Christmas seasonal offering which we have built upon for 2011," Kudler says.

Eyeing the future, Anne Kudler, KFF’s CEO, admits that the following fiscal period will more than likely face turbulent times, but says she thinks that the business is in a much better position to withstand an economic climate that is still struggling. "We have strong sales and a strong and trusted brand with excellent potential. I remain confident we have the right plan to keep sustainable growth in the future."

Government Input

In January 2006, David Cameron, Great Britain’s Tory leader attacked Britain’s chocolate vendors, saying that they have helped contribute to the UK’s growing obesity problem. Cameron, in a health speech stated that shops are using “irresponsible” marketing techniques to sell chocolate by cutting prices on the confection. Cameron asked: “As Britain faces an obesity crisis, why does W.H. Smith's promote half-price Chocolate Oranges at its checkouts instead of real oranges?”

A spokesperson for W.H. Smith, a leading British confectionary chain, stated that fruits and other products were sold in their outlets, alongside chocolate. The spokesperson said: “(The chocolate) is marketed at adults. It’s about choices you don’t have to purchase the products” (www.bbc.co.uk).

Cameron went on to say: “Obviously, we are unable to set policies in this respect, nonetheless we can point fingers, ask difficult questions, and we can pressure the retailers. I believe politicians … should do so” (www.bbc.co.uk).

Economic Considerations

The role of interest rates, exchange rates, and monetary or fiscal policies in the UK chocolate consumption is very important. Interest rates are the indicators of the fiscal policy all over the world. Interest rates also recognize the stability of the financial market. By taking on policies that influence the interest rate, the assumption is that the investment in the consumption of chocolate is negatively related to the interest rates.

KFF will use the factors that influence interest rate and fiscal policies to influence its role in the UK economy. Presently, the economy of the UK is struggling like other economies all over the world, but the desire for chocolate is ever growing (www.foodanddrinkeurope.com).

Innovation, Technology

Customers are progressively worried about well-being matters, while not willing to give up their indulgences. KFF can not only meet, but also exceed such emerging demands by offering chocolate products which can greatly help improve customers’ health and well-being. A few examples of this are products such as sugar-free chocolate, de-fatted cocoa powder, chocolate reduced in sugar, and fillings low in fatty acids.

In addition to just products, KFF offers much more. Their main tactic is to create familiar working collaborations with their clients, so that they can generate products which surpass the expectations of the customers (www.just-food.com). The know-how they have constructed over time means that more accurately than just comprehending the tendencies in the markets of their customers, they often can predict them. Research and Development has continuously remained one of KFF’s strengths, and they have presented plenty of groundbreaking products into a wide-ranging variability of marketplaces. The various markets are where Kudler Fine Foods’ approach to partnership specifically exhibits its advantages. KFF not only helps their customer bases by providing their selected constituents, but also can provide advice, support, and backing about flavor creations, processes of production, and the countless additional facets essential for effective development of products.
Social and Demographic The demographic breakdown of Britain’s chocolate consumer is as follows: • Nearly two-thirds of all chocolates are bought by female consumers, however, they devour a little more than a half of what they purchase • Males buy less than a third of all chocolate in the UK, and usually eat the most of what they purchase • Juveniles under 18 consume just under 40% of all chocolates, however, they only purchase 20% of what they consume (www.foodforum.org.uk) Based on these figures, it would suffice to say that marketing toward women is an easy and profitable decision. Marketing towards children may sound profitable, but could wind up backfiring, because of the UK’s increasing childhood obesity problem. An alternative could be to market the low carb, low sugar, or sugar-free chocolates to the children, but focus more on the taste, rather than the ingredients. While the healthy chocolate campaign may double advertising expenses, it may end up being a major success based on the overall consumption of chocolates by children.
Conclusion
After reviewing and researching the international market, Team A believes that the United Kingdom is the best choice in which to introduce the new Swiss chocolate products and confections. As stated before, the United Kingdom is Europe’s largest chocolate consumer by a wide margin. Expanding to the British market is a no-brainer for Kudler Fine Foods. Even though the price of chocolate in Europe is rising, so is the British persons’ taste for chocolate.

