Assignment # 3 Pricing Strategy and Channel Distribution

1
Marketing Management MKT 500
Strayer University
Professor Shirley Mclaughlin
May 15, 2011
Assignment # 3 Pricing Strategy and Channel Distribution
2
etermine an! !iscuss a "ricing strategy #Penetration or Skimming$
Pricing is a key element of the marketing mix. In order to evaluate the best pricing strategy for
our business, we evaluated the dynamics of our marketplace, like our location, the target market
and their willingness to pay as well as our product offering and what features differentiate us
from the competition.
At TW !hics our goal is to provide "uality, great tasting, and healthy southern style cuisine at
a reasonable price. We have a niche in the sit down dining segment of the restaurant industry
and to gain brand recognition our prices will be slightly cheaper than other restaurants offering a
comparable meal with meat and vegetables. TW !hics will use a penetration pricing strategy
which will be designed to get more customers to buy our product by charging a lower price to
attract customers from our target market. While charging a lower price might result in a
reduction of our profit margin, we are willing make this sacrifice to gain a faster entry into the
marketplace and increase brand recognition.
TW !hics perfectly portioned healthy southern style entrees will be served with TW sides
and will cost on average #$%& per plate. ne si'e drinks can be purchased at #(.)* and our bite%
si'e desserts, like red velvet cake and banana pudding will cost #(.*+ each. ,ere are a few
competitors and the average pricing for an entr-e with TW sides.
This Is It / entrees with two sides / averages #&%((
Paschal0s / entrees with two sides / averages #()%(*
1olk0s / entrees with two sides / averages #2%(+
ur prices will be positioned reasonably to contribute acceptably to our margin.
Assignment # 3 Pricing Strategy and Channel Distribution
3
etermine an! !iscuss "ricing tactics #"ro!uct line "ricing, value "ricing, !ifferential
"ricing or com"eting against "rivate %ran!s$ to %e use! for your "ro!uct&
,aving the right pricing strategy in place to capture the perceived value of TW !hics healthy,
southern style cuisine concept is essential in capturing our target market. We don0t want our
menu items priced too high or too low, so we will use a combination of value based pricing and
competitive based pricing.
The customers3 perception is influenced by the value they perceive in the relationship between
the attributes of our product and the price they will have to pay for that product or service 4When
to 5se 6alue Pricing r Perceived 6alue Pricing % ) Pricing 7trategies, )+((8. 9y using a value
based pricing, TW !hics will be able to recreate your traditional southern style recipes at what
customers believe to be a low value price.
!ustomers also are influenced by price comparison amongst similar products or services. 4When
to 5se 6alue Pricing or Perceived 6alue Pricing % ) Pricing 7trategies, )+((8 Therefore, TW
!hics will research our competitor0s prices and use this information as a benchmark to gage our
value pricing strategy and build brand recognition.
'!entify any legal an! ethical issues relate! to the "ricing tactics&
The restaurant industry is heavily regulated by the 1:A. TW !hics prepares healthy southern
style cuisine that is reduced in fat and low in calories. If we are preparing food that is
inconsistent with the way we do business, like frying our chicken as oppose to baking, we will
encounter legal issues. Also, failing to disclose important information like, this dish may contain
nuts, could create trouble as well, if a customer has an allergic reaction.
Assignment # 3 Pricing Strategy and Channel Distribution
4
With obesity on the rise, there is more awareness surrounding the ethical issues related to the
pricing strategy. 7tudies have shown the price of a calorie to be substantially cheaper when
obtained from unhealthful, energy%dense foods, instead of from more healthful, less%dense foods
4PW;<<, )++&8. Therefore, we want to build value in our pricing while being competitive.
We aren0t trying to be the low cost leader and price our food below that of our competitors
because doing so could feed into consumer perception that lower cost food s are generally not
good for you.
Pre"are a marketing !istri%ution channel analysis i!entifying the (holesaler, !istri%utor
an! retailer relationshi"&
TW !hics will use an indirect marketing strategy to move product through the supply chain.
This distribution channel originates with the grower=farmer who sells their product to the
vendor=manufacturer. The manufacturer sells the product to the distributor and the distributor
sells to the restaurant and the restaurant services the customer. In this marketing strategy, 5.7.
1oodservice 45718, one of the country0s leading foodservice distributors, offering over >+,+++
national, private labels and signature brand items and an array of services to more than
Assignment # 3 Pricing Strategy and Channel Distribution
5
)*+,+++ customers will be the distributor of our food products and restaurant supplies. 571 has
over ?,+++ vendor suppliers nationwide like, Pilgrim0s Pride, a poultry supplier, @ed Aold, Inc., a
dry grocery supplier, Windsor 1oods, a fro'en food supplier, Taylor 1arms, a produce supplier,
Winona 1oods, dairy in addition to, other well known companies like, Aeorgia Pacific, Braft and
!ampbell0s 457 1oodservice, )+(+8.
TW !hics, as the retailer in the distribution channel, will purchase both food and supplies from
5.7. 1oodservice to simplify the business ordering process by obtaining everything we need, to
prepare and serve our delicious, healthy southern style cuisine, from one source. 7ince 571 has
access to greater range of vendors and they are able to secure better pricing and structure
competitive service agreements due to lower purchasing costs.
iscuss ho( the !istri%ution strategy fits the "ro!uct)service, target market, an! overall
marketing o%*ectives for the com"any&
TW !hics has a niche in the casual dining segment of the restaurant industry. ur goal is to
demonstrate to the customers in our target market that you can enCoy "uality, healthy foods like
those you cook at home while dining out. 571 promotes healthy eating and even offers ideas
and recipes for incorporating healthy dishes in your menu items. 571 will be the supplier for
our food supplies which will eliminate the need to search for the best price on our food products
and free up more time to focus on promoting the business and turning a profit.
Assignment # 3 Pricing Strategy and Channel Distribution
6
References
2!1!"# $etrie%ed &ay 12' 2!11' (rom )S *oodser%ice+
htt,+--...#us(oodser%ice#com
2!1!"# $etrie%ed &ay 13' 2!11' (rom *ol/0s Southern 1itchen $estaurant+
htt,+--...#(ol/s/itchen#com-menu2,latters#htm
Paschal's# 2!1!"# $etrie%ed &ay 15' 2!11' (rom Paschal0s $estaurant+
htt,+--...#,aschals#com- menu2,latters#htm
P34566' 6# &# 2!!7"# *ood Prices and 3besity+ 5%idence and Policy 8m,lications (or
9a:es and Subsidies# Milbank Quarterly ' ;<1"' 227=25<#
This Is It# 2!1!"# $etrie%ed &ay 15' 2!11 (rom
htt,+--...#thisisitbb>#com-menu#html
When to Use Value Pricing Or Perceived Value Pricing - 2 Pricing trategies# 2!11"#
$etrie%ed &ay 15' 2!11' (rom 5? Articles+ htt,+--e@inearticles#com-A4hen=to=)se=
Balue=Pricing=3r=Percei%ed=Balue=Pricing===2=Pricing=StrategiesCidD1341477