PRICING STRATEGY FOR PINCH OF SPICE(CANTEEN)

-DISHA DIVECHA (2014144)

-EDEN JACQUES (2014145)

-GHANISHTHA AGARWAL (2014147)

-HARJAS BAKSHI (2014148)

PRATHAMESH PATIL (2014159)

PUSHKARAJ KULKARNI (2014163)

SHONIT NARALKAR (2014172)

VASUDHA PARMAR (2014183)

ASSUMPTIONS

Canteens are the only source of food on campus.Pastry Palace and Kailash Juice Centre don’t exist.

POINT OF DIFFERENCE

We will serve healthy food (in addition to other food) and target health conscious customers. Serve Oats, Subway type sandwiches, juice, salads, choice of brown bread, boiled eggs and chicken.

Takeaway Counter – Target students who come to pick up food in between 2 classes. Eg. Ready made rolls, sandwiches, quiche, cutlets, patties, croissants etc.

Food Delivery – Delivery of food to the rooms. Fixed Charge of Rs 100 per month. A La Carte Menu to cater to food delivery to rooms.

Loyalty Programme – Rs. 200 = 1 Point. Points can be used to buy products the next month.

SWOT ANALYSIS

  

StrengthsHealthy food

VarietyHygeine

Quick service(Takeaways)

WeaknessesProcurement

LogisticsLocation

No expansion of area

ThreatsCompetition

Outside CompetitionSubstitutes

OpportunitiesMore Variety

Increased turnout on weekendsIncreased turnout at breakfast

SWOT

STEPS TO BE FOLLOWED:

Selecting the Pricing ObjectiveDetermining The DemandEstimating CostsAnalyzing competitors cost , prices, and offersSelecting a pricing methodSelecting a final price

MENU OFFERED

4P ANALYSIS Product: Products for sale in a college mess should meet the basic requirements. The products that we propose to include in

our menu include the following (in addition to existing menu options): Place: Improving the canteen environment & Giving it a new look. Maintain hygiene. A well-positioned menu board which speeds up the serving process.   Promotion: Promote the canteen as a positive part of the college community. Put the canteen menu and other relevant information on the college intranet and/or internet sites. Offers / menus of the day Price: Pricing strategy will be based on Target return pricing, which will give us fair idea what our target will be. We will avoid price wars by not following ‘going rate pricing’.

SELECTING THE PRICING OBJECTIVE

Our core objective is to maximize the market share. Since there will 7-8 competitors, maximizing market share is a primary objective.

Survival will be our short term objective as there is stiff competition.

DETERMINING THE DEMAND

Total number of target consumers is given - 450 Pricing will depend on the following factors:

Surveys Statistical analysis

ESTIMATING COSTS

  Fixed cost

Transportation Vehicle

50,000Equipment Costs (Oven, Stove, Utensils

etc)

2,00,000

Monthly Rent

55,000

Water bill per month

6,500

Labour Costs (Including cooks, managers)

80,000

Total

3,91,500

Variable Cost  

Raw Material 3,00,000

Fuel cost per month (Petrol Expense, LPG Cylinders ) 40,000

Electricity ( Cost per month ) 10,000

Repair and Maintenance Expense 5,000

Total 3,55,000

COST SUMMARY

Total Cost Expenditure 7,46,500

Revenue generated 8,29,250

Profit82,750

Profit Percentage 10%

ANALYZING COMPETITORS COST , PRICES, AND OFFERS

Units sold Amount Revenue Breakfast 200 25 5000

Lunch 250 55 13,750

Dinner 250 55 13,750

Evening snacks 250 35 8,750

Midnight snacks 150 35 5,250

Earnings per day     46,500

Monthly Revenue   13,95,000

       

Existing Canteen Pricing Strategy

Units sold Selling Price Revenue Breakfast 125 35 4375

Lunch 125 65 8125

Dinner 12565

8125

Evening snacks 125 35 4375

Midnight snacks 50 35 1750

Earnings per Day     26750

Monthly Revenue     829250

Profit     82,750

Proposed Plan

SELECTING A PRICING METHOD

Target Return Pricing = unit cost + (desired return X invested capital )/ unit sales

Going Rate Pricing – Pricing is based on prices of competitors. Keep prices in the same range.

SELECTING THE FINAL PRICE

We will chose the approach of Target Return PricingAvoid price wars

FINDINGS

42%

40%

18%

Healthy Food

Yes No Maybe

63%

37%

Food delivery to Rooms

Yes No

FINDINGS

79%

21%

Willing to pay extra for quality food

Yes No

77%

17%

6%

Quick Meals Counter

Yes No Maybe

Thank You