References
Kotler & Keller. (2007). A Framework for Marketing Management (3rd ed.). New Jersey: Pearson-Prentice Hall.
Kotler & Keller. (2006) Marketing Management (12th Ed.) New Jersey: Pearson-Prentice Hall. http://news.bbc.co.uk/2/hi/uk_news/politics/4580778.stm http://www.foodanddrinkeurope.com/Products-Marketing/Brits-top-European-chocolate- rankings http://www.foodforum.org.uk/ffiles/Divine_Chocolate-Inn Mat Man Pro Con- KS3 KS4.shtml http://www.just-food.com/analysis/thorntons-keeps-faith-in-multi-channel-strategy_id116567.aspx http://www.just-food.com/news/brits-top-chocolate-consumption-league-despite-higher-prices_id83432.

Similar Documents

Premium Essay

Channel and Pricing Strategies

...Channel and Pricing Strategies MKT/571 May 31, 2012 Understanding various markets and strategies when dealing with the launch of a new product can be challenging. Below is a breakdown of the channel strategies, pricing strategies, and environmental factors. In addition, the government and economic factors, innovation and technology, and the demographics of the new product are factored in the plan for the launch. Channel Strategies Most manufacturers do not sell their goods directly to the final consumer. Between the final consumer and the manufacturer stands a group of intermediaries who perform various functions. The intermediaries are referred to as marketing channels, groups of interdependent organizations involved in the process to help make a product or service available for consumption or use, marketing channels (Kotler, & Keller, 2007). Every manufacturer needs a marketing strategy in order to promote their product and make it readily available to the public. So choosing the correct strategy is a critical decision facing management. Apples launch of the new mini iPad will need two channel strategies, one for their domestic market (U.S.A), and one for their international market (Japan). Since the product is new choosing the correct market is crucial for the success of the mini iPad. Apples reputation in their domestic market is one of high brand loyalty....

Words: 1958 - Pages: 8

Premium Essay

Pricing Strategies & Channels

...Within these strategies we identify and summarize cases when the resulting prices are lower than the pre-Internet prices, and when they are higher, relating them to the respective channel costs and to the relative convenience to the consumer of the Internet channel. We find that Strategy 3 – the specific equal-pricing strategy that optimizes profits for the manufacturer – often is also preferred by the retailer and customers (through lower prices) over the other equal-pricing strategies. We next consider the implications of the equal-pricing constraint through a...

Words: 13647 - Pages: 55

Premium Essay

Channel and Pricing Strategies

...Although setting a price in foreign countries involves different elements than found in the United States Kudler believes that the six-step procedure will be vital in the franchising pricing strategy. (Kotler & Keller, 2007). The six-step procedure includes: 1. Selecting the pricing objective; 2....

Words: 1773 - Pages: 8

Premium Essay

Pricing Strategy and Channel Distribution

...Assignment #3 Pricing Strategy and Channel Distribution Marketing Management – MKT 500 February 15, 2012 Pricing Strategy and Channel Distribution Determine and discuss a pricing strategy (Skimming and Penetration). One of the four major elements of the marketing mix is price. Pricing is very important strategic element. The pricing strategies impinge on featuring products, channel decisions, and promotions. This strategy helps marketers set prices. (Pride, Hughes, & Kapoor, 2011) There are many ways to price a product. Two commonly known pricing strategies are skimming and penetration. Lavishness Hair Studio is likely to use one or both of them over a calculated period of time. Price skimming involves charging the highest price possible for a short time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to “skim the cream” off customers who are willing to pay more to have the product sooner. Prices are usually lowered once demand falls. Penetration pricing is the opposite; it involves the setting of lower, rather than higher price for a new product. The seller wants to discourage competitors from entering the market by building a large market share quickly. The plan is to raise prices as soon as the introductory offer is over (Pride, Hughes, & Kapoor, 2011). Lavishness Hair Studio will use price penetration during the initial opening phase of the business....

