ASSIGNMENT 5

PRICE
JAMBA JUICE, DEL MONTE, COCA COLA

Objective:

Price is the only element in the Marketing 4P that generates revenue.Product, Place, and Promotion all cost money.Price is the only element that makes money, but perhaps the most intricate.

• Income Per Capita is different in different countries
• Purchase Power Parity plays a role
• Pricing requires basis of pricing
  • Cost Plus Pricing
  • Markup Pricing
  • Demand Based Pricing
  • Competition Based Pricing
• Then there are various pricing strategies
  • Differential Pricing
  • New Product Pricing (Penetration, Skimming)
  • Product-Line (Captive, Premium, Bait)
  • Psychological (Bundle, EDLP, Prestige)
  • Promotional
• For highly priced item (e.g. I-phone) the pricing has to be same regardless of Income Per Capita to avoid Arbitrage
• Finally, the most challenging of all is the consumer’s “Perception of the Value”

The objective of this assignment is to evaluate how pricing should be determined in different countries, depending on the all the challenges listed above.

Let us assume that you are a consultant being asked by three clients: Jamba Juice, Del Monte Ketchup, and Coca Cola.

All these clients wish to research the probability of market entry into the cities they do not have presence in yet.Jamba Juice wishes to enter Lagos, Nigeria. Del Monte Ketchup wishes to enter Khabarovsk, Russia.Coca Cola wishes to enter San Salvador, El Salvador.These cities are major cities in their respective country that once these companies succeed in these major cities, they plan on expanding to other major cities.

Average household income in these cities are not nearly that of average household income in the U.S.Jamba Juice, Del Monte Ketchup, Coca Cola are perishables, so arbitrage concept does not apply.These products are consumables that should be within the range of what average household income should be able to afford…or should they?

For submission and presentation in class, research the following questions. College level research and critical thinking responses are expected. MLA citation required.

Individual Work

1. Research Jamba Juice and also Lagos, Nigeria.Jamba Juice is not a necessity, but rather a premium product.
   1. What is the Per Capita Income in Lagos, Nigeria?
   2. What is the Purchase Power Parity?What can Per Capita Income in Lagos buy considering their cost of living?
   3. What is Jamba Juice company’s basis of pricing?
   4. What is the competitive environment in Lagos?
      1. Any direct competitors?
      2. What are substitute products?
      3. What is your best judgment of consumers’ perceived value for product such as Jamba Juice?
   5. Now taking 1a – 1d into consideration, what should be your pricing strategy (skimming, competitive, premium, penetrating, etc.)
   6. How does your price compare to that of the price in the U.S. in terms of the product price ratio to the household income?
   7. What is your rationale for the pricing in terms of the brand positioning you wish to maintain?
2. Research Del Monte Ketchup and about Khabarovsk, Russia.
   (Hint: This is an American brand that may be linked to one’s status symbol)
   1. What is the Per Capita Income in Khabarovsk, Russia?You will notice the income in Khabarovsk is quite different from that of Moscow, Russia.
   2. What is the Purchase Power Parity?What can Per Capita Income in Khabarovsk buy considering their cost of living?
   3. What is Del Monte’s company’s basis of pricing?
      (hint: you can compare Del Monte and Heinz to gauge)
   4. What is the competitive environment in Khabarovsk?
      1. Any direct competitors?
      2. What are substitute products?
      3. What is your best judgment of consumers’ perceived value for product such as foreign brand (especially American brand) tomato ketchup?
   5. Now taking 1a – 1d into consideration, what should be your pricing strategy (skimming, competitive, premium, penetrating, etc.)
   6. How does your price compare to that of the price in the U.S. in terms of the product price ratio to the household income?
   7. What is your rationale for the pricing in terms of the brand positioning you wish to maintain?
3. Research Coca Cola and all the countries it has presence in, as well as San Salvador, El Salvador. Unlike Jamba Juice and Del Monte, Coca Cola already has presence in many countries, with all levels of per capita income.Coke has a long-standing global experience.
   1. What is the Per Capita Income in San Salvador, El Salvador?
   2. What is the Purchase Power Parity?What can Per Capita Income in San Salvador buy considering their cost of living?
   3. What is Coke company’s basis of pricing?
   4. What is the competitive environment in San Salvador?
      1. How many global soda brands does Coke have to compete against?
      2. How many local soda brands does Coke have to compete against?
      3. What is your best judgment of consumers’ perceived value for product such as Coke?
   5. Now taking 1a – 1d into consideration, what should be your pricing strategy (skimming, competitive, premium, penetrating, etc.)
   6. What is the actual price of Coke in San Salvador?
   7. How does the Coke price in San Salvador compare to that of the price in the U.S. in terms of the product price ratio to the household income?
   8. With Coke’s intention of being a global brand, what did Coke do to uphold the brand image but at the same time make the product cost cheaper so that they can sell the product at a cheaper price point?
      (hint: container)