AB 209 UNIT 6 ESSAY Product and Price

Product and Price




Date due:

Product and Price

‘More than coffee’ is aimed at being a coffee shop that is geared and meant to sell something more than what you get in any other coffee shop. We intend to set up a business that is aimed at giving our clients a great value for their money and a place of having fun. Why a coffee shop? Someone might ask. I settled on this business because there is always a guaranteed market of java junkies and coffee lovers like myself who want something new and some memorable experiences with our coffee cups. Besides, the cost of entry and exit in this kind of business is relatively low. I am writing this paper to outline my pricing strategy, competition and mode of survival and doing business in such a competitive environment. It is good that when one is coming up against established enterprises it is good to have a counter plan to be able to cut a niche for yourself.

Needless to say, this being a coffee shop business perhaps the most important product that should come to the fore on anyone mind is coffee. We intend to give our customers a variety of choices of finely roasted and brewed coffee types such as Cappuccino and Americano. But the most important thing that we would want to sell at ‘; More that coffee’ is experience. We intend to create an environment where people can come to relax and have a great time with their family and relatives. This will do by increasing the number of comfortable seats this according to Robson (1999) who observed that successful coffee shops have comfortable seats.

We also intend to play soft, slow and soulful music in the background in our coffee shop. Good lighting inside, a nice and pleasant smell, nicely decorated interior with warm colors. All these extra steps are deliberately taken to arouse and enhance the mood of our customers and increase sells. Creating a perfect environment that give our customers a wonderful and memorable experience is critical in our business because we believe that this is what will set us apart and attract more customers.

Creating a perfect environment and wonderful coffee is not all that we have to offer. We plan to bake muffins, cookies and fix some light meals for our clients. Repairing coffee machines that have broken down for coffee lovers at an affordable is the other service that we shall provide at our coffee shop. What crowns it all is that we intend to have a robust presence on social media platforms such as twitter and facebook to enable to interact with our clients. To timely respond to their concerns and find out their demands and work on satisfying them.

The competition that we face in this lucrative coffee shop business in our town is from two sources; Java Place and Coffee bar. Java Place has a reputation of providing the best coffee in town and it attracts quite a substantial percentage of customer .Some people say that its market share can be as much as 40% our market survey corroborates it. Their strength comes from having established a good name in the market and it will not be easy to dislodge them from their lofty position but they have weakness and this what we aim to exploit. Java as much people love their finely brewed coffee there is a disconcerting feeling you get when you visit their coffee shop. The place is small, stuffy and with poor lighting system. Almost all customers you bump into are in hurry to buy their coffee and then carry it home. The difference with us is that we want to give our customers more than just coffee. You can call it getting more than what you pay and bargain for; a nice sitting place with opportunity for outdoor space for those who may want to spend some time out with friends as they sip on their coffee. The pricing strategy of Java place is what you might call market pricing. This is the price that customers are willing to pay in exchange for the product. Their price for a cup of cappuccino is $7 that is higher than the market average of $ 5 for the same quantity.

On the other hand, coffee bar is the oldest coffee enterprise in town with a loyal customers. They have a good premise. With almost everything you would expect at a good coffee shop. A spacious facility with comfortable seats and there is also space for outdoor sitting but just one thing that we can exploit to our advantage. Coffee bar is not very responsive to customers especially to young customers who craving for something more than just coffee. For instance, they don’t have a social media platform where they can reach out to identify the needs of their customers. Coffee bar’s pricing strategy is price lining where different coffee types are priced differently for instance a cup of cappuccino and Americano will cost you $ 6.

Of the ‘four Ps’ of the marketing mix as described by Kotler and Armstrong (1991) price is the most important factor. Price is important because it is close and perhaps the most important determinant to profitability. Settling on a good pricing strategy is key because the price of competitors eventually affect the performance of your business. In terms of some customers may shun your business for another one if your price is deemed too high or they may flock too your business if the price is low but that may not always translate into profit. Skimming pricing is the strategy that we will adopt in determining and setting our price this is because we are aiming at selling experiences and memories besides the finely roasted and brewed coffee. A high price of about of about $8 will also help us to recoup the startup cost so that we can become profitable in the long run.

Capital is the greatest challenge for most young people who want to establish startups that is because banks and other lenders are either unwilling or reluctant to provide financial support (Berger and Udell, 2004). To acquire some equipment such as coffee machines and steamers and coffee beans we will expect our suppliers to give us on credit and we can gradually pay as soon as some we make sells. The benefit would be that we can pay them at a slightly higher than what they market requires. We also expect that once the business has picked and we are done with paying for the startup cost, we can allow our customers to buy on credit. This will mainly be extended to our customers who have proven to be loyal and regular. The only thing we would expect is that that all payments are made within a period of one week and that will help us to recoup our money as soon as possible.

Finally, we hope that with the various innovative measures that we have put in place we can have one of the most profitable and exciting coffee shops that our customers can ever hope for.


Berger, Allen N. and Udell, Gregory F (2004). A More Complete Conceptual Framework for SME

Finance, World Bank Conference on Small and Medium Enterprises: Overcoming Growth

Constraints World Bank

Kotler, P., & Armstrong, G. (1991). Principles of marketing (5th ed.). Englewood Cliffs, N.J.:

Prentice Hall.

Robson, S. (1999, June). Turning the tables: The psychology of design for high-volume

Restaurants. Cornell Hotel and Restaurant Quarterly. 56-63.

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