Saint MBA565 Final Exam Latest 2019 August

You are currently working for a company called Pierogi’s and
More. This company specializes in
authentic ethnic European style foods.
Product offering includes Blintzes, Golabki, Kaputsa, and Kielbasa, but
the main item in the product line is the traditional Pierogi. A pierogi is best described as a piece of
pastry or dough that is stuffed with various ingredients. Going back to the tradition of the product,
the original pierogis were normally stuffed with mashed potatoes, spinach,
sauerkraut and/or variety of cheeses.
The pierogi was the ‘worker’ or ‘laborers’ meal, so consequently did not
include meats as they were not affordable but when available, some meats would
be an ingredient in the pierogi. These
meat-based pierogis were considered a delicacy and used mainly for special
occasions.

The pricing strategy has been quality/value-priced
based. The company has been trying to
develop a reputation and perspective of a high quality item. The standard price for one dozen pierogis has
been $5.99 per dozen. This price is a
little higher than the prices of the main competitors. Depending upon the ingredients, the
competitors’ prices range from $2.79 to $5.39 per dozen in most grocery
stores. Based on the current production
costs and overheads, there is some room to manipulate price, but there is a
desire to make sure that the pricing strategy reflects the quality of the
product. While the company has completed
no in-depth research or analysis, management believes they offer the highest
quality pierogi on the market and believes their price should reflect as
much. A breakdown of the cost structure
revealed total variable costs of $1.87/dozen and total fixed costs of
$0.20/dozen.

Pierogi’s and More is starting to enter a new phase of
distribution. To this point, sales were
through the current company store front or direct sales to a few local
markets. The company is now branching
into specialty or higher end grocery retail.
This change will require the inclusion of a wholesaler into the
marketing channel. Studies have shown
that most grocery wholesalers maintain a 30 percent mark-up while the retailer
maintains a 25 percent mark-up.
Pierogi’s and More desires to maintain their current price point at the
retail level when they enter this new distribution channel. The company would also like to maintain a 45
percent mark-up.

Based upon the above information, please respond to the
following:

a: Using the target price of $5.99, determine the price
point the company should use for the wholesaler. Does this price point allow the company to maintain
its desired 45 percent mark-up? If you
know that the consumer price elasticity for this product group is 0.80, what
would be your concerns when establishing the price?

b: Do you believe the company should continue to use a
value-based pricing mechanism? Why or
why not? If you know the customer group
has a high level of price sensitivity, what is your concern with this pricing
scenario?

c: In addition to the pricing decisions, Pierogi’s and More
does not have a promotional campaign designed for this new marketing
channel. Prepare an appropriate
marketing campaign to enter the new market.
Be specific in your response.
Does brand play a role in this process?

d: Pierogi’s and more has the opportunity to distribute the
product through the specialty store in both a frozen offering and a fresh
offering in the deli/meat counter.
Should their pricing structure be the same or different for the two
products? How would this impact other
aspects of the promotional mix? Does
brand play any roll in this process?

e: Create a slogan for the business, less than 20 words,
which captures the essence of the brand. Explain your rationale for the slogan.
Then show how it should be incorporated within the brand image and integrated
marketing communication plan.