In Vietnam, with the current high demand and consumption of potatoes, potato snack industry is considered a very competitive market in which many companies are trying to obtain the most of the market shares. Consequently, this pricing strategy must not be ignored. Before setting the price, Poca has to consider that of other big firms such as Oishi, Kinh Do, Toonies….under this industry of Oligopoly.
Consumers are very sensitive to the prices of products, and therefore consider carefully among wide range of brands to choose the most suitable one to purchase. As a result, when one firm increases or decreases its price, other firms will be very likely to follow the trend to compete. Poca does, too. As Poca is a high quality product, competitors with which it is going to compare the price are Oishi or Pringles, which seem to go in the same direction in pricing. Actually, competition-based pricing is not only an effective but also economical strategy. Because Oishi and Pringles are large brands compared with Poca, so they have to share the same views in calculating to make profits as well as achieve market shares.
This pricing strategy allows Poca to lower the costly market research to collecting data but still be able to follow goals. Moreover, this will helps Poca more flexible in setting price, due to the possible price adaptations to attract consumers. For instance, Pringles set the high price for its products due to its quality and tasty flavors. Poca will consider cutting some incurred cost and keeping the same quality as Pringles to set a lower price. Actually, Pringles sells at 12,000 VND for a small 43g tube, while Poca costs customers only 6,000 VND for a 50g bag (for more details, see Appendix). Consumers pay less and can still enjoy the same high quality snacks. This will increase the demand of Poca potato snack.
New-product pricing strategies Market-penetration pricing Unlike other competitors in high quality products who follow market-skimming pricing, Poca focuses on the other one, that is market-penetration pricing. Compared with others, Poca is still a young brand established in November 2005. Therefore, the very first thing that Poca should focus on is to obtain the most of the market shares in a very concentrated market. This is also one of the goals that Poca aims to accomplish during early years. With this strategy, Poca is still capable of competing with other firms despite comparatively low profits. Poca will set a low price to attract the most of customers and therefore have to control the cost strictly in order not to let expense exceed the price.
One of the strengths of this strategy is that it allows the company to be capable of competing with other firms more effectively in spite of low cost. Although Oishi or Pringles set high price for their snacks, they only produce limited amounts while Poca can do that in mass production. Moreover, the fact that Poca is sold at low price is not resulted from the cut down of quality but from that of other expenses. Thus, consumers can still enjoy high quality snacks with a lower price. For example, Pringles is sold at 24,200 VND each tube while Poca is sold at 6,000 VND each, which is still lower than Oishi. However, Poca potato snack is still currently receiving a great many positive supports from consumers.
Furthermore, this direction of Poca in pricing is going to be followed by other advantages: 1. Firstly, the low price will help Poca to strengthen the brand loyalty due to the large number of consumers it is going to appeal. 2. Secondly, this is a pretty safe strategy to follow with a young brand like Poca due to low cost of production incurred, because the company cannot predict whether the brand is able to survive the competitive industry or not. 3. Finally, this strategy is totally suitable for our target market that has been identified at the beginning – teenagers. With a low reasonable price, teenagers can definitely afford for one pack.
1. Product mix pricing 2. 1. Product-line pricing As Poca is trying to make its products variable with flavors, tastes as well as package sizes, this strategy is certainly the one to follow. Poca now has many different flavors, features and prices. The company currently offers prices varying from 1,000 VND to 6,000 VND for a bag whose size varies from 10g to 60g. This widens consumers’ range of choices and facilitates their decisions when buying. Therefore, this strategy will help Poca brand more appealing to customers and consequently maximize the profits.
1. Product-bundle pricing Due to the fact that potato consumption is higher than ever as a substitute for fresh potatoes, the demand for potato snack is quite greater than that of other flavors. As a result, it is preferred to be consumed in big packages on occasions of going camping or traveling. Poca is currently sold in big package of 24 small bags of 27g. The price is lower; that is, customers only spend 92,000 VND for a package instead of 96,000 VND when they buy 24 single bags. Therefore, the same as product-line pricing, the strategy helps consumers more easily make their choices and save their money, as well as maximize the profits of the company.
1. Price-adjustment 2. a. Discount and allowance pricing Similar to product-bundle pricing, Poca offers big packages with reduced price, which helps consumers to save their money rather than buy single bags. Because this is only a trial strategy with the company to collect consumers’ feelings about packaging selling, Poca is only sold in a big-size package of 24 bags. (A package of 24 27g bags = 92,000 VND; 24 single 27g bags = 96,000).
1. Promotional pricing The company sometimes holds parties or concerts with the performance of the brand’s representatives – famous stars, together with which discount programs will be given away, to attract more consumers. Poca has held a friendly meeting with the previous representative – My Tam with her fans. In the meeting, attendants were served with free Poca snacks and offered discount cards allowing them to buy with a lower price for certain amounts.
This event has been supported by many people. In the short-run, the company will open a similar concert with the performance of the current representatives – Pham Quynh Anh and WeBoys. Moreover, on occasions like summer or Tet holidays, to increase the sales in short-run, Poca often gives discount for the wholesalers, retailers and consumers buying large amounts. For instance, Poca sells products at 5,000 VND for each 50g potato snack bag, and 90,000 VND for a package of 24 small bags on these occasions.
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