Words: 1302 - Pages: 6

Premium Essay

Pricing Strategy and Channel Distribution

...Determine and discuss a pricing strategy (Penetration or Skimming). Pricing is very important strategic element. The pricing strategies impinge on featuring products, channel decisions, and promotions. The researcher realizes there is no real determine pricing, following a life cycle for developing the pricing of Destini’s Closet product. First, develop market strategy – which the researcher evaluated and conducted a marketing analysis to identify the market segments, target market, SWOT analysis, and the market positioning. Second, marketing mix decisions – the researcher defined the product (Clothing), contacted manufactures for distribution, and decided promotional tactics. Now the researcher is focusing on the cost productions, price of substitute products, and prices offered by the competition. The researcher notices that competitors change their prices often. Case scenario, competitors are always looking for a competitive match, this can be an advantage and a disadvantage for the business. Competitors may strategize a different packaging of their product; this can be good for Destini’s Closet by reducing their price. It’s all up to the customer wants and needs. The demographic crowd the researcher is focusing on would rather price reduction then a new look to a product. What if production price are rising?...

Words: 1134 - Pages: 5

Premium Essay

Pricing Strategy and Channel Distribution

...Pricing strategy and Channel Distribution Anthony McKenzie MKT 500 Marketing Management Prof. Deidre Guion November 13, 2011 Determine and discuss a pricing strategy (Penetration or Skimming). The marketing penetration strategy its intention is to raise market shares of any product or services that is still prevailing in the consumer market. This particular pricing strategy was adopted by companies and business in order to increase their sales revenue merely because there wasn’t really a need to make any need to make any needless changes that could affect their products or services The other side of market penetration points out that there are other existing businesses or company that selling their products and services to the consumer. However, they can foresee their existing sales figures can change by using the marketing penetration strategy (Market Penetration Strategy, n.d.). Determine and discuss pricing tactics (Product line pricing) Value pricing, Differential pricing, or Competing against private brands) to be used for your product. The pricing tactic choosing to help promote the sales of products for the Alpha & Omega Medical Supply Company is Differential Pricing, the particular reason why this particular pricing tactic was selected. A company or business uses this type of pricing of their products and services. There are individuals who are living below or near the poverty level....

Words: 1024 - Pages: 5

Premium Essay

Pricing Strategy and Channel Distribution

...Pricing Strategy and Channel Distribution Stacy Allen MKT 500 -Marketing Management Dr. Adina Scruggs February 12th, 2012 Penetration entails giving most of the value to the customer and keeping a small margin. The objective is to gain as much market share as possible. It is often used as part of an entry strategy for a new product and is particular useful for preventing completive entry. The opposite of penetration pricing is skimming. Skimming gives more of the cost-value cap to you than to the customer. This strategy is appropriate in a variety of situation. For example, if there is a strong price-perceived quality relationship and the value proposition includes a position of the product at the high end of the market, then this objective makes sense. Financial Objectives * Reach profitability by year two. * Reduce store overhead by 5% each year. * Have a double digit growth rate for the first few years. The product-line approach involves offering both a high-priced and a low-priced brand. For example, this is a classic strategy that Procter & Gamble use. Just for Women Shoes strategy would be running and work out sneakers at the premium level and everyday work pumps (black, navy, brown) at the low end. Value pricing is related to customer expectations: It gives more value than they expect for the price paid....

Words: 2053 - Pages: 9

Premium Essay

Pricing Strategy and Channel Distribution

...PATIENT INFORMATION Date Last Name Date of Birth Address Home Phone Number Employer First Name Middle Initial Age Social Security Number City State Zip Other Phone Number Work Phone YES NO A. Are you pregnant? If yes, please stop and return to the front desk. B. Are you on ANY type of steroids (oral, inhaler, injections or creams)? Have you been on steroids within the past 3 weeks? C. Have you had an organ transplant? D. Have you had cancer? Are you in remission? E. Do you have any implanted electronic devices? YES YES YES YES YES YES NO NO NO NO NO NO Can we leave a message on your answering machine? YES NO May we contact you at work? YES NO May we give results at this address? YES NO Would you like to receive occasional informational notifications? If so please provide address: Email Authorization to release information to and relation. Your Primary Care Physician Is: Have you ever filed legal actions against a healthcare provider? YES NO EMERGENCY CONTACT INFORMATION Last Name First Name Phone Number(s): Nearest Relative/Friend Not Living With You: Phone Number(s): Middle Initial Above information will be used for verification and emergency purposes only. How Did You Hear About Laser Med Center? Patient Signature: _____ INITIAL CONSULTATION AND PATIENT HISTORY Circle any of the following which apply: - Arthritis - Compression Fracture - Diabetes - Kidney Failure/Dysfunction - Liver Failure/Dysfunction - High Blood Pressure - Irregular Heart Beat - Light......

