Reference no: EM132166157
Can someone provide me a feedback on the discussion post below. This is a marketing management class.
Company: Corral de Tierra Market
Size: Small, single counter convenience store
Number of locations: 1
What is the company’s pricing objective?
The company’s pricing objective is product-quality leadership. As Kotler and Keller (2016) state that, “many brands strive to be the “affordable luxuries” – products or services characterized by high levels of perceived quality, taste, and status, with a price just high enough not to be out of consumers’ reach” (p. 469). This is what Corral de Tierra Market strives to be. Corral de Tierra Market is essentially a convenience store market, but it is different than other convenience store models in the area for a few reasons. They offer higher end options in regards to wine selection and cheeses. They also offer chef made fresh delights for you to bring home for dinner in a grab and go style for busy weeknight dinners.
How sensitive are the company’s target customers to changes in price?
Because this business model is a convenience store model, it does have the target customers who are not there to get a deal or comparison shop. It is simply a mode of convenience. Because of that, it is apparent that the company’s target customers have a lower sensitivity to price changes. But, as the owner told me, “no matter what, you can’t make everyone happy all of the time.”
Do they have some target segments that are less price sensitive than others?
They definitely have some target segments that are less price sensitive than others. The customers that are interested in wines and cheeses are less interested in the price rather than having the availability of selection in an area when there is not very much to choose from. In regards to the take and go food, when these items increase in price it is a subject of unhappiness from customers sometimes. It is interesting to see that some items have this price sensitivity.
How much consideration does the company give to competitors’ prices when setting their own?
Corral de Tierra Market gives moderate consideration to competitors’ prices when settling their own prices. It is important to not have an outrageous gap between their pricing in comparison with the competition. But, again there is no other store that has a similar business model within 15-30 miles from them, giving them the upper hand when pricing.
What method of pricing do they use to arrive at the final price for the customer?
This was difficult to listen for without directly explaining what I was looking for. But, after having the owner explain how they did things for a bit, I came to the conclusion that they use target-return pricing. Kotler and Keller (2016) describe, “in target-return pricing, the firm determines the price that yields its target rate of return on investment” (p. 476). As with any small business, the return on investment is absolutely essential to its success. The owner re-evaluates pricing each year and adjusts to be sure he stays within a specific percentage range.