MBA 565 - Final Exam

Final Exam
Angela Arambula
4/24/19
MBA 565 - Marketing
Dr. Aaltonen
Saint Leo University
MBA 565 - Final Exam

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 you concerns when establishing the price?

To calculate a target price, a company needs multiply its projected earnings by its

estimated multiple. The earnings-per-share estimate times your adjusted multiple will equal your

stock target price. (Winer et al. 2016) In order to determine a price point of a product, a

company needs to estimate how many units they will send the wholesaler. Using the target price

of $5.99, the wholesalers price point should be adjusted based on the number of units that are

sold. If the company wishes to maintain its desired 45% mar-up price their product must be sold

at roughly $4.60. When selling to the wholesaler, the company will need to set a specific amount

of unit the wholesaler must order in order to continue receiving the wholesale price.

Price elasticity of demand is an economic measure of the change in the quantity

demanded or purchased of a product in relation to its price change. Expressed mathematically, it

is: Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

(Investopedia 2018) Price elasticity is thus an indirect measure of customer value in that a

manager can determine how close a brand is to the customer value point through planned price

experimentation or market reactions to price changes. (Winer et al. 2016) When establishing the

price for this product, optimal pricing would be the safest strategy to keep a low-price elasticity

and adjust it as needed. By segmenting the market, the company will be able to meet its objective

and maximize their profit.

MBA 565 - Final Exam

References:

Kenton, W. (2018) Price Elasticity of Demand. Investopedia. Retrieved from:

https://www.investopedia.com/terms/p/priceelasticity.asp

Winer, R. & Dhar R. (2016) Marketing Management (4th Ed.) Boston, MA; Prentice Hall.

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?

Value-based pricing is a technique for setting the price of a product or service based on

the economic value it offers to customers. This pricing strategy allows companies to capture the

maximum amount that a customer is willing to pay in order to significantly improve company

profits. (Forbes 2017) I feel the company should indeed continue to use value-based pricing, The

high quality of its ingredients continues to provide the product, brand equity and increase its

brand image. With this type of mechanism, customers are willing to pay for the product and the

company can adjust prices as the company grows and helps create value.

Based off the high levels of price sensitivity, the concern for the product is that stores

will have to lower the price in areas of lower income in order to sell. Since the company is

entering a new phase of distribution and would like to maintain a 45% markup, the goal here is

to be mindful of the changes in price elasticity and plan for it according to the demographics.

The demand for this product will most likely not be as high in these areas since the product is

considered more of a luxury item.

MBA 565 - Final Exam

Reference:

Singh, J. (2017) Value-Based Pricing: Two Easy Steps To Implement And Two Common Pitfalls

To Avoid. Forbes Business Development Council Retrieved from:

https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2017/07/27/value-based-

pricing-two-easy-steps-to-implement-and-two-common-pitfalls-to-avoid/#241c41236413

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?

There are many things to consider when preparing a promotional campaign, the first step

is to prepare a situation analysis and taking a look at competitors and where they stand in the

market. Choosing a target audience is equally important because it will allow a business to set

sales goals and promote to those specific audiences. The budget is just as important, knowing

exactly how much to allocate in terms of promotions and advertising can allow a business to

enter highly competitive markets. There are different ways marketing campaigns accomplish the

advertising and promotion section of the campaign. As the text suggests, “marketing campaigns

usually endorse products through different media outlet such as, radio advertisements,

commercials on TV, newspaper and online platforms such as Facebook.” (Winer et. al. 2016)

Pierogi’s & More provide their customers with a product that is considered a luxury

brand, therefore when creating a marketing campaign, to enter the market the company should
MBA 565 - Final Exam

focus on building up their brand image. Showing customers that their fresh ingredients and taste

are above other competitor products on the market. The company should use a variety of

advertising outlets to explain what Pierogi’s & More has to offer its customers. It will explain

how they use the freshest of ingredients, making their product stand out above their competitors.

References:

Cowman, S. (2019) How to Structure an Effective Campaign Plan. Smart Insights. Retrieved

from: https://www.smartinsights.com/traffic-building-strategy/campaign-planning/structure-effective-

campaign-plan/

Winer, R. & Dhar R. (2016) Marketing Management (4th Ed.) Boston, MA; Prentice Hall.

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?

Distribution to specialty stores in both frozen and fresh options should vary in price. The

company should be able to produce both frozen and fresh options, having the frozen options at a

lower cost since these products will be able to maintain its freshness longer. The fresh options

should be offered at the deli section of the market and be sold at a higher price. The reasoning

behind this is that the fresh options that do not sell in time of the expiration date of the product

must be discarded. Considering this variable is important. Having the availability of both options
MBA 565 - Final Exam

provide customers a choice while equally maintaining the quality of the product whether it be

fresh or frozen. The frozen option must redefine “Value” for frozen food shoppers. The product

must also ensure shoppers understand that frozen food offers convenience and nutrition and that

this creates complete “solutions” that make meal preparation easy. (Acosta 2012)

The brand plays a very significant role in this process. Consumers often view frozen

foods as cheap, low quality food items. As previously stated, it is imperative that the frozen

option must redefine its value and in turn offer the quality customers seek. By improving and

promoting the frozen option, the company can gain customers because they are showing

consumers that the are not giving up the quality of the product.

References:

Acosta (2012) Cold Facts about Frozen Foods. AMG Strategic Advisors. Retrieved from:

http://www.ala-national.org/assets/research_center/HT_Cold_facts_Spring_2012_MR.pdf

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.

“Pierogi’s and More, Only the freshest quality ingredients from the old country to your

table.” The rationale for this slogan is to offer customers a taste of home using only the freshest

quality ingredients. Customers prefer food that is natural, fresh and that does not contain

preservatives. This also shows customers the quality of the product and offers them “good, old-
MBA 565 - Final Exam

fashioned” pierogi’s from the old country, offering not only a product but an experience. The

type of foods we consume are changing, with medical experts around the globe urging us to

make healthier choices. (Janacek 2016) In a day and age where more people are eating healthier

and want their food to be fresh, building a brand image and creating a sound integrated

marketing communications plan is imperative. The use of IMC creates a message to customers

that will have an effective impact on them by using several marketing tools and in turn create a

profitable outcome for the company. The essence of the brand is the freshness and quality they

provide customers. They will use this to gain the competitive advantage.

The will use most of the advertising outlets available to them because they will be able to

reach as many potential customers as possible this way. The chosen form of advertisement for

the slogan will be in form of a TV commercial. The commercial will show the kitchen workers

from the old country (the grandmothers, the men and women) working hard in the kitchen, using

the freshest ingredients to make the pierogi’s. This will provide viewers with the want to share in

this experience. To want to find out what these pierogi’s are all about and sets them above the

rest.

References:

Mills, C. (2018) Brand Strategy & Integrated Marketing Communication. Retrieved from:

https://smallbusiness.chron.com/brand-strategy-integrated-marketing-communication-

64368.html

Janacek, D. (2016) Fresh Food Marketing Strategies: The Five Best. The Fresh One. Retrieved

from: https://www.fresh-one.com/fresh-food-marketing/