Words: 735 - Pages: 3

Premium Essay

Assignment #3: Pricing Strategy and Channel Distribution

...o Discuss how households have changed over the past 20 years and the implications of these changes on the purchase of consumer goods. Over the past 20 years, the traditional household dynamic has drastically changed. In the early 1900’s families consisted of a husband, wife and children. Most people were married at a young age and were focused on family rather than their careers. In today’s society people are getting married later, households sometimes consist of two husbands or two wives and people are career focused. With modern technology allowing for households to have interactive programs, internet and even phones consumers are focused on speed. Consumers want things faster, cheaper and better. Manufacturers must now find better faster and better ways to reach consumers. With Social Media outlets such as Facebook and Twitter quickly taking over, manufactures have adapted a new way to reach consumers. o How would Procter & Gamble market shampoo to Young Transitionals differently than Start-up families? Proctor and Gamble can market shampoo to different segments of the population by taking to social media and adapting new marketing methods. Many manufactures have taken to sites such as Groupon and Living Social to market new products. In a turbulent market consumers tend to use coupons more and to seek specials. Groupon and Living Social provide a discount to consumers for trying a new product or service. Consumers pay twenty dollars and receive 40 dollars......

Words: 376 - Pages: 2

Premium Essay

Marketing

...New Product Launch: SONO Filter February 12, 2012 Determine and discuss a pricing strategy (Penetration or Skimming). SONO water filter is a new product in the market with limited resources and finance. I will choose penetration pricing strategy for this new product to gain market share and lure consumers away from the current competitors. This pricing strategy will sets product price low for a specific time period, but once SONO filter develop a strong clientele base, I will raise product price to the normal level. Once product’s extra features and value will be recognized by the consumer, it will create its own place in the market and among other competitors. Rather than choosing Skimming strategy, Penetration strategy would fit better in this product because the product does have other competitors, such as BRITA or PUR. Determine and discuss pricing tactics (product line pricing, value pricing, differential pricing, or competing against private brands) to be used for your product. To ensure the firm’s pricing objectives such as to achieve a target return, maximize profit, increase sales volume and to meet competition, I will have to determine a strong pricing tactics through analyzing product line pricing, value pricing, differential pricing, or competing against private brands. SONO filter will offer competitive pricing scale to its product line: including stylish water filter jugs, filtered cartridges and filtered water dispensers....

Words: 904 - Pages: 4

Premium Essay

Toyota Market Plan

...It provides a description of the pricing strategy that Toyota will use when establishing product prices. The report further gives a detailed explanation of two distribution channels that Toyota will use to supply products to customers. These channels include the dealership and retail channel. Toyota will also use a promotional strategy that will use various components of the marketing mix: Advertising, public relations, personal selling and sales promotions. The marketing implementation plan of Toyota covers various concepts, which include, structural issues and tactical marketing activities. The final part of the marketing plan is an evaluation and controls. It covers formal and informal controls, marketing implementation schedule and an explanation of a market audit. Pricing Strategy The pricing strategy that the Toyota company applies should fit the financial preferences of their target emerging markets such as the Asian countries and other potential international markets. The pricing objectives of the company will be: * To increase the profit margin by 50% in the next one 12 months * To increase sales volumes by 20% in the next two years Toyota will apply various pricing methods, in order to achieve the above pricing objectives. According to Shefer (2007), marketing managers use various pricing methods to achieve their pricing objectives....

Words: 2783 - Pages: 12

Free Essay

Pricing Strategies

...Pricing Strategies and Marketing Channels Introduction Pricing Strategies and Marketing Channels are essential to the success of the health care system today. The role of pricing is to give the product or service its image. A health care facility that has quality products and services has to make sure that they also have a good pricing mix to attract new customers and to appeal to its customers loyalty. In today's society, customers are beginning to be sensitive to pricing of products and services because of the economic change. With the rise in prices, loss of employment and the health insurances issues on the minds of citizens in the United States, many are now searching for the best service or product that they can obtain for less. This paper will display the importance of pricing strategies and the use of intermediaries in the health care system. It. will explore the concepts of pricing strategies and marketing channels and their relevance to the health care system. Explain at least four of the seven steps for setting an initial price for a product or service, In the past, many physicians, customers and health care professionals thought it to be unethical and unprofessional to market the sales of health care products and services (Kreidler, 2008). The following will addresses how the health care facility can be successful in marketing its products and services. :These next four steps will show the importance of price setting....

