Pricing Product, External and Internal Factors Affecting Pricing Decisions - Essay Example

Marketing Plan 2 Detailed of the product For Delicious Food Restaurant to enter the Chinese market and perform as anticipated, the product must be stated and well described since it is the main reason that the business seeks to venture into the market. While the product is being described, the target market must be the main subject of concern since the business intends to ensure that the product matches the market and the customer’s preferences. The product must also seek to fulfill an existing gap in the market. For instance, the market could be having an inadequacy of a specific product, which the business could introduce to take advantage of the deficiency or the main supplier having weaknesses that could be exploited. The product that Delicious Food Restaurant will be bringing to the Chinese market would be unique and specific to the Chinese market. The product would include a variety of supplies in the main category of the fast foods. Some of the introductory products could include Chinese Fish Flavor and the Chinese Chicken Flavor. The flavors that the company would adopt include delicious indigenous flavors. The term indigenous would fit perfectly in the trademark description since the products would involve the most important food products to the Chinese culture, which include chicken and fish. The color of the products would vary with the product type. However, most of the flavors would have a golden brown color. In the same way, the shape would vary. For instance, the foods with fish flavors would be prepared with a fish shape so that it would be easier to identify them. Additionally, chicken flavors may be prepared having a shape of a chicken’s wing. Packaging would only be done on a customer’s request. The packaging would include degradable material such as paper packages that have specific identification to the company as the main labeling along with some information concerning other available products. Target market Chinese population has been in a constant rise where the country has above 1 billion people. This population is very promising for the company since the large the population the higher the probability of acquiring a large market once operations commence. Consumer preference shift from the traditional foods is causing an expansion in the fast food market each day. In fact, China is one of the biggest fast food markets globally implying that it presents endless opportunities for the companies venturing into the market. The Chinese fast food market increased in revenues by approximately 13% annually reaching an approximated $94 billion by 2013 from $74 billion in 2010. The future prospects maintain that the market will continue growing both in size and in revenues due to the increasing adoption of the western culture in China (Smith). Many businesses are taking advantage of the anticipated growth in the Chinese market through entering this market. Consequently, the market has been flooding with many competitors who have invested most of their efforts to the urban regions of China. The main competitors include McDonald’s and Yum Yum. With regard to growth rate, Yum Yum has outdone McDonald’s as it is growing at a rapid rate and if the trend continues, McDonald’s market may soon belong to Yum Yum (McDonalds: Dont Look Back, Yum Brands Is Gaining On You). One of the specific needs of the Chinese market is quality with respect to health concerns. The market does not have a company that it can trust absolutely with respect to health. This is because both giants have fallen under criticism concerning health efforts as they have had several cases related to outbreak of certain livestock related diseases. In this perspective, Delicious Food Restaurant will seek to reassure the Chinese population that it is a company that can guarantee high quality foodstuffs with specific concern to health. The products will be made in such a way as to fulfill the need for a reliable organization. The pricing strategy Pricing of Delicious Food Restaurant’s foods would include the collective expense incurred when preparing and delivering the foodstuffs and market research concerning the pricing of the competitors. This would be important to ensure that the pricing of the company’s products is not too low for the customers to doubt it and not too high for the customers to avoid the restaurant. This would also be determined by assessing the characteristics of the Chinese population, which is willing to pay highly for a good quality product. Therefore, the pricing strategy would be determined by several market related aspects. The external market factors would include the competitor’s pricing and the characteristic of the population. In addition, it would also be wise to consider the demand in the market when choosing the marked price (Farooq). On the other hand, the internal factors would include the production cost that the company incurred in production of the foodstuffs. The selected price must be related to the distribution, design, and promotion decisions. This would ensure that there is profit maximization as well as fairness in the setting of the prices for both the customer and the organization. It is usually easy to set prices when the production cost is relatively low. Consideration of both the external and internal factors would ensure that the organization is attractive in the market and profitable at the same time. Distribution strategy When choosing the distribution strategy, the organization must be careful so as not to increase the expenses in unnecessary ways. Therefore, the most appropriate and cost effective distribution strategy is chosen carefully. The distribution strategy would be based on the location of the customers and how segmented the market is. Since Delicious Food Restaurant is a new business in the market, it would be a good idea to use distribution companies in taking the products to other markets such as retail shops. Since the business would be undertaking most of the activities in the various restaurant branches, it would be easier and cost effective to concentrate with offering the products at the restaurants. However, it would also be effective to attract customers by distributing the products to areas that have low competition such as the rural areas. Since the distribution companies have predetermined connections, it would be good to first trust them with the distribution before the organization establishes its own distribution channels (Welling). In addition, this distribution strategy would also be effective especially when considering the idea that the business would target the less exploited areas, which are in the non-urban regions. Such distribution would affect the price due to high distribution costs. Therefore, the main distribution strategy would involve the distribution companies. However, since the distribution companies usually target big companies, they might be reluctant to render their services to Delicious Food Restaurant. In such a case, the organization would inquire for distribution related information from the supplier companies. The company could offer important information helping Delicious Food Restaurant in establishing own distribution channels. Promotional strategies Since Delicious Food Restaurant is a new entrant into the market, it would be wise to apply the most basic promotional strategies that include product giveaways where the customers would be allowed to sample the products before they buy. This would be a way of introducing the company in the market and an effective way of enticing the public to try the new product. In the contemporary world, social media advertising and promotion have become very prevalent since social media is highly affordable. This would offer a direct advertising platform, which is effective. Contests would also be an effective way of introducing the company in the eyes of the public. While contests do not require purchases, the main issue behind it is to put the logo of the organization in the eyes of the public (Hose and Demand Media). This would capture the attention of the public as people like winning prices. In addition, charity and cause can be an effective promotion strategy for the new business. This is because promoting a product while supporting a good cause is one of the best ways of capturing the attention of the public and increasing awareness on the existence of a specific product or company in the market. This would be one of the best strategies related to public relation activities that facilitate the establishment of relationships between the customer and the organization. Although all promotional strategies require financing, it is worth the risk because the market share and profitability increase as awareness increases. Works Cited Farooq, Umar. “Pricing Product, External and Internal Factors affecting pricing Decisions” 31 Jul. 2011. Web. 11 May. 2014. http://www.studylecturenotes.com/management-sciences/marketing/92-pricing-product-external-and-internal-factors-affecting-price-decision Hose, Carl and Demand Media. “Top Ten Promotional strategies”. 2014. Web. 11 May. 2014. http://smallbusiness.chron.com/top-ten-promotional-strategies-10193.html “McDonalds: Dont Look Back, Yum Brands Is Gaining On You.” 20 Nov. 2012. 11 May. 2014. http://seekingalpha.com/article/1021651-mcdonalds-dont-look-back-yum-brands-is-gaining-on-you Smith, Gavin. “Fast-Food Restaurants in China Industry Research Report – Now Available from IBISWorld” 10 Feb 2013. Web. 11 May. 2014. http://www.prweb.com/releases/china/fast-food/prweb10414588.htm Welling, Jen. “Choosing sales and Distribution Channels”. n.d. Web. 11 May. 2014. http://www.missionretail.com/saledist.html Read More