Product in Ghana - Price - Essay Example

1. Launching a product in the market is not an end in itself but just a beginning to the end as the company would seek to generate profits from its operations. Thus, in our bid to launch a new product comprised of chocolate infused with wine or spirits in the Ghanaian marketplace, we intend to gain a substantial market share through generating sales that can sustain our operations. Therefore, this section of the paper discusses the measures that are going to be taken into account in order to come up with meaningful and effective retail prices that sustain this new business venture.

In as far as the element of price is concerned, it can be observed that producers need to take into consideration that the targeted consumers have various choices to make in the market place and there are different methods that can be adopted to deal with them. One method is to allow choices to be resolved through free play of market forces where resources are allocated through the price mechanism (Harrison Barry, 14). This means that the individuals as consumers are free to choose the goods and services they will purchase while the producers can also freely produce products of their choice. However, it has to be noted that the ultimate success of this business is determined by the retail price of the product offered since the customers make the final say by virtue of being the final consumers of the product.

It is has been established that there are many industries related to the alcohol-based chocolate industry in Ghana (Euromonitor). These include companies that produce sweets and chocolates, food and beverage companies will also actively participate in this market we intend to penetrate. Thus, the success of our marketing approaches would strongly depend on our retail prices in comparison with the prices of similar products offered by other competitors in the market. The retail price was determined by taking into consideration the cost of raw materials that would be used in the production of this product, costs of manufacturing as well as distribution. According to Laary (2015), a ton of cocoa costs $1759 in Ghana. In order to minimize the cost of production, our products will be manufactured in bulk and they would also be distributed in bulk through identified wholesalers and distributors. Labour costs are estimated to be $300 while transport costs to selected wholesalers are pegged at $800. Total cost of production would be pegged at $2800. We have estimated that after processing, a ton of cocoa can produce about 700 kg worth of finished chocolate ready for distribution to final consumers. Finished products are expected to weigh 100 grams per each chocolate bar. Therefore, from about 700 kg of finished products, we will be looking at getting 7 000 bars of finished chocolate. (700 000 ÷ 100 = 7 000). This will be packed into cartons of 20 bars which will give us 350 cartons. We have reached this price after researching competitor prices of between $10 and $15 per carton according to (Alibaba, 2016). Thus, the wholesale price of each box of our product would be pegged at $15 implying that each chocolate costs 75 cents at wholesale price. All in all, 350 cartons of chocolate will give us a total of $5 250. A price markup of 15 % has been suggested for wholesale prices of $15 per carton containing 20 bars of chocolate. (15÷ 100 X 15 = $2.25). Thus, a profit of $2.25 will be obtained from the sale of a box of 20 chocolates. Thus, $17.50 ÷ 20 = 0.87 meaning that the retail price of each 100 gram bar of chocolate would be pegged at a round figure of 90 cents.

At the suggested retail price above, we believe that we will be in a better position to generate some profits from our operations. We will be mainly concerned about ensuring that our operational costs are lower than the revenue we anticipate to generate from every consignment of one ton of raw cocoa, the basic ingredient in cocoa production. From manufacturing, our products will be distributed to different wholesalers who in turn would supply them to different retail outlets that have been identified where the products would be sold to the final buyers.

2. In our business venture, we will deal with middlemen who will distribute the product to the final consumers. We have identified 1 585 retail outlets that would sell our final products to the consumers. However, we are not going to reach all these retail outlets directly since we are going to engage the services of middlemen to distribute the products to different wholesalers. We also identified the wholesales that would distribute our product to different retail outlets. This helps us to cut transport costs since the retail outlets are centrally located such that the retailers of our products can easily access them. The company pays the transport costs to the suppliers engaged to distribute the product from the manufacturing firm to different wholesaler that would in turn distribute the final product to the consumers. The storage costs by these wholesalers are also paid up for by our company. The retail outlets should have liquor licenses as required by the Liquor license Act in Ghana. The breakdown for transport and distribution costs would be pegged at $800 as indicated above.

3. Ghana’s income per capita GDP in 2015 was 775.46 US dollars, which is equivalent to 6% of the global average (Trading Economics). In determining our retail price of this new product soon to be launched in the Ghanaian market place, we have taken into consideration such as per capita income as well as competition from other major players in this industry. It is our strong conviction that the targeted customers would be willing to pay the pegged retail prices by virtue of the fact that our product would be unique in the market and it would also be favorably priced by in comparison to the prices that are charged for other similar products in the market. The other issue is that their per capita income is high such that they can afford to spend only 90 cents for our new product soon to be launched. According to Alibaba (2016) the average price of 100 grams chocolate is between $1 and $1.15 in Ghana and our price is favourable since it is below the market average in this country. We have also considered the element of competition that exists in the market and have seen to it that our prices would be attractive to the final buyers of the products that are going to be offered to them. The differentiation strategy going to be used in the production of the products to be offered has been designed with the sole aim of appealing to the interests of the customers so that they can purchase our products. The main aim behind the adoption of this strategy is to position our product in the best way that can appeal to the interests of the customers in comparison to other similar products offered in the market. We took all the necessary steps to ensure that the aspect of competition is not underestimated since it has a bearing on the performance of our product in the market.

It is anticipated that the consumers will be prepared to pay the pegged retail price since it has been derived using various methods such as taking into account the operational costs. We also considered the per capita income and we have been satisfied that that the targeted customers earn enough money to cater for their different needs. Our product is classified as luxury and in most cases people would prefer to purchase basic commodities over luxury goods. However, this depends on their level of per capita income. The targeted customers are not that poor such that they may fail to afford this fairly priced commodity which is unique from other similar products offered on the market. The customers are certainly going to derive benefits from using our product and this is another reason why we have been convinced that they would be willing to pay the price for the commodity. The other issue is that we strongly target the middle class and these have steady incomes such that they may not completely fail to pay for our products given that the price is favorable considering their uniqueness.

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