Words: 1681 - Pages: 7

Premium Essay

Branding and Positioning

...This particular paper will explain in detail domestic and global product branding strategy, optimum pricing strategy and a distribution channel analysis that identifies the wholesaler, distributor, and retailer relationships including e-Commerce. Discussions within the paper will also include the use of a push or pull strategy, a distribution channel analysis and supporting references.Domestic and Global BrandingA brand is the likeness, idea or image of a specific product or service that buyers connect with, by identifying the name, logo, slogan, or design of the entity that owns the idea or image. When the idea or image is marketed so that it is recognizable by more and more people, and identified with a certain service or product when there are many other companies offering the same service or product, it is then considered branding. Advertising professionals work on branding not only to build brand recognition, but also to build good reputations and a set of principles to which the company should strive to maintain or exceed. Branding is an important part of Internet commerce because it companies to build their reputations as well as expand beyond the original product and service, and add to the revenue generated by the original brand ("What is branding," 2012). The branding of this company will be specifically related to the transportation needs of the elderly on all levels. The logo will be a silhouette of an elderly person escorted inside a vehicle....

Words: 1422 - Pages: 6

Premium Essay

Portion Product Pricing

...Product, Pricing, and Channels Paper Davy Ferguson, Antoinette Gardner, Adrienne Howard, Nancy Rooke, Taivonti Savage MKT/421 May 12, 2015 Dr. Christopher Whitaker Product, Pricing, and Channels Paper Meeting the Needs of the Target Market Duende is an athletic apparel company focusing on the growing demand for fashionable, functional active wear. There is a large market for the products currently offered by Duende and consumers are looking for athletic apparel in new fabrics and bright colors which broadens the scope for even more products to join the Duende product line. Today, Duende offers products such as running shoes, backpacks, hats, sunglasses, socks, protective gear, fitness devices, and yoga apparel. Duende’s research and development group is constantly surveying the market to stay in touch with latest trends. Active wear is especially appealing to those who are interested in a healthier lifestyle. Duende’s offers a product line geared toward the gym-minded professional who is interested in clothing that is comfortable and also motivational. A pair of super cute leggings works for the gym and also transitions well into the after gym trip to the grocery store. Some of our customers will purchase our products to use as leisure wear. Our customers will wear our products because they feel good, look good, and make them feel good about themselves even if they do not plan to go to the gym today....

Words: 1986 - Pages: 8

Premium Essay

Products, Pricing and Channels

...Products, Pricing, and Channels Introduction The all-new Mustang is the next chapter in the life of one of the world’s most iconic cars. The 2015 Ford Mustang is loaded with innovative technologies and delivers high levels of performance and style. “The Mustang is the first car to offer four, six, and eight-cylinder engines that each produces at least 300 horsepower. With more powertrain options to choose from, there is a Mustang to fit any lifestyle. The 3.7-liter V6 and upgraded 5.0-liter V8 are joined by an all-new 2.3-liter Eco Boost engine that brings state-of-the-art technology to Mustang.” (Ford, 2014) Description & Features The Mustang’s Eco Boost engine uses direct injection, variable cam timing and turbocharging to deliver plenty of usable performance across a broad RPM range. Mustang is equipped with over 300 horsepower and 270 lb.-ft. of torque on tap from the standard 3.7-liter V6, even the most accessible Mustang delivers the performance customers expect. Drivers will appreciate smoother shifts from the updated manual gearbox while a reworked automatic transmission features new steering wheel-mounted shift paddles for drivers who want the choice between convenience and control. (Ford, 2014) There are several key design features that define the all-new Mustang, including, a lower, wider stance with a reduction in roof height, and wider rear fenders and track....

Words: 2168 - Pages: 9